VIRTUAL POWER LINES

INNOVATION LANDSCAPE BRIEF

© IRENA 2020

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ISBN 978-92-9260-181-2

Citation: IRENA (2020), Virtual power lines, International Renewable Energy Agency, Abu Dhabi.

ABOUT IRENA
The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports
countries in their transition to a sustainable energy future and serves as the principal platform for
international co-operation, a centre of excellence, and a repository of policy, technology, resource and
financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable
use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and
wind energy in the pursuit of sustainable development, energy access, energy security and low-carbon
economic growth and prosperity. www.irena.org

ACKNOWLEDGEMENTS
This report was prepared by the Innovation team at IRENA’s Innovation and Technology Centre (IITC) and was authored by
Arina Anisie and Francisco Boshell, with additional contributions and support from Harsh Kanani and Anusha Rajagopalan
(KPMG India).

Valuable review was provided by Patrick Clerens (The European Association for Storage of Energy – EASE) and
Alexis Cauzit (RTE), along with Harold Anuta, Gayathri Nair, Laura Casado, Elena Ocenic, Nina Litman-Roventa, Martina Lyons
and Paul Komor (IRENA).

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This document does not represent the official position of IRENA on any particular topic. Rather, it is intended as a contribution
to technical discussions on the promotion of renewable energy.
www.irena.org

1 BENEFITS
Virtual power lines (VPLs) allow large-scale integration of solar and wind power without grid congestion or redispatch,
avoiding any immediate need for large grid infrastructure investments.

1 2 3 4

POWER GRID PEAK DEMAND

GENERATION
Supply-side-storage Demand-side-storage
1. Charges based on previous 3. Charges when renewable-based
renewable generation avoid generation and network capacity allow
congestion and curtailment
4. Discharges to address peak demand
2. Discharges to demand-side storage system
whenever grid capacity is available

2 KEY ENABLING FACTORS 3 SNAPSHOT

Regulatory framework for energy ➜ VPLs provide 3 GW of installed storage capacity
storage systems worldwide

Multi-service business case ➜ Global needs for network investment deferral

for storage systems could reach 14.3 GW by 2026.

Digitalisation ➜ Australia, Italy, France and the US are piloting VPLs

to reduce renewable power curtailment.

What are VPLs?

VPLs consist of utility-scale storage systems connected to grid at two key points:
• One on the supply side, storing surplus generation from renewables
that could not be transmitted due to grid congestion.
• Another on the demand side, charged whenever grid capacity allows
and then discharged when needed.

VIRTUAL POWER LINES

Storage systems used as VPLs complement existing infrastructure
and offer a technically sound, financially viable alternative to reinforcing
the power grid where additional capacity is needed.
 I N N OVAT I O N L A N DS C A P E B R I E F

ABOUT THIS BRIEF

T his brief forms part of the IRENA project

“Innovation landscape for a renewable-
powered future”, which maps the relevant
innovations to create actual solutions. Solutions
to drive the uptake of solar and wind power span
four broad dimensions of innovation: enabling
innovations, identifies the synergies and formulates technologies, business models, market design
solutions for integrating high shares of variable and system operation.
renewable energy (VRE) into power systems.
Along with the synthesis report, the project
The synthesis report, “Innovation landscape for a includes a series of briefs, each covering one of
renewable-powered future: Solutions to integrate 30 key innovations identified across those four
variable renewables” (IRENA, 2019a), illustrates dimensions. The 30 innovations are listed in the
the need for synergies between different figure below.

INNOVATION DIMENSIONS

ENABLING TECHNOLOGIES BUSINESS MODELS MARKET DESIGN SYSTEM OPERATION

1 Utility scale batteries 12 Aggregators 17 Increasing time 25 Future role of distribution

2 Behind-the-meter 13 Peer-to-peer electricity granularity in electricity system operators
batteries trading markets 26 Co-operation between
14 Energy-as-a-service 18 Increasing space transmission and
3 Electric-vehicle
granularity in electricity distribution system
smart charging 15 Community-ownership
markets operators
4 Renewable models
19 Innovative ancillary
power-to-heat 16 Pay-as-you-go models
services
27 Advanced forecasting
5 Renewable 20 Re-designing capacity
of variable renewable
power-to-hydrogen power generation
markets
21 Regional markets 28 Innovative operation
6 Internet of Things
of pumped hydropower
7 Artificial intelligence
22 storage
and big data 23 Market integration
8 Blockchain of distributed energy 29 Virtual power lines
resources 30 Dynamic line rating
9 Renewable mini-grids
10 Supergrids 24 Net billing schemes

11 Flexibility in conventional
power plants

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This brief provides an overview of virtual power
The brief is structured as follows:
lines (VPLs)1 – the innovative operation of energy
storage systems (ESSs), particularly utility-scale I Description
batteries, in response to the increased integration
of renewable energy in capacity-constrained II Contribution to power sector transformation
transmission and distribution networks. The
brief highlights examples of battery storage III Key factors to enable deployment
systems deployed with the primary objective of
deferring conventional grid reinforcement, and IV Current status and examples of ongoing
explores innovative ways to operate batteries initiatives
to enable VRE integration in different power
system contexts. V Implementation requirements: Checklist


1 Also referred to as virtual transmission lines or non-wire alternatives.

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 I N N OVAT I O N L A N DS C A P E B R I E F

I. DESCRIPTION

T he increasing share of renewable electricity

in power systems, especially from variable
sources, requires efficient management of
Such storage averts the need for curtailment.
The other. on the demand-side, can be charged
whenever transmission capacity is available.
transmission and distribution networks to In this second case, the ESS is used to meet
prevent congestion. The traditional approach to demand during periods when there is insufficient
increasing grid capacity is reinforcing the system transmission capacity, using batteries charged
with additional network components (e.g. adding during previous periods of low demand and free
overhead lines) or by upgrading existing lines or transmission capacity.
cables to address thermal or voltage constraints.
Ultimately, a VPL is the application of ESSs to
As an alternative to expensive upgrades to the help manage congestion without interfering in
transmission and distribution infrastructure for the balance between demand and supply. Figures
VRE grid integration, non-wire alternatives – also 1 and 2 illustrate how VPLs work.
called virtual power lines (VPLs) – are being
rolled out. Instead of reinforcing or building Used as VPLs, utility-scale battery storage offers
additional transmission and distribution systems, a technical alternative to adding electricity grid
energy storage systems (ESSs) connected capacity, while also increasing system reliability
at certain points of the grid can support the and security. The aim of using VPLs is to make
existing network infrastructure and enhance the additional electricity capacity available much
performance and reliability of the system. VPLs faster and, in some cases, at a lower cost
are a particular application of batteries. In this than pursuing a conventional infrastructure
case, batteries are usually owned and operated reinforcement or expansion. VPLs provide a
by system operators (for more information about particularly cost-effective solution when network
batteries’ applications see Innovation landscape congestion occurs during specific rare events,
brief: Utility-scale batteries [IRENA, 2019b]). such as extremely high temperatures during the
summer, and when costly upgrades to network
VPLs include ESSs connected in at least two capacity would be underutilised. Furthermore,
locations. The first is on the supply side, close to if regulations permit, the ESS can also support
the renewable generation source, which stores the system by providing ancillary services such
surplus electricity production that cannot be as frequency regulation, voltage support and
transmitted due to grid congestion. spinning reserves.

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Figure 1 The concept of VPLs

1. 2. 3. 4.

Power generation Grid Peak load

Supply-side ESS Demand-side ESS

1. Charges using renewable generation to 3. Charges when load is lower that renewable
avoid curtailment due to grid congestion. generation and network capacity is available
2. Discharges to demand-side ESS when between load and generation.
grid capacity is available. 4. Discharges to address peak demand,
when network between loan and generation
in songested.

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 I N N OVAT I O N L A N DS C A P E B R I E F

Figure 2 illustrates the flows in a practical example of how a VPL works.

Figure 2 Example of the functioning of a VPL

STEP 1: CHARGING GRID CAPACITY: PEAK DEMAND:

100 MW 130 MW
ESS 2

100 MW

30 MW 100 MW
POWER GENERATION GRID PEAK DEMAND
130 MW
ESS 1

Renewable generation that cannot be transmitted through the grid is saved in ESS 1.

STEP 2: TRANSMITTING
DEMAND IS LESS
THAN 70 MW
ESS 2

<70 MW 30 MW

30 MW <70 MW
POWER GENERATION GRID DEMAND
<70 MW
ESS 1

ESS 1 is discharged and the electricity is transmitted to ess 2 when grid capacity is available.

STEP 3: DISCHARGING
PEAK DEMAND:
130 MW
ESS 2

100 MW 30 MW

30 MW 100 MW
POWER GENERATION GRID PEAK DEMAND
130 MW 130 MW
ESS 1 PEAK DEMAND IS MET

ESS 2 is discharged to address peak demand when the network is congested.

Note: MW = megawatt.
Source: Adapted from ENTSO-E (2016).

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II. CONTRIBUTION TO POWER

SECTOR TRANSFORMATION

A s mentioned, VPL provides a particularly

cost-effective solution when network
congestion occurs in specific rare events, such
In this case, ESSs can enable the integration
of higher shares of wind and solar electricity
without any need for large capital investments to
as extremely high temperatures during the expand transmission infrastructure. Additionally,
summer, and when costly upgrades to network with the adoption of necessary regulations, the
capacity would be underutilised. ESS can provide ancillary services to support the
operation of the power system (Figure 3).

Figure 3 Key contributions of VPLs

VIRTUAL POWER LINES

REDUCED CURTAILMENT OF VRE USING BATTERIES TO PROVIDE

DUE TO GRID CONGESTION ADDITIONAL SERVICES TO THE GRID

FASTER AND MORE FLEXIBLE SOLUTIONS

COMPARED TO NETWORK REINFORCEMENT

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 I N N OVAT I O N L A N DS C A P E B R I E F

Reduced curtailment of VRE due to grid Faster and more flexible solution
congestion compared to network reinforcement

Grid congestion tends to happen when network The implementation process for traditional
components reach their thermal limits due to investments in transmission upgrades often
excessive generation or demand, or because of takes several years and cannot react to rapidly
a requirement to keep synchronous generation changing demand and generation patterns.
online. Traditional methods adopted to counter Where demand is growing steadily, traditional
it are reinforcing the grid, redispatch, demand grid reinforcement investment can be carried
response, generation curtailment and other out in large increments. This is more difficult
power flow control measures. in places where demand is flat or declining,
such as in Europe, where the need for greater
Reinforcing the grid is an option that requires transmission capacity results from the move
significant time to be implemented, may face towards increasing shares of renewable energy
public acceptance issues and is relatively and thus changing the location of generation,
expensive when congestion happens only rarely. not higher demand.
Redispatch refers to shutting down generating
units behind the congestion and starting power Battery storage can provide an immediate solution
units beyond the congestion instead, closer to to congestion on certain lines, especially when
the demand. This option comes at a cost for the congestion occurrences are rare – exceptional
system, as actors involved need to be rewarded events rather than regular ones. With a small
or compensated. Demand response can be amount of storage capacity, the necessary
employed to alleviate system congestion by expansion in transmission infrastructure can be
motivating interaction between power system deferred up to a point in the future when the
dispatchers and power consumers. However, such cost of the transmission upgrade is lower than
an approach presents challenges as it requires the cost of using storage (Eyer, 2009; Eyer and
both technical and economic considerations. Corey, 2010).

Curtailment of generation means disconnecting The existing transmission and distribution

renewables whose generation cannot be infrastructure is designed for peak load that
controlled. ESSs can be used to absorb the only occurs for a limited period. Additional
renewable energy generation that would otherwise investment to manage variability from increasing
have been curtailed due to grid congestion. Such VRE could potentially lead to even lower
batteries must be located at points close to the utilisation. Conversely, investing in an ESS will
most frequent congestion points caused by the simultaneously result in improved utilisation of
excess renewable generation. both transmission and distribution infrastructure
and the VRE generation assets (E2Tech, 2015).
For example, in Chile the independent power Unlike poles and wires, battery-based energy
producer AES Gener has submitted a proposal storage is modular and can be scaled to fit the
for two 200 MW energy storage projects to the need. Therefore, the storage technology and
Chilean regulator for inclusion in Chile’s National size most suitable for network needs should
Transmission Expansion Plan. If approved, the two be selected to ensure an efficient, reliable and
virtual transmission projects will relieve congestion secure operation of the system.
in a transmission line where 700 MW of renewable
generation is set to come online (Kumaraswamy, Table 1 summarises the benefits that the VPL can
Cabbabe and Wolfschmidt, 2019). provide as a solution to the need for costly and
time-consuming network reinforcement.

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Table 1 Summary of network upgrade challenges and benefits brought by VPLs

Network upgrade
Benefits of VPLs
challenges
Lengthy (multi-year) planning, Storage systems can be designed and built, and be operational, in several
permitting and development months to
process defer transmission upgrades or at least provide resilience for the network
through the lengthy development process.

Uncertain load growth rates VPLs with the ESSs can be deployed in small modular capacity increments,
and demand patterns avoiding oversizing and stranded assets.

Single function of transmission When not needed for transmission and distribution network deferral, ESSs can
capacity have multiple uses such as generating revenues and reducing grid operation costs
by providing frequency regulation, voltage support, spinning reserves and other
services, provided regulations allow them to provide such services.

Local community opposition The ESSs could have a smaller impact on nearby property values compared to
transmission lines, as the ESS are often installed at substations or existing grid
facilities.

Source: Eller (2017).

Using batteries to provide additional They can also offer system inertia, traditionally
services to the grid provided by coal-fired plants, for which synchronous
condensers have become the main requirement,
In addition to enabling greater dispatchability and flexible ramping (see Innovation landscape
of VRE generation, storage can also provide brief: Utility-scale batteries [IRENA, 2019b]).
reactive power, enabling network operators
to better preserve system performance in the However, the regulatory framework dictates
event of temporary transmission outages or, in whether batteries used as VPLs can also
more extreme circumstances, prevent blackout. participate in the wholesale and ancillary service
VPL projects are also well-suited to providing a markets, where such markets exist. Moreover,
range of ancillary services. Batteries can provide the optimal use of the battery itself should also
fast frequency response, which could replace consider the number of charges and discharges
peaking gas power plants. per day and the life span of the battery.

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 I N N OVAT I O N L A N DS C A P E B R I E F

III. K
 EY FACTORS TO
ENABLE DEPLOYMENT

E fficient use of utility-scale battery storage as

non-wire reinforcement of network capacity
requires regulations that position the battery
Energy storage plays a key role in the transition
towards a carbon-neutral economy and has been
addressed across different jurisdictions.
either as a network asset, as a market player, or
both. Communications and control systems are The EU “Clean energy for all Europeans” package
also key for the optimal operation of batteries seeks to define a new regulatory framework that
as VPLs. allows energy storage to compete with other
flexibility solutions, such as demand response,
Establishing a regulatory framework for interconnections, grid upgrades and flexible
ownership and operation of ESSs generation. Directive (EU) 2019/944 on common
rules for the internal market for electricity states
Clear regulations regarding the ownership and that network tariffs should be cost-reflective and
operation of the ESS are essential for enabling transparent, while ensuring security of supply
their operation, either as a market participant or and not discriminating against energy storage.
as a network asset. For example, if the ESS is As per this directive, generally, distribution
classified as a market-based asset, transmission and transmission network operators are not
and distribution operators may face restrictions allowed to own energy storage assets. However,
on owning or operating the asset for grid it provides for certain specific circumstances
reinforcement deferral. If it is classified as a in which regulated entities, distribution system
network asset and used as a VPL, it might not operators (DSOs) and transmission system
qualify for providing services in a competitive operators (TSOs), are allowed to own and
market-based environment. operate energy storage facilities (European
Commission, 2017). Such situations are:
Therefore, clear regulations are needed to guide
the use of ESSs while maximising the benefits for • If these assets are considered “fully integrated
both the system and the ESS. The cost-benefit network components”2, and the regulatory
analysis for storage systems should incorporate authority has granted its approval.
benefits offered to the wider power system
rather than only considering benefits directly • If other parties, following a transparent
offered to the ESS owner. tendering procedure, have not been awarded
the right to own and operate storage or cannot
do so at a reasonable cost within the given
timeframe.

2 Fully integrated network components are those integrated into the transmission or distribution system and are used only for the
purpose of reliable operation of the system.

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 V I RT UA L P OW E R L I N E S

In addition, these facilities must be necessary FERC organised a technical workshop

for DSOs or TSOs to fulfil their obligations, stakeholders in November 2019 to explore
and are not used to buy or sell electricity in ways to address challenges and support the
electricity markets. In all other situations, energy deployment of grid-enhancing technologies,
storage services should be market-based and including energy storage as a transmission asset.
competitive under the new European electricity FERC is currently reviewing all the inputs from
market design. the workshop, with a view to issuing its position
(FERC, 2019; Konidena, 2019).
Some TSOs have started naming this solution
– using batteries as integrated network Implementing the multi-service
components – as VPLs. Certain EU member business case
states have already implemented regulations
at national level to enable storage operations In a multi-service business case approach,
as VPLs. In Italy, transmission and distribution multiple stakeholders are jointly involved in the
network operators are allowed to own and ownership, development, management and/or
control battery systems if the operator can prove operation of a VPL with two or more ESSs to
the monetary benefit of energy storage over maximise its social welfare by fully deploying
other alternatives, including the cost of investing all the services the storage system can deliver.
in expanding network infrastructure. However, This approach reflects the ownership provisions
storage systems should not negatively impact laid out in Articles 36 and 54 of the Directive
competitive market functioning (Castagneto- (EU) 2019/944 on common rules for the internal
Gissey and Dodds, 2016). Such regulations market for electricity in European Union.
enabled Italy’s TSO, Terna, to launch projects
using grid-connected battery ESSs to integrate ESSs should be permitted to provide a range of
renewables and boost transmission capacity. services including storage to reduce congestion,
which would help to defer network investment, as
Outside Europe, countries are also investigating well as ancillary and balancing services, such as
ways to redesign their regulations to enable frequency and voltage regulation. Allowing the
energy storage as a transmission asset. In stacking of multiple revenues is key to improving
September 2019 Australia’s Energy Security the business case for storage and maximising its
Board (ESB) called for submissions to inform social welfare. If considered individually, most
the redesign of the rules governing the national of the services provided by energy storage
electricity market. The rules must incentivise facilities do not continuously mobilise 100% of
storage and other dispatchable generation in the power/energy capacities of an ESS or do not
the future renewables powered system. The ESB generate enough revenue to reach profitability
aims to set new rules by 2022 and for them to (EASE, 2019). This is illustrated in the UK case
be implemented by 2025 (PV magazine, 2019). in Figure 4.

In the United States, the Federal Energy

Regulatory Commission (FERC) Order 841
directs grid operators across the country to
develop market rules for energy storage to
participate in the wholesale energy, ancillary
services and capacity markets by treating
storage as a generation resource.

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 I N N OVAT I O N L A N DS C A P E B R I E F

Figure 4 Annual cost-benefit of storage applications in the United Kingdom

350
Annualised cost of suitable storage technology
300

250

200

150

100

50

0
Short-term Short-term Price Price Price Price Short-term
operating operating arbitrage arbitrage arbitrage arbitrage operating
reseres reseres + + + + reseres
+ + Transmission Transmission Distribution Transmission +
Fast Fast access upgrade upgrade upgrade Fast
reserves reserves charges deferral deferral deferral reserves
+ + + +
Price Distribution Distribution Distribution
arbitrage access upgrade upgrade
charges deferral deferral

Source: E ASE (2019).

Where unbundling rules do not permit TSOs and Digitalisation

DSOs to own and operate energy storage assets,
market players may be able to operate such Digitalisation is critical to employing an ESS
assets and thereby participate in balancing and effectively as VPL. Communication systems need
ancillary services markets to maximise storage to be deployed together with energy management
utilisation. A “hybrid” model could be envisaged software, possibly with artificial intelligence.
where storage assets are developed, owned, Digital technologies, such as artificial intelligence,
operated and maintained by a regulated entity. can be used to better predict and make decisions
The regulated entity would dispatch the storage on the management of the ESS. In the case of
asset for infrastructure services while pursuing a multi-service business case, communication
its primary goal of ensuring a safe and reliable between various players involved in the operation
electricity system. of the ESS is key (for more details see the
Innovation landscape brief: Artificial intelligence
A market player could be responsible for providing and big data [IRENA, 2019b]).
and monetising market-based value streams,
such as arbitrage and frequency regulation. If the Identifying and agreeing upon the most
asset is not used for infrastructure purposes, it important interoperability standards will allow
could be used fto provide market-based services for a seamless and secure connection between
to avoid the suboptimal utilisation of the asset, batteries and system operators. Interoperability
maximise social welfare and reduce costs for standardisation would mark an important step
consumers. The revenues the regulated owner towards the integration of battery storage for
would receive from the market players would be energy services and harness the full potential of
deducted from the amount that the regulated a flexible, reliable electrical grid system (Dodge-
entity may include in its cost base (EASE, 2019). Lamm, 2018).

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 V I RT UA L P OW E R L I N E S

IV. C
 URRENT CONTEXT AND
ONGOING INITIATIVES

O ver the years, the price of grid-connected

battery storage has steadily declined and is
expected to decline even further in the coming
The plan, put forth in early 2019, includes
allocating costs between renewable power
developers and distribution companies that have
years. For instance, the price of lithium-ion an obligation to serve load.
batteries has fallen by over 30% in the past
five years (Bullard, 2018). This has made it an In the United States, Pacific Gas & Electric
affordable non-wire alternative to large capital selected a 10 MW energy storage project as part
investments in transmission and distribution of a portfolio of transmission solutions during
network infrastructure. its regional transmission planning process, the
first such project chosen to provide congestion
French TSO, RTE, is implementing its first 40 MW relief in US markets. In addition, in 2018 the US
VPL pilot project named RINGO, with the goal of PJM Interconnection market received proposals
increasing grid integration of renewable energy for multiple 25–50 MW battery-based storage
and optimising electricity currents on its network. projects to help relieve network congestion issues
A German grid development plan, produced (Kumaraswamy, 2019). in Australia, projects using
by all four TSOs in the country, has proposed battery-based storage as virtual transmission
1.3 gigawatts (GW) of energy storage to ensure are being considered alongside traditional poles
grid stability and lower network costs. and wires to add capacity on key interstate
transmission lines (Kumaraswamy, Cabbabe and
The Andhra Pradesh Transmission Company, a Wolfschmidt, 2019).
publicly owned utility in India, proposed between
250 MW and 500 MW of energy storage to add Some of the key indicators suggesting the
capacity to its transmission network with an growing use of ESSs for deferring investment in
innovative cost recovery mechanism. network infrastructure are shown in Table 2.

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Table 2 Key indicators about VPLs

Description Key facts

Countries where VPL projects are being piloted Australia, France, Germany, India, Italy, United States¹

Storage capacity of VPL projects currently being Globally: 3 GW

considered or constructed (as of 2019)² US: 62.5–87.5 MW (3 projects)
France: 40 MW
India: 250–500 MW
Chile: 400 MW
Germany: 1 300 MW
Australia: > 1 000 MW
Italy³: 35 MW

Expected growth in battery storage for transmission

~ 14 300 MW by 2026⁴
and distribution investment deferral

Estimated savings from transmission and distribution USD 100 million project deferred by five years would result in
investment deferral savings of about USD 29 million (assuming discount rate of 7%)

Sources: ¹ Kumaraswamy (2019); ² Kumaraswamy, Cabbabe and Wolfschmidt (2019); ³ Musio (2017); ⁴ Navigant Research (2017).

Examples of VPL projects This pilot project was authorised by the French Energy
Regulatory Commission (CRE) for a period of three
RINGO project, France years as an experiment to capture lessons learned,
also called a “regulatory sandbox” environment. The
The French TSO, RTE, has deployed a pilot project regulator has approved a budget of EUR 80 million
called RINGO that involves placing ESSs at three (about USD 95 million) for this project.
various locations in the network to manage
congestion. The ESSs will be deployed so that Multi-use of energy storage systems, Italy
while one battery absorbs renewable energy
generation in excess of transmission capacity, The rapid integration of VRE into the grid in Italy
another will be connected to the demand centre. has not allowed enough time to strengthen and
Each battery in this system will have a capacity of expand the transmission and distribution network.
12 MW/24 megawatt hours (MWh) and is expected In response to the resulting grid congestion,
to be operational in 2020, for a test period of three about 500 gigawatt hours of wind energy was
years. The batteries used will be lithium-metal- curtailed in 2010. To address the issue, Terna,
polymer batteries at one location, and lithium-ion Italy’s TSO, has implemented pilot projects to test
batteries at the other two locations. the use of battery storage systems to reduce VRE
curtailment and solve grid congestion.
Control systems will determine when the energy
stored in the supply side battery can be shifted As part of a pilot project, Terna installed three
to the demand side battery according to the grid-scale sodium sulphur (NaS) batteries with
transmission line congestions, generation and a total capacity of 34.8 MW/250 MWh in the
demand patterns. The aim of this battery system Campania region. The aim was for the batteries
is to help manage congestions without interfering to store wind energy that would otherwise have
in the balance between demand and supply been curtailed due to transmission congestion.
(Energy Storage News, 2018). The stored energy was then transported
to northern parts of the country whenever
From 2020 to 2023, the batteries will be operated transmission lines are not congested (NGK,
solely by RTE as VPLs. From the beginning of 2019). These batteries were also used to provide
2023, they will be open for use by third parties ancillary services to the grid, such as primary
for potentially multiple uses such as frequency and secondary frequency regulation (Musio,
regulation, demand and supply adjustment, 2017).3 The net efficiency of the battery systems
congestion resolution and energy arbitrage, was found to be 65-80% in continuous operation,
among others (Pie, 2018). providing both primary and secondary frequency
regulation services (Musio, 2017).

3 The Terna example followed specific rules in Italy that limit pilot projects to a specified duration.

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MurrayLink 2.0, Victoria to South Australia, Grid booster project, Germany

Australia
A key challenge in the German energy transition
Lyon Group’s large-scale solar and battery is the adaptation of its grid infrastructure to an
storage projects in Riverland and Nowingi, increasing share of renewables, especially wind
Australia, have created a new virtual grid, and solar. A number of highly energy-intensive
providing the option to defer or reduce industries are located in southern Germany, and
investment in grid reinforcements. The project as nuclear plants are phased out in the southern
provides a combined 180 MW/720 MWh of states, increasing amounts of electricity need to
advanced battery storage, located on either be transferred from the north to the south of the
side of the existing 220 MW MurrayLink country. This results in increasing congestion along
interconnector, and acts as a VPL providing the north–south transmission line. Reinforcing the
15% additional transmission capacity. It allows grid is a very lengthy process that poses various
congestion management to unlock inter-regional challenges, including potential impacts on the
Renewable Energy Zones and enables greater environment and land acquisition difficulties.
utilisation of the interconnector asset.
In addition to reinforcing the grid, the German
Australia’s first VPL provided the option of regulator plans to avoid grid congestion via greater
lifting transmission constraints ten times digitisation and the use of new technologies. Two
faster than the time required to construct a innovative pilot facilities for grid boosters under
new interconnector and at a fraction of the the Network Development Plan were approved at
cost, resulting in reduced electricity prices, the end of December 2019 (Federal Ministry of
and providing long-duration storage to firm Economic Affairs and Energy, 2020). Specifically,
renewable generation and fast frequency two spatially separated energy storage devices are
response to the system (Lyon Group, 2019). planned to be installed to the north and south of the
main grid congestion, to act as source and sink, and
thus a VPL, in case of emergency (Tennet, 2020).

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V. IMPLEMENTATION
REQUIREMENTS: CHECKLIST

TECHNICAL • Batteries or other ESSs (such as thermal storage systems) with the ability to effectively meet
REQUIREMENTS transmission and distribution network requirements. The ESS should be chosen according to the time
duration/scale of the congestion, as well as the technical capabilities of the storage to provide the
necessary services (batteries being more effective at providing synthetic inertia than thermal storage).
• Control systems to optimise the utilisation of battery and network infrastructure (possibly using
artificial intelligence).
• Common interoperable standards (both at the physical and the information communication technology
layers) to increase co-ordination between the ESS and the system and network operators.

REGULATORY
REQUIREMENTS • Clear rules on the ownership and operation of the VPL.
• Compensation structures that reflect the costs of the VPL.
• Regulations enabling a multi-service business case, so that the social welfare benefits provided
by the ESS is maximised.
• Regulations that enable network operators to consider battery storage systems in network planning,
together with conventional investments in network infrastructure.

STAKEHOLDER
ROLES AND System operators
RESPONSIBILITIES
• Invest more in pilot projects to evaluate the benefits of VPLs with ESS over conventional network
infrastructure.
• Consider batteries and storage solutions in the grid planning process.
• Include in their operational practices the use of batteries to alleviate congestion.

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 V I RT UA L P OW E R L I N E S

ABBREVIATIONS

CRE Energy Regulatory Commission MW Megawatt

DSO Distribution system operator MWh Megawatt hour

ESB Energy Security Board TSO Transmission System Operator

ESS Energy Storage System VPL Virtual Power Line

FERC Federal Energy Regulatory VRE Variable Renewable Energy

Commission

GW Gigawatt

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INNOVATION LANDSCAPE BRIEF

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