Sound energy storage key to enter new energy markets in Hungary

Today, decarbonising and increasing the share of renewables is a standard goal for many organisations, governments and companies. What’s new about the project between Wärtsilä’s Greensmith Energy and Hungarian ALTEO is that it will not only boost the country’s efforts to add more greens but add new revenue to its energy system.

The contract with Sinergy KFT, subsidiary of Budapest-based energy company ALTEO Group, includes a lot of firsts. To start with, it’s Wärtsilä’s first Engineering, Procurement and Construction (EPC)  energy storage project delivery in Europe, including batteries, inverters, power electronics and software.

On top of this, it’s the first Wärtsilä engine plus storage installation worldwide. The existing power plant, operating with three Wärtsilä W34SG engines, is co-located with an energy storage solution that incorporates GEMS, an industry-leading energy management system from Greensmith Energy, a Wärtsilä company.

“The energy storage isn’t just deployed next to an existing power plant, but it’s integrated into it,” notes Markus Ehrström, Business Development Manager, Wärtsilä Energy Solutions. “What this means is that, now, the complete portfolio can be optimised to maximise profits. For instance, the energy storage can take first load and the engines can then follow during a fast start up procedure.”

For ALTEO, the collaboration with Wärtsilä is the first energy storage project. It enables the company to offer more flexibility to the grid and optimise its power generation portfolio.

The installation will enable ALTEO to participate in the electricity market by providing frequency and secondary regulation to the national grid operating in virtual power plant more. The total output of the battery storage plant is 6 MW / 4MWh. A VPP, or, virtual power plant is a cloud-based system that integrates several types of power sources to give a reliable overall power supply.

“The integration of the energy storage system is a huge step in ALTEO’s Virtual Power Plant development and we believe that this technology has opened us new opportunities to successfully respond to upcoming challenges,” says Peter Luczay, Director of wholesale energy trading and virtual power plant management at ALTEO.

Software is key

Wärtsilä acquired Greensmith Energy Management Systems in July 2017, following a year-long co-operation on stand-alone energy storage and hybrid energy solutions. According to Ehrström, it was the companies’ combined competence that convinced ALTEO to choose Wärtsilä.

“This is a concrete demonstration of how Wärtsilä and Greensmith Energy go well together,” he says. “The capabilities and knowledge of Greensmith Energy as well as Wärtsilä’s long track record in EPC and engine knowledge ensure that we know how to create hybrid solutions for our customers.”

GEMS, a critical component of Wärtsilä’s engine plus storage installation, analyses changes in market conditions and rate structures (prices at which different products can be sold in the market), effectively “future-proofing” energy storage investments for both power developers and regulated utilities. Future-proofing ensures that as applications and market conditions evolve, GEMS can be modified, leveraging software-based intelligence. It has the ability to develop new applications, update existing application rules, and optimise the revenue streams across multiple applications while still complying with warranty requirements. And all this can be done remotely.

Ancillary services are a proven application provided by GEMS, generating additional revenue for ALTEO. Typically, ancillary services are the balancing services required to operate the grid, such as, frequency regulation and primary, secondary and tertiary regulation.

Here, software plays a key role in the efficient running of the installation. According to Risto Paldanius, Director, Energy Storage, Wärtsilä Energy Solutions, the software enables not only the optimisation of energy storage, but the whole plant, without operator influence.

“Software really is one of the most crucial elements when it comes to hybrid installations,” he explains. “With its help, it’s possible for us to hybridise any generation assets together, not only those of Wärtsilä’s.”

Different infrastructure, different needs

Paldanius points out that the global energy storage market is still in its early days. However, according to Bloomberg, the market is expected to grow from a 1 billion USD market to 20 billion USD market by 2030. “Personally, I even believe that this figure is underestimating the hybridisation opportunities of the existing assets,” says Paldanius.

“Storage systems will become more and more prevalent on all scales, from the grid scale to individual household installations,” he says. “The grid scale storage development started in the US, namely on the PJM-market, with innovations from companies like Greensmith.” PJM-electricity market is the largest electricity whole sale market in the USA. Globally, it is only exceeded by common European electricity whole sale market.

Now, the trend is spreading across the globe, with the likes of Europe and Australia on North America’s heels. The inherent challenge of renewable energy is that it is intermittent, and energy will be produced only when the sun shines or when the wind blows. Thus, with the transition towards renewable energy, there will be an increased need for energy storage and optimisation. This needs gets an additional boost from regulatory authorities realising the technology’s benefits for the grid.

Paldanius notes that energy storage can be used in various applications. Each business case is defined by the application, which depends on the location: the existing electricity market and its products or savings generated by energy storage. Local regulation rules play a role, too.

“Often the regulatory framework lags behind the developments in technology,” Paldanius tells. “It sometimes takes time to understand how the energy infrastructure can be improved by new technologies and digitalisation.”

“Storing energy is like time travel”

Together, Wärtsilä and Greensmith Energy are very well positioned to be at the forefront of the new developments. Paldanius has been involved in the acquisition process from the very beginning. Previously, Greensmith was mainly operating in North America, but with Wärtsilä, the whole world is now wide open, with the ALTEO project as a prime example.

“Many countries and markets will be looking at examples of energy storage solutions,” Paldanius says. “For example, Australia is already growing strong, but the Philippines, Thailand, Indonesia, Jordan and Saudi Arabia are places that are showing increasing signs of interest. Islands in the Caribbean as well as the Pacific and the Mediterranean can also greatly benefit from energy storage.”

Storage solutions are changing the very nature of energy production, so what’s happened in Budapest will set an example for the power plants of the future. Paldanius describes the changes that have taken place in the energy sector in the past 15 years as the largest in decades.

“In a way, energy storage is a bit like time travel, as it enables us to use energy from the past,” he concludes.

Written by

Chandralekha Mukerji
Anne Salomäki