Executing a clean island microgrid that relegates fossil fuel generation to a back-up role was never going to be easy. First announced in 2013, Graciosa is finally expected to go live in the next few months. The project has not been without its teething issues, both technical and commercial.
When commissioned in mid-2018, a hybrid renewable power plant on Graciosa in the Azores, 1500km from the Portuguese coast, will enable two thirds of the island’s electricity demand to be fed by renewables. Estimated annual diesel savings are in the region of €2 million.
Crucially, the 4700 inhabitants will not have to fear being fuel-stranded. Like many islands, Graciosa relies on regular shipments of oil, required to feed its generators. When the weather is bad, barges cannot dock.
The microgrid will form the centrepiece of other ambitious plans that include the introduction of electric cars and transportation on the island that will run on clean electricity, something that governments presiding over much larger mainland grids are also trying to do.
When the wind doesn’t blow
Done well, clean microgrids for powering islands are one of the few economically viable business cases for energy storage.
Nevertheless they have proven to be difficult to bring off, let alone reach a stage where developers and investors have achieved a repeatable, commercial clean microgrid model. The island of El Hierro in the Canary Islands, for example, has failed to reach its ambitious target of 100% powered by renewables – onshore wind and hydropower in this case.
Through many extended periods since entering commercial operation in 2016 the island’s grid has had to fall back on its diesel generators when the wind has not blown. The result is that the Gorona del Viento microgrid’s energy production costs more than the diesel it was intended to replace.
The cost of the wind-pumped hydro microgrid is valued in the region of €84 million. Hubert Flocard, an ex-director at the Nuclear Physics Institute of the French National Scientific Research Centre and Energy Matters blog writer Euan Mearns estimate that diesel generation will be supplying island demand for about 50% of the time. Flocard reportedly described Gorona del Viento as a “a technical semi-failure.”
No pressure, then, on those partners and stakeholders bringing Graciosa’s multi-megawatt microgrid to commercial fruition and to show how renewables-based generation can power some of the most remote communities with cheaper clean electricity.
The combination of 4.5MW wind, 1MW of solar PV and 3.2MWh of battery storage will allow the island’s utility and offtaker, Electricidade dos Açores (EDA), to depend on renewables for the majority of Graciosa’s electricity demand.
The offtake agreement is guaranteed by the mainland, which is ultimately the Portuguese state, through the subsidy mechanism that guarantee the Azores power at the same price as the mainland.
The offtake agreement is linked primarily to the level of diesel savings, so is affected by oil prices. The target level of renewable penetration to be achieved by the system is 65%, reducing diesel-generated power to 35% of the overall power consumption on the island. The guarantee through the subsidy system provides a minimum (collar) and maximum (cap) return for the equity investors in the project.
The project’s original developer Younicos had designed the energy storage system to allow variable generation from wind and solar to take over base-load generation, so that diesel generators only need to be used for back-up.
To do this requires controlling the batteries to provide multiple system services to the microgrid, such as frequency and voltage control, but also islanding and blackstart. Younicos’ energy management system (EMS) is able to pack in all of these capabilities and create grid-forming batteries. This is where batteries, rather than conventional power generators are able to re-establish power within a microgrid or an islanded grid, even where there is a high share of renewable generation.
The project is expected to be commissioned in the next few months and arriving at this point has taken considerably longer than originally anticipated. In 2013 Younicos first announced it was developing the €24 million microgrid, which it said would be up and running by 2016. At the time of announcing Graciosa Younicos usually chose Samsung SDI batteries for its energy storage projects. The South Korean lithium ion battery producer was one of Younicos’ early backers.
Optimising battery performance is a balancing act, between fulfilling the functions and requirements the energy storage system is programmed to do and preserving the state of the batteries themselves, which are made up of many individual cells, degrading at different rates.
Lithium ion battery cell performance is affected by temperature variations. Though manufacturers’ battery management systems are designed to detect these, ensuring all of that information gets fed back into the energy storage system’s overall controls is not straightforward.
Based on Younicos’ work on chemistry, racks and battery management system validation within its lab near Berlin, Samsung SDI was able to extend 20 year warranties for its batteries when controlled by Younicos, compared with 10 year warranties that were more typical at the time for large stationary storage applications.
However, in April 2015 it was a battery energy storage system supplied by Leclanché that Younicos announced would be installed on Graciosa, to be integrated with Younicos’ EMS, designed to manage the core components of the microgrid and give the battery grid-forming capabilities.
During the previous year Leclanché had gone through a strategic shift in its business, from a long-established Swiss producer of high-quality battery cells and modules to supplier of turnkey battery energy storage systems (BESS), which requires AC-side components in addition to the software controls for linking batteries to the inverter.
The battery energy storage system installed on Graciosa uses Leclanché’s lithium titanate cells. The chemistry is suitable for power-intensive requirements and achieving long life, in the region of 15,000 cycles and at a 100% depth of discharge (DoD).
At the time of the announcement, Leclanché anticipated the system going live by the end of 2015.
Proving profitability for investors
Remote locations in general and islands tend to suffer from high costs for generating electricity and due to the need for stability in the power demand, diesel powered generators have been the predominant form of power generation for islands or regions or sectors that are off-grid, like mining.
In these types of grids renewables penetration, without storage, tops out at about 15-20%. Adding more intermittent generation destabilizes these systems. Energy storage, connected with solar and wind generators, yields a microgrid capable of providing stable, reliable not to mention cleaner and more sustainable electricity at a lower cost than diesel generators can. Renewables penetration can be increased.
“That said, while there are hundreds of islands around the world facing the same issue as Graciosa, the problem is that the project financials don’t work and investors are hesitant to step in. On Graciosa we’ll demonstrate that a system can be built with a profitable business case so investors are willing to step in,” said Joep Thomassen at the time, who was vice president of distributed generation at Leclanché between 2014 and 2017.
Leclanché’s chief executive Anil Srivastava agrees that island and remote microgrid projects have been challenging. The profile of wind generation is more demanding on the energy storage system, unlike solar PV, which tends to be relatively simpler. “Our BESS can accommodate two different load profiles simultaneously,” according to Sriva
At the time it was announced that Younicos would be installing Leclanché’s BESS, it was also announced that an affiliate of Recharge, a special purpose vehicle set up to invest in Leclanché, would lend €3.5 million to the project’s company, Graciolica, which was a wholly owned subsidiary of Younicos, to accelerate the project through 2015.
Denmark-based developer and investment firm HowardScott set up Recharge. In March 2016 Recharge took a 50.1% stake in Graciosa, making it the majority shareholder in the project. In June 2017 Younicos said in a press release that it expected to commission Graciosa, as the first multi-megawatt grid-forming clean power system, by the end of last year.
In December 2017, Recharge placed an order for an EMS from Greensmith, which will replace Younicos’ EMS in the Graciosa microgrid.
Scott Macaw, a partner at HowardScott, says: “Our company has project management and implementation capability, which is essential in installing and commissioning projects like this. HowardScott’s clean energy solutions are bankable, which is a requirement to have our solutions financed.”
Due to ongoing legal actions, Macaw declines to comment regarding the decision behind changing EMS provider. However, he says he is enthusiastic with regards to working with Greensmith’s technology.
Philip Hiersemenzel a spokesman for Younicos confirms the company is in a commercial and legal dispute with Recharge and says the EMS for the project is ready to be installed.
Island communities across the continents are among the most vulnerable to the effects of climate change, so the steady growth in the number of islands running on self-generated renewable energy, minimising diesel consumption and reliance, is progress that few would argue with.
Recent success stories include the American Samoan island of Ta’u, some 4000 miles from the west coast of the USA, which benefits from abundant sunshine. The island’s roughly 600 inhabitants now rely on almost 100% solar electricity for their energy needs, provided by a 1.4MW PV array supplied by SolarCity and a 6MWh Powerpack battery storage system from Tesla, implemented in just under a year.
Graciosa, by comparison is a more complex project, with a significantly larger population to be served. It is also one where wind and solar generation have had to be harnessed within a single system to ensure the island is able to rely on renewable sources for the majority of its power needs.
When commissioned, Graciosa will contribute to the ongoing evolution of clean island microgrids, unlocking further potential for these types of projects among remote communities, who sooner, rather than later, require a clean, reliable and cost-effective alternative to generating electricity solely from fossil fuels.