Transmission and Distribution Deferral

This application is sometimes referred to as “Deferred T&D Upgrade Investment”.  It involves the temporary use of an electricity storage device.  The storage unit is installed on the power grid, usually near the end use, where the need for a T&D upgrade is forecast.  The electricity storage system allows the existing transmission line to be used for a longer time, either because it is not replaced or is not upgraded.  The benefit is equal to the annual carrying charges for the capital investment that are avoided if the upgrade is deferred. 

Example: Consider a 3 MW upgrade to a 9 MW distribution system, which will eventually be needed to supply a 12 MW load.  The total expenditure for the change might be $1,500,000 to $2,000,000 and the annual carrying charge for the investment would be about $150,000, i.e., $50 per kW per year.  Since, in practical cases, the total increase in capacity is not needed immediately.  If the load growth is typical of the US, it will be less than 2.5 % each year.  Thus, a 225 kW electricity storage system would ensure capacity during the first year.  Similarly, an additional 225 kW could be added the next year, etc.  So long as the annual cost of the storage system is less than the annual carrying charges, it is a good solution.  In fact, with the leverage, it is possible that the storage system would pay for itself in less than two years.  At some point, however, the grid upgrade must occur.  At that time, the electricity storage system will be disconnected from the grid.  Depending on the life expectation of the storage system, it could then be used for exactly the same purpose at a different site.