“Grid-forming technology is an important part of the energy transition”

Expert Interview – May 28, 2024

How can the grids be kept stable when conventional power plants are shut down? This is the question currently being addressed by experts in grid stability and energy security.

Until now, it has primarily been the synchronous machines in thermally operated power plant controls that ensured grid and frequency stability.

Now, companies are proving that renewables can also do this alongside energy storage systems by using what are known as grid-forming inverters.

In an interview with Daniel Duckwitz, Product Manager Grid Services and Hariram Prabhakaran, Head of Industry Solutions at SMA Solar Technology. We asked how such grid-forming power plants work, where this market is heading and, of course, whether 24/7 renewable energy will be possible with grid-forming technology

Interview with Daniel Duckwitz and Hariram Prabhakaran from SMA Solar Technology

Daniel Duckwitz, Product Manager Grid Services, SMA
Hariram Prabhakaran, Head of Industry Solutions, SMA

Grid-forming inverters are currently on everyone’s lips in the solar industry. First of all, can you explain to us what a grid-forming inverter is and what distinguishes it from an ordinary inverter?

H. Prabhakaran: First of all, a little context – if we want to master the energy transition successfully and shut down conventional power plants, we need three different things. First, we need much more renewable energy. Second, and most importantly, we need more storage systems. And, third, we need grid stability. A system transition to 100 percent renewables can only succeed if we have all three of these things.

SMA has built a system using grid-forming technology for the German town of Bordesholm and has demonstrated that it is possible to a) operate a power grid that only utilizes renewable energies, storage and grid-forming technology and b) keep it stable. Grid-forming technology is an important part of the energy transition.

D. Duckwitz: Actually, this inverter isn’t the starting point necessarily, rather it’s the requirements the energy system actually has to fulfill that are. A grid-forming inverter can stabilize the energy system, it “forms” it, essentially, which means that power grids can be operated only with inverters based on renewables and grid-forming storage systems.

This is why we call it “grid-forming”. This is currently not the standard for PV inverters, for example, which means that a power grid consisting solely of inverters and PV generation couldn’t be operated on its own. In the future, however, renewables and storage systems will form the grid.

What are the ingredients for stable grid operation?

D. Duckwitz: First of all, you need both voltage stability and frequency stability. This means that voltage and frequency must always be recovered and stabilized when disruptions occur. Then, the next ingredient for reliable grid operation is grid restoration – the ability to restart after those very rare occasions when extreme events happen.

Until now, these ingredients have come from conventional power plants, most of which will disappear in the future, hence the need to focus on grid-forming. In concrete terms, this means that the inverters are controlled as a voltage source because their power system inertia stabilizes the voltage and the frequency. This is similar to the flywheel mass in a conventional power plant.

Then there’s black start capability. This means that a battery storage system with a grid-forming inverter can start itself and, in doing so, serve as a starting unit for grid restoration, making it the first system that provides the voltage and allowing the power grid to restore itself from this starting point.

Where are we right now, specifically where power electronics for grid-forming inverters are concerned? Which technical properties, such as greater overload capacity, do the products that are currently being developed for grid-forming operations need?

D. Duckwitz: Overload capacity is important for being able to supply additional power quickly when there’s power system inertia. Apart from that, however, the grid-forming capability mainly consists of a new control system, i.e. new software on the inverter, so that it enables grid-forming on one hand, but also fully provides all other normal system functions as before on the other.

This means that the battery is used as an energy storage system, for example to shift energy from midday to the evening, but is then also ready for use at any time for additional power peaks, in order to catch up with the frequency. This regulation, this software, that’s actually what’s new. Even if the inverter itself, so, the hardware, looks the same or very similar, it has greatly enhanced functionality that enables complete system operation without conventional power plants.

What we’re doing is basically redeveloping the entire software, the entire way it’s controlled. We have to comply with the emerging standards in each market where stability and grid-forming are concerned, but we also must continue to meet the previous standards, too. The result is a product that looks the same as before in terms of hardware, but is very different in terms of operation and functions. During operation, a predefined output is no longer simply fed in, rather it’s immediately deviated from if necessary based on the grid stability.

If the power grid needs something else, the system has to deviate from the setpoint. This is a major area of tension, because it may behave slightly differently from what we previously expected. It may only be a matter of a fraction of a second, but this must be taken into account in the overall operational management.

Which configurations do grid-forming inverters make possible for stability services and how do they differ?

D. Duckwitz: We’re only looking at large installations at the moment, i.e. output from around 10 megawatts to the gigawatt range, which rules out smaller storage devices for the time being. This is because the technology is new and easier to initiate with a few large systems – but at the same time, large systems can already make a significant contribution to system stability.

It’s already possible to provide power grid stability services with large battery storage systems in the high and extra-high voltage range because an energy storage system is required to stabilize the frequency. Without the storage system, it’s not possible to react reliably all the time because PV is only available when the sun’s shining. Accordingly, the initial focus is on large-scale battery installations. We expect large PV hybrid power plants, which also have storage systems, to follow soon.

What business models exist in markets where Battery Energy Storage Systems (BESS) and grid-forming inverters are already being used to stabilize the grid?

D. Duckwitz: First, there are grid stability services, i.e. new grid services, particularly for power system inertia and short circuit power. The UK is the pioneer in this area. The first major invitations to tender, in which battery projects were also able to participate, were issued there two years ago. Of the new technologies, only battery storage systems were subsidized. This makes the UK, and Scotland in particular, the first market where projects SMA is involved in are now being implemented and where the first start-ups will take place this year.

Comparable markets are also emerging in the EU on the basis of the new “non-frequency-based ancillary services” – these are currently being implemented nationally. In Germany, the market design is expected to be adopted this year, meaning Germany is expected to become the first continental European market for power system inertia.

Then there are other markets such as Australia. There are also tenders for power system inertia there, albeit often on a regional basis.

Another approach to how grid-forming installations are connected to the grid does exist. These are the weak grids – power grids that don’t have sufficient transmission capacity, but where building renewable plants is still desirable. One example is an area in the Australian desert that’s far away from consumption centers, where you have to think carefully about how many power lines you want to build there at all, but on the other hand the area is easily usable for PV systems.

As a result, many PV installations are being built, but then the challenge is being able to use the power grid there at all. Grid-forming battery storage systems can achieve two things there – one, stability is improved locally, i.e. the voltage in particular is kept stable and, two, the battery also makes it possible to shift energy transportation to the evening hours. From the project developer’s point of view, it’s all about making the areas and the grid connection usable.

This won’t only be the case in Australia, it’ll also be the norm in Europe in the future that grids will be highly utilized; that grid expansion may be a lengthy, decades-long process; and that it’ll be necessary to work with highly used and, therefore, weak grids. Large battery storage systems will also solve two challenges in Germany – namely those of stabilizing and relieving the grid.

What difficulties do you see in countries like the UK where the first projects have already started?

D. Duckwitz: One current challenge is that, on one hand, we have standards and norms that are currently being developed, but on the other, we want to work quickly. Everyone involved recognizes that stability has to be guaranteed. In other words, you want to move fast, and standardize as you go, because you want to implement a lot of projects. Balancing new requirements, standardization and speed is challenging.

H. Prabhakaran: There are countries where the requirements haven’t been recorded conclusively yet, which is a technical challenge on the system side. They do have standards, but they’re old and weren’t initially issued with grid-forming technologies in mind. Creating incentives for project developers is more of a challenge at a political level.

At SMA, our technology enables us to provide power system inertia. This means extra costs, also for our customers, the project developers. This technology will only be used if there is a suitable business model and a suitable investment environment where money can be earned. This has been achieved in the UK.

What are the advantages and disadvantages of providing grid stability services with BESS + grid-forming inverters compared to synchronous generators?

D. Duckwitz: Batteries are very efficient because they solve two problems at the same time – they store energy to shift renewable generation to the load and they stabilize the system. So I can solve both problems from one system, provided building enough such systems is possible. That has a lot to do with market design. So, is the energy market in itself set up in such a way that it’s economical to build a battery storage system to shift energy into the evening and night hours?

On one hand, yes, and on the other, are the stability services remunerated accordingly? If they are, the battery is clearly the best, most cost-effective technology and it’s also very flexible. The individual functions can then also be arranged differently in terms of time, so that some functions can only be switched on when they’re needed, with a different weighting between energy trading and stabilization functions.

If we compare this with the synchronous machine – it’s built and then that’s that, nothing can be influenced. If conventional power plants with fuel are no longer built, the generator can only be used as a stand-alone machine, i.e. in phase-shift operation. This means it can also stabilize, but it can’t do anything else, and it’s too expensive for that.

This has also been seen in the UK – synchronous machines were also awarded tenders there, but at a multiple of the prices that batteries receive for their stability services. In other words, from an economic perspective, it’s significantly more expensive to rely on synchronous machines.

Can the synchronous machines in thermal power plants be completely replaced in the future?

D. Duckwitz: Yes. For certain hours of the year, covering 100% of demand from renewables is already possible, but we are still reluctant to switch off conventional power plants completely for these periods. As soon as there are enough grid-forming batteries in the system, it will be possible to switch them off completely.

H. Prabhakaran: It depends on how much storage capacity we have. If, for example, our grid-forming technology can provide 24 hours of storage capacity, then we can theoretically replace all rotating technologies. But, of course, not all synchronous machines will be replaced in the short term. That will take several decades.

Over the next few decades, conventional power plants with renewable fuels will still need to be used from time to time. The question is, where is the economic optimum of battery storage systems and hydrogen power plants? The low efficiency and high costs of hydrogen suggest that a higher proportion of battery storage use is the optimum.

What new commercial potential does BESS + grid-forming inverters offer project developers and operators?

D. Duckwitz: Firstly, there are tenders for grid stability services. The advantage is that contracts for stability services are concluded over a longer period of time, for example over a period of five to ten years. This is attractive for both sides – project developers have investment security and stability is ensured to the general public at low cost. The other obvious potential is dealing with delayed grid expansion. From the project developer’s point of view, grid connections can be used by strengthening the power grid locally.

From the general public’s point of view, this brings additional low-cost energy onto the market. In addition, batteries can also be used to rebuild the grid – this is also a system service that is remunerated. From the operator’s point of view, this means we’re talking about three different markets – energy trading, stability and grid reconstruction.

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