Executive Summary
To meet the evolving demands of the 21st century, the U.S. power grid is undergoing transformational changes that defy its traditional design of large-scale generation remotely located far from consumers, centralized control structures with minimal feedback, limited energy storage, and passive loads. Over the last decade, the U.S. electric generation mix has changed dramatically, with increased generation from highly-flexible natural gas, rapid deployment and penetration of variable renewable resources, and decreased generation from traditional baseload resources. Other changes that are beginning now and expected to accelerate in the near term include increased deployment of energy storage technologies and greater use of digital and communication technologies in the control of power systems. The introduction of new sources of dispatchability, flexibility, and reliability offers the potential for a more optimized, cost-effective, and modern energy sector from fuel to generation to delivery to load.
One key trend in the evolving U.S. energy sector is the emergence of hybrid energy systems (HES). We define HES in this report as systems involving multiple energy generation, storage, and/or conversion technologies that are integrated—through an overarching control framework or physically—to achieve cost savings and enhanced capabilities, value, efficiency, or environmental performance compared to the independent alternatives. This definition is consistent with—but broader than—industry definitions. And as defined here, HES are related to, but distinct from, colocated resources, which share some characteristics with HES but have more-limited opportunities for operational synergies.
HES present an opportunity to optimize power plant designs to maximize the services that are useful to and valued by the electric and broader energy systems. They can vary in terms of their subcomponents, linkages (e.g., locational, physical, and operational), and application spaces (e.g., customer-sited or utility-scale). HES can also be configured to provide various electric and nonelectric products (e.g., fuels). For example, HES can have electricity as their only output, with common examples including various generation technologies combined with energy storage. In other cases, HES can consist of industrial processes that utilize generated heat or power to produce a commodity-scale product (e.g., using electrical or thermal energy to produce hydrogen from water or a methane source).
Recent analysis, experimentation, and deployments of HES suggest advantages currently outweigh disadvantages for some technology combinations. They also indicate that hybridization could be an effective strategy for realizing net-economic benefits relative to independent plants by allowing multiple technologies to share costs and infrastructure; enabling the provision of more grid services (or the same grid services at a lower cost); and enhancing system reliability, flexibility, and resilience. Hybridization can also help mitigate financial penalties for variable resources (e.g., integration charges and imbalance penalties) and overcome suboptimal technical requirements or limited participation models for the provision of services (e.g., capacity or ancillary services). For example, if a utility or system operator imposes ramp-rate limits on variable renewable resources, or it disallows these resources from participating in ancillary services markets, then hybridizing can help resolve these market design limits. Similarly, a utility or system operator could impose energy requirements on certain market products that might limit the ability of independent energy storage to participate unless it is paired with another resource.
Hybridization also poses challenges and uncertainties. To a large extent, wholesale electricity markets, electric utility regulation, and state energy policies were designed with the expectation that power generating facilities would consist of a single technology type. Furthermore, system operators have historically been able to optimize dispatch to minimize costs and maintain reliable operations across the full portfolio of available resources, rather than having some resources optimize their operations independently. The emergence of competitive HES is thus creating challenges for the design, operation, and regulation of wholesale electricity markets, for state regulation of electric utilities, and for the design and implementation of energy policies. Additionally, current data, methods, scenarios, and analysis tools—ranging from plant-level to capacity expansion to energy economic models—are insufficient for representing the costs, estimating the value, and evaluating system impacts of HES. Optimizing the design and operations of HES also requires development of controls, sensors, telemetry, metering, and other communications equipment to facilitate the coordinated operations of subcomponents with different objectives.
Responding to growing industry interest in HES, the U.S. Department of Energy (DOE) has undertaken research and development (R&D) projects to address challenges and promote innovations in HES. The DOE Hybrids Task Force reviewed DOE's HES R&D portfolio and found that technologies from four DOE program offices—the Office of Energy Efficiency and Renewable Energy (EERE)3, Office of Fossil Energy (FE)4, Office of Nuclear Energy (NE), and Office of Electricity (OE)—are the subject of state-of-the-art HES research. Moreover, our review confirmed that DOE has supported the development of HES research capabilities that are designed to explore hybrid-specific questions, span multiple research topics, and evaluate a diverse suite of subcomponent combinations and linkages. Finally, our review revealed that HES research is often housed in an individual office, particularly when it involves a single source of electricity generation linked with an energy storage or conversion technology.
Detailed treatment of the nuances of each generation technology is important and relevant, but many aspects of HES are crosscutting and will be relevant to other generation technologies, including those that are the focus of other DOE program offices. Therefore, a key finding of our review is that there may be opportunities for additional or enhanced collaboration across EERE, FE, NE, and OE, as well as across suboffices that house individual generation technology types and other government agencies conducting HES-related research such as the Advanced Research Projects Agency–Energy (ARPA-E).
This report was prepared by DOE and its National Laboratories to establish the state-of-the-art in HES research and highlight challenges that are relevant across HES, regardless of their subcomponents. The report was designed to identify high-priority, near-term opportunities for HES research where multiple DOE program offices could coordinate their efforts to increase impact or reduce duplication. These opportunities do not necessarily reflect new research activities, but rather those that are both high-priority areas for HES and amenable to multi-office collaboration or coordination. The opportunities reported here are categorized into three research areas: markets, policy, and regulation; valuation; and technology development. In addition, two overarching opportunities influence and are influenced by activities in all three research areas.
Executing the opportunities and activities outlined in this report—and any future ones that arise as needs and goals evolve—will be at the discretion of the DOE program offices and will only be possible through ongoing coordination, communication, and collaboration. Existing mechanisms present a framework on which to build, and they illustrate that many forms of collaboration could take place. These could include joint Grid Modernization Laboratory Consortium (GMLC) Lab Calls, funding opportunity announcements (FOAs), workshops, and technical assistance programs. In all cases, any future activities under a given opportunity should build on, and avoid undermining, related interoffice and intraoffice research that is already underway for HES.
Overarching Opportunities
The DOE Hybrids Task Force identified two opportunities as having immediate priority and whose results will help inform opportunities within all three research areas. These opportunities are intended to identify the key current drivers of HES, explore the time frame for current motivations for and anticipated drivers of HES in the future, gain greater visibility into industry efforts related to HES, and disseminate relevant information. Each activity would begin by compiling and synthesizing findings from previous DOE workshops and data resources. Leveraging DOE's past investments in hybrid energy system workshops and data resources would both avoid duplication and help identify the unique aspects of recent commercial activity surrounding HES, which should be the focus of both overarching activities.
Motivations for HES
Host a series of workshops designed to explore the relative importance of the diverse present-day motivations for HES, with a focus on technology combinations that are being deployed, proposed, and considered for interconnection today. Planning and preparation for the workshops would involve reviewing the participants and outcomes of previous related DOE workshops on HES; findings from the workshops would inform deeper analysis around the perceived benefits of HES that are not adequately represented in established valuation tools and methods.
Public Data Resources
Establish regularly updated, publicly available data resources on current and projected technology costs, performance, market value, and market trends for different kinds and configurations of HES. Activities under this opportunity could include compiling data resources from existing work for specific technology combinations, as well as collecting and disseminating new data resources when appropriate.
Markets, Policy, and Regulation Opportunities
The objectives of the markets, policy, and regulation research area are to evaluate regulations, policies, ownership structures, and market products that are emerging or needed to ensure efficient operation of HES. To relate the greater sense of urgency for the markets, policy, and regulation opportunities, they are presented prior to those for valuation and technology development; in other words, the sudden rise in HES is challenging conventional approaches in markets, policy, and regulation. The opportunities outlined here include gaining a better understanding of the evolving development status, rules, and policies specific to HES; proactively responding to the potential impacts of higher penetrations of HES on electricity markets and system operations; improving the analysis of HES within interconnection and transmission planning studies; and providing analytical and technical support to state regulatory commissions and energy offices regarding HES.
Markets Database
Synthesize and disseminate current and evolving rules and policies specific to HES including changes in market participation models, developments in stakeholder proceedings, and changes in interconnection queue procedures.
HES Integration Studies
Analyze the impacts of different kinds and penetration levels of HES on system planning, operations, reliability, costs, resilience, environmental compliance, or fuel provision, as well as state and local policy goals.
HES in Interconnection and Transmission Planning
Review existing approaches to representing HES in interconnection and transmission studies, and examine how HES can defer or avoid transmission and distribution investments.
Technical Assistance
Provide technical assistance to states, tribal entities, legislatures, public utility commissions, and state energy agencies on policy design, utility regulation, and regulatory design issues for HES. This could include assistance in evaluating the role of HES in states' long-term energy policies, evaluating HES in utility planning and procurement, optimal hybrid investment strategies for utilities, regulatory issues around utility ownership and contracting for HES, and rules for HES in state policy mandates.
Valuation Opportunities
The valuation research area focuses on tools, methods, and metrics for quantifying the value that different HES can provide, given hybrid system configuration, energy system, and market characteristics. HES come in a variety of types, are used in a variety of applications, and produce a variety of products. Comprehensive and harmonized valuation methodologies that encapsulate these variations are essential for determining which HES, if any, can best meet the needs of the electric and broader energy system. Opportunities are presented and organized in terms of identifying sources of value, developing consistent metrics and methodologies, and applying tools to estimate HES value over different scales and time horizons.
Sources of Value
Enhance information sharing across recent and ongoing HES research in different DOE offices to achieve harmonized value definitions and categories.
Products and Services Taxonomy: Establish a harmonized definition for the services and products that HES can provide, building on ongoing technology-specific valuation efforts.
Documentation of Complementary Characteristics: Synthesize existing and compile additional data on the capabilities of different technologies which, when combined, enable or enhance the provision of products, services, or new value propositions.
Cost Synergies: Leverage and extend recent research to develop a flexible, consistent framework for assessing the potential cost impacts of hybridization.
Methodologies and Metrics to Measure Value
Establish common methods and metrics for evaluating candidate HES to enable an apples-to-apples comparison of candidate HES.
Resource and Product Complementarity: Expand ongoing complementarity analyses to new resource combinations, considering both location-dependent and the potential for virtual complementarity; expand analysis of complementarities across electricity and other product markets, including their infrastructure, transport, and storage requirements.
HES in Valuation Tools: Coordinate activities for representing and optimizing HES in existing and underdevelopment valuation tools, including price-taker, production simulation, production cost, resource planning (capacity expansion), energy sector, and integrated assessment models.
Valuation Analysis Framework: Develop common valuation scenarios, systems, and reporting protocols for consistent treatment and evaluation of HES.