FACTS of life: upside for STATCOMs & SVCs?

Upside for STATCOMs

Wind and solar have so far leaned upon conventional power grids. But larger deployments will increasingly need to produce their own reactive power; controllably, dynamically. Demand for STATCOMs & SVCs may thus rise 30x, to over $25-50bn pa. This 20-page note outlines upside for STATCOMs and who benefits?

This 20-page research note is about controlling reactive power in increasingly renewable-heavy grids. We believe this theme is going to become increasingly important, but it has been overlooked, for two reasons, laid out on pages 2-3.

What is reactive power? After reviewing hundreds of technical papers and patents, our ‘best explanation’ is set out on pages 4-7, to explain concepts such as real power, reactive power, power factor, power triangles, phase angle and VARs.

Lean on me. Wind and solar assets inherently produce no reactive power and may even have consumed it. This was fine in the early days, as renewables assets could rely on the large and controllable output of reactive power from spinning generators. But regulations are tightening. And if renewables are to dominate future grids, replacing spinning generators, then they will increasingly need to produce their own reactive power (page 8).

FACTS = Flexible AC Transmission Systems. We review different options for renewables to control reactive power on pages 9-14. The discussion covers switched capacitor banks, synchronous condensers, upsized inverters, Static VAR Compensators (SVCs) and Static Synchronous Compensators (STATCOMs). In each case, we review the costs ($/kVAR), advantages and challenges for each technology. We think STATCOMs are taking the lead to back up large wind projects.

Market sizing for STATCOMs and SVCs market suggests that a 30x ramp-up is not mathematically inconceivable. If wind capacity additions ramp from 100 GW pa to 300-500 GW pa, and we install 0.5 MVAR/MW of STATCOMs/SVCs at an average of $160/kVAR, then this would become a $25-50bn pa market. Huge numbers. Worked examples and quotes from technical papers are also given (page 15-16).

Who benefits? Leading companies in STATCOMs and SVCs are profiled on pages 17-20, after reviewing 2,500 patents. The market is incredibly concentrated, with two leading large-caps, and a handful of smaller and interesting semi-pure plays. Our screen is linked here.

To read more about the upside for STATCOMs & SVCs, please see our article here.

Power transmission: raising electrical potential?

HVDCs in energy transition

Electricity transmission matters in the energy transition, integrating dispersed renewables over long distances to reach growing demand centers. This 15-page note argues future transmission needs will favor large HVDCs in energy transition, costing 2-3c/kWh per 1,000km, which are materially lower-cost and more efficient than other alternatives. What opportunities follow?

Long distance power transmission is likely to grow more important in the energy transition. There are six reasons for this claim, especially linked to wind and solar, which are laid out on pages 2-4.

The simple physics of power transmission are laid out on pages 5-7, with worked examples showing how the existing grid transmits relatively small power quantities over relatively low distances, but resistive power losses ‘blow up’ if we try to expand AC power lines.

Overcoming these challenges via higher voltages and thicker power cables is not really feasible, especially as reactive power consumption becomes the limiting factor on AC lines. Again, the techno-economic theory behind these claims is laid out on pages 8-11.

HVDC lines melt away many of the problems noted above. We outline the reasons on page 12, along with real-world data from world-leading HVDC projects that have been constructed in China since 2010.

Economics. We think HVDCs can deliver multi-GW power, over distances around 3,000km, for total transmission spreads of 5-10c/kWh. Underlying assumptions, and comparisons with other technologies — batteries, hydrogen — are given on page 13.

Who benefits? Some of the leading companies in HVDC, and interesting new project proposals are discussed on page 14.

To read more on HVDCs in energy transition and its leading companies, please see our article here.

Copyright: Thunder Said Energy, 2022.