Distribution-level ESS investment and solar-linked projects to address grid bottlenecks
Integrated operation of distributed resources, from equipment diagnostics to generation forecasting and optimal bidding
Short-term contracts of 1 to 3 years to lower RE100 procurement barriers for small and midsize businesses
H Energy is expanding businesses that connect renewable energy production, consumption and trading through energy storage system (ESS) operations and short-term power purchase agreement (PPA) contracts. The company aims to address grid bottlenecks that prevent generated electricity from being supplied when needed despite growth in generation facilities, and to create a market where small and midsize businesses can procure renewable energy for the periods and volumes they need.
H Energy is securing storage resources through direct investment in distribution-level ESS and ESS Oncare, which is based on a subscription power management system (PMS). By combining these with short-term PPAs lasting 1 to 3 years and power plant construction and asset management businesses, it has focused on connecting investment, production, consumption and trading of distributed energy on a single platform.
H Energy identified a starting point for new businesses in the current business structure, in which increasing renewable energy deployment can actually reduce commercial viability. According to the Sustainable Growth Initiative (SGI) of the Korea Chamber of Commerce and Industry, domestic generation capacity increased by 154% over the past 20 years, while transmission infrastructure increased by only 26%. The explanation is that grid expansion has failed to keep pace with growth in generation facilities, exposing existing plants as well as new ones to curtailment.
H Energy has focused on reducing this burden by using ESS to shift when electricity is supplied. This involves storing surplus electricity that the grid cannot readily accommodate and discharging it when needed. The company operates a real-time balancing system that charges when generation is in surplus and discharges when it is insufficient. Alongside investment in distribution-level ESS and efforts to secure operating resources, it is making direct investments in solar-plus-ESS projects to meet nighttime RE100 demand.
These operations are underpinned by technology that connects small solar installations scattered across the country through data and keeps them ready to generate electricity. For a virtual power plant (VPP) to function properly, generation forecasting must be accompanied by continuous checks for equipment faults, communications failures and consistency between meter readings and trading data.
The integrated asset management platform Solar Oncare accumulates data on generation, equipment condition, fault history, maintenance and settlements. It analyzes the current-voltage characteristics of solar panels to identify major fault types remotely and connect signs of abnormalities with on-site action. Combined with the operating algorithm of ESS Oncare, an AI-based ESS asset management platform, it develops charging and discharging schedules based on weather, generation, electricity prices and grid conditions.
The accumulated operating data is used for VPP generation forecasting and optimal bidding. The company explains that because incentives decline when forecasting errors exceed the specified threshold, it considers not only average generation but also uncertainty and potential losses. It therefore applies a stochastic bidding strategy that analyzes generation as a probability distribution rather than presenting a single fixed value.
The algorithm, jointly developed with a team led by POSTECH professor Choi Dong-gu, is designed to optimize expected revenue and forecast-error risk together. According to the research, which was published in the INFORMS Journal on Applied Analytics, applying the proposed design increased the VPP incentive attainment rate from 77.82% to 84.31%. The day-ahead generation forecast error rate is also around 3% to 4%, meeting the KPX threshold of no more than 8% cited by the company.
On the consumption side, the company is working to complement a renewable energy procurement market centered on long-term contracts.
“Existing Direct PPA arrangements are mainly long-term contracts of around 20 years, creating entry barriers for small and midsize businesses with relatively weaker creditworthiness or lower electricity consumption,” an H Energy representative said.
The company's planned “RE100 short-term PPA trading” model supports businesses in procuring renewable energy for the periods and volumes they need through contracts lasting 1 to 3 years. In the longer term, it plans to integrate distributed resources nationwide into a VPP and connect them with businesses' real-time demand, adjusting differences between generation and consumption through ESS and real-time market trading. The aim is to broaden participation in renewable energy trading beyond large companies able to make long-term purchase commitments.
In the new power plant construction market, the company is pursuing a structure that simplifies construction through standardized materials and quality assurance under SolarKIT, while securing customers before building plants. It would raise capital through the investment platform Mohaet, build plants using SolarKIT and manage their operating condition through Solar Oncare. The strategy is to secure demand and supply together.
The ultimate goal of these businesses is to establish a “DER eXchange Platform.” This distributed energy platform would adjust secured generation and storage resources to meet demand and manage everything from investment to trading within one system. H Energy also plans to develop a market where participants can manage volatility risk by diversifying renewable energy trading methods to include forwards and futures, alongside long- and short-term contracts.
“In the power grid of the AI era, the ability to forecast accurately, respond in practice and participate responsibly in the market matters as much as equipment capacity,” an H Energy representative said. “H Energy's approach to carbon neutrality is to transform RE100 into a broadly accessible electricity trading ecosystem in which all businesses can participate.”
Original Korean article: Electric Times
English brief by Korea Wind Intelligence, koreawindintel.com
