Aaron Townsend National Renewable Energy Laboratory October 28, 2013 Colorado Rural Electric Association Energy Innovations Summit Energy Storage in the.

Aaron TownsendNational Renewable Energy Laboratory

October 28, 2013

Colorado Rural Electric Association Energy Innovations Summit

Energy Storage in the U.S.

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Outline

• Brief History

• Current Installations

• Value Challenge

• Additional Value Created by Deployment of Renewables

• Conclusions

National Renewable Energy Laboratory Innovation for Our Energy Future2

Ancient History of Energy Storage (<1980)

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Challenges of meeting variations in demand provided early motivations for storage (<1980)

- Projected nuclear builds (100s of GW)- Fuel Use Act of 1978 (no gas or petroleum plants)

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Limited Activity– PHS costs increase, increased

siting challenges– Cheap natural gas– Limited nuclear build out – Exotic technologies remain

costly– Cheaper and/or easier to meet

variation in load and capacity requirements with conventional generation resources

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Fuel Use Act

Recent History (1980s-2000)

Existing Storage Facilities

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Conventional Pumped Hydro: ~ 22 GW

CAES: 1 Plant (110 MW)

Others (<100 MW total): A few batteries, SMES, mostly for local power quality issues

More Recently

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• Renewed interest in storage• Emergence of energy and ancillary service

markets• Natural gas price volatility • Perceived role of storage in enabling renewables

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Current Activities

• Many proposed plants• Renewed RD&D funding via DOE ARRA and ARPA-

E• California AB 2514• Challenging economics

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What is Storage Worth?

• Standard metrics (LCOE) are not particularly useful• Storage provides multiple values, but not all can be

monetized

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Value of Storage in Restructured Markets

Historical Values of Energy Storage in Restructured Electricity Markets

Market Evaluated

Location Years Evaluated

Annual Value ($/kW)

Assumptions

Energy Arbitrage

PJMa 2002-2007 $60-$115 12 hour, 80% efficient device. Range of efficiencies and sizes evaluated[1]

NYISOb 2001-2005 $87-$240 (NYC)$29-$84 (rest)

10 hour, 83% efficient device. Range of efficiencies and sizes evaluated.

USAc 1997-2001 $37-$45 80% efficient device, Covers NE, No Cal, PJM

CAd 2003 $49 10 hour, 90% efficient device.

Regulation NYISOb 2001-2005 $163-248

USAe 2003-2006 $236-$429 PJM, NYISO, ERCOT, ISONE

Contingency Reserves

USAe 2004-2005 $66-$149 PJM, NYISO, ERCOT, ISONE

a Sioshansi et al. 2009b Walawalkar et al. 2007c Figueiredo et al. 2006 d Eyer et al. 2004e Denholm and Letendre 2007

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Value of Storage in U.S. Markets

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Regulation Only

Renewable deployment will increase opportunities for economic storage deployment…..and also the competition

Arbitrage alone is generally insufficient to support most storage technologies, which are generally >$1,000/kW

Bottom Line on Value

• Current market conditions supports bulk storage at capital costs under $2000/kW for a 6 hour or more device

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Impacts of Renewables on the Grid

• Storage is often perceived as “necessary” for renewables to achieve a large (>10%? >20%?) penetration.

• Renewables are seen as a source of value for storage

• Can renewables be used without storage?

• How do renewables impact the grid?

National Renewable Energy Laboratory Innovation for Our Energy Future131313

So What are the Opportunities?

• Renewables increase the already existing value (and size) of markets for storage

• Arbitrage/load leveling/unit cycling

• Operating reserves

• Transmission alternatives

• How do storage economics compete with the alternatives?

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National Renewable Energy Laboratory Innovation for Our Energy Future

Flexiblity Supply Curve

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Conclusions

• Low-cost natural gas is currently the dominate force in U.S. electric power sector

• Storage is being constructed based on R&D support and mandates.

• Costs will need to be reduced substantially for storage to be cost competitive

• Storage is undervalued in existing markets and it is still difficult to assess the true value and opportunities for energy storage in the current and future grid

• Storage faces competition for other sources of flexibility

National Renewable Energy Laboratory Innovation for Our Energy Future

Thank You

Contact information:

[email protected]

303-275-3272

Current Capacity

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Example Analysis

• 300 MW energy-only device in Colorado

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Wind and Solar Penetration

2X NG Prices

Base NG Price

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VG Penetration

Base Energy Only Device 300 MW Energy + Reserves100 MW Reserves Only

• Energy-only device compared to reserves devices