ECONOMICS OF STORAGE LoCal Meeting - July 8, 2009 Presented by Mike He and Prabal Dutta.

ECONOMICS OF STORAGE LoCal Meeting - July 8, 2009

Presented by Mike He and Prabal Dutta

Lots of Storage Technologies

NiMHNiCad

Li+LiPoly

LiSulphur

LiSulphurSupercap

EEStorCompressed Air

Pumped WaterSMES

FlywheelThermal

Why Store Energy?

Peak-to-Average Reduce electricity rate by shaving peak

load Match Supply and Demand

When supply/demand is inelastic or intermittent

Economic Arbitrage When price of electricity varies

substantially and An efficient market exists to buy and sell

real energy

Peak-to-Average

When electricity cost is set by peak power draw Peak-shaving yields big dividends Benefits accrue at all times, not just at

peak load times Load shift if possible Generate electricity locally if feasible

economically LoCal

Buy electricity when local demand is low Convert and store electricity for later use Convert and use electricity when highest

local demand

Match Supply and Demand

When supply/demand is inelastic or intermittent

Solar S/D well-matched for typical industrial loads;

storage overkill S/D poor-match for early morning or evening

residential loads Wind

S/D matching is variable, TBD Statistical multiplexing plays a role in

smoothing out LoCal

Store when supply is high but demand is low Use when supply is low but demand is high

Economic Arbitrage

When a sufficient wholesale price difference exists Buy electricity when price is low Convert and store electricity for later sale Convert and sell electricity when price is

high

IESO: A Concrete Analysis

http://www.iemo.com/imoweb/marketdata/marketToday.asp ($1 CAD = $.86 USD)

Ontario IESO (July 7, 2009)

Wholesale electricity price ($CAD/MWh) Min: $3.52 Avg: $20.99 Max: $42.32 Range: $38.80

Average hourly demand Min: 15,000 MW Avg: 17,162 MW Max: 19,570 MW Range: 5,070 MW

Ontario IESO (July 7, 2009)

Price and Demand vs ToD

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour of Day

Pri

ce (

$/M

Wh

) an

d D

eman

d (

GW

h)

Price ($/MWh)

Demand (GWh)

Ontario IESO (July 7, 2009)

Price vs Demand

0

5

10

15

20

25

30

35

40

45

14000 15000 16000 17000 18000 19000 20000

Demand (MWh)

Pri

ce (

$/M

Wh

)

?

Ontario IESO (July 7, 2009)

Wholesale Price and Uplift Charge

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour of Day

Ch

arg

e ($

CA

D/M

Wh

)

Price

Uplift

Storage Economics

To be marginally viable, must satisfy: CostPUE / PriceDeltaPUE < CycleLife CostPUE / PriceDeltaPUE => cycles needed

to profit Where

CostPUE is Cost per unit of energy storage Li+ (e.g. $300/kWh) Pumped Hydro ($10-$45/kWh)

PriceDeltaPUE is max(price) - min(price) per unit energy

CycleLife is number of cycles of storage technology

Storage Economics

IESO Case Study on July 7, 2009 PriceDeltaPUE = $38.80

(CostPUE / PriceDeltaPUE / CycleLife) ?<? 1

Tech CostPUE PDPUE CycleLife LHS Li+ $300/kWh $.0388/kWh 1200

6.44 Pump. Hydro $45/kWh $.0388/kWh Inf (need 1160)

<1

Energy Density

Cost

Lifetime vs Efficiency

Per-cycle Cost

Summary Table

Storage Technology

Energy Density Cost Self-discharge Round Trip Efficiency Lifetime

Thermal (various media)

20-80 kWh/m3 $40-65/ kWh 1-2% per day 90% Unlimited

Flywheel 0.2 Wh/kg $300/kWh Minimal 80-90% ~20 years

Compressed Air 2 kWh/m3 $1-5/kWh (storage only)

None 80% Unlimited

Superconducting Magnetic Energy Storage

1-10 Wh/m3 $54,000/kWh None with cooling 90-95% Unlimited

Pumped Hydro 0.3 kWh/m3 @ 100m

$10-45/kWh None 75% Unlimited

NiMH Battery 30–80 Wh/kg $364/kWh 30%/month 66% 500-1000 cycles

NiCad Battery 40-60 Wh/kg $400/kWh 20%/month 70-90% 1500 cycles

Lithium Ion Battery

160 Wh/kg $300/kWh 5%/month 99.90% 1200 cycles

Lithum Polymer Battery

130-200 Wh/kg $500/kWh 10%/month 99.50% 1000 cycles

Lead Acid Battery

30-40 Wh/kg $100-200/kWh 3%-4%/month 70%-92% 500-800 cycles

Sample Load Profiles

0 5 10 15 20 250.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Time (hr)

Load

(kW

)

Warm Summer Weekday

0 5 10 15 20 250.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

Time (hr)

Load

(kW

)

Warm Summer Weekend

Sample Load Profiles

0 5 10 15 20 250.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

Time (hr)

Load

(kW

)

Mild Spring Weekday

0 5 10 15 20 250.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

Time (hr)

Load

(kW

)

Warm Autumn Weekend

Marginal revenue potential drops quickly and varies

Mild Spring Weekend Day Warm Summer Weekday

Storage power density matters:Small window to buy cheap

Mild Spring Weekend Day Warm Summer Weekday

1x

Power Density

2x

Buy-low/sell-high cycle rateis limited: must hold for a while

Price and Demand vs ToD

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour of Day

Pri

ce (

$/M

Wh

) an

d D

eman

d (

GW

h)

Price ($/MWh)

Demand (GWh)

Unexpected arbitrage cancreate opportunistic profits

http://www.iemo.com/imoweb/marketdata/marketToday.asp ($1 CAD = $.86 USD)

Must disentangle residential, commercial, industrial, and night life/party loads

Price and Demand vs ToD

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour of Day

Pri

ce (

$/M

Wh

) an

d D

eman

d (

GW

h)

Price ($/MWh)

Demand (GWh)

OntarioNight Life

Limitations

Assumes Time-of-Use pricing Assumes zero price-elasticity

For marginal profit potential analysis Likely reality: price sensitivity high at peak

load times Garbage-in/Garbage-out

Wholesale prices and load profiles are average values

No distinction between $USD and $CAD Only a marginal viability analysis

Average-case viability much lower

Takeaways

Storage still has a long way to go for economic viability in financial arbitrage

Peak to average case may be more economically viable

Cost, power density, efficiency, cycle life are important factors

Need a metric for: Capacity X CycleLife 100W lightbulb for a day = Raising a car

~1km