Energy Storage Workshop

Energy Storage Workshop

Tom Plant

CELA 2019

Agenda

• What is energy storage?

• Policy tools

• Policy Overview

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What is energy storage?

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Storage is in all parts of the grid

And in microgrids

Older Storage

Newer Storage

Costs continuing steep decline•2017 Project

• TEP (AZ): 30 MW, 4-hr storage + 100 MW solar = $0.045/kWh

•2019 Project

• LADWP (CA): 87.5MW, 4-hr Storage + 175 MW solar = $0.033/kWh

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Source Cost Past Projected

IHS1 Installed cost 52% reduction 2012-2015 50% reduction 2016-2019

Lazard2 Installed cost 50% reduction 2015-2019

BNEF3 Battery cost 60% reduction 2010-2015 35-50% reduction 2016-2020

Navigant4 Battery cost 50% reduction 2010-2015

UBS5 Battery cost 50% reduction 2010-2015 55-65% reduction 2016-2020

GTM6 BOS cost 41% reduction 2016-2020

IHS7 BOS cost 50% reduction 2016-2020

1 IHS, Future of Grid Connected Energy Storage, Nov 2015, available at https://technology.ihs.com/512285/grid-connected-energy-storage-report-2015 2 Slide 17 in Lazard, Levelized Cost of Storage – Version 1.0, Nov 2015, available at https://www.lazard.com/media/2391/lazards-levelized-cost-of-storage-analysis-10.pdf#18 3 Slide 70 in keynote presentation by Michael Liebrich from the BNEF New Energy Finance Summit, 5 Apr 2016, available at https://data.bloomberglp.com/bnef/sites/4/2016/04/BNEF-Summit-Keynote-2016.pdf#71 4 Navigant Research, Sam Jaffe presentation at NY-BEST Conference, Sep 2014, cited in slide 9 in NY-BEST presentation Batteries and Energy Storage, 10 June 2015, available at https://nysolarmap.com/media/1292/acker_nybest.pdf#9 5 UBS, US Battery Storage: Upstream Supply Chain Biggest Winner of EVs, Oct 2016, available at https://neo.ubs.com/shared/d1Wg6h8EJsbg/ 6 GTM Research, Grid-Scale Energy Storage Balance of Systems 2015-2020, Jan 2016, available at https://www.greentechmedia.com/research/report/grid-scale-energy-storage-balance-of-systems-2015-2020 7 IHS, Energy Storage Inverter (PCS) Report, Sep 2016, available at https://technology.ihs.com/523547/energy-storage-inverter-pcs-report-2016

Storage can provide multiple services

SOURCE: RMI

NREL | 9

Services currently valued in some markets

Proposed or early adoption services

Currently not valued services

Many Additional Services Needed by the Grid

Energy and Capacity

Ancillary Services

Transmission Services

Distribution Services

End-Use Applications

mS S Min Hr Day

Energy

Firm Capacity

Fast Frequency Response

Frequency Regulation

Ramping reserves

Contingency Spinning Reserves

Replacement Nonspin Reserves

Voltage Support

Black-Start Capability

Type of Service

Primary Frequency Response

Timescale

Transmission Upgade Deferral

Transmission Congestion Relief

Distribution Upgade Deferral

Distribution Voltage Support

Distribution Loss Reduction

Power Quality

Reliability and Resiliency

Demand Charge Management

Time of Use and Real-Time Pricing

mS S Min Hr Day

Inertial Response

New term – “Essential

Reliability Services”

Deployments across states

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All Storage Sectors Are Growing• in 2018, a total of 760.3 MWh

of energy storage was interconnected

• a 44.9% increase over 2017

• Cumulative energy storage total capacity to 1,966.6 MWh nationwide.

• Residential storage deployments grew 500.1% in 2018

• Non-residential storage showed strong growth of 34.9%

• Utility-supply storage remained the largest segment, at 394.8 MWh, and grew by 11.3%.

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Electrochemical storage (batteries)

• Solid electrode (battery)

• Scales by number of units in array

• Common chemistries• Lithium-ion

• NMC• LFP

• Lead- & sodium-based

• Key benefit = fast & flexible

• Liquid electrode (flow battery)

• Scales by volume of tanks on single unit

• Common chemistries• Vanadium redox

• Key benefit = long-lived

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What about mechanical storage?

• Pumped hydroelectric• Installed originally to absorb excess central generating power, especially nuclear

• Innovations to come include fast-response variable-speed turbines, distributed scale

• Most of storage capacity in U.S., geographically constrained• Availability constrained by drought, affected by changing climate

• Environmental concerns of hydro power• Siting impacts, power vs. ecological use

• Compressed air/liquid air• Few large-scale installations; capital intensive• Innovations to come

• Compressed liquid• Underwater compressed air

• Key benefit = bulk supply & long duration

• Flywheel• Key value is instantaneous response, though generally short duration = niche

applications• Innovations pushing for multi-hour

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Storage Performance Characteristics

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1 kW 10 kW 100 kW 1 MW 10 MW 100 MW 1+ GW1 S

EC

1 M

IN1

HR

4 H

RS

12

+ H

RS

POWER

DU

RA

TIO

N

Solid Rechargeable Batteries

Flow

Batteries

Flywheels

Customer Thermal

Molten Salt

Compressed Air

Pumped Hydro

Arrows indicate trajectories of future capabilities

SOURCE: IREC, Charging Ahead, 2017 (based on DOE/EPRI Handbook) + new data

Why All The Buzz On Battery Storage?

• Fastest growing storage type

• Costs declining rapidly

• Located on all part of the grid at any size• Utilities, customers, and third-parties all operating

• Systems from 5 kW to 100,000 kW in use

• Quick to deploy• MW-scale deployments <1 year from contract

• Uniquely flexible & expanding performance capabilities• Instantaneous response and ramp, bi-directional

• Capable of multiple services• Grid balancing, backup, system capacity, network capacity, curtailment

avoidance, energy arbitrage

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How to Determine Energy Storage Duration

• The duration—the length of time storage can sustain its electric output—can be determined by knowing how much energy the resource can store.

8 MWh of energy= 4 hours of duration

2 MW of power

• For example, a storage resource described as a 2 MW / 8 MWh unit can sustain its maximum (rated) power of 2 MW for 4 hours.

As storage costs go down, size & duration go up

2008:1 MW, 15 min battery in PJM

2012:36 MW, 40 min battery in ERCOT

2016:30 MW, 4 hour battery in SDG&E

2017:100 MW, 75 min battery in Australia

2020:300 MW, 4 hour battery in PG&E (approved)

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Shift from primarily providing ancillary services to increasingly providing capacity / resource adequacy

All battery storage installed 2003-2017:800 MW / 1200 MWh

Single PG&E battery in 2020:300 MW / 1200 MWh

DER storage aggregationsto follow(largest today ~20 MW)

Examples of power plant sized batteries

• Operating• SCE/Tesla (CA) 20 MW, 4-hr

• SDG&E/Fluence (CA) 30 MW, 4-hr

• KIUC/Fluence (HI) 20 MW, 5-h

• Approved / in development• PG&E/Vistra 300 MW, 4-hr

• SCE/Fluence (CA) 100 MW, 4-hr

• Xcel CO (multiple): 275 MW, 4-hr

• HECO (multiple): 262 MW, 4-hr

• NV Energy (multiple): 100 MW, 4-hr

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"We believe now that utility-scale battery storage, from a technology standpoint, is sufficiently viable to begin to displace, if you will, what has been virtually exclusively natural gas as that flexible, ramping, backstop resource.”

-- Daniel Froetscher, VP of Operations, APS

Policy Tools

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Policy tools fall into three categories

Capture the full VALUEof energy storage

Ensure accurate market signals that monetize

economic value, operational efficiency, and societal benefits

Enable COMPETITION in all grid planning and

procurements

Storage can be a cost-saving and higher-

performing resource at the meter, distribution, and transmission levels

Ensure fair and equal ACCESS for storage to the grid and markets

Reduce market and grid barriers that limit the

ability for energy storage systems to

interconnect

Policy tools in the toolbox

POLICY OVERVIEW

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Legislative Resources

•Examples of storage legislation • Cost benefit study

• Nevada SB 204 (2017)

• Utility planning

• Colorado HB 18-1270 (2018)

• Minnesota SF 100 (2019)

• Business model innovation

• Maryland HB 650 (2019)

• Behind-the-meter storage incentive

• California SB 700 (2018)

•Energy Storage Association has a library of model legislation • Utility planning bills

• Behind-the-meter incentives

• Cost benefit studies

• Distribution interconnection

• Business model innovation bills

• Peak demand reduction / clean peak

•Please reach out to ESA’s state policy director, Nitzan Goldberger, for more information ([email protected])

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• Inaccurate assumptions about costs and applications

• Not considered in utility planning and wholesale markets (distribution, transmission, energy, capacity)

• Unable to provide services and capture revenues for values they are or can provide

• One asset cannot be used for multiple applications

• Lack of regulatory clarity (especially around ownership and competition)

• Burdensome interconnection process

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Barriers to Energy Storage

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Distribution Interconnection

•Why does distribution interconnection matter?

• Even the best storage targets or incentive program won’t result in deployment if storage cannot interconnect

•Key issues for interconnection of storage

• Capturing realistic behavior profile of the system

• Otherwise long study timelines and expensive upgrade costs

Commissions in California, Hawaii, New York, Nevada and Arizona have updated their rules to reflect energy storage

Maryland, Minnesota, North Carolina, Colorado and Michigan are considering storage specific modifications

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States + Utilities Incorporate Storage in IRPsWashington:Policy Statement and draft regulations call for sub-hourly modeling and mechanism to value flexibility

Michigan: PSC issued guidelines on consideration of storage in 2019 IRPs

Arizona:Regulators rejected utility IRPs, called for evaluation of storage, gas moratorium

~4,500 MW of storage proposed by utilities in IRPs

New Mexico:Revised IRP rules require consideration of energy storage

Colorado:HB 18-1270/PUC updated all rules to consider storage procurement

NARUC: A November 2018 resolution calls for modeling “the full spectrum of services that energy storage and flexible resources are capable of providing.” The NARUC/NASEO Task Force for Comprehensive Electricity Planningis a two-year project, working with 16 states.

https://www.naruc.org/taskforce/

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Minnesota:2019 legislation requires IRPs to include best practices for storage modeling

IRPs in 32 states

Multiple Use Frameworks

•Key for economics and benefit to ratepayers is for the same storage asset to be able to provide multiple applications

• Same asset providing multiple benefits → best bang for the ratepayer buck

• More revenue streams → better economics, more systems

•States have begun exploring ways to break down the barriers through multiple use application working groups and pilots

• New York working group

• California working group

• Maryland HB 650 storage pilot

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Comparison of flexibility attributes

Gas Peaker Energy Storage

Range~80% of capacity--minimum operational

limits200% of capacity--can act as supply or

demand

UtilizationLow--only to meet peak demand or

emergenciesHigh--simultaneous grid services

Service Factor Low--only when spinning (<10%) High—always on (50-100%)

Dispatch time Minutes Seconds

StandbyStart/stop costs &

EmissionsNo costs &

No direct emissions

Net Cost of Capacity = Cost –Operational Benefits

•Traditional cost of capacity comparison

•Net cost of capacity comparison

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Installed Cost Installed Cost

Energy Storage Gas CT

$/k

W

Installed Cost FlexibilityBenefits

Net Cost Net Cost Electricity Sales Installed Cost

Energy Storage Gas CT

$/k

W

More expensive

Less expensive

As outlined in Portland General Electric 2016 IRP

MA State of Charge study

• Commissioned by MA Dept. of Energy Resources• Part of Gov. Baker’s Energy Storage Initiative

• Explores cost-benefit and policy/regulatory framework for storage• Modeled 1,766 MW of battery storage deployment in MA

• Found $2.3B in ratepayer benefits & $1.1B in storage direct revenues• Compared to $1-1.3B in storage cost

• Ultimately recommends policies to support the deployment of 600 MW• $800MM savings over 10 years

• 350,000 mtCO2 reduction over 10 years (equiv. 73K cars)

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Taming peaks is key•MA State of Charge Study: 1,766 MW of

storage is economically justified

Reduced peak capacity

T&D deferral DER integration

Energy price reduction

Ancillary service cost reduction

Generator cost reduction

$- $500 $1,000 $1,500 $2,000

50% of benefit is reducing system peak25% of benefit is reducing local peak (T&D deferral + DER integration)

Peak capacity is expensive

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Top 1% of MA hours = 8% of MA cost ($680MM/yr)Top 10% of MA hours = 40% of cost ($3B/yr)

Strategen consulting, llc: Evolving the RPS: A Clean Peak Standard for a Smarter Renewable Future

Strategen consulting, llc: Evolving the RPS: A Clean Peak Standard for a Smarter Renewable Future

Energy Management and Demand Charges

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Key considerations for procurement targets

• Is there a long term policy signal?

• Is the target binding?

• Is there a competitive framework that ensures multiple end-use applications and ownership structures?

• What technologies are included?

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Storage Targets/Goals

California:1,325 MW x 2020+ 500 MW added

Oregon:Min of 10 MWh and max 1% of peak load per utility

Massachusetts: Target of 200 MWh x 200, 1,000 MWh x 2025

New York: 1,500 MW x 2025 target and 3,000 x 2030

New Jersey: 600 MW x 2021 and 2,000 MW x 2030 goal

Arizona:3,000 MW x 2030 (proposed by ACC)

Nevada:Study determined 1,000 MW by 2030 is in the public interest

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Under development

Target/goal in place

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Questions?