Energy Storage: Power System Game Changer Prepared for Minnesota Energy Storage Summit 2015 July 14, 2015 Janice Lin Managing Partner, Strategen Consulting, LLC Executive Director, California Energy Storage Alliance Chair, Energy Storage North America Chair, Global Energy Storage Alliance
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Energy Storage: Power System Game Changer
Prepared for Minnesota Energy Storage Summit 2015
July 14, 2015
Janice Lin
Managing Partner, Strategen Consulting, LLC
Executive Director, California Energy Storage Alliance
Strategic thinking and industry expertise creates profitable clean energy businesses
U.S. Department of
Energy
Strategen Clients
4
CESA 2015 MEMBERSHIP
CESA STEERING COMMITTEE MEMBERS
1 Energy Systems Inc.AbengoaAdvanced Microgrid SolutionsAES Energy StorageAquion EnergyARES North AmericaBrookfieldChargepointClean Energy SystemsCODA EnergyConsolidated Edison Development, Inc.Cumulus Energy StorageCustomized Energy SolutionsDemand EnergyDuke EnergyDynapower Company, LLCEagle Crest Energy CompanyEast Penn Manufacturing CompanyEcoult
EDF Renewable EnergyElevation SolarELSYS Inc.Energy Storage Systems, Inc.EnersysEnerVault CorporationEnphase ENERGYEV GridFlextronicsGE Energy StorageGreen Charge NetworksGreensmith EnergyGridtential Energy, Inc.Hitachi Chemical Co.Ice EnergyIMERGY Power SystemsInnovation Core SEI, Inc (A Sumitomo Electric Company)Invenergy LLC
K&L GatesLG Chem Power, Inc.LightSail EnergyLockheed Martin Advanced Energy Storage LLCLS Power Development, LLCManatt, Phelps & Phillips, LLPMobile SolarNEC Energy Solutions, Inc.NextEra Energy ResourcesNRG Solar LLCOutBack Power TechnologiesPanasonicParker Hannifin CorporationPowertree Services Inc.Primus Power CorporationPrinceton Power SystemsRecurrent EnergyRenewable Energy Systems Americas
IncRosendin ElectricS&C Electric CompanySaft America Inc.Sharp Electronics CorporationSkylar Capital ManagementSolarCitySony Corporation of AmericaSovereign EnergySTEMSunEdisonSunPowerToshiba International CorporationTrimark Associates, Inc.Tri-TechnicWellhead ElectricYOUNICOS
Steve BerberichPresident & CEO
CAISO
Doug LittleCommissionerAZ Corporation
Commission
Anne McEnteePresident & CEO,
RenewablesGE Power & Water
Pedro PizarroPresident Southern
California Edison
Michael QuinnVice President & CTO
Oncor Electric Delivery
Advance education, collaboration, knowledge and proven frameworks about the benefits of energy storage globally
» Learn from local market development efforts, help proliferate best practices
» Foster collaboration among key stakeholders including policy makers, utilities, renewable energy community, financial institutions and environmental organizations
» Help establish standards and protocols to advance energy storage acceptance worldwide
»“Self-consumption” refers to on-site energy production for on-site energy consumption (while receiving value for electricity fed to the grid).
Feed-in tariffs, high electricity rates, and the growing availability of storage systems are making self-consumption a much more attractive option for
German solar producers
»The Rise of Self-consumption in Germany: Private electricity prices are now almost
twice as high as the cost of self-generated solar electricity from the roof of a house
• Feed-in-tariff: €0.15
• Electricity rates: €0.27 -0.29
Germany’s KfW Development Bank is offering low-interest loans for the installation of a combined PV and storage system or for retrofitting an existing solar plant with a battery.
FIT Rate for Small-Scale Systems versus Residential Retail Electricity Rates in Germany
» Renewables integration driving need for Flexible Capacity ▪ Estimated 7,500 – 11,000 MW of flexibility needed
» Long Term Procurement Planning from OTC and SONGS retirement (6,029 MW OTC retiring by 2024) ▪ SCE (50 – 600MW)▪ SDG&E (25 – 300MW)
» CAISO Reforms to Wholesale Market▪ Market design updates specific to storage▪ Storage being considered in transmission planning process▪ Updates to interconnection process
Energy storage accepted as key to enable greater grid flexibility
Chart Source: Prepared statement of Mark Rothleder on behalf of the CAISO (February 20, 2015). http://www.ferc.gov/CalendarFiles/20150220110211-Rothleder,%20CAISO.pdf
* Source: CAISO Final 2014 Flexible Capacity Needs Assessment May 2014
Significant renewable curtailment forecasted at 40% RPS
Estimated Renewable Curtailment Frequency and Magnitude in 2024 at 40% RPS
Source: Phil Pettingill, Governor’s Greenhouse Gas Reduction Goals http://www.caiso.com/Documents/Presentation_Governor50Workshop_PPettingill_7-9-15.pdf
» Incentive program launched in 2001 to encourage customer sited distributed generation. Provides financial incentives for the installation of qualifying technologies installed to meet all or a portion of the electric energy needs of a facility.
» Annual Budget: $83million (through 2019)
» $1.42/Watt for Advanced Energy Storage (min 2 hours duration)
» Administered by CA utilities
» New program criteria (2015-2019): Cost effectiveness of Greenhouse Gas (GHG) emission reductions over the useful
life of the resource will determine eligibility and incentives levels.
Reductions of aggregate, non-coincident customer peak demand and improved onsite electricity reliability.
The Self Generation Incentive Program (SGIP) is one of the longest-running and most successful distributed energy resource incentive programs in the US
• Lifts caps imposed on rate increases levied during the energy crisis• Allows IOUs to develop tariffs with fixed charges• Such charges would be capped at no more than $10/month for
residential and $5/month for CARE customers. Starting Jan 1 2016, the fixed charges can increase by CPI.
• Fixed charges can be good or bad for storage. If they are time based, more similar to demand charges, then they could promote storage adoption
• Beginning January 1, 2018, the CPUC may require or authorize an electrical corporation to employ default TOU pricing to residential customers.
• TOU pricing may make residential behind the meter load shifting attractive for storage, but will not entirely justify storage systems.
• Beginning July 1, 2017, electrical corporation (>100,000 customers) must provide new NEM tariff (or earlier, if they met their 5% aggregate peak demand NEM cap)
• New NEM tariff to be developed by Dec 31, 2015 (note: applies to solar, wind and fuel cells)
• NEM rules affect behind the meter storage value proposition. Tariff details will determine the final impact.
• Requires electrical corporations to consider non utility owned DERs as an alternative to investments in their distribution system.
• Requires by July 1, 2015 for all electrical corps to submit to the CPUC a distribution resources plan to help identify optimal locations for DERs.
• Understanding where there are opportunities in the distribution system is a great application for storage.
• Defines the RPS target of 33% as a floor, not a ceiling. • More renewables means more opportunity for storage.
For each case, a benefit-to-cost (B/C) ratio was generated to show the direct, quantifiable fixed and variable costs and benefits, incorporating the time value of money, for the modeled project over its lifetime.
A benefit to cost ratio greater than one means that the modeled benefits exceed the project costs; in other words, the net present value (NPV) was greater than zero, and for this study had an return (IRR) greater than the 11.5% discount rate
CAISO reforms enabling storage in wholesale market
» Market Design – New rules for storage set for: Effective flexible capacity / Flexible RA Net qualifying capacity / System and Local RA Distributed energy resources
» Transmission Planning Non-Conventional Resource study methodology
piloted in 2013; implemented system-wide in the 2014 study process
» Resource Interconnection Approximately half of CAISO’s most recent applications have storage
components representing more than 2,300 MW of new storage capacity CAISO allowing generators to add storage to existing projects Generator interconnection process under reform
Cluster 8 closes on April 30th. We will update with new information as it
» Current tariffs in Minnesota do not show clear customer ownership benefit
» Cost-effective cases stacked multiple major benefits, including distribution deferral, system capacity, frequency regulation, and solar investment tax credit
▪ Benefit stacking may have near-term technical and regulatory challenges
» Existence of distribution deferral and system capacity is limited by “need”, defined in utility IRP and distribution planning processes
▪ Typically requires load growth
» New storage “need” may emerge when new flexibility constraints arise from large penetrations of wind & solar
▪ California is working to develop new tools and methods to plan for flexibility need and assess resources