What’s Driving Energy Storage

Deployment in the United States?

Presentation to MassCEC and DOER Workshop- October 30, 2015

Cedric Christensen, Strategen Consulting

Jacqueline De Rosa, Customized Energy Solutions

Rahul Walawalkar, Customized Energy Solutions

Power System Gamechanger?

ENERGY STORAGE

Electro-Chemical

(Flow battery / Lithium Ion )

Mechanical

(Flywheel)

Bulk Mechanical

(Compressed Air)

Thermal

(Ice / Molten Salt)

Bulk Gravitational

(Pumped Hydro)

Transportation

(Electric Vehicles)

Energy Storage: Diverse Asset Class

145 GW of Operational Energy Storage

5

Operational Energy Storage (without hydro)

6

Planned Energy Storage (without hydro)

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Countries Leading Deployment (non hydro)

8

Customer

ISO / RTO

Utility

Value Proposition

Use Cases

Technology

Finance / Costs

Interconnection

Configurations

Metering

NEED SOLUTION

10

Transforming global energy use to create a clean, prosperous, and

secure low-carbon future.

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Source: http://www.rmi.org/electricity_battery_value

Grid Connected Storage Use Cases

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DescriptionTransmission

SitedDistribution

SitedCustomer

Sited

1. Transmission BenefitsStorage dispatched to reduce transmission load

2. Capacity BenefitsStorage dispatched to provide peak and/or flexible capacity

3. Generator SupportStorage adding to the value of renewable or fossil generators

4. Regulation OnlyStorage providing frequency regulation only

5. Distribution BenefitsStorage dispatched to reduce distribution load

6. Retail BenefitsStorage dispatched for retail tariff benefits

» In addition, all of the above forms of storage except for #3 can theoretically be dispatched during off hours to provide services such as Frequency Regulation, Spinning Reserve, or Energy.

» Rules are not in place to provide full value for all cases in all regions.

Example of attractive ISO/RTO markets for DERs

Western Texas Eastern

Opportunity CAISO ERCOT PJM NYISO ISO-NE MISO SPP

Peak Load 45 GW 70 GW 162 GW 34 GW 27 GW 127 GW 47 GW

Retail Bill Management(Demand and Energy) ◕ ◔ ◑ ◑ ◑ ◔ ◔

Incentive Programs ◕ ○ ◔ ◑ ◑ ◔ ○

Energy Arbitrage ◑ ◕ ◑ ◑ ◑ ◔ ◔Ancillary Service Market Participation ◔ ◑ ◑ ◔ ◔ ◔ ○Capacity MarketParticipation ◑ ○ ◕ ◑ ◑ ◔ ○Growth / Enhanced Value from Regulatory Reforms ◕ ◔ ◔ ◕ ◕ ◔ ○

OVERALL ◕ ◑ ◑ ◑ ◑ ◔ ○

OPPORTUNITY LEVEL: LOW HIGH○ ◔ ◑ ◕

Benefit-to-Cost Ratio Ranges by Modeled Use Case

For each case, a benefit-to-cost (B/C) ratio will be 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

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Utility PartnersScheduling CoordinatorsSoftware / Analytics

Network Management Energy Services Providers (includes O&M)

Many Players & Business Models in the DER Ecosystem

New Players are Moving In

Advanced TransportationStationary Storage Developer

Traditional Power

Systems integrator

ICT – Analysis / Prediction

New Energy EcosystemICT x Energy

#brightbluebox ?

The California Example

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» OTC and SONGS retirement▪ 6,209 MW of Retiring OTC Capacity by 2024

» AB 2514▪ 1,325 MW procured by 2020

» Long Term Procurement Planning ▪ SCE (50 – 600MW)▪ SDG&E (25 – 200MW)

» CAISO Reforms to Wholesale Market▪ Market design updates specific to storage▪ Storage being considered in transmission planning process▪ Updates to interconnection process

» SGIP - $83M/year through 2020

» Net Energy Metering / Rate Design

Seller Resource TypeTotal

ContractsMax Quantity

(LCR MW)

Selected Energy Storage Resources

AES Centralized Battery Storage 1 100.0

Advanced Microgrid Solutions

Customer Sited Battery Storage 4 50.0

Ice Energy Customer Sited Thermal Storage 16 25.6

NRG Energy Customer Sited Battery Storage 1 0.5

Stem Customer Sited Battery Storage 5 85.0

Total 27 261.1

Source: SCE RFO winners. https://www.sce.com/wps/portal/home/procurement/solicit1n/lcr

Southern California Edison chose to procure over 5x the amount of energy storage than required by the CPUC to meet Local Capacity Requirements (LCR)

» 50 MW of energy storage required. 261 MW Procured

» Over 1,800 offers of all resource types competing

From Centralized to Distributed RA

Customer Sited Storage can Provide Grid Services

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• Distributed Energy Resources (DER)

• Can provide several grid benefits:

• Distribution Capacity

• Steady-state Voltage

• Power Quality

• Reliability and Resilience

• Demand Side Management (DSM)

• Energy Efficiency (EE)

• Demand Response (DR)

• New York – Reforming the Energy Vision (NY REV)

• Push for cleaner, more resilient, and cheaper electric system

• Con Edison proposed a combination of customer side Demand Management ($200 million) and moderate substation upgrades ($300 million) to avoid a $1 billion new substation

• Program would shed 52 MW from specific areas by 2018

• The majority of the area’s load is comprised of residential buildings and small commercial loads – i.e. no large industrial load reduction targets

• Demand side management could include energy storage in residential buildings

Brooklyn-Queens Initiative

Capturing Wholesale Value

Electricity Markets in North America

Energy Storage Applications

Generation

• Energy Arbitrage

• Ancillary Services

– Frequency Regulation

– Spinning Reserves

– Supplemental Reserves

– *NEW* Ramping

• Capacity

– Reliability

– System, Local, Flexible

• Reliability– Voltage

Support/Reactive Power

– Black Start

– Frequency Response

Transmission & Distribution

• Upgrade deferral

– Reduce circuit and line overload

• Grid resiliency

– Outage mitigation

– Back-up power

• Voltage support/power quality

• Congestion relief

End-users

• Reduce Demand Charges

• Optimize Retail Rates

• Power Quality/UPS

• Onsite renewables

• Demand Response

ISO/RTO Markets focus on Energy, Capacity, Ancillary Services, Demand Response, Transmission

Potential Value Streams» In Front of the Meter

• Energy Marketo And possibly ramping

• Ancillary Services o Operating Reserves, Regulation, Frequency, Reactive Power, Black

Start

• Capacity Market

» Behind the Meter:

• Wholesale DRo In addition to Arbitrage, Demand Charge Savings, State/Federal

Incentives

• Capacity Market

» Transmission and Distribution

• FERC Order 890

– Participation by non-generator resources in the RTO/ISO Ancillary Services markets, including Regulation.

– Preventing Undue Discrimination and Preference in Transmission Service

• FERC Orders 719 and 745– Improve DR in the wholesale power markets

• FERC Order 755– Pay for Performance Regulation

• FERC Order 784 – Third-party provision of ancillary services and the accounting and financial reporting

for new electric storage facilities”

FERC Orders

176

36

20

1

14.5

Energy Storage in the Wholesale Markets

PJM ERCOT NYISO MISO CAISO

PJM: Frequency Regulation, ERCOT: Fast Response, CAISO: Regulation, MISO: Regulation, NYISO Frequency Regulation

• Additional Ancillary Services and Compensation:

– Frequency Response• FERC ORDER 794

– Approves NERC BAL-003

• FERC NOPR: Frequency Response Market Based Product NOPR

– Reactive Power• FERC Docket AD14-7

FERC Orders Continued

Areas that are Developing

• Interconnection Rules

– Exporting and Non-Exporting

• RTO/ISO Aggregation Rules

– In front of the Meter and Behind the Meter

– Minimum Size Requirements

• Demand Response Rules

– Measure and compensate Behind the Meter Storage Participating In

Wholesale Market

• State of Charge (SOC) Management and Dispatch Signal

• Metering and Telemetry Requirements/Costs

• Quantify Transmission and Distribution Deferral Benefits,

Transparency

• Capacity Market (Resource Adequacy) Rules/Compensation

Dynapower's manufacturing facility in Vermont

features a 100 KW wind turbine, 101 KW roof

mounted photovoltaic and an on-site energy

management & storage system. Currently in

operation.

Beacon Power 20 MW Flywheel Frequency

Regulation Plant (Hazle Township, PA). In

Operations since June 2014.

Goldman Sachs Manhattan Headquarters, NY . Tanks for ice

thermal storage used to reduce high demand charges during

summer peak. Chilled anti-freeze runs through pipes

connected to the 11-ton vessels during nights to use cheap

power to freeze water. That ice is used the next day in its air-

conditioning system. In operations since 2010.

1 MW , 3.2 MWh UET Vanadium Flow Battery,

Avista Utilities in Washington state. Used for load

shifting, frequency regulation, and conservation

voltage regulation on the Turner distribution

circuit. In operations since June 2015

PG&E’s Vaca-Dixon Substation, Vacaville, CA.

2-MW / 14 MWh Na-S battery used for load

shaping, renewables (PV) integration, and

ancillary services. In operations since 2012.

2nd Life Battery System at BMW in Mountain View,

CA. 100 kW inverter and 8 used LiFeP 240 kWh

batteries for multiple applications . e.g. Demand

Response , Peak Demand Shaving, and PV Energy

Storage, and as UPS.