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Harnessing the Potentialof Energy StorageStorage Technologies, Services, and Policy Recommendations
May 2017
Harnessing the Potential Of Energy Storage Storage Technologies, Services, and Policy Recommendations Prepared by: Edison Electric Institute May 2017
This report was prepared through a collaborative process by members of EEI's Energy Storage Task Force. If you have any questions, comments or concerns, please contact: Alison Williams Manager, Clean Energy 202-508-5026 [email protected] Lola Infante, PhD Sr. Director, Generation Fuels and Market Analysis 202-508-5133 [email protected] © 2017 by the Edison Electric Institute (EEI). All rights reserved. Published 2017. Printed in the United States of America. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system or method, now known or hereinafter invented or adopted, without the express prior written permission of the Edison Electric Institute.
Attribution Notice and Disclaimer This work was prepared by the Edison Electric Institute (EEI). When used as a reference, attribution to EEI is requested. EEI, any member of EEI, and any person acting on its behalf (a) does not make any warranty, express or implied, with respect to the accuracy, completeness or usefulness of the information, advice or recommendations contained in this work, and (b) does not assume and expressly disclaims any liability with respect to the use of, or for damages resulting from the use of any information, advice or recommendations contained in this work. The views and opinions expressed in this work do not necessarily reflect those of EEI or any member of EEI. This material and its production, reproduction and distribution by EEI does not imply endorsement of the material. Published by: Edison Electric Institute 701 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2696 Phone: 202-508-5000 Web site: www.eei.org
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ExecutiveSummary
Energystoragetechnologies—includingbatteries,flywheels,compressedair,thermalstorage,andpumpedhydropower—areoperationalacrosstheUnitedStates.Useofstorage,particularlybatteries,isgrowingatarapidrate,withanestimated260megawatts(MW)installedin2016alone,up300percentfrom2014.1Ofthemorethan24gigawatts(GW)ofoperationalstorageintheUnitedStates,includingpumpedhydropower,electriccompaniesarethelargestusersandoperators—representingmorethan98percentofactiveenergystorageprojects.2Theyareusingstorageforawiderangeofpurposesthatresultinimprovedoperationoftheenergygrid;increasedreliability,resiliency,andoperationalflexibility;andtheintegrationofmoresolarandwindpower.
Whileinstalledcostsarestillrelativelyhighformanyenergystoragesystems,costsarerapidlycomingdownforsomestoragetechnologies.Atthesametime,policies,regulations,andmarketsdonotalwaysrecognizethebenefitsandflexibilitythatenergystoragecanprovidetotheenergygridandsociety.Aswelooktothefuture,itisimportanttorevisitpoliciesandregulationstomaximizethevalueachievedbyenergystorage.Furthermore,withtechnicalimprovementsindesignandcontrol,thevalueandusesofenergystoragewillcontinuetoevolve.Therefore,itisimportantforthenation’selectriccompaniestocontinuallyexplorethetechnicalperformanceofenergystoragetoensureappropriateplanninganddeploymentofstoragetechnologiesthatcanbestenhancethereliabilityandresiliencyoftheenergygridforthebenefitofallcustomers.
Tocontributetothediscussion,thispaperprovidesanoverviewofoperationalenergystorageintheUnitedStates;itsownership,useby,andvaluetoelectriccompanies;andpotentialbarriersandchallengestogreateradoption.Finally,thispaperofferspolicyrecommendationsonenergystorageforpolicymakersandregulators.
1GTM/EnergyStorageAssociation,U.S.EnergyStorageMonitor,Q12017,March2017.2U.S.DepartmentofEnergy,GlobalEnergyStorageDatabase:http://www.energystorageexchange.org/.
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WhatIsEnergyStorage,andWhyIsItValuable?
Insimpleterms,energystorageprovidesawaytosavepreviouslygeneratedenergyanduseitatalatertime.Thatenergycanbestoredaspotential,kinetic,chemical,orthermalenergyandthencanbereleasedinvariousforms,mostcommonlyaselectricity.Theabilitytobankenergy
forlaterusemakesenergystorageausefulandversatileresourceforelectriccompaniesandtheircustomers.
Forelectriccompanies,thelargestusersandoperatorsofenergystorageintheUnitedStates,theprimarybenefitsofenergystorageareaddedflexibility,reliability,andresiliencyinoperatingtheenergygrid.Morespecifically,energystorage,deployedattheappropriatescale,canbeusedinvariouswaystoenhanceelectriccompanyoperations,optimizeandsupporttheenergygrid,andenhancethecustomerexperience.
Flexibility
Storageallowsenergygridoperatorstobettermanageconstantfluctuationsinsupplyanddemand.Aselectriccompaniesintegratemorerenewableenergyresources,
likesolarandwind,intotheenergygrid,energystoragecanprovidemoreflexibilitybyhelpingtomanagethesevariableresources.
Energystoragecanhelpwithrenewablesintegrationintwoprimaryways.First,storagecanhelptoaddressthevariabilityofrenewableenergygeneration.Whileweatherforecastingisimproving,thereisstilluncertaintyaboutwhenthewindwillblowandthesunwillshine.Energystorageprovidesanoptionforstoringwindorsolarenergythatmaybeinexcessofimmediatedemandandsavingituntildemandishighenoughtodischargeorreleaseitoutofstorage.Inthisway,certainstoragetechnologiescanallowavariablerenewableenergyresourcetoperformlikeonethatislessvariableandmeasurablyreliable.
Second,therapidresponsetimeofsometypesofenergystoragemakesthemeffectivetoolsformanagingchangesinenergyoutputthatcanoccurwithsomerenewables,suchaswhenwindspeedsfluctuateorcloudspassoversolarpanels.Inadditiontouncontrollableweatherchanges,thereareinherentoperationalchallengeswithvariableenergyresources.Forexample,whenthesunrises,outputfromsolarresourcesescalatesquickly(andviceversaintheevening),resultingineitherasteepincreaseordecreaseinoutputthatcanmakeit
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challengingtomatchavailableresourceswithloadrequirementsinreal-timeoperations.Assomeformsofenergystoragecanrespondattheirdirectedcapacityinlessthanonesecond,thespeedofoperationisakeyconsiderationwhenweighingstorageasanoptionforprovidingbothflexibilityandreliability.
Fast-RampingEnergyStorageCanHelpBalanceRenewableGenerationOutput
Somekindsofenergystoragecanhelpmanagespikesanddropsintheoutputofrenewablesgenerationbystoringexcessenergyorreleasingitonamoment-to-momentbasis.Thisabilitytoquicklyrampuporrampdownmakessomestoragedevicesespeciallywell-suitedforbalancingfluctuationsinrenewableenergyoutput.
Reliability
Thereliabilityoftheenergygridisenhancedbyenergystorageinavarietyofways.Storagecanprovideahostofgrid-supportorancillaryservices—includingmanagingpeakload,essentialreliabilityservices(voltageandfrequencycontrol),reserves,andblackstart—thatarecriticaltomanagingtheenergygridandmaintainingservicewithoutinterruption.
Oneuseofenergystorageisasaresourcetohelpmanagepeakload—aprocessalsocalledpeaksmoothingorpeakshaving.Traditionally,peakloadismetwithresourcesthatareabletostartquicklybutrunforlimitedtimes(i.e.,peakerplants)—mostoftensimple-cyclenaturalgascombustionturbine(CT)plants.Whenproperlysizedforthisusecase,energystoragetechnologiescanprovideanalternative.Storagesystemscanbedispatchedveryquicklyandcanholdseveralhoursofenergythatisgeneratedduringoff-peakhoursatlowercostandthendeployedduringmorecostlyhigh-demandperiods—apracticeknownasenergytimeshifting.Certaintypesofenergystoragecanbeimportanttoolsforgridoperatorswiththeirabilitytomeet,shift,orsmoothpeaksindemandforenergy.
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StorageCanHelpMaketheEnergyGridMoreReliableThroughPeakShifting
Energystoragecanhelptomanagepeakenergydemandbychargingatlowdemandtimesofday,suchasatnight,andthendischarging(orreleasingenergy)duringpeakperiods,likeinlateafternoonandearlyevening.
Energystoragecanprovidetwoessentialreliabilityservices:frequencyregulationandvoltagesupport.Frequencyregulationisthemoment-to-momentreactiontofrequencydeviationsfromthestandard60HzintheUnitedStates.Controlisnecessarytopreventacascadingfailureofthesystemandharmtocomputersandotherelectricaldevicesthatusethesystem.Sometypesofenergystorage,withnear-instantaneousresponsetimes,canplayakeyroleincorrectingforunintendedfluctuationsinoutputfromgeneratorsthatcancausefrequencydeviations.Voltagesupportisnecessarytomaintainproperoperationofequipment,preventdamagetoconnectedgeneratorsfromoverheating,facilitateenergytransfers,andreducetransmissionlosses.Energystoragecanservevoltagesupportbyprovidingorabsorbingreactivepowerandbyhelpingtomaintainaspecificvoltagelevelontheenergygrid.
Reservecapacityisanotherimportantaspectofgridreliabilityinwhichenergystoragecanplayarole.Electriccompaniesarerequiredtokeepcertainamountsofavailablegenerationcapacity(knownasreserves)thatcanbeaccessedquicklyincaseofdisruptionorunexpectedswingsinthedemandforenergy.Similartothewayitcanbedispatchedquicklyforpeakloadmanagement,energystoragecanbeusedtohelpmeetorreducetheneedforthesereserverequirements.
Resiliency
Electriccompaniesconstantlyplanandprepareforrestoringservicesafelyandefficientlyintheeventofdisruptions.Tore-energizetheenergygridafterapoweroutage,electriccompaniesuseblack-startresourcestorestoreservicequickly.Someenergystoragetechnologieshave
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particularcharacteristicsthatfittherequirementsofblack-startresources.3Storagealsoprovidestheshort-termbenefitoffastresponse,acrucialattributeforquicklyrestoringpowerinablack-startsituation,althoughthedurationofdischargemaylimittheeffectivenessofsomestoragedevicesforthisapplication.
Energystoragealsocanserveasabackupenergysourcetoindividualloadsorevenentiresubstationsintheeventofatransmissionordistributionoutage.Thismaybeaneffectivealternativetoatransmissionordistributionupgradeormayserveasaninterimsolutionwhilealong-termplanisimplemented.Similarly,storageresourcesplayavitalroleinmicrogrids.Thesestandaloneenergysystems,whichusedistributedgeneration,canoperateinparallelwithorindependentlyoftheenergygrid.Thevalueofamicrogridisitsabilitytomaintainservicewhenthebroaderenergygridexperiencesinterruptions.Electriccompanies,theU.S.military,severalindustries,andcitiesandcommunitiesaroundthecountryareusingorconsideringmicrogridsasawaytoincreasetheirresiliencyandtomanagetheirownenergyneeds.Inallofthesesystems,energystorageisavitalcomponent.
CustomerBenefits
Inadditiontothemanybenefitsthatenergystoragecanprovidetotheenergygrid,energystoragetechnologiesalsocanprovideservicestocustomersdirectlyoneithersideofthemeter.Asmentionedabove,resiliencyisanimportantservicevaluedbymanytypesofcustomers.Othercustomerusesincludetheopportunitytomaximizethebenefitsofprivatesolarproductiontoreducethedemandforgrid-providedelectricitywithstorageusedtosmoothproductionanddemand,forexample.
EnergyStorageIsUsedToSupportAllPartsoftheEnergyGrid
3Blackstartistheprocessofbringingapowerplantbackonlinewithouthelpfromthetransmissionnetwork.Itisanessentialservicetorestorepowerafteranoutage.
Energy storage can provide benefits along all parts of the energy grid, including improving operations of generation, transmission, and distribution, as well as serving residential, commercial, and industrial customers. Table 1 (below) provides a list of storage services by customer and technology.
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Table 1. Storage Services by User and Technology
Application User Major Technologies
Description
Energy Grid Services
Frequency Regulation Electric company Batteries Provides safety and decreases fluctuations
in load managing the variability in the grid's frequency ISO/RTO Flywheels
Reserve Capacity Electric company
Pumped hydro Batteries
Contributes to electric company’s adequacy/reserve margin requirement
Grid Asset Optimization
Electric company Pumped hydro Load levelling and peak shifting of grid assets ISO/RTO Compressed Air
Batteries
Spinning Reserve
Electric company Flywheels Batteries Compressed Air
Maintains system frequency stability during emergency operating conditions and unforeseen load swings ISO/RTO
Transmission & Distribution Upgrade Deferral
Electric company ISO/RTO
Batteries
Can provide a portion of peak demand that is served by transmission and distribution equipment whose capacity must be increased due to demand growth or whose life is to be extended
Energy Arbitrage Electric company Batteries Allows electric companies to provide/buy
power when electricity prices are highest/lowest ISO/RTO Pumped Hydro
Variable Resource Integration Electric company Batteries Reduces ramp rates and helps electric
companies integrate higher levels of variable resources
ISO/RTO Compressed Air
Voltage Support Electric company Batteries Helps manage delivery of reactive power
to maintain voltage ISO/RTO
Other: Black Start, Power Quality/Harmonics, Inertia Response
Electric company Batteries Suppresses system harmonics, supports system during system restoration, provides dynamic functional equivalent of synchronous generation ISO/RTO Compressed Air
Customer Services
Load Shifting
Commercial & Industrial (C&I)
Batteries
Peak shifting of residential or C&I loads to save on energy costs, such as demand charge reduction and time‐of‐use optimization
Residential Thermal May help reduce grid‐supplied electricity
Load Shifting with Solar
C&I Batteries with solar
Same as load shifting, but with the ability to flatten load between battery and solar technologies
Residential Helps provide steady emergency backup power
Emergency Backup C&I Residential
Batteries
Provides emergency power during outages such as grid failures and weather‐related incidents
Microgrid Support C&I Batteries Flywheel
Supports local power systems that can disconnect from the larger grid and operate autonomously
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EnergyStorage:ManyTypes,ManyUses
Giventhemanybeneficialattributesofenergystorage,electriccompaniesarebuilding,procuring,andoperatingdifferenttypesofenergystoragesystemsinvariouspartsofthecountry.Itisimportanttonotethatenergystorageisnotasingletechnologybutratherahostofdifferenttechnologieswithvastlydifferentoperatingcharacteristics,coststructures,andbenefits.Thetechnologythatisdeployedinagivenlocationlargelyisdeterminedbythatarea’sresources,needs,andmarketstructure.
Theenergystoragedescriptionsbelowareintendedtoshowthewidevarietyofoperatingtechnologies,howtheyareused,andexistingbarrierstogreateradoption.
PumpedHydro
Pumpedhydrostoragesystemsprimarilyworkinconjunctionwithmajorhydropowerdams—calledanopen-loopsystem.Insimpleterms,waterispumpedfromalowareatoahigherreservoirduringoff-peak(i.e.,lowcost)times.Thewateristhenstoreduntilitiseconomicaltousetheresource.Atthatpointthewaterisreleased,spinningturbinestogenerateelectricitythatissuppliedtotheenergygrid.ManyofthepumpedhydrosystemsintheUnitedStateswerecommissionedinthe1960sto1980s,withthemostrecentbecomingoperationalin2012insouthernCalifornia.Duetoissuessuchasinitialcostandsitingdifficulties,onlyalimitedamountofnewpumpedhydroisexpectedtocomeonlineinthecomingyears.
Batteries
Batterytechnologiesarepartofthelargergroupofelectro-chemicalstorage.Therearetwocategoriesofbattery:solidstateandflowbatteries.Solidstatebatteriessuchaslithium-ionhavesolidelectrodesandsolidelectrolytes.Incontrast,flowbatteries,orredox(reduction-oxidation)batteries,operatewithtwochemicalcomponentsdissolvedinliquidsoftenseparatedbyamembrane,astructurethatenablesnear-instantaneousrecharging.Ofallofthebatterytypes,lithium-ionisthemostpopular.Theircostshavedeclinedsignificantlyinrecentyearsand,asaresult,theyarefindingapplicationsinelectronics,electricvehicles,andindustrialoperations.Electriccompaniesprimarilyareusinglithium-ionandsomelead-acidbatteriesbecauseoftheiravailability,price,anddurability.Batterylifespanvariesbytype,withsolid-statebatteries(lithium-ion,zinc,etc.)typicallylasting5-15yearsandflowbatterieslasting15-20years.4
4Lazard’sLevelizedCostofStorageAnalysis—Version2.0,December2016.
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Thermal
Thermalstoragetechnologiesallowfortemporaryenergystorageintheformofthermalenergy(heatorcold)—similartohowaninsulatedmugkeepsadrinkhotoricecubeskeepadrinkcold.Themostcommonformofheatstorageismoltensaltthermalstorage,althoughthereareotherformssuchasmoltenglass.Moltensaltcurrentlyisusedinconjunctionwithparabolictroughstostoreheatproducedviasolarpower.Inthesesystems,sunlightisfocusedviamirroredpanelstoheatsalttotemperaturesofupto1050⁰F.Themoltensaltisstoredininsulatedtanksuntilenergyisneeded.Toconvertstoredheattoelectricenergy,themoltensaltturnswaterintosteaminheatexchangerswithsteamusedtogenerateelectricityinasteamturbine/generator.Heatstorageoftenisusedforstoringpowerduringlowdemandperiodsandreleasingitwhendemandincreases.Italsoisusedtohelpmanageminute-to-minutefluctuationsinrenewablegeneration.Storedheatalsomaybeusedinmanufacturingprocessesorbuildingspaceconditioningsystems.
Iceandchilled-waterthermalstorageuseexcesslow-costenergytochillorfreezewater,whichisthendeployedinavarietyofsystemsfromairconditioningsystemstofreezers.Thiscoldstoragemostoftenisusedbycustomerstoreduceelectricdemandandbyelectriccompaniesfortimeshifting.
CompressedAirEnergyStorage(CAES)
Inacompressedairstoragesystem,atmosphericairiscompressedandstoredunderpressureinundergroundgeologicalsitessuchasretiredminesorsaltcaverns.Whenenergyisrequired,theundergroundcompressedairisreleased,drivinganexpansionturbinetogenerateelectricity.TheestimatedusefullifeofaCAESsystemis15-20years.5Thereisonlyonelarge-scaleoperationalCAESplantintheUnitedStates:a110-MWplantinMcIntosh,AL.6WhileCAESuseremainslimited,thereareseveralsuitablesitesforitsexpansionacrosstheUnitedStates.
Flywheels
Flywheelstoragesystemsuseelectricitytopoweramachine,actingasamotorthatspinsaseriesofrotors.Astherotorsturn,electricenergyisstoredaskinetic(orrotational)energy.Whenelectricityisneeded,theflywheelturnsthemachinenowactingasagenerator,convertingthekineticenergyintoelectricitythatisfedtotheenergygrid.Tomaintainefficiency,flywheelsoftenarecontainedinavacuumonmagneticbearingstoreducefriction.Flywheelsgenerallyarelowmaintenance,havealonglife,andrespondquickly,makingthem 5Lazard’sLevelizedCostofStorageAnalysis—Version2.0,December2016,https://www.lazard.com/media/438042/lazard-levelized-cost-of-storage-v20.pdf.6PowerSouthCAES:http://www.powersouth.com/mcintosh_power_plant/compressed_air_energy.
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usefulforelectriccompaniesasspinningreservecapacityaswellasfrequencyandvoltagesupport.Additionally,manydatacentersintheUnitedStatesrelyonflywheelstoragetomitigateshort-termenergydisruptions.
CurrentDeployment
Ofthemorethan24GWofoperationalenergystorageintheUnitedStates,pumpedhydroisbyfarthemostcommon,representingmorethan93percentofinstalledstoragecapacitybysize.Thenextlargestsegmentisthermalstorage,followedbybatteries,compressedair,andflywheels.WhilepumpedhydrostoragedwarfsotherenergystoragetechnologieswhenconsideringalloperationalstorageintheUnitedStates,batteriesaredrivingthestoragemarkettodayintermsofthenumberofprojects.Large-scaleoruniversalsolarpowerplantshavegivenrisetoahandfuloflargethermalenergystoragesystems,makingthisstoragetechnologythelargestplayerbysizeinrecentyears.
ComparisonofEnergyStorageProjectsByTechnologyType
ElectricCompaniesArePrimaryUsersofStorage Electriccompaniesarethelargestownersandoperatorsofenergystorage.Theyuseenergystoragefacilitiesthroughtheassetstheyowndirectlyandalsothroughthosethattheyprocurevialong-termcontracts,orpowerpurchaseagreements.Manylarge-scalestorageprojects—includingpumpedhydropowerstorageandthermalstorageprojects—wouldnotbeeconomical
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withoutaguaranteeofusebyelectriccompaniesintheformofalong-termcontract.AccordingtotheU.S.DepartmentofEnergy,electriccompaniesrepresentmorethan98percentofenergystorageprojectsintheUnitedStates,7includingpumpedhydropower,andareasignificantcontributortothesector’srapidgrowth.Lookingonlyatnewerenergystoragetechnologies,andexcludinglarge-scalepumpedhydropowerstorageprojects,electriccompaniesremainthelargestusersandoperators,representing75percentofU.S.energystoragecapacity.
Ofthe22electriccompany-ownedstorageprojectscommissionedin2015and2016,allbutonewasabatterystoragesystem.Lithium-ionsystemsrepresented98percentofthebatteryprojects,makingelectriccompaniesasignificantcontributortotheadoptionofthefastestgrowingenergystoragetechnologyintheUnitedStates.8
Map1.OperationalandPlannedEnergyStorageProjects
Source:U.S.DOEGlobalEnergyStorageDatabase(AccessedonApril27,2017).
7U.S.DepartmentofEnergy,GlobalEnergyStorageDatabase.8U.S.DepartmentofEnergy,GlobalEnergyStorageDatabase.
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StorageCostsAreDeclining
Energystoragecostsareasvariedasthetechnologiesthemselves.Broadly,however,energystoragecostsarefalling.Batteriesarethemostcommontypeofenergystoragedeployedtoday.Withinthiscategory,pricesvarywidelydependingonthespecifictechnology,thestageofdevelopmentandcommercialization,andthewaythetechnologywillbeused.Advancesintechnology,aswellaseconomiesofscale,havehelpedtodrivedownlithium-ionbatterycostsinrecentyears.Themediancostoflithium-ionbatteriesfellbymorethan10percentfrom2015to2016.9
Onalevelizedcostbasis,storagecostsareprojectedtocontinuetofallforbatteriesandflywheelsbetweennowand2020.10Costsareexpectedtodropmostdramaticallyforbatteries—especiallylithium-ionandflowbatteries.AccordingtoLazard’sindustrysurvey,overthenextfiveyears,lithium-ionbatterypricesareexpectedtodropby50percent,flowbatteriesareexpectedtodropby40percent,andlead-acidbatteriesareexpectedtodrop25percent.11
Ifthesepricedeclinesarerealized,thethreetypesofbatteriescouldbecomemorewidelydeployed.
Levelizedcostsarethemostprominentcomprehensivecostfiguresforevaluatingtheeconomicsofenergystoragetechnologies,butthisisanimperfect—andoftennotuseful—metric.Althoughlevelizedcostanalysisprovidesonemeansofcomparingdifferentstoragetechnologiesandcompetingtechnologies,levelizedcostsdonotaccountfor
themultiplewaysstoragecanbeusedand,therefore,donotcapturethemultiplevaluestreamsfromwhichenergystoragecouldbenefit.
Thestackedvalueofenergystorageisdeterminedbasedonthespecificationsandusesoftheindividualproject,makingitdifficulttocomparecostsacrossenergystorageprojects.Somestoragetechnologies,forexample,aremoreappropriateforintegratingrenewables;othersaremoreappropriateaspeakingplantreplacementsorforprovidingancillaryandessentialreliabilityservices. 9Lazard’sLevelizedCostofStorageAnalysis—version2.0.10 Ibid. 11Ibid.
Theeconomicviabilityofstoragedependsonthewayitsvalueiscalculatedandtheway
servicesitprovidesarecompensated.
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Ultimately,thedecisiontobuildandfinanceenergystoragedependsonthetypeofstorage,thewaythestoragesystemwillbeused,itssize,anditslocation.Further,theeconomicviabilityofstoragedependsonthewayitsvalueiscalculatedandthewayservicesitprovidesarecompensated(intermsofusecases),aswellasonthecommercialbackingofthetechnologyprovider.
ChallengesToWiderDeploymentOfEnergyStorage
Despiteitsgrowingpopularity,energystoragecontinuestofacechallengesthatarepreventingthesetechnologyoptionsfromachievingtheirmarketpotentialandmaximizingthebenefitstheycanprovidetocustomersandsociety.Today,themainchallengesforenergystorageare:therelativelyhighcostforsometechnologies;limitedpublicknowledgeregardingtechnicalperformance;regulatoryrequirements;andmarketrulesthatcanmakeitdifficultforthesetechnologiestoparticipateinthemarketsonacomparablebasiswithotherresources.Incombination,thesefactorsareimpactingtheacceptanceandadoptionofsomeenergystoragetechnologies.
Cost
Highcostsarestillachallengetowiderdeploymentofenergystoragesolutions.Althoughthecostsofsometechnologiesaredeclining,energystoragedevicesremainexpensiverelativetoothertechnologiesprovidingonlyoneservice.Whilesomestoragetechnologycostsaredecreasingrapidly,itiscriticaltoremoveotherbarrierstoenergystorageadoption,sothatthefullrangeofbenefitsofenergystoragecanberealizedastheseresourcesbecomemoreandmoreprominent.
Forelectriccompanyandwholesalemarketapplications,energystorageisfinancedeitherthroughelectriccompanyinvestmentstoimprovesystemreliabilityandtoreducetheneedfortransmissionanddistributionupgrades,orthroughparticipationinelectricitymarkets(wholesaleenergy,capacity,andancillaryservices).Althoughenergystoragedevicesareabletoprovidemultipleenergygridservicesandtoparticipateindifferentmarkets,theyoftencannotcaptureallvaluestreamsduetoexistingmarketperformancerequirementsandcode-of-conductrestrictions.Theabilityofenergystoragetobecomecost-competitiveandmeettheseperformancerequirementswouldhelpthemtomonetizeallvaluestreamsandrealizetheirfulleconomicpotential.
TechnicalPerformance
Widespreadadoptionofenergystoragesystemsdependsupongreaterinformationandcertaintyabouttheirperformance.Experiencewithsomeofthenewertechnologiesislimited,
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sothereareincompleteorunreliabledataontheirperformanceinvarioussituationsandatdifferentscales.Electriccompaniesandmarketsneedtohaveahighlevelofconfidenceintheperformanceandtechnicalcharacteristicsoftheirassetssotheycanoptimizethemanagementoftheenergygrid.
Technicalissuesgobeyondthestoragetechnologiesthemselves.Equallyimportantisthewayinwhichstorageisconnectedtotheenergygrid.Storageinterconnectionmaybeachallengeinsomeareas,andinfrastructureandregulationsmayneedtobeupgradedtoaccommodatetwo-wayflowsofelectricitysostoragecanchargeanddischargeenergyonthegrid.Thetechnicalaspectsofstorageinterconnectionarebeingtestedinpilotprogramsinmanypartsofthecountry.Furtherdeploymentofenergystoragewillrequirethatinterconnectionalsobeaddressedfromtheregulatoryperspective.
RegulatoryChallenges
Becauseexistingregulationsweredevelopedatatimewhenpumpedhydrowasessentiallytheonlyformofenergystorage,theydonotaccountfortheparticularcharacteristicsandintrinsicflexibilityofsomenewerstoragetechnologies:
• ClassificationandFlexibility:Classificationrulesatthestateandfederallevelsmayneedtobeupdatedtoaccommodateresourceslikestoragethatareabletoprovidemultipleservices.Updatingtheseruleswillhelptoensurethathowaresourceisclassified(e.g.,asgeneration,transmission,distribution,orload)doesnothamperorprecludeitsabilitytoprovideotherservicesonacomparablebasiswithotherresources.Marketrulesshouldbeclarifiedormodifiedsothatallresourcesthatarecapableofprovidingaproductareabletoparticipateinthatmarket.Marketproductsshouldbedefinedinatechnology-neutralwaysothatmarketproductsandrulesaregearedtowardtheserviceneededratherthantowardspecificresourcetypes.Thiswillhelptoensurethatproductrequirementsandeligibilityaretiedtotheunderlyingoperationalneedsofthesystemandnotthecharacteristicsofspecifictypesofgeneration.TheFederalEnergyRegulatoryCommission(FERC)andRegionalTransmissionOrganizations(RTOs)alreadyareworkingtowardmodifyingexistingrulessothatclassificationrulesaccommodatemultipleusesandallowenergystoragedevicestomaximizetheirapplicationsand,thus,enhancetheirenergygridandsocietalbenefits.
• Ownership:Incertainareasofthecountrythathaverestructuredtheirelectricitymarkets,electriccompaniesmaynotbeallowedtoowngenerationassets.Accessrestrictionsderivedfromexistingassetclassificationrules(when,forexample,storageisclassifiedasagenerationasset),meanthatelectriccompaniesinsomepartsofthecountrymaynotbeallowedtoinvestinenergystoragedevices.Yet,electriccompanies
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areresponsibleforensuringthereliabilityoftheenergygrid.Theirinabilitytoownenergystorageinsomecasestakesawayanoptiontoenhancethereliabilityandresiliencyofthenation’senergygridtothebenefitofallcustomers.Forexample,electriccompanies—withtheirextensiveknowledgeoftheelectricsystem—areinthebestpositiontobeabletoidentifythemostvaluableapplicationsandtheoptimallocationstositeresourcesontheenergygrid.Thelocationmatterswhenitcomestothedeploymentofdistributionsystemassets,includingenergystorage.Thesameresourcecanhelporhurtthereliabilityandresiliencyoftheenergygriddependinguponwhereitislocated—byalleviatingcongestion,forexample.Thisisnotonlyimportantforreliability,butitalsohasadirectimpactoncostsasnewtechnologieshavethepotentialtodeferortoreducetheneedforincrementalinvestmentsor,onthecontrary,requireadditionalinvestmentsinnewcapacityordistributionupgrades.
• InterconnectionandOperation:Electriccompaniesareresponsibleforinterconnectingandoperatingnewenergystoragedevicessafelyandreliably.Instudiesanalyzingtheimpactofthesenewinterconnections,energystoragedevicesgenerallyareassumedtochargeanddischargeatlevelsandtimesthatareinconsistentwithactualoperations.Integrationofdistributedenergyresources,suchasbatterystorage,intoelectrictransmissionanddistributionoperationsiscomplexandrequirestheadoptionofadditionaldistributionautomationtechnologies.Likeallresourcesthatinterconnecttotheenergygrid,energystoragedevicesshouldberequiredtodefinetheparametersunderwhichtheywilloperate.Forinstance,itshouldbeclearwhatservice(s)theenergystoragesystemwillprovide,whereitwilloperate(i.e.,transmissionordistributionsystem),whenitwillbeavailableandforhowlong(duration),andhowthesesystemswillaccomplishthosetaskscoordinatingwithelectricsystemsoperations.Inaddition,regulationsshouldbeclarifiedorrevisitedtoallowforenergystorage.Forexample,historically,regulationsaddressedconsumptionatgeneratingplantswithnetdeliveriestotheenergygrid.Thesetypesofregulationsarebeingappliedtostoragedevices,butareill-suitedtoaccommodateenergystoragesystemsthatreceiveelectricitytostoreforlaterdischargetotheenergygrid.
FERC,RTOs,andindividualstatesshouldcontinuetoworktowardremovingbarriersthatartificiallylimittheabilityofenergystorageresourcestoprovidetheservicestheyaretechnicallycapableofproviding.Thiswouldallowenergystoragetomonetizemultiplevaluestreamsandmaximizeitsfullpotentialforcustomersandsociety.
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PolicyRecommendations
Expandingdeploymentofstoragerequiresovercominganumberoftechnical,economic,andregulatorychallenges.Asresearch,testing,andusecontinuetodrivedowncosts,policyandregulatorychangescanhelptoallowenergystorageresourcestoachievetheirfullpotentialandimprovestorage’scontributionstomarkets.Policiesandregulationsdonotalwaysrecognizethemanybenefitsenergystoragecanprovide.
Belowaresomepolicyrecommendationsforpolicymakersandregulatorstokeepinmindwhenconsideringenergystorage:
• Deploymentofenergystorageshouldbedoneinasafe,secure,reliable,andcost-effectivemannerthatrecognizesthebenefitsofstorage,includingreliabilitybenefits,whetherinfrontoforbehindthemeter.
• Allelectriccompaniesshouldhavetheabilitytoownandmakeinvestmentsinenergystorageregardlessofregulatorymodel.
• Regulationsandstandardsshouldrecognizetheflexibilityofthevarioustypesofenergystorageandthebestwayseachcanbeusedandallowtheuseofenergystoragetechnologies,onacomparablebasiswithotherresources,regardlessofwhethertheysupportgeneration,transmission,distribution,and/ordemand-sideoperations.
• Regardlessofmarketdesignandregulatoryenvironment,marketproductslikeancillaryandessentialreliabilityservicesshouldbedefinedinatechnology-neutralwaysothatmarketproductsandrulesaregearedtowardtheserviceneededratherthantowardspecificresourcetypes.
• Thespecificbenefitattributesapplicabletovariousenergystoragetechnologiesaredependentonwhichservicestheparticularstoragetechnologyiscapableofproviding.Realizingthefullbenefitsofenergystoragewilldependontheresource’sabilitytoprovidemultipleservicesandtobecompensatedfairlyforservicesprovided.Regulationsandstandardsshouldallowfortheprovisionofmultipleserviceswithoutcompromisingsafety,security,andreliability.
• Whethertransmission-level,distribution-level,ordirectcustomerinterconnectionisimplemented,systemimpactsshouldbeassessedusingcriteriaappropriatetothetechnology,theintendedusesofthedevice,andtheelectricsysteminwhichthedeviceistobeutilized.
Harnessing the Potential of Energy Storage
16 Edison Electric Institute
• Whetherownedbyelectriccompanies,customers,orthirdparties,energystorage,whendeployedinthedistributionsystem,shouldfollowthesameguidingprinciplesasallothersimilarlysituatedresources:
o Ensureenergystoragesystemsareconnectedsafely.
o Ensurefair,economicallyviablecompensationofservices,whichwilldependonregulatoryframeworkandmarketdesign.
o Ensurethatretailratemakingavoidscost-shiftingtocustomerswhodonotownstoragedevices.
o Enablefullparticipationbyelectriccompaniesintheownershipand/oroperationofdistributedstorageasdeterminedbytheelectriccompanyandtosupportitsbusinessmodel,includingmaximizingthevisibilityandcontrolofdistributedstoragebyelectriccompanies.
o Encourageoptimallocationandothertechnicalspecifications,whenpossible,toincreasethevaluethatdistributedstorageprovidestothedistributionsystem.
o Ensure,forplanningandoperatingpurposes,visibilitybyelectriccompanies,impactassessment,andsomelevelofcompanyinputintoandcontroloftheenergystorageresourcesthatareconnectedtothedistributionsystem.
o Encourageappropriatecoordinationamongthetransmissionanddistributionsystems(andfederalandstateregulators)totheextentthatdistributedstoragewillimpactthetransmissionsystem.
Movingforward,itisimportanttorecognizethemultiplevaluesandvariedusesofenergystoragesothatthesetechnologiescanhelptoenhancetheflexibility,reliability,andresiliencyoftheenergygridforthebenefitofallcustomers.
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