Challenges of Storage Development - Advanced Rail Energy Storage (ARES)

Prepared for Bulk Storage Conference, Sacramento

November 20, 2015

Nov

embe

r 20,

201

5

1

Today’s Discussion

• ARES Technology• Hurdles for a Start-up• Project Development Challenges

Nov

embe

r 20,

201

5

2

Nov

embe

r 20,

201

5

ARES Ridgeline Technology

• Pumped storage on rails• 78 % round-trip

efficiency• No degradation with

cycling or over the project lifetime

• Load-following, regulation and long-duration (8 hours +) storage capabilities

• 50 MW to 1000 MW +3

Nov

embe

r 20,

201

5

ARES NevadaARES’ First Commercial Regulation Facility

(Adhesion-Drive Technology)

4

Specifications

Charging Capacity 57MWDischarging Capacity 44MWStorage Duration 15 minElevation Differential 2,000’Average Grade 6.9%Maximum Grade 8.0%Track length 5.5 mi.Number of Trains 6ROW Size 72 acreRamp Rate 300 MW/minOn-Line Date Sept 2019System Life 40+ yrs

ARES’ Significant Advantages

Nov

embe

r 20,

201

5• Scalability -- ARES Energy Storage facilities are scalable from small ancillary services facilities up to large regional energy storage systems.

• Extensive Site Options -- ARES sites are abundant in many arid regions with wind and solar resources.

• Variable Output at a Constant Efficiency -- An ARES system operates at a constant high efficiency over its full range of power output regardless of discharge state

• Higher Efficiency – ARES’ round-trip energy storage efficiency is 78.3% – its round-trip Ancillary Services efficiency is up to 84%

• Lower Capital Cost – ARES’ cost is approximately 60% of an equivalent power pumped storage hydro facility

• No Use of Water• No Emissions• No Environmentally Troubling Materials (e.g., lithium extraction)

5

Key Hurdles to Manage1) Acquire financing for ARES

Nevada project• Based on market revenue forecast• Improvements are needed for pay-

for-performance rules for regulation and mileage

2) Demonstrate capabilities by building a large demonstration project

• In discussion with 3 utilities

3) Secure long-term contracts or licensing revenues from utility-owned projects

4) Stay funded during start-up period

Nov

embe

r 20,

201

5

6

Storage Project Development Challenges

In California

Nov

embe

r 20,

201

5

7

FERC Order 755- Pay For Performance

Nov

embe

r 3, 2

015

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 240%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CAISO Mileage Accuracy - November 11th, 2016

Regulation Down Performance Accuracy Regulation Up Performance Accuracy

Hour

Acc

urac

y Pe

rcen

tage

Reg-Up Mileage Average Accuracy = 50.8 %Reg-Down Mileage Average Accuracy = 59.5.%

Existing regulation resources have poor regulation accuracy and slow ramp rates which cause: • depressed regulation and mileage prices, and• a reduced incentive for new fast ramping resources

to enter the market

8

Nov

embe

r 20,

201

5

Project Development Challenges – Energy Storage Procurement Targets

Storage Grid Domain Point of Interconnection 2014 2016 2018 2020 Total

Southern California EdisonTransmission 50 65 85 110 310Distribution 30 40 50 65 185Customer 10 15 25 35 85

Subtotal SCE 90 120 160 210 580Pacific Gas & ElectricTransmission 50 65 85 110 310Distribution 30 40 50 65 185Customer 10 15 25 35 85

Subtotal PG&E 90 120 160 210 580San Diego Gas & ElectricTransmission 10 15 22 33 80Distribution 7 10 15 23 55Customer 3 5 8 14 30

Subtotal SDG&E 20 30 45 70 165Total – all 3 Utilities 200 270 365 490 1,325

Issue – Procurement quantities are small relative to the optimal size of rail storage systems

9

Project Development Challenges

Nov

embe

r 20,

201

5Timeline from project site selection to an approved contract is lengthy(If you were to be short-listed in an RFO)

Project Development TimelineSite Selection

EIR

CPUC Contract Approval

Build Project

RFO Timeline

Up to 3 Years

Project Design

10

Questions? Nov

embe

r 20,

201

5

11