Power System Game Changer

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

Confidential

Objectives

» Strategen CESA ESNA GESA Introduction

» Why Storage is a Game Changer

» California Update

» Share Lessons Learned

» Open Dialogue RE: Implications for Minnesota

» Find New Champions

© 2015 Strategen Consulting3

California Energy Storage Alliance (CESA)

» Founded in January, 2009

» 80++ member companies

» Active in over 20 regulatory proceedings at CPUC, CAISO, and CEC

Strategen Consulting

» Started consulting in PV and energy storage space in 2005

» Unique focus in strategic advisory work in the clean energy industry

Energy Storage North America (ESNA)

» Largest grid storage conference in the world

» 28 countries in attendance

» Next event: October 13-15, 2015 San Diego Convention Center

Introduction

© 2013 California Energy Storage Alliance

A sampling of our clients:

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

© 2013 Strategen Consulting

Objectives








Storage uses a time-tested tradition

9


We can bottlesunshine and wind

10

Power System Gamechanger:

ENERGY STORAGE


Storage is already a partof our everyday lives

12


Electro-Chemical

(Flow battery / Lithium Ion )

Mechanical

(Flywheel)

Bulk Mechanical

(Compressed Air)

Thermal

(Ice / Molten Salt)

Bulk Gravitational

(Pumped Hydro)

Transportation

(Electric Vehicles)

Many solutions are available today


Storage isa fast growing Californiaindustry


ASSUMPTION FACT

Renewable energy

will be wasted

Energy storage can

match renewable

generation to demand


We make “jam”

out of sunshine.

Make it Store it Use it

16


Example 1: Self-consumption in Germany

»“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

Electricity Cost exceeds PV Cost


Example 2: We build peaker plants to do one job

Peaker Replacement


Comparing Energy Storage With The Status Quo

19

• Siting Constraints

• Installation Speed

• Available Flexible Range

• Capacity Factor (hours of operation/year)

• Multiple Value Stream Capture

• Ramp/Response Rate

• Total Emissions

• Water Usage

VS.

Natural Gas Peaker Energy Storage

Key Criteria to Consider


Energy Storage Can Be Sited Closer to the Load

Russell City Energy Center Hayward, Ca

ES Siting Source: Powertree Integrated Energy Services

20


Energy Storage: Diverse, Modular, Faster to Install!Battery and thermal storage resources can be installed much more quickly than

traditional resources, reducing risk and increasing technology flexibility

0 1 2 3 4 5 6 7

CCGT

Combustion Turbine

Battery/Thermal Storage

Time in Years

Minimum Time

Maximum Time

Siting, Permitting, and Installation Time by Resource

21


Energy storage responds far more quickly and is more effective

Energy Storage Can Respond Faster and is More Effective

Energy Storage System

Full Power Ramp

<1 second

Graph Source: Kirby, B. “Ancillary Services: Technical and Commercial Insights.” Wartsilla, July, 2007. pg. 131. http://www.cpvsentinel.com/about.html

LMS 100 Gas Peaker Plant

Full Power Ramp

10 Minutes

http://www.cpvsentinel.com/about.html


Energy Storage: Four Times the Flexible Range

23

Important to compare benefits, not megawatts

100MW LMS 100

Gas Peaker Plant1

100MWEnergy Storage System

50MWMin. Output

100MWMax. Output

50 MW Range 100MWDischarge

-100MWCharge

200MW Range

1. Source: http://yosemite.epa.gov/R9/air/EPSS.NSF/e0c49a10c792e06f8825657e007654a3/8a153d8ab24cb6868825723400679b82/$FILE/WCE%20Evaluation.pdf

http://yosemite.epa.gov/R9/air/EPSS.NSF/e0c49a10c792e06f8825657e007654a3/8a153d8ab24cb6868825723400679b82/$FILE/WCE Evaluation.pdf


Energy storage can be utilized more fully throughout the year

Energy Storage: Three Times the Utilization

24

100 MWLMS 100

Gas Peaker Plant1

100MWEnergy Storage System

>95%UtilizationUtilization

20%-40%

0% 50% 100%

Startup Time

Shutdown Time

Min Utilization

Max Utilization

Unutilized

1. Source: http://yosemite.epa.gov/R9/air/EPSS.NSF/e0c49a10c792e06f8825657e007654a3/8a153d8ab24cb6868825723400679b82/$FILE/WCE%20Evaluation.pdf

0% 50% 100%

Startup Time

Shutdown Time

Min Utilization

Max Utilization

Unutilized

http://yosemite.epa.gov/R9/air/EPSS.NSF/e0c49a10c792e06f8825657e007654a3/8a153d8ab24cb6868825723400679b82/$FILE/WCE Evaluation.pdf


PEAKER STORAGE

Years to install

Slow to respond

Does one thing

Dirties air

Used 5% of time

Wastes water

Months to install

Fast to respond

Does many things

Keeps air breathable

Used 95% of time

Water saver


.


ASSUMPTION FACT

Energy storage isn’t

viable.Energy storage is

already saving money

throughout the US


Energy Storage in the news (April-May 2015)


Validation of Cost Effectiveness: SCE (2014)

Seller Resource TypeTotal

Contracts

Max Quantity(LCR MW)

Selected Energy Storage Resources

AES In-Front-of-Meter Battery Storage 1 100.0

Advanced Microgrid Solutions

Behind-the-Meter Battery Storage 4 50.0

Ice Energy Behind-the-Meter Thermal Storage 16 25.6

NRG Energy Behind-the-Meter Battery Storage 1 0.5

Stem Behind-the-Meter Battery Storage 5 85.0

Total 26 261.1

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


Objectives








California: Home to the World’s Largest…

SCE Tehachapi Li-Ion Battery 8 MW/32 MWh – Tehachapi, CA

Ivanpah Solar Thermal Project 393 MW - San Bernardino, CA

Desert Sunlight Thin-Film PV 550 MW – Riverside, CA

Alta Wind Energy Center 1550 MW - Kern County, CA

Solar Star Silicon PV Project 579 MW – Kern County, CA

Geysers Geothermal Plant 955 MW – Lake County, CA


California as a Role Model

2013 California – AB 2514 Sets 1.325 GW energy storage target - passed

2014 Arizona – All-Source Procurement with Storage Carve-out required for Arizona Public Service

2014 Hawaii – PUC directed HECO to prepare energy storage plans.Large RFP issued for up to 200 MW of energy storage

2015 Oregon – HB 2193 Sets 5 MWh energy storage target – passed

2015 US Senate – Energy Storage Promotion and Deployment Act of 2015 Sets national mandate equal to 2% of 2024 peak load -introduced

Takeaway

California can be a learning lab for other jurisdictions

Confidential, Copyright 2015 Strategen Consulting LLC33

» AB 2514▪ 1,325 MW procured by 2020

» 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

» SGIP - $83M/year through 2019

» Net Energy Metering / Rate Design

Variety of factors Advancing Energy Storage in CA


California Policy Landscape – Leadership From Our GovernorGovernor Jerry Brown’s State of the State Address

January 5, 2015

Governor’s ambitious new clean energy 2030 goals:

» Increase renewable electricity use from 33% to 50%

» Reduce petroleum use in cars & trucks by up to 50%

» Double the efficiency of existing buildings and make fuels cleaner

» Reduce emissions to 40% below 1990 levels (April Executive Order)

2013 2020 2030


35


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

Actual Net Load Curve for April 12, 2014

CAISO estimate: system-wide 2014 flexible capacity requirement of7,520 MW (May) to 11,212 MW (Dec)

43% of prices were

zero or negative

http://www.ferc.gov/CalendarFiles/20150220110211-Rothleder, CAISO.pdf


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

http://www.caiso.com/Documents/Presentation_Governor50Workshop_PPettingill_7-9-15.pdf


Governor Brown Sponsored AB 2514 in 2010

Use case category, by utility

2014 2016 2018 2020 Total

Southern California Edison

Transmission 50 65 85 110 310

Distribution 30 40 50 65 185

Customer 10 15 25 35 85

Subtotal SCE 90 120 160 210 580

Pacific Gas & Electric



Customer 10 15 25 35 85

Subtotal PG&E 90 120 160 210 580

San Diego Gas & Electric



Customer 3 5 8 14 30

Subtotal SDG&E 20 30 45 70 165

Total – all 3 Utilities 200 270 365 490 1,325

Resulting CPUC Requirement: 1.325 GW in operation by 2024


Results of Strategen’s Production Cost Modeling with Storage

39

0.4125 GW Storage (only 2 hour storage)

1.325 GW Storage (2, 4, & 6 hour

storage)

2.65 GW Storage(2, 4, & 6 hour

storage)% of total CA Generation Capacity

0.5% 1.7% 3.4%

Unit Starts Reduced in CA*

3,000 8,000 13,000

Curtailment Reduction in CA

8.1% 23.3% 40.0%

» Even a small amount of energy storage makes a big system impact

» There are diminishing returns to additional storage, but the benefits have not yet plateaued

» Under the storage scenarios, 3-4 emergency peaker natural gas plants were removed from dispatch

*Numbers are rounded for simplicity


California utilities are far exceeding their mandated targets(Figures in MW)

2014 Proposed ProcurementsIOU

(Existing or InProgress)

CPUC2014

Target(AB 2514)Transmission Distribution Customer Total

PG&E 50 21.5 6.5 78 12* 90

SCE Open Ended 16.3 0 >16.3 280** 90

SDG&E 10 6.0 0 16 86*** 20

Totals >60 43.8 6.5 >110.3 378 200

Source: California Public Utilities Commission

*Excludes 150 MW Rice Solar – to be counted in future solicitations

**Includes 261 MW of storage projects under procurement from December 2013 LCR solicitation

***Includes 40 MW Lake Hodges Pumped Hydro and min 25MW LTPP Track 4 LCR requirement by 2022


Validation of Cost Effectiveness: SCC Track 1 LCR RFO (2014)

Seller Resource TypeTotal

Contracts

Max Quantity(LCR MW)

Selected Energy Storage Resources

AES In-Front-of-Meter Battery Energy Storage 1 100.0

Ice Energy Behind-the-Meter Battery Energy Storage 16 25.6

Advanced Microgrid Solutions

Behind-the-Meter Battery Energy Storage 4 50.0

Stem Behind-the-Meter Battery Energy Storage 5 85.0

Total 26 260.6

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


SCE Energy Storage LCR RFO Results

Counterparty Technology

AES; NRG Energy, Inc. Large scale lithium ion battery installation

Advanced Microgrid Solutions; STEM

Distributed customer-sided lithium ion battery installations that offer Demand Response-like load drop

Ice Energy Holdings, Inc.Distributed customer-sided thermal storage that reduces Air Conditioning load

AES

NRG Energy,

Inc.Advanced Microgrid Solutions

Stem

Ice Energy Holdings,

Inc.

Grid-Connected

2

Customer-Connected

1

Total Energy Storage Offered (1590 MW)

Contracted Energy Storage(261 MW)

Source: SCE


Distributed storage will play a key role

» 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

Capacity Incentive Rate (% of Base Cost)

0 – 1 MW 100%

1 – 2 MW 50%

2 – 3 MW 25%


SGIP Reservations - 2014

$1,150,067 $1,166,400

$3,742,120

$7,192,022

$7,196,735

$66,015,336

Other

Danko Enterprises

CODA Energy

Green Charge Networks

Stem Inc

Tesla

Grand Total: $86,462,681

Energy Storage 2014 Funding Allocations

Technology % of Incentive

Wind Turbine 2.0%Gas Turbine 2.3%Microturbine 3.5%Internal Combustion 4.9%Fuel Cell CHP 6.4%Fuel Cell Electric 34.9%A.E.S. 46.0%

2014 Allocation by Technology

67% of December 2014 reservations were from Tesla

($20.5M)Data source: SGIP Quarterly Statewide Report Note: Total 2014 SGIP budget was $165M (includes carryover funds from prior years)


AB 327: Net Metering 2.0 Actions and Impacts

Action Impact on Energy Storage

• 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.


Objectives








Lessons Learned from California Experience

Leadership + Focus + Collaboration =

Progress


Importance of

Leadership

What you focus on is what you get!


Best Practices for Stakeholder Engagement: Focus!

STEP 0 STEP 1 STEP 2 STEP 3

Identify status quo alternatives

to storage applications

Create broad awareness of about

the role of grid storage

Identify and engage with key stakeholders

Determine regionally appropriate applications

considering both supply and demand

STEP 4 STEP 5 STEP 6 STEP 7

Work with key stakeholders to build practical

implementation plans and programs

Independently assess the system value of storage applications

versus status quo alternatives

Reconvene results and prioritize

applications with greatest benefits

Determine the barriers to applying

storage in high priority applications


Collaboration is the key to success

Collaboration Best Practices

1. Leadership – individual champions2. Stakeholder Engagement - establish

common understanding of how storage can be used

3. System Analysis - agreed upon approach to cost effectiveness

4. Technology neutrality - monetize services delivered

5. Consistency - legal and regulatory framework to monetize value streams and overcome barriers

6. Sharing - leverage tools/best practices/experiences of others


Objectives








Minnesota Electricity Overview

» MISO: Midcontinent Independent

System Operator

Over 170,000 MW generation capacity

(Market)

» Minnesota State Energy Profile

Coal-fired power plants provide nearly

50% of generation

Nuclear power plants provide around

20% of generation

Wind power provides 15% of

generation

Energy Information Administration, 2013


Energy storage is like bacon

It goes well with everything!


» XCEL Minwind Wind-to-Battery Project Luverne, Minnesota

Energy Storage in Minnesota (source: DOE database)

Technology Type Sodium-SulfurBattery

Rated Power in kW 1,000

Duration at Rated Power (HH:MM)

7:12

» Total kW: 1297 kW of storage

▪ (1) Sodium-Sulfur Battery: 1,000 kW

▪ (9) Lead-Acid Batteries: 297 kW


Previous Strategen Work

» Made in Minnesota Energy Storage Program

▪ Create a statewide energy incentive program

▪ Reduce costs through debates of utility controlled,

customer sited energy storage equipment if

manufactured in Minnesota

» Utility Controlled Energy Storage

▪ Improves energy and grid efficiency

▪ Delivers backup power to consumers

▪ Reduces greenhouse gas emissions

▪ Can align wind and solar energy with peak grid

demand and intermittency


Benefit-to-Cost Ratio Ranges by Modeled Use Case

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


Whitepaper Conclusions for Minnesota

1. Energy storage has the potential to provide multiple sources of value for

customers and utilities.

2. Utility controlled, customer sited storage in Minnesota has the potential to

provide benefits to the grid greater than the system’s cost.

3. Customer sited commercial and residential storage that relies upon customer

tariffs were not able to achieve a benefit to cost greater than one.

4. Reliability (backup power) and voltage support service benefits of energy

storage, while conceptually attractive, have not been found to be materially

sufficient to significant impact the cost-effectiveness of energy storage.

5. Certain storage benefits can vary by utility type. Energy storage should be

modeled according to the benefits within a specific utility and to best suit

each utility’s characteristics.


Anyone can be a Champion!

Meet Lon Huber, Strategen Director

» Prior to joining Strategen, served in the Arizona consumer

advocate office (RUCO) where he was the staff lead on

resource procurement and distributed generation

» Negotiated an agreement between Arizona Public Service

(APS) and RUCO to require APS to analyze (with an

independent evaluator) storage, efficiency, renewables and

demand response as a potential alternatives prior to building

or upgrading conventional power plants

» Required APS to utilize energy storage as a companion

resource to new natural gas peaking plants equal to at least

10% of the natural gas plant’s capacity

» Mandated at least 10 MWh of operational storage by 2018


It takes a village


Co Founder & Executive Director California Energy Storage Alliance (CESA)

» Industry advocacy group founded in January 2009

» 90+ member companies

» www.storagealliance.org

Co Founder & Board ChairGlobal Energy Storage Alliance (GESA)

» Educational non profit founded January 2014

» www.globalesa.org

Co Founder & Conference ChairEnergy Storage North America (ESNA)

» Largest storage conference in the world

» Next event: October 13-15, 2015 San Diego Convention Center.

» www.esnaexpo.com

Helpful Links for More Information

Founder & Managing PartnerStrategen Consulting

» Strategic advisory exclusively in clean energy

» Clients: governments, utilities, corporations

» www.strategen.com

http://www.storagealliance.org

http://www.globalesa.org

http://www.esnaexpo.com

http://www.strategen.com


Questions?

Janice LinManaging Partner

2150 Allston Way, Suite 210Berkeley, CA 94704

www.strategen.com

O 510 665 7811x101M 415 595 8301F 888 453 0018

[email protected]


Countries Leading Energy Storage Deployment (non-hydro)


Global Projected Energy Storage through 2020


Operational Energy Storage (non-hydro)


Planned Operational Energy Storage (non-hydro)


Tesla’s Powerwall – the power of Consumer Demand

» Intended for Germany self-consumptions market

»SOLD OUT until mid 2016 in North America!

Tesla unveiled its stationary storage product, Powerwall, on April 30, 2015. The battery charges from solar PV, or when utility rates are low.

»Transformative consumer demand-driven sales

»Tesla’s unveiling was a great PR event for the entire storage industry


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

becomes available.


» Strategen found that utility controlled, customer sited storage in Minnesota has the potential to provide benefits

to the grid greater than the system’s costs and may need to capture THREE of the FOUR following key benefits to

be economic:

a. Distribution upgrade deferral

b. Frequency regulation

c. System capacity

d. Co-located and configured with PV to capture the Federal Investment Tax Credit (FITC)

» Customer controlled, customer sited storage that relies upon customer tariffs alone did not result in economic

value without incentives

Utility-Managed, On-Site Energy Storage in MinnesotaPresentation Prepared for the Minnesota Department of Commerce, Division of Energy Resources

» In 2013, the Minnesota Department of Commerce contracted with Strategen and the Electric Power Research

Institute to investigate the potential costs and benefits of grid-connected electrical storage technology located at

the utility customer in Minnesota


Use Cases

» Storage can shift from on-peak to off-peak night

» Storage can “shave peaks” of usage to reduce demand

charges

» Storage may be available to provide back-up power if

configured as a uninterruptible power supply

» Storage can “shave peaks” from circuit loads to defer or

avoid new capital expenditure

» Storage may also provide both real power and reactive

power to manage high penetration solar

Case 2: Utility Controlled – Distribution OnlyCase 1: Customer Bill Savings

» Similar “peak shaving” operation of storage may also

offset the buildout of new generation

» Wholesale energy and ancillary services markets provide

additional revenue

Case 3: Utility Controlled - Distribution + Market

» Customer demand bill savings top priority

» Potential to capture FITC when properly co-located and

configured with a PV system

» Market ancillary service value off-peak when customer isn’t

using it

» Market participation benefit stacking in conjunction with PV

significantly improves the economics as compared to the

Customer Only Control (Use Case #1)

» Benefit stacking can provide a cost-effective outcome with

simultaneous need for generation & distribution upgrades,

and access to operational market benefits

» Results reveal challenging economics for customer

controlled storage without additional incentives

» Substantial value from upgrade deferral possible but

typically insufficient as a single benefit stream to justify

the costs of an energy storage system

Case 4: Shared Control


» 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

Overall Modeling Conclusions

Power System Game Changer

Documents

Transcript of Power System Game Changer