The First Ontario Energy Storage Symposium - APPrO · Note of explanation: This is the advance...

Confidential - Not for Re-distribution - - Please note the disclaimers on page 3 and 4.

Advance releaseProceedings of

The First Ontario Energy Storage Symposium

November 18 and 19, 2014Toronto, Ontario

Confidential - Not for Re-distribution Please note the disclaimers on page 3 and 4.- -

Advance text-based release

Draft proceedings of the firstOntario Energy Storage Symposium

November 18 & 19, 2014Metro Toronto Convention Centre, Toronto, Ontario

Further electronic mediaTo see the web page at which APPrO has posted all the speaker presentations and backgroundpapers, readers can go to www.appro.org choose “What’s new” and follow the links in the newsrelease of April 7 2015.

©2014/2015 Association of Power Producers of Ontario25 Adelaide St. E., Toronto, ON, M5C 3A1tel. (416) 322-6549, fax (416) 481-5785e-mail: [email protected]://conference.appro.org/conference2014/

Primary writer and editor: Steve KishewitschManaging Editor: Jake BrooksOn-site photos by David SmileyLayout by Stephen KishewitschSpecial thanks to the following contributing writers:Vicky ChristieAndrew ClareFaisal BakhteyarMitchell FrenchMaral KassabianBilal KhanArt KrauseRichard LaszloFrances LeaPeter LegRachel PhinnemorePeter TsengPeter VersteegLavender Zhang

Note of explanation:This is the advance release of the proceedings of the APPrO 2014 Technical Conference and theFirst Ontario Energy Storage Symposium. The advance release contains the text of the proceedingsbut excludes graphics. A more complete edition of the proceedings including graphics and otherrefinements will be available from APPrO in June 2015.


Table of Contents

Disclaimer:Reasonable efforts have been made to ensure the accuracy of the reports in these proceedings. However the editors wereunable to definitively verify every passage before publication and some errors may remain. Readers are advised tocheck with the original sources if they wish to have definite information about what was said. APPrO accepts noresponsibility for errors, omissions or for the consequences of any use made of this information.

Introductions ................ 5

Outcomes of the IESO’s Storage RFP, and What’s Next? ................ 6

Overcoming barriers to energy storage ................ 9

Lessons learned from early storage deployment:The technology providers experience ................ 15

Keynote: Dr. Ian Potter, National Research CouncilStrategies for Canadian Competitiveness: ................ 21

Ontario on the Innovation Roadmap:An overview of local capacity for energy storage innovation to capture global opportunities

................ 24

The Energy Storage Technology Roadmap:Where is storage technology headed, and whatopportunities exist in the Canadian ES value chain?

................ 30


Proceedings ofThe Inaugural Ontario Energy Storage Symposium

andAPPrO 2014 Technical Conference

November 18 and 19, 2014Metro Toronto Convention Centre, Toronto, Ontario

This set of conference proceedings is being made available in conjunction with a technical report on theevent prepared by the National Research Council Canada (NRC). In this parallel effort, NRC has summarizedthe main themes that came forward and developed recommended next steps.

Please note: This is a preliminary draft of conference proceedings. The contents have not been completelyverified, and are not for redistribution. Reasonable efforts have been made to ensure the accuracy of thereports in these proceedings. However the editors were unable to definitively verify every passage beforepublication and some errors may remain. Readers are advised to check with the original sources if they wishto have definite information about what was said. APPrO accepts no responsibility for errors, omissions orfor the consequences of any use made of this information.

Acronyms used in this report:CAE: Capacity Allocation ExemptCAR: Capacity Allocation RequiredCBA: Cost Benefit AnalysisCCGT: Combined Cycle Gas TurbineCESOP: Clean Energy Standard Offer ProgramCHP: Combined Heat and Power (co-generation)CIA: Customer Impact Assessment (orConnection Impact Assessment)COD: Commercial Operation DateDR: Demand ResponseDSC: Distribution System CodeEA: Environmental Attribute(s) or EnvironmentalAssessment(s)ECT: Economic Connection TestEOT: Eastern Ontario TriangleFIT: Feed-in Tariff (Ontario’s open-endedprogram for procuring renewable energy)GA: Global Adjustment (a fixed charge added toOntario electricity bills)HOEP: Hourly Ontario Energy PriceHONI: Hydro One Networks Inc.IESO: Independent Electricity System OperatorIGUA: Industrial Gas Users AssociationIPSP: Integrated Power System PlanLDC: Local Distribution CompanyLMP: Locational Marginal PricingLRP: Large Renewable ProcurementLSE: Load Serving Entity

LTEP: Long Term Energy PlanMini Perm: Short-term financing used to pay off

income-producing construction orcommercial properties, usually payable inthree to five years.

MRDCL: Minimum Required Domestic Content LevelNTP: Notice to Proceed (a stage in the FIT processwhich allows financial commitments to beconfirmed)NUG: Non-Utility Generator (generally associated

with power purchase agreements signed byOntario Hydro in the late 1980’s and early1990’s)

OEB: Ontario Energy BoardOEFC: Ontario Electricity Financial CorporationOPA: Ontario Power AuthorityOPG: Ontario Power Generation, Inc.PTG: Power to GasPV: Photovoltaic (solar panels)REA: Renewable Energy ApprovalRESOP: Renewable Energy Standard Offer ProgramRFP: Request for ProposalsRPP: Regulated Price PlanRRFE: Renewed Regulatory Framework forElectricity (a regulatory initiative in Ontario)SBG: Surplus Baseload GenerationSDTC: Sustainable Development Technology CanadaSIA: System Impact Assessment


SMD: Supply Mix DirectiveTAT and DAT: Transmission Availability Test and Distribution Availability TestTIR: Technical Interconnection Requirements, a document produced by Hydro OneTSC: Transmission System CodeTSSA: Technical Standards and Safety Authority

Day 1November 18, 2014:

Introductions

Bob Stasko, the Executive Director of ESO, opened the Symposium.

Jake Brooks, the Executive Director of APPrO, offered an explanation of why APPrO which representsgenerators, chose to associate itself with a new business, being storage, and one that might compete withthem. The generation sector is capital-intensive business. Generators therefore watch asset values closely,he said, and some generators have started investing in storage paired with generation. There are a lot ofsigns that storage is going to be increasingly attractive economically, he noted, citing recent studies byNavigant and others.

There are natural opportunities for synergy between generation and storage, synergies that occur inboth a technical and business sense. This event also represents a coming together of two associations: ESOand APPrO. Storage, if it continues to decline in cost relative to real-time power, will challenge two basicassumptions:1. How much capital should be invested in the peak-load system (generation and transmission to serve peakload), compared to the baseload system (generation and transmission)2. What the appropriate scope of business is within a power company. How much is regulated, how much isintegrated with competitively offered services. And of course, what the investment in storage should be.These are important factors that could be affecting asset values in the future.

Even a small adjustment in these two assumptions would mean:a) Significant change in the deployment of capital for new infrastructure, maintenance and capex in existinginfrastructureb) Significant change in the scope of business, the boundaries, for existing utilities and power companies.

In historical terms there’s a new prospect of high value service integration at the small scale, Brookssaid. If this materializes it would mean that utilities operating at the smaller scale, even relatively smallmicro-utilities the size of distributors or individual companies, might achieve efficiencies of scope, andcapture some of the kinds of gains from integration between functions that were previously available onlyto large integrated utilities achieving efficiencies of scale in the past. This could mean more development ofthe new technologies, more cost reductions and more changes in the scope of business for utilities.

Recognizing this kind of potential for change explains to a large extent why generators have chosen tocollaborate with the storage industry and link their conference to this Storage Symposium.


Outcomes of the IESO’s Storage RFP, and What’s Next?

Leonard Kula from the Ontario Independent Electricity System Operator (IESO) provided an overview of therecent IESO energy storage RFP and also what the IESO saw on the horizon for energy storage projects in theProvince.

He began his session by reviewing the current state of the power system. The supply outlook remainspositive, but plans need to be put in place to move toward increased levels of responsiveness and efficiency.What’s important is keeping the grid in balance, considering that it derives 60% of its energy from nuclearpower. The growing level of renewables on the system has added complications and in any case change iscontinuous and inevitable. The key to managing the grid is readiness and flexibility. The system has seenchange over the years - the natural gas-fired plants that have taken the place of coal, for example. They arefast-acting but have high minimum outputs, meaning reduced flexibility. Hydro resources have also lostsome flexibility, due to both equipment and regulatory issues. On the other hand, the ability to dispatchlarge parts of the growing fleet of renewables has added flexibility. Now, energy storage, with the ability torespond in timescales ranging from milliseconds to hours, can provide some of that sought-after flexibility.

Pumped hydro has been the vastly predominant form of storage in North America, but especially inOntario other forms are beginning to take a larger share. Historically, Ontario has explored the benefits ofenergy storage as far back as the 1950s with the introduction of the Sir Adam Beck pumped hydro project atNiagara Falls.

The IESO’s 2012 procurement of alternate technologies for regulation chose three projects, two ofthem in storage: a 2MW flywheel and a 4MW li-ion battery, both commissioned in July 2014. Hydro One andToronto Hydro have also added storage on distribution lines.

The IESO embarked on storage procurement proper in 2014. The expected projects areimplementations of Ontario’s 2013 Long Term Energy Plan, which identified the potential role of energystorage in Ontario’s electricity system. The IESO and the Ontario Power Authority jointly developed aframework to procure 50 MW of technologically diverse energy storage for Ontario. This procurement plancame in two phases: in Phase 1, the IESO selected 33.54 MW of projects in July 2014, while in Phase 2 theOPA plans to select the remaining 16MW, with a focus on the ability of storage to provide capacity.

In the IESO RFP, “Grid Energy Storage” means a commercially available technology that is connectedto the transmission and distribution system and is capable of absorbing grid energy (charging), storing it fora period of time and then injecting the energy (discharging) less reasonable losses back into the grid or itsequivalent. The IESO sees value in all three operations.The IESO 2014 Storage RFP used the 2012 Alternative Technologies for Regulation (ATR) RFP framework as astarting point but went further, providing for other storage services over various timeframes such asoperating reserve, ramping, and load-following in addition to the ancillary services focus of the ATR. Itincluded definitive contracts to provide clarity for all respondents to understand the legal requirements ifthey were selected, and also a fairness commissioner as part of the process. The projects were selected foreach of four geographic envelopes including Southern Ontario (uncongested, transmission connected),Southern Ontario (congested areas, transmission and distribution connected), and Northern Ontario(congested, weaker transmission connectivity). The minimum project sizes were 2MW for transmission-connected projects, and 0.5MW for distribution-connected projects. There were three rounds of selectioncriteria to select a number of diverse projects in a clear and transparent manner across these envelopes.These included: Round 1; envelope diversity in which the highest ranking project in each envelope wasselected, Round 2; technology diversity in which the highest ranked project in every envelope was selectedas long as the technologies were not repeated, and Round 3; capacity fulfilment in which the highest rankedprojects remaining subject to envelope capacity were selected to realize the target of up to 35MW.The criteria used in selecting the projects were: technical requirements (40%), contract terms (20%), andcost (40%, with half of this attributable to cost/MW, and the other half to cost/MWh). Technologyevaluation assessed different characteristics of storage devices: examples include energy storage over 2, 12,and 16 hour periods, ramping capability, and availability. Storage characteristics were specified to support


power system services within the IESO day-ahead and real-time operating time frames. The respondentswere allowed to propose contract terms - not less than three or more than ten years - but weighting wasused to influence shorter term contracts. This method was intended to facilitate learning and allow the IESOto move to enduring mechanisms later. In addition, there was an upper cost threshold in the RFP selectionin order to protect ratepayers. The upper threshold was not and will not be disclosed.Payment for services commences after the energy storage projects have been built, tested, and verified, sothat risk lies with the developer. There were tight RFP timelines, consistent with the expectations of thelocal energy storage community. The IESO designed and released the RFP and was able to evaluate andselect the projects in roughly 5 months. For this work, Ontario was recognized externally as a “fast mover”on the energy storage file in advance of California’s much larger procurement of energy storagetechnologies.Overall, there was a tremendous response to this RFP, with more than 400 proposals submitted, showinghow actively engaged the storage sector was. In July 2014, 12 successful projects from 5 proponents wereannounced totaling 33.54 MW: Canadian Solar Solutions Inc. (battery, 4MW), Convergent Energy and PowerLLC (battery & flywheel, 12MW total), Dimplex North America Ltd. (thermal, 0.74MW), Hecate Energy(battery, 14MW), and Hydrogenics Corp. (hydrogen, 2MW). All of the contracts have been signed for theseprojects.As a final note, Mr. Kula described what is next for the IESO and these Phase 1 storage RFP projects. Overthe next 30 months, the vendors must now design and build their facilities and verify their operation. Froma system operations perspective, the IESO will work to integrate these projects into the operation of the gridand to assess their capabilities. This includes proving them over operating time-frames, providing ancillaryservices, and providing bulk energy and transmission services such as energy time-shift, ramping and load-following, operating reserve, and congestion management. From a market operations perspective, it will beimportant to integrate energy storage devices into the electricity markets to identify opportunities forfuture market mechanisms.The IESO is technology-agnostic, Mr. Kula concluded, so long as the market attracts the needed capabilitiesand compensates providers fairly.

Questions and discussion1. Is the IESO trying to identify a proper proportion of storage for Ontario to have in its unique system?

Leonard Kula: The IESO isn’t necessarily trying to set an optimal amount of storage, it’s more a case ofdetermining the system’s reliability needs and how to meet them.

2. What is the IESO’s perspective on its ability to promote learning among the broader community aroundthe tech and business aspects? How well did the providers respond to the various aspects of theprocurement?

The amalgamated IESO will want to use contracts and markets working together for the ratepayer. Mr.Kula described himself as a strong advocate of markets, yet the IESO had just completed an RFP for differentstorage devices. There’s a role for both. Procurements can provide a model for enabling new technologies.The experience with demand response can help as well.

The IESO will do all it can to share what it has learned.

3. A lot of jurisdictions are developing transparent markets for spinning reserves and ancillary services thatallow qualifying facilities to bid in. How is that going here?

The IESO participates in a lot of external forums, particularly things like storage and smart grid. SomeAmerican operators have pushed the development of certain sectors by creating markets. Ontario has usedprocurement instead to obtain the facilities, and then look at the enduring mechanisms. There’s a NERC taskforce looking at the services needed to provide voltage control and frequency regulation. Systems areevolving and needs can be met in a variety of ways.


4. How is the IESO planning to dispatch the storage in the absence of a market context? What will the signalbe, how will it be optimized, in particular in the context of the dispatch to the other participants in thesystem?

The IESO didn’t provide a lot of information of that sort in doing the RFP, because it didn’t know whatwould be coming forward. Out of over 400 responses, a variety of selection criteria could have been used.All the facilities must provide an ancillary service, either voltage control or frequency regulation. Ontariogenerators provide those, plus others - energy, naturally, plus for example operating reserve in the case ofSir Adam Beck. So the IESO will provide the right context for those services to be offered based on theircontract. Flywheels and batteries, for example, will be given appropriate constructs to operate on theirrespective timescales. The IESO’s scheduling algorithms will not see those as anything special, just assuppliers or consumers of energy. The details are still being worked out.

5. Does the IESO have the ability to accord some technologies a performance premium in their specialty, asPJM does?

The IESO has the flexibility to do what it wants. It will start with existing mechanisms, but wants toevolve its tools to encourage storage, and other facilities, to enter the Ontario market.

6. What about behind-the-meter storage?Within its recent RFP the IESO wanted to make sure it carved out a space for distribution-connected

projects, and set a minimum size of 500 kW.

7. (Continuing the previous question): the kind of net-zero house that California is encouraging could be oneway to level out load and deal with intermittency.

A fair comment. The IESO will be looking beyond solutions to current issues to address what may becoming in the future.


Overcoming barriers to energy storage

MODERATOR:Ian Philp – Director of Partnerships at the Advanced Energy Centre at MaRS

PANEL:Lisa DeMarco, Norton Rose Fulbright, Partner & Head of the Toronto Energy PracticeDavid Teichroeb, Enbridge Inc., Business Development & Emerging TechnologiesGeorge Pessione, OPA, Director of Resource Integration & Power System PlanningGary Thompson, Toronto Hydro, Lead of Generation Planning & System StudiesCarlos Silva, ENBALA Exec VP Ops

Moderator Ian Philp started the session by noting that storage is one of the most discussed topics at MaRStoday, with so much potential, but also a lot of questions. He planned to conduct the session in 3 parts: Thefirst will be an opportunity for each panel member to offer their perspective on storage, the second willcover some prepared questions for debate/discussion and the third an open forum for participants to askquestions of the panel.

Ian Philp: With the amount of renewables coming on line into power systems like California or Ontario, andstorage lining up as a tool to assist with the adoption of that. How significant do you think energy storagewill be for power systems like this in the future?

Lisa DeMarco: Energy storage is to renewables as the introduction of fracking and horizontal drilling was tothe Natural Gas industry eight years ago – a positive technological disruption. She noted the growth in themarket - $500MM market today, with expectations of $10.4BB by 2017, and $25BB by 2020. Ms DeMarconoted:1: Storage is especially relevant in jurisdictions like Ontario where baseload power generated mostly bynuclear and hydro are slow in responding, as it provides much-needed flexibility.2. It is advantageous for the distribution & transmission sectors as it can be used as a tool to defer to stageinvestments.3. She expects that it will enable large consumers (i.e. industrial) to have more control over their use ofenergy and the timing of that use.

She summarized by saying that storage is green energy’s silver bullet, and therefore is very significant.

Ian Philp: From a system planner’s perspective, how can storage tech be aligned with their optimal value,what is their best niche and how can they work with our systems?

George Pessione: Mr. Pessione pointed out that we use a single term “storage” but there are actually avariety of storage options, many technologies, each with different attributes and cost structures. As eachjurisdiction has its own profile, what works well in one spot may not in another. As you develop anunderstanding of the profile of a jurisdiction, and alongside that, understand the attributes of certainstorage technologies you now have the context within which to evaluate that storage opportunity as itsvalue may be different in one area from another. You can then start to understand how to introduce storagein each system and from that context understand how to deal with the various barriers – economic / rate ofreturn, system attributes and regulatory.

Ian Philp: From an energy infrastructure perspective how does storage differ from other large infrastructureand what barriers would have to be overcome before storage could get a bigger piece of Ontario’s energyinfrastructure investment?


David Teichroeb discussed energy storage as analogous to the blue box – reduce, reuse, recycle – which instorage translates to: conservation, time shifting and turning these environmental supplies of surplus andoff-peak electricity into other high-value commodities that also advance greater deployments of renewablesinto the larger Ontario energy economy.1. Reduce: We can use storage to conserve renewable electricity instead of curtailing it (in the case of wind)or spilling it (in the case of hydro). Flywheel technologies (as alluded to in an earlier technical session) couldbe used instead of gas-fired plants for frequency control, freeing the gas plants to operate more efficiently.2 Reuse: We can move that energy from off-peak to on-peak times, and in the process relieve constraintson the transmission and distribution infrastructure.3. Recycle, perhaps the least-understood aspect: There are technologies (e.g., power-to-gas) that will enablethe conversion of low carbon or surplus electricity into hydrogen gas, with several possible end uses for thatgreen gas. As examples, this can be a method to deliver renewable content to oil refineries, or thetransportation sector. The silos between energy sectors are one barrier that could be dismantled withstorage, as the wholesale supplies of energy from one area can be converted into useable wholesale fuel inanother. In order to see real value we would need to think and plan across all of these areas, requiring acommon definition of what is “high value.” We need to optimize the infrastructure and energy supplies wehave today before we build any more.

Mr. Teichroeb concluded with a suggestion that we prioritize the storage and use of renewable powerwe have already paid for before considering exporting it to other markets.

Ian Philp: How do you perceive storage from LDC perspective? Is it an opportunity, is it a threat, what doesit look like to you?

Gary Thompson: As the managers of 952 energy sources, Toronto Hydro is the largest LDC in Ontario, whichmakes storage an item of interest. Mr. Thompson listed several benefits of storage: Operationally storageprovides a necessary energy source. It enables a degree of flexibility to move energy within the system,without relying on external sources. Power quality continues to be an issue for LDCs in general, whichstorage helps mitigate. Storage can provide local short-term supply when an outage occurs. Microcontrollerscan switch between sources of energy, including storage in a matter of seconds to get a local system backup, rather than the 45 minutes it may take a crew to respond. It can ensure critical facilities like hospitalshave a secure power supply during an outage. At the same time, with a storage unit currently being installedin a new building downtown, there are technical considerations needed to deal with its effect on the localsystem.

From a financial perspective, storage can be used to defer line upgrades. Where there are generationfacilities within the grid, storage can provide black start capability.

Mr. Thompson also listed some unresolved issues. Storage is not a typical asset, like a switch or anarrestor, and therefore something new that crews and first responders need to understand how to workwith. As an energy source, linesmen need to be aware that it’s a hazard, and equipment needs to be in placeto ensure their safety. It’s something that, like other assets, LDCs need to realize the full value of – a factthat bears on its implementation in manual vs. automatic operation. While consumers could store energy inoff-peak hours, and utilize it at high peak times, the question remains of how to deal with the utility’scorresponding loss of revenue.

Because of the way the system was designed for an earlier period, integrating storage requiresaccommodations to be made, and these entail capital costs. And lastly, Toronto Hydro is anticipating 30% ofits staff retiring. New training programs are needed for their replacements.

Ian Philp: – From the point of view of ENBALA, can you give us some thoughts on the road that utilities havetaken so far, and how storage providers can help to show those economic benefits for themselves and LDCs?


Carlos Silva: Many view storage as the holy grail. However the big barrier is cost, which is why it is beingprocured at experimental scale by LDCs today to test out some of its capabilities. Limited procurementshave helped to fuel development and reduce costs, but there’s still a big gap. To address the economics, hesuggests considering both the cost and values – and specifically to quantify the value that storage canprovide. By reviewing several different applications for storage we may open up value streams from newareas. There are new value streams that can come from customers who can use storage to make better useof time-of-use or demand charges, or as a tool for their energy efficiency/conservation processes. Thesevalue streams can be accessed by looking where storage is being installed (behind or in front of meter).

To work better in the future, Mr. Silva suggests a more interactive development of procurement –bringing competitors of storage together with representatives from LDCs, to collaborate on what can bedone and where the opportunities might be. The current IESO stakeholder group working on the RFP forFast DR (Demand Response) is a good example.

The economic benefit for Ontario will only come when we move procurement from the experimentalmode it’s in today, to one that enables full scale deployments. Creating an operational platform that canmanage such a diverse set of storage options and allow them to work together in real time remains key.

Ian Philp: The two biggest inter-related issues we have heard about so far are about the regulatory modeland the business model. There is still difficulty quantifying benefits and costs, and how that would workwith a renewed regulatory model. What are the regulatory barriers that we need to overcome in order tobring more storage into our system? To Dave specifically, how would that enable storage providers to attractinvestment capital to finance these builds?

Lisa DeMarco: Many of the current rules were created at a time when we couldn’t store energy. Today thereare challenges in determining how it should fit – it’s not a generator, but has generation capabilities; it’s notload, but has load capabilities. Today, when storage is loading, it is charged at retail rates, but whengenerating, it is only paid wholesale rates – this is a real economic gap that needs to be addressed. Wewould need to look at making changes to the regulations in order to optimize these resources.

David Teichroeb: distinguished between behind-the-meter storage and those operating in the wholesalemarket. Behind-the-meter applications can be adequately dealt with through existing demand responseprograms, although the demand response programs will need refining. Large storage devices like flywheels,as Ms. DeMarco argued, are wholesale service providers – not retail loads. There are other areas wheremarket rules could be augmented to treat wholesale storage as a set of distributed export nodes – not justbringing the power back as electricity, but also as a range of commodities and services with positivereliability and environmental attributes. As an example, outside of just the barriers in electricity regulation,there are also opportunities for augmentations to the wider provincial energy policies that could be made toincrease the economic and environmental value of storage. Turning renewable surplus power into hydrogenfor oil refineries is one example, where offsetting the conventional hydrogen source that refiners use todaywith renewably generated hydrogen can be environmentally more valuable than using this stored renewableenergy for power generation, even during periods of peak electricity demand. Set environmental policy,Teichroeb argued, to allow renewable hydrogen supplies, from off-peak electricity generation, to competewith the blending of biofuels for Ontario’s Renewable Fuel Standards. The result is Ontario’s refiners areadded as a domestic wholesale market for Ontario electric power. The refiners would compete alongside ofexports to neighbouring states or provinces. This would likely provide a more supportive off-peak powermarket and allow Ontario consumers to benefit from the green benefits they paid for when the electricitywas first generated.

Ian Philp: George and Gary, does that square with your understanding from a bulk system or LDCperspective of where the barriers are? And what are your thoughts on how changes like that would affectthe way our system works, or the way we get value from these resources?


George Pessione: Yes, with a few “buts.” Mr. Pessione agreed that the regulatory structure is not ideallyconfigured for this today, though both the OEB and IESO are working on it. The other barriers are abouteconomics and the value vs cost proposition. The particular niche it’s in will limit the application of a givenstorage option, and this narrower band of value would have to pay for the total cost. This is the biggestbarrier today. The amount of surplus wind or solar energy that storage can recover today doesn’t addenough value to overcome that barrier.

The IESO/OPA 50 MW storage procurement will help us to better understand where those facilitieswill bring value. If the numbers are made public, it will help develop the needed understanding.

Gary Thompson: Everything Toronto Hydro does must be in line with the rate filing framework as defined bythe OEB. Toronto Hydro currently has their five year rate plan in front of the Board, and hopefully there willbe fair consideration given for what they have put in with respect to storage. The reality is that some of thelarge customers are becoming very impatient and are starting to make their own plans, in some caseswithout the utility. So from a barrier perspective, Mr. Thompson sees the regulatory restrictions of the OEBas a key factor. While there is a lot happening here, Mr. Thompson wishes they could move faster. He fearsthat customers will move ahead on their own – and that this will create a very interesting environment forToronto Hydro.

George Pessione: Ontario is breaking new ground in a number of areas, and regulators tend to beconservative. There is general recognition on all sides that smart grid and storage are good things forcustomers. The dilemma lies in the regulator’s ability to balance the value and cost. If we hurry and select atechnology today, then do we close the door on perhaps better technologies for the next five years? Cost isa huge consideration. Trying to make a large investment with a high degree of uncertainty is another bigbarrier.

Ian Philp: Based on the points that are coming up, I believe we are seeing the possibilities for public privatepartnerships – how do we do that?

Carlos Silva: Partnerships are needed when putting storage behind the meter. The money (value) flow canget complicated, when trying to determine and manage who is using the asset at any point in time and forwhat purpose, and who is benefitting in each case. There are platforms in existence today that can do this,which include a 3-way partnership between the load, utility and the enabler.

Ian Philp: Lisa and Dave, are there other private sector perspectives on what these partnerships could looklike?

Lisa DeMarco: There are a lot of opportunities for various commercial structures to work well between theutilities and independent storage developers. There are leasehold structures, and classification outside ofthe ICM (Incremental Capital Module) or capital model the rate regulator uses. She also suggested thatoperations and maintenance may provide some interesting options including alternative structures thatcould work across the various energy silos.

David Teichroeb: There is some potential for fractional ownership opportunities. For example, perhaps apartnership between utilities and private industry where a regulated utility can justify 40-60% of a storageasset for providing distribution system relief. By allowing for multiple revenue streams in this way, we cancreate a scenario where storage becomes much more economic today if utilities and private industry sharein the investment and benefits.

In addition, the technologies may be too diverse for one utility to own and operate everything to thefullest degree. Partnering with an industry expert in a given technology might give the utility confidence toinvest more in storage solutions and collect more value for customers.


Ian Philp: What have we learned and what will we learn from the 50MW IESO/OPA procurement today?How should our experiences/learnings from the FIT program inform how this storage procurement shouldbe deployed with/by LDCs?

Carlos Silva: The IESO/OPA have learned to be more pointed about how the product will be used, and howto run a more collaborative pre-qualification stage, a more open Q&A.

Gary Thompson: Talk with your LDC before bidding a project. Toronto Hydro has developed more customerfriendly processes during the FIT program which are starting to be used in storage procurement. TorontoHydro will have 12 storage projects by the end of next year, with four underway already. Mr. Thompsonwarned that there is a need for only proven and robust technologies to move forward – that in order for theIESO/OPA to do their jobs well, they will want the security of knowing that taxpayer dollars are being spentwell.

George Pessione: Mr. Pessione noted that they have taken lessons from IESO and that their processes arealso informed by their own understanding of procurement best practices.

Lisa DeMarco: Ms. DeMarco took a moment to acknowledge the cooperation between regulators, LDCs, theministry, and technology developers during the lead-up to this most recent procurement. She sees it as anindication of Ontario’s leadership in this sector.

David Teichroeb: In opposition to the idea that storage is a threat to some of the more traditionalgenerators, Mr. Teichroeb suggested that if we get this right, then the alignment of storage from planning tooperation, allows flexibility and creates an opportunity to make this a bigger market for some of the moretraditional players (e.g. wind). Storage can offer improved operating flexibility for inflexible or intermittentgeneration, and if these supplies can be better integrated into the market then this could open upopportunities for targeted CHP to be placed in urban load centres in a far greater way than is the case today.

The session was then opened up to the floor for questions.

1. The breaking down of silos is one of the most important considerations. Demand response programs, andthe storage RFQ seem to be addressing more of the shorter term storage applications. Seasonal-scale shiftscould also be beneficial. Integrating further and bringing the transportation and energy sector togetherwould create even greater possibilities. How could these programs be adjusted so that a seasonal shift couldbe addressed better?

George Pessione agreed that being able to move large amounts of energy from one time to another,e.g. from the spring freshet to summer peak, generates the highest possible value for a storage asset. A truestorage device (take in, store for 6 months, then discharge) like this would be ideal. He is not aware of anyconstraints under the current procurement models for a technology that can do that. The challenge isbringing it to market in a competitive manner. Hydro-Quebec for example has huge storage capacity.

David Teichroeb: The current pipeline capacity and underground storage just for Enbridge’s assets isequivalent to 40,000 MW. He discussed the example of last winter, and noted that if we had been able storeenergy long enough, we could wait for the market conditions to rise, then you can trade at prices that areroughly equivalent to what that green energy is stored at. Those conditions existed through last winter. Mr.Teichroeb would like to see Ontario use more of what we have already built today before we build more.

Lisa DeMarco: These are some of the tough questions that need to be asked. What is the ability for usto optimize existing assets vs looking at other options?


2. It is encouraging to hear how storage has multiple values, but what we don’t have in Ontario is a marketthat can monetize these things. Maybe the evolution in Ontario will be toward markets like we are havingwith demand response. Any comments?

Lisa DeMarco: California’s paradigm does note 21 services (values of storage), many of which we inOntario, and many others also, do not yet value. The key is how this can be done? It would be erroneous tothink that this can only be achieved via a market-based paradigm. It could be a hybrid of contractual andmarket parameters.

Carlos Silva: ENBALA has tried to manage this environment by owning the resource. Using ENBALA asthe way to market, they would share revenues, and have a continuous commissioning program in the facilityitself to use the resource for demand charge mitigation, and energy efficiency. It works, but has a longpayback.

3. Storage providers are working blindfolded; unable to define the needs of grid operators. How can weimprove transparency that will help storage solution providers get creative and come up with solutions thatbetter fit the needs?

George Pessione: This is in part a chicken and egg problem – we don’t know what storage can do andwe have a number of needs for the system. He anticipates that this clarity will come through the feedbackloops that are built into the current procurement models.

Gary Thompson asked that we appreciate that storage in the transmission realm tends to be adifferent animal from storage in the LDC realm. In a distribution network, a single energy source (asset) inthe middle of a city can meet up to 4 purposes – which is why a distributor will give it serious consideration.There are enough projects around the world to give us a good feel for what storage can do. It is important toengage with technology providers to look at purposes but also maturity of product.

The current model is working well, he suggested.

4. When the first IESO 35 MW storage RFP came out, we studied it, along with the RESOP contracts thatwere awarded for land-based solar, and the OPA bid. Some of those sites were ideal for storage, but thecontracts were so tight that we couldn’t consider including storage though the projects were ideally suited.Yet some on today’s panel suggest using our current assets before looking elsewhere. Second, what’s thepanel’s opinion on the significant lobbying going on the US today for FIT contracts for storage?

George Pessione: Going by the literature, storage seems to fit best as a bulk system resource, ratherthan specific to any one renewable. The LRP coming up will include opportunities to include storage. As foracquiring storage as a FIT, the OPA anticipates that everything will be managed through competitive bids.

5. From a business model perspective, what are the most significant challenges that would inhibit thedeployment of storage, at the bulk system level, LDC and customer side of meter levels?

George Pessione: Aside from the bulk value to the system, the challenge is getting the money relatedto any of the other values of an asset from those that benefit from it. Some vertically integrated utilities canmanage this, but a hybrid system like we have in Ontario makes this more challenging.

The other challenge, in general, is to get the cost below value.David Teichroeb: As we learn what storage can/can’t do, there will be opportunities for other services

and procurements. There is a current imbalance between long-life generation assets under PPAs and short-term contracts being offered to long-life storage assets that the market will need to address. Alberta hasfound that modelling storage as a service provider to the system at large, rather than using storage foroptimization for a given windfarm, provides the better economics. Mr. Teichroeb suspects that the same willprove to be true in Ontario.

George Pessione noted an exception to Mr. Teichroeb’s comment, when trying to improve powerquality. This may make a niche work that serves a dedicated renewable. In this case, one must consider thatthe power from the solar farm is now power corrected – plus the storage becomes an embedded cost,providing better quality.


Lessons learned from early storage deployment:The technology providers experience

As moderator Robert Stasko pointed out, this panel represented developers with hands-on experience withdifferent storage technologies, implementing projects with pros, cons, barriers and benefits. Each presenterbriefly introduced themselves as well as their respective companies before the main presentations began.

Flywheels are being used to provide quick response power, and to provide short-term energy balancing tothe system, improving power quality. Temporal Power developed and makes a kind of mechanical battery, a9000 pound (solid) steel flywheel that rotates at 11,500 rpm, which CEO Cam Carver described as thehighest energy flywheel in the world. The flywheels can be installed together to make multi-MW systems.

Flywheels are being used in three applications: renewable integration, frequency regulation andisolated grids. Currently, Temporal Power has been commissioned to build 7 MW worth of flywheels inOntario; 5 MW for Hydro One and 2 MW for NRStor which is operational today. Some key partners andinvestors are Hydro One, NRStor, Enbridge and Northwater Capital. Key contractors include Lockheed Martinand Emersson Electric. Temporal Power has been provided with great support from Ontario Center forExcellence, OPA, SDTC, Ontario Innovation Demonstration Fund. Ontario has been a great place to developthis technology from a garage (in 2009) to what it is today.

[slide 4]Caption: Energy storage technologies and applications

Temporal Power’s flywheels are really expanding the applications such devices can support and arenow at grid scale. Regarding the three types of functions mentioned above: renewables integration providesintermittent output, smoothing out variations in power; grid balancing, that is, frequency regulation, a taskcurrently handled by traditional generators; and in isolated grids, which experience the same types ofproblems in a more acute way due to the smaller scale and need for more renewables.

Slide 7The 5MW Clear Creek project is with Hydro One, in Southwest Ontario near Tilsonburg, where a 20

MW windfarm sits on the end of a 40 km feeder line that had power quality issues due to ramping of thewind generators. Temporal Power conducted a number of simulations to model the installation (figure {slide7}), which shows the large voltage swings that have been minimized with the help of their flywheels. Theinstallation was able to decrease the size of voltage variations from 6v to 1v, injecting real and reactivepower in less than 100 milliseconds.

Slide 9MINTO is the company’s second project, designed to provide frequency regulation (fig. {9}). The 2

MW-rated plant receives a signal every 4 seconds from the IESO to either generate or pull power to balancethe grid on millisecond timescales. The curve in green is the signal sent by the system operator to agenerator to generate energy. The red curve on the left shows how a traditional coal-fired plant responds.On the right, the flywheel follows the IESO request much more closely.

Slide 10Ontario is becoming a leader in the energy storage space. Figure {10} other ISOs in North America

active in the technology as well.Energy storage has a real role to play in Ontario to increase flexibility, create a more efficient system

with lower costs, and allow more renewables to be integrated.Some general observations: the technical and system aspects around commissioning a project make

good communication vital. To respond to changing output on a 100-millisecond basis calls for working withmultiple parties who have to agree on how the installation is going to operate. The implications have to beconsidered for the larger grid and the local distribution company. Finding off-the-shelf equipment that allowsuch response times can be a challenge. Control schemes have to allow the facility to operate reliably andautonomously. Low voltage ride-through functionality that can support the grid if it trips is an additionalvalue that can be included with the right power electronics. There’s a potential synergy that can benefit


existing assets beyond the individual project, such as stabilizing local distribution lines and reducing linelosses. Additional renewables can be allowed on the local system, not just on a specific feeder.

Hydrogenics designs and builds megawatt-scale electrolyzers for the generation of hydrogen for energystorage applications. Rob Harvey, Director of Energy Storage at Hydrogenics, spoke about the company’sPower-to-Gas (PTG) project with Enbridge in Ontario. The concept was first developed in Germany, whichalready gets over 25% of their power from renewables through wind and solar, and has had to deal with theintegration of that amount of variable generation for some time.

Slide 2PTG uses electrolysis to convert surplus renewable generation into hydrogen which is used as

renewable fuel or gas. (slide {4}). One option in transportation is refueling fuel cell electric vehicles. Asecond option is to inject the hydrogen into the natural gas grid, at seasonal storage scales. The hydrogencan also be used as a feedstock for refining.

In Ontario the electricity sector accounts for about 20% of end-use energy. The transport and gassectors account for another 35% each, which is a lot of untapped potential for the energy from renewables.In addition, while creating the hydrogen you’re also providing a service to the grid through regulation, etc.

Slide 3There are many PTG projects in Europe, 18 of the 30 are in Germany (fig. {slide 3}). Applications

include direct injection into natural gas grid, hydrogen fueling for transport, biogas methanation (usinghydrogen to upgrade biodigester gas to synthetic natural gas) and industrial hydrogen feed. Hydrogenics hasprovided eight electrolysers to these projects, including four of the five largest.

The 2MW E-ON project in Falkenhagen, Germany, is the first direct injection Power-to-Gas plant in theworld. It was commissioned August 2013 using Hydrogenics’ electrolysers with no issues so far astechnology is concerned. However, monetizing the full value of the gas will require changes from aregulatory perspective. E-ON currently has an agreement with Swiss Gas for 50% of the gas produced, andhas created a retail product called Wind Gas where a customer can sign up to get 10% renewable energy intheir gas supply.

Mr. Harvey also highlighted a project developed by Audi, one of the early movers in Power-to-Gas,which creates renewable natural gas that Audi markets as e-gas. Customers can sign up for and get creditsfor buying e-gas as part of buying the car. This project can generate 1000 tonnes of e-gas a year, enough tofuel 1,500 cars for 15,000 km “emissions-free”.

Another project is the Mainz Energy Park, with partners Siemens and Linde. This is a demonstrationproject to show that PTG can be used in many different ways, providing regulation and balancing for thegrid. The focus has been on bridging between electric and gas sectors.

For the 2MW Ontario project, Hydrogenics and Enbridge will be providing regulation services to theIESO. An electrolyser has a dynamic response as fast as a flywheel for regulation, ramping services orspinning reserve. The project’s cornerstone unit is the world’s first megawatt-scale stack which is the size ofa bar fridge. Project partners include the Canadian Gas Association and its research arm ETIC.

Learning from Germany has been mostly on the technology and hydrogen gas management side.While the IESO’s 35 MW energy storage procurement is establishing commercial projects, they are greatlearning opportunities providing real operating data to inform the process, and to make regulatory changesthat will help eliminate barriers for future commercial scale projects. Mr. Harvey also commented thatenergy storage is no exception to the rule that buying retail and selling wholesale does not a viable businessmodel make.

We need to think outside the electricity silo box to grow the potential for renewables, he concluded.

Curtis VanWalleghem: HydroStor has developed a storage technology using compressed air storedunder water. The company’s first demonstration project is just offshore the Toronto Islands in Lake Ontario.This technology targets the long duration market, which includes day-to-night and night-to-day or weekday-to-weekend deferral. This environmentally friendly technology relies on well-known, long-life components,which makes it cost effective and very scalable (kW to GW).


Slide 3Not all air storage technologies are the same. On the mechanical side there are three types: diabatic,

adiabatic, isothermal, with a number of companies in this sector already. Hydrostor decided not to play inthe machinery side, instead they focus on where to store the air. Some technologies require particular sitessuch as an empty natural gas cavern to be implemented. Hydrostor uses hydrostatic pressure to make adifferent type of air cavity, with fewer siting limitations. Hydrostor changes the problem from buildingpressure vessels to ballasting air, using lower pressure, meaning easier thermal management than highpressure and less energy loss. The compressed air gets warm which then runs through a heat exchangerusing pressurized water. The heat is removed and the air is stored underwater under hydrostatic pressure.When you want the energy back you open a valve and the air is recombined with the heat and the air runs alow pressure turbine. A concentrating solar loop can be added to increase efficiency. In this system, constantpressure is the biggest gain since the pressure is set by how deep underwater it is and not by how much gasis left in the system.

Slide 4, 5In air storage technologies, 30-45% of your cost is where you hold your air. Hydrostor’s technology is

just a little more expensive than a mega-cavern, but much less expensive than tanks (steel pressure vessels).Their technology can be made much more scalable than caverns, and usable in more locations than otherair storage technologies.

The airline is drilled underground ~3-4 km long then is returned thereby using the earth as a rockanchor for the air storage bags. A boat goes out to drop down some marine salvage lift bags with a pipeconnector. With the bags anchored to the rock in this way by the pipe in the ground it can hold 10,000tonnes of buoyancy. This system also allows for bags to be winched up/down and replaced for ease ofmaintenance every couple of years, at a cost of about $2,000 per bag (bags have a 10 year warrantee). Thesystem uses well-tested technologies that come with warrantees, providing peace of mind for investors andinsurers. The team can also remain lean since they don’t manufacture anything themselves.

At the time of the conference Hydrostor’s project had just a few days left to completion. The companywill focus on islands, micro-grids and congested coastal cities. All seek the same six conditions: long durationapplication, acceptable MW-scale storage, near deep water, they don’t incorporate natural gas, and they gowhere pumped hydro and underground compressed air cannot. In island locations they will integrate wellwith renewables, and with genset replacements for micro-grids. In congested locations the technology canavoid or defer new line construction. Using synchronized motors and generators, it is good for ramping andvoltage support in addition to load levelling. Several other installations are contracted or being negotiated.

There have been no real challenges in fitting a project to the grid. Permitting was interesting at first.Hydrostor ran into issues such as how to rope off the area, dealing with fish spawning areas, how to work insynergies with renewables. The largest issue may be collecting the value of all the benefits that wouldnormally accrue to an integrated utility, but this is something the OEB is working on. Making the economicswork purely on arbitrage is difficult, given that when the bags are filled the operator pays an uplift charge,something that it does not recuperate. It’s also not yet clear whether storage can go on a rate base, or not.

NRStor Vice-President Jason Rioux suggested that in 20 years we will look back and ask ourselves howwe operated the grid without storage. NRStor is a technology-agnostic developer of energy storage projects,both grid-connected and behind the meter, that looks for technologies and companies to identify storageapplications worth investing in and then develops revenue streams for these projects as an enabler fortechnology partners. NRStor works with many different battery categories to apply the right technology atthe right price.

The MINTO project that NRStor did with Temporal Power, described by Cam Carver above, is the firstin Canada of its type, and the first to provide to provide regulation services to any grid in Canada. Thesystem, providing flexibility in both directions and great accuracy, came into commercial operation in July ontime and on budget.

Slide8


Dealing with regulation services isn’t for the faint of heart. Equipment lifetime for a given technologycan be ruled by the depth and number of the discharge cycles – a matter of concern for utilities. In thatregard, flywheel technology compares favorably and doesn’t look scary to a utility since it resembles muchof the rotating equipment already seen in the industry. Figure {Slide 8} is a view of a typical generate anddischarge duty cycle that you wouldn’t want to wish on any piece of equipment, but the flywheels handle itvery well, allowing other machinery to function within a band where they are at their most efficient.Applications like these will allow for reductions for ratepayers in the form of increased efficiencies.

Batteries are very versatile thus can be made to suit many projects. Underground compressed airtechnology is also being deployed and an example of a near-isothermal compressor application washighlighted in Texas. They can provide very long duration storage, but is limited by siting availability.

NRStor spends a lot of time with LDCs to plan for implementing storage into their planning cycle, aspart of deferring new line construction, and several are working on including it in their filing with the OEB.NRStor also spends time with large loads, where power quality issue is a concern, such as data centres,where elsewhere in the world there have been 10, 20, 30 MW projects, though not yet in Canada. Some ofthese call for new business models and types of contracts, that NRStor has been facilitating. The rate atwhich storage technologies can ramp is really not comparable to any of the traditional technologies.

Slide 14Gas-fired generation has some interplays with storage that have seen little discussion so far, such as

the ability to permit black start when sited next to a generator. A large 500MW facility might only require 5MW worth of storage to start up. Another possibility is automated generation control, with five minutedispatch requests up and down for a given amount of capacity, that is hard on conventional equipment (fig.{14}). Gas-fired generators spend a lot of money to manage the gas supply (sometimes on an hourly basis)to enable the variable burn rates. By responding to requests for rapid increases in generation, ES systemscan allow gas burn profiles to be normalized. This can avert costly peak demand charges and requirementsfor firm pipeline capacity from the gas utilities. Storage can help reduce station service costs incurred byproviding power to large loads that start up and stop for part of the day by peak-shaving the load profile.

eCamion CEO Hari Subramaniam: eCamion is a battery storage company that focuses on applicationsunder 1MW, from 20 kWh to 1 MWh. eCamion is an Energy Storage Ontario member, which got its start in2010. eCamion is focused on community power, that is, the distribution system. The unit with TorontoHydro was deployed in 2013. eCamion has the smallest design to date for the energy it generates.

Slide 3eCamion had a milestone year with S&C Electric where they deployed their first US system in Detroit,

where they delivered two repurposed community storage units using Fiat batteries, which are currentlyundergoing final testing. eCamion is an integrator, buying cells from manufacturers and create the modulesthemselves, which allows them to create proprietary control systems. They are currently field tests theirmodules in vehicles prior to offering them to utility applications.

eCamion focuses on the “edge” of the grid, i.e. distribution, close to the home, commercial andindustrial applications. More testing and deployment will be done in 2015. eCamion is still defining theirvalue proposition by testing out several markets.

eCamion focuses on 3 pillars: customer control, adaptive infrastructure and power system flexibility.eCamion is a turn-key solution provider, working in a technology-agnostic way with a customer’spreferences to provide them with the solution they want.

eCamion partnered with Toronto Hydro with integrated solar panel providing a community withislanding backup power. The system provided 4 hours worth of power to 90 houses on the feeder during lastyear’s ice storm. This project also helps test capital deferral, allowing Toronto Hydro to put off installing alarger transformer. Two more units are to be deployed next year.

The other big project is with Detroit Edison together with S&C Electric. One learning experience thereis working with a much larger company’s factory acceptance testing, a company that could become a carrierfor eCamion’s technology.


The company had earlier co-developed with General Motorsa 16 kW storage device using GM’s Voltcar battery, and deployed it in Los Angeles. The project helped evaluate the question of whether there was amarket for taking repurposed batteries for storage applications.

Working with both Toronto Hydro and DTE Energy revealed that there are still very few standards forthe technology. CSA had few standards, IEEE only came out with its own standards for storage as a completepackage in 2013. S&C has a different protocol for their own products, including seismic and water testing,and likewise each LDC has their own handbook for protection and control and safety, so it’s hard to make astandard technology that meets the standards of all utilities. The data feed from the controller, for example,has to be consistent with the LDC control centre data format.

eCamion is focused on Li-ion batteries, in two basic configurations. Different models of inverter havedifferent behaviours, like harmonics, so that care is needed in integrating them into the system properly formaximum efficiency. Two pilots are underway with PowerStream provided some lessons in adapting thesystem to a larger building, and integrating with a diesel genset for a microgrid.

There is a value proposition from the utility perspective, as long as the system is placed and sizedappropriately. There is a need for smaller units, under 25 kW, but at the same time 250 kW is a good size fordistribution lines. There is a lot of interest from owners of electric vehicle solar carports; there again thetrick is to identify the exact value proposition.

Finally, the company is about to start a project with three Ontario utilities, in three differentcommercial building sizes, which will provide an avenue into demand management, even though thatmarket is largely exists outside Canada (e.g. Europe, Asia, and certain US jurisdictions) where the peakdemand prices are very high.

Questions

1. To each member of the panel: What was unforeseen at the beginning of your project, and how did youhandle it?

Jason Rioux: We’re still seeing automatic generation control signals coming in from the IESO after ourfacility is fully exhausted or fully charged. It’s just responding so much quicker than they’re used to. Weneed to custom tailor these signals, especially to address the quick response times provided by storagesolutions, to get more out of these assets.

Curtis VanWalleghem: Permitting, and therefore the construction phase, took longer than expecteddue to water habitat sensitivities. These were first of their kind projects in both ARUBA and Lake Ontario.Contracting has also been an issue since there is no standard storage contract and every jurisdiction isdifferent. In terms of construction, even though we use light weight bags and cheap air, the forces involvedare very large. The first bag had a fixed bottom that creased when empty, resulting in fatigue over multiplecycles. The bag design had to be revised to avoid the failure mode.

Rob Harvey: Hydrogenics’ technology is fairly conventional, turn-key electrolysers. The energy storageaspect is new. Our first with will be with the IESO where we will be the equipment supplier as well asdeveloper. The learning experience will be in the steps to becoming an ancillary service provider, the stepsin permitting, the verification testing for the IESO. The operating data from regulation services, the dispatchinstructions, etc. will be new for the company to learn.

Cam Carver: When you put your first system on the grid, you have to step up and do the full turnkeyEPC (engineer – procure – construct) work for the first time too. Are we going to overbuild? Maybe we don’tneed the same kind of redundancy the second time and the third time you don’t even need a building. Asyou go, you start to optimize the build. The permitting is worth highlighting, and other things that are not inyour control. They may not be the most difficult or important things (e.g. communications connections), butif you don’t do them your facility won’t get started.

2. What lessons were learned that led to cost reduction?RH: Electrolysis is not new, but the applications for energy storage are orders of magnitude larger

than conventional industrial use. We realized early on that scaling up the standard technological workhorse,


alkaline electrolysis, was taking up a lot of space. This means the power density must go up and systemsneed to be designed with a smaller footprint and to use less material for costs to be driven down.

CVW: A typical bag holds about 150 cubic meters of air. The size of the bags are currently limited bytheir weight to allow man-handling and packaging on standard pallets. We are currently working with ourvendor to design a more lightweight bag using different fibers, so that we can use one large bag instead ofmultiple smaller ones. Onshore, we are looking to partner with a mechanical supplier, like GeneralCompression, to ideally use a single machine that does compression and expansion and is also possiblyisothermal for slightly increased efficiency. These two advancements is where we see the most opportunityfor cost reduction.

JR: Need to build first the commercial scale projects to prove them on the grid, then build larger scaleprojects and prove that they are economic.

Hari Subramaniam: Margins on the controller algorithms could be improved but hardware is the mainthing that could feed cost reduction. Most of this will depend on what happens in the chemistry sector.There are always new technologies that could bring an integrated solution. There is also potential forinverter manufacturers to bring down costs as that market slows down, if a price fight develops.

If a customer isn’t willing to pay for a full-featured system, a budget system can still be designed tomeet at least their basic needs.


Day 2November 19, 2014:

Keynote: Dr. Ian Potter, National Research CouncilStrategies for Canadian Competitiveness:

Building a Strong Energy Storage Value Chainthrough Collaboration

Dr. Potter began his session by emphasizing the importance of understanding supply chain dynamicswhen developing energy storage projects, as these technologies will typically be expected to have a longlifetime. He then highlighted some of the big picture challenges that Canada faces and that NRC tries toaddress within this context, including economic development, natural resource management, andenvironmental issues. The innovation landscape is an important part of addressing these challenges, andCanada’s innovation resource is very strong. The contribution at the federal level to R&D, in the widestsense, is about $6 billion a year. Dr. Potter suggests, however, that there is still an innovation gap and thatCanada needs to help companies overcome a number of innovation-related hurdles that they continue toface. For example, one of the hurdles lies in getting different sectors – between universities and companies,and even within companies themselves – to communicate with each other.

Slide 8He described the tools that the Canadian Government has set up to address that innovation gap, and

one of those tools is NRC (figure {slide 8}). The NRC has been around for 98 years and it is dedicated toovercoming Canada’s key innovation gaps, particularly in industry, where it helps companies in reducing risk,overcoming innovation hurdles and in creating value. The NRC acts as Canada’s primary Research andTechnology Organization (RTO), with ~3550 employees and $894.4M in expenditures in 2013-14, and with avision of being the most effective RTO in the world. One of the keys to this vision is working with clientsacross Canada, as NRC’s success is largely measured by the success of Canadian businesses, and particularlyits clients.

To help clients, NRC has the ability to offer a wide variety of services. These include helping small andmedium sized businesses address critical challenges by providing technology and business advice, offeringstate of the art infrastructure, facilities, and technology including testing and verification equipment. Typicalexamples include wind tunnels for aerospace projects and transmission towers, climatic testing for vehiclesand outdoor equipment, and specialty expertise and know-how from across NRC. Where NRC lacksexpertise it partners with Canada’s universities and other research organizations across the country.

Importantly, Dr. Potter states that, the way that NRC delivers value is through its programs (fig. {10}).Programs are temporary management structures intended to help organizations achieve specific objectivesand they are designed specifically to meet an identified industrial gap or need. Importantly, programs arealso the primary basis for investment decisions at NRC.

Slide 10Canadian energy needs vary significantly by province, and the same may be said for energy storage

technologies. There have been significant smart grid investments thus far and some of that investment todate has been directed towards energy storage technologies. Innovation today can potentially bring downthe expected costs of these types of technologies. While Canada’s electrical industry has been successful inmany areas and is recognized as one of the safest in the world, utilities do sometimes struggle withinvestment in innovation. The NRC can help utilities specifically look into innovation in their sector and findworthwhile opportunities, and the NRC believes that there are a lot of places where energy storage may fitand provide value. Pike Research figures investment in energy storage of about $120 billion will be requiredby 2021 – a huge number, but innovation may drive the cost of that needed investment down – systems


engineering, for example, in getting conventional energy sources working harmoniously with wind and solar,through the use of storage. In the short term there may be several potential energy storage opportunities inthe far north where delivering traditional fuels is expensive.

Slide 15To better understand where energy storage as an industry might be headed, Dr. Potter points to

methods such as gap analysis (fig. {15}), which has recently shown that the collection and ownership of datais going to be a critical concern for technology providers and utilities. Another gap identified is what to dowith the learnings from various early stage demonstration projects, how that information can be used tohelp future projects, and how this knowledge can be brought to various stakeholders. For developers, healso points to available knowledge sources and available support within the field of key players in energystorage technologies, such as universities with funding through NSERC, Environment Canada, NRC andNRCAN, SDTC, SR&ED, associations, and guides on the Industry Canada website (fig. {16}). There are guideson the Industry Canada website to assist companies in accessing the right organization, and businessassociations like IGUA.

Slide 16At the end of the day the NRC is trying to reduce cost and increase reliability, durability,

maintainability, and market acceptance of storage. Forward thinking is essential, planning only for today’smarket may mean missing a lot of potential value. One has to look at future markets to be successful. Usingscenario analysis and working hard to understand the business case, technology, risks, and failure modeswill all help in bringing successful demonstration projects to market. To that end the NRC conducts techno-economic assessments, provides technical support for demonstration projects and aids client-driven R&D.The NRC will invest about $16 million dollars over the next 5 years through the energy storage program. Ifindustry is receptive, the NRC will revisit this number further.

Slide 18Dr. Potter closed by saying that it is important to understand the business environment and the

supply chain when developing energy storage demonstration projects, as these can be complex andsometimes fragmented. The value chain needs to be understood (fig. {18}), as does the availability ofventure capital, and of expertise. A comprehensive database will help. Demonstrations are the key todriving this technology forward and learnings from them are important. There will be an energy storagefuture, the prospect is quite big, but so are the challenges. NRC will be there to help clients to capture thislarge market.

Questions

1. How is it that Canada lags, for example, Germany in developing renewables, but has more activity instorage?

Dr. Potter: Germany has had a number of minority governments over the last few decades, resultingin the Green party sometimes having influence on the countries energy strategy, and particularly in thepromotion of renewables. Canada tends to do things provincially, with each province investing differently. Astrong Canadian entrepreneurial spirit for alternative energy has been also a contributing factor to thegrowth of storage.

2. Where does Canada stand regarding the proportion of spending on R&D for storage, compared to othercountries?

Mr. Potter suggested looking up the International Energy Agency’s numbers.

3. What is NRC’s biggest success in storage, and biggest lesson?Advanced batteries, including fuel cells, would be the biggest success at the moment. The failure

there was not recognizing the importance of manufacturing readiness, so that production volumes could bescaled-up to realize economies of scale, thus reducing costs to viable levels. Getting the cost of lithium ionbatteries will be the next big result.


4. Will export markets be most important in developing Canada’s storage technology sector, and is thatwhere manufacturers should be looking?

Ian Potter: I’m a fan of growing locally, and exporting when the opportunity arises. There is a hugeopportunity in the north of the country. If we can make the technologies work there they will workanywhere.


Ontario on the Innovation Roadmap: An overview of local capacity forenergy storage innovation to capture global opportunities

Moderator Jennifer Hiscock of Natural Resources Canada opened the session with a graphic of publiclyfunded storage demonstration and pilots in Canada (see figure {slide 1}), of which roughly 50% were fundedby NRCan. The panel itself was asked to discuss the innovation ecosystem that exists in Canada to supportthe development of storage technologies and associated business development opportunities.

[Hiscock Slide 1]Caption: CCEMC is the Climate Change & Energy Management Corp. in Alberta; CEF = Clean Energy

Fund, an NRCan fund along with ecoEII; SDTC = Sustainable Development Technology Canada; h2EA =Hydrogen Early Adoption Fund, managed by Industry Canada; AIF = Atlantic Innovation Fund. OPA / IESOrelated projects are not included.

Aisha Bukhari from Women in Renewable Energy (WIRE) made the case for Ontario energy storagebusinesses to enter into international markets using eCamion’s community energy storage capacity as a casestudy.

Slide 3 & 4Japan, China, India, and South Korea make up over 70% of the energy storage market value, with

energy storage currently a rapidly growing $1B market in Japan (fig. {3}). Energy storage is important toJapan because it is necessary to integrate the substantial solar power generation in the country. Followingthe 2011 Fukushima nuclear disaster, 84% of Japan’s energy was sourced from imported fuels. However, acombination of energy storage and solar can beat the price of oil in Japan without the need for incentives(fig. {4}).

Slide 5The energy storage market can be segmented into the residential energy storage (RES), community

energy storage (CES), and large energy storage (LES) segments. Especially in Japan, RES and CES account forthe largest portion of the market due to high urban density. CES provides the highest value for cost becausemultiple customers can be supplied with the same system. eCamion’s competitive advantage in the CESsegment is their smart integrated control system proven in their successful demonstration projects withToronto Hydro and others.

In terms of market entry, Canadian energy storage companies can either partner directly with localutilities or engineering, procurement and construction (EPC) companies, or license their technologies toexisting businesses. In her assessment, Ms. Bukhari found that entry through partnerships with solar EPCfirms (especially those who also have operations in Canada) would provide the greatest mutual benefit.EPCs would be able to integrate more solar into the grid with the availability of energy storage options andthe energy storage companies would benefit by leveraging the pre-existing relationships the EPCs had withtheir local utilities.

In terms of choosing partners, several criteria need to be considered:Experience in renewable energy projects

Operations in both the target markets and Canada

Existing relationships with target utilities

Available capital financing

EPC experience

Previous working relationship


Attracting partners requires companies to have the ability to execute and deliver proven and reliablecommercial solutions, build strong relationships, have a product pipeline, and be able to access financing.Companies will face risks such as currency fluctuations, missed revenue targets, partner withdrawals andcompetition threats but these can be mitigated through various strategies such as hedging, diversifying thecustomer and partner base, and establishing long-term contracts with utilities.

Companies that are seeking global opportunities are advised to assess their readiness forinternational expansion, prepare a business case, and develop an implementation plan to execute.

When asked about standards in a highly competitive Japanese market, Ms. Bukhari clarified that thereare not yet many standards established for small-scale projects and so the opportunity is ripe to get in earlyand help establish such industry standards.

Ms. Hiscock opened the panel discussion by recognizing Canada as a world leader in its scientificresearch and Higher Education Expenditure on R&D (HERD) rates, which are above the OECD average.However, this is in stark contrast to Canada’s Business Enterprise Expenditure on R&D (BERD) rates, whichare far below the OECD average. Ms. Hiscock then invited Shantanu Mittal of the Ontario Centres ofExcellence (OCE) to share his experience in closing the disparity through enabling industry-academiccollaboration. The OCE has provided support to several energy storage players participating in the nascentlocal cluster (fig. {slide 3}).

[Mittal Slide 3]There are several factors that have led to a concentration of energy storage companies in Ontario:

• History: Pumped hydro• Geology: SW Ontario Salt Deposits: CAES (compressed air)• Geography: Proximity to deep water: underwater CAES• Deregulation: Renewable generators• Supply Mix: Nuclear predominant following closure of coal plants• Economic Downturn: Ontario became a net energy exporter• Legislation: Green Energy Act: Renewables, Smart Grid• FIT Program: Incentives for renewables, domestic content requirement• US-led Investment in smart grid, emphasis on renewables• Automotive Mfg: Battery technology• Large Industry: Petrochemical cluster - sensitive to momentary power outages• Research Expertise: Hydrogen, fuel cells, materials-batteries, power engineering, systems integration

Energy storage requires a long-term investment strategy that delivers capital to all stages of theproduct lifecycle – R&D in the academic environment, forming partnerships to conduct demonstrationprojects, and adoption by the end-user all require time. Parties that are looking at energy storage as anoption should understand that it requires patience and sustained investment in every phase ofdevelopment. A viable energy storage industry in Ontario will create local jobs and sustained returns thatare not at risk of being moved abroad because of the level of investment required to create them.

Dan McGillivray of the Centre for Urban Energy (CUE) at Ryerson University is involved with instilling asense of entrepreneurialism in a new generation of science, technology, engineering and math (STEM)students. The work done at CUE is well supported by major players in the industry, like the OPA, theMinistry of Energy and Hydro One, and driven by industry, he emphasized, but managed by the academiccommunity. Mr. McGillivray called innovation a contact sport that requires collaboration between differenttypes of industry players and the integration of applied research, innovation, and education.

On innovation, CUE collaborates with the Digital Media Zone incubator and hosts Entrepreneur-in-Residence Marzio Pozzuoli who tackled many of the issues that entrepreneurs continue to face in Ontario.For one, Mr. Pozzuoli had a difficult time selling his product in Ontario, something other local startups havestruggled with as well.

Talent development is also very important at CUE and one way to encourage entrepreneurial thinkingis to allow participants to compete for seed funding to develop their ideas. Students first get $5,000 to find a


customer for their innovation, then $8,000 develop a prototype, then $25,000 to turn it into a business. OCEparticipates as well. To build on its education component, CUE recently started a summer school thatpartners engineering students with MBA students to collaborate on ideas.

Mr. McGillivray commented that, “the pace of energy technology innovation is accelerating,particularly in the areas of solar PV and battery storage, which are reaching grid parity, making the electricalgrid optional for some consumers, reducing the revenues received by utilities and threatening to strandbillions of dollars of energy assets.” He pointed to Jeremy Rifkin’s view that industry is witnessing theemergence of the third industrial revolution, in which the marginal cost of producing some goods – forexample, solar power – drops to zero. The first was driven in part by coal and the locomotive, the second byelectricity and trucks, and the third is currently being driven by the Internet, renewable energy, andtransportation and logistics improvements. As a result, there is a great opportunity for a new generation ofentrepreneurs to capitalize on this period of dramatic change.

iCUE is CUE’s innovation lab that encourages entrepreneurial behavior in students and provides asupportive incubation space for new ideas and companies. There are currently 10 student-run startupsoperating out of iCUE. Firms that have since grown out of iCUE, such as Plug’nDrive, have created jobs in thesector and will change the sector itself.

In developing and supplying storage technology and services to the world, Ontario is in a leadershipposition, which needs to be nurtured. There is a tremendous opportunity here, but the key is getting to theinternational markets – Ontario by itself is too small to support multibillion dollar businesses. Ontario’sinnovation programs have been very supportive in encouraging the formation of a concentration ofcompanies in the domestic storage value chain. A FIT-type program for energy storage with a competitivebid component would help make Ontario even more attractive for investments. Local demonstrationprojects, international marketing, and successful delivery will be required for Ontario to maintain itsposition as a global competitor in storage technology. Finally, Canada needs to enter the internationalmarket as a team, not competing with itself internally.

To further elaborate on cleantech innovation and how to incubate the most innovative ideas, JonathanDogterom of MaRS spoke about the non-profit organization’s approach to helping Ontario companies growfrom interesting local businesses to globally profitable enterprises.

The MaRS Cleantech group consists of a Venture Services group, Arctern Ventures, and the AdvancedEnergy Centre. The Cleantech Venture Service provides services to approximately 150 companies, of which40 are in a high-growth stage. MaRS has a direct relationship with Arctern Ventures, which is a venturecapital firm with $30 million in capital that provided seed money for Hydrostor. MaRS also manages theprovincially funded Investment Accelerator Fund, which provided the first seed funding for Temporal Powerand eCamion. MaRS launched the Advanced Energy Centre in collaboration with the Ministry of Energy,Capgemini, and Siemens in order to break down barriers so that innovative products from the energyindustry can be deployed locally and readied for implementation globally. The first project there was theGreen Button, giving consumers access to their energy data.

[Dogterom Slide 13 & 14]Capital (equity + debt) raised for energy-related ideas makes up a large portion of the total capital

raised (fig. 13}). In the last three months $52 million has been raised by Smart Energy Instruments, Sparq,Regen, and Ranovus (fig. {14}), all of which were initially funded through MaRS. Such success demonstratesthat Canadian companies are starting to raise the capital that is commonly seen in the United States andother jurisdictions.

There is a long roster of innovative energy companies in Ontario, with roughly 50% of all energystorage projects in Canada located in Ontario (fig. {16}). One reason behind the concentration of innovativecompanies in Ontario is the presence of the Feed-in-Tariff program. The FIT program kick-started domesticmanufacturing, and it is often the case that the availability of domestic manufacturing results in moreinnovation. The availability of financial support through various funds such as the Innovation DemonstrationFund, SDTC (federal), the Smart Grid Fund, and the Investment Accelerator Fund, also provides a platformfor innovation. Finally, the 50 MW energy storage procurement allows for greater industry participation.


The Ontario energy and cleantech sectors also generate the majority of their revenue through export sales(fig.{slide 18})

[Dogterom slide 16, 18]Two major industry trends, behind the meter control and distributed generation, will determine the

future of energy storage. An example of behind the meter control is Nest, the thermostat company that hasbeen able to get consumers to install the product at their own cost, achieving what OPA’s Peak Saverprogram was designed to do but without the added logistics. Nest also provides the ability for consumers toparticipate in demand response with their utilities, essentially affording them leverage with utilitiesoperating in capacity markets. This level of consumer participation is what led Google to acquire Nest earlierin the year. The second trend is the adoption of distributed generation technologies, which will require theuse of energy storage. Mr. Dogterom brought up a previous presentation by a utility in which the utilityreasoned that consumers would not leave the grid because of the associated costs. However, the drop inprice of distributed generation and energy storage technologies, and a rise in behind-the-meter control willdestroy the costs barriers discussed by utilities. Utilities are already feeling some of the impacts, with thetop 20 European utilities having lost 50% of their value in the last five years.

Moving forward, it is important to realize that the electricity grid is for social good. Once people canafford the capital cost of solar and energy storage, and start to leave the system, utilities must figure outhow to maintain their assets with a smaller revenue base. As a result, it is critical to have innovators workwith utilities to maintain the quality and reliability of the grid. There needs to be regulatory mechanismsthat reward innovation and efficiency in the system. There is a massive economic opportunity for Ontarioand the rest of Canada if such initiatives can be executed successfully in this jurisdiction, because it willallow Ontario to guide other jurisdiction who will inevitably deal with the same issues.

Ken Nakahara of the Ontario Ministry of Energy is responsible for managing the Smart Grid Fund andpreviously led the team that developed the latest Long Term Energy Plan (LTEP) that ushered in the 50MWof energy storage procurement. Mr. Nakahara reflected on earlier presentations by saying that supportingthe smart grid results in benefits for Ontario, but is also meant to benefit the companies participating in thesector to compete globally and realize the economic development opportunity. It is part of the largermandate of the Ministry of Energy to partake in such economic development activities. One suchopportunity Mr. Nakahara promoted was the Japan Smart Energy Week (Feb 23rd-27th, 2015), and theMinistry of Economic Development is in the process of organizing a trade mission for companies interestedin participating.

The grid of tomorrow will be very different from the grid of today in that it will cater to a consumerwho is both producing and consuming energy, hence requiring greater integration of the system. One of thegovernment’s roles is to set up the policy for smart grids and this was started as early as 2009 as part of theGreen Energy Act. The three focus areas covered a range of technologies including energy storage asdemonstrated in slide 3 (as “adaptive infrastructure”):

[Nakahara Slide 3]The idea behind such visions was to future proof investments in the sector so that new technologies

can be easily integrated without requiring major unforeseen systemic changes. Ontario is active in allaspects of storage as the government recognizes its key role in grid modernization (slide 40.

[Nakahara Slide 4]One item not necessarily explicitly mentioned in the slide above is the opportunity to connect 21 of

25 remote communities in the north to the grid and determine how the remaining four communities canbenefit from microgrid, on-site renewables and storage opportunities to reduce diesel consumption andimprove reliability.

The 2013 LTEP discussed 5 initiatives related to storage. They include: 50MW procurement for storageby the end of 2014; work to address regulatory barriers; opportunities for storage under LRP; examiningopportunities for storage under net-metering conservation policies; and independent studies to establishthe value of energy storage’s many applications.

One of the major obstacles for the sector is the business innovation challenge. R&D spending relativeto revenue in the utilities sector is among the lowest across all sectors. Only a few of the 80 electric utilities


in the province have the customer base required to attract large-scale technology vendors and the sufficientbalance sheet to pursue innovation. The traditional regulatory approval process has not been conducive torapidly evolving technology and is only beginning to evolve with the OEB’s Renewed Regulatory Frameworkfor Electricity. The sector’s low innovation performance has been a long-standing challenge for advancingtechnologies like energy storage, and also became a catalyst for the Ministry of Energy to create the SmartGrid Fund.

The Smart Grid Fund (SGF) is a $50M competitive grant program designed to leverage Ontario’sadvantages in the energy sector and build the smart grid industry by funding technology demonstrationprojects on Ontario’s distribution system. SGF has three objectives: advance smart grid in Ontario, supporteconomic development, and reduce the risk and uncertainty in electricity sector investments. Since it waslaunched in 2011, SGF has supported over 15 projects with more to be announced in the near future. Theprogram has created over 600 jobs and leveraged over $100M in investment. Energy storage was a focusarea for the most recent call for applications. Projects being led by Canadian Solar, Electrovaya, and OpusOne Solutions have been recently announced and incorporate forms of storage.

Mr. Nakahara concluded by pointing to the Ministry of Energy’s participation in the InternationalSmart Grid Action Network (ISGAN), which allows the Ministry to keep tabs on sector developmentsthroughout the world. Ms. Hiscock then introduced Nicolas Muszynski of project developer RES Canada, acompany that was awarded a 4MW project under the IESO’s 10 MW pilot procurement for frequencyregulation.

Mr. Muszynski started by indicating that RES Canada saw energy storage as an enabler for renewablesand as an important grid asset. On a day-to-day basis, he saw financing, contracting and/or procurement,and regulatory challenges as the major factors that need to be addressed.

Financing is a very important component of getting energy storage projects operational and it iscurrently very unclear how future projects will get financed because there are multiple approaches. Havinga contract with the IESO was extremely helpful in securing financing for the project, even though RESCanada funded the majority of the investment. One challenge is that many new entrants are used toinvesting in renewable energy projects that are backed by long-term contracts, whereas the IESO onlyawarded RES Canada a three-year contract. The length of the contract changes the financing dynamicbecause one needs to know where the revenue will come from post-contract completion.

RES Canada expects to see longer contracts in new procurement rounds, but there are still severalchallenges that need to be addressed with contracting and procurement. One such challenge is themechanics of the contract. Currently, energy storage projects face demand charges because they are seen asa load on the grid, but they also face fees for connection upgrades because they are also seen as generators.Who ultimately shoulders such operating charges is something that needs to be resolved at the contractlevel. Another approach being taken on the utilities side is devising a system for treating storage as a rate-based asset, which changes the financing structure for the facility. Much work needs to be done to identifythe value of rate-based system and how the case is made for such value within the distribution system,because rate-based assets are usually targeting a very specific grid issue.

The regulatory challenges RES Canada faced with its project revolved around fitting energy storageinto the existing regulatory framework. The project timelines did not necessarily allow for the developmentof new frameworks and so the OEB worked to shape existing structures to allow energy storage to play inthe market. A lot of work is being done at the OEB to make storage its own category, which will have a bigimpact on how storage is viewed. The advantage RES Canada had was that their first energy storage projectwas built in the US and so they were able to transfer insights from the US regulatory process to the OEB.European companies within the RES group are now looking to Ontario to see how the regulatory system isbeing set up. As a result, there is a special responsibility on the regulatory authorities to propose somethingthat is effective, reasonable, and exportable.


Discussion:

Ms. Hiscock proposed the first question and asked how much the partnership strategy to access globalmarkets was built into the types of support provided to organizations innovating through R&D. Mr. Mittal ofOCE answered by stating that such international partnerships were of great importance to OCE, using theexample of Hydrostor looking to partner with a large wind energy developer to commercialize theirtechnology. In the uphill battle that is accessing international markets, having the ability to leverage andcollaborate with partners de-risks the investments being made and so such partnerships are very valuable.Mr. Dogterom of MaRS provided a few examples but started by indicating that it is very hard for a startupwith limited funds to establish itself in new jurisdictions. MaRS recently overcame the barrier by allowing itsinnovators to piggyback on corporate partners Capgemini and Siemens at an industry event. At Utility Weekin the Netherlands, Hydrostor was able to access Capgemini’s customers at their corporate booth, whichwas a win-win situation because it showed Capgemini’s customers that they are at the forefront ofinnovation. Another example is that of Smart Energy Instruments, which received seed capital from ArcternVentures and went on to receive second round funding from 3M’s venture arm based out of Munich.

Ms. Hiscock’s second question referred to the exportability of the regulatory side of the industry,something that Mr. Muszynski touched on in his presentation. Mr. Nakahara, speaking from the Ministry’sperspective, said that such export of regulatory insights had not happened yet on their end, but there areopportunities appearing to indicate that more of this will happen in the future. The Advanced Energy Centrehosted a delegation from Abu Dhabi in 2013 and many of the delegates were from the regulatory side andwanted to know how Ontario had been able to set up a system so accepting of renewables andconservation. Mr. Muszynski added that as a developer, RES Canada spend a lot of time in consultation withregulators, especially in Ontario which has a very active consultation process for their various programs. Theexpertise and insight that is developed domestically as a result of the consultations is exported to the USmarket and RES Canada is being consulted as an industry implementer of the technology.

Ms. Bukhari was then asked about the role Toronto Hydro played with the eCamion communitystorage project and whether or not the level of transparency demonstrated was a requirement of the SDTCgrant or on Toronto Hydro’s own impetus. Ms. Bukhari indicated that it was Toronto Hydro’s own initiativeso that any learning from the innovative project could be shared with interested parties and so that thereweren’t redundant projects taking place elsewhere in the province. Toronto Hydro also formed the E8group, consisting of the 8 largest utilities, which would get together every quarter to share insights fromresearch projects.

Ms. Hiscock then asked for comment on the unique logistical and operational challenges facing off-grid Northern communities and whether enough was being done to address the non-technology issues thatare inherently present in remote communities such as limited access to capital and transportationinfrastructure etc. Mr. McGillivray used the example of a project proposed by Ryerson studententrepreneurs to build a greenhouse in Revulsion Bay, Nunavut. He stated that while the project addressedthe elements, one major challenge was the need for full redundancy on replacement parts because theycould not be purchased at local stores. He also commented that industry likely wouldn’t transfer all thetechnological insights from the North to the South because the environments are very different and, forexample, the costs of redundancy would not be justified. Working with First Nations people can requirespecial preparations because there are differing perspectives and ways of conducting work, and with therecent Supreme Court ruling, the First Nations are often in charge of projects. Second, the temperatureextremes mean that technologies have to be designed for the extreme environments. Mr. Nakaharamentioned that the business case with northern communities was strong because of the high cost of dieselfuel. The opportunity isn’t limited to Ontario either, and the Ministry of Energy has been talking to itscounterparts in Manitoba, Quebec, and Newfoundland. The challenges faced by such communities areinherently unique such as the ice roads not being able to bear the weight of trucks transporting windturbines, or forest roads not having sufficiently large turn radius’. As a result, Mr. Nakahara believes solarwill be a more viable option.


The Energy Storage Technology Roadmap: Where is storage technologyheaded, and what opportunities exist in the Canadian ES value chain?

Ben Kaun, senior project manager for storage at EPRI, gave an overview of EPRI and its perspective on thestate of energy storage technologies and its integration in North America and worldwide. Mr. Kaun alsodescribed EPRI’s Energy Storage Integration Council, a public technical forum that deals with storagedeployment.

EPRI sees energy storage as the silo-busting technology. There are 3 main ways to use storage:• An alternative capacity resource – an alternative to traditional generation, transmission, and distribution.

• A flexibility resource that can provide support for power and voltage swings caused by renewablesintegration.

• A resiliency resource in case of outages.

There can be multiple levels of distributed storage, near the utility substation or closer to the edge ofthe grid in communities. Storage can also be used behind the meter at commercial locations, in residences,or as electric vehicles.

Slide 5Caption: The diameter of each cylinder represents the technology’s capacity deployed

worldwide, while the volume represents the total energy deployed. Pumped hydro is 99% of installedcapacity – there’s so much it doesn’t even fit on the slide. The blue-green circle is the Californiaprocurement target, which is specified only in terms of capacity. For comparison’s sake, non-grid-relatedbattery capacity, in automobile use and all electronics, is also shown in violet.

EPRI sees challenges in technical, economic and regulatory areas. In the technical area, performance,lifetime and durability are factors. Economic challenges include historically high costs of the underlyingtechnology and high levels of non-recurring engineering associated with any early demonstration phaseprojects. It’s hard to put together value propositions in regards to regulation since a single device has tosupport multiple stakeholders including generation, transmission, distribution and customers.

A clear definition of energy storage is still lacking – we have been describing storage as similar toother assets within a framework designed for generators and wires, when in fact storage is a completelynew type of asset. That is becoming less of a problem, with advanced technologies addressing technicalissues, new business models finding ways to combine several services from a single device, and an numberof regulatory rulings coming out, in Ontario and elsewhere. The industry is maturing, with the initial smallstartups now becoming large startups and multinationals investing billions in technology and creating newproducts for the grid market. In addition, the other battery markets are driving costs down and performanceup, to the benefit of grid storage applications.

Understanding the value of these storage technologies is an ongoing challenge. Historically, thedevelopment of grid-ready products has been a mixed experience. There has also been a lack of clarityconcerning what users need and will need in the future. Commonly, there are early phase issues when newproducts are taken into the field too early. Grid integration is still not an exact science in terms of physicalconnection and site construction. Those in the industry need to work together to develop commonframeworks and methods.

To that end, a year and a half ago EPRI launched the Energy Storage Integration Council, a publicforum convened to get utilities, vendors and the research community together on technical issues. Thecouncil convenes the forum based on the needs of utilities. General themes are the development ofcustomizable standard products to drive cost reductions, seamless grid integration using generalized controlalgorithms, as well as common methods for deployment and installation.


There are five working groups in ESIC: applications, performance (testing), system development(products), grid integration, and analysis.

The Applications group focuses on the underlying problem, defining methods to solve the problem,and on cost-benefit analysis. The analysis group’s main task is to figure out what needs to be done withmethods and tools to understand value and impact. The performance group develops protocols tocharacterize energy storage in the grid’s context. System developers ensure product safety, communicationsand control. Integration installation provides siting and permitting for storage.

Jim Greenberger, Executive Director of the National Alliance for Advanced Technology Batteries(NAATBatt International): NAATBatt works as a bridge between small companies, research institutions,larger multinational battery companies and customers, to provide market intelligence to its members andpromote the technology’s adoption. The organization has 70+ corporate members in six categories: energymaterials; cells, packs and components; ICT systems: manufacturing tools; end-user applications; and newtechnologies. He noted Canada’s world-class research into the technology, but a lagging commercial sector.

He went on to debunk some myths about energy storage:• Energy storage is new.• Storage is not market ready.• Storage is approaching market parity in terms of cost. In fact it’s there: pumped hydro has been availablefor decades and has shown to be cost effective.

Photo in slide 3Caption: the first electrochemical battery was invented by the Persians over 2,000 years

ago. It took more than another 1500 years for Alessandro Volta to demonstrate his voltaic pile in 1798.Gaston Plante invented the lead-acid battery in 1859, still the most common type in use today.

The revolution in batteries and storage has been possible due to several new battery chemistries,most notably Li-ion. Li-ion batteries have 6-7 times the energy density of their predecessors. Nor is therevolution over, new chemistries are coming that will allow us to apply them in new ways.

Slide 4ESS, electric stationary storage, today is a very small contributor to the total of battery applications.

In 2024 the battery market will be very different. There will be larger bars for newer technologies includingrobotics.

Slide 5Caption: A summary of battery applications. SLI = starter, lights and ignition: the reason

lead-acid batteries are still the largest market. ESS = electric stationary storage, what this session is about,and still a tiny proportion of the total market for batteries.

Slide 6Caption: This plot provides some idea of what’s driving storage deployment. Drivers

include renewables integration in the west and power reliability in the east, as well as individual statemandates. Growth of this market now is giving an indication of how the market will change by 2020.

There are 3 major drivers in storage development: renewables integration, grid reliability and marketopportunity, in the form of frequency regulation and demand charge reduction.

Storage is a diverse field. What technology you use will depend on what need you’re trying to serve(figure {slide 8}). Determinants include the tradeoff between energy and power, how long the energy isneeded for, and cost.

Slide 8, 9Using a golf cart as an example to illustrate the effect of cost (fig. {9}), Li-ion is 3-4 times as expensive

as lead-acid, but when you consider the cycle life and depth of discharge, you come out with a differentanalysis. The point is that cost is not a straightforward analysis.

Slide 10


Figure {10} is a Li-ion roadmap outlining where we are and what is coming out of the labs.Predictability of the technology of choice will play a critical role in decision-making. Having worked early inhis career in wind, Mr. Greenberger often found himself in conferences with rooms full of wind turbinedevelopers, only a few of whom could get financing, since they were the only ones who had put anyturbines on the ground. ESS will have the same issue. The key is to make the bankers smile, and to do thiswe need to be able to eliminate technological risks. Though Li-ion may not be as well suited as some othertechnologies, its presence in the market as well as its known risks will work in its favor for deployment.

It is important to define the actual need to be met. Storage per se is not a need; the need is forparticular applications of storage. We need to identify what we’re asking storage to do. That will permitOntario to focus, to identify the proper stakeholders, to identify the proper technologies and in whatdirections they’re forecast to move, and then to focus on the proper allocation of resources to make ithappen. These are largely the purposes in developing a roadmap.

Bala Venkatesh, Academic Director at the Center for Urban Energy (CUE) at Ryerson University, addressedthe need to decide what kind of storage is required, to allow the economics to play out as it should. Figure{slide 3} shows in a general way the tradeoff between power and energy delivered, somewhere along which,for a given technology, is the right technology for a given application and cost. Flywheels are good for fastapplications; pumped hydro for high volumes of energy and seasonal shifting.

There is a lot of research at CUE including battery systems, flywheel and ice storage. CUE helped withcontroller designs for Temporal Power’s flywheels, which can balance the power from wind turbines whichspin up and down uncontrollably.

Slide 8Caption: controller design from 3 or 4 years before, for a flywheel on a distribution line

with a windfarm, allowing it to balance both varying supply from the windfarm and varying load fromresidences.

Slide 10, 11Most applications for flywheels are for some form of instantaneous power, two examples of which areshown in figure {10}. FERC in the United States has passed regulations 755 and 784, specifically aimed atflywheels, allowing flywheels to be paid for their performance advantage (i.e. speed of response) inproviding frequency regulation, over the traditional, less efficient regulation by thermal generators (fig.{11}). The lesson here is that any changes to market rules must regard the technologies and theopportunities presented by the system.

Next, CUE has been working to test lithium-ion battery system with 1.2 MWh of storage using a 370kW ABB converter, with a view to developing a standard set of test protocols, that then can be a standardreference for developers and regulators. The tests, for example, have allowed development of graphs likefigure {16}, showing how operation and maintenance costs increase as the number and depth of charge/discharge cycles increases. Also from CUE’s tests, figure {17} shows how the same factors affect battery life.

CUE is also currently testing out an ice storage technology (running a chiller generating ice at night forbuilding cooling during the day), funded by Toronto Hydro, located on top of the CUE building. Figure {20}shows the results, on the basis of which Toronto Hydro is able to calculate how much it can defer upgradeson its lines. The building’s electrical demand was reduced by 5.5 kW during the day and allowed Ryerson tosave on its energy bills.

Slide 20What are the drivers for change? Prof. Venkatesh asked. Is it technology alone, or is it cost or convenience?

Landis Kannberg, lead manager from Pacific Northwest National Laboratory provided an overview onthe readiness of various technologies.

Slide 2There are many different battery storage technologies, some of which are in their early stages

including sodium flow batteries etc. (fig. {slide 2}) Others are more advanced, like the redox flow batteries.All of them must contend with a whole set of issues including codes and standards. There is a series of


studies in Washington and California looking at specific needs that grid storage can meet, information aboutthe strengths of applications in each area, and other attributes which will be important in evaluation.

PNNL thinks in two dimensions: the purpose and value of storage and the impediments indeployment, as well as a suite of technology maturation issues (fig. {3}) – value stream analysis, simulationof performance in the grid, addressing codes and standards that can be either inhibitors or enablers. On thetechnology itself there is component cost analysis, cost models, and approaches to manufacturing that candrive down cost.

Slide 3Caption: This shows how research is focused on areas with the most substantial impact.

Slide 4For example, redox flow batteries were seeing failures at high temperature, thereby also imposing

operating costs since their environment needs to be thermally managed. The batteries were formingprecipitates that clogged flow channels. Further development in the lab lead to the discovery that HClresulted in expanded usability. The new development provided an 80% increase in operating temperaturewindow and a 70% increase in energy density. This technology has now been commercialized and licensedto three different companies.

There are many different storage applications, all with varying valuations and a distinct set ofattributes. The grid is always evolving so the valuation of the applications will always be changing. Bundlingof applications can provide more revenue streams to offset costs. For example, Bainbridge Island in PugetSound was having substantial problems with reliability and capacity of their energy. Puget Sound Energy hadproposed upgrading transmission and substations at substantial cost. Storage offered an alternative,especially using a bundle of services that storage can meet simultaneously. Operating solely for arbitrageresults in one operational curve; adding a balancing service provides a different one, and adding T&Ddeferrals results in a third.

Slide 8, 9.Caption: The effect on cost of bundling several services: arbitrage only versus arbitrage,

balancing and transmission/distribution deferral.

This kind of analysis, in addition to indicating the possible revenue streams, also can clarify what sizeinstallation is needed, in terms both of power and energy.

Slide 10.Caption: From left to right, the value of: substation deferral, capacity, outage mitigation,

balancing services, and arbitrage.

Figure {10} provides a visual method of evaluating different measurements of value with regards to service.Arbitrage is not cost-effective when it is the sole service being provided. However, when you combine theattributes, total value can outweigh the cost of the system.

Energy storage is growing internationally. The Department of Energy (DOE) Sandia laboratory hasinformation in a database on all storage projects worldwide. The Department has been funding substantialdevelopment and demonstration projects, with results due in 2015. The Pacific Northwest NationalLaboratory is also active in this area providing technology development and the analytics to supportdeployment.

Storage can provide multiple values to the grid. Teasing those values out and finding ways to monetizethem is needed for its full deployment.

Lithium-ion is not the only technology that has gone through dramatic improvements over the past 25years, said Dr. Isobel Davidson, Principal Research Officer at the National Research Council. Electrochemicalstorage of all sorts have grown in their applications and global production capacity, with the widespreadadoption of smaller batteries in consumer products such as phones and laptops leading to larger packs beingdeveloped for grid-scale applications today. Different technologies can be considered for different


applications, where the main drivers are cost and siting considerations. There are many changes inregulations that are currently affecting the market. The growth of behind-the-meter applications createsopportunities for smaller, high energy density units. It’s estimated that 25 kWh would be an attractivesystem for a typical commercial building in California.

Slide 3Sodium sulfur batteries have had an early lead in storage applications, but Li-ion has been catching

up, thanks to the number of suppliers and their competitive pricing. Slower than expected sales of electricvehicles has meant more Li-ion batteries being more widely available for storage. At the same time, itsmanufacture for electric vehicles allowed it to be sized up for stationary storage. The high energy density ofLi-ion allows it to be moved from site to site and be tested in multiple applications, and deferral of additionsto infrastructure. Lithium-ion’s high round trip efficiency, over 90%, makes it more competitive in energyarbitrage applications.

Cost is always a concern, currently sitting at $1000/kWh for grid-based applications, but a cost thatwe can expect to shrink by comparison with other applications. See figure {slide 5}.

Slide 5Caption: The line on the left shows the historical experience with lithium batteries for

consumer electronics. Bloomberg estimated a comparable trend line, on the right, for EV applications, but infact the trend has dropped much faster (actual data points shown as triangles), with the cost of areplacement for the Nissan Leaf now at $270 / kWh.

Cost reductions for grid-scale applications can be expected because battery pack construction isessentially the same for all sizes, and so new manufacturing techniques are not required. Mass-producedcells are assembled into modules and then further combined into packs. The major difference is that packsrequire controls and inverters for grid applications.

Li-ion battery cell sizes range from three ampere-hours for a laptop battery to 200Ah per cell for alarge prismatic unit. The batteries can be made into many different shapes including cylindrical, pouches, orprismatic stacks which can be wound or folded. Li-ion is not one type of chemistry, it is a family ofchemistries that provides a range of possibilities for cathodes and anodes. The choice of chemistries willaffect voltage, power rating and safety of the battery, and in deciding on an application, it’s important toknow the chemistry of the particular unit being considered. This method of development provides flexibilityand the same flexibility will be applicable to grid storage. The batteries can be designed for high power orhigh energy or somewhere in the middle.

For an idea of the range of formats, see figure {7}.Slide 7

Caption: On the bottom right, the Nissan leaf uses 4 pouch cells in each module whichare then assembled into a pack. The total number of cells for the battery is less than 200 cells. Tesla, whichuses consumer batteries, uses 7000-9000 cells. Each approach has its pros and cons.

Li-ion batteries have been proven safe and reliable. Everyone has heard stories of batteries failing –this is a small fraction of the number of batteries that are deployed today. However, systems still have to beput in place to assure that these storage systems will fail gracefully. For large systems, it is always prudent toinclude fire suppression functionality.

1. Moderator Adam Tuck (AT): We need to strengthen the supply and value chain in Canada andinternationally. How are collaborations, such as at ESIC, effecting uptake?

Ben Kaun: Especially for battery based storage, with its billion dollar market size, there is a fairly wellintegrated supply chain, with larger packs already being developed for EVs and other high-capacityapplications. ESIC is helping with cost reduction by integrating the various products in the field. In terms ofintegrating batteries for grid applications, there is still some standardization that needs to happen, or justgetting the various parties to communicate in order to avoid non-recurring engineering costs so that


developers don’t have to reinvent each phase of a project. As we see more commonly used processes wewill see some more value chain linkages with regards to grid scale.

James Greenberger: Supply chain road mapping is somewhat overblown. You need to figure outwhere you’re going before you can know where to fill in the gaps in the supply chain. You need 3 things:standards (which EPRI is working on), a mechanism for certification of products, and deployments – time inthe ground. We need to show the bankers that there’s little risk. Once you have that in place, it’s easier tomake a roadmap.

2. Moderator AT: On the commercial side, how are these facilities able to obtain insurance at reasonablecost levels? Is it based on technical or financial risk?

Landis Kannberg: This issue has come up in our work. The DOE hosted a safety workshop whichincluded representatives in the insurance industry. The key is understanding the risks involved in thesestorage technologies. Leveraging development in other industries improves your ability to gain insurance,such as Li-ion batteries. New technologies have new hurdles to gain insurability.

Ben Kaun: Li-ion has a converging technical risk in terms of safety, but integration into gridapplications adds another level of risk. Most failures so far were not in the storage medium itself, butpropagated in from elsewhere.

James Greenberger: There are certainly issues in insurance for renewables. Currently a partner ininsurance is getting out of renewables due to previous loss in the field. To get this to full commercial realitywe need to figure out what you need and get experience to insurers to help them predict reliability toproperly price their product.

Bala Venkatesh: At CUE all projects have to be insured before we can start. Insurance agents looktowards CUE to provide details on reliability. At universities, things blow up all the time, the key is to workwith manufacturers to disclose potentially dangerous equipment.

Isobel Davidson: The Department of National Defense does a lot of extreme abuse testing which maybe of interest to the insurance industry to see what could happen if things go wrong.

3. Moderator AT: There’s no one technology that’s taking over. Why are we not seeing much uptake in theflow battery, and will that change in the short term?

James Greenberger: It comes down to technology risk. The role of other industries cannot beovershadowed. In the case of Li-ion, the automotive industry is providing information for financiers andinsurers, making it more familiar and helping understand risks. We need more information about flowbatteries, which will come about by putting something on the ground.

Landis Kannberg: There are only a few systems installed and new chemistries are coming along withlittle practical experience. We, as a species, always want to take the minimal amount of risk. People don’ttake on technologies to further storage technology but to address a suite of other issues with low risk. Newtechnologies need experience in the field such that we can see the risks.

4. Audience member question: Tesla cars are marketed towards a certain type of consumer – how close arewe to that type of packaged solution for solar, that a consumer can use in their residence to disconnect fromthe grid?

Ben Kaun: There is fairly widespread use of net metering in the US, where customers benefit fromretail values for energy they create and inject into the grid. There will be more evolution as time goes on.The solar industry is investing in new storage products along this line – compact battery products integratedwith solar power. But it depends heavily on a support program that will reduce upfront costs.

James Greenberger: It’s not an accident that Tesla and Solar City are owned by the same people, whoare very interested in developing that kind of package. Honda is selling energy home management systemsin Japan, based on a battery closely related to their automotive batteries. Detroit is also looking into thisidea as well.


Landis Kannberg: The bundled approach that Solar City is advocating is one approach. Currentproduction at Tesla is producing 2 GWh worth of storage annually. With their new factory they will produceabout 35 GWh per year.

A comment from another audience member regarding above question: The audience member justcompleted a solar PV project off Lake Erie. Solar panels are used successfully to power up a brand newelectric vehicle. This idea is feasible with technologies available today, using a Canadian-made building-integrated photo voltaic system.

Comment from an audience member: We are moving to net zero homes, though we still need the gridto back us up. Following Superstorm Sandy resilience has been recognized as very important. Value versuscost is the consideration. A pure focus on lower costs is not the way forward.

5. Moderator AT: : There is a lot of clean energy dialogue and lots of initiatives to facilitate communication.We benefit from a lot of people working in the US. How then do we make the success we’re seeing inOntario an international success? Based on experience in US, what kinds of things have you seen be reallysuccessful there and how does collaboration fit in?

James Greenberger: From the standpoint of road mapping, it’s all about focus, figuring out what youwant to use the technology for, supporting the businesses and getting those products into the ground andgaining experience. Demonstration projects are absolutely critical in moving the product to commerce.

Ben Kaun: The amount of need is much greater than the resources available to fill it. We have newneeds and have organizations popping up but it’s unclear who will be doing what. Organizations need tofigure out what needs to be done, apportion the tasks among them and then collaborate on finding theanswers.

Further electronic media

To see the web pages at which APPrO has posted all the speaker presentations and backgroundpapers readers can use the following co-ordinates and credentials:

Energy Storage Symposium and APPrO 2014 Technical Conference presentations pagehttp://conference.appro.org/conference2014/index.php?option=com_sdlisting&task=userform&year=20142

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