The Role of Energy Storage as a Renewable Integration Solution under a 50% RPS

Joint California Energy Commission and California Public Utilities Commission Long-Term Procurement Plan Workshop on Bulk Energy Storage

November 20, 2015Sacramento, California

Arne Olson, Partner

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Storage is understood to be a key renewable integration solution

It is widely assumed that dedicated grid storage will be needed at high levels of wind and solar penetration

Studies to date have included storage as a renewable integration solution but have not provided clarity on when storage is needed, or what type

• E3’s Investigating a Higher RPS study estimated benefits from 5,000 MW of energy storage as a solution case

• E3’s Western Interconnection Flexibility Assessment tested benefits of 6,000 MW of energy storage as a solution case

• CEERT’s Low Carbon Grid study assumed 7,400 MW of grid storage in all cases

• CAISO investigating 500 MW of storage in 2014 LTPP case

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Overgeneration is the main challenge at 50% RPS

Studies show that the potential for over-generation becomes significant at higher renewable penetrations

Renewable energy production is concentrated during relatively few hours of the year

California will need to find ways to use, export or store surplus renewable energy

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Value of integration solutions is driven by the cost of overbuilding renewables

Renewable curtailment requires “overbuild” of renewable resources to replace curtailed energy

• Increases the cost of RPS compliance

Integration solutions reduce curtailment and overbuild costs

Optimal level of integration solutions minimizes balances the overbuild costs with solution costs

Least cost portfolio of solutions and

renewable overbuild

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E3’s Investigating a Higher RPS: storage provides value but is higher-cost than other solutions

Low-cost pumped hydro reduces average retail rate by 0.6¢/kWh under Large Solar case

• Assumes no other solutions are implemented!

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CAISO-CEC Integration Solutions Study

Study purpose: explore renewable integration solutions

• Previous studies have identified the need for solutions to integration challenges at 50% RPS

• E3’s Higher RPS study evaluated several individual solutions

• CEERT Low Carbon Grid study assumed all solutions in place

This study seeks to identify how much of which solutions are needed, and when

• Evaluate solutions needed for different combinations of renewable portfolio and operating regimes

Renewable Integration Solutions (RESOLVE) Model adds storage or other solutions if cost-effective

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Bulk storage provides two types of renewable integration services

Long duration services: storing energy during one period and providing it back to the grid during another

• Value from energy arbitrage and hourly ramps

• Particularly valuable when charging can occur during overgeneration conditions

Short duration services: providing ancillary services for meeting grid needs within the operating hour (Regulation, Load Following, Spin, Non-Spin)

• Particularly valuable during overgeneration conditions

Both services can be provided by multiple types of storage

• Li-ion batteries, flow batteries, pumped hydro

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Long-duration services

Storage charges during daylight hours and generates at night to displace fossil generation and meet evening ramps

Example April day

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Short duration services

Storage provides within-hour reserves, reducing the need for thermal generation to run

• This provides highest value during overgeneration hours by reducing renewable curtailment

Renewables

Scheduled Curtailment

Load following reserve requirements

Gross Load

Net Load

Using storage for Load Following reserves reduces the need for thermal generation

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Storage costs are a big driver of results

Technology Round-Trip EfficiencyLi Battery 85%

Flow Battery 70%

Pumped Hydro 75%

RESOLVE builds energy storage if it reduces the cost of RPS compliance• Independently solves for optimal

discharge capacity (MW) and energy storage (MWh)

Battery costs for bulk grid needs are not well understood today and are more uncertain in the future

More storage added under aggressive cost reductions

• Storage costs are traded off against overbuild cost

“Mid” storage costs assumptions($/kW-yr)

6-hr Li-ion battery

6-hr flow battery

12-hrpumped storage

2-hr flow battery

2-hr Li-ion battery

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Observations from preliminary RESOLVE runs

Significant quantities of storage resources are added under high-solar cases without other solutions

Implementation of other solutions can delay and reduce the need for energy storage

Some storage is needed for long duration services above 55% RPS in nearly all cases

Quantity, type and duration of storage depends on the relative costs

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“Pocket Guide” to Integration Solutions

Integration solution Findings

Regional coordination More efficient dispatch and reduced curtailment

Time of use rates Shifts energy consumption toward daylight hours

Subhourly renewable dispatch

Allows system to operate with fewer thermal resources during overgeneration events

Renewable portfolio diversity

Avoids curtailment by spreading renewable production over more hours of the year

Flexible loads Advanced DR

Shifts energy consumption toward hours with overgeneration, but cost and potential are unknown

Additional storage Reduces curtailment but requires significant investment

Gas retrofits Makes existing resources more flexible at a low cost

New flexible gas resources Provides limited dispatch flexibility at a high cost

Energy efficiency Provides significant cost and GHG savings but may not reduce curtailment

Conventional demand response

Provides cost savings but does not significantly reduce curtailment

Low cost solutions with

potentially large benefits

Costs and benefits should be evaluated on specific project

or program basis

Valuable, though not as

much for integration

Solutions with the highest

identified renewable integration

value

Net benefits even w/o renewables

Thank You!Energy and Environmental Economics, Inc. (E3)

101 Montgomery Street, Suite 1600

San Francisco, CA 94104

Tel 415-391-5100

www.ethree.com

Arne Olson, Partner (arne@ethree.com)