GES2013 Day2 Session2 RWE Friedrich Schulte

RWE 25/06/2013 PAGE 1

The potential and costs of electricity storage

Global Energy Systems, Edinburgh27 June, 2013Friedrich Schulte, RWE AG

RWE AG, CON 25/06/2013 PAGE 2

Initial situation of the German “Energiewende”1

Central storage within the transmission grid2

Agenda

Decentral storage within the distribution grid and Local “Home” storage 3


The German Federal Government assumes a decrease of

power generation of 45 % until 2050

Source: EWI/Prognos/GWS Studie

The initial situationThe initial situation of energy turnaround

Energy concept of the German Federal Government

2010 2020 20502030 2040

Nuclear energyConventional generation

RES (approx. 80% of generation)

Imports

Decrease of power consumption

- 45%

17%

25%

58% 45%

10%

20%

25%

The initial situation of the German „Energiewende“


Fluctuating power generation will continue to increase

Source: Alfred Wegener Institute

Source: BMU, July 2011; Fraunhofer ISE, July 2012; own assessment

Wind power feed-in 2008

Variation of the solar irradiation 2009-11-9Contribution of renewable energy to the gross power

generation Germany (2000 to 2013)

0

200

400

600

800

1.000

1.200

1.400

1.600

06:00 12:00 18:00

MW

20.000

18.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

JanDecNovOctSepAugJulJunMayAprMarFebJan


24

22

20

17

1615

14

12

109

8876

0

2

4

6

8

10

12

14

16

18

20

22

24

[%][TWh]

160

150

140

130

120

110

100

90

80

70

60

50

40

30

20

10

0

2013e

2012

2010

2005

2000

Biomass

Hydro Power

Wind

PV

Share

W/m

2


Integration of fluctuating power generation is a challenge

in many respects

German wind energy production at selected days in April 2011

15,000

10,000

5,000

0

20,000

Wind input in MW

12.04. 13.04. 14.04. 15.04. 16.04. 17.04. 18.04. 19.04. 20.04. 21.04. 22.04.

Supply of very high

load

Providing large amounts of

power for longer time frame

Very high load

gradients

> Solutions have to comply

with all requirements at

the same time

> Criteria for the mix of

measures are:

- Costs- Technical characteristics- Emissions- Acceptance



Energy storage is just one of four major measures to

balance power generation and consumption continuously

1

Power generation Power consumption

230 V 50 Hz

Flexible power generation Expansion of electricity

grids

„Smart“ Technologiesto control demand side

2

3

Possible technical measures

Energy storage4



System levellocation of storage not relevant

(central storage on UHV / HV level)

Decentral level storage in

distribution grid

Local levelStorage at home




distribution grid


distribution grid


For the analysis three modelling stages result from the

possible location of the storage within the grid level


There is no one-size-fits-all solution. The different storage

applications call for specific solutions

min

year

week

hour

month

The various needed technologies are defined by type and level of application>1) Partly caused by build-up of RES2) Uninterrupted power supply

Integration of Renewables

Load balancing for

customers

System Services1)UPS2)

Avoiding

Grid

expansion

Arbitrage

peak/off-peak

local level

decentral level

1 MW 10 MW 100 MW 1 GW 10 GW100 kW10 kW

system level





Agenda

Decentral storage within the distribution grid and Local “Home” storage3


0

1

2

3

4

5

6

7

8

9

2012

2017

2022

2027

2032

2037

2042

2047

2052

Ko

ste

n u

nd

Erl

ös

e in

Mio

EU

R (

rea

l 2

01

0)

SDL

Intraday

Day-aheadVermarktung

New built PSP is mid-term unattractive, but within the next

20 years notable improvements of the situation are expected

� Storage makes its revenue using all marketing opportunities, whereas no multiple sale may occur: Day Ahead Intraday und System services

� Regarding system services storage can offer secondary regulation and tertiary reserve:� Power provision is remunerated in EUR/MW by the hour – independently of the energy demand

� Energy supply remunerated in EUR/MWh by physically delivered MWh balancing energy

1

2

3

Revenue streams of pumped hydro storage

New built pumped hydro commissioned in 2012 (100 MW, 10h)

Reven

ues i

n M

io.

EU

R (

real

2010)

� Day Ahead Arbitrage is still the most important source of revenues

� Due to portfolio considerations for a specific plant revenues may shift from arbitrage to other sources

� Revenue significantly improves after 2030

� If a new built PHS is commissioned later the overall IRR over the lifetime increases

System Services

Central storage within the transmission grid


The storage of excess power from renewables in the gas

grid provides some important...

... advantages ...

> Storage close to generation and

balancing of fluctuating feed-in

> Reduction of electricity grid bottlenecks

> Gas grid provides large energy storage

capacities up to seasonal storage

> Contribution to the security of supply

… but also has disadvantages

> High investments costs

> Low efficiency

> High economic costs

> Lack of commercial maturity

Excess power

from RES

Load-Centers

gas-grid

power-grid



Power 2 Gas is technically feasible, however with competitive

disadvantages for all conversion routes

+ -

G

Fluctuatinggeneration

ElectrolysisNatural gas production

Existinggas grid+)

CCGT-plant

CO2ηBW ≈ 72 % ηHW ≈ 60 %

el. H2 CH4 CH4

ηBW ≈ 77 %

Note: *) A reliable cost evaluation of excess RES is currently unavailable. Assumption: 10 ct/kWhCapex in €/kW feed electricity

Electrolysis, CH4 and CCGT-planteff. 32 % - Electricity costs 1€ / kWh

> Wind to H2 to CH4 is 10 - 20x more expensive than electricity and gas today

> Significant progress in technical developments is still needed>

Elektrolysis and production of CH4

η=55%; CH4 costs 50 ct/kWh



In the long-term especially pumped hydro storages

remain attractive on system level

Li-Ion-batteries in all scenarios

< -10% (despite learning curve)

from 2030 „interesting“ (here marginal PHP*)

P2G and H2 may become profitable in the long-term due to favourable storage capacity

CAES can reach the threshold long-term only

with higher storage volume (>10 full load hours)Range within

scenarios:

Dynamic

Best View

Stagnation

Inte

rna

l ra

te o

f re

turn

(IR

R)

rea

l

Pumped

hydro

storage (new)

Diabatic

Compressed air

storage

Adiabatic

Compressed air

storage

Power-to-gas, Electrolysis

with H2-turbine

Lithium-Ion

battery

* 2GW additional PHP storage until 2020 assumed, additional new PHP calculated by model.

Commissioned

Technology



In the mid term central storage will mainly rely on existing

plants. Options should be developed by selected R&D

*) Adiabatic means using the compression heat. Advanced storage technology

highly efficient but still expensive. RWE Generation develops with R&D project “Adele”

� Mid-term some upgrades and few especially

favourable PHS Projects

� Long-term plus 10 GW.

Pumpedhydro storage

(PHS)

Compressed air storage (CAES)

Adiabatic compressed air

storage (ACAES*))

Perspective on system level

� Needs very high gas prices and RES share >70 %

� Trend towards bigger storage volumes by bigger

caverns to unload storage over up to 20h

� Due to thermal storage capex even higher

compared to CAES

� Efficiency up to 70 %

� Cost reduction for storage required

Action

� Operate existing

plants

� Keep future

options open

� No activities

� Pursue R&D

projects

� Pursue R&D

projects

Power-to-Gas(P2G)

� Very pre-commercial technology, long-term option

� Poor efficiency and high capex

� Viable at very high share of RES, weak grids and

demand for seasonal storage

� Uses gas grids as cheap existing big storage



Heute

20 to 25%

2020

35 to 40%

2030

50 to 60%

2050

75% to 100%

Relevance of new Storage

New Pumped Hydro

Compresssed Air

Power-2-Gas

Only with a share of RES exceeding 50 % significant

storage increase on system level will be required

With the “Energiewende” increasing share of RES power generation




Agenda

Decentral storage within the distribution grid and Local “Home” storage3


Grid extension is rather cheap - making grid storage only

the second best choice to cope with a high share of RES

� Grid extension costs caused by massive PV amounts to € 60k, even with branch length as long as 600 m

� The equivalent solution using a 100 kW/4h Lithium-Ion Battery will still cost about €90k**) in 2050

� With more than 40 years grids have at least twice the operational life time compared to storage

� Managed distributed generation in a smart energy environment will further limit storage

� Medium voltage grid extension cost per kW is even cheaper than in low voltage

� Although distances are longer, the storage business casesin the regarded scenarios do not close

Decentral storage

Medium voltage grid

Low voltage grid – typical situation

*) the battery was analysed using three representative grids for suburban area, villages and

rural area within the same scenarios used for analysing central storage**) combined capex model assuming optimistic €80 kW (2010 plus €190 kWh (2010 in 2050

at a useable capacity of 90 %


The added value of storage in the distribution grid will not

be satisfactory from macro economic perspective only

However, if policy supports decentralised Storage for reaching RES targets it will still take off!!

Technology

Low Voltage Medium Voltage Grid

Compressed

air storage

Power-to-gas Power-to-H2

incl. TurbineFlow batteries Lithium-Ion

batteryLead-acid

batteryLithium-Ion

battery

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

2030 2050 2030 2050 2030 2050 2030 2050 2030 2050 2030 2050 2030 2050

Inte

rna

l R

ate

of

Re

turn

(IR

R)

rea

l

Best view

Dynamik

Stagnation

Regardless of

the battery

location IRR is

negative

Commissioned

P2G and H2 may become economic in the long term provided that scalability and ambitious learning curves could be achieved

Decentral storage within the transportation grid


Recent developments of the energy system are very much in

favour of battery home storage systems

>Biggest uncertainties for local storage business:

a) future stationary battery characteristics and prices b) future regulatory framework (related to social consent on the “Energiewende”)

End customer prices1) PV modul prices2)

� Concerns about rising

electricity prices

� Personal independence and

autarky are desirable

� Security of grid supply is not

an issue, even in winter after

shut down of nuclear

� “Get rid of the big utilities”

Mainstream believes

Push to develop and use local storage systems

Stable trend to higher prices

driven by „EEG“ and other

fees and taxes

1) bdew: “Haushaltsstrompreis” D, 1998 – 2013 in ct/kWh2) Fraunhofer Institut ISE, Freiburg, 2013

Unprecedented decrease in

PV system prices led to

system parity even in GER

1998 … 2013

Ct/kWh

1998 … 2013

€/Wp

Decentral storage


Batteries allow for an increase of the local consumption of

the PV power generation

2423222120191817161514131211109876543210

Houshold

power consumption

PV power

generation

Local PV power generationand consumption will be decoupled time-wise

Battery

charging

Battery

discharging

hour of the day

kW

For a typical*) B2C customer a battery will increase the self consumption by about 20 %

>� The economics of batteries rely on the avoided power purchases� Business case depends on avoided grid fees, taxes, …� With decreasing battery prices home-storage will be profitable for the investor

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6 7 8 9 10

PV

self

consum

ption

PV System size [kWp]

15,00 kWh

5,00 kWh

0,00 kWh

*) Family household, 4.500kWh annual consumption,

5 kWh Battery, 5 kWp PV

+20%

Decentral storage


If you want to know more: www.RWE.com > Innovation

Thank you very much for your attention!

Documents

GES2013 Day2 Session2 RWE Friedrich Schulte