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Energy Storage: Power System Game Changer
Prepared for Minnesota Energy Storage Summit 2015
July 14, 2015
Janice Lin
Managing Partner, Strategen Consulting, LLC
Executive Director, California Energy Storage Alliance
Chair, Energy Storage North America
Chair, Global Energy Storage Alliance
Confidential
Objectives
» Strategen CESA ESNA GESA Introduction
» Why Storage is a Game Changer
» California Update
» Share Lessons Learned
» Open Dialogue RE: Implications for Minnesota
» Find New Champions
© 2015 Strategen Consulting3
California Energy Storage Alliance (CESA)
» Founded in January, 2009
» 80++ member companies
» Active in over 20 regulatory proceedings at CPUC, CAISO, and CEC
Strategen Consulting
» Started consulting in PV and energy storage space in 2005
» Unique focus in strategic advisory work in the clean energy industry
Energy Storage North America (ESNA)
» Largest grid storage conference in the world
» 28 countries in attendance
» Next event: October 13-15, 2015 San Diego Convention Center
Introduction
© 2013 California Energy Storage Alliance
A sampling of our clients:
Strategic thinking and industry expertise creates profitable clean energy businesses
U.S. Department of
Energy
Strategen Clients
4
CESA 2015 MEMBERSHIP
CESA STEERING COMMITTEE MEMBERS
1 Energy Systems Inc.AbengoaAdvanced Microgrid SolutionsAES Energy StorageAquion EnergyARES North AmericaBrookfieldChargepointClean Energy SystemsCODA EnergyConsolidated Edison Development, Inc.Cumulus Energy StorageCustomized Energy SolutionsDemand EnergyDuke EnergyDynapower Company, LLCEagle Crest Energy CompanyEast Penn Manufacturing CompanyEcoult
EDF Renewable EnergyElevation SolarELSYS Inc.Energy Storage Systems, Inc.EnersysEnerVault CorporationEnphase ENERGYEV GridFlextronicsGE Energy StorageGreen Charge NetworksGreensmith EnergyGridtential Energy, Inc.Hitachi Chemical Co.Ice EnergyIMERGY Power SystemsInnovation Core SEI, Inc (A Sumitomo Electric Company)Invenergy LLC
K&L GatesLG Chem Power, Inc.LightSail EnergyLockheed Martin Advanced Energy Storage LLCLS Power Development, LLCManatt, Phelps & Phillips, LLPMobile SolarNEC Energy Solutions, Inc.NextEra Energy ResourcesNRG Solar LLCOutBack Power TechnologiesPanasonicParker Hannifin CorporationPowertree Services Inc.Primus Power CorporationPrinceton Power SystemsRecurrent EnergyRenewable Energy Systems Americas
IncRosendin ElectricS&C Electric CompanySaft America Inc.Sharp Electronics CorporationSkylar Capital ManagementSolarCitySony Corporation of AmericaSovereign EnergySTEMSunEdisonSunPowerToshiba International CorporationTrimark Associates, Inc.Tri-TechnicWellhead ElectricYOUNICOS
Steve BerberichPresident & CEO
CAISO
Doug LittleCommissionerAZ Corporation
Commission
Anne McEnteePresident & CEO,
RenewablesGE Power & Water
Pedro PizarroPresident Southern
California Edison
Michael QuinnVice President & CTO
Oncor Electric Delivery
Advance education, collaboration, knowledge and proven frameworks about the benefits of energy storage globally
» Learn from local market development efforts, help proliferate best practices
» Foster collaboration among key stakeholders including policy makers, utilities, renewable energy community, financial institutions and environmental organizations
» Help establish standards and protocols to advance energy storage acceptance worldwide
© 2013 Strategen Consulting
Objectives
» Strategen CESA ESNA GESA Introduction
» Why Storage is a Game Changer
» California Update
» Share Lessons Learned
» Open Dialogue RE: Implications for Minnesota
» Find New Champions
© 2013 Strategen Consulting
Storage uses a time-tested tradition
9
© 2013 Strategen Consulting
We can bottlesunshine and wind
10
Power System Gamechanger:
ENERGY STORAGE
© 2013 Strategen Consulting
Storage is already a partof our everyday lives
12
© 2013 Strategen Consulting
Electro-Chemical
(Flow battery / Lithium Ion )
Mechanical
(Flywheel)
Bulk Mechanical
(Compressed Air)
Thermal
(Ice / Molten Salt)
Bulk Gravitational
(Pumped Hydro)
Transportation
(Electric Vehicles)
Many solutions are available today
© 2013 Strategen Consulting
Storage isa fast growing Californiaindustry
© 2013 Strategen Consulting
ASSUMPTION FACT
Renewable energy
will be wasted
Energy storage can
match renewable
generation to demand
© 2013 Strategen Consulting
We make “jam”
out of sunshine.
Make it Store it Use it
16
© 2013 Strategen Consulting
Example 1: Self-consumption in Germany
»“Self-consumption” refers to on-site energy production for on-site energy consumption (while receiving value for electricity fed to the grid).
Feed-in tariffs, high electricity rates, and the growing availability of storage systems are making self-consumption a much more attractive option for
German solar producers
»The Rise of Self-consumption in Germany: Private electricity prices are now almost
twice as high as the cost of self-generated solar electricity from the roof of a house
• Feed-in-tariff: €0.15
• Electricity rates: €0.27 -0.29
Germany’s KfW Development Bank is offering low-interest loans for the installation of a combined PV and storage system or for retrofitting an existing solar plant with a battery.
FIT Rate for Small-Scale Systems versus Residential Retail Electricity Rates in Germany
Electricity Cost exceeds PV Cost
© 2013 Strategen Consulting
Example 2: We build peaker plants to do one job
Peaker Replacement
© 2013 Strategen Consulting
Comparing Energy Storage With The Status Quo
19
• Siting Constraints
• Installation Speed
• Available Flexible Range
• Capacity Factor (hours of operation/year)
• Multiple Value Stream Capture
• Ramp/Response Rate
• Total Emissions
• Water Usage
VS.
Natural Gas Peaker Energy Storage
Key Criteria to Consider
© 2013 Strategen Consulting
Energy Storage Can Be Sited Closer to the Load
Russell City Energy Center Hayward, Ca
ES Siting Source: Powertree Integrated Energy Services
20
© 2013 Strategen Consulting
Energy Storage: Diverse, Modular, Faster to Install!Battery and thermal storage resources can be installed much more quickly than
traditional resources, reducing risk and increasing technology flexibility
0 1 2 3 4 5 6 7
CCGT
Combustion Turbine
Battery/Thermal Storage
Time in Years
Minimum Time
Maximum Time
Siting, Permitting, and Installation Time by Resource
21
© 2013 Strategen Consulting
Energy storage responds far more quickly and is more effective
Energy Storage Can Respond Faster and is More Effective
Energy Storage System
Full Power Ramp
<1 second
Graph Source: Kirby, B. “Ancillary Services: Technical and Commercial Insights.” Wartsilla, July, 2007. pg. 131. http://www.cpvsentinel.com/about.html
LMS 100 Gas Peaker Plant
Full Power Ramp
10 Minutes
© 2013 Strategen Consulting
Energy Storage: Four Times the Flexible Range
23
Important to compare benefits, not megawatts
100MW LMS 100
Gas Peaker Plant1
100MWEnergy Storage System
50MWMin. Output
100MWMax. Output
50 MW Range 100MWDischarge
-100MWCharge
200MW Range
1. Source: http://yosemite.epa.gov/R9/air/EPSS.NSF/e0c49a10c792e06f8825657e007654a3/8a153d8ab24cb6868825723400679b82/$FILE/WCE%20Evaluation.pdf
© 2013 Strategen Consulting
Energy storage can be utilized more fully throughout the year
Energy Storage: Three Times the Utilization
24
100 MWLMS 100
Gas Peaker Plant1
100MWEnergy Storage System
>95%UtilizationUtilization
20%-40%
0% 50% 100%
Startup Time
Shutdown Time
Min Utilization
Max Utilization
Unutilized
1. Source: http://yosemite.epa.gov/R9/air/EPSS.NSF/e0c49a10c792e06f8825657e007654a3/8a153d8ab24cb6868825723400679b82/$FILE/WCE%20Evaluation.pdf
0% 50% 100%
Startup Time
Shutdown Time
Min Utilization
Max Utilization
Unutilized
© 2013 Strategen Consulting
PEAKER STORAGE
Years to install
Slow to respond
Does one thing
Dirties air
Used 5% of time
Wastes water
Months to install
Fast to respond
Does many things
Keeps air breathable
Used 95% of time
Water saver
© 2013 Strategen Consulting
.
© 2013 Strategen Consulting
ASSUMPTION FACT
Energy storage isn’t
viable.Energy storage is
already saving money
throughout the US
© 2013 Strategen Consulting
Energy Storage in the news (April-May 2015)
© 2013 Strategen Consulting
Validation of Cost Effectiveness: SCE (2014)
Seller Resource TypeTotal
Contracts
Max Quantity(LCR MW)
Selected Energy Storage Resources
AES In-Front-of-Meter Battery Storage 1 100.0
Advanced Microgrid Solutions
Behind-the-Meter Battery Storage 4 50.0
Ice Energy Behind-the-Meter Thermal Storage 16 25.6
NRG Energy Behind-the-Meter Battery Storage 1 0.5
Stem Behind-the-Meter Battery Storage 5 85.0
Total 26 261.1
Source: SCE RFO winners. https://www.sce.com/wps/portal/home/procurement/solicit1n/lcr
Southern California Edison chose to procure over 5x the amount of energy
storage than required by the CPUC to meet Local Capacity Requirements (LCR)
» 50 MW of energy storage required. 261 MW Procured
» Over 1,800 offers of all resource types competing
© 2013 Strategen Consulting
Objectives
» Strategen CESA ESNA GESA Introduction
» Why Storage is a Game Changer
» California Update
» Share Lessons Learned
» Open Dialogue RE: Implications for Minnesota
» Find New Champions
© 2013 Strategen Consulting31
California: Home to the World’s Largest…
SCE Tehachapi Li-Ion Battery 8 MW/32 MWh – Tehachapi, CA
Ivanpah Solar Thermal Project 393 MW - San Bernardino, CA
Desert Sunlight Thin-Film PV 550 MW – Riverside, CA
Alta Wind Energy Center 1550 MW - Kern County, CA
Solar Star Silicon PV Project 579 MW – Kern County, CA
Geysers Geothermal Plant 955 MW – Lake County, CA
© 2013 Strategen Consulting32
California as a Role Model
2013 California – AB 2514 Sets 1.325 GW energy storage target - passed
2014 Arizona – All-Source Procurement with Storage Carve-out required for Arizona Public Service
2014 Hawaii – PUC directed HECO to prepare energy storage plans.Large RFP issued for up to 200 MW of energy storage
2015 Oregon – HB 2193 Sets 5 MWh energy storage target – passed
2015 US Senate – Energy Storage Promotion and Deployment Act of 2015 Sets national mandate equal to 2% of 2024 peak load -introduced
Takeaway
California can be a learning lab for other jurisdictions
Confidential, Copyright 2015 Strategen Consulting LLC33
» AB 2514▪ 1,325 MW procured by 2020
» Renewables integration driving need for Flexible Capacity ▪ Estimated 7,500 – 11,000 MW of flexibility needed
» Long Term Procurement Planning from OTC and SONGS retirement (6,029 MW OTC retiring by 2024) ▪ SCE (50 – 600MW)▪ SDG&E (25 – 300MW)
» CAISO Reforms to Wholesale Market▪ Market design updates specific to storage▪ Storage being considered in transmission planning process▪ Updates to interconnection process
» SGIP - $83M/year through 2019
» Net Energy Metering / Rate Design
Variety of factors Advancing Energy Storage in CA
© 2013 Strategen Consulting
California Policy Landscape – Leadership From Our GovernorGovernor Jerry Brown’s State of the State Address
January 5, 2015
Governor’s ambitious new clean energy 2030 goals:
» Increase renewable electricity use from 33% to 50%
» Reduce petroleum use in cars & trucks by up to 50%
» Double the efficiency of existing buildings and make fuels cleaner
» Reduce emissions to 40% below 1990 levels (April Executive Order)
2013 2020 2030
© 2013 Strategen Consulting
35
© 2013 Strategen Consulting
Energy storage accepted as key to enable greater grid flexibility
Chart Source: Prepared statement of Mark Rothleder on behalf of the CAISO (February 20, 2015). http://www.ferc.gov/CalendarFiles/20150220110211-Rothleder,%20CAISO.pdf
* Source: CAISO Final 2014 Flexible Capacity Needs Assessment May 2014
Actual Net Load Curve for April 12, 2014
CAISO estimate: system-wide 2014 flexible capacity requirement of7,520 MW (May) to 11,212 MW (Dec)
43% of prices were
zero or negative
© 2013 Strategen Consulting
Significant renewable curtailment forecasted at 40% RPS
Estimated Renewable Curtailment Frequency and Magnitude in 2024 at 40% RPS
Source: Phil Pettingill, Governor’s Greenhouse Gas Reduction Goals http://www.caiso.com/Documents/Presentation_Governor50Workshop_PPettingill_7-9-15.pdf
© 2013 Strategen Consulting
Governor Brown Sponsored AB 2514 in 2010
Use case category, by utility
2014 2016 2018 2020 Total
Southern California Edison
Transmission 50 65 85 110 310
Distribution 30 40 50 65 185
Customer 10 15 25 35 85
Subtotal SCE 90 120 160 210 580
Pacific Gas & Electric
Transmission 50 65 85 110 310
Distribution 30 40 50 65 185
Customer 10 15 25 35 85
Subtotal PG&E 90 120 160 210 580
San Diego Gas & Electric
Transmission 10 15 22 33 80
Distribution 7 10 15 23 55
Customer 3 5 8 14 30
Subtotal SDG&E 20 30 45 70 165
Total – all 3 Utilities 200 270 365 490 1,325
Resulting CPUC Requirement: 1.325 GW in operation by 2024
© 2013 Strategen Consulting
Results of Strategen’s Production Cost Modeling with Storage
39
0.4125 GW Storage (only 2 hour storage)
1.325 GW Storage (2, 4, & 6 hour
storage)
2.65 GW Storage(2, 4, & 6 hour
storage)% of total CA Generation Capacity
0.5% 1.7% 3.4%
Unit Starts Reduced in CA*
3,000 8,000 13,000
Curtailment Reduction in CA
8.1% 23.3% 40.0%
» Even a small amount of energy storage makes a big system impact
» There are diminishing returns to additional storage, but the benefits have not yet plateaued
» Under the storage scenarios, 3-4 emergency peaker natural gas plants were removed from dispatch
*Numbers are rounded for simplicity
© 2013 Strategen Consulting
California utilities are far exceeding their mandated targets(Figures in MW)
2014 Proposed ProcurementsIOU
(Existing or InProgress)
CPUC2014
Target(AB 2514)Transmission Distribution Customer Total
PG&E 50 21.5 6.5 78 12* 90
SCE Open Ended 16.3 0 >16.3 280** 90
SDG&E 10 6.0 0 16 86*** 20
Totals >60 43.8 6.5 >110.3 378 200
Source: California Public Utilities Commission
*Excludes 150 MW Rice Solar – to be counted in future solicitations
**Includes 261 MW of storage projects under procurement from December 2013 LCR solicitation
***Includes 40 MW Lake Hodges Pumped Hydro and min 25MW LTPP Track 4 LCR requirement by 2022
© 2013 Strategen Consulting
Validation of Cost Effectiveness: SCC Track 1 LCR RFO (2014)
Seller Resource TypeTotal
Contracts
Max Quantity(LCR MW)
Selected Energy Storage Resources
AES In-Front-of-Meter Battery Energy Storage 1 100.0
Ice Energy Behind-the-Meter Battery Energy Storage 16 25.6
Advanced Microgrid Solutions
Behind-the-Meter Battery Energy Storage 4 50.0
Stem Behind-the-Meter Battery Energy Storage 5 85.0
Total 26 260.6
Source: SCE RFO winners. https://www.sce.com/wps/portal/home/procurement/solicitation/lcr
Southern California Edison chose to procure over 5x the amount of energy
storage than required by the CPUC to meet Local Capacity Requirements (LCR)
» 50 MW of energy storage required. 261 MW Procured
» Over 1,800 offers of all resource types competing
© 2013 Strategen Consulting
SCE Energy Storage LCR RFO Results
Counterparty Technology
AES; NRG Energy, Inc. Large scale lithium ion battery installation
Advanced Microgrid Solutions; STEM
Distributed customer-sided lithium ion battery installations that offer Demand Response-like load drop
Ice Energy Holdings, Inc.Distributed customer-sided thermal storage that reduces Air Conditioning load
AES
NRG Energy,
Inc.Advanced Microgrid Solutions
Stem
Ice Energy Holdings,
Inc.
Grid-Connected
2
Customer-Connected
1
Total Energy Storage Offered (1590 MW)
Contracted Energy Storage(261 MW)
Source: SCE
© 2013 Strategen Consulting
Distributed storage will play a key role
» Incentive program launched in 2001 to encourage customer sited distributed generation. Provides financial incentives for the installation of qualifying technologies installed to meet all or a portion of the electric energy needs of a facility.
» Annual Budget: $83million (through 2019)
» $1.42/Watt for Advanced Energy Storage (min 2 hours duration)
» Administered by CA utilities
» New program criteria (2015-2019): Cost effectiveness of Greenhouse Gas (GHG) emission reductions over the useful
life of the resource will determine eligibility and incentives levels.
Reductions of aggregate, non-coincident customer peak demand and improved onsite electricity reliability.
The Self Generation Incentive Program (SGIP) is one of the longest-running and most successful distributed energy resource incentive programs in the US
Capacity Incentive Rate (% of Base Cost)
0 – 1 MW 100%
1 – 2 MW 50%
2 – 3 MW 25%
© 2013 Strategen Consulting
SGIP Reservations - 2014
$1,150,067 $1,166,400
$3,742,120
$7,192,022
$7,196,735
$66,015,336
Other
Danko Enterprises
CODA Energy
Green Charge Networks
Stem Inc
Tesla
Grand Total: $86,462,681
Energy Storage 2014 Funding Allocations
Technology % of Incentive
Wind Turbine 2.0%Gas Turbine 2.3%Microturbine 3.5%Internal Combustion 4.9%Fuel Cell CHP 6.4%Fuel Cell Electric 34.9%A.E.S. 46.0%
2014 Allocation by Technology
67% of December 2014 reservations were from Tesla
($20.5M)Data source: SGIP Quarterly Statewide Report Note: Total 2014 SGIP budget was $165M (includes carryover funds from prior years)
© 2013 Strategen Consulting
AB 327: Net Metering 2.0 Actions and Impacts
Action Impact on Energy Storage
• Lifts caps imposed on rate increases levied during the energy crisis• Allows IOUs to develop tariffs with fixed charges• Such charges would be capped at no more than $10/month for
residential and $5/month for CARE customers. Starting Jan 1 2016, the fixed charges can increase by CPI.
• Fixed charges can be good or bad for storage. If they are time based, more similar to demand charges, then they could promote storage adoption
• Beginning January 1, 2018, the CPUC may require or authorize an electrical corporation to employ default TOU pricing to residential customers.
• TOU pricing may make residential behind the meter load shifting attractive for storage, but will not entirely justify storage systems.
• Beginning July 1, 2017, electrical corporation (>100,000 customers) must provide new NEM tariff (or earlier, if they met their 5% aggregate peak demand NEM cap)
• New NEM tariff to be developed by Dec 31, 2015 (note: applies to solar, wind and fuel cells)
• NEM rules affect behind the meter storage value proposition. Tariff details will determine the final impact.
• Requires electrical corporations to consider non utility owned DERs as an alternative to investments in their distribution system.
• Requires by July 1, 2015 for all electrical corps to submit to the CPUC a distribution resources plan to help identify optimal locations for DERs.
• Understanding where there are opportunities in the distribution system is a great application for storage.
• Defines the RPS target of 33% as a floor, not a ceiling. • More renewables means more opportunity for storage.
© 2013 Strategen Consulting
Objectives
» Strategen CESA ESNA GESA Introduction
» Why Storage is a Game Changer
» California Update
» Share Lessons Learned
» Open Dialogue RE: Implications for Minnesota
» Find New Champions
© 2013 Strategen Consulting
Lessons Learned from California Experience
Leadership + Focus + Collaboration =
Progress
© 2013 Strategen Consulting
Importance of
Leadership
What you focus on is what you get!
© 2013 Strategen Consulting
Best Practices for Stakeholder Engagement: Focus!
STEP 0 STEP 1 STEP 2 STEP 3
Identify status quo alternatives
to storage applications
Create broad awareness of about
the role of grid storage
Identify and engage with key stakeholders
Determine regionally appropriate applications
considering both supply and demand
STEP 4 STEP 5 STEP 6 STEP 7
Work with key stakeholders to build practical
implementation plans and programs
Independently assess the system value of storage applications
versus status quo alternatives
Reconvene results and prioritize
applications with greatest benefits
Determine the barriers to applying
storage in high priority applications
© 2013 Strategen Consulting
Collaboration is the key to success
Collaboration Best Practices
1. Leadership – individual champions2. Stakeholder Engagement - establish
common understanding of how storage can be used
3. System Analysis - agreed upon approach to cost effectiveness
4. Technology neutrality - monetize services delivered
5. Consistency - legal and regulatory framework to monetize value streams and overcome barriers
6. Sharing - leverage tools/best practices/experiences of others
© 2013 Strategen Consulting
Objectives
» Strategen CESA ESNA GESA Introduction
» Why Storage is a Game Changer
» California Update
» Share Lessons Learned
» Open Dialogue RE: Implications for Minnesota
» Find New Champions
© 2013 Strategen Consulting
Minnesota Electricity Overview
» MISO: Midcontinent Independent
System Operator
Over 170,000 MW generation capacity
(Market)
» Minnesota State Energy Profile
Coal-fired power plants provide nearly
50% of generation
Nuclear power plants provide around
20% of generation
Wind power provides 15% of
generation
Energy Information Administration, 2013
© 2013 Strategen Consulting53
Energy storage is like bacon
It goes well with everything!
© 2013 Strategen Consulting
» XCEL Minwind Wind-to-Battery Project Luverne, Minnesota
Energy Storage in Minnesota (source: DOE database)
Technology Type Sodium-SulfurBattery
Rated Power in kW 1,000
Duration at Rated Power (HH:MM)
7:12
» Total kW: 1297 kW of storage
▪ (1) Sodium-Sulfur Battery: 1,000 kW
▪ (9) Lead-Acid Batteries: 297 kW
© 2013 Strategen Consulting
Previous Strategen Work
» Made in Minnesota Energy Storage Program
▪ Create a statewide energy incentive program
▪ Reduce costs through debates of utility controlled,
customer sited energy storage equipment if
manufactured in Minnesota
» Utility Controlled Energy Storage
▪ Improves energy and grid efficiency
▪ Delivers backup power to consumers
▪ Reduces greenhouse gas emissions
▪ Can align wind and solar energy with peak grid
demand and intermittency
© 2013 Strategen Consulting
Benefit-to-Cost Ratio Ranges by Modeled Use Case
For each case, a benefit-to-cost (B/C) ratio was generated to show the direct, quantifiable fixed and variable costs and benefits, incorporating the time value of money, for the modeled project over its lifetime.
A benefit to cost ratio greater than one means that the modeled benefits exceed the project costs; in other words, the net present value (NPV) was greater than zero, and for this study had an return (IRR) greater than the 11.5% discount rate
© 2013 Strategen Consulting
Whitepaper Conclusions for Minnesota
1. Energy storage has the potential to provide multiple sources of value for
customers and utilities.
2. Utility controlled, customer sited storage in Minnesota has the potential to
provide benefits to the grid greater than the system’s cost.
3. Customer sited commercial and residential storage that relies upon customer
tariffs were not able to achieve a benefit to cost greater than one.
4. Reliability (backup power) and voltage support service benefits of energy
storage, while conceptually attractive, have not been found to be materially
sufficient to significant impact the cost-effectiveness of energy storage.
5. Certain storage benefits can vary by utility type. Energy storage should be
modeled according to the benefits within a specific utility and to best suit
each utility’s characteristics.
Confidential, Copyright 2015 Strategen Consulting LLC
Objectives
» Strategen CESA ESNA GESA Introduction
» Why Storage is a Game Changer
» California Update
» Share Lessons Learned
» Open Dialogue RE: Implications for Minnesota
» Find New Champions
Confidential, Copyright 2015 Strategen Consulting LLC
Anyone can be a Champion!
Meet Lon Huber, Strategen Director
» Prior to joining Strategen, served in the Arizona consumer
advocate office (RUCO) where he was the staff lead on
resource procurement and distributed generation
» Negotiated an agreement between Arizona Public Service
(APS) and RUCO to require APS to analyze (with an
independent evaluator) storage, efficiency, renewables and
demand response as a potential alternatives prior to building
or upgrading conventional power plants
» Required APS to utilize energy storage as a companion
resource to new natural gas peaking plants equal to at least
10% of the natural gas plant’s capacity
» Mandated at least 10 MWh of operational storage by 2018
Confidential, Copyright 2015 Strategen Consulting LLC
It takes a village
© 2013 Strategen Consulting
© 2013 Strategen Consulting
Co Founder & Executive Director California Energy Storage Alliance (CESA)
» Industry advocacy group founded in January 2009
» 90+ member companies
» www.storagealliance.org
Co Founder & Board ChairGlobal Energy Storage Alliance (GESA)
» Educational non profit founded January 2014
» www.globalesa.org
Co Founder & Conference ChairEnergy Storage North America (ESNA)
» Largest storage conference in the world
» Next event: October 13-15, 2015 San Diego Convention Center.
» www.esnaexpo.com
Helpful Links for More Information
Founder & Managing PartnerStrategen Consulting
» Strategic advisory exclusively in clean energy
» Clients: governments, utilities, corporations
» www.strategen.com
© 2013 Strategen Consulting
Questions?
Janice LinManaging Partner
2150 Allston Way, Suite 210Berkeley, CA 94704
www.strategen.com
O 510 665 7811x101M 415 595 8301F 888 453 0018
© 2013 Strategen Consulting
Countries Leading Energy Storage Deployment (non-hydro)
© 2013 Strategen Consulting
Global Projected Energy Storage through 2020
© 2013 Strategen Consulting
Operational Energy Storage (non-hydro)
© 2013 Strategen Consulting
Planned Operational Energy Storage (non-hydro)
© 2013 Strategen Consulting
Tesla’s Powerwall – the power of Consumer Demand
» Intended for Germany self-consumptions market
»SOLD OUT until mid 2016 in North America!
Tesla unveiled its stationary storage product, Powerwall, on April 30, 2015. The battery charges from solar PV, or when utility rates are low.
»Transformative consumer demand-driven sales
»Tesla’s unveiling was a great PR event for the entire storage industry
© 2013 Strategen Consulting
CAISO reforms enabling storage in wholesale market
» Market Design – New rules for storage set for: Effective flexible capacity / Flexible RA Net qualifying capacity / System and Local RA Distributed energy resources
» Transmission Planning Non-Conventional Resource study methodology
piloted in 2013; implemented system-wide in the 2014 study process
» Resource Interconnection Approximately half of CAISO’s most recent applications have storage
components representing more than 2,300 MW of new storage capacity CAISO allowing generators to add storage to existing projects Generator interconnection process under reform
Cluster 8 closes on April 30th. We will update with new information as it
becomes available.
© 2013 Strategen Consulting
» Strategen found that utility controlled, customer sited storage in Minnesota has the potential to provide benefits
to the grid greater than the system’s costs and may need to capture THREE of the FOUR following key benefits to
be economic:
a. Distribution upgrade deferral
b. Frequency regulation
c. System capacity
d. Co-located and configured with PV to capture the Federal Investment Tax Credit (FITC)
» Customer controlled, customer sited storage that relies upon customer tariffs alone did not result in economic
value without incentives
Utility-Managed, On-Site Energy Storage in MinnesotaPresentation Prepared for the Minnesota Department of Commerce, Division of Energy Resources
» In 2013, the Minnesota Department of Commerce contracted with Strategen and the Electric Power Research
Institute to investigate the potential costs and benefits of grid-connected electrical storage technology located at
the utility customer in Minnesota
© 2013 Strategen Consulting
Use Cases
» Storage can shift from on-peak to off-peak night
» Storage can “shave peaks” of usage to reduce demand
charges
» Storage may be available to provide back-up power if
configured as a uninterruptible power supply
» Storage can “shave peaks” from circuit loads to defer or
avoid new capital expenditure
» Storage may also provide both real power and reactive
power to manage high penetration solar
Case 2: Utility Controlled – Distribution OnlyCase 1: Customer Bill Savings
» Similar “peak shaving” operation of storage may also
offset the buildout of new generation
» Wholesale energy and ancillary services markets provide
additional revenue
Case 3: Utility Controlled - Distribution + Market
» Customer demand bill savings top priority
» Potential to capture FITC when properly co-located and
configured with a PV system
» Market ancillary service value off-peak when customer isn’t
using it
» Market participation benefit stacking in conjunction with PV
significantly improves the economics as compared to the
Customer Only Control (Use Case #1)
» Benefit stacking can provide a cost-effective outcome with
simultaneous need for generation & distribution upgrades,
and access to operational market benefits
» Results reveal challenging economics for customer
controlled storage without additional incentives
» Substantial value from upgrade deferral possible but
typically insufficient as a single benefit stream to justify
the costs of an energy storage system
Case 4: Shared Control
© 2013 Strategen Consulting
» Current tariffs in Minnesota do not show clear customer ownership benefit
» Cost-effective cases stacked multiple major benefits, including distribution deferral, system capacity, frequency regulation, and solar investment tax credit
▪ Benefit stacking may have near-term technical and regulatory challenges
» Existence of distribution deferral and system capacity is limited by “need”, defined in utility IRP and distribution planning processes
▪ Typically requires load growth
» New storage “need” may emerge when new flexibility constraints arise from large penetrations of wind & solar
▪ California is working to develop new tools and methods to plan for flexibility need and assess resources
Overall Modeling Conclusions