RMI Irvine Workshop

8/12/2019 RMI Irvine Workshop

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RMI advances market-based solutions that transform global energy use. We

engage businesses, communities, and institutions to cost-effectively shift to

efficiency and renewables, creating a clean, prosperous, and secure energy

future.

Our whole-systems expertise unlocks market-based solutions that can be

replicated and implemented now.

As an independent, non-partisan nonprofit, we convene and collaborate

with diverse partnersbusiness, government, academic, nonprofit,

philanthropic, and militaryto accelerate and scale solutions.

We boldly tackle the toughest long-term problemschallenges often

ignored by those held to short-term results.

Weve been a leader in energy efficiency and renewables for more than 30

years.

INTRODUCTION TO RMI

WHAT WE DO

WHATDIFFERENTIATES US

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RMIS SCOPE OF CURRENT ACTIVITY

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Program commitmentsare dark starbursts


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Favorable defection economics exist for a small minority of customers today, but will expand to millions of

customers by 2024 under conservative assumptions Hawaii is the most favorable geography today, with hybrid systems at or near prevailing commercial and

residential rates

Approximately 20% of customers in both Mid-Atlantic and Southwest will see favorable economics within a

decade

Parity generally happens for commercial customers before residential ones

Achieving DoE targeted levels of technology advance and/or optimizing demand before installation of the system

brings forward parity economics by 5-10 years. In our most progressive case, all customers in the Southwest and90% of customers in the Mid-Atlantic would see favorable defection economics within 10 years

Defection is suboptimal

From an economic perspective, the difference in cost between installing a 98% solution vs. a 100% solution

for a customer is dramatic, and unless we devise ways to share the benefits of these resources, there would

be an unnecessary over-investment

From a social perspective, the consequences of individual customer defection are even more tragic,

because those unable to physically install or afford these systems would pay an increasing percentage ofthe cost for maintaining the grid.

All this leads us to conclude that the traditional utility business model is broken today. Utilities are making

investments now for customers that may not exist in the future

These systems can create value for customers, utilities, and the businesses that provide them. Migrating to a

system that enables the two-way exchange of value by a wide-range of producers and consumers will unlock this

value

REPORT KEY MESSAGES

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Key Messages

Study Overview

Results

Ongoing Research

PRESENTATION OVERVIEW

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STUDY

OVERVIEW

BACKGROUND AND MOTIVATION


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SPIRALING EFFECTS THAT IMPERIL THE

TRADITIONAL UTILITY BUSINESS MODEL

one can imagine a day when battery storage technology

or micro turbines could allow customers to be electric grid

independent.

- Peter Kind, Disruptive Challenges report, 2013

Study Goal: Establish a fact-base for where andwhen solar plus battery storagehybrid power systems compete with

traditional utility service

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THESE FACTORS GIVE CUSTOMERS A NEW

SPECTRUM OF CHOICE

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WHERE WE LOOKED TO SEE IF IT COULD HAPPEN

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WE TESTED THE DISRUPTION THROUGH A VARIETY

OF SCENARIOS

Base Case

Accelerated TechnologyImprovement

Demand-SideImprovement

CombinedImprovement

PV Sunshot

Residential - $1.50/W

Commercial - $1.25/W

Efficiency Measures

Residential30% ReductionCommercial34% Reduction

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HOW WE ARRIVED AT OUR RESULTS

FinancialAssumptions

ITC Eligibility

MACRS

Financial AnalysisModel

HOMER software

CostProjections

Solar PV

Batteries

Inverter

Diesel Fuel*(*Commercial Profiles Only)

2 LoadProfiles

Residential

Commercial Hybrid SystemResults

Levelized Cost of EnergyNet Present Cost

kWh/yr

Replacement Costs ($/yr)

O&M ($/yr)

Emissions

TechnicalSpecifications

Solar PV

Batteries

Inverter

Generator*

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BY 2025 MILLIONS REACH PARITY IN OUR MOST

CONSERVATIVE COMMERCIAL SCENARIO

With projected

declines in technology

costs parity arrives in

ALL of our locations by

2050

Assuming aggressive

price reductions (e.g.

DOE Sunshot) or

introducing demand

management, these

dates move forward bynearly a decade

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WITHIN A DECADE EVEN LARGE GROUPS OF

RESIDENTIAL CUSTOMERS REACH PARITY

Despite small

systems, residential

customers will see grid

parity by 2050

With aggressive

technology price

reductions or demand

management, parity

arrives over ten years

earlier

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THE COMMERCIAL PARITY TIMELINE

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THE RESIDENTIAL PARITY TIMELINE

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EFFECTS ON CUSTOMERS AND REVENUE IN THE

SOUTHWEST BY 2024 (COMMERCIAL)

Base Case$0.19

Demand-side Improvement$0.14

Accelerated Technology Improvement$0.12

Combined Improvement$0.09

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SOUTHWEST BY 2024 (RESIDENTIAL)

Base Case$0.46




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MID-ATLANTIC BY 2024 (COMMERCIAL)

Base Case

$0.24

Demand-side Improvement$0.17 Accelerated Technology Improvement

$0.16


States included in the Mid-Atlantic region for this graph: CT, MA, NJ, NY, PA, RI

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MID-ATLANTIC BY 2024 (RESIDENTIAL)

Base Case$0.92




States included in the Mid-Atlantic region for this graph: CT, MA, NJ, NY, PA, RI

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ONGOING

RESEARCH

PLANS FOR COMPANION REPORT


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TRANSFORMING THE CURRENT RELATIONSHIP

WITH ELECTRIC SERVICE

Grid

as

Backup

Battery

as

Backup

Transactive

System


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Distributed resources and the grid can be complementary

GRID DEFECTION HAS REAL TRADE-OFFS

Reduced capacity needs on the grid

Contributions to ancillary services

Transmission congestion relief

Access to fast-ramping resources

Peak shaving and demandresponse capability (upgrade deferral)

Reduced environmental impact

Improved resiliency

Reliability (stable voltage and

frequency, redundancy)

Virtual storage

Start-up Power

Access to upstream markets

Risk reduction

Diversification of supply and

demand sources

GRID BENEFITS DER BENEFITS

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Rather than a threat, solar-plus-battery systemsoffer new and expanded values that we are nottaking advantage of

New or revamped business models can unlockthese values

A forthcoming companion piece to this study willinvestigate design principles that unlock thepotential value of these systems while sharing thebenefits across stakeholders

SEEING THE POTENTIAL THREAT AS AN

OPPORTUNITY

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THE REPORT IS THE PRODUCT OF A TEAM

EFFORT

OUR PROJECT PARTNERS:

Galen Barbose, Lawrence Berkeley National Laboratory

Kristin Brief, Ambri

Nicholas Chase, U.S. Energy Information Administration

Ali Crawford, Sacramento Municipal Utility District

Cummins Power Generation

Julieta Giraldez, National Renewable Energy Laboratory

Allan Grant, Corvus Energy LimitedRob Harris, PowerSecure Solar

Eric Hittinger, Rochester Institute of Technology & Aquion Energy

Grant Keefe, Distributed Sun

Dave Lucero, EaglePicher

Lee Kosla, Saft Batteries

Paul Komor, Renewable and Sustainable Energy

Institute (University of Colorado)

Christopher Kuhl, ZBB Energy Corporation

Tom Leyden, Solar Grid StorageMarc Lopata, Microgrid Solar

Jim McDowall, Saft Batteries

Pierre Moses, Make It Right Solar

Jeremy Neubauer, National Renewable Energy Laboratory

Scott Reeves, EaglePicher

Armando Solis, Hanwha Q Cells USA

Matthias Vetter, Fraunhofer Institute

Ted Wiley, Aquion Energy

OUR SUPPORTERS:

THOSE THAT OFFERED CRUCIAL INSIGHTSAND PERSPECTIVES:

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1. Near-term grid parity, and thus defection risk, exists for bothcommercial and residential customers; we are entering an era ofgreater customer empowerment

2. Grid parity for the majority of US electricity customers arrives

within the 30-year economic life of typical utility power assets

3. Parity Defection

4. Defection is sub-optimal and can lead to uneconomic andinequitable outcomes

5. The speed of disruption in the electricity sector is outpacingregulatory and business model reform; we have


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Creating a clean, prosperous,

and secure energy futureTM


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Utility Load Profile Load Size(kWh/yr)

Rate Projection(low)

Rate Projection(high)

Hawaiian ElectricCo.

HonoluluResidential

14,479 0.62%

3%

HonoluluCommercial

722,700 0.34%

Southern CaliforniaEdison

Los Angeles CountyResidential

7,914 0.10%

Los Angeles CountyCommercial

586,557 0.10%

CPS Energy San AntonioResidential

15,247 0.90%

San AntonioCommercial

670,504 0.70%

Louisville Gas &Electric

LouisvilleResidential

12,837 -0.50%

LouisvilleCommercial

604,809 -0.40%

ConEdison (NY) Westchester CountyResidential

11,927 0.30%

Westchester CountyCommercial

577,431 0.10%

RETAIL PRICE PROJECTIONS USED IN OUR

STUDY

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TRENDS IN RETAIL ELECTRIC PRICE INCREASES

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TRENDS IN RETAIL ELECTRIC PRICE INCREASES

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TESTING THE ASSUMPTIONSCENARIOS

Accelerated TechnologyImprovement

Portrays the impacts of sharply

decreased total installed PV costs

along with aggressive battery price

projections.

DOE SunShot PV goals included asour PV costs.

DOE battery target included as our

battery cost.

Factors driving to these prices:

Scaling of the large format, lithium

ion battery market

New battery chemistries

2nd use application for EVbatteries

Reductions in solar balance of

systems costs

Demand-sideImprovement

Portrays the impact of full

implementation of cost effective

energy efficiency and demand

management to shift the load profile,

especially during allowed periods of

capacity shortage.

Efficiency is the lowest cost energy

solution. Reducing the total load of

the system reduces the size of the

PV and battery assets necessary to

meet the consumers load. A smaller

system reduces the total capital cost

of the hybrid system.

Demand management capabilities

that enable consumers to shift their

load profile in response to seasonal

weather patterns, also reduce the

necessary size of the system.

Combined SystemImprovements

Portrays the lower cost technologies

considered in the accelerated

technology improvement scenario,

coupled with the efficient and flexible

load profile in the demand-side

management improvement scenario.

Combining innovation and efficiency

creates a total system improvement,

that brings hybrid systems to grid

parity much sooner than any of our

other scenarios considered alone.

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LOS ANGLES GENERATION MIX IN 2024

Documents

RMI Irvine Workshop