ENERGY STORAGE: EVOLUTION AND REVOLUTION ON THE ELECTRIC GRID THURSDAY, MARCH 29, P.M. ET/ 2 P.M. CT/ 1 P.M. MT/ 12:00 PT

Transcription

1 ENERGY STORAGE: EVOLUTION AND REVOLUTION ON THE ELECTRIC GRID THURSDAY, MARCH 29, P.M. ET/ 2 P.M. CT/ 1 P.M. MT/ 12:00 PT March 29, 2018

2 Presenters Ravi Manghani Director of Energy Storage GTM Research Lon Huber Head of Consulting Strategen

3 Ravi Manghani Director of Energy Storage GTM Research

4 Energy Storage - Evolution and Revolution on the Electric Grid Prepared For: Ravi Manghani Director, Energy Storage manghani@gtmresearch.com March 29, 2018

5 5 POWER & RENEWABLES RESEARCH GTM, MAKE & Wood Mackenzie form the premier market intelligence provider on the decarbonization and decentralization of energy We guide companies leading the electricity transformation Power Market Fundamentals Long-term Supply & Demand Outlooks 20-year Wholesale & Retail Price Outlooks Regional Market Dynamics Policy and Regulation Analysis Thermal & Renewable Databases and Demand Outlooks Technology Value Chain Evolutions Wind, Solar, Storage, and Grid Edge Competitive Landscapes Technology Cost and Performance Outlooks Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 5

6 Contents 1. U.S. Energy Storage Deployment Trends 4 2. Energy Storage Technology and Cost Trends 8 3. Federal and State Policy Barriers Coming Down 12 Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 6

7 Tomorrow s Decarbonized and Decentralized Power Market The Power Market of the Past A top-down, flow from supply to demand Tomorrow s Decarbonized and Decentralized Power Market A flatter system with outside market responses and actors at every node reshaping power market planning and operations Dispatchable Generation Dispatchable Generation Intermittent Generation Connecte d Devices Electric Vehicles Transmission Transmissio n Energy Storage Demand Side Management Distribution Distribution End Customers End Customers Advanced Metering Infrastructure Distributed Generation Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 7

8 1. U.S. Energy Storage Deployment Trends Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid

9 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Deployments (MWh) U.S. Q Deployments in Megawatt-Hours Down 57% From Previous Year U.S. Quarterly Energy Storage Deployments by Segment (MWh) Record breaking quarters: Q and Q Aliso Canyon Systems come on-line Source: GTM Research/ESA U.S. Energy Storage Monitor Residential Non-Residential Front-of-the-Meter Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 9

10 Where Is Energy Storage Deployed So Far? (Megawatt-Hours) California Accounts for 48% Through 4Q 2017 Residential Non-Residential Utility All Others 37% Arizona 5% Hawaii 24% Californi a 34% Hawaii 2% All New York 4% Others 8% Californ ia 86% Hawaii 6% All Others 25% Texas 29% Califor nia 40% Source: GTM Research/ESA U.S. Energy Storage Monitor Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 10

11 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Energy Storage Deployments by Technology (MW) Lithium-Ion Technology Continues the Trend of More Than 94% Share Quarterly Energy Storage Deployment Share by Technology (MW %) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lithium Ion Lead Acid Sodium Chemistries Flow - Vanadium Flow - Zinc Other * Other includes flywheel and unidentified energy storage technologies. Source: GTM Research / ESA U.S. Energy Storage Monitor Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 11

12 2. Energy Storage Technology and Cost Trends Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid

13 Technology Cost ($/kwh) Commercialized Storage Technologies Lithium-Ion Off to the Races Commercialized Energy Storage Technologies: Cost ($/kwh) Versus Cumulative U.S. Installed Capacity (MW) $1,200 $1,000 $800 $600 $400 Cycle life of more than 100,000; mature in power quality and UPS applications and frequency regulation, suited for <30- minutes duration projects Cycle life of 2,500 to 4,500, suited for peak shaving; NaS suited for 6-hour while Na-Ni suited for 2- to 6-hour discharge applications Cycle life ranges from ,000 depending on depth of discharge, mature technology with over 600 MW of utility-scale systems deployed, suited for power and energy applications from 12-minutes to 4-hour discharge on both sides of the meter $200 $- Oldest battery technology with cycle life of 1,000 at high depth of discharge; particularly suited to the off-grid market and 4-hour discharge duration or longer Cumulative U.S. Installed Capacity (MW) Lithium Ion Lead Acid Sodium Chemistries Flywheel Source: GTM Research / ESA U.S. Energy Storage Monitor Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 13

14 Early Stage Storage Technologies No Clear Winner, Flow Batteries Have Better Prospects Demonstration/Pilot Phase Energy Storage Technologies: Cumulative U.S. Installed Capacity (MW) High power, low energy, cycle life of 1 million, suited for 2-minutes or less power applications like frequency regulations, voltage stabilization, renewables smoothing and battery support Cycle life still under test, suited for 2- to 12-hour discharge applications like micogrids and off-grid projects For technologies still in early commercial/demonstration phase, costs are illustrative Cycle life varies from 10,000-12,000, cost spreads from $425-$750/kWh, few projects deployed, VRB batteries furthest along while Zn- Br batteries still nascent, suited for power and energy-centric applications of 4- to 12-hour discharge at rated power Cycle life of 3,000, suited to applications needing 4- to 20- hour discharge like microgrids and off-grid applications Cycle life of 6,000, pricing ranges from $160- $200/kWh, demonstration phase, suited for applications of 4 hour discharge like peak load shaving and power centric applications Cumulative U.S. Installed Capacity (MW) Flow Aqueous Zinc-hybrid Liquid metal batteries Ultracapacitor Source: GTM Research / ESA U.S. Energy Storage Monitor Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 14

15 Year-Over-Year Decline (%) Annual Declines in Battery Price and Balance-of-System Costs Will Drop Below 10% After 2020 Year-Over-Year Decline in Lithium-Ion Battery Price and BOS Cost, E (%) 0% -5% -10% -15% -20% -25% -30% -35% Source: GTM Research Phase 1: Battery price reductions were the primary driver for system price declines -10% -11% -22% -22% Phase 2: Extreme reductions in BOS costs drove down system prices by more than 25% -24% -24% -32% -27% -14% -14% -10% -9% -16% -8% -8% -7% -6% -5% -8% -8% E 2019E 2020E 2021E 2022E Battery Price Phase 3: Continued reductions in battery prices and BOS costs are driven by production ramp-up, growing competition and improvements in system design and engineering BOS Cost decline Phase 4: As the storage market matures, both battery prices and BOS costs will continue to decline but the rate will be lower post-2020, with improvements arising from experience. Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 15

16 3. Federal and State Policy Barriers Coming Down Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid

17 Biggest Shot in the Arm: FERC Rules Energy Storage Must be Eligible to Participate in Wholesale Markets FERC Order 841 On February 15th FERC released draft final rules adopting participation and eligibility requirements for energy storage in ISOs and RTOs. The participation model for electric storage resources must: Ensure that a resource using the participation model for electric storage resources in an RTO and ISO market is eligible to provide all capacity, energy, and ancillary services that it is technically capable of providing Ensure that a resource using the participation model for electric storage resources can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with rules that govern the conditions under which a resource can set the wholesale price. Account for the physical and operational characteristics of electric storage resources through bidding parameters or other means. Establish a minimum size requirement for participation in the RTO and ISO markets that does not exceed 100 kw. Also requires that the sale of electric energy from the RTO or ISO market to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price. Source: GTM Research Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 17

18 The Momentum Builds: Energy Storage in Integrated Resource Plans Storage Modeled, Eligible or Mandated in Utility IRPs (MW) WA MW in Resource Plan Specific Storage Capacity As Much As OR MA TBD CA Estimated Total Opportunity: 5.1 GW, 16.8 GWh CO IN KY WV VA NC AZ NM SC Source: GTM Research FL There are several utility resource proceedings all over the country that explicitly include storage in their resource plans. There s about 5.1 GW of opportunity in existing utility IRPs. These IRPs offer a view of storage as a flexible resource on the grid, and complementary, not necessarily a direct threat to CT plants. Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 18

19 Notable State Policies Roundup Levelling the Playing Field Washington WA UTC energy storage policy statement Oregon Minimum 5 MWh per utility storage mandate California 1,385 MW storage mandate SGIP incentive ESDER initiative to integrate storage on CAISO Local capacity procurements, storage RFOs for peaker replacement Colorado SB allows customers to install BTM storage New York Maryland First state with BTM energy storage tax credit Texas Massachusetts 200 MWh energy storage target $20 million ACES program SMART energy storage adder Gov. Cuomo - 1,500 MW goal NY REV demo projects Con Edison demand management programs Texas PUC initiated rulemaking docket to address energy storage on distribution grid Arizona Clean peak standard proposal 3 GW energy storage goal proposal Hawaii First state with innovative solar-plus-storage projects Customer solar self-supply tariff Ravi Manghani, GTM Research: Energy Storage - Evolution and Revolution on the Electric Grid 19

20 Thank You! Ravi Manghani Interested in other GTM Research products and services? Please visit or contact March 29, 2018

21 Lon Huber Head of Consulting Strategen

22 Energy Storage - Evolution and Revolution on the Electric Grid Lon Huber March, 2017

23 1660 Projects, MW 23

24 Strategen Strategen provides insight to global corporations, utilities and public sector leaders, helping them to develop impactful and financially sustainable clean energy strategies A Sampling of Our Clients 24 3

25 Storage analytics and cost/benefit 25

26 Topics What is energy storage? Value and services Key trends and drivers Moving forward 26

27 Energy storage is a very broad asset class Electro- Chemical Mechanical Bulk Mechanical (Flow battery / Lithium Ion) Thermal (Flywheel) Bulk Gravitational (CAES) Transportation and Chemical (Ice / Molten Salt) (Pumped Hydro) (Electric and Hydrogen Vehicles) 27

28 Size and Duration by Technology Source: Australian Renewable Energy Agency (7/2015): Energy Storage Study Funding and Knowledge Sharing Priorities 28

29 Topics What is energy storage? Value and services Key trends and drivers Moving forward 29

30 Broad electric power system applicability Bulk Storage Ancillary Services Distributed Storage Distributed Storage Commercial Storage Residential Storage 30

31 Energy storage is flexible Energy storage can be deployed quickly, relocate and scaled up or down as required. (Shift, scale-able, shiftable) This makes it a critical tool to navigate the rapid change that is occurring Aliso Canyon: from RFP to online in 7 months May 27, 2016 SCE issues Aliso ACES RFO and DBT RFP Jul. 18, 2016 SDG&E files application for 150 MWhs of storage Aug. 15, 2016 SCE files application for 108 MWhs of storage Aug. 18, 2016 CPUC approves SDG&E applications Sept. 15, 2016 CPUC approves SCE Round 1 applications Dec. 31, 2016 Feb Projects brought online Total: 94.5 MW / 342 MWh 31

32 Resiliency: Dominican Republic 20 MW of storage in Santa Domingo, Dominican Republic provides efficient frequency regulation to the grid Provided key services during September s Hurricanes Irma and Maria, when about 50% of the island s power plants were forced offline SOURCE: AES ADVANCION CASE STUDY: 32

33 Operational use cases for storage systems (There are many) Grid Location Minimum duration of output energy Short (< 2 min) Medium ( 2min 1 hour) Provide Spin/ Non Spin Long (1 hour +) Provide Capacity Generation Provide Ramping Provide Frequency Regulation Services Smooth Intermittent Resource Output Firm Renewable Capacity Shift Energy Avoid dump energy and/or minimum load issues Provide Black Start Provide In-Basin Generation Transmission Distribution End User Improve Short-Driven Performance Provide System Inertia Provide System Inertia Maintain Power Quality Avoid Congestion Fees Defer System Upgrades Improve System Reliability Defer System Upgrades Mitigate Outages Integrate Intermittent Distributed Generation Self-consumption Provide Uninterruptible Power Supply Demand Charge/ TOU Dynamic Response Energy Shifting Source: Modified from SCE 2011 chart 33

34 Approach to evaluating storage opportunities 1. Identify primary need 2. Explore combinations of stackable benefits; discard incompatible value streams 3. Optimize value streams and understand tradeoffs 34

35 Main Use Case: Distribution deferral Grid Location Minimum duration of output energy Short (< 2 min) Medium ( 2min 1 hour) Long (1 hour +) Generation Provide Spin/ Non Spin Provide Ramping Provide Frequency Regulation Services Smooth Intermittent Resource Output Provide Capacity Firm Renewable Capacity Shift Energy Avoid dump energy and/or minimum load issues Provide Black Start Provide In-Basin Generation Transmission Distribution End User Improve Short-Driven Performance Provide System Inertia Provide System Inertia Maintain Power Quality Avoid Congestion Fees Defer System Upgrades Improve System Reliability Defer System Upgrades Mitigate Outages Integrate Intermittent Distributed Generation Self-consumption Provide Uninterruptible Power Supply Dynamic Response Demand Charge/ TOU Energy Shifting Source: Modified from SCE 2011 chart 35

36 Value stack example #1: Distribution deferral 36

37 Value stack example #2: Frequency regulation Grid Location Minimum duration of output energy Short (< 2 min) Medium ( 2min 1 hour) Long (1 hour +) Generation Provide Spin/ Non Spin Provide Ramping Provide Frequency Regulation Services Smooth Intermittent Resource Output Provide Capacity Firm Renewable Capacity Shift Energy Avoid dump energy and/or minimum load issues Provide Black Start Provide In-Basin Generation Transmission Distribution End User Improve Short-Driven Performance Provide System Inertia Provide System Inertia Maintain Power Quality Avoid Congestion Fees Defer System Upgrades Improve System Reliability Defer System Upgrades Mitigate Outages Integrate Intermittent Distributed Generation Self-consumption Provide Uninterruptible Power Supply Dynamic Response Demand Charge/ TOU Energy Shifting Source: Modified from SCE 2011 chart 37

38 Value stack example #2: Frequency regulation 38

39 Value stacking: Dist. deferral + frequency regulation Primary Use Case Secondary Use Case Stacked Use Cases Potential benefits from additional use cases 39

40 Deployment (MW) US installed capacity by application 1400 Energy Storage Applications by State Application Description 1200 Regulation Renewable Integration Market products for wholesale market participation Storage sited with renewable projects Resiliency Microgrids and Black Start applications 400 Capacity T&D Local Capacity and Resource Adequacy Transmission and Distribution Upgrade Deferral Regulation Renewable Integration Resilency Capacity T&D Other Regions Arizona Hawaii ERCOT ISO-NE NYISO PJM CAISO Note: Pumped Hydro technology excluded. Some storage capacity may be double-counted if the system performs multiple applications Source: DOE Energy Storage Database Accessed Jan 11,

41 The power system is underutilized % Time per Year Source: PG&E Demand Response Programs: An Overview Presentation 41

42 Why peak demand is important Analysis finds that for every $1 spent on reducing peak demand, at least $2.62 can be saved by ratepayers in Illinois and $3.26 by ratepayers in Massachusetts. Cutting top 100 hours of peak demand could save New York State up to $1.7 billion per year 15% of total production assets run less than 7 days per year or less than 2% of that time According to EIA: Average peaker plant runs about 2-7% of the year Over 70 GW of new peaker plants will be built in the U.S. before 2026 MA DOER slide: Commissioner Judson presentation at Restructuring Roundtable, May 2016 Source: 42

43 Topics What is energy storage? Value and services Key trends and drivers Moving forward 43

44 Chapter 1 Frequency regulation Frequency regulation (FR) storage projects are low energy applications therefore lower cost for batteries Important but shallow market as renewable generation increases FR was largest front-of-meter storage application in USA until MW of fast-response storage in PJM Typically 30 minute to an hour capacity Volatile market pricing 44 Source: Energy Storage North America 2017 solarprofessiobnal.com 44

45 Chapter 2 Niche transmission & distribution infrastructure deferral Energy storage for T&D deferral is expected to grow from 332 MW in 2017 to 14,325 MW in Use case attributes: High T&D upgrade costs High peak-to-energy ratio Modest projected load growth Uncertainty regarding the timing or likelihood of major load additions T&D construction limitations (siting, line access local community opposition to new power lines and infrastructure.) An energy storage system used for T&D deferral will be able to provide additional benefits (renewable integration, etc.) Australia Example: Grid utility support system, 20 energy storage systems to support remote networks Source: energy-storage.news, businesswire.com, ergon.com 45 45

46 Chapter 3 Battery peaker local capacity SCE purchased 5X CPUC requirement (50MW) Aliso MW / 342 Mwh Peaker Plants Constructed In 7- months Highlighted Fast Deployment Of Energy Storage Led To 100MW In 100 Days Deployment In Australia Primarily a Storage-only Application SCE Energy Storage LCR Procurement Seller Adv. Microgrid Solutions Resource Type Total Contracts MW BTM Battery AES FTM Battery Ice Energy BTM Thermal NRG FTM Battery Stem BTM Battery Total

47 Chapter 3.5 C&I and Co-op Demand Charge Mitigation Great River Energy Co-op in Minnesota issued RFP for 10 MW PV and 10 MW/20 MWh Storage system in 2018 Primary use case for storage is to dispatch over 2-4 hours peak period for demand reduction Storage to be charged 100% by co-located PV Irvine Company Hybrid Electric Buildings Batteries and advanced software 10 MW / 60 MWh 20 buildings 20% peak demand reduction Source: greatriverenergy.com, advmicrogrid.com, 47

48 Chapter 4 Dispatchable solar PV + storage peaker Source: Australia: Cooktown Solar and Storage 33MW solar plus 1.4MW/5.4MWh Lithium based battery storage Fringe grid in Australia and will test the boundaries of operation of utility scale solar battery storage in these conditions. The Project is now in operation. Funding dependent on dispatchable/storage aspect to assist with supplying solar during evening peak Altogether, Lyon Group planning 1.7GW of PV and 1GW of battery storage by 2020 Arizona: Tucson Electric Power 100 MW solar plus storage plant 30 MW of four-hour duration batteries 20 year PPA ~3 cents/kwh solar ~4.5 cents/kwh with battery Will be largest solar-plus-utility-scale-battery system in the US 48 Source: 48

49 Chapter 4.5 DER alternatives Customer sited DER and embedded solutions will be leveraged more in the future to avoid utility infrastructure. New markets and compensation models will be required to encourage, guide and extract this value. New grid operation approaches will be required to compliment new markets Source: conedbqdmauction.com, arena.gov.au New York: Brooklyn Queens Demand Management program 41 MW customer sited solutions 11 MW utility sited solutions California: SCE & PG&E Energy Storage Solicitation for Local Capacity Several behind and in-front of meter energy storage resources procured Australia: AGL virtual power plant aggregated BTM storage systems, 5MW/7MWh total for customer, distribution and wholesale benefits 49 49

50 Chapter 5 RE + longer duration storage KIUC: The Lawai Project 28 MW solar farm 100 MWh 5 Hour Li-Ion Battery Expected 3.7 million gallon reduction in fossil fuel consumption per year. 25-year PPA, 11 cents/kwh Near the wholesale energy price! Supply power at peak evening times Australia: Australia s largest solar farm. Solar Q proposes to build 350MW solar PV + storage with a second phase to expand to 800MW 800MW would provide ~ 15% of the state's south-east electricity needs from PV and 4,000 MWh of batteries Storage is critical aspect to serve evening load Source: theverge.com, abc.net.au, hawaiienergypolicy.hawaii.edu 50

51 Topics What is energy storage? Value and services Key trends and drivers Moving forward 51

52 Distributed Storage Making it a reality Chapters won t happen by themselves Ancillary Services Bulk Storage Distribute d Storage Commercial Storage Market Rules Market Study, Valuation & Targets All Source Procurements and Resource Plans Renewable Energy Strategy Non-wires Alternatives Resiliency Rate Design EV Infrastructure Residential Storage Source: EPRI 52

53 Conceptual path forward Li-Ion batteries (Costs are proportional to energy/time) Past Future Source: SCE 2011 Source: ABB 53

54 The importance of demand Modest sales of EV/hybrids can have significant impact on global cell production Currently, significant underutilization in global cell production Source: CEMAC report to DOE 54

55 China targeting/investing in energy storage China are expecting Li-ion to play significant role in clean energy future China s 13 th 5 year plan guarantees payouts if manufacturers meet targets Directing and encouraging internal manufacturing to increase production and capture market Source: 55

56 56

57 What is at stake? Low Carbon Grid Study (February 2016): 57

58 Renewable curtailment & negative prices SOURCE: ( ( TIMEDISPATCHCURTAILMENTREPORTMAY13_2017.PDF) 58

59 The RPS

60 Are your state policies ready? Coming in less than 5 years! 60

61 Adding solar to storage unlocks tax benefits Storage is eligible for ITC if charged from solar Level of benefit dependent on ability to charge from solar-paired system Battery must be 75% charged from solar to receive ITC Retrofits eligible for ITC, if 100% RE charged Tax reform includes changes to depreciation/macrs, and ITC stay tuned for new IRS rules Source: NREL 61

62 Source: Global drivers of EVs By 2030 all new cars in the Netherlands must be emission free India announced that it would end sales of gas and diesel cars by Norway agreed to end sales of gas and diesel cars by France announced it would end sales of gas and diesel cars by Britain announced it would end sales of gas and diesel cars by The Scottish government announced it would phase out gas and diesel cars by Others soon to announce 62

63 Thank you! Lon Huber Vice President Strategen Consulting, LLC Phone: th Energy Storage North America (ESNA) Conference + Expo: November 6-8, Pasadena, CA Largest grid-connected energy storage conference in North America, covering all applications including EV charging ( Clean Peak Paper: 63

64 Archived Webinar Slides and a recording of today's event will be made available within 5 business days at Register for additional webinars at the address above. Questions? Contact Gretchenn.DuBois@ncsl.org Thank you for attending! March 29, 2018