The Role of Energy Storage in the Modern Low-Carbon Grid Paul Denholm National Renewable Energy Laboratory Strategic Energy Analysis and Applications Center June 12, 2008

Today’s Discussion: The Role of Storage in the Past, Present & Future Grid Less studied storage increasingly valuable and at some point necessary Low Carbon Future Studied storage valuable but not necessary Past Present Near Future? 0% 1% 20% 100% Fraction of Energy from Wind and Solar Topics to Discuss: Grid applications of storage & valuation Potential changes in storage valuation created by renewable energy Storage technologies

3 Weeks in Colorado (Xcel) 2003 The Challenge 3 Weeks in Colorado (Xcel) 2003 Challenge is to meet this demand, increasingly with technologies that don’t behave the way we would like them to behave

Fraction of Energy from Wind and Solar Grid of the Past Challenges of meeting variations in demand provided early motivations for storage (<1980) - Limited flexibility steam plants (no CTs) - Projected nuclear builds (100s of GW) - Fuels Act (no gas) Past Present Near Future? 0% 1% 20% 100% Fraction of Energy from Wind and Solar

Early Storage Build Out CAES: 1 Plant (110 MW) Others (<100 MW total): A few batteries, SMES, mostly for local power quality issues Conventional Pumped Hydro: ~ 20 GW

Recent History (1980s-2000) Limited Activity PHS sites mostly gone Cheap natural gas Limited nuclear build out Exotic technologies remain costly Fuel Use Act Cheaper and/or easier to meet variation in load and capacity requirements with conventional generation resources

Fraction of Energy from Wind and Solar Grid of the Present Renewed Interest in Storage - Emergence of energy and ancillary service markets - High natural gas prices Present 0% 1% 20% 100% Fraction of Energy from Wind and Solar

Potential Values of Energy Storage “Capturable” in existing markets Energy Arbitrage Capacity Frequency regulation Spinning and non-spinning reserve Less-Capturable / Regulated Services Black start T&D deferral All of the above in regulated service territories

Valuation of Energy Storage 6 MWh Sold = $251.8 8 Hours of Spin = $64 8 MWh Purchased + 6 Hours of Double Spin = 53.3 Daily Net Revenue (no O&M) = $369.2 1 MW, 6 MWh Device, 75% efficiency Revenues have increased 76% by combining services

Storage in Today’s Grid Can provide a variety of services Proper valuation must consider multiple services (energy + capacity) Still economic, technical, regulatory & institutional impediments to larger deployment As with any potential solution it needs to meet investment criteria and beat the competition Storage is useful but not a required component of the grid

Fraction of Energy from Wind and Solar Grid of the Near Future Growth in renewables - dominated by wind Perceived need/opportunities for “firming” Concerns about adequate T&D Near Future? 0% 1% 20% 100% Fraction of Energy from Wind and Solar

Will Opportunities for Storage Increase with RE Deployment? Will there be increased opportunities for storage? Increased variation in price Increased need for capacity & ancillary services Greater need for T&D

Characteristics of Wind Variable and uncertain output Limited dispatchability (can curtail when needed) Significant ramp rates (but generally over hours not minutes) Wind output is not usually coincident with peak load Wind is an energy resource, not a capacity resource Somewhat anti-correlated with load

Possible RE Impacts that Increase Opportunities for Storage Increased need for ancillary services due to ramping and variability Increased variation in prices due to anti-correlation with load Increased T&D requirements due to low capacity factors How to evaluate???

Utility Wind Integration Studies Simulate system with and without wind Use expensive commercial software that includes existing generation mix, transmission system Get lots of wind simulations from a commercial vendor Spend several 100ks to several M$ Evaluate costs of forecast errors, additional reserves etc.

Load Impacts GE Study of ERCOT Reduced Fuel Use Limited Capacity Greater Ramp Rates GE Study of ERCOT

Forecast error results in over- or under-commitment & increased costs

Example Results (Arizona Public Service)

Comparison of Cost-Based U.S. Operational Impact Studies Date Study Wind Capacity Penetra-tion (%) Regula-tion Cost ($/MWh) Load Following Cost ($/MWh) Unit Commit-ment Cost ($/MWh) Gas Supply Cost ($/MWh) Tot Oper. Cost Impact May ‘03 Xcel-UWIG 3.5 0.41 1.44 na 1.85 Sep ‘04 Xcel-MNDOC 15 0.23 4.37 4.60 June ‘06 CA RPS 4 0.45* trace 0.45 Feb ‘07 GE/Pier/CAIAP 20 0-0.69 na*** 0-0.69*** June ‘03 We Energies 1.12 0.09 0.69 1.90 29 1.02 0.15 1.75 2.92 2005 PacifiCorp 1.6 3.0 April ‘06 Xcel-PSCo 10 0.20 2.26 1.26 3.72 3.32 1.45 4.97 Dec ‘06 MN 20% 31** 4.41** Jul ‘07 APS 14.8 0.37 2.65 1.06 4.08 * 3-year average; total is non-market cost ** highest integration cost of 3 years; 30.7% capacity penetration corresponding to 25% energy penetration; 24.7% capacity penetration at 20% energy penetration *** found $4.37/MWh reduction in UC cost when wind forecasting is used in UC decision

Load Impacts & Price Volatility

Price/Load Relationship More wind results in lower off-peak prices, and a greater overall difference in on/off-peak prices… ..And sometimes $0 cost energy (curtailed wind)

Important Takeaways: How Does Wind Increase Opportunities for Grid Storage? Dedicated RE storage generally not justified Integration cost penalties are not so high that they themselves would pay for storage…Wind “adder” less than $5/MWh in cases up to 20% capacity (even 20% energy in some cases) existing flexible generation limits the impact Spatial diversity smooths aggregated wind output reducing short-term fluctuations to hour time scales What wind does do is add to the existing opportunities for energy storage

Increased Opportunities for Storage Small increase in A/S market due to wind Increased arbitrage opportunities Larger swings in prices More hours of low cost electricity, including zero cost energy from curtailment Increased opportunities for T&D deferment/alternative

Storage in the Near Future Grid Applications still dominated by whole grid applications RE begins to have an impact Increase in A/S requirements Increase in short-term price volatility More hours of low-cost energy Storage increasingly attractive but not yet a required component of the grid

Fraction of Energy from Wind and Solar Grid of the Future Carbon constraints & high priced fossil fuels Massive growth of all RE sources including wind, solar PV, CSP, geothermal - RE as the dominant electricity source Competition from non RE baseload technologies including IGCC/CCS & Nuclear 0% 1% 20% 100% Fraction of Energy from Wind and Solar

What Happens When Extremely Large Amounts of RE is Deployed? More interaction between RE sources and baseload plants More curtailment, perhaps significant Need to evaluate whole new grid architectures Enabling technologies become necessary Analysis can be challenging Good wind data over large regions is limited An analysis of PV can provide and example of the potential need for storage or other enabling technologies…

PV Coincidence With Load - Summer 16 GW simulated PV system providing 11% of system’s energy

PV Coincidence With Load - Spring Potentially curtailed PV 2000 Normal Min Load

50% or more of a system’s energy is generated here Why is RE Curtailed? Price approaches $0 50% or more of a system’s energy is generated here

RE Curtailment Solar Wind IGCC, Nuclear

PV Curtailment

Wind Curtailment

PV Curtailment and Cost Impacts To date, analysis has examined scenarios where RE is largely restricted to shaving the top of demand. Reduces used of load following and peaking fuels (mainly natural gas) We have examined some cases where RE starts to dip into baseload plants. Question is what happens when we push the system even further….

Supply Demand Coincidence Provides the ultimate limit to RE penetration Generation does not occur when desired Too little supply during periods of high demand Too much supply during periods of low demand Storage can effectively “shift” supply to demand But so can other enabling technologies…

Options for Increased Use of RE Additional Load

Flexibility Supply Curve High Cost Supply Side Flexibility Electricity Storage Existing RE Curtailment Thermal Flexible Generation CSP Existing Hydro Pumped Hydro Gas Storage Demand Side Flexibility Markets Thermal Storage New Loads Electricity Gas Generation Coal Cycling Heating Transportation Ice Heat Low Cost The relative order of these is conceptual only. Improved Pricing Demand Response Increasing RE Penetration

Supply Side Storage Technologies CSP Thermal ?

Three Classes of Electricity Storage Devices Short-term storage for ancillary services Distributed storage for local applications Bulk energy storage

Short-term Devices (30 min or less) Devices that can provide frequency regulation and spinning reserve Flywheels, batteries & capacitors Beacon Flywheel for Frequency Regulation

Distributed Storage (<10 MW or so) Provide both capacity and energy services Local T&D appears to be a primary application Primarily batteries Flow batteries NaS Other battery chemistries?

Bulk Energy Storage Limited growth opportunities for PHS (Courtesy of TVA) Limited growth opportunities for PHS Compressed Air Energy Storage (CAES)

What is CAES? Hybrid storage/generation system using gas turbine technology Requires natural gas 4000-4400 BTU fuel per kWh out 0.7-0.75 kWh electricity in per 1 kWh out Use of natural gas makes round trip efficiency difficult to define, but 75% is a reasonable value Requires underground storage Salt domes, aquifers, hard rockAlternative fuels possible including biofuels and “adiabatic” CAES using thermal energy storage Alternative configurations pursed by EPRI and others

Proposed CAES Projects Iowa Stored Energy Park ~300 MW, $800-$900/kW Norton, OH 2700 MW (merchant plant – arbitrage and A/S)

Possible CAES Geology Succar & Williams 2008 Robert Haug (ISEP): “Suitable aquifer storage sites are difficult to find…………..but not impossible”

Concentrating Solar & Thermal Storage Huge resource- several times the nation’s electric demand High-efficiency storage can be added at relatively low cost

Parabolic Trough Power Plant w/ 6hr Thermal Storage Hot Tank HX The lack of a viable thermal storage system as higher temperatures has been an issue for parabolic trough plants. Based on experience for Solar Two, SunLab proposed an indirect molten-salt storage concept. Based on positive preliminary assessments, SunLab asked Bechtel to conduct a design assessment of the concept. Cold Tank

End Use Storage Thermal Storage Electric Transportation and PHEVs Hot or Cold Dispatchable Low Cost Electric Transportation and PHEVs

PHEVs as Dispatchable Load

Storage in the Future Grid Inherent conflict between competing sources of low-carbon energy Wind and solar need flexible generation IGCC and nuclear reduces system flexibility Flexibility will have to come from a variety of sources on both the supply and the demand side Storage is one of a large number of enabling technologies that can increase the utilization of RE generation Still unclear at what point storage becomes the best option, but its probably less than 100%!

Questions?