1. Energy Storage for Reducing Costs to Ratepayers Jason Burwen NASUCA Annual Meeting November 14, 2016

2. Energy storage = flexibility
It enables energy that is generated to be used at a later time, when it is most needed

3. Storage is in all parts of the grid
And in microgrids

4. Projects operating across the U.S.
Several MW-scale projects have 8+ years of operations
Source: DOE Database

6. Main types of energy storage
Reserve & Response Services
T&D Grid Support
Bulk Power Management
Pumped Hydro
Compressed Air
Flow Batteries
(V, Zn, Na+)
Molten Salt
Customer Thermal
Current Batteries
(Li+, Pb, NaS, Ni)
1 Sec 1 Min Hr Hrs Hrs
Duration
Flywheels
1 kW kW 100 kW 1 MW MW 100 MW 1 GW
Power

7. Storage offers many applications
Bulk Services
Bulk Energy Services
Electric Time Shift
Electric Supply Capacity
Curtailment avoidance
Ancillary Services
Frequency Response
Regulation
Operating Reserves
Voltage Support
Black Start
Network Services
Transmission Services
Upgrade Deferral
Congestion Relief
Distribution Services
End User Services
Energy Management Services
Power Quality
Power Reliability / Outage Mitigation
Retail Energy Time Shift
Demand Charge Management
…and can provide these services interchangeably over time, depending on location
Source: EPRI/Sandia National Laboratory

8. Storage for risk management
Scalable to application – modular tech can be scaled precisely to needs, expanded as needed
Reduces lock-in – years vs. 25+ years for gas peaker
Can change functionality to meet changing system needs
Can be re-deployed if containerized
Fast to build & deploy – can meet contingencies & substitute for longer-to-build infrastructure
Minimal direct environmental impact

9. What does all this add up to?
Storage lowers costs to ratepayers
Reduces spending on excess capacity (i.e., power plants and infrastructure) to meet system and local peak demands
Increases reliability by mitigating supply disruptions and outages
Increases overall efficiency of the grid
Contributes to risk management in long-term planning
Reduces local emissions as well as GHGs

10. Peak capacity
The main value

11. Example: peak capacity replacement
Avg ~4% utilization (Source: GE)

12. Example: peak capacity replacement

13. Example: peak capacity replacement

14. Comparison of flexibility attributes
Gas Peaker
Energy Storage
Range
~80% of capacity--minimum operational limits
200% of capacity--can act as supply or demand
Utilization
Low--only to meet peak demand or emergencies
High--simultaneous grid services
Service Factor
Low--only when spinning (<10%)
High—always on (50-100%)
Dispatch time
Minutes
Seconds
Standby
Start/stop costs &
Emissions
No costs &
No direct emissions

15. Example: Distribution upgrade deferral
Substation
Storage
AND/OR
Behind-the-meter Storage
Energy storage enables deferral of substation and feeder upgrades by reducing local peak demands & increasing power quality/reliability

16. Storage Meeting Peak Capacity
CALIFORNIA: SCE Local Capacity Requirement procured 250 MW of storage to respond to retired generating capacity
ARIZONA: APS-RUCO settlements requires 10% of peak generating capacity procurement to be storage
NEW YORK: ConEd (52 MW) and PSEG-LI (360 MW) projects seek DERs (like storage) as peak load reduction to defer local capacity upgrades

17. Taming peaks is key
MA State of Charge Study Finds 1,766 MW of storage economically justified
50% of benefit is reducing system peak 25% of benefit is reducing local peak (T&D deferral + DER integration)

18. Installed Cost of Capacity
100 MW / 4-hour Lithium-Ion Battery Storage
2016
2017
2018
2019
2020
Upper
$ 1,814
$ 1,549
$ 1,337
$ 1,209
$ 1,083
Lower
$ 1,660
$ 1,315
$ 1,056 $ $
Upper: GTM install costs, BNEF experience curve (low end, 14%), Navigant global installs
Lower: IHS install costs, BNEF experience curve (high end, 19%), Navigant global installs

19. Value of Avoided Start/Stop
From NREL (2015) Operational Benefits of Meeting California’s Energy Storage Targets

20. Net Cost of Capacity = Cost – Operational Benefits
Traditional cost of capacity comparison Net cost of capacity comparison
More expensive
Less expensive

21. Net Cost of Capacity 100 MW / 4-hour Lithium-Ion Battery Storage
avoided start-up/shut-down costs of ~$20/kW-yr
avoided fuel costs of ~$10/kW-yr
8% discount rate
2016
2017
2018
2019
2020
Upper
$ ,519
$ ,255
$ ,042 $ $
Lower
$ ,365
$ ,020 $ $ $
Upper: GTM install costs, BNEF experience curve (low end, 14%), Navigant global installs
Lower: IHS install costs, BNEF experience curve (high end, 19%), Navigant global installs

22. MA DOER State of Charge Study
Key need: unlock value
“The biggest challenge to achieving more storage deployment in Massachusetts is the lack of clear market mechanisms to transfer some portion of the system benefits (e.g. cost savings to ratepayers) to the storage project developer.”
MA DOER State of Charge Study

23. If you see peak capacity proposal…
Is storage considered alongside other options for peak capacity?
Are the RFPs for peak capacity all-source, or prescriptive to tech?
Does forward-looking planning (IRPs) includes storage?
What is the method for determining cost-benefit of storage? Does is include both capacity and operational benefits (flexibility services + avoided system costs)?
What cost estimates are used for storage? Are they recent and reflect current industry trends?

24. Jason Burwen j.burwen@energystorage.org
Thank you
Jason Burwen

25. Parking Lot

26. Storage costs decreasing rapidly
Li-ion cost reductions
IHS: 52% cost reduction
Navigant: 50% cost reduction
BNEF: 60+% reduction
Li-ion cost trajectories
Lazard: 50% cost reduction
IHS: 50% cost reduction
BNEF: 14-19% experience curve  % reduction by 2020

27. EPRI: Installed Costs 2017
Energy Storage Cost Summary for Utility Planning: Executive Summary. EPRI, Palo Alto, CA:

28. Keys to storage for ratepayer
Create Signals of Storage Value: Develop or implement programs and policies that send a signal, such as unbundling/pricing grid services, establishing valuation methods, and creating cost-effective procurement targets.
Increase Competition in Procurement: Ensure proper consideration of energy storage in RFPs focusing on CT proposals, non-wire alternatives, and peak load reduction
Storage in All Planning: Include storage in all state and utility planning processes including integrated resources plans, distribution system planning, transmission planning, and RPSs; ensure most up-to-date cost assumptions, modeling practices, and valuation methodologies
Ensure Grid Access of Storage: Remove barriers to transmission interconnection; enable access to DER storage applications in grid modernization, DER compensation, interconnection, and DR proceedings

29. Energy storage: not if, but when
IN THE U.S. annual installation in 2021 expected to be over 2,100 MW--
9x installation in 2015….
…and distributed storage is expected to rise from 15% to over 50% of annual installations by 2021.
Source: ESA/GTM

30. Storage duration also growing
IN THE U.S. annual installed energy in 2021 expected to be over 6,000 MW--
36x installed energy in 2015…
…and average system discharge duration is expected to increase across all segments.
Source: ESA/GTM

31. IN THE U.S. market size in 2021 expected to be $2.9 billion--
Market size 6x in 2021
IN THE U.S. market size in 2021 expected to be $2.9 billion--
6x market size in (GTM)
And by 2020, behind-the-meter market is expected to match bulk- storage market size.
Source: ESA/GTM

32. Source: ESA/GTM

33. Energy storage: not if, but when (2)
Profitability for non-residential customers in cities already
58% of profitable buildings provide 71% of demand
Average optimal battery size of 31 MWh per profitable building
Source: McKinsey

34. Energy storage: not if, but when (3)
Medium C&I Energy Storage Returns
from Demand Charge Management Alone
2016
2022
IRR 5%-10%
IRR 10%+
IRR 5%-10%
IRR 10%+
Source: GTM Research The Economics of Commercial Energy Storage in the U.S.: The Outlook for Demand Charge Management

35. Storage unlike other DERs
Source: SEPA

36. Storage can provide multiple services

37. Key is unlocking value
BTM storage capable of multiple services with value exceeding today’s unit costs

38. Storage opens path to more DERs
Increases DER hosting capacity
And increases value of paired DR, DG
More efficient grid utilization
Defer substation and feeder upgrades
Increase circuit reliability & power quality
Meet system capacity needs

39. Recent State Regulatory & Legislative Energy Storage Activities (As of Q2 2016)
Regulatory Activity
Legislative Activity
Leg + Reg Activity

40. Shared State Policy Efforts
At PUCs
Long-Term Resource Planning
Demos, Pilots, or Incentive Programs
All-Source RFPs & Procurement Targets
Grid Modernization & Distribution System Planning
In legislatures
Tax Credits or Incentives
Procurement Targets