1. CALIFORNIA ENERGY COMMISSION CEC’s Energy R&D Program and the Potential for Storage Technologies Electrical Energy Storage - Applications and Technology Conference San Francisco, California Terry Surles, Director Public Interest Energy Research Program California Energy Commission April 15, 2002

2. CALIFORNIA ENERGY COMMISSION GDP (2000)

3. CALIFORNIA ENERGY COMMISSION Production of Electricity by Source Renewables Wind/Solar - 2% Biomass/waste - 2% Small hydro - 3% Renewables - 2% Oil - 3% Natural gas - 16% Hydro - 32% Coal - 52% Imports 23%

4. CALIFORNIA ENERGY COMMISSION Peak Demand is Increasing Faster than Newly Installed Capacity Megawatts

5. CALIFORNIA ENERGY COMMISSION California Energy Perspective  Previous system wasn’t broken  Market power became concentrated w profits up by selling less for more  No price signal for end users  Loss of momentum on demand side management w 10 GWh saved by early 1990’s w Restructuring derails utility DSM  1.4 GW of renewable cancelled w “No need” w Price was above cost to utilities  Results w Demand up 0.7%, price up 130% w Blackouts with 28 GW load with ~ 50 GW capacity

6. CALIFORNIA ENERGY COMMISSION ISO Daily Peak Loads January 2000 - August 31, 2001 Summer Peak is 50% higher than rest of year Yet blackouts occurred here

7. CALIFORNIA ENERGY COMMISSION

8. California Energy Issues: Interdependencies  Relationship of natural gas to electricity use w storage down 87% from 11/99 to 11/00 w generators pass through spot gas prices w $3 to $69 MBtu from 12/12/99 to 12/12/00  1-in75 year drought will cause increased gas demand w 600Bcf in west, 225 Bcf in So Cal  SONGS outages reduced 1100 MW of generating capacity w increase gas demand by 200 Mcfd  First cold winter in US in three years w price up all over, higher in California

9. CALIFORNIA ENERGY COMMISSION What Changed by Summer & Fall 2001?  CA peak demand > 40,000 MW on only 9 days  FERC ordered generators to offer power  FERC threatened scrutiny of outages  Conservation of ~8% from publicity campaign and higher prices  Capacity additions 1/1/01 - 8/1/01 8/2/01 - 8/1/02 CA & N. Baja 3,192 MW7,652 MW NW, Alberta, BC 2,104 MW4,038 MW SW 2,331 MW3,212 MW 7,627 MW 14,902 MW

10. CALIFORNIA ENERGY COMMISSION Peak Demand Influenced by Economics and Weather

11. CALIFORNIA ENERGY COMMISSION Summer 2001 Peak Demand Reductions versus Summer 2000

12. CALIFORNIA ENERGY COMMISSION California: policy really does work MWh per person-year

13. CALIFORNIA ENERGY COMMISSION Top Ten Peak Energy Uses/Sectors (assumes a 56,000 MW peak)

14. CALIFORNIA ENERGY COMMISSION CAL ISO Daily Peak Loads January 1, 2000 - December 31, 2000

15. CALIFORNIA ENERGY COMMISSION PIER Objectives: Meeting Ratepayer Needs in Near- and Long-Term Relevance: Reliability, Safety, Quality, Cost Tangible Products - near-term - perception Externalities - environment - security Future Choices - efficiency - distributed energy resources

16. CALIFORNIA ENERGY COMMISSION Funded Program Areas to January 2002 (in millions) Supply$82 Renewables, EPAG Demand$50 Buildings, Ind/Ag/Water $48 Systems Integration, Environmental

17. CALIFORNIA ENERGY COMMISSION Reasons for PIER Interest in Storage Technologies  Need to be responsive to the end-user and system needs  Need to have tools for mitigating energy problems  Newer emerging storage technologies that hold promise  Demonstration for acceptance and integration into electricity system  CA’s needs present an opportunity for storage technologies ranging from less than a second for power quality oriented applications to several hours of energy as customer and system level backup  Deregulation of energy made manifest the costs of instability and blackouts thus increasing the value of storage technologies

18. CALIFORNIA ENERGY COMMISSION

19. CA Real Time Electricity Price Daily Variations For March 11, 2002 (California ISO) ~ $ 50/MWh

20. CALIFORNIA ENERGY COMMISSION California’s Future Storage Technology Portfolio Must Address Certain Issues Industrial  Need for increased reliability  Need for improved power quality due to increased use of digital controls in industry System Support  Manage transmission and distribution instability caused by congestion  Overcome transmission bottlenecks caused by limited transmission capacity Distributed Generation  Improve dispatchability and reliability of intermittent renewables  Create load-following capability for fuel cells

21. CALIFORNIA ENERGY COMMISSION Emerging Technologies for Funding Consideration Short-Term Power Quality  Supermagnetic energy storage (SMES)  High-speed flywheels for short-term power  Ultracapacitors Load management and reliability  Low-speed flywheels  Modular pumped-hydro energy storage  Advanced batteries

22. CALIFORNIA ENERGY COMMISSION Developing Storage Technologies for Intermittent Renewables is a Mechanism for Improving Electricity Systems Value  Increase overall capacity factor  Meet ISO’s need to better schedule power that meets demand  Enable wind park operators the ability to provide reasonable day-ahead bids to ISO  Allow wind to act as a dispatchable resource as tied to new predictive models

23. CALIFORNIA ENERGY COMMISSION Example: CEC Cofunded Development of the AFS Trinity Advanced Flywheel System  Distributed generation w load following, cold start and islanding w for fuel cells, microturbines and natural gas engine gensets  Industrial power management w chip fab tools w light rail transit w electronic power distribution voltage stability  Power quality/UPS w alternative to lead-acid batteries

24. CALIFORNIA ENERGY COMMISSION Attributes for Addressing State Issues Program Integration Balanced Technology Portfolio - Temporal -Technology -Risk Technology Partnerships - Universities - Industry - Federal Focus on California - Specific to State needs

25. CALIFORNIA ENERGY COMMISSION State Funded R&D Programs Result in Collaboratively-Funded Programs with U.S. Department of Energy Current Collaborative Programs Renewables Efficiency Small-scale Fossil Systems & Environment

26. CALIFORNIA ENERGY COMMISSION Next Steps for CEC Storage Technology R&D  Establish criteria for targeted, programmatic solicitation  Develop solicitation for storage applications in partnership with DOE and industry  Aim for 2-3 demonstrations of emerging technologies