How to Calculate the Cost of Solar Energy Storage Solutions

Transcription

1 The First 100% Solar Electric State August 2015 S Solar PV C Consumers B Energy Banks T Transmitters By James A. White,

2 INTRODUCTION Imagine a state that is powered entirely by solar power. Early pioneers of this hypothetical 51 st State would likely get their power from solar modules and batteries that are located at each consumer s site. As the number of individual solar and battery installations increase, there are economic and operational issues that favor interconnecting the various solar electric and storage systems between the various pioneers. This paper first looks at the issues and costs of pure offgrid solar PV systems, because ultimately this is what electric utilities must be competitive with, and then looks at the justification for interconnecting the individual electric producers using a regional distribution system. Using free market principles, this paper looks at what it would take to power a state entirely with solar energy. 51 ST STATE S ELECTRIC ECOSYSTEM The solar electric supply system in the 51 st State is a combination of the following elements. Solar PV Producers (S) The solar PV in the 51st State comes in two basic forms: 1.) Distributed solar PV located at the consumer. 2.) Large utility-scale solar located some distance from the consumer. Distributed solar typically has a higher cost per installed watt, but avoids distribution and transmission losses. Solar orientation and shading at the consumer s location may also limit the output of the distributed solar system. Solar electricity produced at the customer s facility can be owned by the consumer, third party provider, or the electric utility. Large utility-scale solar PV is typically characterized by having a lower cost per installed watt and better solar site conditions. Utility-scale solar requires a transmission and distribution system to deliver its energy to the consumer. Consumers (C) Consumers are residential, commercial or industrial users of electricity. Consumers in the 51 st State have the option of generating their own solar energy on-site, or purchasing solar energy from others. Energy Banks (B) Energy banks can be located at the customer s facility, or located remotely. Energy banks can be in the form of: Stationary on-site batteries located at the consumer s facility. Electric vehicle batteries owned by the consumer or others. Pumped hydroelectric storage facilities typically located off-site from the consumer. Surplus electricity is used to pump water to elevated storage areas, and then this energy is recaptured by running the stored water through a generator. Large utility-scale battery-based storage facilities. Utility-scale pumped electrochemical storage batteries such zinc-bromine or vanadium flow batteries. Other forms of electrical energy storage. Purchasing electricity after the sun goes down in the 51 st State is much more expensive because it includes all the solar PV generating costs, efficiency losses and the costs of having stored the energy in the energy bank. Transmitters (T) Transmitters are the poles, underground service, wires, transformers and distribution equipment that are typically owned by the electric utility to transport electricity from one region of the 51 st State to another. Transmitters connect consumers and with offsite solar electric producers. The 51 st State - The First 100% Solar Electric State 2 August 2015

3 OFF-GRID SYSTEMS The first electric power system to be analyzed in the 51 st State are individual off-grid solar electric systems. An off-grid solar PV system consists of solar PV modules, combined with a battery storage system to provide all of the consumer s electricity. S Solar PV 100% 80% 60% 40% 20% 0% 1/1/09 2/1/09 Battery State of Charge, % 3/1/09 4/1/09 5/1/09 6/1/09 7/1/09 8/1/09 Figure 2 - Battery Charge Level Over Time 9/1/09 10/1/09 11/1/09 12/1/09 Figure 2 above shows the state of charge throughout a year for a sample battery-based system. Supplemental Energy (T-) B Energy Bank Figure 1 - Off-Grid System Energy Diagram C Consumer Electricity generated by the solar array is used to power the immediate electric needs of the consumer and any excess is stored in the battery bank. If the battery bank or other energy storage device is full, the output from the solar array will go unused and is essentially wasted. Conversely, if the battery storage runs out, the consumer must either curtail their energy use until the sun shines again, or come up with another source of electricity. These inherent deficiencies of off-grid systems are some of the reason why consumers may want to use transmitters (poles and wires) to interconnect their solar power arrays and energy banks with other consumers. The addition of transmitters is covered later in this white paper /1/2009 2/1/2009 3/1/2009 4/1/2009 5/1/2009 6/1/2009 7/1/2009 Figure 3 Battery Empty, Additional Energy Needed From Some other External Source Figure 3 for shows the times when the battery is depleted and additional energy is needed to meet the consumer s electrical demand. Figure 4 below shows the solar energy that has no place to go and is wasted /1/2009 2/1/2009 3/1/2009 4/1/2009 5/1/2009 6/1/2009 7/1/2009 8/1/2009 8/1/2009 9/1/2009 Extra Energy (T+) 9/1/ /1/ /1/ /1/ /1/ /1/ /1/2009 Figure 4 Battery Full, Excess Energy Available To Others The 51 st State - The First 100% Solar Electric State 3 August 2015

4 Sizing Off-Grid PV Module and Battery Storage Increasing the size of the solar array or energy storage capacity will reduce the time that the consumer s power will be curtailed, but it will increase the per kwh cost of electricity. For off-grid systems, determining the size of the solar array and battery storage is complicated and depends on many factors, such as: The size, shape and nature of the annual electric loads, The relative cost of energy storage batteries compared to PV module cost, Availability and cost of other generating resources, The ability or willingness of the customer to curtail their energy use during low sunlight or high energy use periods, and How closely the consumer s electrical loads match the solar resource at that specific location. Coincidence Ratio One key factor that can be helpful in determining the size of a battery storage system needed for an off-grid solar PV system is called the Coincidence Ratio. It is a measure of how closely the loads align with the solar generating resource. R Coincidence Ratio R Solar PV kwh Consumed Directly Consumer s Total Annual kwh Consumption A solar powered pumped storage system that only pumps water when the sun is shining would have a coincidence ratio of 1.0. The portion of the coincidence ratio that is less than one signifies the amount of a consumer s electricity that must come from the battery or some other resource. In the chart below R would be calculated by dividing the green area by the sum of the green and blue areas. In the case below the coincidence ratio works out to 68%. Solar Energy Sent to Battery Solar Energy Withdrawn From Battery Solar kwh Consumed Directly Figure 5 Coincidence Ratio Example Time The 51 st State - The First 100% Solar Electric State 4 August 2015

5 EFFICIENCY MAP OF 51ST STATE S ELECTRIC LECTRICAL SYSTEM S Solar PV ηsb ηsc ηst C Consumer B Energy Bank ηbc ηtb ηbt ηdist T Transmitter Figure 6 - Map of Conversion Efficiencies η Efficiencies ηsc DC Solar to AC kwh Inverter Efficiency ηsb DC Solar to DC Battery Storage Efficiency ηst DC Solar to AC kwh Inverter and Transmission Line Efficiency ηdist AC Transmission Voltage to Delivered Distribution Voltage Efficiency ηbc DC Battery Storage to AC Inverter Efficiency ηtb AC Transmission to DC Battery Storage Efficiency ηbt DC Battery Storage to AC Transmission Voltage Efficiency The 51 st State - The First 100% Solar Electric State 5 August 2015

6 CALCULATIONS Solar PV Generation Costs The raw cost of solar generated electricity depends primarily on the size of the system. The unit cost per installed DC watt is generally higher for small distributed generation system and relatively low for large utilityscale PV systems. If all of the electricity generated by the PV system can be utilized, the calculated cost per kwh is relatively straight-forward. Simply calculate the annual payment to repay the cost to purchase and install a solar PV system, and divide it by the total number of kwh generated each year. To determine the annual payment amount, input the capital cost, interest rate and life of the PV system into any financial calculator, and voila, out comes the annual payment. The total number of kwh s of electricty generated per kw of installed solar capacity for various cities is shown in below in Table 1. AC kwh/year per DC kw Location Installed Charolette, NC 1279 Honolul, HI 1432 Houston, TX 1206 Los Angeles, CA 1427 Miami, FL 1318 New York, NY 1148 Phoenix, Arizona 1559 San Juan, Puerto Rico 1376 Seattle, WA 982 Yakima, WA 1241 AC kwh/yr based on 1 kw PV array input in Enter the zip code for your area to determine the AC kwh/year. Table 1 - Annual AC kwh/year per DC kw of Installed Solar Capacity Assuming a 25 year life and 5% interest, a distributed generation system in Miami, Florida with an installed cost of $2,500 to $4,000 per DC kw would have an annualized cost of $0.13 to $0.21/kWh. A utility-scale solar power system with an installed cost of $1,200 to $1,500 per kw of installed solar capacity in Miami, Florida would have an annualized cost of $0.062 to $0.077/kWh. Battery Costs The following calculations will show that the biggest challenge to a 100% solar powered electrical system in the 51 st State is the cost of energy storage. At present, the cost per kwh of battery storage is significantly more than the cost of solar generated electricity. Cost per kwh of useful energy coming from battery storage is a function of: kwh storage capacity of the battery, Installed cost per kwh of storage, Rated life of the battery in terms of number of cycles, Total number of equivalent deep cycles each year, and In and out conversion efficiency of electricty going in and out of the battery. Approx. Battery Life Rated No. of Cycles (Years) Number of Cycles per Year Number of Cylces kwh Supplied By Battery Each Year per Year kwh of Rated Storage Capacity Battery Life kwh Storage Capacity x Rated No. of Cycles (Years) Total kwh Supplied by Battery Each Year Battery Energy Cost per kwh h , ηsb ηbc Example: Installed cost of $400 per kwh of rated capacity, 2000 Cycle Life, 125 Cycles per Year, 5% Discount Rate, η SB 85% Efficiency In and η BC 85% Efficiency Out. Battery Cost $0.28/kWh The 51 st State - The First 100% Solar Electric State 6 August 2015

7 Pumped Hydroelectric Storage (PHES) Costs The advantage of the pumped hydroelectric storage system is that it can be cycled an infinite number of times and is capable of storing many megawatt-hours of electricity. The disadvantage is that they are expensive and require an elevated storage basin, and access to relatively large volumes of water that can be pumped without damaging the natural habitat. The amount of energy that can be stored by a PHES system is defined by the following equation. Useful kwh of Pumped Storage Pumped Storage Elevation Gain (Ft) x Average Area of Pumped Storage (Acres) x Useable Drawdown of Pumped Storage (Ft) x Pump & Motor Pumping Efficiency (<90%) x Water Turbine & Generator Efficiency (<90%) x Conversion Factor Therefore, the amount of total kwh energy storage capacity is a function of the elevation gain of the reservoir and the acre-feet of storage capacity. The cost to install a PHES system will depend on the complexity of the intake structure, pumping/generating system, and piping costs from intake structure to the elevated storage basin, and the construction requirements of the storage basin. According to a report from the National Hydropower Association report titled Challenges and Opportunities for New Pumped Storage Development, (NHA Pumped Storage Development Council, 2012) 1, a 1,000 MW sized pumped hydroelectric system at a feasible site would cost between $1,500/kilowatt (kw) to $2,500/kW. Smaller systems would have a higher cost per kw. A U.S. Energy Information Administration (EIA) report cites a cost of $5,600 per installed kw (U.S. Energy Information Administration (EIA), 2012). Determining the incremental cost per kwh of energy withdrawn from a PSHE system depends on the average load-factor of the generating unit. At any one time, the PHES system is either charging or discharging energy. The unit may charge energy quickly and discharge it slowly over time, but the amount of useful kwh in and out over a one year period should be the same. kwh per kw of PHES Capacity per Year 1 kw x 365 Days/Year x 24 Hours/Day x Load Factor At best, a PHES has a theoretical maximum load factor of 50%. In other words, the amount of kwh generated by the unit will be no more than half. Many PHES are designed to provide of six hours of peak energy storage capacity, which corresponds to a maximum capacity factor of 25%. Therefore, the number of kwh provided by a PHES storage system per year would at most be 4380 kwh/kw to 2190 kwh/kw or less. Annualized capital costs for $1,500/kw to $5,600/kW using 25% to 40% load factor, 5% interest, 35 year life work and 85% IN efficiency and 85% OUT efficiency works out to a price range of: Pumped Hydroelectric Storage Cost $0.036/kWh to $0.21/kWh (Note that the above costs do not include operating and maintenance cost of the PHES system.) Diesel Generation Costs Even though diesel generators are not allowed in the 51 st State, the cost of diesel generation is shown here for comparison. Energy Cost of Diesel Diesel Cost/Gallon x 3413 BTU/kWh (139,000 BTU/Gallon x 35% Efficiency) $2.7/Gallon x 3413 BTU/kWh $0.21/kWh 139,000 BTU/Gallon x 32% Note that the above cost does not include capital costs or operating and maintenance expenses. According to an (EPRI, 2003) study of the cost of various distributed generation systems, the median capital cost of a utility sized distributed diesel generator is $378 per kw. Annual maintenance cost for a 1.83 MW diesel ranges from $1,000 to $8,000 per year with most reporting an annual maintenance costs of $5,000. The 51 st State - The First 100% Solar Electric State 7 August 2015

8 Transmission & Distribution Costs For the purpose of this white paper, the electrical transmission and distribution system are considered the transmitter of electricity between the various parties. Anyone that utilizes a transmitter has to share in the cost of installing and maintaining that system. To provide clear price signals in the 51 st State, all consumers that utilize a Transmitter must pay for the distribution system through a peak kw demand charge. The demand charge is set by the utility to be sufficient to repay the transmitter s cost of installing, maintaining the electrical distribution system. The distribution system is designed for bi-directional flow of electricity, so the peak demand charges are applied to the greatest of either the produced or consumed energy. CREATING A FREE MARKET There are three forms of electricity in the 51 st State. 1. Solar electricity that is produced and consumed on the spot by the consumer. This electricity that is self-generated, stored on-site and selfconsumed is not metered. 2. Excess solar electricity that is produced by a consumer above what they consume or the dedicated output of a solar PV plant, and 3. Solar electricity that comes from an energy bank. Only the last two forms of electricity are traded in the 51 st State. Energy from an energy bank is worth much more than energy that comes directly from solar PV generation. This is because energy from the bank includes the cost of generating the solar PV that went into the bank, plus all the inefficiencies of going in and out of the bank, as well as recovering the capital costs of the energy bank. The energy trades take place through the electric meter. Each consumer, solar PV producer, and energy bank have an electric meter that separately measures the electricity that is exported and imported into their facility. Unlike conventional electricity in the other 50 states, electricity is cheaper during the day when energy is plentiful, and more expensive in the evening and nights. Battery Recycling is Big Business in the 51st State Lowering the costs of battery storage is of great interest in the 51 st State. Entrepreneurs in the 51 st State have found that one of the least expensive forms of battery storage is to import batteries that have been removed from electric vehicles. Electric vehicle batteries that are replaced when their range begins to diminish still have sufficient energy storage for stationary applications. Once the batteries are no longer useful for stationary applications, they can be completely disassembled and recycled into completely new batteries. One of the innovative new industries in the 51 st State is the use of solar DC power to directly electroplate lithium metal from old batteries into completely new lithium ion battery cells. The future is bright in the 51 st State, very bright indeed. REFERENCES EPRI. (2003, March). Costs of Utility Distributed Generators, 1-10 MW, 24 Case Studies Retrieved from inalreportcostsofutilitydistributedgenerat ors.pdf NHA Pumped Storage Development Council. (2012). Challenges and Opportunities For New Pumped Storage Development. National Hydro Association. U.S. Energy Information Administration (EIA). (2012, June 29). Electricity storage: Location, location, location and cost. Retrieved from Today in Energy: The 51 st State - The First 100% Solar Electric State 8 August 2015

9 APPENDIX GOVERNING EQUATIONS Solar PV-to-Consumer Energy Cost per kwh , ηsc Solar Coincidence Ratio, SCR h h Solar PV-to-Battery-to-Grid-to-Consumer Energy Cost per kwh h , ηsb ηbt X Battery Ratio Number of Cycles per Year h h Approx. Battery Life, Years. h. h h. h Solar PV-to-Battery-to Consumer Energy Cost per kwh h , ηsb ηbc Solar PV-to-Grid-to-Consumer Energy Cost per kwh , ηst ηdist The 51 st State - The First 100% Solar Electric State 9 August 2015

10 ADDENDUM THE SOLAR POWER MARKET Retail Electric Utilities The retail electric market in the 51 st State is fully dergulated. Retail electric providers can utilize their own solar generatation and/or energy banks, or they can purchase wholesale energy from independent solar generators and energy banks using: Solar Power Exchange 1. Real Time (Spot Market): Hour-to-hour pricing. 2. Pre-Schedule: Pre-arranged prices for energy sold next day or up to one month into the future. 3. Forward Market: Energy that is traded up to five years into the future. 4. Long Term Contract: Fixed priced contracts for energy sold over a long period of time (up to 20 years). Retail electric utilities in the 51 st State use a portfolio of the above products to provide electricity to customers. They then market their portfolio of products based on the customer s tolerance for risk and ability to curtail usage based on price. Transmission Utility s Role The primary role of the transmitting utility in the the 51 st State is three-fold: Provide transmission and distribution of electricity between suppliers and consumers, Metering of energy with the ability to remotely disconnect grid-connected energy generators and consumers, Operate the Solar Power Exchange as an unbiased and independent clearinghouse and trading hub between retail buyers and sellers of electricity (kwh) that utilize the transmission and distribution system. Retail Customers Because retail rates are decoupled in the 51 st State and the same regardless of whether energy is produced or consumed, retail customers have incentives to be both consumers and net energy producers. Electric rates in the 51 st State are kept in check because individual consumers always have the option of not being connected to the grid and generating all their own energy using their own solar and battery storage system. If they do choose to connect to the grid, retail customers can continue to generate and store their own energy, but they also have option of feeding any excess energy they produce back onto the grid. Monthly Statement Each monthly statement includes the following: Monthly meter reading fee and service charge Per kw demand charge based on the peak kw of power purchased or sold to the electric grid Net energy charge or generation income: Flat Rate Energy is set at a fixed rate per kwh in accord to a published rate schedule. Flat rates may change seasonally. Time-of-Use Pricing - Rate schedule to reflect the additional cost of energy storage and the seasonal variation of the solar resource. Prices could be different for each season, and be higher at night than during the day. Real Time Pricing Energy prices are set hourly each day. Prices are transmitted hourly to the customer and they can choose whether or not to curtail their energy consumption. Monthly energy statements show the amounts the customer owes, but they also show the amount payable to the customer for any excess production. Customers can sell energy at the same price they receive it. The 51 st State - The First 100% Solar Electric State 10 August 2015

11 Power Trading with the Energy Bank The cost of energy coming from an energy bank depends on the number of cycles the energy bank gets cycled each year. The more times that a kwh of stored energy can be turned over, the faster then energy bank can recover their investment. Like any peaking plant, energy banks that only supply during super-peaks of demand once or twice a year essentially have an asset is rarely used, and must therefore charge a high premium for their energy. Solar PV-to-Battery-to Consumer Energy Cost per kwh h h The 51 st State - The First 100% Solar Electric State 11 August 2015

12 Simplified Efficiency Map S Solar PV ηinverter. B Energy Bank ηin-out C Consumer ηac-to-dc T Transmitter ηt&d Figure 7 Simplified Efficiency Map If the DC-to-AC efficiency of the solar and energy bank inverters are similar, the DC-to-AC inverter efficiency can be applied to the output of solar array and ignored from that point forward. η Efficiencies ηinverter DC to AC kwh Inverter Efficiency ηin-out DC-to-DC Round Trip Efficiency of the Storage System Energy Out / Energy In ηt&d Efficiency of Transmission and Distribution System 1 Line Losses ηac-to-dc AC-to-DC Converter Efficiency The 51 st State - The First 100% Solar Electric State 12 August 2015