Energy Storage Seminar - Mexico

Transcription

1 Energy Storage Seminar - Mexico Presented by: Vir Chahal and Matt Tanner June 18, 2015 DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING

2 Table of Contents» 1» Background 2» Applications and Benefits 3» Technologies, Companies, and Deployment 4» U.S. Policies and Incentives 5» Implications and Lessons Learned 6» Appendices 2

3 Background Until recently, grid scale electrical energy storage has been either pumped hydro, Background compressed air energy storage, or lead acid batteries.» 1890 s Pumped storage used in Italy and Switzerland» 1929 First U.S. pumped hydro storage system at Rocky River, New Milford, CT» 1978 First compressed air energy storage (CAES) plant in Huntorf, Germany» 1970 s Lead acid batteries begin to be used for reactive power» 1991 First U.S. CAES plant in McIntosh, Alabama» 2000 s Increased use of batteries in grid scale pilots Pumped Storage Cutaway Diagram CAES Source: DOE/EPRI 2013 Electricity Storage Handbook Source: Haisheng Chen, Progress in electrical energy storage system: A critical review, 2008 Now, batteries and other energy storage technologies are being deployed on a large scale. 3

4 Background Recent advancements in the energy storage industry including competition and electric vehicles are causing utilities to re-examine storage technologies. Energy Storage Advancements Policy Renewable portfolio standards (RPS) and goals FERC Final Order 755 pay for performance Federal STORAGE bills CA AB2514 CPUC Decision D Technology Demonstrations and Commercial Deployment Federal DOE funding State funded demonstrations IPP & Utility demonstrations Commercial deployments Cost Reductions Manufacturing improvements Economies of scale due to electric vehicles Competition 4

5 Table of Contents 1» Background» 2» Applications and Benefits 3» Technologies, Companies, and Deployment 4» U.S. Policies and Incentives 5» Implications and Lessons Learned 6» Appendices 5

6 Applications and Benefits There are a variety of applications for energy storage including: load leveling, grid operational support, and grid stabilization. Load Leveling (Generating power off peak and using it on peak) Renewable Energy Shifting Wholesale Market & Cost Optimization Retail Market (e.g., time of use rates, demand charge management) Asset Management Grid Operational Support (Matching supply to demand) Load Following Operating Reserves Frequency Regulation Renewable Energy Firming Black Start Grid Stabilization (Improving reliability) Renewable Energy Ramping Renewable Energy Smoothing Backup Power Power Quality Renewable Energy Shifting and Frequency Regulation offer significant value in the wholesale and ancillary service markets. Appendix A provides definitions for each of these applications. 6

7 Applications and Benefits Depending on the application, technology, system s location, regulatory market, and ownership, energy storage can provide multiple benefits. Market Revenue Arbitrage Revenue Capacity Revenue Ancillary Service Revenue Optimized Generator Operation Economic Reliability Environmental Asset Utilization Efficiency Cost Interruptions Air Water Reduced Congestion Cost Deferred Generation Capacity Investments Deferred Transmission Capacity Investments Deferred Distribution Capacity Investments Applications Load Leveling Renewable Energy Shifting X X X X X X X X X X X Wholesale Market & Cost Optimization X X X X X X X X X X X Retail Market X X X X X X X X X X Asset Management X X X X X X X X X Grid Operational Support Operating Reserves X X X X X X Load Following X X X X X Frequency Regulation X X X X X X Renewable Energy Capacity Firming X Black Start X X Grid Stabilization Renewable Energy Ramping X X X X X Renewable Energy Smoothing X X X X Backup Power Power Quality 7 Reduced Electricity Losses Appendix B provides definitions for each of these benefits. Reduced Electricity Cost Reduced Outages X Improved Power Quality X Reduced CO 2 Emissions Reduced SO X, NO X, and Particulate Emissions Reduced Water Use

8 Applications and Benefits Example of Renewable Energy Shifting The expected load profile in California shows a variety of potential needs that can be met through different energy storage applications. California has an aggressive RPS mandate of 33% by 2020, which may potentially increase to 40%. The increase in solar energy is expected to result in large shifts in net load, as shown in the duck curve. Base-load generation that is not designed to frequently cycle combined with renewable resources coming online will likely result in curtailment during afternoon hours and reserve violations in the evening. Source: CPUC Energy storage could address this issue by leveling the load while reducing overall cost. In addition, energy storage could provide operating reserves and frequency regulation. 8

9 Applications and Benefits Example of Frequency Regulation Energy Storage Technologies can provide regulation service more quickly and effectively than conventional technologies. Comparison of Storage and Thermal Units Providing Regulation Source: Motion to Intervene and Comments of Beacon Power, LLC, FERC Docket ER The chart shows a storage unit (blue) quickly and effectively responding to movement dispatch from the ISO compared to a thermal unit (red). 9

10 Table of Contents 1» Background 2» Applications and Benefits» 3» Technologies, Companies, and Deployment 4» U.S. Policies and Incentives 5» Implications and Lessons Learned 6» Appendices 10

11 Technologies, Companies, and Deployment Electric energy is stored through mechanical, electro-chemical, thermal or chemical means. Mechanical Batteries Flow Batteries Other Source: Beacon Power Pumped Hydro Storage (PHS) Compressed Air Energy Storage (CAES) Flywheel Source: SAFT Lead Acid Advanced Lead Acid Zinc Air Sodium Sulfur Sodium Metal Halide Sodium Ion Other Lithium- Iron Phosphate Manganese Oxide Titanate Cobalt Nickel Cobalt Aluminum Nickel Manganese Cobalt Source: Zinc Bromine Vanadium Redox Iron Chromium Other Source: Thermal Ice Based Thermal Molten Salt Power To Gas Hydrogen Synthetic Natural Gas Capacitors electric double-layer capacitors, or supercapacitors or ultracapacitors Appendix C provides additional detail on some of the technologies. 11

12 Technologies, Companies, and Deployment Cost reductions are expected across all technologies, with the largest percentage reductions expected for Li ion and flow batteries. $700 Lowest Cell Price for Utility Applications 2014, 2017, 2020 $600 $500 $/kwh $400 $300 $200 $100 $ Lithium Ion Sodium Sulfur Sodium Metal Halide Advanced Lead-Acid Flow Batteries Source: Navigant Research 12

13 Technologies, Companies, and Deployment New project orders are heavily favoring Li-Ion chemistries. New Announced Projects by Technology and Region* World Markets: 3Q Q (MW) Li-Ion NaS Battery Advanced Lead-Acid Flywheel Thermal Sodium Ion Flow Battery Power-to-Gas Hybrid Liquid Air Energy Storage North America Western Europe Asia Pacific Navigant Energy Storage Tracker 1Q15 *Note: Does not include PHS, traditional CAES, or solar thermal storage. 13

14 Technologies, Companies, and Deployment Systems integrators typically provide a turnkey system including all 4 components of an energy storage system. Energy Storage System Components Thermal Management Power Conversion Storage Mechanism Software & Controls Energy Storage System Image Source: REneweconomy, AVL, Energy Storage Report, Free-SQL 14

15 Technologies, Companies, and Deployment System integrators such as NGK, AES Energy Storage, and Younicos account for about 2/3 of the global deployment of energy storage. Deployed Capacity Market Share by Top 20 Technology Vendors* World Markets: 1Q 2015 Samsung SDI 2% ZBB Energy 3% Toshiba 3% Saft 4% Beacon Power, LLC 5% LG Chem 2% Altairnano 2% BYD 6% Younicos 6% ABB 1% Navigant Energy Storage Tracker 1Q15 *Note: Does not include PHS, traditional CAES, or solar thermal storage. ETOGAS GmbH 1% Prudent Energy 1% AES ES 14% DN Tanks 1% Sumitomo 1% EnerDelRongke Power 1% 1% Prudent Energy <1% NGK Insulators 47% 15

16 Technologies, Companies, and Deployment In a recent report, Navigant Research rated AES Energy Storage the leader among energy storage system integrators for strategy and execution. FOLLOWERS CHALLENGERS CONTENDERS LEADERS Execution RES Americas AES Energy Storage NEC Energy Solutions LG CNS Younicos ZBB Energy Green Charge Networks Sharp Greensmith S&C Electric CODA Energy Stem Source: Navigant Research Strategy 16

17 Table of Contents 1» Background 2» Applications and Benefits 3» Technologies, Companies, and Deployment» 4» U.S. Policies and Incentives 5» Implications and Lessons Learned 6» Appendices 17

18 U.S. Policies and Incentives Multiple levels of regulatory policies and incentives can impact storage. Federal Regional State Utility The Federal Energy Regulatory Commission (FERC) regulates wholesale markets. The National Electric Reliability Council (NERC) sets standards to maintain reliability. ISOs/RTOs operate and organize bulk transmission and wholesale markets. Legislatures can approve storage mandates or set renewable portfolio standards. Public Utility Commissions (PUC) can approve investment in storage. Municipal utilities can invest directly in storage technologies. Investor Owned Utilities (IOUs) may be able to get rate recovery for energy storage if approved by the PUC. NERC Regions ISOs/RTOs Source: NERC 18

19 U.S. Policies and Incentives - Federal Federal regulations provide incentives for storage and reform markets to properly value storage. Region Program Summary Total Value U.S. Energy Investment Tax Credit 10%-30% tax credit for purchasers of energy storage systems with renewables 10%-30% tax credit U.S. FERC 792 U.S. FERC 755 Changes the Interconnection Fast Track threshold from 2 MW to 5 MW and counts storage as a small generating facility Creates a fast-regulation service in wholesale power markets with compensation based on speed and accuracy N/A N/A U.S. FERC 784 Similar to FERC 755, but for transmission providers N/A 19

20 U.S. Policies and Incentives - Federal The Federal Energy Regulatory Commission (FERC) oversees energy markets and has ordered reforms that support energy storage. FERC 755 enacted in 2011 Frequency Regulation (FR) is the continuous balancing of load and generation on a power system. FERC 755 orders ISO s to restructure FR markets to separate payment for reserving capacity and movement and to reward movement accuracy. Historically, FR payments were made to units simply for reserving capacity, not for actually providing the movement. Storage units were disadvantaged under this because they provide outsized movement compared to unit size and provide highly accurate balancing service. Regulation Movement for Two Units Providing 20 MW of Regulation Motion to Intervene and Comments of Beacon Power, LLC, FERC Docket ER

21 U.S. Policies and Incentives - State Many states have a renewable portfolio standard which mandates a specific percentage of renewable resources. High levels of intermittent renewable penetration may cause large shifts in states net load profile and increase demands on ancillary services. Energy storage can address many of the issues associated with high penetration of intermittent renewable resources. Source: DSIRE 21

22 U.S. Policies and Incentives - State Regulatory bodies across the U.S. states are modifying their policies to further encourage the development of storage technologies. 22

23 U.S. Policies and Incentives - State Some states have influential policies impacting the amount of storage to be deployed on their systems in the near term. California Storage Mandate Investor owned utilities must procure 1,325 MW of energy storage by This mandate will increase installed capacity in Calironia by orders of magnitude. New York Reforming the Energy Vision NY REV focuses on incentivizing small-scale and distributed resources. Distributed storage is a critical component. NY REV represents is not a mandate but it reduces the impact when compared to the California mandate. 23

24 U.S. Policies and Incentives - State Several states have programs that provide incentives for energy storage. Region Program Summary Total Value New York Con Edison/NYSERDA Enhanced Load Reduction Program $2,600/kW thermal; $2,100/kW battery; extra 10% for >500 kw $10 million California Self-Generation Incentive Program (SGIP) $1.46/W incentive 0-1 MW = 100% base 1-2 MW = 50% base 2-3 MW = 25% base $77 million for 2015 Connecticut Department of Energy and Environmental Protection Microgrid Program 3-year resiliency program to build microgrids indirectly supports energy storage $48,000,000 New Jersey Office of Clean Energy at the New Jersey Board of Public Utilities Proposal $2.9 millions awarded to 13 projects in Focused on behind the meter, critical systems ~$3 million per year 24

25 Table of Contents 1» Background 2» Applications and Benefits 3» Technologies, Companies, and Deployment 4» U.S. Policies and Incentives» 5» Implications and Lessons Learned 6» Appendices 25

26 Implications and Lessons Learned The energy storage industry in the U.S. has evolved over the last 5-10 years demonstrating many successes and providing lessons learned to strengthen the industry going forward. Storage can be used to provide many economic, reliability and environmental benefits The cost of storage has been decreasing rapidly and technology performance has been documented through demonstrations and commercial deployments. Federal, regional, state, and utility policies, programs, and incentives are being implemented to support the industry. Proper regulatory structures are still critical to support the growth of the industry. As described in the following example case study, the disparate impacts of the frequency regulation market reforms in PJM and NYISO show the necessity of careful market structure design. 26

27 Implications and Lessons Learned PJM and NYISO both implemented rule changes in response to FERC 755, but with different approaches. FR Procurement Targets Performance Score Comparison of PJM and NYISO FR Market Rules PJM Based on effective MW procured post performance measure Relatively strict NYISO Based on actual MW procured Low threshold for avoiding performance penalties FR Demand Curve Dispatch Methodology None Priority dispatch of fast units such as storage Yes No priority dispatch 27

28 Implications and Lessons Learned While different market rules explain some of the gap in prices, regulating units consistently receive more in PJM than NYISO. Market Price NYISO PJM 2014 Average Received Price for Thermal Resource ($/MW) $13.29 $ Average Price for Fast Moving Resource ($/MW) $19.00 $ Average Received Price for Thermal Resource Excluding Polar Vortex ($/MW) $8.82 $ Average Received Price for Fast Moving Resource Excluding Polar Vortex ($/MW) $13.56 $29.62 Source: PJM & NYISO Thus, the FERC 755 reforms have incentivize storage in PJM more than in NYISO. 28

29 Key C O N T A C T S Colette Lamontagne Director Burlington, MA colette.lamontagne@navigant.com Amanvir Chahal Associate Director Washington, DC Amanvir.Chahal@navigant.com Matthew Tanner Associate Director Washington, DC Matthew.Tanner1@navigant.com 2010 Confidential and proprietary. Do not distribute or copy. 29

30 Table of Contents 1» Background 2» Applications and Benefits 3» Technologies, Companies, and Deployment 4» U.S. Policies and Incentives 5» Implications and Lessons Learned» 6» Appendices A. Application Descriptions B. Benefit Descriptions C. Technologies D. Frequency Regulation Market Details 30

31 Appendix A: Application Descriptions Load Leveling Applications Application Renewable Energy Shifting Wholesale Market Arbitrage and Cost Optimization Retail Market Asset Management Description This application involves storing electricity from renewable sources when the price of electricity is low and selling that stored energy when the price of electricity is higher. Because wind typically produces energy at night when electricity prices are low, the price differential between the electricity used to charge the battery and the electricity sold at peak can be very large. The energy that is discharged from the storage could be sold via the wholesale market, sold under terms of an energy purchase contract, or used by an integrated utility to reduce the overall cost of providing generation during peak times. Wholesale Market Arbitrage and Cost Optimization involves purchasing inexpensive electric energy, available during periods when price is low, to charge the ES plant so that the stored energy can be used or sold at a later time when the price is high. In deregulated markets, ES can be used for price arbitrage purchasing and storing electricity during cheap, off-peak hours and selling during peak hours. Arbitrage is only cost-effective if the price differential compensates for the inefficiency of the ES device. In regulated markets, a utility may install ES to decrease its cost of generating energy during peak load rather than to profit from a wholesale market. End users (utility customers) that have time based rates can use ES devices to reduce their overall cost for electricity. They could accomplish this by charging the ES during off-peak periods when the electric energy price is low, then discharge the ES during times when on-peak energy prices apply. This application is similar to the previous application except that savings are based on the customer s retail tariff as opposed to the wholesale price. In addition, end users could use storage to reduce the overall costs for electric service by reducing demand charges. Using ES to reduce their power draw during specified periods (demand charge periods), end users can lower the costs that are tied to the amount of load (kw) they demand from the grid. This typically applies to industrial customers. This application involves installing ES in order to delay generation, transmission, or distribution system capacity upgrades. The value of this application is derived from the fact that ES can be used to provide enough incremental capacity to defer the need for a large lump investment in G,T&D equipment. 31

32 Appendix A: Application Descriptions Grid Operational Support Applications Application Operating Reserves Load Following Description Operating Reserves is an ancillary service concerned with maintaining extra capacity that can be called upon when some portion of the normal electric supply resources become unavailable unexpectedly. There are three generic types of reserve capacity: spinning reserve, non-spinning reserve, and backup supply. In a deregulated market this application involves using ES to participate in the market for these services. In a regulated market, using ES to replace traditional spinning reserve can yield operational benefits. Using ES to provide spinning reserves obviates the need to operate a conventional unit at partial load so that it is ready to provide capacity in the event of an outage. This will improve the heat rate of the generation unit and result in fewer emissions. It will also improve the marginal cost to operate that generation. Load following is an ancillary service concerned with maintaining grid balance by adjusting power as demand for electricity fluctuates throughout the day. Load following operates on a time scale of about 10 to 15 minutes. In a deregulated market, this may not be a separate ancillary service depending on the mix of generation and the structure of the energy market in the area. If there is sufficient generation mix in the area that is flexible enough (i.e. able to ramp up quickly enough to meet the system need) to meet the system load following needs then this balancing can be effectively accomplished through the energy market. Additionally, sub-hourly energy markets allow system operators to do a great deal of balancing through energy markets without having to explicitly purchase additional control services. The Load Following application can involve using ES to participate in the market for load following services (if such a market exists). In a regulated market, ES rather than conventional generation can be used to provide this service. This can provide a benefit with two possible elements: a capacity element and a marginal cost element. The capacity element involves reducing the cost associated with installing additional generation capacity to provide this service. Finally, providing this service with ES may yield a marginal cost benefit if partial load operation of conventional generation is reduced (part load operation typically leads to sub-optimal generator performance in terms of heat rate and therefore leads to higher marginal costs). 32

33 Appendix A: Application Descriptions Grid Operational Support Applications (Continued) Application Frequency Regulation Renewable Energy Capacity Firming Black Start Description Frequency regulation is an ancillary service concerned with managing energy flows to reconcile momentary differences between supply and demand. This service is provided by on-line generation equipped with automatic generation control (AGC) that can change output quickly to track the moment-to-moment fluctuations in customer loads and correct for the unintended fluctuations in generation. Regulation helps maintain interconnection frequency, manage differences between actual and scheduled power flows between balancing areas, and match generation to load within the balancing area. This application can involve using ES to provide this service and participate in the market for area regulation services. Because ES can respond to system regulation needs more accurately and quickly than some conventional generation sources, less capacity could be required if ES devices rather than conventional devices are used to provide this service, which frees up conventional capacity to meet energy needs. This application involves using ES to enable the power output from intermittent renewable energy resources to be more consistent by providing energy when the power output from these sources drops temporarily. In a regulated market, firming renewable resources may enable a utility to defer the need to invest in additional conventional generation. In a deregulated market, where the electric supply capacity market is evolving, firming a renewable generation resource could enable a non-utility merchant to sell additional renewable energy capacity into the market resulting in a larger capacity credit revenue stream. However, this market is evolving and in some markets, generation capacity cost is included in wholesale energy prices. Black start is an ancillary service which provides power to a conventional generator in order to restart after a partial or full shutdown. This application involves ES to provide this service. 33

34 Appendix A: Application Descriptions Grid Stabilization Applications Application Renewable Energy Ramping Renewable Energy Smoothing Description As wind generation penetration increases, the electricity grid effects that are unique to wind generation will also increase. Storage could assist with orderly integration of wind generation (wind integration) by managing or mitigating the more challenging and less desirable effects from high wind generation penetration. This application involves using storage to mitigate volatility from low wind conditions and high wind cutout. Solar and wind resources are intermittent on a seconds to minutes basis due to cloud cover or inaccurate wind forecasts. ES can help to smooth the output volatility and improve power quality. Backup Power Power Quality ES may be used to ensure highly reliable electric service. In the event of an extended system disruption ES can be used to ride through the outage, to complete an orderly shutdown, or to transition to on-site generation. This application applies to both the utility and the end user. It involves using ES to protect on-site loads downstream from ES against short-term duration events affecting power quality. Manifestations of poor power quality include variations in voltage magnitude, variations in the primary 60-Hz frequency at which power is delivered, and interruptions in service ranging from a fraction of a second to several minutes. Reactance is a localized phenomenon that occurs because equipment that generates, transmits, or uses electricity, injects or withdraws reactive power into the system. Voltages are sensitive to, and controlled by, reactive power on the system and must be maintained within tight ranges to protect customer and utility equipment and to prevent voltage collapse and outages. Historically, voltage support has been provided by generation resources, however because reactive power is a localized phenomenon and because it cannot be transmitted effectively over long distances, those generation resources must be located in the right region to be able to manage reactance. Reactance can be managed in more distributed ways as well with capacitors, inductors and transformer tap changes but these solutions are slow to respond and can actually exacerbate voltage related problems during contingency conditions. ES is well suited for this application because it is quick to respond, can be sited where it is needed, and can effectively provide voltage support during contingency conditions. 34

35 Appendix B: Benefit Descriptions Economic Market Revenue Economic Asset Utilization Benefit Arbitrage Revenue Capacity Revenue Ancillary Service Revenue Optimized Generator Operation Reduced Congestion Costs Generation Capacity Investments Transmission Capacity Investments Distribution Capacity Investments Description ES can be used to store electricity purchased when prices are low, during off-peak periods, and discharge when electricity prices are high during peak periods, resulting in a revenue stream for the storage owner. As demand on the electricity grid grows from year-to-year, the need to install additional generation capacity to meet this demand also grows. In a deregulated market, where the electric supply capacity market is evolving, ES capacity can be sold to the capacity market in order to generate a capacity credit revenue stream for a storage owner. In deregulated electric service territories there may be organized markets for ancillary services such as load following, area regulation, reserve capacity, voltage support, and black start. The ability of ES devices to rapidly charge and discharge to the grid enables them to effectively provide these services resulting in a revenue stream for the owner. Using ES to respond to changes in load by absorbing or discharging energy as needed by the system can enable generators to run closer to their optimum operating zone. Therefore, by smoothing the load curve that the generation fleet must meet, storage can improve generation performance as measured by improved heat rate efficiency and lead to lower operating costs. If ES is located close to load centers it may be used to reduce congestion by charging during periods of no congestion and discharging during congested periods. Charging and discharging in this way will meet peak demands while reducing the amount of electricity that must be passed through the congested transmission pathways. If congestion can be reduced in this way the costs associated with congestion can also be reduced. By reducing peak demand or providing ancillary services that are typically provided by conventional generation assets, ES can result in deferred generation capacity investment benefits. Load leveling leads to less generation capacity required to meet the system needs. Providing ancillary services with ES frees up more generation capacity to meet system energy needs. Utilities build transmission with capacity sufficient to serve the maximum amount of load that planning forecasts indicate. However, this maximum capacity is only required for very short periods each year, when demand peaks. Providing stored energy closer to the load reduces the power flow on transmission lines, potentially avoiding or deferring capacity upgrades. ES can be used to relieve load on overloaded feeders, potentially extending the time before upgrades or additions are required. 35

36 Appendix B: Benefit Descriptions Benefit Description Economic Efficiency Economic - Electricity Cost Reduced Electricity Losses Reduced Electricity Cost (Consumer) Reduced Electricity Cost (Utility/Ratepayer) By charging electricity close to load centers during periods of low demand and discharging during peak demand period, ES can reduce the peak load on the grid. Because losses are proportional to the square of current on the system, reducing peak load will result in a reduction of the total amount of electricity line losses on the system. ES can be used to reduce the cost of electricity for a consumer by enabling the consumer to avoid peakdemand charges and peak electricity prices. A consumer can charge their device when prices are low and discharge the device when prices are high. Because high prices tend to coincide with peak-times, this activity will also lower the customer s overall peak usage, which will lead to additional savings if the customer has a demand charge associated with their tariff. Charging storage devices when demand is low, and discharging the devices when demand is high may decrease a utility s energy costs by allowing the utility to run a more cost effective mix of generation. This is because discharging the stored electricity during peak times may eliminate the need to dispatch additional expensive on-peak conventional generation. Reliability Power Interruptions Reduced Outages Improved Power Quality ES can be used during a power outage as a backup power supply for one or more customers until normal electric service can be restored. The backup would only be available for a limited time depending on the amount of energy stored. However, even a temporary backup power supply can reduce the number of outages experienced by customers and/or greatly mitigate the impact of a disturbance event. Alternatively, storage can be used to provide grid support that will inherently increase the reliability of the system. ES can be used to protect on-site loads downstream from storage against short-term duration events affecting power quality. ES can also be located on the system and used to help regulate voltage thereby improving power quality for end-users. Manifestations of poor power quality include variations in voltage magnitude, variations in the primary 60-Hz frequency at which power is delivered, and interruptions in service ranging from a fraction of a second to several minutes. 36

37 Appendix B: Benefit Descriptions Environmental Air Environmental Water Benefit Reduced CO 2 Emissions Reduced NOx, SOx, and particulate Emissions Reduced Water Use Description ES can reduce electricity peak demand and thereby reduce feeder losses. This translates into a reduction in CO 2 emissions if peak load is typically produced by fossil-based electricity generators. However, since ES has an inherent inefficiency associated with it, ES could increase overall CO 2 emissions if fossil fuel generators are used for charging. Alternatively, by providing certain ancillary services storage can enable conventional generation resources to be operated at more optimal conditions resulting in an emissions benefit. Finally, storage can yield a reduced emissions benefit by enabling greater utilization of renewable resources. ES can reduce electricity peak demand and thereby reduce feeder losses. This translates into a reduction in emissions if peak load is typically produced by fossil-based electricity generators. However, since ES has an inherent inefficiency associated with it, ES could increase overall emissions if fossil fuel generators are used for charging. Alternatively, by providing certain ancillary services storage can enable conventional generation resources to be operated at more optimal conditions resulting in an emissions benefit. Finally, storage can yield a reduced emissions benefit by enabling greater utilization of renewable resources. ES can reduce the use of water by minimizing the operation of generators that require water and maximizing the use of generators that do not require water. 37

38 Appendix C: Technologies - CAES Isothermal and adiabatic pilots have shown higher efficiency than traditional CAES, but are struggling to be cost competitive. Modular CAES Tanks Adiabatic CAES from RWE Power Source: Highview Power Storage Source: RWE 38

39 Appendix C: Technologies - Flywheel Large, high speed flywheels are typically used for frequency response while smaller low speed units are used for power quality. Metric Current Status Energy Density Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency N/A* 30sec-30min >100,000 cycles years >85% 2014 Price $1,500-$2,500/kW* Advantages Disadvantages Manufacturers Typical Applications High power density and cycle life Low energy density Beacon Power, Temporal Power, PowerThru, Kinetic Traction Systems, Vycon Energy Grid Stabilization, Grid Operational Support Source: Beacon Power Flywheel System Components *Note: Flywheel systems are generally sized and priced base on $/kw due to their use in power applications. 39

40 Appendix C: Technologies - Advanced Lead Acid Lead acid technologies are well established, but have a low cycle life when operated to a high depth of discharge, or at partial state of charge. Metric Energy Density Current Status Wh/kg Advanced Technologies Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency 4-8 hrs ,000 cycles 8-15 years 60-80% 2014 Price $500-$1,200/kWh Advantages Disadvantages Manufacturers Typical Applications Low cost Low energy density Ecoult/EastPenn/Furukawa, Exide, EnerSys, Axion, Trojan, Atraverda Load Leveling, Grid Operational Support, Grid Stabilization, Carbon Enhanced Lead Acid: Doping carbon on the electrodes reduces the accumulation of lead sulfate deposits that inhibit the performance of lead-acid batteries. Supercapacitor Integration: Pairing a carbon supercapacitor plate with the cathode reduces the stress due to load cycling and increases cell life. Bipolar Cells: Using bi-polar plates allows for reduced ohmic losses, reduced weight and higher power density than traditional cells. 40

41 Appendix C: Technologies - Advanced Lead Acid The advanced technologies allow for an increased cell life, and can also increase power and energy density. Traditional, Bipolar, and Super Capacitor Source: The Advanced Lead-Acid Battery Consortium, ECOULT 41

42 Appendix C: Technologies - Sodium Sulfur NGK has installed over 300MW of sodium sulfur (NaS) packs. A fire in 2012 lead to redesigns to improve safety. Metric Energy Density Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency Current Status Wh/kg 4-8 hrs 1,500-6,500 cycles 5-15 years 75-90% NGK Sodium Sulfur System 2014 Price $450-$800/kWh Advantages Disadvantages Manufacturers Long operating record No longer dropping in cost NGK Typical Applications Load Leveling Source: NGK 42

43 Appendix C: Technologies - Sodium Metal Halide Sodium metal halide batteries (previously known as ZEBRA), have been around since the 1970s, but were recently revived by FIAMM & GE. Metric Energy Density Current Status Wh/kg GE Durathon Basic Chemistry Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency 4-8 hrs 2,500-3,500 cycles 15 years 75-85% 2014 Price $500-$1,200/kWh Advantages Disadvantages Manufacturers Relatively cheap materials Not yet at production volumes FIAMM, GE Durathon Typical Applications Load Leveling Source: Green Car Congress, May

44 Appendix C: Technologies - Lithium Ion Lithium ion cells are gaining market share due to a drop in price and their relatively flexible operating characteristics. Metric Current Status Energy Density Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency Wh/kg 4-12 hrs ,000 cycles 7-10 years 90-95% 2014 Price $ /kWh Advantages Disadvantages Manufacturers Typical Applications High power density, rapidly decreasing costs Potential thermal runaway Saft, Toshiba, AltairNano, Electrovaya, Dow Kokam, LG Chem, BYD, Tesla, Alevo, and others Load Leveling, Grid Operational Support, Grid Stabilization, Illustrative Lithium Ion Cells Source: DOE/EPRI 2013 Electricity Storage Handbook 44

45 Appendix C: Technologies - Lithium Ion Within lithium ion, different cell chemistries result in varying energy densities, power densities, and cell costs. Technology Lithium Ion Variants Energy Density (Wh/kg) Cost Range ($/kwh) Lithium Cobalt (LCO) Lithium Polymer Lithium Manganese Spinel (LMO) Lithium Nickel Cobalt Aluminum (NCA) Lithium Nickel Manganese Cobalt (NMC) Manufacturers Samsung SDI, LG Chem, Panasonic Samsung SDI, LG Chem, BYD, ATL, Lishen Samsung SDI, LG Chem, AESC Panasonic, Saft Johnson Controls, Xalt Energy Lithium Titanate (LTO) Toshiba, Leclanché, ATL Lithium Iron Phosphate (LFP) BYD, Lishen, A123 Systems Source: Navigant Consulting 45

46 Appendix C: Technologies - Zinc Bromine Smaller zinc bromine systems have been deployed in remote locations and demonstrations with larger systems are on going. Metric Energy Density Current Status Wh/kg Redflow Storage System Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency 1-5 hrs 5,000-7,000 cycles 15 years 60-70% 2014 Price $ /kWh Advantages Disadvantages Manufacturers Modular, scalable Low efficiency, membrane degradation Redflow, ZBB, Primus Power Typical Applications Load Leveling Source: Redflow Advanced Energy Storage 46

47 Appendix C: Technologies - Vanadium Redox Vanadium systems have higher efficiencies for flow batteries, and are targeting price decreases to $350/kWh. Metric Energy Density Max. Discharge Time Cycle Life Calendar Life Round Trip Efficiency Current Status Wh/kg 4-12 hrs 5,000-7,000 cycles 15 years 65-80% Imergy ESP30 Containerized Module 2014 Price $500-$1,100/kWh Advantages Disadvantages Manufacturers Long life, higher efficiencies (for flow) System costs Prudent Energy, UniEnergy, Imergy, Gildemeister, Sumitomo, Vionx Typical Applications Load Leveling Source: CleanTechnica, Dec 1,

48 Appendix C: Technologies Cost There is significant variability in installed cost of different technologies. Comparative Installed System Capital Costs, 2014 $1,800 $1,600 $1,400 LiFePO NMC Advanced Lead Acid Next generation CAES Pumped Hydro Vanadium Redox Flow Battery Zinc Air Battery LMO LTO Traditional CAES NaS battery Zinc Bromine Flow Battery Sodium Metal Halide $1,200 ($/kwh) $1,000 $800 $600 $400 $200 $- $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Source: Navigant Research ($/kw) 48

49 Appendix D: Frequency Regulation Market Details In response to FERC 1 Order 755, NYISO 2 restructured its regulation market to separate payment for regulation capacity and movement. Regulation Movement for Two Units Providing 20 MW of Regulation» NYISO procures frequency regulation in the market to balance second-to-second changes in supply and demand. 3» NYISO has two regulation market products: 4 Regulation capacity is the payment for allowing NYISO to use a portion of a unit s capacity for frequency regulation. Regulation movement is the payment for changing dispatch up or down in order to provide frequency. Motion to Intervene and Comments of Beacon Power, LLC, FERC Docket ER FERC stands for Federal Energy Regulatory Commission 2. NYISO stands for New York Independent System Operator 3. NYISO Ancillary Services Manual, Section 4.1 and NYISO Ancillary Services Manual, Section Motion to Intervene and Comments of Beacon Power, LLC, FERC Docket ER » The graph to the left shows the regulation movement of two 20-MW units: a fast-moving energy storage unit (blue) and a slow-moving thermal unit (red). Each unit is on call to provide the same regulation capacity (20 MW), so each receives the same regulation capacity payment. But the blue unit has several times as much change in dispatch as the red unit, so it receives more payment for movement. 5 49

50 Appendix D: Frequency Regulation Market Details Units clear the regulation market based on the combined capacity and movement bid and the opportunity cost of providing regulation.» Units (including generators and energy storage) may bid three parameters in the market: 1 A regulation capacity bid ($/MW) A regulation movement bid ($/ΔMW) A maximum regulation capacity offer (MW)» Units clear in both the day-ahead and real-time markets and cleared units always provide capacity; however, movement is dispatched in real-time according to market needs. 2» The real-time market is co-optimized for energy and ancillary services, 3 meaning that the opportunity cost (i.e., lost margin in the energy and other ancillary services markets) is added to the bid when determining the least-cost units for providing regulation. 4» NYISO has proposed increasing the movement multiplier to 13 in the second quarter (Q2) of » The marginal regulation unit is the highest-cost cleared unit, taking into account: 7 The regulation capacity bid ($/MW) The regulation movement bid times NYISO s Regulation Movement Multiplier (10 * $/ΔMW) The opportunity cost of the unit providing regulation 1. NYISO Ancillary Services Manual, Section NYISO Ancillary Services Manual, Section NYISO Ancillary Services Manual, Section NYISO Market Administration and Control Area Services Tariff Section NYISO Market Administration and Control Area Services Tariff Section NYISO Uniform Regulation Movement Multiplier Update 7. NYISO Market Administration and Control Area Services Tariff Section

51 Appendix D: Frequency Regulation Market Details The NYISO regulation market incentivizes slow moving units to bid high capacity and low movement and fast moving units the opposite.» NYISO restructured its regulation market to separate regulation capacity and movement. Capacity payments are made in order to reserve capacity to be able to provide movement when called upon by the ISO Movement payments are made for unit dispatch in response to ISO signals to maintain frequency. Units split their bid between capacity and movement but market clearing is based on the single value (capacity bid + 10 X Movement Bid). Units are dispatched for movement in proportion to capability.» The PJM frequency regulation market design is more favorable to fast moving units than the NYISO market design. The bidding behavior of NYISO market participants likely suppresses prices relative to PJM.» Storage units whose costs depend on LBMPs face significant risks if LBMPs exceed expectations in a given hour, and can lose money if LBMPs are high and movement prices are low. 51