VIA ELECTRONIC FILING. August 29, 2014

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1 VIA ELECTRONIC FILING August 29, 2014 Hon. Kathleen H. Burgess Secretary to the Commission New York State Public Service Commission 3 Empire State Plaza Albany, New York Ms. Julia Bovey Director Long Island Office Department of Public Service 125 East Bethpage Rd. Plainview, New York Re: Matter Number PSEG Long Island s Utility 2.0 Plan Dear Secretary Burgess and Director Bovey: On behalf of the New York Battery and Energy Storage Technology Consortium ( NY BEST ) please find enclosed for filing with the New York State Public Service Commission, our comments on PSEG Long Island s Proposed Utility 2.0 Plan ( The proposed Plan ). NY BEST, which represents more than 140 organizations from New York State and beyond, is very interested in the future of the electric grid on Long Island. As such, our comments reflect our interest in ensuring that the proposed Plan adopted by PSEG Long Island fully incorporates energy efficiency and distributed energy resources, such as energy storage, as a primary tool in the planning and operation of an interconnected modernized power grid. If you have any questions or require additional information regarding these comments, please contact me at (518) Respectfully, William P. Acker Executive Director Enclosure 1

2 NY BEST COMMENTS ON PSEG LONG ISLAND UTILITY 2.0 PLAN INTRODUCTION The New York Battery and Energy Storage Technology Consortium ( NY BEST ) is a notfor profit industry trade association that serves as the voice of the industry for approximately 140 member organizations on matters related to advanced batteries and energy storage technologies. Our membership covers the full span of activities related to research, development, production and deployment of energy storage devices, and currently includes technology developers ranging in size from small start up companies to global leaders such as General Electric, leading research institutions and universities, Brookhaven National Lab and numerous companies involved in the electricity and transportation sectors. Our membership represents a significant, active and growing sector of New York s energy economy. Our mission is to catalyze and grow the energy storage industry and establish New York State as a global leader in energy storage. We do this by: (1) serving as a center for communication, education and interaction amongst stakeholders; (2) leveraging New York s world class intellectual and manufacturing capabilities and market leadership; (3) supporting and accelerating the commercialization process from research and development to products and widespread deployment; and (4) advocating for policies that promote the energy storage industry. BACKGROUND NY BEST has been heavily engaged in the New York State Public Service Commission s Reforming the Energy Vision Proceeding (REV) and we support PSC s efforts to transform New York s electric industry with the objective of creating market based, sustainable products and services that drive an increasingly efficient, clean, reliable, and customeroriented industry. Under the reform envisioned by the REV Staff Report and Straw Proposal, a wide range of distributed energy resources will be coordinated to manage load, optimize system operations and enable clean distributed power generation. Our analysis of, and comments on, the PSEG Long Island proposed Utility 2.0 Plan reflect our core position with respect to REV. In short, NY BEST believes that to achieve the goals of REV, products and services provided to the grid must be valued based on transparent 2

3 and standardized methodologies, procedures and processes. To do this, the costs and benefits of energy resources, such as storage, must be unbundled to ensure that each DER s value streams are appropriately and fairly captured. We also believe that DERs, such as energy storage, must be fully and fairly evaluated prior to the selection of any generation, transmission or distribution asset and that competitive barriers must be eliminated so that distributed energy resources can participate on a level playing field. COMMENTS AND RECOMMENDATIONS ON THE PSEG UTILITY 2.0 PLAN NY BEST has reviewed the PSEG Long Island s proposed Utility 2.0 Plan and we congratulate PSEG Long Island on its initial steps to prepare a plan for the future electric grid on Long Island. NY BEST further appreciates PSEG Long Island for recognizing in the proposed Plan the important benefits energy storage technologies can provide to the electric grid on Long Island. However, we have several concerns with the proposed Plan. These concerns, along with our initial comments and recommendations, are outlined below. Flawed Cost Analysis for Energy Storage NY BEST is concerned that the assumptions used by PSEG Long Island in evaluating energy storage are deeply flawed. Energy storage designs vary by power (MW), energy (MWh), and type of technology. This complexity frequently creates challenges for utilities which typically do not have vast experience with this type of resource. PSEG Long Island has stated in the proposed Plan that energy storage would be considered for capacity and peaking applications with a duration requirement of 3 4 hours (5:00 pm to between 8:00 pm and 9:00 pm). Given this proposed operation, we are perplexed as to how the proposed Plan s initial $6,000/kW cost estimate for energy storage was derived. 1 Based on our knowledge of the industry and information from NY BEST members, we would expect that this type of project and duration would cost 50% to 80% less than the estimate included in the proposed Plan. If this estimate has driven a cost/benefit analysis for energy storage, then the results of that analysis are deeply flawed. 1 Table 3.16 of the proposed Plan, reflecting Case 2, estimates 2.5 MW energy storage would cost $15 million, or $6,000/kW or $6 million per MW. 3

4 Importantly, the optimal duration (or ratio of energy to power) for energy storage technologies depends upon a number of variables and the particular application. It appears that the analysis presented assumes that energy storage units would operate at a proposed rated output for closer to 12 hours. However, 12 hours of duration may not be necessary in all instances. In many cases, the benefits being sought from the energy storage application can be achieved at a shorter operating duration and the cost benefit will be substantially improved for the shorter duration output. We strongly encourage PSEG Long Island to revise its analysis of energy storage to include a full array of cost and performance options; for example, energy storage units that operate for a proposed output of four, six and/or eight hours. Such durations have been proven to deliver important benefits to grid operators across the US and globally, and it is clear that some of the system concerns highlighted by PSEG Long Island (e.g., shifting the energy peak from PV systems to better coincide with system demands) could be met with shorter duration systems. Combine Solar PV and Energy Storage In the proposed Plan, PSEG Long Island indicates that they have looked at options to reach their 40 MW solar PV target, including incentivizing and/or mandating west facing solar, a far less effective use of solar. NY BEST would suggest that a more effective approach to shifting the energy produced from a PV system to better match the system peak load requirement would be the addition of energy storage. Doing so would maximize the output (and value) from the PV arrays and add additional benefits beyond time shifting the power produced by the PV systems to the distribution network. Inconsistency with REV Vision NY BEST does not believe the proposed Plan is consistent with the vision set forth for REV and we are concerned that if unchanged, it may create a negative precedent for future utility implementation plans. Specifically, the proposed plan does not embrace Distributed Energy Resources (DERs) in the manner or to the extent envisioned by REV and in fact, unduly limits the role for energy storage and distributed generation. Further, in addition to using a flawed cost analysis for energy storage as discussed above, PSEG Long Island in evaluating options for future grid operations does not utilize a benefit 4

5 cost analysis or appropriate methodologies and tools to incorporate the full benefits of energy storage. Energy storage technologies enable all generation sources on the grid to operate more efficiently, flexibly, and resiliently; increase system efficiency and utilization; facilitate integration of renewable energy resources on the grid; reduce greenhouse gas emissions, reduce other air pollutants and limit environmental impacts; and lower costs for consumers. Energy storage resources are currently operating on the nation s grid and are used in a variety of applications to balance generation and load in an efficient and costeffective manner. As of August 2014, some 270 distributed energy storage projects across the US totaling 212 MW have been deployed or planned. Energy storage technologies are ideally suited to assist with grid resiliency and increased reliability. Storage provides the flexibility to integrate renewables into the electric grid without consuming additional fossil fuels needed to meet the ramping requirements of renewable energy generation resources. Energy storage technologies have the power to extend and optimize the operating capabilities and reliability of the electric grid because they allow electricity that is generated at one time to then be used at a later time. This capability provides flexibility in generation and distribution, improving the efficiency and utilization of the entire system. Energy storage technologies allow surplus generating capacity to be used to charge energy storage facilities during overnight periods in order to serve peak loads the following day thereby relieving stress on transmission equipment during peak periods, making better utilization of transmission, distribution and generation assets and providing better service to customers. In addition, energy storage increases the overall efficiency of the grid and multiplies environmental benefits because the electricity that is stored is derived from cleaner, more efficient assets (i.e., high efficiency thermal power plants and renewables), rather than low efficiency, higher emission peaker plants. Dispatchable energy from energy storage can avoid the need to build additional generation to reliably meet customers needs during periods of high demand. Further, modernizing the electric grid for today s needs and creating a grid capable of handling an increasing amount of intermittent renewable generation (such as wind and solar) will require a substantial capacity for electrical energy storage. 5

6 Energy storage facilities are environmentally beneficial and have limited environmental impact. Specifically, these technologies: o Result in no direct emissions, and reduced system wide emissions through better utilization of existing assets o Do not require substantial amounts of water to be used or consumed o Have no chemicalor fuel handling or storage requirements o Have limited visual, ecological and land use impacts Energy storage provides benefits to transmission and distribution load areas. For example, energy storage can provide ramp rate control for renewable energy, as well as other grid services such as reactive power and voltage support. These benefits need to be recognized in any analysis of storage. Production simulation and cost model tools such as GE MAPS and other tools and methodologies such as those used in the California AB 2514 evaluation process have proven effective and NY BEST s recommends that they be given full consideration and the proposed Plan should be revised accordingly. NEW FRAMEWORK RECOMMENDED As discussed above, we strongly encourage PSEG Long Island to reevaluate the value of energy storage to address peak load using more accurate cost and use information, as well as utilize appropriate existing tools and methodologies for evaluating storage. In the longer term, NY BEST believes there is a clear, identified need to utilize a framework that allows energy resources to be compared on an equal footing and to have each distributed energy resource valued based on its actual costs and benefits to the grid. When examining the benefits and cost of DER devices such as storage, NY BEST recommends that two primary components be considered. First, devices need to be evaluated at the stand alone, project level, ensuring that all benefits that are potentially offered by the devices are recognized and captured. Secondly, the analysis should assess the overall system level benefits that are provided when the DER devices are considered in 6

7 terms of aggregated assets that will contribute to overall system operation and contributions to the State goals of increased renewable production and cleaner energy. The modeling methodologies in each case differ, but do require a level of sophistication and complexity to accurately assess. When assessing the early stage accounting of benefits of storage, NY BEST believes it is important to ensure that all capabilities of application provided are accounted for and accrued to the system. Using storage as an example, when considered as a stand alone unit, consideration will need to be made for: a. Standard, project level benefits of the device to include reliability, peak shaving capabilities, load shifting capabilities; b. Benefits to the feeder itself, to include benefits such as deferral of equipment replacement/upgrades and feeder level protection against intermittency of variable renewable devices; c. Benefits from participating in market opportunities, such as customer side access to market products such as regulation, spinning reserve, or potential new products offered to support grid operation; and d. Societal benefits such as emission reduction, though better suited to be examined in the system analysis due to the cause effect issues When examining DER devices at this level, simulation approaches need to be considered. DER devices will be performing multiple roles and tapping into multiple benefit streams. The devices themselves will be governed by controls and optimization routines that will make simple accounting of how units operate difficult. The best means to assess such scenarios is through actual simulation of operation of the devices. Examples of this have been seen in the California AB 2514 evaluation process where tools and methodologies were incorporated that simulated the grids and how the devices operate in performing specific roles or use cases. When assessing later stage applications, the benefits need to focus more on the grid operation where improvements in efficiency, cost savings from visualization of the DER devices on the system, and aggregated bulk assets being incorporated into system planning activities. The methodologies have again been demonstrated in prior studies, but analysis will need to incorporate: 7

8 a. Better understanding of the value and cost of self optimizing behavior b. Modeling and analysis of the likely behavior of self optimizing customers enabled by technologies such as storage and weighed against the economics of New York tariffs and market signals c. Understanding of the likely load and profile changes that will occur due to adoption of the DER devices For the long term incorporation of the benefits, a more holistic understanding of the likely scenarios will need to be considered but the benefits such as improvement in efficiencies, cost reductions, potential improvements in emissions will need to be assessed, extracted, and accrued to owners of DER systems. A summary of the potential benefits that need to be accounted for in assessing DER systems in shown in the chart below: End Use Distribution/Trans Wholesale/Markets System Local Reliability Reactive supply and Voltage control Regulation (ISO product) Criteria air pollutants (SO2, NOx, PM) Load management T&D capacity upgrade deferral Flexible resource adequacy Carbon Emissions Energy time shift T&D reliability upgrade deferral System resource adequacy Security & Resiliency Local Resiliency and leveraging renewable assets Intermittency mitigation of variable renewable resource Local resource adequacy Cost reductions due to utilization of aggregated DER (storage) asset Peak Load Reduction Black start capability Over generation and curtailment support Distribution System Reliability Market energy (day ahead/realtime) Efficiency improvement of fossil generation (hybrid application) Transmission & Distribution Capacity Flexible ramping product (Future ISO product) Fuel Price Hedging Frequency response (inertia) (Future ISO product/standard) Generation Capacity 8

9 Spinning/non spinning reserve (ISO products) Capacity Market NY BEST strongly encourages PSC to incorporate a framework such as what we have outlined above as part of the REV process. This type of framework could be applied statewide for use by all utilities, including PSEG Long Island. SUMMARY NY BEST strongly encourages PSC to recommend to PSEG Long Island that its proposed Utility 2.0 Plan be revised to incorporate our suggestions in relation to the evaluation of energy storage for Long Island s electric grid. Energy storage offers Long Island a host of benefits that will improve grid efficiency, provide increased resiliency, support clean energy and transform Long Island s grid to a modern and efficient system. Given the inadequate treatment that energy storage has received in the proposed Plan to date, none of these benefits will be realized unless a more comprehensive evaluation of storage is performed. NY BEST would welcome the opportunity to review these comments directly with DPS staff and PSEG Long Island. We greatly appreciate the opportunity to provide these comments and we stand ready to work with PSEG Long Island and the Commission to create a final Utility 2.0 Plan that incorporates these comments and recommendations. Respectfully submitted, William P. Acker Executive Director NY BEST 1450 Western Ave, Suite 101 Albany NY