ESO Summary of Recommendations

Transcription

1 June 23, 2016 The Hnurable Catherine McKenna Minister f Envirnment and Climate Change 200 Sacre-Ceur Bulevard Gatineau, QC K1A 0H3 Dear Minister McKenna Re: Recmmendatins t deply energy strage slutins t help address Canada s climate change challenges frm Energy Strage Ontari (ESO) ESO Summary f Recmmendatins Assign an ecnmic value t carbn emissins; Increase grid efficiency by encuraging and enabling the deplyment f the energy strage prjects in Canada; Implement plicies that encurage innvatin and investment in the develpment and grwth in clean-tech energy strage industry. Energy Strage Ontari (ESO) is pleased t make this submissin t Envirnment and Climate Change Canada t supprt Canada s effrts t meet carbn reductin targets, t strengthen Canada s energy infrastructure, and t transfrm the ecnmy twards innvatin and clean, green technlgies. As the federal/prvincial Wrking Grups deliberate n plicy, ESO is making recmmendatins t ensure that the value f energy strage is understd and cnsidered in the suite f electrificatin and infrastructure ptins t help meet Canada s climate change gals. We will be prviding mre detailed infrmatin and input n these measures as the federal-prvincial Wrking Grup prcess cntinues thrughut the next few mnths. 1

2 Energy Strage Ontari ESO is the industry rganizatin that represents the brad range f cmpanies engaged in the energy strage business in Ontari and Canada. We are the nly trade assciatin in Canada fcused n advancing the rle f energy strage and building the market fr the energy strage business. ESO has becme the hub fr energy strage in Canada. Thrugh netwrking, knwledge-sharing, advcacy and stakehlder educatin, we are helping t build a strnger industry and shwcase the value that energy strage can bring t imprve ur envirnment and ur ecnmy. Our membership represents all players alng the energy strage value chain -- technlgy prviders, prject develpers, investrs and peratrs, lcal electricity distributin cmpanies, and NGOs. We have als partnered with ther rganizatins, such as the Natinal Research Cuncil f Canada (NRC), and with Ryersn University n their Energy Strage Technlgy Netwrk prjects funded thrugh Natural Sciences and Engineering Research Cuncil f Canada (NSERC). Bth rganizatins are carrying ut imprtant wrk t research and develp new energy strage knwledge and applicatins. In additin, we are reaching ut t like-minded industry assciatins, such as the Canadian Slar Industries Assciatin, the Canadian Wind Energy Assciatin, and ther rganizatins that are pursuing similar gals and recmmendatins. Attached t this submissin yu will see a full list f ur membership. 2

3 Overall Opprtunity Energy Strage Ontari welcmes Canada s fcus n meeting GHG emissin targets f 30% belw 2005 emissins by We als supprt thse prvinces where plicies have, r intend t, put a price n carbn. Carbn pricing is an effective plicy instrument t curb carbn emissins and shape new practices and behaviur. There is als imprtant ptential and cmpatibility with climate change measures intrduced in specific prvinces, such as Ontari s Climate Change Actin Plan and Alberta s Climate Leadership Plan. Energy strage ptimizes all the resurces n the grid and in the energy system, it lwers greenhuse gas emissins, helps defer cstly transmissin and distributin system upgrades, and increases resilience and efficiency. As such, Canada is nw in a tremendus psitin t demnstrate leadership n hw an ecnmy can grw prsper while migrating t lw carbn energy systems. T get there three critical cmpnents are required: 1. An ecnmic value placed n carbn emissins that prvides cnsumers and business with financial incentives t mve t lw carbn energy systems; 2. High efficiency energy systems that use less energy t d the same r mre wrk and; 3. Energy strage systems that will enable meaningful reductin f fssil-based energy generatin thrugh the existing carbn-free energy systems and the further deplyment f additinal renewable generatin such as wind and slar. 3

4 Energy strage systems shuld play an increasingly vital rle in Canada s energy future as we mdernize ur energy systems. Tday, there are significant market barriers that inhibit the deplyment f energy strage systems and the imprvement and sustainability f grid infrastructure. With the right market structures, Canada can ensure affrdable and reliable energy that supprts carbn reductin gals, advances a mre efficient system fr peratin and enhanced renewables integratin, and spurs innvatin and ecnmic develpment. Value Prpsitin f Energy Strage Energy Strage technlgies fundamentally imprve the way we generate, deliver, and cnsume electricity. They have the pwer and versatility t make ur pwer netwrks mre resilient, efficient, and cleaner than ever befre. These technlgies include different types f batteries, flywheels, pwer-t-gas (hydrgen), cmpressed air and pumped hydr. Energy Strage adds value at all pints in the energy system-- transmissin grid, lcal distributin netwrk and behind the meter n a custmers' premises. It can increase the value f the energy prduced by ther surces and adds capacity t the system. It can act as a lad and generatr and prvide a range f grid balancing services including regulatin services, vltage supprt and cngestin management t allw grid peratrs t integrate increasing amunts f renewable generatin. Energy strage assets can lwer greenhuse gas emissins by permitting mre efficient dispatch f gas-fired generatrs, and lwer system csts by deferring cstly transmissin and distributin system upgrades. The result is a cleaner, mre flexible and cst-effective electricity system. 4

5 Energy strage systems als have the ability t absrb excess energy frm the grid, stre it, and then prvide it when it is needed as pwer, r alternatively, prvide a pathway t decarbnize the transprtatin sectr. Fr example: 1. The strage f lw-emissin baselad generatin capacity at lw demand perids and its reinjectin int high value areas n the transmissin grid and high density lad centers within the distributin grid during perids f high demand. Nt nly des this maximize the value f current energy generatin resurces it als maximizes the use f existing transmissin and distributin assets by reducing cngestin; 2. The rapidly grwing cntributin f carbn-free electricity frm renewable, intermittent surces can be smthed ut and its use maximized, allwing very high penetratin int the electricity system; 3. The deplyment f lcal area micrgrids that will prvide cmmunities with energy resiliency imprving the reliability f lcal energy supply during climate-induced weather events; 4. The mass adptin f electric vehicles withut the need fr a cmplete redesign f the distributin grid facilitating energy strage based vehicle charging statins. 5. The prductin f renewable fuel frm electricity as hydrgen t pwer fuel cell electric vehicles. Energy Strage in Canada Ontari is the leading jurisdictin in Canada, and ne f the tp jurisdictins in Nrth America, fr energy strage. Ontari deplyed energy strage thrugh a 50MW prcurement first annunced in 2013, which was cmpleted in late This prcurement was versubscribed with a variety f 5

6 innvative, and fully cmmercial, energy strage prjects that have set the fundatin fr the applicatins that imprve grid peratin and resiliency in Ontari. Energy strage is particularly relevant in Canada as it can: Enable further carbn emissin reductins by making the electricity grid mre efficient, integrating renewables and allwing clean, renewable electricity t be injected int ther parts f Canada s energy system, such as transprtatin and industrial uses; Mve nrthern cmmunities and resurce develpments ff f diesel- based energy systems; reducing the carbn ftprint f these cmmunities and imprving cnditins in ften underserved First Natins cmmunities in the Nrth; Enable grid islanding, increasing reliability and resiliency f lcal grids. This capability is especially relevant t an electricity grid like Canada s where high density areas f cnsumptin are intercnnected by lng transmissin lines that are increasingly under pressure frm extreme weather events; Prvide hme wners with residential strage with back-up pwer in the event f grid utages, cntrl ver time-f-use electricity prices withut altering behaviur and ease integratin with rftp slar system fr self-cnsumptin, verall lwering electricity csts, increasing resiliency and reducing carbn emissins right in the hme. Help t leverage Canada s thriving clean-tech innvatin and manufacturing industry in the hme market t encurage exprts and further enable a lw-carbn wrld ecnmy. 6

7 Carbn Reductins Canada can take this pprtunity t emerge as a glbal leader in energy strage, while at the same time meeting ut aggressive GHG reductin and lw carbn ecnmy plicy bjectives. In Ontari alne, there is an pprtunity t use strage t reduce carbn-emissins frm gas plants by up t 4.5 millin tnnes f CO2 per annum. In 2015, 91% f available Gas Fired Generatin Capacity ran, n average, fr just under three hurs each day, accunting fr 8.3 TWh f Ontari s electricity generatin and emitting apprximately 4.5 millin tnnes f CO2. Apprximately millin tnnes f CO2, ut f this 4.5 millin Tnnes, culd be eliminated with 1,000 MW f energy strage by negating 2-3 TWh f thermal gas pwer generatin. This assumes that natural gas generatin perates at peak lads and at a capacity factr f 32% (as referenced in the IESO Pwer System Planning August 13, 2015 dcument). Micr-Grid Diesel Displacement In cnjunctin with wind and slar, strage can als play an integral rle in nrthern ff-diesel strategies fr Canada. Specifically, strage plus renewable micrgrid systems can greatly reduce the amunt f expensive, dirty diesel being shipped t these cmmunities, while increasing pwer supply resiliency and reliability. These slutins can be installed relatively quickly and can bridge the gap fr cmmunities that might be awaiting a transmissin line. 7

8 Lcal Grid Resiliency The Canadian energy system and electricity grid is a vast and smewhat fragmented grid with pckets f high cnsumptin ften separated by hundreds f kilmeters. With extreme weather events increasing the pressure n the lng transmissin and distributin infrastructure cnnecting these pckets t centralized generatin the lcal grids will need t be increasingly self-sufficient. Energy strage can enable these lcal grids t be much mre reliable withut as much dependency n utside supply, allwing fr ecnmically and technically ptimized asset deplyment t meet reliability standards. Innvatin Ecnmy Canada is flush with innvatrs, entrepreneurs and established cmpanies wrking t imprve the market fr energy strage. Supprt fr the Canadian energy strage industry will nt nly imprve the electric grid and its cntributin t carbn reductin targets but als will create cuntless Canadian jb pprtunities and exprt ptential fr Canadian cmpanies. ESO s membership basts innvative cmpanies funded in Canada, active in the Canadian market and seeking pprtunities in new exprt markets. Fr example, we highlight here just three examples f Canadian-based cmpanies wh are pineers in energy strage in Canada as creatrs and manufacturers f innvative technlgies, and a develper that seeks deplyment pprtunities and harnesses the value f these technlgies: Tempral Pwer makes large steel flywheels respnd t tw-secnd signals frm the electricity system peratr t help regulate and match the pwer supply and demand Hydrgenics has pineered high pwer density electrlysers which split water t prduce hydrgen allwing lnger term energy strage as renewable fuel r renewable gas. 8

9 NRStr is a develper that has wn cntracts with Ontari s Independent Electricity System Operatr t develp prjects with flywheels and cmpressed air energy strage technlgy as well as partnering with Tesla Energy and Opus One (anther Ontari start-up) t bring the Tesla Pwerwall hme battery t Canada. U.S. Mdel It is instructive t lk at ther jurisdictins t learn hw they have intrduced energy strage int their energy systems. Varius states in the U.S. (e.g. Califrnia, Texas, Massachusetts) have taken imprtant leadership t ensure the deplyment f energy strage systems and technlgies. The energy strage market there is set t grw t an annual installatin size f 6 gigawatts (GW) in 2017 and ver 40 GW by 2022 frm an initial base f nly 0.34 GW installed in 2012 and 2013, accrding t research firm IHS. In June, 2016, President Obama s administratin annunced new executive actins as well as state and private sectr cmmitments t accelerate the integratin f strage, which is expected t result in at least 1.3 gigawatts f additinal strage prcurement r deplyment ver the next five years. Federal Plicy Supprt fr Energy Strage ESO recmmends the Canadian gvernment implement plicies that encurage the deplyment f energy strage acrss the varius prvincial energy markets. Plicies shuld be brad enugh t include multiple technlgy types and investr types as well as be flexible enugh t be integrated int the varying prvincial plicies. These supprt mechanisms culd include, withut limitatin, the fllwing measures: 1. Supprt fr studies identifying the need and use cases f energy strage; 9

10 2. Direct/Match funding f prjects r innvatin prgrams; 3. Lan guarantees r ther mechanisms prviding lw cst investments; 4. Intrduce tax incentives fr Energy Strage, which culd include An Investment Tax Credit n Capital Csts fr taxpayers wh invest in energy strage prjects; Allw energy strage t be eligible fr the Canadian Renewable and Cnservatin Expense (CRCE) tax incentives; Allwing energy strage assets t be eligible fr accelerated depreciatin under class 43.2 fr at least 10 years Exempting all crprate taxpayers frm the Specified Energy Prperty rules; Granting legislative exemptin frm the applicatin f the tax shelter rules and the rules that prevent the benefit f the tax incentives frm being allcated disprprtinately between the taxable and tax exempt partners; Exempting taxpayers wh invest in energy strage prject partnerships frm the applicatin f the at-risk rules and the negative ACB rules; We lk frward t discussing energy strage and ur prpsals with yu. Yurs truly, Patricia Phillips Executive Directr 10

11 Energy Strage Ontari Membership 11