Factors Affecting Economics Of Electricity Storage Projects

Transcription

1 Factors Affecting Economics Of Electricity Storage Projects In Competitive Electricity Markets Presented by Rahul Walawalkar Ph.D.,CEM, CDSM Sr. Energy Consultant Presented at the IAEE International Conference 2009 San Francisco Customized denergy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA 2009, Phone: Fax: ltd.com

2 Agenda: Energy Storage Technologies & Electricity Markets Factors affecting Economics of EES EES Design, performance & capabilities Market tdesign, Rules & Barriers Project Financing Other Factors (Fuel price,environmentalregulations environmental regulations & competition) Questions??? 2

3 Overview of Electricity Markets Source: FERC: act/rto/rto map.asp 3

4 EES for Electric Utility Applications Pumped Hydro Energy Storage Compressed Air Energy Storage Sodium Sulfur (NAS) Flow Batteries Vanadium Redox (VRB) Zinc Bromine (ZBB) U Long duration (15 Minute) Flywheels s t o C t a C a p n Available for commercial order Preconstruction and licensing period Finalized cost estimate Design/construction period lfirst commercial service I2nd plant in service tdevelopment period 3rd plant <--estimate actual--> 4th plant 5th plant Icost estimate Mature plant cost > Simplified cost estimate w ith incomplete data NAS ZBB Flywheel VRB 4

5 Opportunities for Energy Storage Energy Arbitrage Ancillary Services Regulation Operating Reserves Voltage Support Installed Capacity Deferral of investment in Peaking Generation Transmission & Distribution Supporting integration of renewables 5

6 Factors Affecting EES Economics EES Design, Performance & Capabilities Technology selection Power & Energy rating Life expectancy Round R d Trip Efficiencyi Response rate & any other operating considerations Footprint & any special permitting requirements Capability to meet requirements for different markets 6

7 EES Selection: Discharge Time & System Power Rating Source: Electricity Storage Association 7

8 Round Trip Efficiency & EES Utilization 8

9 Net Revenues with different CAES Configurations enue $ / MW Annual Rev ~51% increase over daily operation CAES Configuration o Heat Rate Energy Ratio Power Ratio Ramp rate Response time Storage Duration (Daily) 1.00 (Monthly) Power Ratio 9

10 Factors Affecting EES Economics Market Design Access to various markets for energy, ancillary services and capacity Generation Supply mix & Demand Curve Locational factors Electric transmission network & interconnection 10

11 Comparison of ISOs/ RTOs 11

12 FERC Orders Recent changes in MarketDesign 890: open regulation markets to non gen resources 719: demand response and long term power contracts PJM & NYISO opened up ancillary service markets for demand dside resources during ISO NE initiated pilot program for alternative technologies participationin in regulation market Creation of a new category for ancillary services to remove barriers for energy limited resources NYISO: Limited Energy Storage Resources (LESR) MISO: Stored Energy Resource (SER) CAISO has proposed a EES Pilot for ancillary services 12

13 Factors Affecting EES Economics EES Revenues & Cost On Peak Energy Revenues & Off Peak Costs Ancillary Service Revenues Capacity revenues Interconnection costs Natural Gas price 13

14 Location, Location, Location NYISO PJM NY West NY East West Central East NYC South NYC: NYC, Long Island NY East: Capital, Hudson Valley, Millwood, Dunwoodie NY West: West, Genesee, Central, Mohawk Valley, North PJM East: AECO, DPL, JCPL, METED, PECO, PPL, PSEG, RECO PJM Central: PENELEC, APS PJM South: DOM, BGE, PEPCO PJM West: COMED, AEP, DAY, DUQ 14

15 PJM NYISO LMP Profiles ( *) 09 * Partial year data as of June

16 Effect of Location & Round Trip Efficiency onnetrevenue 16

17 Effect of Natural Gas Price in NYISO 17

18 Average Daily LMP Curves for each month in NYC ( ) 09) 18

19 Ancillary Service Revenue 19

20 Regulation Price Profiles NYISO ( ) 2 0

21 Probability Curve for Expected Regulation Revenues 21

22 Capacity Credit NYISO has a locational ICAP requirement 80% for NYC 97.5% for Long Island PJM uses Reliability Pricing i Mechanism (RPM) to set up locational capacity prices Future capacity prices will be influenced by demand growth generation addition / retirements cost of new generation technologies 22

23 OtherFactors Affecting EES Economics Financing Factors Capital Costs Real estate and taxes Cost of borrowing Construction & permitting period 23 23

24 Impact of capital cost on economics of CAES in NY 24

25 OtherFactors Affecting EES Economics Transmission / Distribution Upgrades Impact of wind & renewable integration Impact of environmental regulations Renewable Portfolio Standard mandates NYS 15x15 Program Initiative Carbon Tax 25 25

26 Transmission Infrastructure National Interest Electric Transmission Corridor 26

27 PJM: Proposed new transmission projects Source: PJM 27

28 Impact of Renewables NYISO is anticipating more than 3000 MW of wind being added on the grid in next 3-4 years Represents around 10% of peak load for NYISO 20-30% of off peak load May result in increased regulation and ancillary service requirements Can improve the case for energy arbitrage by lowering off peak prices 28

29 Occurrence of Negative LMPs in NYISO Zones 29

30 Conclusions Electricity markets across US allow or are working on allowing EES to participate ii in energy, ancillary services & capacity markets. The economic feasibility of EES will depend on factors including Design parameters Market Structure and location Ability to capture multiple revenue streams Financing i Environmental regulations For large scale integration of EES it is important that technology developers and market participants, as well as potential investors understand these factor while determining value proposition of EES for different applications. 30

31 Co authors & Colleagues Acknowledgements Netra Thakur, Rick Mancini and Jim Harvilla I would also like to thank Dr. Jay Apt & Dr. Lester Lave (CMU) Dr. Peter Balash (NETL) Joseph Sayer & Mark Torpey (NYSERDA) Haresh Kamath & Robert Schainker (EPRI) This analysis was supported in part by Carnegie Mellon Electricity IndustryCenter (CEIC) New York State Energy Research Administration (NYSERDA) National Energy Technology Labs (NETL) 31

32 QUESTIONS??? Dr. Rahul Walawalkar ltd.comltd.com ltd.com ld Customized denergy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA Phone: Fax: ltd.com