State Policies to Fully Charge Advanced Energy Storage

Transcription

1 State Policies to Fully Charge Advanced Energy Storage

2 Agenda Introductions Basics of Energy Storage Energy Storage Deployment Hurdles What Are States Doing? Discussion/Deep Dives 2

3 About IREC OUR MISSION: Increase access to sustainable energy and energy efficiency for more Americans through independent fact-based policy leadership, quality work force development, and consumer empowerment. Regulatory Reform Quality Workforce Consumer Empowerment Independent 501(c)3 non-profit Est

4 IREC Regulatory Activity Historic, State Regulatory Activity ( ) Current State Regulatory Activity ( )

5 Goal of the Guide Provide state policymakers and regulators with a more comprehensive tool to navigate key regulatory and policy pathways to support the widespread economic deployment of energy storage. Download a FREE copy at

6 About the ESA

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8 Agenda Introductions Basics of Energy Storage Energy Storage Deployment Hurdles What are States Doing? Discussion/Deep Dives 8

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10 How to Determine Energy Storage Duration The duration the length of time storage can sustain its electric output can be determined by knowing how much energy the resource can store. For example, a storage resource described as a 2 MW / 8 MWh unit can sustain its maximum (rated) power of 2 MW for 4 hours. 8 MWh of energy 2 MW of power = 4 hours of duration

11 Energy Storage Applications and Services Generation Applications Bulk Energy Services Electric Time Shift Electric Supply Capacity Renewables Integration Firming Curtailment Avoidance Spinning and Non- Spinning Reserve Capacity Ancillary Services Frequency Response & Regulation Ramping / Load Following Voltage/VAR Support Infrastructure Applications Transmission Services Network Capacity Congestion Relief Distribution Services Network Capacity Voltage/VAR Support T&D Upgrade Deferral Increased Hosting Capacity Area Regulation Cross-cutting Applications Peak Demand Reduction Energy Management Services Time-Varying Rate Management Demand Charge Management Reliability Services Back-up Power Black Start System Flexibility Power Quality

12 Storage Applications and End-Users Complementary alternative to natural gas peaking capacity in IRPs Helps firm intermittent energy Storage as Transmission (nonwires alternatives) DRPs provide opening for non-wires alternatives Residential customers increasingly asking for paired systems C&I customers demand charge management enhanced with storage Clean Peak Standard policies 12

13 Energy Storage & the Duck Curve

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15 Lithium-ion battery costs continue declining Cost declines of 8-15% year-onyear are projected 15

16 Hardware vs. soft costs Total costs = hardware costs + soft costs / EPC Hardware costs include: Battery, inverter, container Soft costs include: Permitting, interconnection, EPC (this is sometimes a separate line item) Total system costs tend to fall with battery prices falling, but we need to think about soft costs too 16

17 Rates as a driver of customer storage Medium C&I Energy Storage Returns from Demand Charge Management Alone IRR 5%-10% IRR 10%+ IRR 5%-10% IRR 10%+ Source: GTM Research The Economics of Commercial Energy Storage in the U.S.: The Outlook for Demand Charge Management, 2016

18 Storage in resource adequacy & infrastructure System capacity/peak supply In development SDG&E/Fluence 30 MW, 4-hr SCE/Tesla 20 MW, 4-hr Network capacity/t&d assets SCE/Fluence 100 MW, 4-hr In development APS/Fluence 2 MW, 4-hr National Grid/NextEra 5 MW, 8-hr HECO/Stem 1 MW aggregation

19 Downward trends in bids with storage plus PV/wind for utility RPFs Xcel Colorado ERP bids (2018 update) median of $36/MWh for storage plus solar, median of $21/MWh for storage plus wind Indiana NIPSCO s IRP (2018 update) bids average of $35/MWh for storage plus solar

20 Agenda Introductions Basics of Energy Storage Energy Storage Deployment Hurdles What Are States Doing? Discussion/Deep Dives 20

21 How Do We Value Storage Capacity In The Electric Sector? Source: Massachusetts State of Charge Report

22 What Value Does Storage Provide? Source: MA DOER State of Charge Report, Note: Graph recreated from original State of Charge report.

23 Example Value Stack 23

24 States with Storage Interconnection Policy Source: Freeing the Grid. Does not reflect grade changes. Stars indicate states that have made some formal or informal efforts to clarify rules for storage interconnection, size of star is roughly reflective of the strength of the policy. FTG does not current grade states specifically on storage access. 24

25 What Are The Hurdles To Deployment? No price signal or product to capture VALUE of storage Rate design Utility programs Wholesale market products Unable to COMPETE in all grid planning and procurements Integrated and distribution resource planning do not contemplate storage Wholesale market rules Cannot ACCESS grid or multiple programs Interconnection Multiple-use frameworks

26 Agenda Introductions Basics of Energy Storage Energy Storage Deployment Hurdles What Are States Doing? Discussion/Deep Dives 26

27 Context Matters Regulatory context Vertically integrated or deregulated? Wholesale market context Are you in one ISO, multiple ISOs or no ISO? Financial context Are there funds available to conduct a study or incentivize deployment? Does your state do integrated resource planning? is the regulator/utility or wholesale market responsible for it? What level of renewable penetration or distributed generation deployment does your state have or anticipate?

28 Context Matters, Con t Deregulated Illinois New Jersey Texas Maine Vertically Integrated Iowa Minnesota Nevada Utah Virginia North Carolina Nebraska Kentucky Montana Alaska Arkansas Georgia

29 States in RTOs/ISOs Virginia PJM New Jersey - PJM Illinois PJM / MISO Texas - ERCOT Maine NE ISO Alaska - none Arkansas MISO Montana - Partial MISO/NPP Georgia Southeast Iowa - MISO Minnesota - MISO Nevada NPP (potential to join expanded CAISO) Utah NPP North Carolina Partial PJM Nebraska SPP Kentucky Partial PJM

30 Types of Storage Policy Support

31 Procurement Targets/Goals Oregon: Min of 10 MWh and max 1% of peak load per utility Nevada: Study plus target (process underway) New York: 1,500 MW x 2025 target (2030 target TBD) Massachusetts: Target of 200 MWh x 2020 California: 1,325 MW x extra 500 MW New Jersey: Study plus 600 MW x 2021 and 2,000 MW x 2030 goal Arizona: 3,000 MW x 2030 (proposed by ACC)

32 States with Storage Incentives California: SGIP program modified in 2016 to focus on storage, and more incentives under consideration this legislative session Maryland: Legislature passed first-of-its-kind tax incentive bill (SB 758) in 2017 session Massachusetts: SMART incentive program includes adder for systems with storage Nevada: Legislature passed AB 145 for storage in the solar incentive program (SESIP) New Jersey: Renewable Energy Storage Incentive Program for customer-sited storage at critical facilities

33 States + Utilities Incorporate Energy Storage In IRPs Washington: Policy Statement and draft regulations call for sub-hourly modeling, net cost, and Michigan: PSC issued guidelines on consideration of storage in 2019 IRPs IRPs in ~25 states PGE: First to use subhourly modeling; net cost approach APS: Novel approach to modeling demand resources Arizona: Regulators rejected utility IRPs, called for evaluation of storage New Mexico: Revised IRP rules to require consideration of energy storage PNM: Utility employed novel LOLE approach to capture flexibility needs

34 Energy Storage in Distribution Planning Traditionally there was little visibility into utility distribution system planning and it was done with an exclusive focus on load growth With expanded generation and the changing role of the customer, distribution system planning itself needs to evolve Grid Modernization includes: Distribution system planning tools Hosting capacity, forecasting and locational benefits Non-wires alternatives Energy Storage is a critical driver enabling positive advancement in distribution planning

35 Integrated Distribution Planning (IDP)

36 Three Key Tools for Storage Integration and Value Capture Hosting Capacity Growth Forecast Locational Benefits

37 Storage Can Expand Hosting Capacity Each distribution circuit and substation has a limited ability to accommodate (host) DERs The HC is determined by looking at various technical criteria (voltage, protection, etc.) If there is a violation of the technical criteria, the hosting capacity is exceeded and upgrades must be made However it is not a fixed number DERs, particularly storage, can be used to expand or manage HC w/o upgrades Excess Capacity Forecasted Generation Existing Generation

38 Non-Wires Alternatives With customers driving the growth of DERs there are devices capable of providing traditional grid support services being deployed across the system Finding ways for utilities to utilize these DERs to avoid, defer, or improve grid operations is more cost efficient Aggregated storage opens up many new lower cost opportunities An NWA Program Must address utility incentive structure, Create processes for identification of deferral opportunities, and Selection of projects and payment mechanisms

39 Cost-Benefit Analysis Why do a cost-benefit analysis? Models system-wide deployment scenarios and provides estimate for net benefits What should the cost-benefit analysis include? Reducing peak capacity, T&D deferral, integration of DG/renewables, ancillary services cost reduction, energy cost reduction, wholesale market price reduction Other values: resiliency, greenhouse gas reductions, environmental impacts What do you do with it? Commissions should open up a docket to investigate what reforms need to be made to reach those deployment scenarios

40 Cost-Benefit Analysis, Con t States Investigating Storage: MA (governor commissioned), finished 2016 NY (NYSERDA commissioned), preliminary findings released June 2018 NV (legislation, $250,000 from GOE), study ongoing due October 2018 MD (legislation, $125,000) study ongoing due December 2018 NC (legislation, ~$220,000 public & private funding), study ongoing, due October 2018 VA (gov funded $100,000), study ongoing

41 Why Does Interconnection Matter? Without permission to interconnect a system has no access to the market. And storage systems need interconnection approval even for purely behind-the-meter services Interconnection Rules were not written with storage resources in mind (focused solely on generation ) Easily solutions: Include storage in procedures Ensure rules about jurisdiction are clear Don t apply 20 th century assumptions to 21 st century technologies

42 Storage Grid Access Activity National IEEE 1547 update to include smart inverter functionality estimated to be complete in 2018 FERC SGIP (2014) + Current NOPR? States California Rule 21 Hawaii Rule 14H and Rule 22 Nevada Rule 15 Arizona New York Minnesota Maryland

43 What is Usually Missing? Definitions and clarity that storage devices can follow same rules Rules to prevent assumption of extreme scenarios that would increase interconnection costs Guidance on how to safety rely on control settings and devices to ensure those scenarios don t arise Contracts and agreements to support these scenarios Rules on level of review for non-and-limited export projects.

44 Agenda Introductions Basics of Energy Storage Energy Storage Deployment Hurdles What Are States Doing? Discussion Deep Dives 44

45 Conclusions Incorporating energy storage into utility distribution and system-wide planning is critical for facilitating storage can provide a cost-competitive alternative to traditional investment Investigative studies are useful, but only if they have an end goal of developing a procurement target Procurement targets drive learning-by-doing and jumpstarts process to include storage in utility processes Storage incentives are can stimulate the market, but you need effective interconnection and rate design to make sure resources can capture value streams so incentive can be phased out

46 APPENDIX 46

47 Resiliency Planning Reuters/Tom Mihalek

48 Flexibility Addresses Uncertainty for Reliability and Resilience Short-term uncertainty Seconds/Minutes/Hours Longer-term uncertainty Days/Seasons/Years RELIABILITY RESILIENCE RELIABILITY RESILIENCE Voltage/VAR support Frequency regulation Load-following Ramping Curtailment avoidance Frequency response Microgrid islanding Black start service Backup power Transmission upgrade replacement Operates independent of environmental restrictions Congestion relief (Tx) Backup Power Fast deployment to make up for failing infrastructure/lost capacity Microgrid islanding Resource adequacy Congestion mitigation

49 PG&E Demo Hosting Capacity Map

50 PG&E Demo Hosting Capacity Data

51 IRPs and Storage IRPs are used in ~25 states Utilities planning to invest billions of dollars in new and replacement capacity over the next several years Planning models not granular enough to capture operations of advanced storage Models use inaccurate and out-of-date cost information

52 $/kw $/kw Storage in utility IRPs Planners should use up-todate cost estimates and forecasts in Models that use sub-hourly intervals can better capture flexibility benefits By subtracting those flexibility benefits from the cost of storage thereby using a net cost analysis of capacity investment options Traditional cost of capacity comparison Installed Cost Energy Storage Net cost of capacity comparison Installed Cost Flexibility Benefits Energy Storage Gas CT Net Cost Net Cost Electricity Sales Gas CT Installed Cost Installed Cost 52

53 Battery storage vs. gas peakers 53

54 Incorporating Storage into RPS A number of states considering energy storage Massachusetts legislature and Arizona commission considering Clean Peak Standard; Clean resources delivered during peak increase over time from the baseline as a % of sales Considerations of storage eligibility are critical Nevada legislation used RPS multiplier Connecticut legislature provided regulator authority to procure storage with renewables 54

55 Interconnection Rules Overview

56 Thank you Sky Stanfield Attorney for IREC Nitzan Goldberger State Policy Director Energy Storage Association