State Policies to Fully Charge Advanced Energy Storage

Transcription

1 1 State Policies to Fully Charge Advanced Energy Storage

2 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 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 s mission is the promotion, development and commercialization of competitive and reliable energy storage delivery systems for use by electricity suppliers and their customers across the United States. Established 27 years ago Nearly 200 members vendors, developers, utilities & other power sector stakeholders

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8 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 8

9 Energy Storage Technologies Solid State Batteries - a range of electrochemical storage solutions, including advanced chemistry batteries and capacitors Flow Batteries - batteries where the energy is stored directly in the electrolyte solution for longer cycle life, and quick response times Flywheels - mechanical devices that harness rotational energy to deliver instantaneous electricity Compressed Air Energy Storage - utilizing compressed air to create a potent energy reserve Thermal - capturing heat and cold to create energy on demand Pumped Hydro-Power - creating large-scale reservoirs of energy with water Source: Energy Storage Association, IREC

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12 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 2017 IREC

13 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 2017 IREC

14 Source: Rocky Mountain Institute, The Economics of Battery Energy Storage, Oct IREC

15 Energy Storage & the Duck Curve 2017 IREC

16 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 16

17 Types of Storage Policy Support

18 State Policies to Fully Charge Advanced Energy Storage 18

19 Policy Tools Fall Into Three Categories Capture the full VALUE of energy storage Ensure accurate market signals that monetize economic value, operational efficiency, and societal benefits Enable COMPETITION in all grid planning and procurements Storage can be a cost-saving and higher-performing resource at the meter, distribution, and transmission levels Ensure fair and equal ACCESS for storage to the grid and markets Reduce market and grid barriers that limit the ability for energy storage systems to interconnect

20 Policy Tools in the Toolbox

21 State Storage Activity Regulatory Action Legislative Action Regulatory and Legislative Action

22 Top Storage Policy States Incentives Procurement Target Rate Design Interconnection Standards Distribution Planning Cost-Benefit Study IRP California New York Oregon Nevada Maryland Massachusetts Hawaii Arizona Washington

23 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 23

24 Why Focus on Value? Current market structures and policies lack clear mechanisms to identify and capture full value of energy storage systems Ensure net system benefits and cost savings to ratepayers by setting accurate market compensation for energy storage systems

25 25 Example Value Stack

26 Value Setting a cost-effective, no regrets procurement target for storage jump-starts market creation, drives learning-by-doing, and orchestrates development of regulatory framework Incentives in the form of rebates, grants, or various tax incentives, can provide a bridge to scalable deployment for storage Incentives should be designed to decline as storage values become more readily monetized Dynamic and time-varying rates can signal to customers the value of leveraging storage while better aligning customer costs with system costs

27 States with Procurement Targets California: First-in-the-nation GW procurement target for storage by 2020; later increased by 500 MWs Oregon: Legislature passed HB 2193 in 2015 calling on the Commission to set 2020 procurement targets up to 1% of peak load; currently being implemented Massachusetts: State legislature considering 2030 targets and DOER just released target for 200 MWh by Jan 1, 2020 New York: Regulator ordered initial procurements (2 projects per utility) and legislature passed SB 5190 / A 6571 to create 2030 procurement targets Nevada: Legislature passed SB 204 calling on a study to inform biennial increasing procurement targets in 2017

28 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 faciltiies

29 Cost-Benefit Analysis Massachusetts State of Charge Report an excellent example of storage cost-benefit analysis Source: MA DOER State of Charge Report, Note: Graph recreated from original State of Charge report. Other states investigating storage include Nevada, Oregon, and North Carolina.

30 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 30

31 Why Focus on Competition? Storage often not on the menu of options in planning and procurement. When storage is included, it is often with outdated assumptions. Legacy metrics such as LCOE do not reflect the operational parameters or value proposition of energy storage. The benefits storage can offer may not be captured in metric by which value is defined.

32 Competition Including storage in IRPs and distribution planning is critical to least-cost planning Utilities in some states are pioneering reverse auctions for peak load reduction as non-wires alternatives States are revisiting RPS programs and resource adequacy qualifications to consider how storage can help meet system needs

33 Examples of Policy Support for Competition Washington: Draft policy statement from regulator requires consideration of storage in resource planning New Mexico: Consideration of storage required in resource planning Massachusetts: DOER inserting storage in existing programs as part of 200 MWh target New York: Utilities issuing all-source RFPs for grid needs as non-wires alternatives California: Distribution Resource Planning reform to include non-wires alternatives

34 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

35 How Can Storage Be Included in IRPs? Should take proactive approach to include storage in resource planning ESA recommendations: Ensure storage is included as eligible technology Use latest cost/performance data Match resource need with resource selection Use sub hourly modeling Ensure net cost of capacity (stacked benefits) are considered Incorporate load-sited storage options as a potential resource Net cost of capacity = Total installed cost Operational benefits (flexibility operations & avoided costs)

36 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 2017 IREC

37 Integrated Distribution Planning (IDP) 2017 IREC

38 Three Key Tools for Storage Integration and Value Capture Hosting Capacity Growth Forecast Locational Benefits 2017 IREC

39 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, reliability, 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 Hosting Capacity Forecasted Generation Existing Generation 2017 IREC

40 PG&E Hosting Capacity Map

41 PG&E Hosting Capacity Map

42 PG&E Hosting Capacity Map

43 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 2017 IREC

44 Energy Storage and Net Metering On-bill credits for renewable energy production Bill credit is the important component, keep that mechanism separate from the rate itself The addition of storage poses questions and challenges: Ensuring the credit is for renewable energy produced and not energy from the grid Allowing customers to use storage to help mitigate costs of NEM on the system Better reflecting actual energy costs and value Storage specific bill-credit mechanism and rate to allow arbitrage in a grid-beneficial way 2017 IREC

45 Resiliency Planning Reuters/Tom Mihalek

46 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 46

47 Why Focus on Access? The market wasn t designed to include storage Inadvertent roadblocks prohibit storage from interconnecting and participating in the market Arcane rules require 100 MW wind farm with 20 MW battery to interconnect at 120 MW, resulting in unnecessary and costly upgrades PROJECT NOT BUILT Behind the meter storage simply used to shift load may be treated as an injecting resource requiring unnecessary interconnecting processes and costs PROJECT NOT BUILT

48 Access Updating interconnection rules and standards is key to ensuring fair, streamlined and cost effective access for storage In wholesale markets, reform rules on metering, telemetry and accounting to allow customer-sited storage to provide both retail and wholesale services

49 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-themeter 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 2017 IREC

50 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 Minnesota Maryland 2017 IREC

51 Agenda Introductions Basics of Energy Storage Tools in the policy toolbox Value Competition Procurement Grid Integration Access Interconnection Hosting Capacity and Data Access Discussion 51

52 Takeaways for Regulators Incorporating energy storage into planning processes ensures ratepayers will receive cost savings and grid flexibility Updating interconnection procedures and developing time-varying rates is critical for success Grid modernization requires particular considerations for storage

53 Takeaways for Legislators If regulator is being proactive, only provide legislation if it is determined that further authority is needed If no regulatory action on grid modernization, interconnection processes, or procurement targets, then legislation is best way to trigger activity

54 Conclusions It all comes down to Value, Competition and Access Investigative studies are useful, but only if they have an end goal of developing a procurement target Procurement targets are good tool to encourage learning by doing and jumpstarts process to include storage in utility processes Procurement targets and incentives not enough need effective interconnection and rate design to make sure resources show up Many states are already designing policies for a robust storage market. Now is the time to act!

55 Energy Storage Activity by State No recent legislative activity RPS docket underway Clean Peak Standard proposal Utilities moving forward on storage TEP two completed energy storage projects; solar-plusstorage project PPA signed for 4.5 cents/kwh APS recent installation of 2 identical batteries on distribution feeder SRP PPA for solar-plus-storage project APS rate design looking at time varying rates, daily demand charge Nevada Productive 2017 legislative session, Governor signed 9 out of 11 clean energy bills SB 204 Commission to determine if storage procurement targets are appropriate through cost-benefit analysis AB 145 incentive program for storage systems paired with solar PV AB 405 establishes right for customers to interconnection storage systems SB 146 calls on IRPs to include distribution planning process and DER integration Commission updating Rule 15 interconnection rules to include storage Opportunity for storage to be incorporated into the 2017 IRP process for NV Energy Governor vetoed RPS increase bill, but may come back again next year Would have included storage for up to 10% of RPS 2017 IREC

56 Energy Storage Activity by State Vermont H.B. 501 require DPS to develop recommendations and energy storage capacity target DID NOT PASS No recent regulatory activity GMP moving forward on storage Tesla and GMP began offering low cost home backup batteries at $15/mo. in May 2017 Minnesota SF 1174 creation of a rebate program for energy storage systems DID NOT PASS Grid Modernization proceeding ongoing Minnesota regulators recently heard a proposal from Xcel Energy to build an energy storage system instead of a substation In 2008, Xcel Energy began testing a 1 MW batterystorage technology first U.S. wind-to-battery project 2017 IREC

57 Energy Storage Activity by State Connecticut No recent legislative activity Colorado H.B require hearing on benefits/cost of energy storage DID NOT PASS SB guarantee right to install storage equipment; facilitate interconnection & limit fees DID NOT PASS In March 2017, solar groups filed a petition to initiate a rulemaking process to add customer-sited storage to the SGIP Petition was partially granted Pursuant to CT Public Act 15-5, Eversource & United Illuminating recently filed applications to implement DER Hosting Capacity Mapping and other DER-related systems Recent project proposals: Mansfield, CT issued an RFP for 2 microgrid projects DEEP recently denied storage projects proposed by Eversource and National Grid 2017 IREC

58 Energy Storage Activity by State Montana Illinois No recent legislative activity NextGrid docket underway Grid Modernization Utility developments No recent legislative or regulatory activity on energy storage Startup company VizN Energy focused on development of zinc battery technologies is located in the state Ameren recently completed a $5 million microgrid at its Technology Applications Center adjacent to the University of Illinois campus in Champaign, Ill ComEd is running a pilot program to see if battery storage can alleviate issues with power outages in residential areas 2017 IREC

59 Energy Storage Activity by State Hawaii Oregon Ambitious 50% RPS target will require renewables integration OPUC implementing storage targets in docket UM 1751 Prompted by HB 2193 PGE and Pacific Power submitted draft storage evaluation plans on July 14 Opportunity for storage to be incorporated into the 2017 Integrated Resource Planning process for PGE and 2018 Pacific Power IRP Several bills introduced related to increasing energy storage deployments through rebates, tax credits, or green infrastructure loans BILLS DID NOT PASS The PUC directed each of the utilities to submit a comprehensive Grid Modernization Strategy by June 30, 2017, which will be vetted through a stakeholder process HECO tariff and RFP: HECO offers a self-supply tariff for customers to store energy from rooftop PV systems In 2014, HECO issued an RFP for energy storage systems sized from MW PUC Proposed Community Solar Program includes a time of delivery credit structure 2017 IREC

60 Thank you Sky Stanfield Attorney for IREC Jeff Cramer Advocate for ESA