Exhibit to Agenda Item #1a

Transcription

1 Exhibit to Agenda Item #1a Board Strategic Development Committee Meeting and Special SMUD Board of Directors Meeting Tuesday, August 15, 2017, scheduled to begin at 5:30 p.m. Customer Service Center, Rubicon Room Powering forward. Together.

2 Energy Storage State of the Industry Understanding and Realizing the Costs and Benefits of a New Resource for the Grid Giovanni Damato Senior Project Manager Electric Power Research Institute August 15 th 2017 SMUD Board Presentation on Energy Storage

3 Today s Key Takeaways Energy Storage has Real Possibilities: Even after cutting through the tremendous hype, grid energy storage has substantial potential to make inroads into the electricity industry, through niche applications and specialized technologies at first, but proceeding into broader uses, with potential widespread adoption beginning between 2020 and Lithium Ion Batteries are the Immediate Opportunity: A sharp drop in lithium ion prices in the last two years, and strong interest among developers and regulators, have resulted in a number of prominent deployments in niche applications. If successful, these deployments point the way towards broader application of battery storage in specific locations and uses, though prices are still far too high for more classical uses of storage such as load leveling or bulk storage of renewables. Other storage technologies will find it difficult to compete in the near term but may benefit from a mature storage market in the 5-10 year time frame. Long-Term Research is Critical to Success: Present-day technologies meet some needs on the grid, but future needs require radically better technologies with more energy density, higher efficiency, better reliability and lower cost. These technologies cannot be developed without a systematic approach to research and development covering the entire spectrum of Technology Readiness Levels, from early proof-of-concept through demonstration, pilots, and deployment. 3

4 Storage Changes Supply Chains Refrigeration transformed food supply by allowing preservation of a highly perishable product Changed delivery mechanisms E.g. No more milk man Created new supply and demand patterns E.g. Winter produce from Chile Energy storage may similarly transform when and where electricity is produced, transmitted, and used GE Monitor-Top refrigerator, c Picture rom digital collection of Mike Manning, retrieved 31 Oct 2013 from

5 Energy Storage Can Serve Multiple Purposes Capacity Resource: Peaker replacement or non-wires alternative Flexibility Resource: System ramping, renewable variability and uncertainty Reliability / Resiliency Resource: Electricity inventory for reserves Voltage / Power Quality Resource: Power conditioning system capabilities 5

6 and could be sited anywhere Bulk Storage: 10 s to 100 s of MW Distribution Storage: 10kW to 10MW Customer-Sited Storage: 2kW 2MW or more Almost limitless permutations of storage and other resources are possible 6

7 Vehicle Battery Pack Cost $/kw $/kw-yr Efficiency Mean Cycles before Failure Historical Challenges for Storage are Fading Technical Challenges Performance Reliability Efficiency Installed Cost Operating Costs Round Trip Efficiency Cycle Life % % % Lead-Acid Li Ion Target Lead-Acid Li Ion Target Lead-Acid Li Ion Target Lead-Acid Li Ion Large (2012) (2015) (2020) R&D (2012) (2015) (2012) (2015) Advancements (2020) (2020) (2012) (2015) Lithium Ion Battery Cost $20,000 Target (2020) Economic Challenges Project costs Monetization of benefits Regulatory Challenges Lack of defined, monetizable services Capturing value from multiple services $15,000 $10,000 $5,000 $ ,000 1,000,000 1,500,000 2,000,000 Worldwide Vehicle Battery Production Capacity (packs/yr) Costs of Downward Storage Cost Trends Generation Regulatory Rulings Regulation Services T&D Upgrade Deferral Demand Peak Reduction Potential Benefits of Storage Transmission & Distribution For Illustration Only Load Power Quality and Reliability New Business Models Policy Action 7

8 Moving beyond the hype cycle The Gartner Hype Curve Understanding the facts will help us to move beyond the peak of the hype cycle 8

9 Moving beyond the hype cycle Microgrids The Gartner Hype Curve Behind-the-Meter Energy Storage Solar PV Distribution Energy Storage Advanced Energy Communities Bulk Energy Storage Understanding the facts will help us to move beyond the peak of the hype cycle 9

10 Are we reaching the Tipping Point for Storage? Massive investment in lithium ion battery manufacturing has caused the cost of the technology to plummet over the last two years Installed costs less than $500/kWh reported for 2016 EPRI estimates have been $350 - $500/kWh by 2020 Prices have reached a very interesting level Still too high for classical storage applications such as load leveling But applicable in niche applications such as peak shaving for asset deferral, and peaker replacement 10

11 Residential Storage: The Difference a Year Makes 2x Energy 2x Power 60% less space Tesla PowerWall Announced April 30, 2015 Power: 2 kw Energy Capacity: 6.4 kwh Weight: 214 lbs. No Integrated Inverter Tesla PowerWall 2 Announced October 28, 2016 Power: 5 kw Energy Capacity: 13.5 kwh Weight: 264 lbs. Fully Integrated Inverter Installed Cost: ~$950/kW per hour of storage Installed Cost: ~$580/kW per hour of storage 11

12 Source: Solar City Solar + Storage: The Difference a Year Makes September 2015: Kauai Island Utility Cooperative signs a Power Purchase Agreement with Solar City/Tesla 17 MW solar array + 52 MWh battery 13.9 cents / kwh under 20 year PPA January 2017: Kauai Island Utility Cooperative signs a PPA with AES 28 MW solar array MWh battery 11 cents / kwh under PPA (unspecified period) May 2017: Tucson Electric Power signs PPA with NextEra 100MW solar + 30MW / 120MWh battery 4.5 cents / kwh over 20 year PPA 12

13 Aliso Canyon: Less than a year from inception to installation Aliso Canyon: Gas storage plant issues pushed CPUC to call for energy storage to be installed to replace gas peakers by the end of 2016 Several large-scale battery systems installed 20 MW / 80 MWh AltaGas Pomona Energy (SCE) 20 MW / 80 MWh Tesla Energy at Mira Loma (SCE) 2 MW / 8 MWh Powin Energy system at Irvine (SCE) 30 MW / 120 MWh AES Energy Storage at Escondido (SDG&E) 7.5 MW / 30 MWh AES Energy Storage at El Cajon (SDG&E) ( Other systems to come Systems were installed at breakneck speed RFO / RFP issued in June 2016 Awards / CPUC Approval in September 2016 Several systems online by December 31 st, 2016 Final commissioning Jan/Feb

14 Has energy storage arrived? Aliso Canyon shows that lithium ion batteries can be attractive as peaker replacements years before expected Special conditions (reduced availability of gas) make energy storage the preferred choice even though prices may be somewhat higher than gas turbines ($2000/kW) By 2020, storage at $1400/kW for 4 hours may be directly competitive with natural gas turbines in some locations But technology maturity is more than just cost! Does storage have a track record of safety, reliability and predictable performance? How are we using the storage, and what is the business model? How do we incorporate storage into grid planning and operating practice? 14

15 Gaps to Energy Storage Implementation Real-world performance data 15 Testing and evaluation in lab and field settings Collecting data from deployments to build track record Understanding the value of storage Learning how storage can be used to improve grid design and operation Getting the most value out of an energy storage deployment Organizational adaptation to new technology availability Developing best practices for design, deployment, integration, operation, and disposal Incorporating storage into existing planning and operations procedures

16 Policy Trends: Procurement Targets & Programs PUC Procurement Targets California s Targets Source: California Energy Storage Market Update, CESA (2016) Massachusetts's Targets Department of Energy Resources (DOER) determined 200MWh target Electric distribution companies to procure viable and costeffective energy storage systems by January 1, 2020 CA s Self Generation Incentive Program (SGIP) Total SGIP incentive budget authorized through 2019 is $567M Energy storage accounts for 79% of the SGIP budget (current incentive level ~$0.40/Wh) Sample 2017 SGIP Application Data: Storage Duration Average Capacity [kw] Average Energy Capacity (kwh) Average ($/kwh) Electrochemical Storage $1, $1, $1, $ $ $1,883 Thermal Storage $1, $580 Grand Total $1,237 Source: Weekly Statewide Report ( 16

17 Challenges to Modeling Storage Storage and limited energy resources are still not common Rules and regulations still are evolving Benefit stacking is appealing, but will it be possible More services = more value More services = more requirements Can they be satisfied? Locational value of storage requires sitespecific analysis Complex optimization between storage degradation and service participation scheduling 17

18 StorageVET Storage Value Estimation Tool: Goal: support common understanding of storage value between stakeholders Consistently analyze storage across range of uses, technologies, locations Multi-services optimization and stacked services Web-hosted, free public tool Ongoing collaborative effort to apply and refine tool through open forum - EPRI Energy Storage Integration Council (ESIC) StorageVET Goals Accessible Transparent Validated Customizable 18

19 StorageVET Live: 19

20 Energy Storage Integration Council (ESIC) Develop energy storage integration guidelines and tools through industry collaboration Started in 2013, 700 participants from utilities, suppliers and research community Identify Gaps Publication and application Define Work Needed Published products at ESIC website: Working group review Collaborative development 20

21 Facilitating Grid-Ready Energy Storage Systems Storage Technology Explore technology tradeoffs Optimize technology for utility applications Project Deployment Establish best practices for siting and permitting Standardize grid connection Communication and control 21 Power Electronics Guide common functions and control algos Ensure efficient and reliable operation Integrated Product Ensure safety and reliability Understand cost and performance Simplify procurement and operation through standardization of specification and interfaces Communications and Control Developing operational and dispatch algorithms Updated communications and grid controllers to accommodate storage functions and services

22 Research Horizons Near Term Research: Facilitate solutions using present technology Long Term Research: Creating new technologies for the future Without research today, we will not have solutions for tomorrow 22

23 Developing Technologies of the Future 23

24 Today s Key Takeaways Energy Storage has Real Possibilities: Even after cutting through the tremendous hype, grid energy storage has substantial potential to make inroads into the electricity industry, through niche applications and specialized technologies at first, but proceeding into broader uses, with potential widespread adoption beginning between 2020 and Lithium Ion Batteries are the Immediate Opportunity: A sharp drop in lithium ion prices in the last two years, and strong interest among developers and regulators, have resulted in a number of prominent deployments in niche applications. If successful, these deployments point the way towards broader application of battery storage in specific locations and uses, though prices are still far too high for more classical uses of storage such as load leveling or bulk storage of renewables. Other storage technologies will find it difficult to compete in the near term but may benefit from a mature storage market in the 5-10 year time frame. Long-Term Research is Critical to Success: Present-day technologies meet some needs on the grid, but future needs require radically better technologies with more energy density, higher efficiency, better reliability and lower cost. These technologies cannot be developed without a systematic approach to research and development covering the entire spectrum of Technology Readiness Levels, from early proof-of-concept through demonstration, pilots, and deployment. 24

25 Together Shaping the Future of Electricity 25

26 Backup Content 26

27 Building a Utility Energy Storage Deployment Program: Pillars to Support Transition from R&D to Operations PERFORMANCE AND RELIABILITY DATA Get the Data Specify relevant data to safety, reliability, value Consistent comparison Performance/reliability track record MODELING Analyze the Options Identify and screen opportunities Feasible and optimal location Design for optimal lifecycle value IMPLEMENTATION Put into Practice Guidelines for deployment Customized tools Technical training 27