The Other End of Storage: Rebirth of Pumped Hydro

Transcription

1 The Other End of Storage: Rebirth of Pumped Hydro Presentation to the Midwestern Governors Association March 21, 2017 Nick Griffin (Market Development Manager) Ryan Randazzo (Plant Manager) Ludington Pumped Storage, DTE Energy Dan Prowse, P. Eng, FEC Manitoba Hydro

2 Outline: The Other End of Storage a) PSH: mature, globally dominant, most added value, greatest spectrum of grid services b) PSH meets Grid Challenges (rather than distribution and customer services) c) Progress in quantifying the value of flexibility PSH provides to accommodate variable renewable generation (wind & solar) d) The business case for new storage is a concern. Sustained interest in new PSH and new storage technologies but barriers to proceeding to investment & development e) PSH and its variants are safe, secure, reliable with a track record of providing grid services Outline: Rebirth of Pumped Storage 1) Ludington Pumped Storage History and Operation 2) Operation in the MISO Market 3) Grid Benefits & Statistics 4) Refurbishment and Upgrade Project 2

3 Other End : Globally Dominant??? 965 (97% in US)?? 3

4 Other End : Most Mature Reference 1 4

5 Other End : Most Added Value (to Wind & Solar Energy) A MIT study on energy storage to add value to wind and solar using a resource with 4 hours of storage concluded: a) Profitability requires meeting value-adding cost thresholds which depend upon costs of Storage capacity (Power cost), Energy from storage (Energy cost) and value of energy being stored b) Storage can substantially increase value of wind & solar energy c) Low cost pumped hydro storage (& CAES) could be economic d) Other technologies require substantial cost improvements e) Results seem to be generally applicable (not location sensitive) Reference 2 5

6 Most Added Value: PHS, CAES, LA Lowest published costs PHS (Pumped Hydro Storage), CAES (Compressed Air Energy Storage) & Lead Acid Batteries can achieve cost thresholds (dotted & dashed lines) for profitable investment in storage Reference 2 6

7 Other End : Other Considerations For all its strengths, energy storage in water is geographically constrained and utility scale (very large) so it is not an option for customer-sited storage, microgrids or distribution investment deferral Source: adapted from H. Kamath, EPRI presentation to MGA

8 Water Energy Storage: Variations a) Conventional PSH (Pumped Storage Hydro): e.g. Ludington b) Advanced PSH: advanced conventional, variable speed & Ternary designs for faster load to generation transfer times and more variable output (40% of new PSH in Europe projected to be APSH*) c. Reservoir storage: e.g. Manitoba Hydro d. Advanced access to reservoir storage: e.g. MISO s Bi-EAR * Reference 3 8

9 Storage Meets Grid Challenges System Ancillary Services Conventional Batteries Reference 4 plus annotations 9

10 Storage Meets Grid Challenges Conventional Pumped Storage Hydro operation Reference 4 plus annotations 10

11 Storage Meets Grid Challenges 1. Reservoir Storage can exceed PSH scope 2. New technology increases flexibility Reservoir Storage APHS & Bi-EAR Reference 4 plus annotations 11

12 Manitoba Hydro a) Provincial Crown Corporation b) 5,685 MW in generating capacity (98% hydro) c) MISO Market Participant (Provides 11% of Minnesota supply) d) Acts as Bi-Direction External Asynchronous Resource- responds fast to the MISO market (and indirectly to its wind supply variations) e) Has multiple large storage reservoirs to support Bi-EAR operation 12

13 Reservoir vs. Pumped Storage A Pumped Hydro Storage Reservoir size is typically a mile or two across. Grand Rapids reservoir storage is 70 miles across so it stores as much energy as many PHS or CAES plants. Grand Rapids reservoir storage 70 miles across 500 MW Grand Rapids GS 13

14 Other Reservoir Storage Benefits Lake Winnipeg recreation: summer and winter 14

15 Grid Challenges: Need for Flexibility Load (red), wind (blue) and solar (red) supply variations at Bonneville Power Authority over 30 days in April 2010 illustrate grids with large levels of variable generation require other very flexible supply options Reference 5 15

16 Results of Hydro Wind Synergy Study: a) Desirable interaction between MH generation and wind power in northern MISO (hydro smoothes out wind power variations) b) Additional low-variable cost energy from Manitoba reduces market price for energy: Load Cost Savings(2027): $183-$1302 Million/yr c) High cost generators in MISO run less often and use less fuel: Production Cost Savings(2027): $227-$455 Million/yr Calculated over a 20 year period, the net benefit to the MISO footprint from just Production Cost Savings (fuel) are more than double the cost of building a major new transmission line to allow new hydro generation in Manitoba to deliver energy, provide energy storage and fast acting response as requested by MISO. Key issue: cost allocation Reference 6 16

17 Business Case for Pumped Storage Hydro Growth of Pumped Storage Hydro slowed dramatically in US & Europe following electricity markets (since 1990) except where the regulator actively supports PSH. See Appendix E for issues related to business case challenges for energy storage and a recommended approach by FERC and MISO. Reference 1 17

18 Minnesota Power s EnergyForward Strategy A series of MH-MP power agreements are the basis for construction of 700 MW of new hydro generation in MB and major new transmission in MB and MN. Source: adapted from Minnesota Power 18

19 Conclusion: a) PSH and its variants including reservoir hydro are mature, globally dominant and offer most added value & greatest range of grid services b) PSH meets Grid Challenges (rather than distribution/customer needs) c) Studies can quantify the value of the flexibility energy storage resources provide to accommodate variable renewable generation (wind & solar) d) The business case for new energy storage is a concern. While there is interest in new PSH and other storage technologies, the lack of a bankable business case is a barrier to many proposed developments materializing into firm commitments. e) PSH and its variants are safe, secure, reliable with a track record of providing grid services 19

20 The Other End of Storage: Rebirth of Pumped Hydro Presentation to the Midwestern Governors Association March 21, 2017 Nick Griffin (Market Development Manager) Ryan Randazzo (Plant Manager) Ludington Pumped Storage, DTE Energy Dan Prowse, P. Eng, FEC Manitoba Hydro

21 Appendices A.References B.Other Battery Technologies C. Storage Meets Grid Challenges D.Value of Flexibility E. Business Case Issues 21

22 Appendix A: References: 1) The Benefits of Pumped Storage Hydro to the UK, Scottish Renewables, Document: Scottish_Renewables_PSH_OPE_SEA_01, ) Value of storage technologies for wind & solar energy, William A. Braff, Joshua M. Mueller and Jessika E. Trancik, Nature Climate Change, ) A Comparison of Advanced Pumped Storage Equipment Drivers in the US and Europe, R. K. Fischer et al; January 2012, DOI: / , Hydrovision Conference 4) Overview of current development in electrical energy storage technologies and the application potential in power system operation, Xing Luo, Jihong Wang, Mark Dooner, Jonathan Clarke; Applied Energy 137 (2015) ) The energetic implications of curtailing versus storing solar- and wind-generated electricity, Charles J. Barnhart, Michael Dale, Adam R. Brandt and Sally M. Benson; Energy & Environmental Science, 2013, 6, ) Manitoba Hydro Wind Synergy Study - MISO ; accessed at: =114 7) Smart Power, UK National Infrastructure Commission; accessed at: 8) 2015 Hydropower Market Report; Oak Ridge National Laboratory; accessed at: 22

23 Appendix B: Other Battery Technologies Most battery technologies cannot yet achieve cost thresholds (dotted & dashed lines) for profitable investment in storage This slide is a companion to slide #6 of the presentation Reference 2 23

24 Appendix C: Storage Meets Grid Challenges Grid security depends upon prompt response in an emergency: a) Inertia to continue to supply energy in the very short term, primary frequency control to prevent frequency collapse in an disturbance, secondary frequency control to restore frequency, contingency reserves (spinning and non-spinning) to replace lost supply, black start to kick start an area with a wide spread outage Economical grid operation depends upon operational flexibility: b) Load following, load shifting, reliable capacity to meet peak demand, dispatchability to follow control center direction, reliable starts and continued operation to deliver committed energy supply, ramping service, low or no minimum load, voltage control, ability to supply or absorb large quantities of energy quickly to compensate for large changes in wind or solar energy production 24

25 Appendix D: Value of Flexibility Some efforts to determine the value to the grid of the flexibility that various types of energy storage can provide include: a) MIT study indicated that the value of renewable energy can be enhanced by 11% to 25% by storage (slide 5, Reference 2) b) UK National Infrastructure Commission s Smart Power study (2016) predicted saving up to 8bn per year by 2030 ($10 billion US/year) from the added flexibility possible with increased interconnections, flexible demand + energy storage (Reference 7) c) MISO s Manitoba Hydro Wind Synergy Study was an advanced evaluation of detailed market interaction of MISO wind, MISO market prices and Manitoba Hydro generation(reference 6) 25

26 Appendix E1: Business Case for Pumped Storage Hydro The US DOE (ORNL) characterizes interest in 51 new PSH projects in the US* as primarily securing an option to build and notes that sustained interest (is) not materializing into firm commitments toward new PSH development. Issues include: a) Low market prices and low peak to off-peak differentials due to cheap gas and price-taker wind and solar generation b) The old model of peak, off-peak energy arbitrage might no longer be sufficient to justify additional PSH development (Kirby 2012). c) While FERC works to ensure storage resources receive relevant market revenues, markets do not fully recognize the suite of grid services PSH provides. Controversy can be expected about the risk that out-of-market revenue necessary to make a business case for storage will compromise markets or ISO/RTO independence. d) FERC has mandated tariff review but not that ISO/RTOs ensure that storage necessary for efficient operation will receive at least cost of new entry revenue. e) Even if current market revenue supported the cost of new entry, such revenues are subject to change and provide no guarantee of a future revenue stream * Reference 8 26

27 Appendix E2: Business Case for Storage in MISO Status: MISO has been proactive in recognizing the importance of storage in its footprint: a) 2009 to 2014: Studies related to a new 500 kv line linking MH storage to MISO load (the Great Northern Transmission Line or GNTL) b) 2011: series of Energy Storage Workshops c) 2012: Energy Storage Study identified need for advance study tools d) 2013: completed two year Manitoba Hydro Wind Synergy Study which quantified benefits of Bi-directional Energy Asynchronous Resource and the GNTL e) 2015: Bi-directional EAR implemented f) Ongoing: Consultations with stakeholders and FERC to ensure storage resources are not unfairly excluded from market revenue 27

28 Appendix E3: Business Case for Storage in MISO Goal: Ensure economically efficient energy storage is realized by providing secure long-term revenue without use of out-of-market revenue Recommended Approach by MISO: a) Study the value of new entry for various levels and types of energy storage and establish target values for optimum stakeholder benefits b) Calculate the market revenue of new entry for the target storage resources and the cost of new entry for such resources c) If storage is economic ( cost of new entry < value of new entry ), assist regulators and other stakeholders resolve differences between revenue of new entry and the cost of new entry. The Cap and Floor (C&F) approach proposed in the UK as a risk mitigation mechanism (with Floor being a reasonable expectation of market revenue so it is not a subsidy) may merit consideration. 28

29 Appendix E5: Business Case Conclusions 1) Many Pumped Storage Hydro and other resources that store energy in water can pay a vital roll in providing grid level services to help RTO/ISO operations meet the challenges of a changing resources mix. 2) While it is certain that such flexibility is needed and valuable, market revenues do not support major investments even for storage technologies which are proven, globally dominant, provide the broadest spectrum of grid services and are the most economically attractive (such as PSH and its variations). 3) With FERC support, MISO and other ISO/RTOs should determine the types of energy storage options which would be economic in their footprint, project market revenue and work with regulators and stakeholder to achieve changes necessary to realize such storage without out-of-market subsidies. 29