Stakeholder Comments Template

Transcription

1 Stakeholder Comments Template Submitted by Company Date Submitted Charlie Post: Justin Bieber: Wade Greenacre: Pacific Gas and Electric Company September 18, 2014 Please use this template to provide your comments on the presentation and discussion from the California Energy Storage Roadmap workshop held on September 4, Submit comments to Comments are due September 18, 2014 by 5:00pm Presentation materials and background information discussed during the September 4, 2014 workshop may be found at: Please provide your comments regarding each of the storage barrier categories below that were discussed during the workshop. In particular, please direct your comments towards actions that need to be taken (and by whom) in order to further facilitate deployment of storage in California and provide feedback on the priority of the actions that are needed. Financial and Ancillary Services Barriers Financial and ancillary service concerns were among the most significant to stakeholders. It was suggested that the financial barriers are largely a result of either costly requirements in other areas (e.g., requirements related to interconnection or metering) or lack of opportunities to monetize potential benefits, which could include contracts as well as market-based or tariff-based products and services. Other concerns included the need to clarify which aspects of storage operation are subject to wholesale

2 versus retail rates, lack of consistency in how storage is defined, and how storage can function in different types of hybrid arrangements, such as providing distribution level services while also participating in wholesale markets. Regarding bilateral contracting, it was suggested that the year contracts for storage that are planned by the IOUs to meet the CPUC storage mandates provide relief but might be insufficient to provide long-term revenue certainty for high-capital cost pumped storage hydro projects. Stakeholders identified the need to align economic incentives so that utilities contracting for storage also value system benefits such as voltage support, black start, congestion, etc., as well as deferral of distribution or transmission infrastructure upgrades. Several stakeholders referred to the new CPUC proceeding on distribution resources plans (R , pursuant to AB 327) as a venue that will take up some of the issues important to storage and other distributed energy resources (DER). PG&E commends the CAISO, California Energy Commission and California Public Utilities Commission for coordinating the Storage Roadmap and appreciates the opportunity to provide comments. PG&E agrees that the rate structures for storage facilities still need to be clarified, and this issue is the highest storage related priority for PG&E. Toward that end, it will be necessary for the appropriate parties to develop a joint proposal of how storage transactions fit between CPUC and FERC jurisdictions. In particular, urgent resolution is needed to establish 1) rates that storage will pay for charging, 2) what infrastructure charges will be paid by storage devices (transmission access charge, wheeling, distribution access charge, etc.), and 3) who is the authority to make decisions about these various rate issues. Resolution of all these rate issues may differ depending on the storage use case and services provided. It is necessary to clearly identify what prices and rates different configurations of storage devices will pay and be paid for different modes of operation. With respect to new market-based or tariff-based products and services, changes to the CAISO market structure should be predicated on improving the markets effectiveness and efficiency in delivering reliable electric service. In any event, it is unlikely that any near-term changes in market structure would provide sufficient long-term revenue certainty to enable the financing and construction of standalone merchant storage facilities. PG&E does acknowledge the storage community s desire to monetize potential benefits, which could include contracts as well as market-based or tariff-based products and services. PG&E s upcoming RFO is intended to provide opportunities for cost effective storage projects to obtain the needed contract certainty to enable their development. Contract length will be subject to the negotiation of the parties to a contract. As with all successful negotiations, the outcome will have to meet the needs of both parties. PG&E intends to value system benefits such as voltage support, black start, congestion, etc., to the best of its ability in conjunction with market benefits through the solicitation process. This will allow PG&E to procure enough storage resources to meet mandates and policy targets while obtaining the most value.

3 For storage projects whose purpose is to defer distribution infrastructure upgrades, PG&E will compare the relative costs of the storage facility that would defer the upgrades, versus the savings obtained by deferral of the investment in the upgrades. PG&E expects the evaluation would be the same for projects intended to defer transmission upgrades, however PG&E does not expect successful bids in this category in its first RFO, since transmission deferral projects would have to participate in the CAISO s transmission planning process first. PG&E s comments on different types of hybrid storage arrangements and interconnection and metering are discussed below. Interconnection Barriers The major barriers in the interconnection process relate to the complexity of these processes and the uncertainty that they create for developers. Stakeholders sought to clarify the different processes and match them to the needs of each type of system need. Currently, the disparate interconnection processes managed by the ISO and the utilities are difficult to understand; however, the distribution level interconnection processes are viewed as more complex and may be too involved and costly for small distributed resources. In particular the relationship between CPUC Rule 21 and the utilities Wholesale Distribution Access Tariff (WDAT) is unclear, and it is difficult for a proposed project to move from one process to the other as its business requirements change (e.g., the need for deliverability to qualify for resource adequacy). Individual WDAT requirements are potentially costly, in the range of 30-35% of total project costs for small distributed resources. It was suggested that an interconnection process flowchart differentiating between interconnection levels, project configurations, and the project s indented operating behavior based on the products and services it will provide would be helpful to developers. PG&E recognizes that interconnection can sometimes be a challenging process. The challenges can be amplified by complex use cases for some storage interconnection configurations. However, existing processes do accommodate the interconnection of storage devices. There are numerous storage resources that have successfully interconnected to the grid and more that are progressing through the process. The CAISO also has an Energy Storage Interconnection Initiative underway that is exploring potential refinements to the GIDAP process to better accommodate storage. Interconnection costs vary depending on the impact of the interconnected resource, and resources with smaller capacities often do not benefit from the same economies of scale as larger resources. Storage project development will need to recognize the cost and impacts to the electric system, and be designed

4 to provide value that outweighs the costs. PG&E welcomes input from stakeholders regarding different use cases for storage and the associated interconnection process challenges, and looks forward to collaboration to make the process more efficient and less challenging. Market Rules and Regulatory Barriers One of the major topics of the market rules discussion was the definition of hybrid storage resources. The discussion identified three main categories of hybrid functioning by a storage resource: (1) serving in part as a transmission asset and recovering part of its costs through the transmission access charge, and in part as a market participant and earning part of its costs through the market; (2) providing gridrelated services to both the distribution and transmission systems; and (3) located behind the end-use customer meter and providing load-management services to the customer while also participating in the spot market. All of these models lack rules and provisions for how they can work and how they would be compensated. Parties identified a highly problematic uncertainty for project development is the lack of clarity regarding wholesale versus retail rate treatment for such things as auxiliary load, station power, and roundtrip efficiency. Additional clarity was requested relative to the definitions, configurations and uses of behind-the-end-use-customer meter storage and generation combinations. It was proposed that clear single line drawings of resource configurations and the associated metering required for highpriority use cases would be beneficial in helping to address both market rules and metering barriers. One specific issue raised was the need to revise the ISO s procedure for testing and certifying resources for ancillary services, because the existing approach designed for generators is not well suited for storage. Stakeholders also asked for clarification regarding aggregation is resources under the ISO s NGR model. PG&E has been engaged with customers and vendors requesting storage configurations that serve multiple markets and multiple end-uses. Identification and prioritization of use cases would be valuable in order to clarify for high priority use cases the metering requirements, value streams, billing treatment, and cost recovery strategies. Use cases should be prioritized based on 1) likelihood and prevalence in the storage market and 2) level of uncertainty regarding the aforementioned issues. PG&E believes that the IOUs, the CAISO and the CPUC should be actively engaged in both identifying and seeking clarity on high priority use cases. The forums for decision and timelines should reflect jurisdictional roles and priorities, which will require inter-agency coordination. The term hybrid storage lacks a clear definition. When discussing storage resources, it is important to clearly define the relevant configuration and programmatic assumptions, to avoid ambiguities with respect to what rules and regulations are applicable. Currently, there is uncertainty regarding wholesale and retail treatment for auxiliary load, station power, and roundtrip efficiency losses of storage. It is necessary to develop consistent and precise definitions of auxiliary load and station power. Particularly with respect to distribution-connected

5 storage and for customer-sited storage that is aggregated and participates in the CAISO markets, it could be defined in different ways. For any dual use case, where a storage resource may serve as a transmission or distribution asset and participate in wholesale energy markets, there will need to be a distinction for ratemaking purposes, between energy charged and discharged when a device is providing asset benefits and the energy charged and discharged for CAISO wholesale energy market purposes. At this point, it is unclear whether this will require additional metering, compared to a storage facility that was providing only one service or the other (T/D asset or market participation, but not both). Additionally, it will have to be determined whether it is possible, both from a physical as well as a practical perspective, for a resource to provide both services simultaneously. If not, minimum acceptable periods of devotion to one service or the other (hourly, daily, monthly, seasonally, annually?) as well as changeover protocols will need to be developed. For customer-sited storage program participation, namely whether or not a customer is participating in a wholesale market, may inform wholesale and retail billing treatment, jurisdictional requirements and metering requirements. Customer-sited dual-use storage (end use electric load management/wholesale market participation) also raises the issue of how the distinction will be made between charging and discharging for end use load management purposes, and charging and discharging for wholesale market transactions. Program participation distinctions should be provided in any exercises, including single-line drawings, intended to provide clarity. Metering and Telemetry Barriers A distinction was made between metering for settlement purposes, and telemetry for operational needs and it was noted that these two concepts may be merging in the future as the quality of the metering data architecture improves. Some parties argued that there should only be one meter to capture the net behavior of any given facility, rather than trying to capture different behind-the-meter aspects of its behavior with multiple meters; the argument was that as behind-the-meter behavior details become more and more complex, trying to capture the details with more complex metering would be very costly without yielding sufficient improvements in accuracy. Other parties made the counter argument that the facility could be providing different services to different entities (e.g., ISO and distribution system), or under different compensation provisions (e.g., contract and market price), so multiple meters would be necessary to determine the appropriate compensation for each such service. High fixed costs for metering are a concern especially for smaller projects. Various suggestions for metering configurations were proposed, involving single meters, combinations of wholesale and retail meters, and more complex configurations. It was also suggested that the complexity in metering and telemetry was caused more by the underlying tariffs than by the actual measurement. Certification of integrated device metering was proposed as a potential cost reduction.

6 PG&E recognizes that development of appropriate telemetry protocols will be necessary for the operational needs of energy storage systems. Adherence to telemetry protocols will ensure the safe and reliable deployment of energy storage to the grid. PG&E anticipates telemetry protocols to be addressed during its solicitation and contracting process, and looks forward to participating with developers on defining and implementing the necessary controls to ensure storage is able to respond to dispatch signals and operate as needed. Establishing the proper telemetry up front to provide real time dispatch capability would likely be very beneficial to a storage resource. Metering requirements for energy storage are admittedly complex. It is necessary to ensure that energy is being metered appropriately and accurately depending on the use, which can range from energy serving station load, end-use load, or a market/generation function. Certain storage system configurations may be more complex than others in order to adhere to the tariff requirements and ensure accurate measurement and visibility. In general, PG&E supports the simplest metering configurations with the fewest meters, as long as the storage systems performance can accurately be assessed and be fairly compensated for the services they are providing. It can be expected that metering and telemetry will increase in efficiency and efficacy as more storage is deployed. PG&E looks forward to working with developers and regulators in advancing the operational capabilities through telemetry protocols and the various policies and programs storage will operate under for any potential to streamline metering requirements. Modeling Barriers A standard modeling methodology for assessing the benefits and cost-effectiveness of storage and clarity on how it would be used in utility procurement evaluations would be very helpful, but complexity of the system may prevent this. Stochastic modeling and sensitivity to variable generation and load forecasts were proposed as important considerations in future modeling. Many of the utility stakeholders have done significant analysis and modeling of storage resources, but this work has been internal and unable to significantly contribute to the public understanding of the value of storage. Some parties pointed out the need for greater clarity around the different specific needs for improved modeling, so that modeling improvements could be focused on the needs. One significant need is for an accepted methodology for assessing the value(s) a storage device can provide, which will affect how it earns revenues. Others argued that it is not possible to accurately model the behavior of a storage facility operating so as to maximize its revenues from charging at low prices and discharging at high prices

7 PG&E supports the CEC s EPIC Proposal PON (Funding Initiative S8.1) to develop a public model for optimizing energy storage systems by location, size and type. The models developed as part of this proposal are anticipated to be available in the timeframe. While the models developed under that initiative will not incorporate portfolio-specific impacts, and therefore should not be used to evaluate RFO submissions, they would provide an open, public model that could be used by all parties to evaluate and help fine-tune storage technologies and projects. The process for developing these public models should incorporate a technical working group that includes the IOUs and other entities procuring significant amounts of energy storage. While a public model developed through a stakeholder process will be very useful to the storage community, the assumptions used in models are greater drivers of computed value than the specifics of the models themselves. Publicly-available scenarios of prices and required quantities for day-ahead, real-time energy prices and ancillary services products beyond the single snapshot considered for the Consistent Evaluation Protocol will also help to inform the community. The modeling community would also benefit from a publicly available methodology for estimating degradation of available storage technologies under various use cases, as degradation characteristics can be a significant driver of total costs. To allow the IOUs to incorporate portfolio-based impacts in their evaluations, and prevent storage providers from gaming their bids to optimize their bid evaluations, the IOU s proprietary models must remain proprietary, as they are for evaluations of RPS and other solicitations. Standards Barriers It was proposed that the most pressing need for storage standards was a unified, stringent fire protection codes, else fire-related issues could seriously damage perception of the industry. Some local municipal standards were mentioned, but it was agreed that no concerted effort has been made in the legislature. Different uses of storage and different storage technologies could require a variety of safety codes and standards. For instance, hesitance of alternative fuel vehicle automakers to become UL certified would be a case specific standards barrier. The difference between certification requirements for utility systems and independent power plants was also mentioned. The safe and reliable deployment and operations of energy storage are of paramount importance to the successful implementation of the Energy Storage Program. The development of standards will require a coordinated effort between regulatory bodies and technology developers in sharing best practices and industry knowledge to develop cohesive and effective standards. The IOUs may help to facilitate this effort as appropriate, but the primary responsibility lies with regulatory bodies for the implementation and enforcement of any adopted standards.

8 This issue is also addressed in D , which states that [s]everal parties commented that while there are standards and rules addressing safety, there is a lack of coordination at the state level. We agree. In order to facilitate a more cohesive set of standards and practices, we direct Commission staff to work with the state-wide entities such as the Governor's Office of Planning and Research and the Office of the State Fire Marshall to identify existing best practices and, if necessary, develop a set of best practices to improve permitting and inspection by local authorities. The resulting best practices shall be posted on the Commission's website. PG&E looks forward to participating in that state-wide effort. Additional Barriers At the end of the stakeholder meeting, there was an open discussion of additional barriers. Five issues were suggested as potential barriers that have not yet been covered: Greenhouse gas impacts and policy Silo-ed proceedings at the CPUC on issues that pertain to demand and demand management: energy efficiency; demand response; storage; LTPP. It was suggested that the new CPUC proceeding on distribution resources plans (R ) would be a venue to address issues that cut across these different distributed resource types. Difficult to participate in existing markets for non-generating resources Lack of an articulated need for market products and system flexibility from the CAISO and IOUs The roadmap should provide a vision based on consideration of alternative scenarios, to help set priorities among the issues and identify least regrets actions that will be needed across all scenarios. PG&E would like to reiterate that clarifying the rates and costs of energy for various storage configurations is a top priority that needs to be addressed as quickly as possible. PG&E supports a strategic and systematic approach to address challenges and/or barriers that are hindering storage from being deployed, while also monitoring the effects that storage coming online will have on existing operations, policy objectives, and open proceedings. PG&E commends the CAISO, the California Energy Commission and the California Public Utilities Commission for coordinating the Storage Roadmap to map out the strategy and venues for addressing identified issues, and appreciates the opportunity to participate in this effort.