A Power System Planner s Assessment of Energy Storage Presentation for OEB Smart Grid Advisory Committee Presenter: George Pessione Power System Planning, Ontario Power Authority August 20, 2013
Topics Types of Storage Benefits: Who Opportunities & how to address them Some facts Perceptions Hurdles Storage in the Planning Process Summary 2
Applications of Electricity Storage - Niches Storage is not one technology Many Technologies doing some of many things Bulk System Storage/ Energy Production Shifting Distributed Storage/ Renewables Integration Power Regulation/ Quality Applications (AGC, Voltage support) 3
Who Benefits? Developer (Costs + Return) Ratepayers (Benefits other costs) - depends where it is installed Bulk System impacts all ratepayers in Ontario LDC Impacts LDC customers and potentially other Bulk customers Individual Customers and potentially other LDC & Bulk system customers (Net Benefits) (Costs + Return) 4
Opportunities for Storage to Provide Benefits Capacity Value Generation, Transmission, Distribution Energy Production Shifting Arbitrage (hours, days, weeks, seasons) Potential Surplus Energy (PSE) Mitigation Better utilization of renewables (lower emissions?) Operating Reserve Ramping Renewables Integration Power Regulation AGC Power Quality Var. Support 5
What are the Alternatives to Provide Value A MW of storage is not a MW of storage is not a MW of storage BENEFIT Time shifting Surplus Energy ALTERNATIVES Bulk System LDC Customer Flatten Load / Price More dispatchable Gen/Load Exports, Load offers, Curtailment Flatten Load Dispatchable Load Curtailment of DG Capacity SCGT Wires, substations, transformers, etc. Ramping Hydro/Thermal N/A N/A Operating Reserve Hydro/Thermal (market) Power Regulation Hydro/Thermal (RFP) N/A N/A N/A Flatten Load Dispatchable Load Increas eload Rely on LDC to provide capacity Power Quality (VARs) Capacitors (static) Capacitors (static) Power Filters N/A Emissions Conservation, nuclear, renewables, CHP, CCGT 6 Conservation, renewables, DG Conservation, renewables, DG
Which Technology is Better? The answer: It depends Sorry, there is no simple answer Each can have pros and cons Niche Applications & Technologies Some can be better aggregated than others Example: Pumped Hydro Storage Bulk System What is the cost of peaking generation being displaced? Is the facility in a location requiring Tx system support? Can it take advantage of existing facilities to lower its capital costs? Does not benefit LDC or specific load customers Example: Ice Storage Customer Greater LDC benefits if installed in congested service area. Customer benefits greater with larger cost arbitrage Only operates during summer months Example: Fly Wheel Power quality Fast charge/discharge fits into power quality market for some generators (wind/solar), Tx/Dx, customers 7
Ontario Energy Storage Pilots Toronto Hydro Ice Storage Pilot 12 Ice Bear ice storage units were installed at 8 locations in Toronto Hydro and Veridian Connections service areas for the purpose of collecting and analyzing performance data.. Project was funded by the OPA s conservation funds. IESO Procurement of Regulation Services from alternative Sources 10 MW procurement program open only to alternative providers of regulation services. Successful technologies were flywheels, batteries and demand management. Hydro One s Flywheel, Wind Integration Pilot 10 MW of flywheels connected to a Hydro One distribution network to help mitigate voltage fluctuations caused by intermittency in the output of local wind generators. And more 8
People Say Electricity price arbitrage (e.g. day/night) drives economics In Ontario value from arbitrage is not as large as expected (see HOEP) Energy storage can be coupled with Wind Farms to flatten their generation hourly MW output. The volume of storage required to flatten output from a single wind farm is very large Energy storage can be applied to absorb energy during times of PSE, and inject the energy later when it s needed PSE is more of a seasonal phenomena (winter vs. summer) and often occurs over multiple days at a time. PSE is in the order of many TWh to be moved between seasons would require very large storage volumes. Market/Regulatory barriers what s holding storage back Hurdles in regulatory framework exist and should be addressed 9
Monthly Average HOEP (On-Peak vs. Off-Peak) $100 Monthly Average HOEP (On-peak vs. Off-peak) $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 On 10 Off
Average Daily HOEP Arbitrage Opportunity $160 Average Daily HOEP Differential (On-peak Off-peak) $140 $120 $100 $80 $60 $40 $20 $0 -$20 January 1, 2008 December 31, 2012 -$40 11
Monthly HOEP Differential is expected to be Small Monthly Average HOEP Differential (On-peak vs. Off-peak) On Off Arbitrage Next ~15 years 12
Effective Fueling Cost ($/mmbtu) Effect of Cost of Carbon on Fueling Cost $12 Effect of Cost of Carbon on Fueling Cost Assuming Gas @ $5/mmBTU $10 $8 $6 $4 $2 $0 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Cost of Carbon ($/tonneco2eq) 13
4401 4493 4585 4677 4769 4861 4953 5045 5137 5229 5321 5413 5505 5597 5689 5781 5873 5965 6057 6149 6241 6333 6425 6517 6609 6701 6793 6885 6977 7069 7161 7253 7345 7437 7529 7621 7713 7805 7897 7989 8081 8173 8265 8357 8449 8541 8633 8725 Output (MW) Stored Energy (MWh) 1 93 185 277 369 461 553 645 737 829 921 1013 1105 1197 1289 1381 1473 1565 1657 1749 1841 1933 2025 2117 2209 2301 2393 2485 2577 2669 2761 2853 2945 3037 3129 3221 3313 3405 3497 3589 3681 3773 3865 3957 4049 4141 4233 4325 Output (MW) Stored Energy (MWh) Storing a Year s Worth of Wind Wind Output and Stored MWh Wind Output Storage Output Opening Storage 35 30 25 20 15 10 5 0 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Hour 35 30 25 20 15 10 5 0 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Hour 14
Incorporating Storage into the Planning Process The OPA Identifies a System Need/Opportunities Storage must compete with other technologies to provide max. value Optimize The Application to recognize full value of storage Take advantage of existing sites Location, Location, Location Use existing proposals as well as new ideas Regional planning and conservation initiatives are considering LDC/Customer based storage opportunities Develop a Business Case Quantify dispersed benefits Recognize that by claiming one benefit can reduce the value of another benefit Realistic look at the return on investment Compare cost/benefit ratio with the other competing technologies Address Market/Regulatory Hurdles Address appropriateness GAM, Uplift charges Sharing of benefits 15
Contracting Considerations Assuming the Business case has been made Many factors must be considered in making a deal Procurement of storage should be value based Procure only what Ontario needs and only where we need it. Payment that reflects value Discussions with affected stakeholders to determine how costs/benefits are allocated. Which entity is best suited to bear the costs? (LDC, ratepayer, etc.) Are cost sharing agreements a feasible option? How are benefits shared? Storage systems need to be operated efficiently E.g. Some storage technologies need the overall system view as provided by the IESO to provide most effective value. Contracts need to reflect the cost/benefit/risks equations and specify how the facility will be 16 operated
Summary - What s needed to drive Electricity Storage to play a bigger role Recognize the various niches and the technologies that fit them Need to be cost effective and demonstrate value Focus on fact based applications of energy storage and not on perceptions. Recognize real value each benefit electricity storage can provide and the interplay and complexities that exist between the benefits. Address market barriers and determine ways to optimize collection of the benefits that energy storage provides and reflect these in procurement programs and contracts. Keep abreast of Storage technologies significant technical and cost performance improvements. Support early development, piloting, demonstrations, etc., of promising technologies. 17