VIA ELECTRONIC FILING April 21, 2016 Hon. Kathleen H. Burgess Secretary to the Commission New York State Public Service Commission Empire State Plaza, Agency Building 3 Albany, New York 12223-1350 Re: CASE 15-E-0302 - In the Matter of the Implementation of a Large-Scale Renewable Program and a Clean Energy Standard Dear Secretary Burgess: The New York Battery and Energy Storage Technology Consortium (NY-BEST) appreciates the opportunity to provide comments on the Clean Energy Standard (CES) White Paper submitted by the Department of Public Service (DPS) staff. NY-BEST is a not-for-profit industry trade association that serves as the voice of the industry for 150 member organizations on matters related to advanced batteries and energy storage technologies. Our membership covers the full span of activities related to research, development, production and deployment of energy storage devices, and currently includes technology developers ranging in size from small start-up companies to global corporations, leading research institutions and universities, national labs and numerous companies involved in the electricity and transportation sectors. Our mission is to catalyze and grow the energy storage industry and establish New York State as a global leader in energy storage. We do this by: (1) Acting as an authoritative resource on energy storage, proactively communicating energy storage related news and information, and facilitating connections amongst stakeholders; (2) Advancing and accelerating the commercialization process for energy storage technologies, from research and development, to products and widespread deployment; (3) Educating policymakers and stakeholders about energy storage and advocating on behalf of the energy storage industry; and 1 P a g e
(4) Promoting New York s world-class intellectual and manufacturing capabilities and providing access to markets to grow the energy storage industry in New York. We believe that energy storage is essential to achieving the Clean Energy Standard mandate that 50 percent of the electricity used in New York State be generated from renewable sources by 2030. We urge the Commission to incorporate a correlating requirement in the CES for Load Serving Entities to add energy storage to their systems in an effort to ensure the flexibility of new renewable resources being added to the grid, as well as ensure the overall reliability and resilience of the grid. Our detailed comments are attached. NY-BEST and our more than 150 member organizations from across New York State and beyond appreciate the opportunity to provide these comments and we stand ready to assist the Department of Public Service (DPS) staff and the Public Service Commission (PSC) in establishing a Clean Energy Standard for New York State. If you have any questions or require additional information regarding these comments, please contact me at (518) 694-8474. Respectfully, William P. Acker Executive Director 2 P a g e
Introduction NY-BEST Comments on the Clean Energy Standard White Paper NY-BEST supports the goals of the Reforming the Energy Vision (REV) to build a clean, resilient, and affordable energy system for all New Yorkers, including regulatory reforms to integrate clean energy into the core of New York State s energy system and programmatic redesigns to complement and unlock private investment in clean energy. We also enthusiastically support the goals articulated in the State Energy Plan to increase renewable energy resources to 50 percent by 2030 ( 50 by 30 ) and decrease greenhouse gas emissions by 80 percent by 2050. NY-BEST further supports the State s efforts, articulated in the Clean Energy Standard (CES) White Paper to establish the 50 by 30 renewable energy goal as a mandate. We are dismayed, however, that the CES White Paper fails to recognize the essential role for energy storage in enabling the 50 by 30 goal. In numerous comments to the Commission in REV-related matters, and specifically in our August 12, 2016 comments on the Large Scale Renewable Options Paper, NY-BEST has emphasized the critical role for energy storage to achieve the 50 by 30 goal and the State s larger greenhouse gas emissions reduction goals. In addition to the benefits storage provides to New York s electric grid system, energy storage supports New York s clean energy economy and helps to keep New York s energy dollars in New York. The comments provided herein are intended to further reinforce our position that storage must be incorporated in a meaningful way in the State s efforts to achieve the 50 by 30 renewable energy goal. Why Energy Storage is Essential to the CES Energy storage greatly enhances the integration of renewable energy sources on the grid at all levels. Solar and wind power are intermittent sources of energy, only providing power when the sun is shining or wind is blowing. As a result, there are significant challenges to overcome as we move from generating a small portion of the state s energy from these energy sources to relying on them for most of our energy needs. Energy storage provides the necessary solutions to these challenges by enabling the flexibility of renewable energy resources. Energy storage addresses the rapid fluctuation in output from renewables along with resulting ramp-rate issues. More holistically, storing the energy produced by renewables for use at a later time when it is needed is essential to optimizing the 3 P a g e
renewable energy and ensuring the reliability and efficiency of the electric grid, especially as we add increasing amounts of renewable energy to the system. Energy storage is a unique and valuable resource that is able to provide many benefits across a broad spectrum of applications, including and importantly, in the integration of renewable energy resources on the grid. The benefits of storage are numerous and broad, including: Bulk energy services o Off-to-on-peak energy time shifting and firming, on-peak intermittent energy smoothing and shaping, arbitrage, and capacity Management of ramping requirements o Resulting from variable output generation from wind and solar Ancillary services o Frequency regulation, reactive power and voltage support, reserves (spinning, non-spinning, supplemental), black start Transmission and distribution infrastructure o Congestion relief, upgrade deferral, minimization of line losses, voltage support, resiliency, transportable distribution-level overload mitigation, peak load shifting downstream of distribution system, variable distributed generation integration, microgrid formation o Increasing circuit hosting capacity and the ability to integrate distributed renewable resources. Customer energy management o Power quality, reliability, resiliency, demand-charge management and retail time and price shifting, variable generation integration/back-up power/ups. Energy storage is key to creating a cleaner, more resilient and flexible grid system. Energy storage greatly enhances the integration of renewable energy sources on the grid at all levels by time-shifting the energy generated, by firming generator output, and by providing ancillary services such as frequency regulation and spinning and non-spinning reserves. In addition, energy storage resources also provide relief from transmission congestion and reduce the possibility of wind curtailment in high renewable scenarios. Strategically located energy storage can also optimize high renewable generation levels and minimize load pocket congestion. Energy storage paired with solar systems in constrained areas of the distribution system can enable the system to accept higher amounts of solar than 4 P a g e
would otherwise be possible without significant costly interconnection upgrades or curtailment of the resource. While some may argue that Canadian hydropower resources will be sufficient to meet the State s increasing needs for flexibility on the grid, energy storage provides needed flexibility for renewables at all levels of the system and, as a result, avoids the need to build additional transmission lines, substation upgrades and other distribution infrastructure upgrades that will likely be required to support Canadian hydropower or needed to support renewable energy integration in ways that remote sources like Canadian hydropower do not impact. Energy storage also provides enhanced optionality with the ability to add storage capacity to meet system needs without significant cost. In addition, storage greatly reduces the reliance on fossil-fueled peaker plants to supply the additional flexibility needed to support an increasing amount of renewable energy and, as a result, supports the State s environmental goals. A recent study by the Lawrence Berkeley Laboratory 1 assessed the importance of having a sufficient flexibility supply in the presence of increasing amounts of variable renewable generation on the grid. In the study, flexibility is defined as the capability of the system to accommodate variability and uncertainty. The study found that bulk energy storage is particularly well-suited to providing flexibility because it can provide its full nameplate capacity bi-directionally: it can both provide needed power and absorb excess power on short notice. This capability is important for eliminating the impact of short-term fluctuations in renewable output. Having storage on the grid will greatly decrease the need to turn to gas-fired generation plants to meet any short-term demand and eliminating the use of these plants is an essential part of achieving the State s emissions goals. NY-BEST believes that the combination of batteries and other energy storage devices with renewables allows the renewable energy to be used at any time and ultimately has the potential to fulfill all energy needs. How much storage does NY need? A number of studies have looked at how large amounts of intermittent renewables can be incorporated into the grid and they conclude that substantial amounts of storage will be 1 https://emp.lbl.gov/sites/all/files/lbnl-1003750_0.pdf 5 P a g e
required. In its Renewable Electricity Futures Study 2, NREL in 2012 looked at a variety of scenarios for the adoption of 80% renewable electricity sources nationwide by the year 2050. Under these various scenarios, the study concluded that a total deployment of energy storage between 100 and 152 GW would be required. They also concluded that the bulk of these deployments would need to take place much sooner than 2050 in order to support the expansion of renewable energy. According to the NREL analysis, New York would need to deploy about 2.5 GW by 2025 and 3.2 GW by 2030 for this purpose alone 3. NY-BEST believes the NREL study underweighted the contributions of energy storage and battery technology because it did not anticipate the rapid pace of battery cost reductions that have occurred in the past few years. The economics of battery storage are substantially better than the assumptions of the study. Further, the NREL study also did not reflect the changing nature of New York s energy mix, overemphasizing biomass energy over solar power, and it did not address the impact of storage in dealing with constraints on the distribution system, such as the limited hosting capacity of distribution circuits. Despite these drawbacks, NY-BEST believes the study offers valuable insights on the case for storage. Notably, in California, the Union of Concerned Scientists study, Achieving 50 Percent Renewable Electricity in California, 4 released in August 2015, looked at the issue of preventing the curtailment of renewable generation by the use of non-generation strategies including energy storage. The study concluded that an additional 6-9 GW of non-generation flexibility was required in California to eliminate curtailment and avoid the use of fossil fuel generation sources to provide flexibility. NY-BEST, in our recent Energy Storage Roadmap for New York s Electric Grid, 5 established a goal of having 2 GW of storage capacity on the grid by 2025 and 4 GW of storage capacity on the grid by 2030. (Those goals are above and beyond the existing pumped hydro capacity and with multi-hour duration.) NY-BEST found that having multi-hour storage 2 http://www.nrel.gov/docs/fy12osti/52409-2.pdf 3 http://www.nrel.gov/analysis/re_futures/data_viewer/ 4 http://www.ucsusa.org/sites/default/files/attach/2015/08/achieving-50-percent-renewable-electricity- In-California.pdf 5 Energy Storage Roadmap for New York s Electric Grid, by NY-BEST, Randy Simon, Dr. William Acker, et.al, January 2016 https://www.ny-best.org/page/ny-best-reports 6 P a g e
resources of this capacity in the State s energy system will make significant contributions to the three overarching needs of the electricity system and reduce the net costs to the grid and to end-use customers: Improving efficiency and capacity factor of the grid Integration of renewables into the grid Enhancing reliability and resilience of the grid via flexibility NY-BEST s recommendation included the following assumptions and analysis: The State goal of having 50% of generation from renewables by 2030 implies that nearly 30% will likely come from solar and wind energy (~20% of the state s generation is from hydroelectric power and several percent from bioenergy). According to NYISO projections 6 as well as the 2015 New York Energy Plan, average demand in the state is likely to remain on the order of 20 GW and total electricity usage will be about 185,000 GWh. According to the State Energy Plan, the potential contributions for hydropower and bioenergy are 20% and 3%, respectively. The remaining 27% of renewable energy to meet the 50% goal could be achieved, for example, by a combination of 13.5% solar power and 13.5% wind power. With a capacity factor of 17%, producing that amount of energy from PV will require 17 GW of installed capacity. With a capacity factor of 35%, 8 GW of wind power capacity will be needed. In total, therefore, meeting the 50% renewable goals will require 25 GW of intermittent renewables in the state. Storage will be critical to provide flexibility for these resources. Based on industry use cases, storage used for firming renewables and providing flexibility typically provides 10-20% of the associated generation capacity. Thus, 25 GW of intermittent renewables on New York s grid would need 2.5-5 GW of storage to provide flexibility. NY-BEST understands that some of our assumptions regarding total load and the levels of renewable energy required differ from DPS staff s assumptions in the CES which assume a higher level of energy efficiency, lower total load and lowers amounts of renewable energy. However, NY-BEST s analysis uses a conservative approach in that it solely examines the need for firming renewables and does not examine the amount of storage needed to 6 http://www.nyiso.com/public/webdocs/media_room/press_releases/2015/child_powertrends_2015 /ptrends2015_final.pdf 7 P a g e
support energy shifting or distribution system integration issues like circuit hosting capacity limits. As discussed above, the NREL study identified the need for 3.2 GW of storage in New York by 2030, and did not take into account significant factors like distribution system constraints such as the limitations of the hosting capacity of the State s distribution circuits. Different studies will likely yield different results based on the assumptions used, but the key takeaway remains the same, storage is essential to providing flexibility for renewable resources, optimize the use of renewable energy and enhance the overall reliability and resilience of the grid, while also supporting the goals of REV and strengthening New York s clean energy economy. NY-BEST fully expects the need for storage to grow further as we look beyond 2030 and to meeting our aggressive 2050 greenhouse gas goals, which will require electrification of our transportation systems and an additional significant increase in renewable energy. Need for a New York Specific Study The amount of storage needed in New York in the presence of high renewables penetration is very much dependent upon the detailed energy mix in the state and the changing intricacies of the grid infrastructure. For this reason, NY-BEST is again urging PSC to commission a detailed study in the near term to quantify this need with greater specificity. While we understand that the State, in conjunction with the NYISO, has begun a resource planning study to examine the integration of renewables on New York s grid, NY-BEST wishes to stress the importance of expanding this study now to examine a range of options and scenarios for providing flexibility to the grid, assess the need for additional storage capacity and incorporate an analysis of the attendant multiple benefits that energy storage would provide to the entire grid system. By undertaking this effort now, the State will be better able to articulate specific goals for storage and in turn enable LSEs, storage providers and markets to respond by planning and implementing projects with sufficient lead time to support increasing levels of renewable energy. Although storage can be deployed more quickly than other types of resources, it can still take up to two years to complete a storage project due to lengthy interconnection, siting and related issues. Storage deployed in the near term will also provide additional 8 P a g e
benefits to the grid in the form of increased asset utilization, peak load shaving and improved resilience. Establish a Flexible Energy Credit As discussed above, NY-BEST believes there is sufficient evidence and a significant need to support expanding the CES to include energy storage. Specifically, we recommend that the Commission establish as part of the CES, a requirement for Load Serving Entities (LSEs) to add flexible assets, in proportion to new renewable assets, to their systems. As noted in the CES White Paper, The CES, by clearly stating both an absolute mandate and interim targets, will support the development of a vibrant clean energy market and provide the scale and certainty necessary for broad competition that encourages private investment and reduces costs. 7 We agree with this statement and believe that the mandate and target should also apply to energy storage. To accomplish this, NY-BEST proposes that the CES establish a Flexible Energy Credit (FLEC) defined as non-carbon emitting assets meeting certain performance requirements that may be distributed or centrally located and provide energy for a minimum 1 hour duration period. Each 1 kw and 1 kwh of installed capacity would be equal to 1 FLEC, recognizing the different asset nature of energy storage. NY-BEST proposes that the same rules for RECs and ZEC would apply for FLECs, with LSEs required to acquire a level of FLECs that would be set at approximately 10-15% of the total REC level. Pricing for FLECs would be set independently of RECs and ZECs. Consistent with the Commission s decision is the REV Track 1 Order, utilities would be able to own FLEC assets in the form of energy storage. NY-BEST believes this type of tradeable credit program would support the development of the clean energy market and ensure the success of the 50 by 30 goal. Electrification of Transportation The DPS staff in the CES White Paper request comments from parties on the treatment of electric vehicles in the CES. The White Paper states, as follows: 7 See P. 3 of the Staff White Paper On Clean Energy Standard, Case 15-E-0302, January 25, 2016 9 P a g e
Certain types of market developments and program initiatives will have the effect of reducing total carbon emissions while increasing electricity demand. These include electric vehicles and geothermal heat pumps. If the adoption of these technologies has the effect of increasing the compliance obligation under the CES, then the CES could potentially have the inadvertent effect of deterring the adoption of beneficial technologies. Parties are encouraged to comment on the treatment of electric vehicles and geothermal heat pump conversions under the CES obligation. 8 NY-BEST enthusiastically supports the State s greenhouse gas emissions reduction goal to reduce GHGS by 80 percent by 2050 and we believe that electrified transportation is necessary to achieve that goal. Energy storage technologies in the form of batteries, fuel cells and charging stations will be essential to achieving this transformation of our transportation system. While we agree that electrifying transportation will have the effect of increasing demand for electricity and increasing the compliance obligation under the CES, we do not necessarily agree that it will deter the adoption of beneficial electric transportation technologies. Increased electricity demand provides new revenue opportunities and potential new business models for LSEs. In the event that the Commission opts to adopt an efficiency mandate and impose efficiency requirements on LSEs, this may in fact create a disincentive for LSEs to support electrified transportation. In that case, any such energy efficiency mandate would need to account for increased load related to electrified transportation. NY-BEST encourages the design of new programs to encourage integration of electric vehicles with the grid through charging stations and devices and effective controls, benefitting both consumers and the LSEs. We believe this represents a substantial opportunity and urge further analysis and exploration of how the State can best maximize the benefits of electrified transportation. NY-BEST has convened industry experts working in other states to discuss this issue and would welcome the opportunity to further these efforts in conjunction with DPS. 8 Ibid, p.13 10 P a g e
Other Issues NY-BEST agrees with the New York Power Authority (NYPA) that energy storage should not count as LSE load. The PSC should make clear that sales to energy storage facilities will not be counted as part of an LSE s overall load for purpose of establishing CES compliance obligations. As written, the CES White Paper is unclear whether CES targets would apply to load for grid-scale energy storage. Importantly, as we have noted above, construction of substantial grid-scale energy storage may be required to balance the intermittent supply of renewable energy with the demands of loads in order to achieve 50 by 30 goal. Furthermore, existing in-state energy storage resources should be treated similarly, as they currently provide this balancing service. Adding costs to the operation of storage resources that will likely be necessary to assist the State in reaching 50 by 30 would be counterproductive. Thus, the electricity used in the storage mode should not be included in calculating Statewide or individual CES targets or compliance. Conclusion NY-BEST appreciates the efforts of DPS staff in preparing the CES White Paper and we are grateful for the opportunity to provide comments. We strongly urge the Commission to more fully acknowledge and incorporate a specific role for energy storage in supporting the State s renewable energy goals by adopting, as part of the CES mandate, a specific requirement for energy storage. NY-BEST welcomes the opportunity to assist in that effort. Should you have questions or need additional information or assistance, please feel free to contact us at 518.694.8474 Sincerely, Dr. William Acker Executive Director NY-BEST 11 P a g e