NASEO 2017 Northeast Regional Meeting Energy Storage Initiative DOER Commissioner Judith Judson
Energy Storage Initiative $10 million initiative launched in 2015 State of Charge study Demonstration projects Robust stakeholder engagement Study details: Technology and market landscape Comprehensive modeling of the cost and benefits of deploying storage Economic use cases of specific storage applications Economic development opportunities Policy and program recommendations to grow storage deployment and industry in MA Massachusetts will continue to lead the way on clean energy, energy efficiency, and the adoption of innovative technologies such as energy storage. - Governor Baker, Feb 2016, Accord for a New Energy Future Press Event Given the recent advances in energy storage technology and costeffectiveness, it is hard to imagine a modern electric distribution system that does not include energy storage. Utility stakeholder perspective 2
Clean Energy Legislation An Act Relative to Energy Diversity (H. 4568) Governor Baker signed bi-partisan, comprehensive energy diversification legislation on August 8, 2016. Utility procurements of 1,200 MW hydroelectric and 1,600 MW offshore wind Massachusetts is now the third state in the country to have an advanced energy storage procurement authorization. Provides a definition for energy storage; Clarifies utility ownership of storage; Allows storage to be paired with clean energy procurements; 1,200 MW hydropower, 1,600 MW offshore wind Authorizes DOER to set an energy storage target. If a target is set, the legislation allows funding flexibility to achieve it including alternative compliance payments, energy efficiency funds, and refine existing procurement methods.
Storage In Commodity Supply Chains FOOD Warehouses Grocery stores Freezers & refrigerators WATER Reservoirs Aboveground tanks Water bottles GASOLINE Underground tanks Aboveground tanks Tank trucks Portable fuel tanks OIL Aboveground tanks Piping Storage capacity more than 10% of daily consumption NATURAL GAS Depleted fields Aquifers Salt caverns Pipelines Above-ground tanks ELECTRICITY Energy Storage Technologies Currently less than 1% of daily electricity consumption for MA The electricity market has a fast speed of light supply chain and the least amount of storage. This lack of storage creates a need for additional infrastructure to maintain market reliability. 4
Energy Storage Growth & Deployment US grid is expected to have 4500 MW of energy storage by 2020 The cost of energy storage is rapidly declining and lithium-ion battery prices have decreased over 50% between 2012 and 2015 US Market for Advanced Energy Storage technologies is expected to grow by 500% in next five years. There is a huge opportunity to expand the Commonwealth s successful clean energy industry. 5
Massachusetts Energy Challenges: Storage is Game Changer for Meeting Peak ISO-NE State of the Grid 2016 and System Annual Hourly and Weekly Demand The need to size grid infrastructure to the highest peak usage results in system inefficiencies, underutilization of assets, and high cost Energy storage is the only technology that can use energy generated during low cost off-peak periods to serve load during expensive peak. Top 1% of Hours accounts for 8% of MA Spend on Electricity Top 10% of Hours accounts for 40% of Electricity Spend 6
Massachusetts Energy Challenges: Storage reliably integrates more Renewables According to ISO-NE State of the Grid 2016 more fast and flexible resources will be needed to balance intermittent resources variable output. Storage can provide this flexibility. With 69,000+ distributed solar projects and growing, storage can manage reverse power flow at substations 7
Advanced Storage Optimization Model 8
Storage Application Use Cases The Study analyzed the economics and business models of ten storage use cases to inform specific policy and program recommendations 9
Model Results: Significant Benefits and Cost Savings from Optimized Storage Benefit Categories Benefit Description Energy Cost Reduction Reduced Peak Ancillary Services Cost Reduction Wholesale Market Cost Reduction T&D Cost Reduction Increased Renewable Integration Energy storage replaces the use of inefficient generators at peak times causing: 1) reduced peak prices which 2) reduces the overall average energy price. This also benefits the natural gas supply infrastructure. Energy storage can provide peaking capacity to 1) defer the capital costs peaker plants and 2) reduced cost in the the capacity market Energy storage would reduce the overall costs of ancillary services required by the grid system through: 1) frequency regulation, 2) spinning reserve, and 3) voltage stabilization Energy storage can be a flexible and rapid tool that help generators operate more efficiently through: 1) less wear and tear, 2) less start up and shut down costs, and 3) reduced GHG emissions. Energy storage 1) reduces the losses and maintenance of system, 2) provides reactive power support, 3) increases resilience, and 4) defers investment Energy storage reduces cost in integrating renewable energy by 1) addressing reverse power flow and 2) avoiding feeder upgrades Total System Benefits $275M $1093M $200M $197M $305M $219M $2,288M 10
Energy Storage Benefits Remunerable Non-Remunerable Cost Study Findings Opportunities: Energy Storage has potential to provide benefits to the Massachusetts ratepayers, including: Reducing the price of electricity Lowering peak demand and deferring investment in new infrastructure Reducing the cost to integrate renewable generation Reducing greenhouse gas (GHG) emissions Increasing the grid s overall flexibility, reliability and resiliency Generating nearly $600 million in new jobs Barriers: Business models for storage in very early stages Energy storage systems need a way to be compensated for a greater portion of their cost benefit in order to achieve market viability 11
Study Recommendations The Commonwealth can nurture the energy storage industry and grow the deployment of storage in Massachusetts through programs and initiatives Funding for Demonstration projects Establish and Clarify Regulatory Treatment of Utility Storage Grant and Rebate Programs Storage in State Portfolio Standards Paired with Clean Energy procurements ISO Market Rules Initiatives to Grow Companies If adopted, the Study recommendations have the potential to yield: 600 MW of new energy storage by 2025 $800 million in cost savings to ratepayers 350,000 metric tons reduction in GHG emissions over a 10 year time span Equal to taking over 73,000 cars off the road 12
Regulatory Treatment RPS/ APS Grants and Rebates Status of ESI and State of Charge Study 9 out of 12 ESI state policy recommendations are in progress 13 ESI Funding for Storage Demonstrations Recommendations Increase ESI demonstration funding from $10m to $20m Resiliency Grants Solar Plus Storage Feasibility Studies Peak Demand Reduction Grants Storage in Green Communities and Leading by Example grants MOR-Storage rebates Include Storage in the new SMART Solar Program Add Storage (beyond Flywheels) to the Alternative Portfolio Standard Energy Efficiency Programs for Peak Demand Savings Clarify regulatory treatment of Utility ownership of energy storage (rate case, solar ownership, grid mod) Energy Storage in Renewable Procurements Status TBD TBD TBD
Clean Energy Legislation An Act Relative to Energy Diversity (H. 4568) Storage Next Steps On December 27, 2016, DOER determined that a storage target was prudent was the Commonwealth. Requested additional stakeholder feedback on scale, structure and mechanism of a target DOER will adopted a target by July 1, 2017
Chapter 188 of the Acts of 2016 Section 15 SECTION 15. (a) On or before December 31, 2016, the department of energy resources shall determine whether to set appropriate targets for electric companies to procure viable and cost-effective energy storage systems to be achieved by January 1, 2020. As part of this decision, the department may consider a variety of policies to encourage the cost-effective deployment of energy storage systems, including the refinement of existing procurement methods to properly value energy storage systems, the use of alternative compliance payments to develop pilot programs and the use of energy efficiency funds under section 19 of chapter 25 of the General Laws if the department determines that the energy storage system installed at a customer s premises provides sustainable peak load reductions on either the electric or gas distribution systems and is otherwise consistent with section 11G of chapter 25A of the General Laws. (b) The department shall adopt the procurement targets, if determined to be appropriate under subsection (a), by July 1, 2017. The department shall reevaluate the procurement targets not less than once every 3 years. (c) Not later than January 1, 2020, each electric company entity shall submit a report to the department of energy resources demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the department pursuant to this section. 15 Confidential Internal Policy Deliberative
Grant Initiatives for Storage Energy Storage Demonstrations RFP $10 million Advancing Commonwealth Energy Storage (ACES) RFP Released by MassCEC in March with bids due on June 9 th. Peak Demand Reduction Grant $4.5 million Energy Storage is eligible technology Community Clean Energy Resiliency Initiative: Round 3 $14 million Announced 9/22/16, includes 3 programs: Resiliency Feasibility Studies for State Medical Facilities Resiliency Demonstration Projects at public and private hospitals $11.5 million Program Opportunity Notice Posted on 12/5/2016 Resiliency Tool development for community planners and administrators
Storage Integrated with Other Initiatives Energy Efficiency Programs Peak Demand Reduction was one of 3 key priorities negotiated by DOER in the 2016 2018 Three Year Plan All four electric utility partners have submitted proposals to the DPU to pilot peak demand reduction offerings These include: Commercial - small business wifi thermostats, software and controls, thermal storage, BTM batteries, and economic curtailment Residential - wifi thermostats, behavior, and BTM batteries Goal to include at scale demand reduction programs as part of next three year plan 2019-2021
Storage in New Solar Incentive Program DOER released SMART Solar Massachusetts Renewable Target on January 31 Declining block program 1600 MW program with 8 x 200 MW blocks declining by 4% Doubles the amount of solar for half the cost to ratepayers Incentivizes the pairing of storage with solar: Adder will be variable and will be primarily based on the ratio of the storage capacity to solar capacity, as well as the duration of the storage Base adder of $0.045/kWh will be a component of a formula designed to provide more value to higher capacity and longer duration storage Adder will decrease by 4% per block Facilities smaller than 25 kw will also be able to receive a storage adder
Storage in New Solar Incentive Program Energy Storage Adder Formula Energy Storage Adder = ESkW PVkW ESkW PVkW + exp 0.7 8 ESkW PVkW 0.8 + 0.5 ln ESkWh ESkW Where ESkW represents the nominal rated power of the energy storage system and ESkWh represents the nominal rated useful energy of the energy storage system Formula Outputs Base Adder
Storage in New Solar Incentive Program Energy Storage Adder Matrix
Storage in New Solar Incentive Program Energy Storage Requirements Minimum and Maximum Nominal Rated Power: The nominal rated power capacity of the Energy Storage System paired with a solar photovoltaic Generation Unit must be at least 25 per cent and shall be incentivized for no more than 100 per cent of the rated capacity, as measured in direct current, of the solar photovoltaic Generation Unit. Minimum and Maximum Nominal Useful Energy: The nominal useful energy capacity of the Energy Storage System paired with the solar photovoltaic Generation Unit must be at least two hours and shall be incentivized for no more than six hours. Minimum Efficiency Requirement: The Energy Storage System paired with the solar photovoltaic Generation Unit must have at least a 65% round trip efficiency in normal operation. Data Provision Requirements: The Owner of the Energy Storage System must provide historical 15-minute interval performance data to the Solar Program Administrator for the first year of operation and upon request for the first five years of operation. Operational Requirements: The Energy Storage System must discharge at least 52 complete cycle equivalents per year and must remain functional and operational in order for the solar photovoltaic Generation Unit to continue to be eligible for the Energy Storage Adder.
Electric Vehicles: Mobile Energy Storage Massachusetts has a goal of 300,000 ZEVs by 2025 Massachusetts Offers Rebates Electric Vehicles (MOR-EV) Up to $2,500 rebate for eligible electric vehicles Plug In America Pilot Partnership with New England states to host public and employer sponsored EV test drive events Electric School Bus Pilot DOER awarded grants to 4 Massachusetts school districts to purchase an electric school bus and charger 22
THANK YOU 23