Solar+Storage
ReducingBarriersthroughCost-op7miza7onandMarketCharacteriza7on
ModelingInputValuesandAssump3ons
October26,2016(updated)
Thispresenta3ondetailstheinputsandmethodologythatNRELisusingto
modeleconomicandopera3onalconsidera3onsfordistributedcommercialscalesolar+storageprojectsforregionsacrosstheU.S,usingNREL’s
RenewableEnergyOp3miza3onmodel(REopt).
ThismethodologyisconsideredaDRAFTandiss3llindevelopment.
[email protected]
2
Solar-plus-Storage: Cost Reductions through Optimization and Market Characterization
PROJECTSUMMARY
Throughdatacollec3on,innova3vemodelingandanalysisthisproject:
•  Developsprojectcostbaselinestorefinemodelinginputsbasedoncurrent
marketdata
•  Iden3fiescost-op3maltechnologycombina3onsofsolarandstoragefora
varietyofbuildingtypesandmarketcondi3ons
•  Exploresmethodstovaluethecontribu3onofsolar-plus-storagetoelectric
systemresiliency
•  Characterizesmarketpoten3alformul3pletechnologyandpolicytrajectories
•  Supportsiden3fica3onofpolicyandregulatoryop3onstosupportsolar-plusstoragedeployment
Finalresultsavailableautumn2017.
ProjectWebsite:hap://www.cleanegroup.org/ceg-projects/solar-storage-op3miza3on/
QUESTIONS ADDRESSED
•  At what technology costs are projects economical?
•  What policy changes would encourage the formation of new markets?
•  How can system owners capture multiple value streams?
•  How can we value energy resiliency in economic calculations?
•  Where will solar with storage be cost-effective in the near-term? Longer-term?
Methodologyconsiders
different:
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BuildingTypes
OwnershipModels
End-UseCases
U3lityRateTariffs
TechnologyCosts
ElectricityMarkets
Incen3ves/Policies
ClimateZones
VALUESTREAMSCONSIDERED
²  Demandchargereduc3on
²  Energyarbitrage
²  Regula3on/Capacity
²  DemandResponse
²  Resiliency
Principal Investigator: Joyce McLaren
[email protected]
Funded by the DOE Solar Energy
Technologies Office (SETO) as
SuNLaMP Project 30379-1614 (FY16-17)
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Methodology
Thismethodologyiss3llindevelopmentasofOctober2016.
Sendcommentsto:[email protected]
4
BaseCase&ListofSensi3vityAnalyses
BaseCase
Costsavingsfromdemandchargereduc3onandarbitrageonly;
30%ITCand5yearMACRStaken.(Thisbasecaseisconductedfordifferenttechnologycosts,rates,
loca3ons,loadprofiles,ownershipstructures.Seedetailsinfollowingslides.)
NEMCase
Basecase+NEMattheretailratew/systemsizecappedat100%ofload
NEM2.0
Basecase+sellbackcompensa3on/creditatthewholesaleratew/systemsizecappedat100%of
load
FrequencyRegula3on
Basecase+frequencyregula3onpayment(s)
Capacity
Basecase+capacitypayment(s)
DemandResponse
Basecase+demandresponsepayment(s)
ITC
Testimpactofstep-downofITCto10%and0%.
Possibletestofimpactofallowingupto25%gridchargingandtakingreducedITC.
RetailElectricityPriceCAGR
2016-2036
BaseCase0.39%(EIAReferenceCase)
Sensi3vi3es:HighFossilResource0.02%;HighFossilFuelPrices0.69%
AgeandsizeofBuilding
Stock
Basecaseuses1980sDOEReferenceBuildings.Thissensi3vityanalysisteststheimpactoftheage
andsizeofthebuildingonresults.
ValuingResiliency
Basecase+assigningavalueforresiliency
LoadProfile:Hourlyvs.15
min.(3meallowing)
15min.loadprofileswillbeusedtotestthesensi3vityoftheresultstotheuseof15min.vs.
hourlyloaddata.Allotherdata(e.g.weatherdata)remainshourly.
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SummaryofProposedModelingInputAssump3ons
Input/Variable
ProjectLoca3ons
BaseCase
16ASHRAEClimateZones
Sensi7vityAnalyses
LoadProfiles/BuildingTypes
DOEcommercialreferencebuildings,1980’sstock
Newconstruc3on;pre-1980sconstruc3on
AnalysisPeriod
80+commercialrates
incl.basic,demandcharge,TOU,experimentalrates
20years;2017-2037
Infla3onRate
2.5%
ElecCostCAGR
0.39%(EIAreferencecase)
RealDiscountRate
10.2%
ITC
30%forPVandstoragecomponents
MACRSforPV
5year+bonusdeprecia3on
MACRSforstorage
5year+bonusdeprecia3on
Ifbaaerycharges>25%fromgrid:7yeardeprecia3on
Netmetering
Nonetmetering
Retailratew/sizecappedat100%load;
Wholesaleratew/sizecappedat100%ofload
U3lityRateStructures
0.02%(HighFossilResource)
0.69%(HighFossilFuelPrices)
ITCstep-downto10%and0%
PossibleanalysisofreducedITCduetogridcharging
FrequencyRegula3onPayment
BasedonPJMmarket
(pleasecommentonvalue/method)
DemandResponsePayment
$30/kWofreduc3on
CapacityPayment
$30/kW
ValueofResiliency
AverageofACIbasedonLBNL,2013
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FinancialAssump3onsandPVcostsforREoptmodelingareinlinewithNREL
AnnualTechnologyBaseline(2016)
NREL(Na3onalRenewableEnergyLaboratory).2016AnnualTechnologyBaseline
(ATB).Golden,CO:Na3onalRenewableEnergyLaboratory.hap://www.nrel.gov/
analysis/data_tech_baseline.html
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ProposedModelingBaaeryInputAssump3ons
Variable
Value(s)
Inverter&StorageReplacement
InYear10
TotalRoundTripEfficiency
82.9%
BaaeryThroughput
85%
InverterEfficiency
92%
Rec3fierEfficiency
90%
MinimumCharge
20%
Ini3alStateofCharge
50%
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ProjectcomponentsincludedintheREoptmodelingcostassump3ons
BaQery&Hardware
•  Baaery
•  Inverter-PowerConversion
•  ContainerorHousing
•  Containerextras(Insula3on/Walls)
•  ElectricalConduit(Insideofcontainer)
•  Communica3onDevice
•  HVAC
•  Meter(RevenueGrade)
•  FireDetec3on
•  FireSuppression
•  Labor
•  ACMainPanel
•  DCdisconnect
•  Isola3onTransformer
•  AUXPower-ligh3ngetc
SoUCosts
•  DeveloperCost(Customer
Acquisi3on)
•  Interconnec3on
EPC
•  ControlSystem/SCADA
•  SitePrepara3on
•  Loading&DrivefromOEMsite
•  Lising&Hois3ngbycraneonsite
•  PEstampedcalcs&drawings
•  OEMtes3ngandcommissioning
•  ElectricalBOSoutsideofcontainer
(Conduit,wiring,DCcable)
•  ElectricalLabor
•  StructuralBOS(fencing)
•  EPCOverhead&Profit
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Basisforstorageprojectcostassump3ons
$/kW+$/kWh=totalprojectcost
TheREoptmodelrequiressepara3onof$/kWand$/kWh.Storagecostsarenottypicallyreportedinthismanner.
Theproposedstoragecostinputsforthebasecasewereinformedbyconversa3onswithmul3pleindustry
par3cipants.Thegraphsbelowshowthevaluesforprojectswheredatawasmadeavailable.
$/kWh
$/kW
$1600/kW
$500/kWh
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PV&StorageCostAssump3ons
PVCostTotal
(Hardware+EPC)
PVO&Mcost
(includesinverterreplacement)
StorageCost
Storagereplacementcost
(inyear10)
BaseCase
HighCostCase
CostReduc3on
CaseA
CostReduc3on
CaseB
$2.051
$2.252
$1.533
$1.424
$12.60/kW-yr.1
$15/kw-yr.2
$10/kW-yr3
$10/kW-yr.4
$1600/kW5
$500/kWh
+20%
-20%
-50%
$200/kW
$200/kWh
+20%
-20%
-50%
1-4NREL(Na3onalRenewableEnergyLaboratory).2016AnnualTechnologyBaseline(ATB).Golden,CO:Na3onalRenewable
EnergyLaboratory.hap://www.nrel.gov/analysis/data_tech_baseline.html
1ATBaveragefor2017
2ATBhighestfor2017
3ATBaveragefor2027
4ATBaveragefor2037
5StoragecostbreakdownbasedonprojectcostdatacollectedbyNREL.
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Loadprofiles:DOECommercialReferenceBuildings
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PrimarySchool
SecondarySchool
Outpa3entHealthCare
Hospital
MidriseApartment
FullServiceRestaurant
LargeHotel
SmallHotel
QuickServiceRestaurant
• 
• 
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Stand-aloneretail
Supermarket
Warehouse
Largeoffice
Mediumoffice
Smalloffice
Stripmall
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Methodusedtoselectratestomodel
• 
Weiden3fiedtheu3li3eswithlargestnumberofcommercialcustomersineachclimatezone
basedonEIAdata“salesandcustomersperu3lity”.
• 
Wehaveupdatedeachcommercialratefortheselectedu3li3esinNREL’sU3lityRate
Database
• 
WewillmodelatleastoneTOUandDemandChargerateineachloca3on,aswellassome
exis3ngunique/experimentalratestructures.
• 
Wewilliden3fythepoten3alforcustomerbillreduc3onforeachratestructure/building
load.
• 
Whenescala3ngrates,wewillincreaseeachratecomponentbythesamepercent(e.g.we
arenotre-designing/re-weigh3ngrates)
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16ASHRAEClimateZonesarerepresentedinmodeling
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Representa3veU3li3es
Theu3litywithlargestnumberofcommercialcustomersineachclimatezonewasiden3fied.Someclimatezones
arerepresentedbymul3pleu3li3es.Wemodelallcommercialratesapplicableforeachbuildingtype.
U7lityName
ClimateZone
Representa7veCity
Salestocommercialsector(MWh)
FloridaPower&LightCo
1A
Miami,Florida
4,316,495
CenterpointEnergyforDelivery,ReliantEnergyfor
Power(deregulated)
2A
Houston,Texas
NoEIAForm861data
SaltRiverProject
2B
Phoenix,Arizona
1,055,677
Georgiapowercompany
3A
Atlanta,Georgia
3,053,786
LosAngelesDepartmentofWater&Power
3B-Coast
LosAngeles,California
1,045,721
SouthernCaliforniaEdison
3B-Coast
Bakersfield,CA
NVEnergy(NevadaPower)
3B
LasVegas,Nevada
434,855
PacificGas&Electric
3C
SanFrancisco,California
2,365,500
Bal3moregasandelectric
4A
Bal3more,Maryland
169,978
ConEdison
4A
NewYork,NewYork
42,858,551
PublicServiceCompanyofNM
4B
Albuquerque,NewMexico
393,132
CityofSeaale
4C
Seaale,Washington
445,585
Commonwealthedison
5A
Chicago,Illinois
623,588
XcelEnergy(PublicServiceCo.ofColorado)
5B
Boulder,Colorado
1,068,445
XcelEnergy(NorthernStatesPowerCompany)
6A
Minneapolis,Minnesota
1,158,937
NorthWesternEnergyService
6B
Helena,Montana
267,802
MinnesotaPower
7
Duluth,Minnesota
NoEIAForm861data
GoldenValleyElectricAssocia3on
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Fairbanks,Alaska
39,593,000
9,160
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U3li3esarerepresenta3veofallU.S.u3li3es
Thisgraphicindicatesthespreadofu3litysizesthatarerepresented.
Selectedu7litysizescomparedtodistribu7onofsizes
fromEIAForm861Data
5,000
4,500
4,000
3,500
GWh/year 3,000
soldto
2,500
commercial
sector 2,000
Sizeofallu3li3esfromEIAForm861
Sizeofselectedu3li3es
1,500
1,000
0
1
15
29
43
57
71
85
99
113
127
141
155
169
183
197
211
225
239
253
267
281
295
309
323
337
351
365
379
393
407
421
435
449
463
477
491
505
519
533
500
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Uniqueratestructuresareexaminedmoreclosely
Notethatthesetariffsarenotintendedtobearepresenta3veset(bygeography,
customertype,orstructure).Theyhavebeenchosenforindividualanalysisbecause
theyareuniqueandmightrevealinteres3ngopportuni3esforS+S.
U7lity
Tariff(s)
SaltRiverProject
ExperimentalpriceplanforsuperpeakTOUgeneralservice
MinnesotaPower
Commercialcontrolledaccessservice
PG&EandSCE
PeakdaypricingandCapacitybiddingprogram
XcelEnergy(Minnesota)
Real3mepricing
ConEdison
StandbytariffSC9-Rate4mayincen3vizeaflaaerload
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Sensi3vityAnalyses:
ITCstep-down
NetMetering
AncillaryServices
Escala3onRate
AgeofBuildingStock
15-minuteloadprofile
ValueofResiliency
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NetMetering&NEM2.0Sensi3vityAnalyses
•  BaseCaseassumesnonetmeteringorsellbackrate
•  WhydoestheBaseCasenotincludeNetMetering:
o  Thefutureofnetmeteringpoliciesisuncertain
o  Netmeteringdoesnotexistinsomeu3lityterritories
o  Systemownersmaypreventpowerinjec3onstoensuretheabilityto
receivetheInvestmentTaxCredit
o  ManycommercialS+Sinstalla3onshavesufficientloadtoabsorball
self-generatedpower
o  Addingstoragetosolarinstalla3onssome3mesnegatesthevalueof
netmeteringtothesystemowner
•  TwoNetMeteringSensi3vitycases:
(1)netmeteringatretailrate
(2)thewholesalerate
Bothcaseshavesystemsizecappedat100%ofload
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ITC&MACRSforsolarandstorageprojects
TheInvestmentTaxCredit(ITC)andModifiedAcceleratedCostRecoverySystem(MACRS)arena3onallevel
incen3vesthatcanimprovebaaeryenergystorageprojecteconomics.
Battery system
ownership
PV system on site
PV system charging
the battery
Public (university,
federal)
Tax credits for
battery components
none
No PV system
Existing PV system
7 year MACRS
Battery charged by
PV < 50%
7 year MACRS
Battery charged by
PV 50%-75%
5 year MACRS
Battery charged by
PV 75%-99%
5 year MACRS
Portion of 30% ITC
Battery charged by
PV 100%
5 year MACRS
30% ITC
Private
*
Credit: Emma Elgqvist, NREL
Sources: IRS Regs. Sec. 1.48-9(d)
(6); IRS Notice 2015-70; IRS
Publication 946; IRS PLR 201308005
IRS PLR-121432122012; IRS
PLR-201142005; IRS PLR 201208035;
IRS CCA 201122018
New PV system
*We assume energy storage can be added to an existing PV system based on precedents set by a IRS Private Letter Ruling that allowed owner of a wind turbine
to add energy storage to existing facility and claim the tax benefit. We believe that the PV and energy storage would need to be in close proximity and under
common ownership (same taxpayer). We believe a replacement battery (e.g. at 10 years) does not qualify for the ITC, but does qualify for 5 year MACRS.
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HowtheITCandMACRSishandledinthemodeling
• 
InterviewswithS+Sdevelopersindicatethatinsomecasescontrollersarebeing
usedtopreventchargingfromgridtoensurethatthestoragequalifiesfortheITC.
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Inourbasecase,thebaaeryisforcedtochargeonlyfromthePV(nogridcharging)andtakesthefullITCand5yearMACRS.
• 
Thisisasimplifyingassump3onsincetechnicallyanownercouldallowupto25%
gridchargingandtakeareducedITC.
• 
Acasestudyorsensi3vityanalysiscanbeconducted(ifdeemedappropriate)to
inves3gatetheeconomicimpactofallowingupto25%gridchargingwithreduced
ITCtaken.
• 
Twoaddi3onalsensi3veanalyseswillbeconductedtounderstandtheimpactofa
futurestep-downoftheITCto10%and0%.
• 
PossiblymodeltheimpactofthenewbillS.3159-introducedtomake
energystorageeligibleforaninvestmenttaxcredit(ITC)undersecFon48.(More
infohere.)
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ProvidingAncillaryServices:Sensi3vityAnalysis
• 
Storageiscurrentlypar3cipa3nginancillaryservicemarketsinPJMandCAISO
territories.
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PaymentsforancillaryservicesgreatlyimpactS+Sprojecteconomicsintheregions
wheremarketsexist.
• 
OurbasecasewillNOTincludepaymentsfromancillaryservices(thisallowsusto
determinethecircumstancesunderwhichdemandchargereduc3on/TOU
arbitragealonemakeprojectseconomical).
• 
Wewilldosensi3vityanalysestodeterminetheimpactof:
o 
Frequencyregula3onpayments
o 
Capacity(DemandResponse)payments
•  Seeslidesbelowforproposedmethods/values.
•  Weares3lltakingcommentsonappropriateinputvalues.
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PaymentsforCapacity/DemandResponse:Sensi3vityAnalysis
BTMstorageprovidesdemandresponsebydispatchingcapacityinresponseto
eventsdefinedbytheISO/u3lity
•  Broadlyspeaking,DRisprovidedinoneof3ways:
o  DispatchedCurtailment–customeragreestotheremotedispatchofthe
capacitybythesystemoperator
o  MandatoryCurtailment-customerbidsintomarkettoprovideserviceandis
requiredtodispatchifselected
o  VoluntaryCurtailment–customerdecideswhethertoprovideservice
•  Demandresponseprogramsappeartobesimplifying,withaconsolida3onof
products/programsthatstoragecanchoosetopar3cipatein.
•  Programscanbroadlybecategorizedas:
o  Pre-scheduled
o  Real-3me
• 
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PaymentsforCapacity/DemandResponse:Sensi3vityAnalysis
Bothpre-scheduledandreal-3mecapacity/demandresponsemarkets/productsmaybemodeled:
• 
Method:Pre-scheduleDRprogram
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Storagereceivesa$/kWpaymentforprovidingcapacity/demandresponsefora4hourwindowon
thehoaest12daysoftheyear.
•  Methodintendedtorepresentpar3cipa3oninademandresponseprogramsimilartothose
commonlyofferedbyu3li3esinCalifornia
•  MethodissimilartoPJM’sEmergencyLoadResponseproduct
•  The$/kWpaymentwillbebasedonbestavailableinforma3onofcurrentlypublishedDR
payments
•  Methodwillbeappliedineveryu3lityregionbeingmodeled
•  The$/kWpaymentvaluewillbescaledupordown(%)forotheru3lityregions,accordingto
thetotalelectricitycostineachregion.
• 
Method:Real-3meDR
• 
$/kWhpaymentreceivedforpar3cipa3oninreal-3meDRmarketthroughanaggregator(orselfaggrega3on)
• 
Intendedtorepresentexis3ngCaliforniaDRAMorPJMreal-3meDRmarkets
• 
PaymentbasedonbestavailabledataonCADRAMorPJMDRmarketpaymentsandscaledfor
regionsthatdonotcurrentlyhavereal-3meDRprograms,basedoncostofelectricity/kWhunder
generalcommercialtariff.
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PaymentsforFrequencyRegula3on:Sensi3vityAnalysis
FrequencyRegula3on(FR)paymentswillbeinves3gatedineveryu3lityregionbeing
modeled,torepresentimpactofpoten3al/futureregula3onmarkets
ProposedMethod:
• 
HistoricalPJMsignalforoneyearwillbeusedtoboundamountofFRrequested
duringanyhour
• 
InputintoREopta$/kWhpaymentthatwillbeofferedforprovidingfrequency
regula3onduringeachhouroftheday
• 
$amountwillbebasedonhistoricalPJMmarketdataforPJM
• 
$amountbasedonthepublishedenergytransmissiontariffinOASISforother
regions
Logicforthisproxy:ProviderstypicallypurchaseFRfromatransmissionowner.
ButifabaaerycanprovideFR,theservicecouldbepurchasedfromabaaery
instead.
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ElectricityEscala3onRate:Sensi3vityAnalysis
•  ElecCostEscala3onRateisbasedonEIA
•  hap://www.eia.gov/forecasts/aeo/excel/fig-9_data.xls
•  Basecaseassumes0.39%CAGRoverthestudyperiod
2016-2036.
•  Sensi3vityanalysiswillbeconductedusingalternate
escala3onrates:
o  HighFossilResource=0.02%
o  HighFossilFuelPrices=0.69%
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26
AgeandSizeofBuildingStock:Sensi3vityAnalysis
•  Basecaseuses1980sDOEReferenceBuildings.
•  UsingtheDOEReferenceBuildingprofilesforolderand
newerbuildings,sensi3vitytestswillberuntounderstandthe
impactoftheageofthebuildingonresults.
•  Theimpactofincreasingordecreasingthesizeofthebuilding
loadwillbeexaminedforcertainbuildingtypes.
27
15-minutevs.hourlyloadprofile
•  15minuteloadprofilesarebeingcreatedbytheNREL
commercialbuildingteam
•  Resultsusingthese(forasetofscenarios)willbecompared
withresultsfromthebasecasetodeterminethesensi3vityof
theresultsto15minuteprofilesvs.hourlyprofiles.
•  Basecaseretainshourlyprofilesbecausethegranularityof
datasuchasweathernecessarilyremainsatthehourlylevel
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ValueofResiliency:Sensi3vityAnalysis
TheamountofresiliencyprovidedbyanS+Ssystemisdifficulttoquan3fy.
Andisfundamentallydifferentthanthatfromadieselgenerator,whichprovidespower
un3lfuelreservesareexhausted.DuetotheuncertaintyofresiliencyfromanS+S
system,thevaluemaybedeemedlower.
ResiliencyfromS+Sdependsonthe:
–  Baaerystateofchargeat3meofoutage
–  Solarresourceavailableduringoutage
However,theincrementalvalueofresiliencyfrom
S+Scouldbeenoughtomakeaproject
economicallyviable.
Wewillmodeltheimpactofvaluingresiliencyby
includingavalueforresiliencyintheop3miza3on.
Asthevalueplacedonresiliencyincreases,
op3malsystemsizesandthenumberofhoursaloadis
sustainedwillbothincrease.
29
29
AssigningaValuetoResiliency
Method:ForeachhourthataS+Sprojectcansustainagivencri3calload(X%ofthetotal
load)duringagridoutage,avalueforthisresiliencybenefitisincludedintheop3miza3on.
Theproposedvalueofresiliencyistheaveragecostanddura3onofgridoutages(ACI),based
ona2013LBNLreport:
(2015)UpdatedValueofServiceReliabilityEs3matesforElectricU3lity
CustomersintheUnitedStates,LawrenceBerkeleyNa3onalLaboratory,
LBNL-6941E,hap://eetd.lbl.gov/sites/all/files/lbnl-6941e_0.pdf
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PrincipalInves3gator
[email protected]
303.384.7362
ProjectWebsite
hap://www.cleanegroup.org/solar-storageop3miza3on/
31