Value of Energy Storage in Utility Applications
Ben Kaun
Sr. Project Engineer
SVLG Energy Committee Meeting
November 21, 2013
Overview of Presentation
• EPRI Introduction
• Overview of Energy Storage Role on the Grid
• CPUC Energy Storage Proceeding
• Overview of EPRI Analysis for CPUC
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The Electric Power Research Institute (EPRI)
• Independent, non-profit,
collaborative research institute,
with full spectrum industry
coverage
– Nuclear
– Generation
– Power Delivery & Utilization
– Environment & Renewables
• Major offices in Palo Alto, CA;
Charlotte, NC; and Knoxville, TN
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EPRI Energy Storage Program Mission
Facilitate the availability and use of
grid-ready storage options
• Understanding storage technologies and
capabilities
• Identifying and calculating the costs and
values of storage
• Specification and testing of storage products
• Implementation and deployment of storage
systems
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Energy Storage Role on the Electric Grid
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Storage: A Flexible Asset for a Changing Grid
• A resource for shifting energy or
load from one time to another
• A local source of capacity to
supply peak demand and
enhance reliability and resiliency
• A method to enable load shifting
to improve asset utilization and
defer capital investment
• An option to provide flexibility to
mitigate variability from
renewable generation
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The Roles of Storage on the Grid
Bulk Storage
Ancillary Services
Distributed
Storage
Thermal
Storage
Distributed
Storage
Commercial
Storage
Residential
Storage
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V2G
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CPUC Energy Storage Proceeding and
Ruling
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Background of CPUC Storage Proceeding
• Initiated by California Assembly Bill
AB2514 passed in 2010
• CPUC was directed to initiate a 2 year
proceeding for energy storage
– Assess cost-effectiveness of storage
– Recommend procurement target
levels for cost-effective energy
storage in 2015 and 2020
• CPUC Storage OIR (Order Instituting
Rulemaking) R.10-12-007 began in
2012, to be completed in October 2013.
– Proceeding to be repeated biannually
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CPUC Energy Storage Decision Summary
CPUC Commissioner
Carla Peterman
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• 1.325 GW of storage in California by 2020
– Pumped hydro (>50MW) not eligible
• Bi-annual targets (starting in 2014) with
location / utility breakdown
– ~30% CAGR of storage capacity until
2020
• Some reduction possible if storage not costeffective
• Proposed by Commissioner Carla
Peterman (assigned to this proceeding)
• Approved unanimously by CPUC
commissioners on October 17.
• Available at:
http://docs.cpuc.ca.gov/PublishedDocs/Publ
ished/G000/M078/K912/78912194.PDF
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CPUC Energy Storage Procurement Targets
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Next Steps for Utilities and CPUC
• Storage solicitation plan and cost-effectiveness
methodology to be submitted by utilities by March 1, 2014.
• First storage solicitation scheduled to begin by December
1, 2014.
– 200MW of storage in California across all utilities and
location domains
• New Pumped hydro proceeding to begin by 1st quarter of
2014 – because large pumped hydro was excluded
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Energy Storage Cost-Effectiveness
Investigation
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Background of EPRI Storage Value Analysis for
CPUC
• EPRI began developing a software tool in 2011: Energy Storage
Valuation Tool (ESVT)
• CPUC approached EPRI for support with the storage proceeding
• EPRI agreed to self-fund an effort to validate the applicability of
the ESVT to enable transparent valuation of energy storage with
different locations, uses, and technologies
• EPRI reviewed lifetime cost-effectiveness of energy storage in
31 different cases, defined by CPUC and stakeholders
• Issued a report in June, documenting the full process, inputs,
results: http://www.cpuc.ca.gov/NR/rdonlyres/1110403D-85B24FDB-B9275F2EE9507FCA/0/Storage_CostEffectivenessReport_EPRI.pdf
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EPRI Energy Storage Valuation Tool (ESVT)
Supports this Methodology
INPUTS
Time-Varying Prices/Loads
MODEL
OUTPUTS
Cost / Benefit
Optimization of
Storage Operation
Cost
Detailed Financials
Financial Assumptions
Storage Operation
Storage Cost / Performance
© 2013 Electric Power Research Institute, Inc. All rights reserved.
Benefit
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How it Works:
Simplified Overview of ESVT Model Dispatch
Shave peak to offset load
growth
• Top priority: Local Reliability
services / peak shaving
Load by hour in a year
• Second priority: System
resource adequacy /
capacity
140
• Co-optimize for market
profitability between energy
and ancillary services (reg
up, reg down, spin, non-spin)
120
100
80
60
40
20
0
-20
-40
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Energy Price
($/MWh)
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Regulation Down
Price ($/MW)
Regulation Up
Price ($/MW)
Synchronous
Reserves Prices
($/MW)
CPUC Energy Storage Identified Use Cases
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Cost-Effectiveness: EPRI investigated a subset
of these use cases to inform the CPUC
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Overview of Analysis Runs Performed by EPRI
Incorporates fixed and variable costs and benefits.
Considers time value of money.
Does not consider the effects of storage deployment or changing markets.
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Breakeven Capital Cost Results also Provided
Highest storage upfront capital cost resulting in positive NPV.
Hard to generalize -- Dependent on use case, location, and technology.
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Example Result: Distribution Storage at
Substation Result
• Benefit/Cost Ratio = 1.19
• Breakeven Capital Cost:
$866/kWh ($3464/kW)
Input Summary
Year 2015 start
20 year project life, one battery replacement
1MW, 4hr (battery)
CapEx = $2000/kW, $500/kWh
11.5% discount rate
83% RT Efficiency
Energy & A/S prices escalated 3%/yr from
CAISO 2011
$279/kW upgrade cost
2% load growth rate
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Challenges Remain
• Tools for understanding the value
and grid impacts of storage are still in
development
• Grid energy storage is often still a
“technology”, not a product solution
• Cost assumptions for storage defined
in these scenarios have yet to be
achieved
• Grid deployment, integration, and
operation of storage are still major
unknowns
© 2013 Electric Power Research Institute, Inc. All rights reserved.
Storage options will not
become viable without
a concerted, targeted
research effort
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Together…Shaping the Future of Electricity
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