NTNU Energy Transitions Workshop – Trondheim, Norway

Francis O’Sullivan

November 7th, 2017

Advanced Storage and the Changing Power System

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Total global CO2(eq) emissionsGt/year

Meaningful action to address climate change centers on the rapid near-term decarbonization of the power sector

Source: Climate Interactive, Patrick Brown, IPCC

CO2(eq) emissionsGt/year

Actual vs. predicted cumulative solar deploymentGW of Capacity

The relatively good news is that progress in terms of the deployment of low-carbon technologies has been doing better than projected

Sources: MIT Analysis, International Energy Agency, Energy Information Administration 4

U.S. Utility-scale solar PPA prices evolution since 2006 $/MWh

Gains in the competitiveness of key technologies like utility-scale PV over the past half decade have been striking

Sources: Bloomberg NEF, U.S. DOE, MIT Analysis 5

- NV Power signed a utility-scale solar PPA in August ‘16 for $34/MWh

- Tucson Electric signed a 100MW solar + 30MW/120MWh storage PPA in May ‘16 for $45/MWh

Utility-scale electric capacity additions and retirements in U.S. GW

Net GenerationTWh

1240,09

1380,29

805,33652,96

0200400600800

10001200140016001800

2014 2015 2016

Today’s changing capacity mix in the U.S. reveals a rebalancing of the system away from coal and towards gas and renewables

Sources: MIT Analysis, U.S. DOE 6

Unsubsidized U.S. energy technology LCOEs including fuel sensitivity$/MWh In the U.S. combined

cycle gas is the only option that can compete with wind and utility-scale solar PV

In fact today, on an LCOE basis only combined cycle gas can compete with wind and utility-scale solar in the U.S. market

Sources: Lazard 7

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Total Load

Net Load

CA system loadGW

PV & other non-hydro renewablesGW

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CA NV HI VT AZ US

Solar as % of total generationPercent (Jan 2017 to May 2017)

Sources: F. O’Sullivan, CAISO data from 7/17/2016, U.S. DOE

Now that the economics of renewables are becoming more compelling, the harder issues of large-scale integration must be addressed

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Solar PV generation is now pushing power prices in CA into negative territory on a regular basis

Source: U.S. DOE, CAISO 9

Even at today’s relatively modest penetration levels, solar has profoundly altered intra-day pricing in CA

Average hourly price normalized to RTC priceCAISO LMPs

Sources: P. Brown, MIT Analysis, CAISO 10

Dealing with today’s new net-load profile is of course a problem for which a broad range of solutions exist

Transmission capacity and market redesign

Flexible dispatchablegeneration

Energy storage Active demand management

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In terms of contemporary electrochemical storage deployments, Li-ion based chemistries are now utterly dominant

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400

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600

2010 2011 2012 2013 2014 2015 2016

Lithium-ion BatterySodium based BatteryFlow BatteryLead-acid BatteryElectro-chemical Capacitor

~200 MW Increase

~200 MW Increase

Source: U.S. DOE Energy Storage Database on operational projects (accessed Jan 10th, 2017) and Smart Electric Power Alliance.

Global annual grid-connected operational electrochemical storage capacity additions MW

2016 US grid-tied battery deployments

208 MW

72% - Utility owned

26% - C&I owned

2% - Residential

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2005 2010 2015 2020 2025 2030

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400

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1 200

2010 2012 2014 2016 2018 2020 2022 2024

MIT analysis (cost model) MIT Analysis (expert elicitation)News Reports Market LeadersAll Estimates Publications, JournalsNissan Leaf Other EVsDOE Target GM and Tesla (BEV) TargetFuture Projections TeslaDOE Estimate (BEV) DOE Estimate (PHEV)

Li-Ion’s march down the cost curve is well documented (hyped even), but opacity remains regarding the technology’s real economic potential

Source: Sakti et al. 2015 Journal of Power Sources; Sakti et al. 2017 Energy Policy; Ciez et al. 2017 Journal of Power Sources; Nykvist and Nillson 2015 Nature Climate Change; IEA, 2017; MIT Analysis

Cost ($) per kWh

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Different market players are focused on different Li-ion chemistries with varying performance attributes

Source: Sakti et al., Sanyo, Nitta et al., Materials Today, 2015., and other sources.

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Average Voltage (V)

Specific capacity, experimental or typical in commercial cells (mAh/g)

solid indicates commercialization

Cathode crystal structureLayeredSpinelOlivineTavorite

NCAPanasonic/TeslaHigh discharge capacity, long calendar life, may have high capacity fade at elevated temps.

LCOGoodenough (original)/SONY othersHigh capacity fade, high cost, low thermal stability

NMCLG Chem, Tesla grid-level (planned)Higher structural stability, lower cost

LFPA123 SystemsHigh thermal stability, high power capability

LTSExxonHigh gravimetric density, long cycle life

LMOEnergizerPoor cycling stability

LMO – Lithium Manganese DioxideLCO – Lithium Cobalt OxideNCA – Nickel Cobalt AluminumLFP – Lithium Iron PhosphateLTS – Lithium Titanium SulfideNMC – Nickel Manganese Cobalt

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Flow batteries continue to garner attention and some concepts seem to offer the potential for very low-cost energy batteries

Source: ANL & Chiang research group @ MIT

Aqueous-sulfur Flow Battery, at scale(MIT)

Claims cost competitiveness with pumped-hydro and compressed air with 500X the

energy density of pumped-hydro

Cost ($) per kWh

E/P (hours)

Cost ($) per kWh

BOP (pump, PCS etc.)

Non-material(labor, overhead etc.)

Energy (electrolyte, positive, negative)

Power (frame seal, membrane, graphite, felt)

Vanadium Redox Flow Battery (VRFB) Stack, at scale

Could cost ~$300/kWh at ~400MW per annum deployment

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4 hr2015

Day-ahead

Source: P. Brown, MIT Analysis,

Leveraging storage to take advantage of price arbitrage has of course been widely cited as key to supporting high-levels of renewables

Assessment of energy arbitrage value across U.S. ISOs

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Beyond arbitrage, storage can deliver a plethora of other (sometimes valuable) services, but monitization is challenging

Sources: Adapted from RMI 2015. Estimates include those from RMI, NYSERDA, NREL, Brattle Group, Kirby, EPRI, Sandia, and Sakti et al.

Service Value ($/kW-year)

900

Sakti et al. 60-min & 5-min priceswith basic and enhanced Li-ion battery representations

ISO/RTO

Utility

Customer

Stacking services enhances the return on investment from the energy storage system.

Existing studies show a 2-3x increase in value compared to individual use cases

Beyond the technical challenge of providing stacked services, in many markets the regulations explicitly preclude it

Service category

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Today’s regulatory framework in many states makes its difficult or impossible to fully leverage a storage asset’s economic potential

Front-of-meter: ISOs, Utilities

Behind-the-meter: C&I, Residential

FOM & BTM: IPPs, Aggregators…

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RoW-Operational

RoW-Under Const & Planned

US-Operational

US-Under Const & Planned

Indonesiaand MadagascarZinc-air batteries

US AES Alamitos & Solar Energy Corp. IndiaLi-ion

Germany Residiantial PVLi-ion

India & IsraelGigacapacitor

AustraliaKingfisher

Li-ion

JapanSodium-sulfur

Power – MW

Duration – Hrs

Today’s storage deployments are near universally “power” orientated, and targeting ancillary services and demand management applications

Duration – Hrs

% of projects

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88% of the projects are for 5

hours or less

Source: Service capacity data source: EIA Energy Storage Database, deSisternes et al. Applied Energy 2016 19

Battery deployment for regulation on renewables heavy systems is an attractive use case but market size is very limited

2016 CAISO daily frequency regulation requirementsMW

2016 CAISO daily frequency regulation costsMW

Source: F. O’Sullivan, CAISO 20

An important aspect in the evolving U.S. storage market is how the power markets themselves change

Cost savings arising from EIM integration$ Millions

The Energy Imbalance Market – A first step towards greater market integration in the Western U.S.

- CAISO’s development of the EIM is aiding the optimization of the real-time dispatch and reducing costs appreciably

- Estimated $120M in real-time dispatch savings since November ’14

- Aiding California in meeting its renewable energy targets by reducing renewables curtailment

- Reduced Q4 ‘16 CA renewables curtailment by 24GWhs

- Acting as a stepping stone to much greater western integration in a manner designed to best integrate high levels of variable resources

Source: MIT Analysis, CAISO, F. O’Sullivan, P. Brown

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CAISO PacifiCorp NV Energy

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In addition to the restructured markets, the medium-term future for storage will also be heavily shaped by state-level actions

Source: SEPA, A. Sakti

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The commercial models driving today’s storage deployment across U.S. markets vary greatly, with state-level regulation playing a key role

- Politically, very well connected in CA, their main market- Focused on securing large-scale utility contracts - Deployment is via a distributed C&I base- Dual purpose battery application model

- Initial focus on storage+charging for C&I customers- Pivoted to storage+solar with a shared savings business model- Has balance sheet strength given Engie ownership- Sales force being integrated with Engie

- A focus on product standardization for C&I demand charge management- Very strong software focus with capabilities in aggregation- Business model leverages SPVs for asset financing- Tesla is a key supplier… and competitor

- Vertically integrated- Expanding development activity with the integration of SolarCity- Preference for system sales rather than long-term contracting- Diversified market focus, residential BTM, C&I BTM, Utility BTM & FTM

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Some concluding remarks

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