CTOTF Special Workshop: Integrating Renewables into the Generation Mix: Challenges and Unknowns

Jason MakansiPresident, Pearl Street IncExecutive Director, CAREBS

314.495.4545www.pearlstreetinc.com

Integrating Renewables and Conventional Generation

Today’s Landscape

• 60-90% of all generation interconnection requests in six ISO/RTOs are renewable energy

• “Environmental gauntlet” forcing smaller coal plants into retirement, new plants cancelled or postponed

• States RPS in place, Federal RPS lurking• Renewable energy more bipartisan than most

energy issues, especially when positioned as clean or non-carbon energy (including nukes)

Pea

rl S

tre

et

Today’s Landscape

• Renewable energy more bipartisan than most energy issues, especially when positioned as clean or non-carbon energy (including nukes)

• Wind energy can drive prices into negative territory within a balancing authority

• Wind capacity factors average 30%, blows least when needed the most

• Fossil units undergoing deeper, more frequent cycling to fill in around wind. Costs not typically visible, but significant. Overall emissions profiles exacerbated.P

earl

Str

eet

Environmental GauntletOzone

PM2.5

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Beginning CAIR Phase I Seasonal NOx Cap

HAPs MACT

proposed rule

Beginning CAIR Phase II Seasonal NOx Cap

Revised Ozone NAAQS

Begin CAIR

Phase I Annual

SO2 Cap

-- adapted from Wegman (EPA 2003) Updated 2.15.10

Beginning CAIR Phase II Annual SO2 &

NOx Caps

Next PM-2.5 NAAQS Revisio

n

Next Ozone NAAQS Revision

SO2 Primary NAAQS

SO2/NO2 Secondary

NAAQS

NO2

Primary NAAQS

SO2/NO2

New PM-2.5 NAAQS

DesignationsCAMR & Delisting Rule vacated

Hg/HAPS

Final EPA Nonattainment Designations

PM-2.5SIPs due (‘06)

Proposed CAIR

Replacement Rule

Expected

HAPS MACT final

rule expected

CAIR Vacated

HAPS MACT Compliance 3 yrs after final

rule

CAIR Remanded

CAIR

Begin CAIR

Phase I Annual NOx Cap

PM-2.5 SIPs due (‘97)

316(b) proposedrule expected

316(b) final ruleexpected

316(b) Compliance3-4 yrs after final rule

Effluent Guidelines

proposed ruleexpected

Water

Effluent GuidelinesFinal rule expected Effluent Guidelines

Compliance 3-5 yrs after final rule

Begin Compliance

Requirements under Final CCB

Rule (ground water

monitoring, double monitors, closure, dry ash

conversion)

Ash

Proposed Rule for CCBs

Management

Final Rule for

CCBs Mgmt

Final CAIR Replacement

Rule Expected

Compliance with CAIR

Replacement Rule

CO2

CO2 Regulation

Reconsidered Ozone NAAQS

Integration Options

• Enhanced wind monitoring, forecasting, and communications with grid operators combined with demand side management– The “Smart Grid Option”

• Cycling, dispatching existing gas-fired assets and adding to the fleet- the “gas + wind” option

• Build a new layer of bulk and distributed energy storage infrastructure – the storage option

• Run old fossil units into the ground – the “these assets are already paid for anyway” option

Pea

rl S

tre

et

We’ve been here before!

• Baseload nuclear build out of the 1960s-1980s. No cycling allowed

• Pumped storage hydroelectric (PSH) built so nukes could continue baseload operation

• 24,000 MW of PHS facilities operate today• Bulk natural gas storage emerged with the creation

of the dereg, wholesale gas marketRenewables are opposite problem of nukes – unpredictable cycling and on-off within minutes

Pea

rl S

tre

et

Intermittent, Unpredictable Wind

• In ERCOT, less than 10% of total wind capacity counted as being “available” during peak summer days

• Wind credited with 13% of its capacity value in PJM during peak periods

• MISO operators curtail thousands of MWs of wind daily; 1800 MW swings over hourly period common

Wind resources shift suddenly and dramatically

Pea

rl S

tre

et

Cycling Old, Small Fossil Units

• Stomp on the accelerator of your car enough times when cold and see what happens

• Cycling costs, not transparent, are nevertheless known to be significant

• Studies have shown that emissions from cycling fossil plants in Colorado and Texas may actually create a higher emissions burden because of wind fill-in

Pea

rl S

tre

et

Gas + Wind Option

• A favorite one with this crowd, certainly!• Gas turbine plants lose efficiency at part load.• Metallurgical degradation similar to coal units• Emissions profile much better than coal but an

emissions-free MWh from wind still being traded for an emissions-laden MWh from fossil

Emerging fast response turbine technology may alleviate some of these problems

Pea

rl S

tre

et

Integrating Renewables: Killer App for Bulk Energy Storage

• Bulk storage options PHS and Compressed Air Energy Storage (CAES) are fully proven systems, cost effective, and available with full commercial warranties

• Bulk storage most expediently enables renewable energy integration with no additional reliability and technology risk to the grid and offers enhanced grid operations in other ways

Pea

rl S

tre

et

Storage Goes Both Ways

• Unlike other options for renewable energy integration, bulk storage systems function both as load and generation, – ideal for ancillary services.

Pea

rl S

tre

et

Other PHS, CAES Characteristics

• Both types of systems can move from idle position to full load in less than ten minutes, sometimes in as little as three minutes

• CAES and PHS comfortably charge or discharge for two, six, even twelve hour periods if necessary

• PHS has no emissions profile; CAES requires a minimum nat. gas input (in commercial versions) but emissions benefit compared to fossil units is considerable

• Both can act as a transmission resource, optimize transmission line loadings

Pea

rl S

tre

et

CAES vs GTs and CCs

• Advanced commercially available CAES plant suffers only 7% deterioration in cycle efficiency between 25-100% output. CC can suffer 30% or more, GT even higher

• CCs require at least 40 minutes to come up to full load from warm condition, and several hours from a cold condition

• Simple cycle GTs are more flexible but limited by decremental reserves provided to grid operator

Pea

rl S

tre

et

Pea

rl S

tre

et

Bulk Storage Project Activity

• Up to forty new PHS facilities either have obtained a preliminary permit or have applied for one

• Between a dozen and two dozen CAES facilities are known to be under development

• CAES facility in Alabama operating for almost 20 years

• Numerous PHS facilities operating around the country for one to three decades

Pea

rl S

tre

et

Putting Policies in Place• Technology-neutral investment tax credit (ITC) is

being considered by Congress• California has a bill awaiting the Governator’s

signature that could support storage procurement• New York has instituted its “Limited Energy Storage

Resource” (LESR) Policy• PJM, MISO, ERCOT have grid policies that allow

storage to provide ancillary services under market-based pricing. MISO considering a “ramping” product

• Several bulk storage projects were selected for funding through the ARRA Stimulus program

Pea

rl S

tre

et

CAREBS – Storage Policy Voice

• The Coalition to Advance Renewable Energy through Bulk Storage (CAREBS) is dedicated to: – developing policy frameworks that support bulk

storage– promoting the core message that a network of

strategically located bulk storage facilities will bring more renewable energy to more people more of the time

– optimizing grid operations through bulk storage use

WWW.CAREBS.ORG

Pea

rl S

tre

et

Thank you!

Jason Makansi - 314-495-4545jmakansi@pearlstreetinc.com

President, Pearl Street Inc www.pearlstreetinc.com

Principal, Pearl Street Liquidity Advisors LLC www.psliquidityadvisors.com

Executive Director, Coalition to Advance Renewable Energy through Bulk Storage

www.carebs.org

Pea

rl S

tre

et