Energy Storage: What’s the Next Big Thing?2. We are at or close to a tipping point for storage as...
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Energy Storage: What’s the Next Big Thing? Paul Denholm June 5, 2018 • Publication number or conference
Transcript of Energy Storage: What’s the Next Big Thing?2. We are at or close to a tipping point for storage as...
Energy Storage: What’s the Next Big Thing?
Paul Denholm
June 5, 2018
• Publication number or conference
NREL | 2
Storage
• Its becoming difficult to ignore the dramatic cost reductions.
• But what are the market opportunities?
• How big are they?
BNEF lithium-ion battery price survey, 2010-16 ($/kWh)
[Source: Bloomberg New Energy Finance, Lithium-ion Battery Costs and Market (July 2017)
NREL | 3
Applications of Utility-Scale Energy Storage
Application Description Timescale of Operation
Load Leveling/Arbitrage
Purchasing low-cost off-peak energy and selling it during periods of high prices
Hours
Firm Capacity Provide reliable capacity to meet peak system demand
4 + Hours
Operating Reserves
Regulation
ContingencySpinning
Replacement/Supplemental
Fast response to random, unpredictable variations in demand
Fast response to respond to a contingency such as a generator failure
Units brought on-line to replace spinning units
15 minutes to 1 hour
30 minutes to 2 hours
Hours
Ramping/Load Following Follow longer term (hourly) changes in electricity demand
30 minutes to hours
T&D Replacement and Deferral
Reduce loading on T&D system during peak times Hours
Black-Start Units brought online to start system after a system-wide failure (blackout)
Hours
NREL | 4
Value Capture?
• The concept of stacked services is well documented
• But so are the challenges
• Depending on location, these values are captured by 1-4 different entities under different regulatory framework
• What are the likely market applications that can achieve significant market share from a limited number of revenue streams?
NREL | 55
Applications of Utility-Scale Energy Storage
Application Valued in A Single Restructured Market?
Load Leveling/ Arbitrage Yes
Firm Capacity Via scarcity pricing, combined scarcity plus capacity markets, or through resource adequacy payments
Regulation Reserves Yes
Contingency Spinning Reserves
Yes
Replacement/Supplemental/Non-Spinning
Yes but values are very low
Primary Frequency Response / Inertia
No. Early-stage proposals
Ramping/Load Following No. Proposed in several markets
Transmission Replacement and Deferral
Only partially via congestion prices
All Distribution Specific Applications
No. Will likely remain cost of service through regulated entities
Renewable Integration Captured through other services
5
NREL | 6
Frequency Regulation?
• Total market for regulating reserves in all RTO/ISO markets is ~2.5 GW
• Already have ~500 MW of battery storage providing FR
• Several hundred MW that are capable of providing FR (and probably is)
EIA 2018 - U.S. Battery StorageMarket Trends
NREL | 7
Other Ancillary Services
• Perhaps, but much lower prices for spinning reserves
– Non-spin is basically worthless
• Increased competition from DR
0
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12:00 AM 6:00 AM 12:00 PM 6:00 PM 12:00 AM
Re
serv
e P
rice
($
/MW
-h)
NYISO Reg MISO Reg
NYISO Spin MISO Spin
NREL | 8
The Next Big Thing?
NREL | 9
U.S. Peaking Capacity
Installation dates of U.S. peaking capacity (non CHP CT, IC, oil/gas steam)
Data from EIA 860
02468
1012141618202224
Pe
akin
g C
apac
ity
Inst
alle
d (G
W)
NREL | 10
U.S. Peaking Capacity
Significant peaking capacity now over 40 years old. Over the next 20 years, we would expect about 152 GW of peaking capacity to retire
Age of retirement for U.S. peaking capacity (EIA-860)
0%
1%
2%
3%
4%
5%
6%
7%
<20
21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 >60
Frac
tio
n R
eti
red
Age at Retirement
0
20
40
60
80
100
120
140
160
180
200
15202530354045505560
Cu
mu
lati
ve C
apac
ity
(GW
)
Plant Age (Years)
NREL | 11
How to Compare Costs
• Difficult for storage to compete purely on capital cost
• CT: $700/kW (frame) - $1200/kW (aeroderivative)
• Translates to $75 to $200/kWh for battery module if we assume $400/kW BOS
• Assumes 4-hour duration
• And before accounting for limited lifetime
• But storage provides other values that can be captured in an energy market
NREL | 12
$0
$50
$100
$150
$200
$250
$300
$350
$400
3 4 5 6 7 8
Bat
tery
(M
od
ule
On
ly)
Inst
alle
d C
ost
($
/kW
h)
Hours of Storage Needed
High Cost CT/HighValue Location
Low Cost CT/LowValue Location
So How Cheap Does Storage Have to Be?
We are nearing a tipping point for 4-hour storage providing capacity services – but how big is this market?
GTM 2020 Estimate ($217/kWh)
Denholm et al. unpublished
NREL | 13
But How Big Is the Market?
CAISO and MISO allows 4-hour storage to provide resource adequacy. But only a limited market size due to “widening” of net demand peak.
32,000
33,000
34,000
35,000
36,000
37,000
38,000
39,000
40,000
41,000
42,000
12 AM 6 AM 12 PM 6 PM
Load
Me
t b
y St
ora
ge (
MW
)
Hour of Day
4 Hr Storage
6 Hr Storage
8 Hr Storage
Load Met withOther Generators
Denholm et al. unpublished
NREL | 14
Market Potential?
Total market potential for energy storage as a peaking capacity in the U.S.
Denholm et al. unpublished
NREL | 15
Total U.S. Market Potential for Storage as Peaking Capacity
Total market potential for energy storage as a peaking capacity in the U.S.
NREL | 16
How Do Renewables Affect This?
With increased PV penetration, the capacity credit of PV decreases while the capacity credit of storage increases
Zero PV
10% PV
5% PV
NREL | 17
Impact of PV in California on Potential
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
4-H
ou
r S
tora
ge C
ap
acit
y (
MW
) P
rovid
ing
100%
Peak D
em
an
d
Red
ucti
on
Cre
dit
PV Penetration (%)
2017 Estimated PV Penetration
2020 Estimated PV Penetration
2016 Estimated PV Penetration
Denholm and Margolis 2017
NREL | 18
Increase in 4-hour storage technical potential
Preliminary, non-bankable results
Denholm et al. unpublished
NREL | 19
Conclusions / Opinions
1. When properly scheduled, long-duration (several hours of capacity) batteries provide an alternative to combustion turbines for meeting peak capacity requirements
2. We are at or close to a tipping point for storage as peakeralternative
3. This market is 10s of GWs for 4-hour storage and could be >100 GW for 8 hour storage after considering growth in PV
4. MANY CAVEATS– Current markets long on capacity, still need to address missing money in
energy-only markets, etc.
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
www.nrel.gov
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
This work was authored by Alliance for Sustainable Energy, LLC, the manager and operator of the National Renewable Energy Laboratory for the U.S. Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. Funding provided by U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Solar Energy Technologies Office. The views expressed in the article do not necessarily represent the views of the DOE or the U.S. Government. The U.S. Government retains and the publisher, by accepting the article for publication, acknowledges that the U.S. Government retains a nonexclusive, paid-up, irrevocable, worldwide license to publish or reproduce the published form of this work, or allow others to do so, for U.S. Government purposes.
Contact: Paul Denholm, [email protected]
