StorageVET Applications and Demonstration

StorageVET ® Applications and Demonstration Energy Storage Valuation Workshop

Ben Kaun, Program Manager

Giovanni Damato, Senior Project Manager CPUC/CEC Joint Workshop

November 2, 2017 10:00AM © 2017 Electric Power Research Institute, Inc. All rights reserved.

Today’s Workshop Objectives 1. Explain StorageVET® capabilities and methodology 2. Provide concrete illustrations of StorageVET to evaluate energy storage project cost-effectiveness 3. Provide access and engagement instructions 4. Answer audience StorageVET questions and dive deeper into issues of interest

2 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Agenda CEC Greeting - Mike Gravely, Energy Commission

10:00-10:05am

Meeting Objectives and EPRI Introduction - Ben Kaun, EPRI

10:05-10:15am

StorageVET® Introduction - Giovanni Damato, EPRI

10:15-10:30am

Use Case Analyses with StorageVET - Miles Evans, EPRI and Ram Ravikumar, EPRI

10:30-12:15pm

User Engagement - Giovanni Damato, EPRI and Udi Helman, Helman Analytics

12:15-12:30pm

Lunch

12:30-1:30pm

User Q&A and Advanced Training - Giovanni Damato, EPRI 3 © 2017 Electric Power Research Institute, Inc. All rights reserved.

1:30-3:00pm

StorageVET Use Cases—Sneak Peak


Energy Storage Use Cases – Focus for Today’s Workshop Distribution: Substation Upgrade Deferral

Generation: Peaker Substitution 5 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Commercial & Industrial (C&I) Storage

StorageVET Use Case Demos – Focus on Value Stacking Peaker Substitution • Gas Peaker Substitution • Energy Storage vs Conventional Capacity Resources • Capacity, frequency regulation, spinning reserves and energy time shift

C&I Storage • Customer-sited Commercial & Industrial (C&I) Storage • SGIP Incentive • Sensitive to TOU rate structure, demand charges and load profile


T&D Deferral • Distribution feeder with thermal violations due to load growth • Substation deferral with market services with 20 years horizon

EPRI Energy Storage Program Overview


EPRI’s Public Benefit Mission Advancing safe, reliable, affordable and environmentally responsible electricity for society through global collaboration, thought leadership and science & technology innovation


EPRI Energy Storage Program Objectives: Support Energy Storage Transition from R&D to Operations PERFORMANCE AND RELIABILITY DATA

MODELING

Getting the Data  Specify relevant data to safety, reliability, value

Analyzing the Options  Identify and screen opportunities

 Consistent comparison  Performance/reliability track record

 Feasible and optimal location  Design for optimal lifecycle value


OPERATIONAL EXPERIENCE Putting into Practice  Guidelines for deployment  Customized tools  Technical training

More than Batteries: Facilitating Grid-Ready Energy Storage Systems Project Deployment

Storage Technology

• Establish best practices for siting and permitting

• Explore technology tradeoffs • Optimize technology for utility applications

• Standardize grid connection • Communication and control

Communications and Control • Developing operational and dispatch algorithms

Integrated Product • Ensure safety and reliability

Power Electronics • Guide common functions and control algorithms • Ensure efficient and reliable operation

• Understand cost and performance • Simplify procurement and operation through standardization of specification and interfaces


• Updated communications and grid controllers to accommodate storage functions and services

Collaboratively Building Reference Tools through the Energy Storage Integration Council (ESIC) Started in 2013, >1000 participants from utilities, suppliers and research community

Identify Gaps

Publish / collect experiences Seven (7) published products at ESIC website: www.epri.com/esic Industry review 11 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Define Work Needed

Develop products together

StorageVET Introduction


Challenges to Modeling Storage  Storage and limited energy resources are still not common  Rules and regulations still are evolving  Benefit stacking is appealing, but will it be possible – More services = more value – More services = more requirements  Can they be satisfied?

 Locational value of storage requires sitespecific analysis  Complex optimization between storage degradation and service participation scheduling 13 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Storage Made Easy: StorageVET Paving the Way

StorageVET Live in 2016

Integrated Value + Impact Energy Storage Modeling in 2017

StorageVET Expanded Footprint and Validation

2013 CPUC Cost Effectiveness Study using EPRI’s ESVT


2020 Goal: Make Storage…

StorageVET ® Storage Value Estimation Tool: www.storagevet.com

 Web-hosted tool, free to the public  Project cost-benefit analysis  Time-series constraints and dispatch optimization simulation  Multi-services optimization and stacked services  Customizable for location, technology, sizing, use cases  Made possible through funding support from the California Energy Commission (CEC) 15 © 2017 Electric Power Research Institute, Inc. All rights reserved.

StorageVET Goals Accessible

Transparent

Validated

Customizable

Users of StorageVET® Today Key Use Cases

Common Communication Platform • Common Benchmarking Tool

Locating & Screening

• Screening, Design, Procurement, & Operations

Regulators

Utilities

Customers

Developers

Sizing/Designing (stacked services) Operational Strategies (Customer and Grid)

• Bill Savings Assessment • Product Selection


• Sales, Marketing, RFP Response

StorageVET In Action: California Examples  Multiple-Use Applications (MUA)  Self-Generation Incentive Program (SGIP)  Distributed Energy Resource (DER) Hosting Capacity  DER and Microgrid Valuation

 Renewable Portfolio Standard (RPS)


Use Case Analyses with StorageVET Miles Evans, EPRI Ram Ravikumar, EPRI

Use Cases Are Illustrative Only, Do Not Cite


Customer Storage

How does a customer economically justify storage?

© 2017 Electric Power Research Institute, Inc. All rights reserved.

Commercial & Industrial (C&I) Storage


Customer-sited Services


Customer Storage - Introduction  Customer-sited energy storage for demand charge reduction – Not performing energy time shift – Reserve SOC because load uncertain

 There are ‘soft’ reasons for customer-sited ES, including corporate goals or maintaining a green image.


Customer Storage Benefits  Incentives - SGIP

– Additional 20% if equipment comes from approved CA manufacturer 23 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Customer Storage Design and Costs  Large Office in San Diego examines a customer-sited ESS for demand charge reduction – ESS can also shift load from peak hours to off-peak

 Design: – Power Capacity: 250 kW – Energy Capacity: 500 kWh (2 hrs at rated power)

 Cost – Total Installed Cost: $400,000 ($800/kWh*, $400/kWh replacements)

 This ESS is servicing a large office load** *Greentech Media Research’s Q2 2017 Energy Storage Monitor Report – low end **OpenEI San Diego Large Office 24 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Assumptions  ESS round-trip efficiency = 85%  No Auxiliary Power or Self-discharge  No O&M Costs  ES not net-metered  SDG&E AL-TOU Secondary (>500kW) rates – Static over time

 No Demand Response participation or backup power


Demand Charges  Two additive monthly demand charges – Facility demand charge (all times) $24.51/kW – On-peak demand charge $21.13/kW summer $7.57/kW winter

 Flat fee of $465.74/mo – Only $116.44/mo if load <500kW – Edge case for energy storage here


Winter

¢/kWh Hour of Day

Energy Charges  SDG&E AL-TOU Secondary (>500kW) rates  Summer 𝑃𝑃𝑒𝑎𝑘 − 𝑃𝑂𝑓𝑓𝑝𝑒𝑎𝑘 = 4.059¢/kWh  Winter 𝑃𝑃𝑒𝑎𝑘 − 𝑃𝑜𝑓𝑓𝑝𝑒𝑎𝑘 = 3.697 ¢/kWh  These are enough to overcome efficiency losses but maybe not degradation losses 27


Weekday 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Weekend

7.322

Summer Weekday

Weekend

8.148

11.233

9.464 7.322

11.019

12.207

11.233

9.464

7.322

8.148

8.148

Load Power (kW)

Operational Results – StorageVET™ Yearly Peak on Oct 6

1600 1400 1200 1000 800 600 400 200 0

0

2000

4000 Time (hrs)


6000

8000

Operational Results – StorageVET™

Load Power (kW)

Original Peak Load 1600 of peak day load profile  Image before and after

1400 1200 1000 800 600 400 200 0

Modified Peak Load

This month, the battery saved $4615 in demand charges

0

20

40 Time (hrs)


60

80

Thousands

Financial Results

Illustrative – Do not cite

$800 $700 SGIP, $220

$600

Energy Time Shift, $25

$500

$400 $300

Capital Cost, $455

$200 $100

$0

Net Taxes, $60 Cost


Demand Charge Reduction, $506

Benefit

Financial Results  ESS shifted enough load from peak hours to off-peak hours to reduce energy charges by $26,880 over 10 years – Dispatch not optimized against cycling degradation cost – SOC not bounded

 Break-even cost of storage: $1,383/kWh


Financial Results Thousands

 20% SOC Reservation  No Energy Time Shift


$800

$700 $600

SGIP, $220

$500

$400 $300 $200

$100 $0

Capital Cost, $455 Net Taxes, $18 Cost


Demand Charge Reduction , $457

Benefit

PV + Storage in StorageVET® 1400 1200

Storage

$1,200,000

Net Load $1,000,000

PV

SGIP

1000 AC Power (kW)

$800,000 Energy Time Shift

800 $600,000

600 400 200

0 2017-08-01 0:00 -200

$400,000

Initial Capital Cost

$200,000

Principal Interest

Demand Charge Reduction

Net Tax

2017-08-02 0:00

$0

Cost

-400 33 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Benefit

Substation Upgrade Deferral Does the benefit of deferring an upgrade outweigh the cost of energy storage?


Distribution Storage


Substation Upgrade Deferral  Feeder thermal violations due to load growth – Only a few hours a year

 Either upgrade the substation or install storage to discharge during peak hours and defer upgrade. – Load will continue to grow and necessitate upgrades in the future

 Storage can provide other services, including frequency regulation, spinning reserve, energy time shift, and resource adequacy  Analysis horizon = 20 years for all cases 36 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Substation Upgrade Deferral 2022 Feeder Load 16

Thermal Limit

14

Power (MW)

12 10 8

6 4 2 0 0

1000

2000

3000

4000 5000 Hour of Year

6000


7000

8000

9000

Substation Upgrade Deferral Cost-Benefit  Costs – ESS Installed Cost (2MW, 2hr) = $3,200,000 ($1,600/kW)* – ESS Installed Cost (2MW, 4hr) = $4,600,000 ($2,300/kW)* – Fixed Operating Cost = $19.5/kW -yr

 Primary Benefit: Substation XFMR Upgrade Deferral – 14 MVA to 28 MVA upgrade  Upgrade cost = $5.5M**  Carrying cost (12%/yr***) = $660,000/yr

 Secondary Benefits – Southern CA 2015 frequency regulation prices – SCE DLAP 2015 energy prices – Spinning reserve offered when available *EPRI 2016 ES Cost Study for Utility Planning **Based on SCE 15MVA to 28MVA upgrade in 2016 link 38 © 2017 Electric Power Research Institute, Inc. All rights reserved. ***From Scottmadden study link

 Upgrade Deferred until 2022  Upgrade deferral benefits do not cover costs alone • Need stacked value from this MUA to be beneficial  Results sensitive to market conditions over 20 years  Results do not consider potential benefits from:  Resource Adequacy Capacity  Flexible Ramping  Real-time market participation

Millions

Substation Upgrade Deferral StorageVET™ Results 6 Illustrative – Do not cite

$1600/kW 2MW, 4MWh

5 Net Benefit ~ $500,000

Net Tax

Frequency Regulation

4

3

O&M Replacement Cost

Net Energy Revenue

2 Capital Cost

Upgrade Deferral

Costs

Benefits

1

0 39


Preliminary – Do Not Cite

Deferral limits 2022 Peak Power Day 16 Energy = 3.09 MWh

14

Power = 1.02 MW

12 10

Failure to defer not from peak load day

8 6 4 2017-04-25 0:00

2017-04-26 0:00

2017-04-27 0:00


2017-04-28 0:00

Deferral limits 2022 Energy-Limiting Day 16 Energy = 3.93 MWh

Power = 0.911 MW

14 12 10 8 6 4 2017-06-06 0:00

2017-06-07 0:00

2017-06-08 0:00


2017-06-09 0:00

 Upgrade deferred from 2017 to 2030  Higher costs due to larger ESS and more replacements over 20 years

Millions

Deferral with 4hr Energy Storage 8

$2300/kW 2MW, 8MWh

7

Net Benefit ~ $1M

6

Net Tax

5

O&M Replacement Cost



4 3 2

Upgrade Deferral Capital Cost

1 0 Costs 42

-1


Benefits Preliminary – Do Not Cite

Substation Upgrade Deferral Conclusions  In this example, storage needs stacked benefits to break even – Can provide flexible ramping, RTM participation, primary frequency response, and resource adequacy capacity (all not considered)

 Batteries have small footprint, so can be added to alreadyowned property relatively easily – Need to decide on how to prioritize land – ESSs have the potential to be moved, but not often done in practice


Peaker Substitution Economics Example What is the net cost of resource adequacy from energy storage?


Generation: Standalone Storage


Resource Adequacy Services


Peaker Substitution – Overview and Illustrative Economic Case  Primary service: resource adequacy  Secondary services: frequency regulation, spinning reserves, and energy time shift  Alamitos Energy Storage – Economic 100MW peaker substitution with grid services contracted in LA Basin

 Aliso Canyon gas leak caused emergency resource adequacy problem, due to peaking gas delivery constraint – 6 month development vs years for CT if it were an option 47 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Tesla Battery in Southern California

What is the Net Cost of Resource Adequacy? – Find the minimum RA payments required to cover all costs after receiving market benefits – 𝑁𝑒𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 ∗ = 𝑃𝑉 𝑅𝐴 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 = 𝑃𝑉 𝐶𝑜𝑠𝑡𝑠 − 𝑃𝑉 𝐵𝑒𝑛𝑒𝑓𝑖𝑡

Value

 Combustion Turbine (CT) vs Energy Storage System ESS

Total PV Costs

Total PV Benefits

 Compare CT net cost of capacity to ESS net cost of capacity

Net Cost

 Benefits – Energy prices are LMPs from SCE

Costs

Benefits

•

2016/17: historical LMPs

•

2024: CAISO LTPP model results for RPS 33% and RPS 40% scenarios

•

After that, energy and market revenues grow with inflation (2%/yr)

– Frequency Regulation and Spinning Reserve prices from CAISO southern region incremented by 2%/yr 48

* Also called Net cost of new entry (Net CONE)


Net Cost

Costs  Battery Costs (100MW, 400MWh) – $1600/kW – $2700/kW Installed Cost* – $250/kWh Replacement Cost – 1.5% per year Fixed Operating Costs

 CT Costs (100MW) – based on GE LMS100PA – $1305/kW Installed Cost ** – 0.9% per year Fixed Operating Costs – $5.9/MWh Variable Operating Costs*** – Historical fuel prices (not important due to low capacity factor) *EPRI 2016 ES Cost Study for Utility Planning low and high end **CEC 2017 Estimated Cost of New Renewable and Fossil Generation in California ***Reciprocating Internal Combustion Engine Study: 2016 Review. EPRI, Palo Alto, CA: 2016. 3002008269. 49 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Dispatch Requirements  In StorageVET® ESS and CT dispatch based on energy and ancillary services prices  ES is free to co-optimize services other than RA  CT can provide energy, frequency regulation, and spinning reserves when profitable to turn on (~1.5% capacity factor)


Standalone Peaker Substitution Economics (StorageVET) Millions

Assumes 3rd Party Developer-Owned Business Model

$350.00 $300.00

Replacement Expenses

$250.00 $200.00

Initial Capital Expenses

Preliminary – Do Not Cite

Net Tax

Net cost of resource adequacy comparison for high-cost ESS vs CT


Net Energy Revenue

$150.00 Principal

Net Tax

$100.00 Interest $50.00 $-

Principal Interest

O&M ESS Cost

51

Net Cost of Resource Adequacy


O&M ESS Benefit ESS Net Cost CT Net Cost

2016/17: Historical Energy and Ancillary Services Prices 2024: CAISO’s LTPP RPS 33% Model Projections EPRI 2016 ES Cost Study For Utility Planning High-End ES Prices


CT Benefit

CT Cost

Standalone Peaker Substitution Economics (StorageVET) Millions

Assumes 3rd Party Developer-Owned Business Model Illustrative – Do not cite

$250.00

$200.00

Replacement Expenses

Net Tax

Frequency Regulation $150.00

$100.00

$50.00


Lower net cost of resource adequacy capacity due to low ESS costs

Net Energy Revenue CT Net Cost

Principal Interest

Net Cost of Resource Adequacy

O&M $ESS Cost

ESS Benefit


ESS Net Cost

Net Cost of Capacity Sensitivity to Renewable Penetration Net Cost of Capacity ($/kW-yr)

130 Illustrative – Do not cite

Net Net cost cost of of capacity capacity decreases under higher increases when renewables scenario negative prices are eliminated

110 90 70 50 30

Net Profit, Not Cost

10 -10

2016 Incremented

33% RPS

Low ESS Cost

40% RPS

RPS 33% (min=0)

High ESS Cost


RPS 40% (min=0)

CT Net Cost

Peaker Substitution - Conclusions  In this example, the net cost of resource adequacy between storage and CT is in the same range but, – Need to normalize for capacity contribution of each resource  Thermal derating is well-established for fossil generators  Duration derating for energy storage is an under investigation.

 Other considerations for battery storage – Fast development timeline – No gas or water connections – No emissions – However, unproven durability – Participation in real-time market and flexible ramping 54 © 2017 Electric Power Research Institute, Inc. All rights reserved.

StorageVET User Engagement Giovanni Damato, EPRI Udi Helman, Helman Analytics


Becoming a StorageVET User  Visit www.storagevet.com for the latest user information  Send an email with subject “StorageVET Account Setup Request” to [email protected] and [email protected]  Include the following in the email body: – Name – Title – Organization – Address: Street, City, State, Zip – Company Email – Phone xxx-xxx-xxxx

 Receive email response within 3-5 business days from Analytica Cloud Player [email protected] with subject “Invitation to Analytica Cloud Player”


Engage with the StorageVET® Community  Create a StorageVET® account and build your model – Visit www.storagevet.com

 Browse through User Guides and documents for assistance – Visit www.storagevet.com/documentation

 Engage in ESIC User Community – Email [email protected] with your information

 Give feedback on your models during ESIC StorageVET® Online and In-person meetings – ESIC In-person Meeting November 16th Cleveland, OH

 Join ESIC Subgroup Validation Efforts, led by industry partners  Research collaborative 57 © 2017 Electric Power Research Institute, Inc. All rights reserved.

ESIC StorageVET Validation Giovanni Damato, EPRI Udi Helman, Helman Analytics


Methodology 1. Check StorageVET solutions for different applications 2. Compare model results to other commercial and research models 3. Compare model results to operational results from perspective of ISOs and project operators 4. Modify model algorithms as necessary or provide additional data to adjust results 5. Update StorageVET documentation


General approach  Start from more simple and proceed to more complex – Energy arbitrage (day-ahead) – Regulation only (CAISO NGR-REM; other ISO Regulation only models) – Energy + Regulation co-optimized (CAISO NGR) – Energy + Regulation + Spinning Reserve co-optimized (CAISO NGR) – Same as above with generic and flexible RA capacity obligations (CPUC/CAISO capacity obligations in day-ahead market) – Real-time energy and ramping reserves

 Once the wholesale market applications have been evaluated, address distribution-connected, customer-sited, and multiple use applications 60 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Why model historical market revenues?  Accurate historical day-ahead and real-time market prices and market value are a baseline for future price and value projections  Users can validate model results using historical prices against actual revenues of operating projects  However, historical revenues are not necessarily a guide to future value due to rapidly changing system conditions 61 © 2017 Electric Power Research Institute, Inc. All rights reserved.

Energy arbitrage, SCE LAP prices, 2014-2017, perfect foresight, 83.3% efficiency

System Specifications

2014 Revenue

2015 Revenue

2016 Revenue

2017 Revenue, Jan. – June

1 MW, 1 hr

$9,363

$8,616

$11,746

$11,354

1 MW, 2 hr

$16,257

$14,972

$20,472

$19,113

1 MW, 4 hr

$24,808

$21,939

$30,026

$27,151

1 MW, 6 hr

$30,229

$26,072

$34,946

$32,281


Energy arbitrage, SCE LAP prices, 2014-2017, perfect foresight, 83.3% efficiency 40,000.00

35,000.00

Annual energy revenue

30,000.00

25,000.00

20,000.00

2014 2015 2016 2017, Jan-Jun

15,000.00

10,000.00

5,000.00

0.00

1 MW, 1hr

1 MW, 2hr

1 MW, 4hr


1 MW, 6hr

Energy arbitrage, SCE IFM LAP prices, 2017, January June, perfect foresight, 60% - 100% efficiency


Persistence result (prior weekday/prior weekend day), energy arbitrage, SCE IFM LAP prices, 2015, 83.3% efficiency 25,000

Annual revenues ($/year)

20,000

15,000

90% of perfect foresight value captured in persistence calculation

10,000

5,000

0

1 MW 1hr

1 MW 2hr

Fully Optimal DA Revenue Only

1 MW 4hr

1 MW 6hr

Weekday/Weekend day persistence


All results are available on the ESIC collaboration site  All inputs and outputs shown on prior slides are now available on ESIC collaboration site: https://collab.epri.com/esic

 Review and comparison to your own results are requested


Lunch

12:30-1:30PM


User Q&A and Advanced Training Session 1:30-3:00PM


Together…Shaping the Future of Electricity


StorageVET Applications and Demonstration

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