[The state of California has realized that it’s unlikely a larger or national transmission grid will be built to share and balance variable renewable power, and is going to Plan B, energy storage. The problem is, all of the utilities reported back that they weren’t going to be able to add any for reasons reported below. The larger utilities, PG&E, etc must comply, whether they like it or not]
Excerpts from the of 47 page: SMUD AB 2514 report to the state of California on adding Energy storage
CONCLUSION: Defer establishing energy storage procurement targets until more viable and cost-effective energy storage systems become available.
Since 2008, SMUD has invested over $30 million dollars in internally and externally funded research to understand and prepare SMUD and its customers for eventual deployment and utilization of energy storage. Staff has been conducting various field demonstrations, studies, and assessments of different storage technologies, used for different applications ranging from transmission scale to distribution scale to customer scale systems. On technical issues, this body of work has assessed technology performance including such factors as efficiency, reliability, and durability. On economic issues, this body of work has assessed capital costs, installation costs, operation costs , value , and cost effectiveness. Additionally through this body of work, staff has assessed grid integration issues and strategies for interconnecting, aggregating , visualizing and controlling storage systems from grid planning and operations perspectives.
In February 2010, the California Assembly formally recognized the benefits of energy storage through passage of Assembly Bill AB 2514 titled “Energy Storage Systems.” The bill was authored by Chair of the Assembly Rules Committee Nancy Skinner in partnership with then California Attorney General Jerry Brown. The bill passed both houses on September 9, 2010 and was signed by Governor Schwarzenegger on September 10, 2010. In passing the bill, the legislature found that increased deployment of energy storage systems can 1) help integrate increased amounts of variable, intermittent, and off-peak wind and solar energy that will be entering the California power mix on an accelerated basis; 2) avoid or defer the need for new fossil fuel peaking plants and avoid or defer distribution and transmission system upgrades, 3) reduce the use of high carbon-emitting power plants during high electricity demand periods and 4) provide the ancillary services otherwise provided by high carbon-emitting fossil-fueled plants.
October 21, 2013, the CPUC issued Decision D.13-10-040 requiring California’s three investor- owned utilities (IOUs), PG&E, SCE, and SDG&E, to procure 1,325 MW in aggregate of electricity storage projects by 2020 across each of the transmission, distribution and customer grid domains. The specific targets by domain, IOU and year are shown in the following table.
Table 1. Specific Energy Storage Procurement Targets under D.13-10-040
The Decision allows for procurement of all stationary energy storage technologies, except pumped hydro greater than 50 MW. This resource type was excluded because the CPUC was concerned the “sheer size of pumped storage projects would dwarf other smaller, emerging technologies; and as such would inhibit the fulfillment of market transformation goals.”
For the 2014 solicitation cycle, PG&E’s need is larger than SCE’s. PG&E intends to procure approximately 78 MW of storage primarily at the transmission grid level. Transmission & Distribution procurement will focus on three basic configurations; Standalone Energy Storage, Hybrid/Co-Located Energy Storage and Energy Storage Providing a T&D reliability function (Transmission or Distribution Asset). PG&E expects its total need will be filled through a new Energy Storage RFO, competitive solicitations authorized in other proceedings (i.e. the Long Term Procurement Plan, Resource Adequacy, or RPS proceedings), an application for a storage project to meet a utilityidentified storage opportunity. PG&E will rely on existing CPUC- approved customer programs to meet the targets for the customer segment.
In June 2012, the Redding Electric Utility (REU) received City Council authorization for long- term extension of the Utility’s Energy Storage Program, including permanent load shifting through the procurement and installation of several ice storage facilities (“Ice Bear”) throughout the service area. This technology permanently shifts air conditionerdriven peak demand to off-peak hours thereby increasing electric system efficiency and reducing operating costs. The program has proven to be a successful and cost-effective means of improving electric system efficiency for REU, given their climate and load patterns. This type of thermal energy storage meets the requirements of AB 2514 since it is cost-effective, reduces demand for peak electrical generation and also stores thermal energy for direct use for heating or cooling at a later time in a manner that avoids the need to use electricity at that later time. In August of 2014, REU established procurement targets around this program of 3.6 MW by 2016 and 4.4 MW by 20206
SMUD considered10 energy storage technologies in this report including six battery chemistries, pumped storage, compressed air energy storage, flywheels and thermal energy storage. The battery chemistries considered are: lithium ion, lead acid batteries, advanced lead acid, flow batteries, sodium sulfur batteries, and sodium metal halide (sodium nickel chloride is within the genre of battery technology). Each technology offers different operating, performance, capital expense, operating expense, footprint, safety, and technology readiness levels. Pumped Storage
One key advantage of this system is that the gravitational energy stored in the upper reservoir can be stored for long periods of time with virtually no energy loss. Pumped storage is an efficient way to augment baseload generation from conventional power plants. However, efficiency is limited by the efficiency of the pump and turbine unit used in the facilities. It also requires two proximal large reservoirs with a sufficient amount of water surface and pressure elevation between them. Suitable geologic formations are rare and tend to be found in remote off-grid locations, such as mountains, where construction is difficult or restricted.
Compressed Air Compressed Air Energy Storage (CAES) technology is particularly well-suited for energy-intensive applications such as peak-shifting or spinning reserves. CAES converts inexpensive, excess off-peak electricity into compressed air through the use of a motor and compressor. The compressed air is typically stored in sealed underground air pockets or caverns. When electricity is required, the system returns the compressed air to the surface. The air is then heated with natural gas and put through expanders to power a generator, which in turn produces electricity. While CAES utilizes natural gas, the technology uses less fuel than conventional gas turbines – in some cases two-thirds less.
Flywheels are approximately 85% efficient, the response time is extremely rapid, and while duration is low (typically between a few seconds and a few minutes); flywheels can provide a significant power surge. For example, the world’s largest flywheel has an effective capacity of 160 MW and a discharge time of around 30 seconds Thermal Energy Storage Thermal energy storage refers to storage systems that store heat or cooling (in the form of chilled or frozen water) to displace electrical air conditioning load during peak periods. In the case of California, ice thermal storage is particularly relevant. Most firms in this space offer large-scale systems for commercial businesses such as airports, convention centers, or large hotels.
Overall, Li-ion batteries offer high performance, high efficiency, small footprints, and high power density. Li-ion offers the most diversity in terms of subchemistries and borrows heavily from consumer electronics and electric vehicles industries.
Zinc bromide redox batteries use a reversible zinc electroplating process to charge and discharge the electrolyte in the batteries. This relatively complex electrochemical reaction has caused problems in the past with battery life and membrane clogging. Most of the entrants in this space, claim that they have solved these durability problems and can now produce long- lasting batteries. Zinc bromide batteries still require pumps and fluid flow (as do all flow batteries), which can lead to operations and maintenance issues during the long life of a stationary energy storage asset. Although it is a relatively rare and expensive element, vanadium is an excellent energy storage medium with very smooth voltage profiles and low internal resistance. Thus, a vanadium redox battery is capable of extremely long life and high efficiencies compared to other flow battery technologies. No manufacturer, however, has yet successfully figured out how to reduce the costs of these flow batteries to the point where they can compete with other chemistries such as Li-ion or advanced lead-acid.
Sodium metal halides high-temperature chemistry was originally invented in the 1970’s. Sodium metal halide batteries have the advantage of relatively low-cost materials, primarily sodium, zinc, and some nickel. This battery chemistry is still more expensive than Li-ion chemistries such as NCA and LFP. Additionally, sodium metal hydride batteries operate at very high operating temperatures (between 250°C and 350°C), which creates safety and efficiency risks that add to the cost of engineering the systems.
Table 2. Energy Storage Technologies and Best-Suited Utility Applications (ex customer-sited applications) Flywheel Li-ion Advance Thermal Sodium d LeadEnergy Metal
Summary of Energy Storage Deployments According to Navigant Research, 126,073.6 MW (599 systems) of energy storage are currently deployed globally. Another 34,860 MW (comprising 165 systems) are in the pipeline, which refers to projects that have been announced, projects that are funded, or projects currently under construction. Of the nearly 35,000 MW of energy storage in the pipeline, 89% is pumped hydro (traditional or small-scale variants), leaving 3,801 MW of advanced energy storage in the pipeline. Since 2000, 30,465 MW of energy storage have been deployed globally. Asia-Pacific leads the market with 20,317 MW installed, followed by Europe with 8,448 MW deployed, the Middle East with 1034 MW deployed and North America with 622 MW deployed.
The majority of these installations are pumped storage, which accounts for the high volume of storage installed over the past 15 years. Since 2000 in North America, 622 MW of energy storage have been installed, 619 MW in the United States. Of these 619 MW, 572 MW have been advanced energy storage technologies such as advanced batteries, flywheels, or compressed air, for example. 2013 and 2011 were the standout years for energy storage in the United States. In 2011 103 MW were installed in the U.S. and in 2013 that number more than tripled with 341 MW installed. Globally, as of the third quarter of 2014 (Figure 1), there are 23 energy storage technologies installed. Excluding pumped storage, these technologies account for 2730 MW of projects. North America leads the market with 19 technologies installed on the grid system.
Figure 1. Megawatts Deployed Energy Storage Projects by Region and Technology, Excluding Pumped Storage 3Q14
Table 3. Summary of SMUD Energy Storage Demonstrations
SMUD is considering a 400 MW, $800M pumped hydro facility at Iowa Hill.9 SMUD has performed extensive feasibility studies to understand the value that such a project would provide, with estimates ranging from $80-294/kW-yr depending on various factors including the extent and type of renewable generation on the grid, as well as the use of single speed versus variable speed drives within the pumped hydro storage plant. SMUD has also considered compressed air energy storage (CAES) by evaluating over 25 potential sites in and around the SMUD service territory. However, each site was found to have some significant risk associated with it, whether geological, technological, legal, or logistical. The most promising site has complex land rights issues, and the time-frame there would be 10 years or more to develop such a site for a compressed air energy storage plant.
One of the most significant challenges facing energy storage is the integration of storage equipment with other infrastructure, including distributed generation, grid assets, communications equipment, and data acquisition and control systems. Utilities currently must coordinate with multiple vendors, many of which are unfamiliar with the other components of the system, particularly energy storage.
Findings, and Lessons Learned. EPRI, Palo Alto, CA: 2013. 3002001256.; U.S. Energy Storage Project Case Studies: Results, Findings, and Lessons Learned in 2012. EPRI, Palo Alto, CA:
- 1024281.; Distributed Energy Storage Systems: Field Deployments and Lessons Learned. EPRI, Palo Alto, CA: 2013. 1024283.
Reliability, a primary concern for utilities, needs to be proven for widespread adoption of energy storage systems. Several vendors are at the pilot stage and have deployed few systems. In the Anatolia project, the RES vendor had a manufacturing defect that caused SMUD to shut down all the RES units. SMUD encountered multiple failures with various components including cooling fans, capacitors, SD cards, and modems. In Alameda County’s SmartGrid demonstration, the battery DC breakers repeatedly tripped from overcharging. Multiple others have also reported issues with charging and discharging behavior, as well as failed breakers and inverters.
distributed energy storage systems have not been fully optimized for certain applications. At Anatolia, the smoothing application did not work as effectively on RES units as on CES units. Furthermore, SMUD’s storage scheduling software was set up for individual unit programming, whereas fleet-level programming is more useful for utility-owned distributed energy resources. Additionally, SMUD received complaints that the RES units were too noisy when operating in smoothing mode caused by the high rate of switching occurring in the inverter. Multiple utilities, including SMUD, have found that some battery systems lack desirable safety mechanisms, such as remotely operated bypasses in case of a fault.
Communications were also a significant challenge in the Anatolia project. The customer broadband used for RES communication had unstable internet connectivity, and the connection with the cellular modem used for CES units was lost regularly until the cellular provider expanded coverage in the area. Also, in one instance, there was interference between a RES unit and customer broadband equipment.
Reliance on third party provided telecommunications has initially proven to be problematic in SMUD’s Mitsubishi Energy Storage Demonstration as well, resulting in problems with control and monitoring systems including fire protection monitoring.
Another significant lesson is that storage projects take longer than anticipated. With a lack of in-house expertise on new technology, SMUD has routinely found technical efforts to be more complex and time-consuming than expected. At Anatolia, SMUD had never worked with high resolution monitoring equipment on underground feeders and had issues with monitor phasing and SCADA integration. This need for troubleshooting can be further complicated when working with residential systems, as it may require schedule coordination, and some customers complained about the frequency and duration of visits. Other delays included UL and IEEE certification of RES units and the component failures described above.
As is sometimes the case with research and development, technologies occasionally are found to be inadequate or not ready to be scaled from bench scale to field demonstration scale. This proved to be the case with SMUD’s zinc bromine flow battery demonstration project with Premium Power. During the course of this project, difficulties in meeting the design and operational requirements arose and the use cases to be demonstrated were thus forced to be modified or removed by Premium Power. The original power rating of 500 kW and energy rating of 3,000 kWh expected from the system was downgraded to 160 kW and 640 kWh respectively. Additionally, the roundtrip efficiency goal of 66% was not attainable, with the system only reaching 40% roundtrip efficiency. As a result of these shortcomings, SMUD cancelled this research project, deeming this vendor’s technology not technically viable for field trial. Another lesson learned from SMUD’s energy storage technology demonstration work is that not all vendors and suppliers are financially stable. SMUD was awarded DOE funding to conduct demonstration of substation sited energy storage with Satcon and A123. The project would have demonstrated a 500 kW / 500 kWh system located at SMUD headquarters. However, before equipment could be installed, Satcon and A123 went bankrupt (for unrelated reasons). As a result, SMUD cancelled the project. This suggests energy storage vendors and the market as a whole is still developing. Finally, a key challenge with energy storage is projecting and deriving value from energy storage assets due to lack of familiarity with the system.
A broad challenge facing all utilities considering storage is that storage must be used for multiple different applications simultaneously to derive significant value. However, the degree to which one storage asset may be used simultaneously for multiple applications is currently unclear.
In its solar EV charge port project, SMUD found that simply measuring the efficiency of the system is challenging. Actual efficiencies, as well as lifetimes and other battery characteristics, can vary depending on how the battery is used for different applications. More reliable information can inform better decisions on storage investments, including technology selection, sizing, placement, and operating strategy.
Table 4. Summary of Value Analysis Results
- EPRI and E3 looked at the value of energy storage in a variety of locations and applications. The study assessed a wide range of benefits:
price arbitrage for SMUD, regulation revenues, system capacity benefits, deferred distribution investments, reduced customer demand charges, reduced customer TOU rate charges, increased power reliability and improved power quality. Figure 5 shows the results and they range from a present value of $150 to $950/kWh of energy storage capacity. 11Benefits Analysis of Energy Storage: Case Study with the Sacramento Utility Management District. EPRI, Palo Alto, CA: 2011.
Figure 5. EPRI/E3 Value Analysis Results As part of SMUD’s demonstration of customer and transformer sited energy storage (discussed above), Navigant Consulting conducted a value analysis of the configurations tested12: SMUD owned, transformer sited; SMUD owned, customer sited; and customer owned, customer sited. The value analysis was based upon Navigant’s benefit calculation methodology shown in Figure 6. It focused on the applications tested during the demonstration: electric energy time shift, voltage support, distribution upgrade deferral, time of use energy cost management, and electric power reliability. The range of values for each configuration is shown in Figure 7 and ranges from a net present value of $60 to $210/kW of energy storage capacity.
To complement the development of SMUD’s Iowa Hill PHS project, SMUD partnered with Energy Exemplar and EPRI and won a US DOE FOA grant to model the value of the Iowa Hill project. The analysis13found values ranging from $80 to $294/kW-yr, 13Modeling and Evaluation of Iowa Hill Pumped-Hydro Storage Plant: Value in SMUD and in Larger Region depending on the penetration of renewables and other market assumptions. Using this as a benchmark, SMUD’s resource planning group14assessed the value of a 135 MW CAES plant and found similar values in 2030. 5
Current energy storage installed costs vary significantly, not only between technologies but also from project to project within a specific technology, or even vendor. Factors such as grid connection fees, system installation, land acquisition, and other site specific costs will affect the cost of energy storage from project to project all things being equal. Cost ranges in terms of both power and energy are plotted in Figure 8 for comparison. Flywheel energy ranges ($/kWh) are plotted on the secondary y-axis. Practically speaking, flywheels are only used in power- intensive applications such as frequency regulation and most commercial flywheel systems are 15-minute systems. This puts flywheels at a disadvantage when comparing flywheel technology on an energy basis. The most mature technologies, pumped hydro, lead acid batteries, and NaS batteries have the smallest ranges in terms of both energy and power cost. Overall, these technologies have not experienced significant innovation in the past ten years.
Lithium ion is unique in the sense that the figures presented here represent a blending of the most expensive and least expensive subchemistries within lithium ion, both in terms of energy and power. Therefore, the large range of costs is a function of the diversity of subchemistries, some of which are developed for high-power applications, and others developed for high-energy applications.
Flow batteries have the widest range of costs, and this is primarily a function of the varied sub-chemistries and manufacturing models that are being tested within this battery type. Vendors building facilities with large electrolyte storage tanks may have higher $/kW figures than vendors opting to build identical modules. However, this strategy will result in a much lower $/kWh. Sub-chemistries that rely on expensive, albeit efficient and high-performance inputs such as vanadium, will have higher upfront costs than zinc or iron-based subchemistries. Not shown in the figure above are thermal energy storage costs. These are highly site specific depending on building’s layout, existing HVAC equipment and the amount of thermal storage required. In 2012, SMUD commissioned15a technical potential study for large thermal energy storage systems in its service territory, focusing on adding chilled water to existing HVAC systems. The thermal energy storage would be used to shift cooling loads to off peak hours. Detailed onsite surveys were done to estimate: the potential cooling capacity that could be shifted, installation costs, and customer willingness to adopt. The study found costs ranging from ~$50 to $70/ton-hour for chilled water systems and ~$210 to $230/ton-hour for ice storage systems. Installed costs however are not the only metric by which to compare different storage technologies because their application and life-cycle characteristics can be quite different, even within the same technology type. As noted above for example, comparing installed costs of flywheels used for frequency regulation (i.e., a power application) to batteries used for energy arbitrage (i.e., an energy application) can be misleading. In this instance, to have comparable life-cycles, batteries would require replacement and this would need to be considered as a variable O&M expense in any life-cycle analysis. Unfortunately, for many emerging storage technologies there is not yet sufficient data on useful life and annual O&M cost by application to understand lifecycle costs adequately. Unfortunately, no recent and comprehensive analysis can be found in literature that compares storage technologies on life-cycle bases for different applications. A 2013 Sandia National Laboratory report16has information on life-cycle costs, but it is primarily based upon vendor provided and has not been verified with independent real world performance data.
Unfortunately, the study only assessed two combined applications for use of the storage systems – renewable integration/time shifting, and transmission and distribution grid support. Figure 9 below from the EPRI report shows the results of their analysis in $/kWh using low and high costs and efficiencies specific to each technology.
Figure 9. Levelized Cost of Delivered Energy for Energy Storage Technologies Compared to CCGT Though dated, the results show that of the technologies analyzed PHS and CAES are the most cost competitive with using a combined cycle gas turbine to integrate renewables and align the renewable energy production with a utility’s peak load when the energy is most valuable. Projected Energy Storage Costs Market research firm Navigant Research has published that the majority of the cost reductions in each technology will come from developments in the systems integration piece of the supply chain and not in reduced costs from the technologies themselves. Systems integration is woefully underdeveloped in the storage industry. Currently, many technology developers devote significant resources to integrate technologies into energy storage projects.
Some technologies, such as sodium metal halide or flywheels, have few vendors.
When evaluating technical viability, it’s important to consider not only the energy storage technology but also the balance of system, communication and control software, and integration with existing software platforms.
Pumped hydro storage (PHS) and compressed air energy storage (CAES) have a long history of full-scale implementation. In the 1890s, the initial PHS system prototypes were built in Italy and Switzerland. By the 1920s and early 1930s, the first pumped hydro system was built in America, and reversible pump-turbines with motor-generators became available. Since then, PHS has matured and become a widespread energy storage technology with a worldwide installed capacity of about 123GW.22 There are currently two existing CAES facilities in the world: a 290 MW facility in Huntorf, Germany built in 1978; and a 110 MW facility in McIntosh, Alabama built in 1991. Both PHS and CAES can have very large system sizes with high power and energy, making them ideal for utility applications such as load management and operating reserves. The disadvantage is that both PHS and CAES have geographical limitations. PHS requires a reservoir, and underground CAES requires certain geological formations for storing compressed air. If those conditions are available, then PHS and CAES are viable options for bulk grid applications. Sodium sulfur batteries, flywheels, lithium ion batteries, advanced lead acid batteries, vanadium redox flow batteries, and zinc bromide flow batteries have been deployed in commercial applications over the last five years, if not longer.
One of the most significant challenges facing energy storage is the integration of storage equipment with other infrastructure, including distributed generation, grid assets, communications equipment, and data acquisition systems. Furthermore, there are multiple layers of communication that can be difficult to coordinate, especially when some are proprietary.
Cost Effectiveness. Per the guidance provided by Section 2836.2 of AB 2514, staff assessed the cost effectiveness of energy storage for a variety of standalone uses – summarized in Table 5 – and bundled uses.
Table 5. Summary of Applications and Cost Effectiveness
Renewable Energy Shifting – SMUD could use energy storage to store excess renewable energy and discharge during times of high need. However, SMUD currently does not have an issue with excess renewable energy and would get little value from this application. Wholesale Market Arbitrage and Cost Optimization – This application uses energy storage to charge during times of low energy cost and discharge during times of high energy cost. SMUD has analyzed this application in detail, but does not project a large enough, persistent (e.g. occurring over many hours a year) difference between on-peak and off-peak prices to make this cost effective.
Asset Management is the use of energy storage to defer investments in generation, distribution or transmission upgrades. This is applicable to SMUD; however SMUD is currently long on capacity.
In addition, as part of its value analysis, SMUD conducted a comprehensive review of current distribution assets to see if energy storage could defer any investments. SMUD found that its distribution system is robust and could use energy storage for deferral in a very small number of locations and the dollar value of deferral was small relative to the cost of energy storage.
Load Following – SMUD could use energy storage for load following, however SMUD currently uses its hydro resources for load following and they are very cost effective. Operating Reserves – Energy storage could be used to provide operating reserves but SMUD currently has enough reserves for the foreseeable future from its thermal and hydro assets.
Frequency Regulation – Similar to Load Following, SMUD could use energy storage for frequency regulation, but SMUD uses its hydro resources for this and they are cost effective.
Renewable Energy Capacity Firming – SMUD could use energy storage to increase the effective capacity of its renewable resources. However, SMUD currently purchases firming services from the CAISO (using thermal resources) at a competitive price.
Black Start – Energy storage could provide Black Start capabilities for SMUD, but SMUD currently has that capability in existing power plants and does not need more capability.
Renewable Energy Ramping – SMUD does not have wind in its Balancing Authority (BA) that would require ramping support. SMUD does have PV in its BA, but at current penetrations and through post-2020, staff’s current analysis indicates that SMUD can handle PV ramping with current assets.
Renewable Energy Smoothing – For SMUD’s large solar Feed In Tariff projects, energy storage could provide smoothing to mitigate the impacts (e.g. voltage violations, excessive equipment cycling, etc.) of large fluctuations in PV output. SMUD is currently demonstrating the technical viability of this but it has not proven cost effective as a standalone application.
Backup Power – Energy storage owned by SMUD or its customers could provide backup power during outages. However, SMUD has top tier SAIDI, SAIFI and CAIDI scores, so system uptime is very high and the need for backup power is low in SMUD’s service territory. In addition, when outages do occur, staff research indicates that the value of having backup power is low for most customer segments. One exception is the industrial segment, but most industrial customers likely already have backup power systems in place.
Power Quality – Using energy storage to manage power quality on a feeder is applicable, but staff has not found it to be cost effective relative to traditional power quality control equipment (e.g. load tap changers, voltage regulators, etc.). Industrial customers and data centers have high power quality requirements that energy storage could help meet, but they likely already have equipment in place to manage power quality and would not need to add energy storage for this purpose.
Results
Based upon this body of research, staff finds storage at this time is not cost effective with the exception of large pumped hydro storage. Consequently, staff recommends the SMUD Board of Directors should decline to establish an energy storage procurement target for December 31, 2016 and December 31, 2020 at this time.