Transforming the US Electric System The Role of Energy Storage 1 - PowerPoint PPT Presentation

Transforming the US Electric System The Role of Energy Storage 1

2015 Was a Banner Year in the US • 253% year over year growth • The last quarter of 2015 saw more systems go online than all of 2013 & 2014 combined

20 States Installed Storage in 2015

Projects Operating Across the U.S.

System Costs are Rapidly Declining (~2-Hour Grid Scale System) $700 Storage System Cost ($/kWh) $600 $500 BOS $335 $299 $269 $400 $241 $217 $195 $300 $200 Li-ion Battery $330 $304 $279 $257 $236 $217 $100 $0 legend 2015 2016E 2017E 2018E 2019E 2020E System Costs ($ per kWh) 2015 2016E 2017E 2018E 2019E 2020E BOS $335 $299 $269 $241 $217 $195 Li-ion Battery $330 $304 $279 $257 $236 $217 Total $665 $603 $548 $498 $453 $412

C&I Segment Accelerating $350 $1,200 $300 $1,000 Storage System BOS Cost ($/kW) $250 Battery Pack Cost ($/kWh) $800 $200 $600 $150 $400 $100 $200 $50 $0 $0 2015 2016E 2017E 2018E 2019E 2020E 2021E Battery - Baseline Battery - Aggressive Balance of System - Baseline Balance of System - Aggressive

Generalized Storage Value Varies Source: Rocky Mountain Institute

2016 US Federal Storage Action Federal Highlights: • White House – ESA led the ‘Scaling Renewable Energy and Storage with Smart Markets’ Summit with the Administration, leading to new Federal and Private Sector commitments totaling 1.3 GW of storage. • IRS – ESA crafted industry response to Notice 2015-70, updating the definition of qualifying energy property within ITC language and addressing dual-use provisions. • FERC – ESA leadership resulted in FERC AD 16-20, which called upon wholesale markets to review storage market participation, access, and payment. Also because of ESA, FERC included energy storage topics on the agenda of its generator interconnection agreement technical workshop and in Docket RM16-12. • Congress – ESA launched the Battery Energy Storage Caucus, and coordinated the introduction of the ‘Storage ITC’ in both chambers. 5 other storage -specific bills under consideration; including storage PURPA amendment and funding allocations for energy storage R&D work within DOE. • NARUC – ESA continues to host the well attended Energy Storage Regulators breakfast and workshops at NARUC meetings, and our engagement led to creation of main session on storage and ERE track sessions at NARUC conferences.

Overhauling Wholesale Markets Regional Wholesale Markets: • FERC – ESA is the voice of the energy storage industry at FERC, creating markets and access through FERC Orders 745, 755 and 1000 • PJM Interconnection – ESA leading industry response to complex changes in RegD marketplace, ensuring access and fair compensation. ESA engagement led to creation of ‘Performance Capacity’ aggregation market within PJM, opening more opportunities to storage participation. • MISO – Following ESA mobilization, stakeholders prioritized AGC Enhancement and New Storage Resource Type development in MISO. After ESA comments, MISO RASC agreed to investigate capacity qualification for storage as a near-term objective. • NYISO - Following ESA comment, NYISO staff incorporated ideas for enabling 1-4 hour storage in work plan agenda for future expansion. ESA mobilized stakeholders, and NYISO has prioritized Energy Storage Integration & Optimization in the marketplace. • CAISO - Coordinated response to CAISO on FERC AD16-20 to ensure successful CA programs could be expanded for consideration in other competitive markets. Source: Sustainable FERC Project • SPP – ESA led the industry effort to push for Stored Energy Resource type and revised regulation market design.

States (and Cities!) Taking the Lead • Massachusetts - Following direct ESA advocacy and engagement, MA legislators included storage procurement targets and opened up utility ownership in omnibus energy bill which passed in August. Our Mass. Energy Storage Working Group (MAWG) is collaborating to lead the process with DOER officials. • New York – Engaged in NY PSC technical conference to discuss the role energy storage can play in meeting the goals of Reforming the Energy Vision (REV) and the state’s Clean Energy Standard . • NYC: 100MWh Storage by 2020 Target Set • Minnesota - SF 3473 introduced in State Legislature to establish tax credits for non-residential and residential energy storage. • Arizona - AZ CC included energy storage topics on the agenda of its DER interconnection technical workshop as a result of ESA engagement. • Connecticut – As a result of ESA comments, CT DEEP modified clean energy RFP to allow energy storage to charge during Performance Hours, increasing potential utilization rate of storage systems. • New Mexico –Due to ESA’s engagement with PRC regulators and industry officials, NM PRC opened NOPR to add storage to IRP process. • California – Supported efforts by CAISO to enable aggregated market participation. Increased SGIP, expanded state target, eased interconnection • Texas – Led industry response to Future Ancillary Services Team initiative and the DREAM Task Force to expand role of storage and DERs. • Submitted PUC comments and participated in workshops in HI, OR, WA, NV, AZ, MN, MD, CT, MA, NH, and DC.

Caution: Examples of Imperfect Policies 1. Net Energy Metering – an imperfect system to reward value of renewables, reduces arbitrage opportunity • Should instead focus on Time of Use rates, and Time of Delivery value 2. Focus on Ramping Product – it looks like a problem facing the grid, but is it? • ‘Duck Curve’ ramp rate observed for last 3 years. Modeling continues to show that ramping constraints do not exist. 3. Storage = Generation – archaic tariff structures impedes different ownership models and market qualification • Storage is generation, transmission, distribution and load, and all ownership models are viable and valuable 4. Procurement Targets – Potentially limiting or slowing to the storage deployment • Once target is set, not necessarily responsive to actual value/need

Lessons for Discussion • Energy storage is not a ‘bolt - on’ technology • It has its own value proposition that must be quantified • Smarter/Faster markets enable storage to succeed • Markets should be designed around performance, and respect performance limitations • Markets are designed around decades-old tech, and regulations have not kept pace with innovation • Let’s procure technology based on performance and value delivered • ‘All - source’ RFP’s and truly IRP drive the conversation, force jurisdictions to define value • We are in the process of transforming the electric grid • It is not swapping A for B, it is deploying C – and creating new markets and transactions that were not possible before. • Energy Storage enables transformation