Energy Storage

1
Energy Storage the Grid

• Jason Makansi
• Executive Director, Energy Storage Council
• President, Pearl Street Inc
• JMakansi_at_pearlstreetinc.com
• 314-621-0403
• 314-621-2916 fax

2
The Issues Tectonic Shifts in our Industry--and
a Solution

• Consumers and elected officials are demanding
  renewables, but costs of highly variable
  resources not being properly accounted for
• National Security is jeopardized because
  electricity is fundamental to all other
  infrastructure
• Generation, transmission, and distribution are
  being disaggregated
• More than 30 of generating assets are
  non-utility, merchant, or IPP
• Transmission is being reorganized into regional
  grids and markets with private development
  emerging
• Distributed generation is rising as distribution
  utilities seek new opportunities and customers
  with critical needs protect themselves against
  what they see as deteriorating grid service.
• ENERGY STORAGE CAN BRIDGE GAPS BEING CREATED!

3
Five Dimensions of the Old Electricity Value
Chain
Fuel/energy source
Electricity Generation
Transmission
Distribution
Delivery
Traditional way Regulated utility bundled
functions One price does all.
4
Six Dimensions of the New Electricity Value
Chain
Large-scale Energy Storage
Fuels/ Energy Sources
Generation
Transmission
Distribution
Customer Energy Services

• Unbundled services
• Unbundled prices
• New service strategies

Distributed Power/Energy Storage devices
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A New World Order for Electricity
Wholesale market
Retail market

• Fully deregulated
• Significant hedging/trading
• Energy storage for arbitrage
• Flexible/truly dispatchable power stations
• (coal, gas)
• New private DC lines
• Conversion to some private AC Transmission
• FLEXIBILITY, COMMODITY MARKET
• MENTALITY. ARBITRAGE-DRIVEN

• Mostly deregulated
• Distributed power, micro-, mini-grids
• Distributed energy storage devices
• Natural-gas driven
• CUSTOMER-DRIVEN SERVICES
• Demand-side conservation
• Little trading and hedging (except big-
• load customers
• Power quality management

The Electricity Infrastructure BACKBONE

• Mostly regulated or large government role
• Energy storage for ancillary services/security/ass
  urance
• Low cost but inflexible baseload stations (coal,
  nuclear)

• Fee-for-service
• RELIABILITY AND SECURITY DRIVEN
• Incremental rates of return over costs

6
Energy Storage Value Buckets

• Arbitrage-storing and moving low-cost power into
  higher price markets, reducing peak power prices.
• Security and assurance-voltage regulation, black
  start, frequency control, emergency power.
• Asset optimizationreducing the cycling and
  dispatch of large fossil units meant for
  baseload.
• Enhancing renewables transforming take it when
  you can get it into scheduled power. A fuel-free
  electricity source in the peak markets! (Also,
  daily wind resource curves are often opposite the
  daily load demand curves)
• Transmission asset deferrals postpone the need
  for new transmission assets depending on where
  storage assets are placed.
• Support distributed generation Micro- mini-grids
  and on-site power systems must become at least as
  reliable as traditional grid-supplied
  electricity. Todays digital society/economy
  demands power quality several orders of magnitude
  higher. Storage assets placed at
  distribution-voltage substations and integrated
  into advanced DG devices and uninterruptible
  power systems

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The Potential Value(Back-of-the-envelope,
first-order analysis)

• Wind energy enhancement 15-million
• Arbitrage 15-million
• Avoided costs of cycling large coal plants
  11-million
• Ancillary services 4.5-million
• Avoiding/deferring transmission 20-million
• Enhancing security/assurance 23-million
• Environmental 1-million

8
Coal Generation Benefits from Storage Facilities
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The Potential Value

• TOTAL VALUE 90-million annually
• CAES Cost of Electricity (COE)-34-60-million
  annually
• CONCLUSION At a 25 capacity factor, CAES in
  central Illinois could pay back within three
  years.

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Wind Volume vs. Transmission Constraint
Slide courtesy of Ridge Energy Services, Houston,
Texas
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CAES/Wind Value Proposition

• Store excess wind power in a CAES plant and
  redeliver a shaped energy product
• Manage available transmission capacity and
  optimize value
• Improve system stability by using CAES to provide
  voltage and VAR support and ancillary services
• Benefits
• Maximized wind energy sales, PTCs and RECs
• Ability to earn a capacity fee for firm delivery
• Ability to deliver wind power on peak when power
  is more valuable
• Reduced need for system cycling in order to
  accept intermittent wind

Slide courtesy of Ridge Energy Services
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Denmark 20 of Installed Base is Now Wind
Generation

• Operating conditions for system operator are
  deteriorating
• New wind capacity in West Denmark, during late
  2002, rose to 2,350 MWe from 2,315 MWe and caused
  4 events where wind output exceeded local demand,
  compared with 2 in whole of 2002
• A whole week passed in February with almost no
  wind output.
• There have been many events when wind surges or
  drops were rapid. On one occasion, 6 April, wind
  output dropped 487 MWe in a single hour
• Load factor during the first 4 months, 23.4
• Data courtesy of Hugh Sharman, IncoTeco Aps,
  Hals, Denmark

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West Denmark Wind output stopped one week while
load demand was volatile
Data courtesy of Hugh Sharman, IncoTeco Aps,
Hals, Denmark
14
West Denmark Wind output vs load demand for two
days last winter
Data courtesy of Hugh Sharman, IncoTeco Aps,
Hals, Denmark
15
West DenmarkHourly load changes can be
significant
Data courtesy of Hugh Sharman, IncoTeco Aps,
Hals, Denmark
16
Wind Generation is on an Accelerated Growth Curve
World-wide, Especially Europe
Chart courtesy of Burkhard Roemhild, Alstom Power
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Midwest CAES Precedent

• Iowa Stored Energy Project
• Backed by 74 municipal utilities in the state
• 200-MW aquifer-based CAES, 85-MW wind generation
• Vision Intermediate-load generation facility
  using wind energy
• 45-50/kWh all-in electricity costs at a 50
  capacity factor
• Additional value from ancillary services,
  scheduling flexiblity, and so-called green tags

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Barriers to Implementation (based on stakeholder
discussions)

• Budget constraints on transmission
• CAES not viable within the least-cost capacity
  planning exercise and excess capacity available
  for at least five years in the state
• Merchant generation group CAES not in the
  money
• Constraints in Chicago are market not technical
  limitations
• No market participants are complaining about
  congestion on the grid
• Wind energy development is passive currently
• Lack of renewable credits available for
  renewable energy that comes from storage
  facilities
• Value of storage cuts across several
  organizations, none of which are responsible for
  the overall scenario.
• Government response for security (terrorism),
  assurance (blackout)
• DISAGGREGATION OF GENERATION, TRANSMISSION,
  AND RTO EMERGENCE ARE NOT CONDUCIVE TO STORAGE
  INVESTMENTS

19
Small-scale Storage with Wind

• VRB Power Systems Inc, PacifiCorp, and SAIC to
  conduct analytical studies on transmission
  benefits of deploying hybrid wind and advanced
  Vanadium Redox battery storage systems.
• VRB Power Systems and Sea Breeze Power Corp
  create alliance to integrate Vanadium Redox
  energy storage in selected wind farms and
  renewable projects in Canada and Alaska to
  effectively supply firm capacity.

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Flywheels for gridfrequency regulation

• Regulation, or fine-tuning of grid frequency,
  does not require generation
• Required time to full capacity- lt5 minutes
• Flywheel Smart Energy Matrix
• Ten 25-kWh flywheels
• 1-2.5 MW for five to 15 minutes
• Quick connection, highly mobile
• Delivers both real and reactive power
• Excellent deep discharge and cycling
• Sub-second response time

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Storage Technologies
UPS Market
100-MW and above
10-MW
1-MW
Pumped storage Compressed Air Energy
Storage (CAES)
Large-scale batteries Lead-acid NAS Va Redox
Flywheels Batteries Capacitors Ultra-capacitors (c
ombined with DG devices)
Reverse-flow fuel cells Regenesys Sub-surface
CAES (underground pipe)
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Next Steps

• Expand the business models used to evaluate
  storage-include all value buckets, quantify the
  value of flexibility.
• Quantify the value of national security,
  regional assurance. Should there be a minimum
  level of storage to serve the grid?
• Develop second-order more dynamic economic model
  to evaluate storage facilities
• Engage other stakeholders in the region (state
  agencies, RTO, non-investor-owned utilities, etc)
• Work towards extending green tags or credits to
  stored renewables

23
CAES Attributes

• Significant storage capacity at relatively low
  cost (400-600/kW)
• Proven technology, supplied competitively, easily
  optimized for site-specific conditions
• Black start, fast startup (seconds from hot
  spinning reserve condition, 5-12 minutes from
  cold metal), ramp rates of 30 MCR per minute
• Nominal heat rate 2.5 times better than
  combustion turbine, much better part load
  efficiency
• Ability to operate as synchronous condenser
• Project lead times less than three years
• Source EPRI TD Handbook, Chapter on CAES

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Storage Attributes

• FLEXIBILITY
• TRUE INTERMEDIATE-LOAD DEEP CYCLING MACHINE AND
  SYSTEM
• LOW ENVIRO PROFILE
• BRIDGES GAPS BETWEEN GENERATION, TRANSMISSION,
  DISTRIBUTION

25
Conclusion

• Energy Storage has the potential to become the
  sixth dimension of the electricity value chain
  with special near-term benefits for renewables
  and grid management.