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Energy StorageMarket Status, Economics and Future Evolution

Stan Faryniarz, CEP

Stan Faryniarz, CEPRENEWABLE ENERGY VERMONT 2016 CONFERENCEOCTOBER 14, 2016

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I. Storage TechnologiesII. Grid-Scale Storage on an Island System in

Transition to 100% Renewable SupplyA. Deployment & Economics of PV + Battery Storage

III. Behind the Meter (BTM) Battery StorageA. Key Factors for Broad Scale ApplicationB. Deployment Not Optimized, YetC. Use in Defraying Impact of Demand Charges, Time of Use

(TOU) Energy ChargesD. Aggregation & Market Participation Will Tilt the Economics

TOPICS ADDRESSED TODAY

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Electricity Generation Storage Technologies (Classification)

Energy Storage refers to devices that can absorb energy, store it for a period of time, and then dispatch the energy at a later time.

Batteries for electronic devices demonstrate small scale energy storage applications. Large scale applications affecting our electric grid generally fall in these three areas:

Grid Connected(in front of the meter)

Residential or Commercial

(behind the meter)

Electric Vehicles

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Utility Scale• Pumped Storage• Compressed Air Energy Storage (CAES)• Flywheels• Batteries

Distributed Behind-the-Meter (BTM)• Batteries, including• Electric Vehicles

Electricity Generation Storage Technologies (Most Common)

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Storage to

Case Study in Grid Scale Storage: Kauai Island Utility Cooperative (KIUC)

Source: KIUC Strategic Plan www.kiuc.coop

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Daily System Load Profile on Kauai: The “Duck Curve”

MW

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AT THE END OF 2012, MORE THAN 1,200 KAUAI HOUSEHOLDS HAD

ROOFTOP SOLAR. BY 2016, THERE WERE MORE THAN 3,400, WITH A

CAPACITY OF 20.6 MW. [THIS INCREASE HAS OCCURRED WITHOUT A COMMON INCENTIVE

PROGRAM CALLED NET METERING.] IN 2016, ON SOME INDIVIDUAL DAYS,

KIUC DERIVES 97 PERCENT OF ITS ENERGY FROM RENEWABLE SOURCES, INCLUDING 77 PERCENT FROM SOLAR

ON CLEAR DAYS. ON THE AVERAGE CLEAR DAY, WITH SOLAR AT OR CLOSE TO FULL POTENTIAL, ALL BUT ONE OF

KIUC’S DIESEL GENERATORS CAN SHUT DOWN.

HIGHEST IN THE NATION ELECTRICITY RATES.

HAWAII RPS: 100% NET RENEWABLE BY 2045.

HIGHEST SOLAR CAPACITY PER CAPITA.

At KIUC, Grid Scale Solar Competes with Rooftop (BTM) Solar

1:003:00

5:007:00

9:0011:00

13:0015:00

17:0019:00

21:0023:00

0

10

20

30

40

50

60

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Generation Profile during High Solar Day

Hydro Biomass Solar ExportsUtility Solar KRS1 CT1Diesel

Hour EndingM

W

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Solution 1: Li-Ion Batteries Solution 2: Pumped Storage Hydro

KIUC Grid Scale Storage Solutions

Pumping During Peak Solar Daytime

Hours

Discharge During Evening System

Peak Hours

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In 2015, KIUC recently added 6 megawatts of storage with a lithium-ion battery system at its Anahola solar array.

Made industry history in 2016 by breaking ground on the first utility - scale solar plant with the capability to store power to batteries during the day for release to the grid during the evening. The SolarCity/Tesla Project.

The 52 MWh Tesla Powerpack lithium-ion battery storage system will feed up to 13 megawatts of electricity onto the grid to "shave" the amount of conventional power generation needed to meet peak demand in the evening from 5 pm to 10 pm.

20-Year PPA @ 14.5 c/kWh.

Grid Scale Solar Plus Battery Storage Economics

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Price declines moving the market • IHS (research): 50% decline between 2012-2015, another 50%

decline expected by 2019• STEM (corp): 70% declines for Li-Ion batteries 1/2015 to 6/2016

Policy Drivers (State/Fed Targets & Initiatives)• CA – 1.3 GW of storage by 2020• MA – 600 MW by 2025 (DOER recommendation)• White House – 1.3 GW by 2021

Distributed BTM (Res & Comm) could potentially outpace grid-scale by the end of the decade.

Behind the Meter (BTM) Energy Storage (Key Factors)

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Residential Storage Not Mature• Customers want power for multiple days, and economical

systems. Batteries don’t yet provide those.• Example: Tesla discontinuing the 10 kWh battery storage product

targeted for residential applications. o California market rules for the Small Generator Incentive Program (SGIP)

require 5 cycles per week – Tesla’s product could not accommodate that.

In most areas, more economical to sell back to the grid at the time of generation via net metering.

This could change if net energy metering (NEM) rules continue to scale back compensation.• Creates a tension between solar and storage efforts, since

exporting energy via NEM is more valuable than peak shaving – at least under current retail energy rate structures.

BTM Energy Storage Not Yet Optimized

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Demand charge rate (e.g. $/kW-hr) based on peak period consumption• Batteries (with or without customer BTM generation)

facilitate peak shaving• Currently relevant primarily for C&I customers• Proposals for residential demand charges increasing

Time-of-use TOU rates provide opportunity to increase value of storage• Increasing opportunities for residential

Demand Charge and TOU Energy Rates Alter the Economics

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Solar + Storage load profile example

Sources: Rocky Mountain InstituteDaymark Energy Advisors

Lower TOU Energy Rates -------Lowest TOU Energy Rates------ High TOU Energy or Demand Charges Period

Standard Residential Load Profile

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Economics really tilt when rules change to permit aggregated BTM resources to bid into DA and RT energy, and capacity markets• Developers from California are basically establishing business operations and

networks in Northeast, waiting for market rules to change. Then they will likely start developing market quickly as soon as market rules adapt.

Multiple Pilot Applications Ongoing• Aggregation, Virtual Power Plants• Wholesale Market Integration Through Dispatch By Utility or ISO• Microgrids/Nanogrids

Storage management software developments• Permit new uses of storage within markets• Data management will become critical

Storage Economics – Future Opportunities in Aggregation

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Stan Faryniarz, CEP

617-778-5515 x114 or

802-861-1618

sfaryniarz@daymarkea.com

Thank youTo continue the conversation, reach

www.DaymarkEA.com