Presentation is loading. Please wait.

Presentation is loading. Please wait.

Energy Storage Due Diligence WEDNESDAY, January 26, 2011 The Role of Energy Storage in PV Projects PRODUCED BY EUCI January 31, 2011.

Similar presentations


Presentation on theme: "Energy Storage Due Diligence WEDNESDAY, January 26, 2011 The Role of Energy Storage in PV Projects PRODUCED BY EUCI January 31, 2011."— Presentation transcript:

1 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 The Role of Energy Storage in PV Projects PRODUCED BY EUCI January 31, 2011

2 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Overview Why is electric energy storage (EES) needed? What are the uses to which EES can be put? Whats the regulatory environment for EES? How has EES been deployed so far? What issues do parties need to consider in EES transactions? 2

3 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Why is Electric Energy Storage (EES) needed? Generally, electricity must be used as soon as it is produced and must therefore be produced as and when it is needed. Wind and solar generation present forecasting and variability challenges that impose a cost on the grid. Grid operators want to shift this cost onto wind and solar developers in the form of integration charges. See, e.g., BPA Rate Case. Integration charges apply mainly to wind at this point but BPA, Xcel, have expressed a desire to extend charges to solar. Curtailments of generation may signal the grids inability to absorb intermittent resources and can make PPAs hard to negotiate and projects hard to finance. Utilities or system operators may seek caps for intermittent renewable energy. 3

4 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Electric Energy Storage (EES) and Solar PV Energy Solar PV has an advantage over wind in that its generation profile is closer to peak loads. Solar PV can be combined with electric energy storage (EES) in island grid or micro-grid systems (e.g., Hawaii, Alaska, isolated grids). Energy generated from solar PV could be stored for use after sundown (peak shifting). EES could be used to smooth intra-hour variations in solar generation occurring on partly-cloudy days. 4

5 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 PV Array on a Partly Cloudy Day 5

6 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Alternatives to EES: Non-Storage Mitigation Measures Non-storage tools defer the date when addition of more intermittent generation becomes impractical. Geographical diversityincrease size of plant, distribute fleet Improved intermittent generation forecasting Construction of more electric transmission to take advantage of fleet Use of within-hour scheduling changes Generator self-supply of regulation services (the BPA/Iberdrola pilot) Market acquisition of regulation down services (the BPA/Calpine pilot) Dynamic power transfers Combination of balancing authorities However, these non-storage measures can only accomplish so much: Energy storage solutions will increasingly become necessary for continued integration of intermittent generation resources. 6

7 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Electric Energy Storage (EES) and Solar PV Energy EES can help integrate intermittent solar PV energy, as well as windthe key question is whether it is cost effective. Who should deploy EES? Developers, load-serving utilities, grid operators, or some combination? Is EES transmission, generation, distribution, load or something else? Despite uncertainty,solar and wind developers and utilities are beginning to enter into transactions with EES providers. The move to EES is likely to be evolutionary rather than revolutionary. 7

8 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 How EES Can Be Used: Peak Shifting Store electricity generated during periods of low demand (e.g., from wind plants at night) and use the stored electricity to meet load during peak periods. Examples of Peak Shifting Technologies –End-use thermal storage Water heaters (e.g, Steffes Corporation) Air conditioners (e.g., ICE Energy, CALMAC) –Plug-in electric vehicle batteries (V2G) –Grid Scale Pumped Hydro or Compressed Air Energy Storage (CAES) 8

9 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 How EES Can Be Used: Regulation and Load Following Regulation –Balance electricity supply and demand fluctuations over seconds or minutes –Stabilize voltage or frequency Load followingtens of minutes/hours Technologies: Batteries; flywheels; advanced capacitors; regenerative hydrogen fuel cells; superconducting magnetic energy storage (SMES); pumped storage hydro; CAES 9

10 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 How EES Can Be Used: Transmission EES can maintain service to transmission customers by providing reactive power or by providing virtual transmission service in the event of a line trip. EES may also be attractive in situations where it enables a utility to avoid the cost and delay of building new transmission or peaking generation. 10

11 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Cost Elements Costs/benefits vary depending on technology and electricity market in which it is deployed Cost factors –Rated power (maximum rate of discharge) –Efficiency –Energy (duration of discharge) –Frequency and depth of charge Lifecycle costs ($/kW-year): data is available on capital costs, less data is available on O&M 11

12 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Comparison Sampling of EES Costs Source: Energy Storage and the Smart Grid (TiE Oregon Clean Energy Special Interest Group ), presented in Bokka, et al., Feeder Advanced Storage Transaction: Battery Storage for a Smarter Grid, Portland State University Presentation to Portland General Electric on FAST Project (June 15, 2010) 12

13 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 FERCs Approach to EES Rate Setting and Cost Recovery In June 2010, the Federal Energy Regulatory Commission (FERC) issued a Request for Comments Regarding Rates, Accounting and Financial Reporting for New Electric Storage Technologies, FERC Docket No. AD (June 11, 2010) (comment period closed). FERC may issue a Notice of Proposed Rulemaking (NOPR) on this subject in the near future. FERCs Request for Comments itself provides a helpful overview of the EES services over which FERC will probably have rate- setting jurisdiction, as well as the EES services that will be subject to retail rate recovery under state public utility commission jurisdiction. 13

14 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Maintaining Service to Transmission Customers EES Services for Transmission Customers –EES can provide reactive power. –EES can serve as a virtual replacement transmission circuit if a transmission line trip occurs (e.g., a battery that releases energy to replace energy cut off by a tripped transmission line). –FERC would likely allow cost recovery under jurisdictional transmission rate under certain circumstances. 14

15 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Maintaining Service to Transmission Customers Cases Considering Whether EES is a Transmission Asset –Western Grid Development, LLC, 130 FERC ¶ 61,056 (2010) (NaS battery eligible for jurisdictional transmission rates). –Nevada Hydro Co., 122 FERC 61,272 (2008)(deferred ruling whether pumped storage hydro would be treated as transmission until after CAISO proceeding). –Application of Electric Transmission Texas, LLC for Regulatory Approvals Related to Installation of a Sodium Sulfur Battery at Presidio, Texas, PUC Docket No (Texas PUC 2009) (4.8 MW NaS Battery). 15

16 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Enhancing the Value of Generation EES facility could peak shift in order to take advantage of differences between off peak and peak pricing. FERC would probably treat this as being a service offered under the developers wholesale rates, presumably pursuant to a market-based rate tariff. 16

17 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Providing Ancillary Services Ancillary services maintain reliability and deliverability of power to customers in the face of changing load conditions Examples include frequency regulation, voltage control and contingency reserve. EES provider could sell ancillary services where there is a competitive market for such services (e.g., in an ISO). Will the ancillary services market support the financing of EES projects, or will bilateral commitments be required to insure the projects ability to serve debt? 17

18 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Services Subject to State Rate-Setting Jurisdiction An EES system installed on the distribution grid to provide voltage support or to serve as a virtual replacement distribution circuit in the case of a line trip. A peak-shifting EES system used to provide power to a load-serving utilitys retail customers An EES system with a demand-response component (e.g., end-use thermal storage) may receive rate recovery as a demand response program 18

19 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 The Challenge of Multi-Use EES Facilities An EES facility could be used to provide transmission services, peak shifting services for retail customers, and ancillary services. Will the facility as a whole be subject to one rate treatment, or will different aspects of the same facility be subject to different rate treatment? 19

20 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Gas Storage or Tolling Agreement Model To keep transmission and generation services separate, EES facility developer would provide an open-access storage service but would not buy or sell energy from the facility. Tolling customer would pay injection, capacity and/or withdrawal charges to EES owner under long-term contract. Market risks and benefits from purchase, sale or use of energy would be for the account of the customer rather than the EES owner. The customer could, for example, re-sell stored energy subject to FERC wholesale rate jurisdiction (e.g., to arbitrage non-peak energy generation against peal load). If the customer used the EES facility for transmission reliability purposes, the cost of the EES service could be recoverable in transmission rates. 20

21 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Californias AB 2514 Load-Serving Entities (LSEs) –By March 1, 2012, CPUC is to open a proceeding to determine appropriate targets, if any, for each LSE to procure viable and cost-effective energy storage systems –If the CPUC determines a procurement target is appropriate, then it is to adopt by October 1, 2013: A 1 st energy storage system procurement target to be achieved by each LSE by December 31, 2015; and A 2nd procurement target to be achieved by December 31,

22 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Californias AB 2514 Publicly owned utilities –By March 1, 2012, the governing board of the local publicly owned electric utility is to open a proceeding to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems –If the governing board determines that a procurement target is appropriate, it is to adopt by October 1, 2014: A 1 st target to be achieved by the utility by December 31, 2016; and A 2 nd target to be achieved by December 31,

23 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Possibility of Federal Legislation Last Congress: Storage Technology for Renewable and Green Energy Act of 2010, S (Senators Bingamen, Wyden, & Shaheen) –Investment tax credit of 20% for grid-connected qualified energy storage property with greater than 1 MW per hour power rating –Clean Renewable Energy Bonds (CREBS) would be available for grid-connected EES –Tax credit for specified onsite EES –Tax credit for specified residential EES 23

24 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Thermal Storage Southern California Public Power Authority (SCPPA) recently announced a purchase of ICE Energys Ice Bear Thermal Energy Storage Units, which use off-peak energy to produce ice that is used to cool refrigerant for air conditioning during peak hours BPAs thermal storage program with Mason County PUD No. 3 24

25 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: MinWind Xcels MinWind W2B battery project –Wind-to-Battery (W2B) demonstration project –1 MW, 7.2 MWh NaS (sodium sulfur) battery purchased from NGK Insulators Ltd. (NGK) –Installed near the 11.5 MW MinWind Energy LLC (MWD) wind facility in Luverne, MN –Report at e%20Development%20Fund/RDFProjects/Pages/SodiumSulfurBatteryE nergyStorage.aspx (click Milestone 5) e%20Development%20Fund/RDFProjects/Pages/SodiumSulfurBatteryE nergyStorage.aspx 25

26 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: MinWind –Preliminary results (July 2010) indicate that the battery has the ability to: Effectively shift wind energy from off-peak to on-peak availability Reduce the need to compensate for the variability and limited predictability of wind generation resources Support the transmission grid system by providing voltage support, which contributes to system reliability Support regional electricity market by responding to real-time imbalances between generation and load –Duke and SCE are also conducting battery/wind integration tests. 26

27 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: First Wind Kaheawa Project (Hawaii) First Winds 30 MW Kaheawa Wind Project (Maui) –20 GE wind turbine generators –Supported by a 1.5 MW Xtreme Power TM energy storage and power management system –Xtreme Power reports that this system, after 6 months of use, allows: Delivery of energy within strict ramping criteria Storage of energy generated during curtailment periods 27

28 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: First Winds Kahuka Wind Project (Hawaii) Kahuka Wind Project (in permitting) The project would incorporate a 15 MVA, 10 MW/hour energy storage system from Xtreme Power. First Wind received $117 million in DOE loan guarantees for the Kahuka Wind Project. EES component of First Winds Hawaii projects is behind the busbarHECo buys under PPA 28

29 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: LADWPs Pine Tree Wind Farm (California) September 13, 2010: Los Angeles Department of Water & Power (LADWP) entered into an MOU with BYD Ltd. Corp. (China) to develop the parameters and scope of a 5-10 MWh power storage unit to be installed at LADWPs Pine Tree Wind Farm. The MOU is an agreement to study EES rather than a commitment to procure storage. –Either party can terminate the MOU upon thirty (30) days notice. –The MOU makes it clear that any equipment procurement must take place through LADWPs normal procurement process. 29

30 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: LADWPs Pine Tree Wind Farm (California) According to the MOU, the purpose of the project is to solve one or more utility challenges: –Improve integration of renewable energy –Shape or firm energy generated from wind and/or solar generation for economic dispatch or to optimize transmission of renewable energy –Improve electric system reliability –Provide demand response –Shift load to off peak –Promote plug-in electric vehicle technology 30

31 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Flywheel (New York) Developer: Beacon Power Corporation 20 MW flywheel plant located in Stephentown, New York ($69 million, supported by $43 million DoE Loan Guarantee) 8 MW interconnected and on line as of January 24, 2011worlds first grid-connected fly wheel Fast-rotating rims made of a carbon-fiber composite material store excess & renewably generated energy as kinetic energy. The rims spin on magnetic bearings in a vacuum to minimize energy loss from friction. Stored kinetic energy can be released when demand rises or energy from wind or solar sources is not available. Very fast ramp rate (10x faster than fossil fuel plant) Expected to provide 10% of New Yorks frequency regulation needs 31

32 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Grid-Scale Battery AES Energy Storage LLC Phase 1: 8 MW battery-based storage system in Johnson City, New York (on line) On line and providing frequency regulation services in NYISO Phase 2: Additional 12 MW supported by $17.1 million DoE Loan Guarantee Can charge or discharge in one second in response to automated signal 32

33 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Vehicle-to-Grid (V2G) PJM Vehicle-to-Grid (V2G) pilot program in Delaware. The program is testing use of electric vehicle batteries to provide frequency regulation and storage of intermittent energy. Each vehicle in pilot project is earning $7-$10 per day to provide regulation services. 33

34 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Solar PV (CA) SunPower Corp. –Received a grant of $1.8 million from Californias state solar initiative program (September 2010) –Partnering with ICE Energy, Prudent Energy and ZBB Energy Corporation to develop a pilot energy storage program for a commercial customer (Target) 34

35 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Solar PV (Hawaii) Kauai Island Utility Cooperatives 3 MW Kauai Solar Plant, built and run by Poipu Solar Poipu Solar sells to Cooperative under as delivered PPA 1.5 MW utility-scale storage battery supplied to the Cooperative by Xtreme Power 35

36 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Portland General Electric (PGE) FAST Project Feeder Advanced Storage Transaction (FAST) ARRA Funded ($20 million) Goals: –Test high reliability island or micro-grid –Provide energy during peak load periods –Firm intermittent renewable resources 36

37 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Portland General Electric (PGE) FAST Project FAST components –113 kW Solar PV (Kettle Chips Plant) –1,300 kWh EnerDel battery –5 MW Eaton power conditioning system –5 MW customer-owned diesel backup generators (distributed generation) 37

38 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Projects: Portland General Electric (PGE) FAST Project FAST Long-Term Benefits may include: –Wind integration (PGEs 2009 IRP assigns an integration cost of $13.50/MWh of wind generation) –Spinning reserve (worth $5-$5/MWh in PGEs service territory during Oregons peak demand seasons, winter and summer) –Frequency regulation 38

39 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 Possible Models for Use of EES Services by Solar PV EES storage could be installed behind the busbar pursuant to a solar PV power purchase agreement with a utility offtaker (First Wind/HECo model). EES could be installed to provide load shifting, firming and reliability services in a microgrid primarily served by solar PV and/or wind. EES could be installed as part of an on-site PV installation. EES services could be sold on a merchant basis by EES developers to solar PV plant owners, grid operators or utilities. Grid operators could acquire EES services to manage intermittency and charge an integration or transmission service charge (which, like wind integration charges, would be allocated between developer and offtaker in PPA negotiations). 39

40 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Transaction Issues: Structure EES system manufacturers and buyers should be prepared to address the transaction issues outlined in the next few slides, which are likely to arise in any deal involving an EES system. If a developer or utility wishes to buy an EES system, should it buy a turnkey solution or specify the projects components? In the context of a PPA, is the EES solution something that the developer installs behind the busbar (First Wind/Xtreme Power/HECo) or is the EES solution something the utility arranges (Xcel/MinnWind W2B)? 40

41 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Transaction Issues: Performance Performance elements –Rated Power (maximum rate of discharge) –Discharge rate –Discharge duration (hours, minutes, seconds) –Efficiency –Lifetime (cycling) Performance warranties will crop up in procurement agreements and in build-transfer arrangements and will flow through PPAs What is the duration of the performance warranty? What if the performance warranty is not satisfied? Liquidated damages? Other remedies? 41

42 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Transactional Issues: Intellectual Property Intellectual Property (IP) is highly relevant to the EES Industry Entities engaged in this industry should have an IP Strategy Procurement agreement should include reps, warranties and indemnities around EES producers IP IP is an important due diligence issue 42

43 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 IP Due Diligence ActionCautionsRelevant Agreement Non-Confidential Demonstration Limit discussion to non- confidential information Do not share samples None Confidential Discussion Limited disclosure of confidential information Do not leave samples CDA Proof of concept Release samples Non-collaborative Mutual CDA and Material Transfer Agreement Joint Development Collaborative IP ownership issues Complex Joint Development Agreement 43 Staged Disclosures

44 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Transaction Issues: Compliance with Laws The buyer will likely want a representation and warranty that EES supplier is in compliance with all applicable laws The EES buyer may want representations and warranties addressing the concern that the production of the EES system might harm the environment 44

45 Energy Storage Due Diligence WEDNESDAY, January 26, 2011 Energy Storage in PV Projects Monday, January 31, 2011 EES Transaction Issues: Indemnification Intellectual property indemnifications Indemnification against claims and damages arising from production, transportation and delivery process Financial condition (ability to stand behind indemnifications) Required insurance 45


Download ppt "Energy Storage Due Diligence WEDNESDAY, January 26, 2011 The Role of Energy Storage in PV Projects PRODUCED BY EUCI January 31, 2011."

Similar presentations


Ads by Google