1. National Renewable Energy Laboratory Innovation for Our Energy Future * NREL July 5, 2011 Tradeoffs and Synergies between CSP and PV at High Grid Penetration

2. National Renewable Energy Laboratory Innovation for Our Energy Future Bottom Line As penetration of variable generation (solar, wind) increase, it is increasingly important to consider the interaction between these resources and the entire grid system Dispatchable energy (e.g. CSP w/storage) has a higher value than non-dispatchable energy. –At low penetration of solar and wind this difference is small –At higher penetration (15% on an energy basis) this difference may increase by as much as 4 cents/kWh Overall penetration of solar energy can be increased by the use of CSP with storage which provides grid flexibility –Allows for higher levels of PV penetration by providing the ramping rate and range needed to accommodate the variable output of PV systems 2

3. National Renewable Energy Laboratory Innovation for Our Energy Future Increase in Energy Value Due to Dispatchability of Systems with Thermal Energy Storage 3 The actual difference in value is largely a function of penetration and overall grid system flexibility Dispatchable solar energy sources: 1.Maintain high energy value –Always displaces the highest cost energy sources 2.Maintain high capacity value even at high solar penetration. 3.Lower curtailment than solar systems w/o storage 4.Lower integration/reserve costs

4. National Renewable Energy Laboratory Innovation for Our Energy Future Analytic Methods Detailed grid simulations of the Western Interconnect –Simulates the hourly dispatch of the power plant fleet –Ensures reliability by ensuring availability of operating reserves –Validates basic transmission operability using DC power flow –Enforces power plant constraints including ramp limits, operating limits –Calculates fuel burn and associated cost and emission –Assumed frictionless markets (best case scenario for PV) Two scenarios –15% PV and 15% wind –10% PV, 5% CSP and 15% wind Did not capture full range of integration costs due to uncertainty about reserve requirements of PV, short term variability and forecast errors – assumed perfect knowledge of solar resource 4

5. Difference in gas burn National Renewable Energy Laboratory Innovation for Our Energy Future 1) Difference in Energy Value 5 Dispatch of CSP results in less high cost gas and more low cost fuels 10% PV 5% CSP 15% PV No CSP Storage enables a relative fuel savings benefit over PV of about 0.5 cents/kWh at $4.50/mmBTU gas Example WECC-wide dispatch during a 4-day period in spring

6. 2) Difference in Capacity Value of PV 6 National Renewable Energy Laboratory Innovation for Our Energy Future Capacity value adder depends on market conditions - typical values of $40-$70/kW/year Depending on CSP system design and market conditions, adds a CSP value of 0.7-2.0 cents/kWh Normal peak at ~4-5 pm At 10% PV, peak is shifted to 8-9 pm. PV provides no further peak capacity benefits At this point PV cannot reduce the need for generation capacity CSP capacity value remains close to ~100% by shifting energy production to evening (and morning during spring/winter months)

7. Curtailment results from two main constraints – ramping requirements and minimum generation constraints. Curtailment results when existing plants to not have the flexibility to ramp 7 National Renewable Energy Laboratory Innovation for Our Energy Future Ramp rate of conventional generator requirements increases Ramp range of conventional generator requirements increases 3) PV Curtailment Due to Ramping Requirements

8. Curtailment Due to Minimum Generation Constraints 8 National Renewable Energy Laboratory Innovation for Our Energy Future Extensive coal and nuclear cycling unlikely to occur in current system Marginal curtailment rate of PV moving from 10% to 15% of generation was 5% At SunShot goals (~6 cents/kWh) this increases effective PV cost by about 0.3 cents/kWh due to underused capacity 10% PV 5 % CSP 15% PV No CSP PV curtailment would be reduced if grid flexibility were increased CSP/TES provides an option to replace “baseload” capacity with more flexible generation

9. National Renewable Energy Laboratory Innovation for Our Energy Future PV Curtailment at Higher Penetration 9 Estimates marginal curtailment as a function of PV penetration (without additional grid flexibility) Without storage or load shifting, marginal LCOE of PV increases rapidly “Multiplier” to base LCOE

10. National Renewable Energy Laboratory Innovation for Our Energy Future 4) Integration and Reserve Requirements Variability and uncertainty of solar resource requires changes in operation, typically some re-dispatch of system resources to maintain reliability 10 Very large ramping of conventional generators is required. This potentially means more use of fast responding but lower efficiency generators

11. National Renewable Energy Laboratory Innovation for Our Energy Future Reserve Requirements 11 We have not yet analyzed the increased need for frequency regulation or forecast uncertainty for either PV or CSP –One previous PV study estimated costs of re-dispatch at 0.4-0.7 cents/kWh, but used limited data sets and is not reproducible –Estimates from wind integration studies are in the range of 0.2-0.4 cents/kWh Storage enables operation at part load and ability to hold back energy during periods of high uncertainty or large reserve requirements

12. With gas prices in the range of $4.50-$9.00 mmBTU, the estimated value of CSP with storage is an additional 1.6-4.0 cents/kWh relative to PV due to: Energy shifting value: ~0.5-1.0 cents/kWh Capacity Value ~0.7-2.0 cents/kWh Reduced curtailment: Depends on PV cost. At 6 cents/kWh, corresponds to ~0.3 cents/kWh Reserve/integration costs 0.1-0.7 cents/kWh National Renewable Energy Laboratory Innovation for Our Energy Future 12 Summary: Impacts of Storage at 10-15% Solar

13. National Renewable Energy Laboratory Innovation for Our Energy Future CSP as a PV Enabling Technology 13 Historical performance of U.S. small gas steam plants which are a good proxy for CSP – typical operating range of 78% with only a 7% heat rate penalty at 50% load. The ability of a the grid to accommodate PV is inherently limited by the increased variability and uncertainty of net load As PV penetration increases other generators will need: Short start-up times Large ramp rates Large turn-down ratios Good part load efficiency CSP with storage can provide these requirements

14. National Renewable Energy Laboratory Innovation for Our Energy Future 14 Total RE contribution is 35% on an energy basis (solar provides 23%). About 5% is curtailed. Additional PV will largely be curtailed due to minimum generation constraints Dispatch in a “conventional” system CSP energy is shifted to morning and evening, increasing the contribution of solar technologies, but not providing a direct benefit to PV or wind. Relying on thermal generators and ignoring flexibility benefits of CSP limits amount of demand that can be met with variable generation CSP as a PV (and Wind) Enabling Technology

15. National Renewable Energy Laboratory Innovation for Our Energy Future 15 Dispatch in a “CSP-flexible” system CSP provides additional ramping capacity in the evening and morning. Minimum generation constraint reduced CSP energy is still shifted, but also used to provide quick-start reserve capacity during periods of high PV output. Total RE contribution is increased to 46% (solar contribution at 29%) with no increase in curtailment. Adding the flexibility of CSP enables a greater fraction of the load to be served by variable generation CSP as a PV (and Wind) Enabling Technology

16. National Renewable Energy Laboratory Innovation for Our Energy Future Summary As penetration of variable generation (solar, wind) increase, it is increasingly important to consider the interaction between these resources and the entire grid system Dispatchable energy (e.g. CSP w/storage) has a higher value than non-dispatchable energy. –At low penetration of solar and wind this difference is small –At higher penetration (15% on an energy basis) this difference may increase by as much as 4 cents/kWh Overall penetration of solar energy can be increased by the use of CSP with storage which provides grid flexibility –Allows for higher levels of PV penetration by providing the ramping rate and range needed to accommodate the variable output of PV systems 16

17. National Renewable Energy Laboratory Innovation for Our Energy Future Questions? 17 References (Note that several of the results in this presentation have not yet been published). Madaeni, S., R. Sioshansi, and P. Denholm, "How Thermal Energy Storage Enhances the Economic Viability of Concentrating Solar Power" accepted in Proceedings of the IEEE. Madaeni, S. H., Sioshansi, R., Denholm, P. (2011) “Capacity Value of Concentrating Solar Power Plants” NREL Report No. TP-6A20-51253. Brinkman, G.L., P. Denholm, E. Drury, R. Margolis, and M. Mowers. (2011) “Toward a Solar-Powered Grid - Operational Impacts of Solar Electricity Generation” IEEE Power and Energy 9, 24-32. Denholm, P., and M. Hand. (2011) “Grid Flexibility and Storage Required to Achieve Very High Penetration of Variable Renewable Electricity” Energy Policy 39 1817-1830. Sioshansi, R. and P. Denholm. (2010) “The Value of Concentrating Solar Power and Thermal Energy Storage.” IEEE Transactions on Sustainable Energy. 1 (3) 173-183. Denholm, P., E. Ela, B. Kirby, and M. Milligan. (2010) “The Role of Energy Storage with Renewable Electricity Generation” NREL/TP-6A2-47187. Denholm, P., R. M. Margolis and J. Milford. (2009) “Quantifying Avoided Fuel Use and Emissions from Photovoltaic Generation in the Western United States” Environmental Science and Technology. 43, 226-232. Denholm, P., and R. M. Margolis. (2007) “Evaluating the Limits of Solar Photovoltaics (PV) in Electric Power Systems Utilizing Energy Storage and Other Enabling Technologies” Energy Policy. 35, 4424-4433. Denholm, P., and R. M. Margolis. (2007) “Evaluating the Limits of Solar Photovoltaics (PV) in Traditional Electric Power Systems” Energy Policy. 35, 2852-2861.