1. Applications and Benefits of Energy Storage Maui, Hawaii June 16, 2010 Garth P. Corey, Consultant Sandia National Laboratories Sandia is a multiprogram laboratory operated by Sandia Corporation, a Lockheed Martin Company, for the United States Department of Energy under contract DE-AC04-94AL85000. Hawaii Energy Storage Seminar

2. 2 Applications Power vs. Energy Applications Large Scale vs. Small Scale Technology Selection Storage and Renewables Benefits Benefits by Category The Value Propositions Overview

3. 3 General Applications Power vs. Energy Applications Large Scale vs. Small Scale Technology Selection Storage and Renewables Applications

4. 4 General Applications T&D Upgrade Deferral Transmission Congestion Relief Renewables Penetration Photovoltaic Wind Peak Shaving Micro-Grid Systems Energy Price Arbitrage Remote Area Power Systems

5. 5 Power vs. Energy Applications Capacity Issues High Power/Low Energy Low Power/High Energy Operational Limitations Discharge Recharge

6. 6 Storage and Renewables Acts to Stabilize Power Variations For grid-tied applications, Can Provide Transmission Congestion Relief At the Generation Site At the Distribution Point Allows Dispatch of Renewable Power Off grid applications On grid applications

7. 7 Opportunity Drivers  Storage Developments  Emphasis on Modularity  Smart Grid Focus  Cost Reduction and Performance Improvements  Increasing Interest by End Users and Utilities  Peak Demand  Transmissions Constraints  Demand Response Program Reliance  Time-of-use Implementation  Application to Ancillary Services  Renewables Portfolio Standards  Broadening Recognition of ES Roles

8. 8 Value Propositions - Defined Benefits by Category The Value Propositions Benefits

9. 9 Value Propositions: Defined Value = Benefit minus Cost benefit: revenue and/or avoided cost Attractive Value Proposition: Benefit > Cost cost includes necessary return on capital typically need 2 or more benefits Other Criteria up-front capital requirement payback period opportunity cost

10. 10 “Conventional” Value Propositions Utility-owned Electric Supply Resource Power Purchase Agreement Merchant (“real options”) electric energy time-shift electric supply capacity ancillary services End-User Electricity Cost Reduction time-of-use energy cost reduction (on-peak) demand charge reduction (on-peak) power quality and/or reliability (backup)  future: wholesale market during non-peak?

11. 11 Value Propositions: Defined Value = Benefit minus Cost benefit: revenue and/or avoided cost Attractive Value Proposition: Benefit > Cost  cost includes necessary return on capital  typically need 2 or more benefits Other Criteria up-front capital requirement payback period opportunity cost

12. 12 Benefits-Defined  Electric Energy Time Shift  Electric Supply Capacity  Load Following  Area Regulation  Voltage Support  Transmission Support  Transmission Congestion Relief  T&D Upgrade Deferral  Time-of-use Energy Cost Management  Demand Charge Management  Power Quality  Renewables Capacity Firming  Renewables Energy Time Shifting

13. 13 Benefits by Category

14. 14 Incidental Benefits Avoided T&D “I 2 R” Energy Losses on-peak minus off-peak Avoided Transmission Access Charges Increased Asset Utilization generation & transmission, possibly distribution Power Factor Correction Flexibility (e.g. for expansion planning) Reduce T&D Investment Risk Generation Dynamic Operating Benefits (EPRI) Reduced: 1) ramping, 2) part load operation, 3) wear and tear, 4) fuel use (per kWh) and 5) air emissions.

15. “Conventional” Value Propositions Utility-owned Electric Supply Resource Power Purchase Agreement Merchant (“real options”) electric energy time-shift electric supply capacity ancillary services End-User Electricity Cost Reduction time-of-use energy cost reduction (on-peak) demand charge reduction (on-peak) power quality and/or reliability (backup)  future: wholesale market during non-peak? 15

16. EESAT 2009 16 T&D Deferral Value Proposition Primary Benefits 1. T&D Deferral * 2. Electric Supply Capacity (on-peak) 3. Electric Energy Time-Shift (on-peak) 4. Reserve Capacity (>8,000 hrs/year) Secondary Benefits 1. Voltage Support * 2. Transmission Congestion Relief * * benefit is location-dependent

17. 17 T&D Deferral Background Significant T&D Deferral Benefit Possible $300/kW to $800/kW for one year Necessarily Distributed Deployment richer value propositions possible if transportable: multiple deployments Limited Storage Cycling Required Recent DOE/Sandia Report (SAND-2009-4070) survey of existing research important context such as indicators generalized benefit estimation framework

18. EESAT 2009 18 Small Air Conditioning (A/C) Value Proposition Primary Benefits 1. Electric Supply Capacity 2. Electric Energy Time-Shift 3. Voltage Support * 4. Transmission Congestion Relief * Secondary Benefits 1. Electric Supply Reserve Capacity 2. T&D Deferral * * benefit is location-dependent

19. 19 Small Air Conditioning Value Proposition Background Small A/C: “load from hell” on when demand is highest  high energy and capacity cost off >90% of the year  very low utility asset utilization compressor motors have a significant effect on voltage during grid- wide voltage emergencies On-Site or Nearby “Community” Storage Grid provides “surge current” for start-up. Storage + Small A/C Smart Grid Synergies

20. 20 Renewables + Distributed Storage Value Propositions Distributed PV + Storage Central Wind Gen. into Distributed Storage Primary Benefits 1. Renewables Generation Capacity Firming 2. Electric Energy Time-Shift 3. Electric Service Reliability (UPS, backup) Secondary Benefits 1. T&D Deferral * 2. Transmission Congestion Relief * *benefit is location-dependent

21. 21 Wind Generation Integration Short Duration (seconds) reduce output “volatility” (ramping) improve power quality Long Duration (minutes to hours) reduce output variability (ramping) transmission congestion relief “backup” for unexpected wind generation shortfall reduce “minimum load violations”

22. 22 Societal Value Proposition Lower electric energy price/cost Less Supply & T&D infrastructure needs Reduced fuel use Reduced I 2 R T&D energy losses In some cases: reduced direct fuel use More robust grid Superior integration of renewables Optimized electric supply fleet operation In some cases: reduced air emissions

23. 23 Conclusions Emphasize Value Propositions less emphasis on applications & technology need artful aggregation of benefits (> cost)  many storage opportunities require two or more benefits (combined) to exceed cost Increasingly Rich Possibilities for Attractive Value Propositions increasingly rich pricing increasing value for those benefits Smart Grid and “load aggregation” distributed resources (storage, generation, demand response)

24. References and Credits Presentation Materials Thanks to Jim Eyer, jim@dua1.comjim@dua1.com For much of this material Reference Material SAND 2010-0815 Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide Jim Eyer and Garth Corey Feb-2010 24