1. Aaron Townsend National Renewable Energy Laboratory October 28, 2013 Colorado Rural Electric Association Energy Innovations Summit Energy Storage in the U.S.

2. 2 Outline Brief History Current Installations Value Challenge Additional Value Created by Deployment of Renewables Conclusions National Renewable Energy Laboratory Innovation for Our Energy Future 2

3. Ancient History of Energy Storage (<1980) 3 Challenges of meeting variations in demand provided early motivations for storage (<1980) - Projected nuclear builds (100s of GW) - Fuel Use Act of 1978 (no gas or petroleum plants)

4. Installed Capacity 4

5. 5 Limited Activity –PHS costs increase, increased siting challenges –Cheap natural gas –Limited nuclear build out –Exotic technologies remain costly –Cheaper and/or easier to meet variation in load and capacity requirements with conventional generation resources Fuel Use Act Recent History (1980s-2000)

6. Existing Storage Facilities 6 Conventional Pumped Hydro: ~ 22 GW CAES: 1 Plant (110 MW) Others (<100 MW total): A few batteries, SMES, mostly for local power quality issues

7. More Recently 7 Renewed interest in storage Emergence of energy and ancillary service markets Natural gas price volatility Perceived role of storage in enabling renewables

8. Current Activities Many proposed plants Renewed RD&D funding via DOE ARRA and ARPA-E California AB 2514 Challenging economics 8

9. What is Storage Worth? Standard metrics (LCOE) are not particularly useful Storage provides multiple values, but not all can be monetized 9

10. 10 Value of Storage in Restructured Markets Historical Values of Energy Storage in Restructured Electricity Markets Market Evaluated LocationYears Evaluated Annual Value ($/kW) Assumptions Energy Arbitrage PJM a 2002-2007$60-$11512 hour, 80% efficient device. Range of efficiencies and sizes evaluated [1] NYISO b 2001-2005$87-$240 (NYC) $29-$84 (rest) 10 hour, 83% efficient device. Range of efficiencies and sizes evaluated. USA c 1997-2001$37-$4580% efficient device, Covers NE, No Cal, PJM CA d 2003$4910 hour, 90% efficient device. RegulationNYISO b 2001-2005$163-248 USA e 2003-2006$236-$429PJM, NYISO, ERCOT, ISONE Contingency Reserves USA e 2004-2005$66-$149PJM, NYISO, ERCOT, ISONE a Sioshansi et al. 2009 b Walawalkar et al. 2007 c Figueiredo et al. 2006 d Eyer et al. 2004 e Denholm and Letendre 2007 10 National Renewable Energy Laboratory Innovation for Our Energy Future

11. 11 Value of Storage in U.S. Markets National Renewable Energy Laboratory Innovation for Our Energy Future 11 Arbitrage Only Contingency Only Regulation Only Renewable deployment will increase opportunities for economic storage deployment…..and also the competition Arbitrage alone is generally insufficient to support most storage technologies, which are generally >$1,000/kW

12. Bottom Line on Value Current market conditions supports bulk storage at capital costs under $2000/kW for a 6 hour or more device National Renewable Energy Laboratory Innovation for Our Energy Future 12

13. Impacts of Renewables on the Grid Storage is often perceived as “necessary” for renewables to achieve a large (>10%? >20%?) penetration. Renewables are seen as a source of value for storage Can renewables be used without storage? How do renewables impact the grid? National Renewable Energy Laboratory Innovation for Our Energy Future 13

14. So What are the Opportunities? Renewables increase the already existing value (and size) of markets for storage Arbitrage/load leveling/unit cycling Operating reserves Transmission alternatives How do storage economics compete with the alternatives? National Renewable Energy Laboratory Innovation for Our Energy Future 14

15. National Renewable Energy Laboratory Innovation for Our Energy Future Flexiblity Supply Curve 15

16. 16 Conclusions Low-cost natural gas is currently the dominate force in U.S. electric power sector Storage is being constructed based on R&D support and mandates. Costs will need to be reduced substantially for storage to be cost competitive Storage is undervalued in existing markets and it is still difficult to assess the true value and opportunities for energy storage in the current and future grid Storage faces competition for other sources of flexibility National Renewable Energy Laboratory Innovation for Our Energy Future

17. Thank You Contact information: aaron.townsend@nrel.gov 303-275-3272

18. Current Capacity 18

19. 19 Example Analysis 300 MW energy-only device in Colorado 19 National Renewable Energy Laboratory Innovation for Our Energy Future Energy-only device compared to reserves devices