Meet the Battery Revolution 36th USAEE/IAEE North American Conference Jason Burwen, VP of Policy September 12, 2018 www.energystorage.org

ESA represents a diverse membership ESA’s mission is to accelerate the widespread use of competitive and reliable energy storage systems in North America Established 28 years ago Diverse membership— vendors, developers, independent generators, utilities & other power sector stakeholders Federal, regional, & state policy engagement

Energy Storage = Flexibility Supplies precise amount of electricity exactly when (and where) it is most needed, regardless of when it was generated

Why is storage important? Storage optimizes use of the grid & enables system transformation Saves households & businesses money – avoid excess capacity to meet peak system & local demands, optimize use of other grid assets  lower rates Makes the grid more reliable & resilient – balance supply & demand fluctuations; mitigate supply disruptions and outages; manage planning uncertainty and risks Integrates diverse energy mix – compensate natural variability of renewables and makes them “dispatchable;” makes nuclear flexible; reduces gas cycling; increases distributed resource hosting capacity; makes demand more flexible Creates businesses & jobs – new, growing industry offer investment and employment opportunities across the map

Mechanical Storage Battery Storage Thermal Storage

Why all the buzz on battery storage? Located on all part of the grid at any size Utilities, customers, and third-parties all operating Systems from 5 kW to 30,000 kW in use Quick to deploy MW-scale deployments <1 year from contract Uniquely flexible & expanding performance capabilities Instantaneous response and ramp, bi-directional Capable of multiple services Grid balancing, backup, system capacity, network capacity, curtailment avoidance, energy arbitrage Fastest growing storage type Costs declining rapidly

Battery storage growing

Battery Storage Installed Costs Declining Cost declines of 8-15% year-on-year expected through mid 2020s 4-hour Lithium-ion battery Installed Cost ($/kW) Nitzan (we may add a slide on cost-effectiveness today)

Battery storage bids & contracts increasingly common Notable recent procurements PG&E (California): 568 MW of 4-hr storage proposed (one project 300 MW, 4-hr) Xcel (Colorado): 225 MW of 4-hr storage approved NV Energy (Nevada): 100 MW of 4-hr storage proposed APS (Arizona): 106 MW of storage solicited in RFP Xcel (Colorado): $30-32/MWh PPAs for 4-hr storage plus solar Received bids for 8-hr and 10-hr storage NIPSCO (Indiana): average $35/MWh for storage plus solar Storage in over 20% of bid capacity

Overview of Storage Applications and End-Users Increase transmission capacity & extend asset life Complement or alternative to peaking generation Avoid curtailment of renewables/nuclear Reduce generator cycling Maintain grid stability Residential customer demand for solar-paired storage Increase distribution capacity & extend asset life C&I customer demand charge management + power quality improvement Microgrids for resilience Sky

Storage in Resource Adequacy & Infrastructure System capacity/peak supply Network capacity/T&D assets In development SDG&E/Fluence 30 MW, 4-hr SCE/Tesla 20 MW, 4-hr SCE/Fluence 100 MW, 4-hr In development APS/Fluence 2 MW, 4-hr National Grid/NextEra 5 MW, 8-hr HECO/Stem 1 MW aggregation

Storage becoming a mainstream capacity option

Examples of battery storage as capacity Operating SCE/Tesla (CA) 20 MW, 4-hr SDG&E/Fluence (CA) 30 MW, 4-hr Approved / in development SRP/Fluence (AZ) 10 MW, 4-hr SCE/Fluence (CA) 100 MW, 4-hr PG&E/Dynegy (CA) 300 MW, 4-hr KIUC/Fluence (HI) 20 MW, 5-hr solar-paired Xcel (CO) 3 projects 225 MW, 4-hr solar-paired NVE (NV) 2 projects 100 MW, 4-hr solar-paired PG&E/Tesla (CA) 182 MW, 8-hr

Enabling role for infrastructure Extend the life of existing wire assets Enhance resilience of network & critical infrastructure Increase hosting capacity to enable customer choice Adapt to uncertain futures: supply mix, load & DER forecasts Enable the demands of increasingly electrified economy Transportation Industrial processes Ubiquitous computing/IoT Heating? Desalination? If containerized/modular… assets cannot be stranded

Rates As A Driver of Customer Storage Medium C&I Energy Storage Returns from Demand Charge Management Alone 2016 2022 IRR 5%-10% IRR 10%+ IRR 5%-10% IRR 10%+ Source: GTM Research The Economics of Commercial Energy Storage in the U.S.: The Outlook for Demand Charge Management, 2016

Storage pairing with diverse assets Gas + Battery Coal + Battery Wind + Battery Solar + CHP + Battery

Energy Storage & the Duck Curve RAMPING / FLEXIBLE CAPACITY Sky -short, steep ramps – when the ISO must bring on or shut down generation resources to meet an increasing or decreasing electricity demand quickly, over a short period of time; -oversupply risk – when more electricity is supplied than is needed to satisfy real-time electricity requirements; and -decreased frequency response – when less resources are operating and available to automatically adjust electricity production to maintain grid reliability. To reliably operate in these conditions, the ISO requires flexible resources defined by their operating capabilities. These characteristics include the ability to perform the following functions: •sustain upward or downward ramp; •respond for a defined period of time; •change ramp directions quickly; •store energy or modify use; •react quickly and meet expected operating levels; •start with short notice from a zero or low-electricity operating level; •start and stop multiple times per day; and •accurately forecast operating capability. CURTAILMENT AVOIDANCE

As renewables increase, value of flexibility increases Twin measures for reliability Analysis of 40% RE in PNM’s 2017 Integrated Resource Plan Meet highest period of demand Meet fastest change in net load

Roles of Storage in Cleaner Grid Avoiding peakers & related infrastructure Storage already substituting gas capacity in CA, AZ, HI Integrating higher levels of renewables Ramping & other fast-balancing; curtailment avoidance to increase GHG reductions Enabling more rooftop solar, EVs, and other DERs Storage already enabling DERs in CA, AZ, HI, NY Making the grid more efficient Increase generating fleet efficiency; multiple values can be stacked; enables right-sized & just-in-time capacity

Not all benefits are monetized Massachusetts State of Charge report modeled 1,766 MW of battery storage deployment in MA (in ISO-NE) Non-monetized system benefits are >2x accessible revenues Reducing system peak + local peak = 50% of system benefits

What Are The Hurdles To Deployment? No price signal or product to capture VALUE of storage Rate design Utility programs Wholesale market products Unable to COMPETE in all grid planning and procurements Integrated resource planning Distribution planning Wholesale market rules Cannot ACCESS grid or multiple programs Interconnection Multiple-use frameworks Sky

Thank you j.burwen@energystorage.org