Advancing Energy Storage in California: RICAPS Working Group Meeting Summary

1. Energy Storage & Local Government Regionally Integrated Climate Action Planning Suite (RICAPS) Working Group Meeting August 22, 2017 Jin Noh, Policy Manager California Energy Storage Alliance (CESA)

2. About CESA The California Energy Storage Alliance (CESA) is a 501c(6) membership-based advocacy group committed to advancing the role of energy storage in the electric power sector through policy, education, outreach, and research. CESA was founded in January 2009 by Janice Lin and Don Liddell. CESA’s mission is to make energy storage a mainstream energy resource in helping to advance a more affordable, clean, efficient, and reliable electric power system in California.

3. CESA Members Board Members Adara Power Amber Kinetics American Honda Motor Bright Energy Storage BrightSource Energy Brookfield Consolidated Edison Customized Energy Solutions Demand Energy Doosan GridTech Eagle Crest Energy EDF Renewable Energy ElectrIQ Power eMotorWerks Energport Energy Storage Systems GAF Geli Green Charge Networks Greensmith Energy Gridscape Solutions Gridtential Energy Hitachi Chemical IE Softworks Johnson Controls Lockheed Martin AES Magnum CAES Mercedes-Benz Energy National Grid NEC Energy Solutions NEXTracker NGK Insulators NICE America Research Ormat Technologies OutBack Power Parker Hannifin Qnovo Recurrent Energy RES Americas Sharp Electronics Southwest Generation Sovereign Energy STOREME Sumitomo Electric Sunrun Swell Energy UniEnergy Technologies Younicos General and Series A Members

4. Why Energy Storage?

5. Many Types of Energy Storage Technologies Energy storage technologies store energy for use when it is needed Electro-Chemical Mechanical Bulk Storage Thermal Mobile

6. Many Benefits of Energy Storage

7. California’s Ambitious & Important Clean Energy Goals The 50% RPS by 2030 and 40% GHG emissions below 1990 levels by 2030create a need for more energy storage to maximize renewables investments and manage grid reliability Frequency of Real-time Intervals with Curtailments CAISO Net Load Curve California’s 2017 ‘duck curve’ is ahead of schedule and is at estimated 2020 levels Source: CAISO 2017 Source: CAISO 2013

8. California’s Ambitious & Important Clean Energy Goals New policies drive urgency for flexible infrastructure and energy storage resources that reduce curtailments

9. Energy Storage Is Arriving Each of California’s three investor-owned utilities (IOUs) are making major progress toward their 1,325 MW energy storage procurement target by 2020, including 99.5 MW of energy storage that was procured and operational in six months to address reliability issues stemming from limitations of the Aliso Canyon gas storage facility SDG&E has met its overall target but must still procure 7.5 MW to meet its customer domain target SCE has met its customer domain target and must now fulfill its overall target with T&D domain storage PG&E must still fulfill its energy storage targets in all three domains Updated May 2, 2017

10. Expedited Aliso Canyon Procurement In six months, 99.5 MW of energy storage was procured and operational to address reliability issues stemming from limitations of the Aliso Canyon gas storage facility Updated May 2, 2017

11. Current Energy Storage Costs Source: Lazard 2016

12. Current Energy Storage Costs Source: Lazard 2016

13. Linking Energy Storage to its Benefits Key bills are needed to overcome some barriers that still exist that limit the realization of the benefits that energy storage can provide Financing, permitting, & interconnection costs Limited understanding of capabilities, values, & multi-use applications Limited procurement experience Not adequately modeled in grid planning Barriers Solutions SB 546 SB 356 AB 1030 SB 338 AB 1405 SB 801 SB 338 AB 1405 SB 801 SB 338 AB 1405 Benefits • Portfolio diversity and reliability • Renewables integration • GHG emissions reduction • Customer/ratepayer cost savings

14. Identifying the Best Fit Storage Technology

15. Many Types of Energy Storage Technologies Energy storage technologies store energy for use when it is needed Electro-Chemical Mechanical Bulk Storage Thermal Mobile

16. Energy Storage Basics: Energy vs. Power

17. Customer-Sited Storage Characteristics by Technology Type

18. Complexities to Energy Storage Characteristics It is important to pay attention to technology specifications (e.g., degradation, useful capacity, operating temperatures) and warranties in considering the selection, sizing, and controlling of energy storage technologies Note that most SGIP-funded storage is required to have 10+ year warranties. More on that later

19. Complexities to Energy Storage Characteristics There is no perfect battery type

20. Multiple Services from Energy Storage Energy storage can provide multiple services and stacking these values is important to maximizing its utilization and improving cost effectiveness

21. Finding the ‘Best Fit’ Storage Technology

22. Finding the ‘Best Fit’ Storage Technology

23. Key Takeaways • Energy storage power/energy requirements are a function of the desired application and use case and must both be evaluated for optimum technology selection • Sizing the energy storage system requires a calculation of the maximum power and usable energy required for the application • Energy storage costs should be carefully understood as all-in costs should account for usable energy/capacity and include cell, module, rack, and battery management system • Lithium-ion batteries are the clear market leader in terms of cost/scale, but other technologies may be better fit for specific applications • As new grid services become monetized, there will be additional revenue opportunities to make energy storage more cost effective (e.g., deferral, ancillary services)

24. What Can Local Governments Do?

25. Assess Your Load • Most customer-sited energy storage systems must be selected and sized to meet the customer need first before pursuing additional revenue streams from the grid • Therefore, a load assessment is needed to identify the most effective cost reductions and/or critical loads

26. Identify Load Management Strategies • Depending on the load profile and the rate schedule, different energy storage technologies and operational strategies may be needed (e.g., clipping of ‘peakiest’ loads vs. shifting of solar generation)

27. Take Advantage of Incentives • The Self-Generation Incentive Program (SGIP) provides upfront and performance-based incentives for customer-sited storage, including for local governments

28. Take Advantage of Incentives

29. Get Started Early with Permitting Processes • Work with city/county jurisdiction offices to get all the necessary building permits, fire permits, etc. • CESA is working on AB 546 to create an energy storage specific permitting process to streamline permitting, which may include a checklist for expedited or “over-the-counter” permitting • CEC grant funding may be provided for a city/county to develop its expedited process and to deploy necessary online systems

30. Be Aware of New Procurement Opportunities • AB 2868 was passed in September 2016 that requires the CPUC to direct the three utilities to propose up to 500 MW statewide of new distributed energy storage programs and investments that are incremental to the SGIP and the AB 2514 goals • Up to 125 MW of the 500 MW can be sited behind the meter, prioritizing low-income and public-sector customers • Many local government office buildings will be eligible for these new investments

31. Thank You. Questions?Jin NohPolicy ManagerCalifornia Energy Storage Alliance (CESA)jnoh@storagealliance.org703-507-8809