Hawaii Energy Storage Seminar

1. Hawaii Energy Storage Seminar 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.

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

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

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

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

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. “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. 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. 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. Benefits by Category

14. Incidental Benefits • Avoided T&D “I2R” 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 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. 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 StorageCycling Required • Recent DOE/Sandia Report (SAND-2009-4070) • survey of existing research • important context such as indicators • generalized benefit estimation framework

18. EESAT 2009 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. 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. 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. 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. Societal Value Proposition • Lower electric energy price/cost • Less Supply & T&D infrastructure needs • Reduced fuel use • Reduced I2R 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. 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.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