Don Liddell - Independent Energy Producers

Energy Storage and Renewable Integration
Prepared for the 2011 IEP Annual Meeting
Don Liddell, CESA General Counsel
October 5, 2011
Stay With Me….
“Storage is a potential “game changer” to how we have viewed renewable
energy integration thus far. Storage has the potential to provide grid
operational support, enable electric energy shifting, provide load following
capabilities, etc.
While IEP is supportive of including storage in the mix of resources that can
be procured to provide the ancillary services, grid reliability and load
following characteristics that will be needed to integrate renewable energy
resources, storage should be viewed as only one of the resources that can
provide these needed services and products. In fact, other flexible, fastramping technologies, e.g. gas-fired generators or gas paired with Variable
Energy Resources, can provide many of these “products” as well.”
» Independent Energy Producers Association Comments on the 2011 Integrated Energy Policy Report Committee Workshop on
Energy Storage for Renewable Integration, convened April 28, 2011.
About CESA
Our Mission: Expand the role of storage technology to promote the growth of renewable
energy and create a cleaner, more affordable and reliable electric power system
» Core principles for a healthy market:
 Technology neutrality
 Ownership/business model neutrality
» No advocacy for advocacy sake. We are seeking tangible market results
» Explicit support of renewable energy in our mission…and our membership
» Philosophy of coalition building with all stakeholders – strength in diversity
» Resources are limited, and so must be very focused in our efforts
 California Legislature
CESA – Strength Through Diversity & Collaboration
Steering Committee
General Members
Why California?
Energy Storage is fundamental to many key California policy initiatives
» BIG: 13% of US GDP, 8th largest economy in the world
» Foundational Legislation
Energy Storage Procurement Targets (AB 2514)
Renewables Portfolio Standard (SB X1-2)
Solar Energy System Incentives (SB 1)
Self-Generation Incentive Program (SB 412, AB1150)
Global Warming Solutions Act of 2006 (AB 32)
» Pro-storage policy makers in the Legislature and at key agencies
» CPUC Incentives available for customer-sited applications
» CAISO Renewable Integration Stakeholder Process
» Many energy storage projects currently underway in California
CESA is advocating results-oriented change in all of these areas
Energy Storage Is A Very Broad Asset Class
Technology Classes
Energy Storage Technologies
The Grid-Connected Energy Storage Market is Large
Estimated Global Installed Capacity of Energy Storage
Non-Pumped Hydro Total: 16,295 MW
Solar Thermal, 72 MW
Global Total: 138,683 MW
Batteries, 14,296 MW
Pumped Hydro, 123,390
Molten Salt,
142 MW
Flywheels, 42
Compressed Air, 740 MW
Other, 16,295 MW
Thermal Storage, 1,002
Capacitors, 0.5 MW
Source: Strategen Consulting, LLC
U.S. Energy Storage Market Projections
The U.S. Market is Estimated at $238B Over 10 Years, but Certain
Applications Dominate
Market Reference Size =
$10,000 M
Ease of Deployment
Electric Service Power
Electric Service Reliability
Electric Supply Reserve
Renewables Energy Time- T&D Upgrade Deferral 50th
Area Regulation
Wind Generation Grid
T&D Upgrade Deferral 90th
Integration, Long Duration
Electric Bill Cost
Renewables Capacity
Load Following
Wind Generation Grid
Voltage Support
Short Duration
Electric Energy Time-shift
Transmission Support Electric Supply Capacity
Transmission Congestion
Substation On-site Power
Application Lifetime Value ($/kW for 10yr Project Life)
Source: SANDIA Report SAND2010-0815, Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide, Jim Eyer & Garth Corey (February 2010)
Overview of Energy Storage and Solar
Solar + Storage
Base load
Load & Solar
Net Load is Still
Coincident with
Peak Demand
Storage to Shift
Net Peak Load
to Off-Peak
Potential Value Streams
» Charge during off-peak and discharge
during peak to reduce demand charges.
Potential to leverage 30% FITC for both
» Firm up additional demand savings from
» Share inverter / power conditioning
equipment with solar and other
» Potential to provide emergency back-up
Energy Storage is Needed to Meet 33%
Renewable Integration Goals
*Memorandum to CAISO Board of Governors, August 18, 2011.
Energy Storage is a Key Component of the Brown
Administration’s Clean Energy Plan
California-based RPS Procurement
• Build 8,000 MW of large-scale renewable generation
• Plan and permit new necessary transmission within 3 years
Energy Efficiency
• Adopt Load management
• Adopt stronger efficiency
• Make existing buildings more
California-based Clean Distributed Energy
Resources Program
• Build 12,000 MW of localized renewable energy
• Increase combined heat and power production
by 6,500 MW
• Deal with peak energy needs and developing
energy storage
The Key Barrier for Grid-Connected Energy Storage is
the Existing Regulatory Framework
Storage is both blessed and cursed with its ability to provide many
benefits throughout the electric power system
» While energy storage is an established industry, grid-connected storage is a new
application, with limited organized resources to advocate for regulatory change
» Multiple jurisdictions regulate energy storage systems, and thus compensation
» Regulatory proceedings are typically divided into specific asset classes, but
storage spans all asset classes
Regulatory Policy Intervention is Needed
Open FERC Rulemaking Dockets
» November 18, 2010, FERC NOPR issued on Variable Energy Resources (RM10-11-000)
 Require intra-hourly scheduling
 Require VER’s to provide meteorological/forecasting data
 Create a generic ancillary services rate schedule
» February 17, 2011 FERC, NOPR issued on Frequency Regulation Compensation (RM-11000)
 Require a uniform price for regulation capacity and a performance payment
 Compensate providers of frequency regulation services based on accuracy
» May 19, 2011, FERC, NOI issued on Promoting Transmission Investment Through
Pricing Reform (RM11-26-000)
 Western Grid qualified battery storage as wholesale transmission facilities.
 To move away from case by case incentive determination
» June 16, 2011, FERC issued an NOI on Third-Party Provision of Ancillary Services:
Accounting and Financial Reporting for New Electric Storage Technologies (RM11-10000)
 To facilitate the development of robust competitive markets for ancillary services.
 Will address the issue of storage asset classification.
Recent California Energy Storage Policy Developments
California Legislature:
» AB 2514 leads to CPUC Energy Storage OIR
» SB 412 leads to including storage in the Self Generation Incentive Program
» AB 1150 guarantees storage a place in the SGIP and funding for 3 years
» Energy Storage OIR (R.10-12-007)
» DG Interconnection OIR (R.11-09-011)
» Resource Adequacy (R.09-10-032)
» Long Term Procurement Planning (R.10-05-006)
1. AB 2514 (Skinner) - Landmark Energy Storage
» Sponsored by Jerry Brown, former California Attorney General, now
Governor, and authored by Assembly Member Nancy Skinner, and enacted
September 29, 2010.
» Requires CPUC to open a proceeding by March , 2012 to determine, by
October 1, 2013, appropriate targets, if any, for load serving entities to
procure viable and cost-effective energy storage systems by the end of
2015 and the end of 2020.
 Must be technology neutral, but viable and cost-effective .
 Allows utility owned, customer-owned, and third party-owned systems
to be considered.
 Must consider information from CAISO and integration of storage with
other programs.
AB 2514 provides needed regulatory focus on storage
2. AB 2514 (Skinner) - Landmark Energy Storage
» With a one year lag, requires the same determinations of
governing boards of local publicly owned utilities to open a
proceeding by March 1, 2013, and make comparable
determinations by the end of September 2014 with possible
targets by 2016 and 2021.
» Energy storage systems may be used to meet resource
adequacy requirements established for load serving entities.
» Applies to systems installed after January 1, 2010.
SB 412(Kehoe) SGIP Implementation - D.11-09-015
CPUC decision this month is very favorable to energy storage, providing
$2/W for energy storage – stand-alone or paired with renewables
Key Comparisons
GHG Reductions
Size Restriction:
5 MW max
No min/max:
Must meet onsite load
Discharge Capacity:
4 hours
2 hours
Payment Method:
Technology Based
50 % up front
50 % PBI
SGIP’s Future is Assured - AB 1150 (Perez)
Authorizes new funding and extends the SGIP through 2016
» Enacted September 22, 2011
» Authorizes $83M/year of rate payer-based funding (not PGC) through
December 31, 2014 ($249 million, total)
» Clarifies eligibility of energy storage (P.U.Code § 379.6 a(1)):
“It is the intent of the Legislature that the self-generation incentive program increase
deployment of distributed generation and energy storage systems to facilitate the
integration of those resources into the electrical grid, improve efficiency and
reliability of the distribution and transmission system, and reduce emissions of
greenhouse gases, peak demand, and ratepayer costs.”
Energy Storage OIR - R.10-12-007
» Implementing AB 2514 more than 1 year ahead of schedule
» Scoping Memo issued May 31,2011
 Phase 1: Broad Policy issues
 Phase 2: Cost-Effectiveness
» Proceeding is very general in scope
» It will develop a cost-benefit methodology for valuing energy storage
Unless additional workshops or requests for comments are required, the
next step will be issuance of a Proposed Phase1 Decision for comment.
DG Interconnection and Storage OIR - R.11-09-001
» September 22, 2011 CPUC Issued an OIR to improve distribution-level
interconnection rules.
» CPUC aims to establish:
 Interconnection Procedures
 Queue Policy
 Data Collection and Reporting Requirements
 Resource adequacy qualification standards
 Limits on distributed Generation interconnection penetration
» Review cost allocation for system upgrades, improve cost certainty, and
serve as the forum for the Rule 21 Settlement Process.
Comments on the OIR are due on October 27, 2011.
Resource Adequacy - R.09-10-032
» On October 29, 2009, the CPUC opened a resource adequacy rulemaking
to oversee and refine the program and establish local procurement
obligations of the utilities.
» Existing capacity needed decreased from 27,094 MW in 2011 to 26,158 in
» CPUC determined that the counting rules for all resource adequacy
qualifying resources, including demand response (and storage), require
that they must be available for a block of at least 4 consecutive hours on 3
consecutive days.
» CPUC will open a successor rulemaking proceeding this month In order to
provide a forum for future refinements of the RA program, along with local
procurement obligations for 2013 and beyond.
Long Term Procurement Planning - R.10-05-006
» On May 6, 2010, the CPUC opened its long term procurement planning proceeding
for the purpose of reviewing and approving the generation and load sides of the
utilities’ planning.
» The LTPP proceedings operate on a two-year cycle with the utilities responsible for
submitting procurement plans that project their need, and their action plans for
meeting that need, over a ten-year horizon. All resource planning is to be done in
the context of Energy Action Plan II.
» In this cycle, the CPUC is emphasizing standardized resource planning practices,
assumptions and analytic techniques; interim standards, uncertain costs of GHG
regulations, quantifying energy efficiency in the California Energy Commission’s
forecast, firm capacity from demand-side resources, system versus bundled
resource need, refinements to the bid evaluation process.
» The CPUC is expected to issue a proposed decision in a few months that will set out
the planning assumptions it intends to use going forward for public comment.
1. Energy Storage Activity at CAISO
Long Term Generation Planning Support
» CAISO devotes considerable resource to working hand-in-hand with the CPUC on
long-term procurement planning and resource adequacy.
CAISO’s role in long term procurement planning is comprehensive:
» Support the CPUC to identify long term procurement planning, needs and options
» Inform CPUC, and other state agency regulatory decisions related to resource
adequacy, RPS rules and once-through cooling schedule
» Inform CAISO and state-wide transmission planning needs to interconnect 33%
renewables 33%
» Inform design of CAISO’s wholesale markets for energy and ancillary services to
facilitate provision of integration capabilities
2. Energy Storage Activity at CAISO
Participating Intermittent Resource Program
» CAISO is updating PIRP eligibility requirements and cost allocation. PIRP will
be retained for existing PIRP resources and available to new participation.
» CAISO will lower the bid floor from -$30/MWh to -$150/MWh in the first
year and to -$300/MWh in the following year.
» The objective of this program change is to foster additional dispatch
flexibility over time from thermal and renewable resources as well as new
storage technologies.
» The bid floor is intended to account for the opportunity cost of curtailment
faced by wind and solar resources and the scheduling coordinators that bid
them into the market.
coordinators for non-generator resources that require energy from the real-time
market to offer their full capacity as regulation. This requirement ensures that all
non-generator resources that require regulation energy management will have
access to the market enhancement on a non-discriminatory basis. As described
in proposed section, a scheduling coordinator for a resource using
regulation energy management may submit a regulation capacity bid of up to four
the maximum
energy the resource
1)or curtail for 15 minutes
after a dispatch instruction. To meet the existing continuous energy
requirements of regulation, the scheduling coordinator will procure imbalance
» REM energy
– August
a proposed
as necessary.
With the
use amendment
of regulation to allow
in CAISO’s
a resource
may submit
a regulation
up and regulation
down bid for this capacity, but there is no requirement that the scheduling
coordinator submit a symmetrical regulation up and regulation down bid. The
» Without
the REM Tariff, storage resources that have less than one hour of storage
following table reflects the ISO’s current tariff provisions for regulation service
from participating
in CAISO’s
and are
the impact
of deploying
energy management
for ancillary
a non-generator
resource that is capable of generating 20 MW of energy but only for 15 minutes.
3. Energy Storage-Related Activity at CAISO
Tariff rules
Current tariff
Day-ahead market
Resource may only bid or
self-schedule 5 MW as
regulation because it
must satisfy 60 minute
continuous energy
Real-time market
Resource may only bid or
self-schedule 10 MW as
regulation because it
must satisfy 30 minute
continuous energy
Regulation energy
Resource may bid or self- Resource may bid or selfschedule 20 MW as
schedule 20 MW as
The ISO’s existing tariff section addresses voltage support. The ISO proposes to
4. Energy Storage-Related Activity at CAISO
Pay for Performance Compensation, (RIMPR, Phase 2)
» CAISO believes that an additional payment to regulation resources should
be made based upon movement from their preferred operating point.
» Revised Straw Proposal includes no reference to pay-for-performance, or
mileage payments, as was originally planned.
» CAISO is waiting for guidance from FERC.
Federal Income Taxation
Energy storage MAY be eligible for ITC when integrated with renewables
» Under current law, integrated energy storage and renewable energy projects should be eligible
for the 30% federal investment tax credit
 1978 – Congress enacted 10% ITC for equipment that uses solar and wind energy to
generate electricity
 1980 – IRS regulations issued defining eligible “equipment that uses solar energy to
generate electricity, and includes storage devices, power conditioning equipment,
transfer equipment, and parts related to the functioning of those items.”
» Storage eligibility remains unclear … likely still requires private letter rulings.
 There is no clear meaning of ‘storage device’ as used in Treas. Reg. 1.48-9(d)(3)
 Under Section 48 storage equipment should qualify as Auxiliary Equipment if its use of
non-solar energy is 25% or less based on an annual measuring period.
» Potential ITC for storage
 2010 – two storage-focused ITC bills introduced in the House (H.R. 4210 Thompson) and
Senate (S.1091 Wyden)
 2011 – new legislation dependent on resolution of current budget issues and bi-partisan
General References:
» Renewable Power in California: Status and Issues, CEC Staff
Report, August 2011.
» Electricity Energy Storage Technology Options, a White Paper
Primer on Applications, Costs and Benefits, December 2010.
For more information about CESA membership, public filings,
and other energy storage educational material, please visit us
online at:

similar documents