Integrating Energy Storage into the Grid: Expanding Solar...

Janice Lin, Executive Director, California Energy Storage Alliance (CESA). Joel Meister, Legal Fellow, Solar Grid Storage Robert Fleishman, Senior of Counsel, Morrison & Foerster LLP Carrie Cullen Hitt, Senior Vice President of State Affairs, SEIA

December 5, 2013

Integrating Energy Storage into the Grid: Expanding Solar Energy and Reliability

Antitrust Reminder • As a trade association of competitors, SEIA must

comply with federal and D.C. antitrust laws. • Competitively sensitive matters cannot be

discussed on this webinar, including product prices; sales terms or conditions; production levels; sales territories; marketing plans; industry forecasts; or bid terms.

• If any such topic is raised, SEIA will stop the conversation and, if necessary, end the webinar.

• For more information, SEIA’s antitrust policy is available on its website: www.seia.org.

December 3, 2013 © 2013 Solar Energy Industries Association® 2

http://www.seia.org/

About SEIA

• Founded in 1974

• U.S. National Trade Association for Solar Energy

• 1,000 member companies from around the world • Members from across 50 states • Largest companies in the world as well as small

installers • Our Mission: Build a strong solar industry to

power America

• Our Goal: 10 gigawatts (GW) of annual installed solar capacity in the U.S. by 2015


Today’s Agenda

• Speakers – Carrie Cullen Hitt/ Steve Zuretti SEIA – Robert Fleishman, Senior of Counsel, Morrison Foerster – Janice Lin, Strategen Consulting and Co-Fouder and

Executive Director, California ESA – Joel Meister, Legal Fellow, Solar Grid Storage LLC

• Q&A


Solar Penetration Rising -832 MW Installed in Q1 2013- Second Largest Quarter in History


Increase in DG Has Increased Interest in Storage

• CA Legislature Initiated Action with AB 2514 • Other states considering similar activities • SEIA/ESA MOU to collaborate on key policies

(TBD) • Companies are partnering and looking for

solutions.


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Integrating Energy Storage into the Grid:

Expanding Solar Energy and Reliability

FERC and CPUC Developments and Implications

Presented by

Robert S. Fleishman Senior Of Counsel, Morrison & Foerster LLP

December 5, 2013

SEIA Webinar Presentation

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FERC Support for Energy Storage • Interconnection Rights for “Small” Storage - Order 792

(November 2013) • Revises small generator interconnection agreement and

procedures to include equipment for storage for “later injection of electricity”

• Rules that energy storage is entitled to interconnection procedures that are just and reasonable and nondiscriminatory

• Combined renewable/storage projects can be eligible for small generator procedures (including Fast Track) with control technology for purpose of limiting maximum injection amount in the transmission system, subject to safety and reliability assessment

• Transmission provider retains discretion to use maximum injection in interconnect studies/technical and safety screens/supplemental reviews

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FERC Support for Energy Storage • Integration Into Power Markets

• Charging energy is energy stored for later delivery (wholesale), not station power for consumption (retail). Norton Energy Storage, 95 FERC ¶ 61,476 (2001); PJM Interconnection LLC, 95 FERC ¶ 61,470 (2001); 134 FERC ¶ 61,177 (2011).

• RTO/ISO tariffs modified to incorporate energy storage resources. See NYISO, 127 FERC ¶ 61,135 (2009)(incorporating storage resources in regulation markets furthers Commission competition goals).

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FERC Support for Energy Storage • Regulation and Frequency Response: Order 755

(2011) - directs all RTOS/ISOs to pay sellers for frequency regulation: (1) performance payment for faster ramping and accurate response to dispatch signal and (2) capacity payment with opportunity costs for all resources including storage.

• Under Order 784, open access transmission tariffs must reflect accounting for regulation resource’s speed, accuracy in determination of regulation and frequency response reserves (rule changes necessary to prevent and remedy discriminatory rates and procurement).

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FERC Support for Energy Storage • Clarity and Transparency of Costs, Rates Accounting and

Reporting Rules for New Electric Storage Technologies: Order 784 (July 2013)

• Changes adopted to Uniform System of Accounts and reporting rules for public utilities that own or purchase energy storage assets or services.

• Clarifies that storage equipment cost to be allocated among different functions based on services provided and allocation of the assets cost through approved rates.

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FERC Support for Energy Storage • Necessary to accommodate increased availability of these new

resources and ensure transparency of storage costs. • Centralized Capacity Markets in RTOs/ISOs, Docket No.

AD13-7-000 (capacity market rules for storage) - more to come?

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California’s Energy Storage Mandate • Assembly Bill 2415 (2010) – directed CPUC and publicly-

owned utilities to conduct proceedings to determine whether to adopt an energy storage procurement mandate.

• CPUC October 2013 Decision • Pacific Gas & Electric Company, Southern California Edison and

San Diego Gas & Electric Company must procure 1,325 MW of energy storage by 2020.

• All systems must be operational by 2024. • First utility RFOs in December 2014. • Community Choice Aggregators and Energy Service Providers

must procure 1 percent of their projected 2020 peak demand by 2020.

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Investor Owned Utility Targets Storage Grid Domain (Point of Interconnection) 2014 2016 2018 2020 Total Southern California Edison Transmission 50 65 85 110 310 Distribution 30 40 50 65 185 Customer 10 15 25 35 85 Subtotal SCE 90 120 160 210 580 Pacific Gas and Electric Transmission 50 65 85 110 310 Distribution 30 40 50 65 185 Customer 10 15 25 35 85 Subtotal PG&E 90 120 160 210 580 San Diego Gas & Electric Transmission 10 15 22 33 80 Distribution 7 10 15 23 55 Customer 3 5 8 14 30 Subtotal SDG&E 20 30 45 70 165 Total - all 3 utilities 200 270 365 490 1,325

http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M079/K533/79533378.PDF

http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M079/K533/79533378.PDF

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Implementation of Energy Storage Targets • Utilities must file applications for approval of their 2014 storage RFOs • Explanation of type of storage resources and MW quantities • Operational requirements including:

• Grid optimization services required to ensure reliability or deferment of transmission and distribution upgrades

• Integration of renewable energy • Reduction in greenhouse gas emissions

• Proposed methodology for “least cost, best fit” procurement • Evaluation protocol for valuing benefits and costs that allows comparisons across

utilities, bids and use cases • Must reflect full range of benefits identified by EPRI and DNV KEMA reports • Proposed form power purchase/services/equipment agreements

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Regulatory Implications • It’s not just about the regulatory climate, but the climate matters!

• Do regulators consider energy storage to be the “holy grail”?

• Will state regulators study the California program carefully to assess implications of comparable procurement regimes in their states?

• Will energy storage growth be spurred in other states (as with renewables/RPS)?

• Is the role of energy storage adequately considered in FERC Order 1000 Transmission Planning and in capacity markets?

California Energy Storage Opportunities

Janice Lin Managing Partner, Strategen Consulting Co Founder and Executive Director, California Energy Storage Alliance Thursday December 5, 2013

Prepared for SEIA’s Webinar - Integrating Energy Storage into the Grid: Expanding Solar Energy and Reliability

© 2013 Strategen Consulting, LLC

Outline » Background Strategen CESA

» Overview about Energy Storage » California Energy Storage Opportunities Storage Procurement Goals Long Term Procurement Planning Behind the Meter Incentives

» Key Takeaways/Summary » Where to Learn More CESA Members Only Market Development Forum Energy Storage North America Contacts Membership Resources Upcoming Events


A sampling of our clients:

Strategic thinking and industry expertise creates profitable clean energy businesses

U.S. Department of

Energy

Strategen

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© 2013 California Energy Storage Alliance

CESA – Strength Through Diversity & Collaboration

Steering Committee

General Members


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) California’s Electric System is Not Being Efficiently Utilized

The current electric system must have enough transmission, distribution, generation capacity for the largest annual peak load

Most of the year, the system is operating at

about 55% of peak

Weekly average load

California Load

Data Source: CAISO 2011 OASIS Data – Graph is for illustration purposes only.


Storage Lets Us Utilize the System Assets We Have More Efficiently

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During peak times, storage helps to reduce overall load, reducing the need for excess generation capacity

With storage, we can better utilize existing grid resources during off-peak times

Data Source: CAISO OASIS Data – Graph is for demonstration purposes only.


Energy Storage is a Very Broad Asset Class

Chemical Storage

(Batteries)

Mechanical Storage

(Flywheel)

Bulk Mechanical Storage

(Compressed Air)

Thermal Storage

(Ice) (Molten Salt)

Bulk Gravitational Storage

(Pumped Hydro) (Gravel)


Diversity & Modularity = Broad Electric Power System Applicability Bulk Storage

Ancillary Services

Distributed Storage

Distributed Storage Commercial

Storage

Residential Storage


Estimated Global Installed Capacity of Energy Storage (MW) Represents approximately 2.7% of Global Installed Electric Capacity1

Pumped Hydro, 134,953

Thermal 1,121

Flywheel, 433 Compressed Air, 404

Batteries*, 370

Global Total (Excl. UPS): 140,101 MW

Non-Pumped Hydro: 2,328 MW

Some Energy Storage is Already Installed On the Grid

1Based on EIA 2010 Total Electricity Installed Capacity Data (http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=2&pid=2&aid=7) * Batteries include Flow, Lithium Ion, Sodium Sulfur, Nickel Cadmium, Lead Acid, and Ultra Batteries Source: Based on DOE International Energy Storage Database (http://www.energystorageexchange.org) Est are current as of December 2013

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http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=2&pid=2&aid=7

http://www.energystorageexchange.org/


Worldwide Energy Storage by Country

Source: Based on DOE International Energy Storage Database (http://www.energystorageexchange.org) Est are current as of December 2013 26

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D.13-10-040 (California AB 2514) – Landmark New Storage Bill

Energy Storage Procurement Targets for 2015 - 2021

»If cost-effective

»If commercially available

Targets must be:

»Technology neutral

»Application neutral

»Utility-owned, customer-owned, and third party-owned


Historic Assigned Commissioner’s Ruling: 1.325 GW Goal!


AB 2514 Implementation Process and Timeline

Final Decision implementing recommendations

Conduct Cost-Effectiveness Evaluation of Key Applications

Propose procurement recommendations

Revise Recommendations Set Cost-Effectiveness Methodology

Jan. Feb. Mar. Apr. May June July August Sept. Oct. Nov. Dec. 2013

2014 Jan. Feb. Mar. Apr. May June July August Sept. Oct. Nov. Dec.

March 1, 2014

Deadline for IOUs to file procurement application

October 1, 2014

POU Compliance Deadline

December 1, 2014

First round of solicitations

Complete Cost Effectiveness Evaluation


Storage is Now Part of Ongoing Procurement

CPUC Decision Approves $26M in SDG&E’s 2012 General Rate Case May 9, 2013

$26 million for distributed storage/grid reliability $4.8 million per year ($19 million total) for additional RD&D projects including energy storage Procurement to occur immediately and over next few years


Storage Will Soon Be Part of Long Term Procurement

CPUC Decision requires 50MW of energy storage for local capacity requirements February 13, 2013

“Southern California Edison (SCE) to procure… at least 50 MW [of] energy storage resources, [and] up to an additional total of 600MW of capacity required to be procured from preferred resources - including energy storage resources.”

Energy storage resources must be considered “along with preferred resources” including energy efficiency, demand response and distributed generation, consistent with… California’s Energy Action Plan.”


Hundreds of Storage Projects are Underway Behind the Meter Attractive value propositions are possible with the SGIP and PLS

Size Restriction:

» Maximum size: A standalone system can be no larger than the host customer’s previous 12-month annual peak demand at the proposed site. A generation-paired system can be no larger than the generation system it is paired with

» Must meet onsite load – Max. 25% export to grid

Discharge Capacity Criteria:

» Rated Capacity = average discharge kW over 2 hours » Standalone systems must be able to discharge once per

day » Wind-coupled projects must be able to handle “hundreds”

of partial discharge cycles per day.

Incentive Payment Method:

» Tech Based, 50% up front, 50% PBI (100% up front if <30kW)

» Incentive calculations are separate for companion technologies

Minimum Required Round Trip Efficiency (AC to AC) 67.9%

Capacity Factor 10%

(% total yearly capacity the system is in operation)

Cost Cap » Applicants must pay a minimum of 40% of the eligible

project cost » $5 million maximum incentive amount per project

Warranty Requirement » All SGIP-eligible systems must have a minimum 10 year warranty on all major components of the system

SGIP General Requirements for Energy Storage After Tax IRR Impacts*

8%

13% 12%

18%

13%

20%

17%

23%

0%

5%

10%

15%

20%

25%

Base Case StorageOnly

Storage w/PV

No Incentives SGIP FITC SGIP + FITC

*Assumes 100kW, 2h storage system, Base Case CAPEX & OPEX, High School Load, Year 1 in 2014, 3.5% escalation rate, SCE TOU-8B Secondary Service, 350kWp PV system


Governor’s Executive Order: 1,500,000 EVs by 2025

Infrastructure is Needed for: • 1,000,000 EVs by 2020 • 1,500,000 EVs by 2025


Key Takeaways

»Storage opportunities are real and happening now

Storage Rulemaking

Long Term Procurement Planning

SDG&E General Rate Case

Self Generation Incentive Program

»Join CESA to learn more and help shape the market

»Teamwork and collaboration lead to success!


» Advocacy/Market Development: understand the rules and design the market (AB2514, SGIP, LTPP/RA, etc.).

» Business Development: join a network of 70+ members including RE and Storage Developers, Manufacturers, Integrators, Software Providers, and others.

» Market & Regulatory Intelligence: access experts and join our monthly policy calls to weigh in on the fast pace policy and market development in California.

» Networking, Marketing, and Relationship Building: join CESA events, webinars, and meetings with key executives from leading utilities and regulatory agencies.

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JOIN INDUSTRY LEADERS CESA ANNUAL MARKET DEVELOPMENT FORUM Jan 14-15, 2014

Join the California Energy Storage Alliance (CESA)

http://storagealliance.org/content/cesa-members


CESA Annual Market Development Forum CESA Annual Members-Only Market Development Forum When: January 14, 2014 in Berkeley, California Where: David Brower Center, 2150 Allston Way, Berkeley, CA 94704 Theme: Building the Ecosystem 2014 – Implementation http://storagealliance.org/content/cesa-annual-market-development-forum-2014

» Participants will attend the CESA event in order to: Strategize: Help determine CESA’S Advocacy and Organizational Agenda for 2014 Shape: Actively shape the market for grid storage applications in California Network: Facilitate engagement both within CESA and with key industry stakeholders

“Building the Ecosystem” Learn: Explore timely and relevant topics affecting the market for grid storage

http://storagealliance.org/content/cesa-annual-market-development-forum-2014


SUCCESSFUL KICK-OFF IN 2013... ...REWARDING EXCELLENCE & INNOVATION

“I’ve been to a lot of conferences, and I’ve learned more at Energy Storage North America in the first four hours than I’ve learned at any other conference I’ve attended” Phil Undercuffler, Director, Product Management and Strategy at OutBack Power Technologies

ESNA 2014 San Jose Convention Center

Sept 30 to Oct 2

2014


More Information

» Contact Janice Lin, Founder and Managing Partner, Strategen Consulting LLC

• Email: [email protected] • Office: 510 665 7811 • Mobile: 415 595 8301

» CESA Membership http://www.storagealliance.org/

» Upcoming Events CESA Annual Invitation-Only Market Development Forum Jan 14, 2014

• http://storagealliance.org/content/cesa-annual-market-development-forum-2014

Energy Storage North America Sept 30-Oct 2, 2014 • http://www.esnaexpo.com/

mailto:[email protected]

http://www.storagealliance.org/

http://www.storagealliance.org/












http://www.esnaexpo.com/

Integrating Energy Storage into the Grid: Expanding Solar Energy and Reliability

December 2013

Confidential and Proprietary.Do not redistribute without permission of Solar Grid Storage LLC 39

Growth Challenges = Opportunity

Increased penetration of intermittent solar power and other RE causes utility grid operators to search for additional power balancing technologies

Consumers are increasingly demanding emergency backup for power outages

Fierce competition in the solar and RE industries drives companies to find ways to lower costs and provide additional benefits

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Financed Storage = Cost Reduction, Emergency Power, Grid Stability

Making Solar Better

The Solar Grid Storage Executive Team Solar & Battery Experts

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Chris Cook – President, General Counsel • Co-founder, SunEdison; Wrote first solar PPA • Co-founder, SunWorks; Developed US-based

PV manufacturing & utility-scale solar projects • Instrumental developing interconnection and

net metering standards that make solar viable • Chief architect of New Jersey solar program • UMAB: JD; Virginia Tech: BS, EE

Don Bradley – Founder, SVP Biz Dev • > 20 years experience building sustainable

homes with solar + energy storage • Built “Solar Patriot” (2001) on National Mall –

credited with inspiring DOE Solar Decathlon • Built Philly’s first affordable solar homes and

market-rate zero-energy solar communities • Drexel University: BS, Marketing

Dan Dobbs - CFO • Established & ran SunEdison PPA pricing

process; priced > 1GW of solar projects • Led LCOE reduction effort at MEMC/SunEdison • Developed utility tariff analysis and solar

energy valuation capabilities for SunEdison • Captain, US Air Force Reserve, 1998-2006 • MIT: SB,SM - Mech E, SM - TPP; Wharton: MBA

Tom Leyden – CEO • Solar pioneer, launched career in 1980 • VP, East Coast Operations for PowerLight,

acquired by SunPower in 2007; Developed >140 projects w/large Fortune 500 & retail customers

• Past industry roles: President Mid-Atlantic SEIA, Board Member SEIA, Chairman PV NOW

• Princeton University: BA, Psychology

Luis Ortiz – EVP & CTO • Co-founder, President & COO Liquid Metal Battery

Corp.; $20MM venture funding and 15 employees • Research Director GroupSadoway at MIT • 8 years industrial experience including battery

industry (Valence) & metal production • Six Sigma Black Belt Honeywell/Allied Signal • MIT: SB, ScD – Materials Science & Engineering

Gary Robinson – VP Accounting • Virginia Certified Public Accountant • First full-time SunEdison employee; roles include

Controller and VP, Finance & Accounting • 6 years with big 4 accounting firms • Expertise in multi-entity real estate companies • UMD: BS – Chemistry; Georgetown University:

MS - Accounting, MS - Tax

Confidential and Proprietary. Do not redistribute without permission of Solar Grid Storage LLC

Making solar better

Delivering Affordable Storage

Solar Grid Storage is at the forefront of delivering affordable energy storage for commercial solar installations, government entities, and electric utilities

We build, finance, and operate energy storage systems (PowerFactor™)

A complete PowerFactor™ system including inverter and battery is installed alongside solar energy systems

Solar Grid Storage finances the PowerFactor™ systems separately from the PV system Solar Grid Storage maintains and operates the PowerFactor™ systems for 10 years Revenues from grid ancillary services provide the revenues for financing allowing Solar Grid

Storage to offer “inverter services” to the PV customer at lower cost than buying an inverter

42 Confidential and Proprietary. Do not redistribute without permission of Solar Grid Storage LLC

Making solar better

All Parties Benefit

PowerFactor™ Systems Benefit Multiple Parties

Solar Developer - offers the inverter with multiple uses dramatically increasing the value of the system and differentiating them from competitors Host/Customer - reduces PV system cost and includes backup power (UPS quality) that enables solar to work even during power outages Utility – provides local distribution system benefits including voltage and VAR control; Solar Grid Storage systems are fully SCADA enabled Grid - grid operators can use storage for an array of ancillary services – Solar Grid Storage systems are AGC enabled PV Industry - accelerates solar deployment

43 Confidential and Proprietary. Do not redistribute without permission of Solar Grid Storage LLC

Making solar better

In Practice: Konterra Microgrid

Solar Grid Storage business model is to work primarily with solar project developers and provide “inverter services” instead of a purchased inverter

We reached out to Standard Solar, a MD based regional solar developer They had a customer interested in the backup power option storage

provides State of MD – MEA was looking for “game changing” technologies to help

solar – State provided grant funds of $250k

Confidential and Proprietary. 44

Konterra – Real Estate Developer HQ

Local commercial/mixed use real estate developer in Laurel MD

Multi-story office building Cash deal for Standard Solar – Entered into Inverter Services Agreement with

Solar Grid Storage Carport canopy PV from SolAire 400kW Two PowerFactor 250’s from Solar Grid Storage (500kW ac capacity) 300kWh battery from AllCell (L-ion air cooled)


Value Seen by Partners

Konterra (host)

Konterra sees value in including solar + storage for future developments they undertake

Emergency backup services Peak Demand reduction On site Volt/VAR support

Standard Solar (developer)

New product offering unlocks additional value of solar Provides service grid does not Can move solar to a prime power option May break the solar “cost effective” paradigm


Solar Grid Storage Finance

We provide a financed battery solution for PV projects

Project investor – Clean Feet Investors – a boutique clean energy/ clean tech finance company

Solar Grid Storage uses classic partnership flip model just like early solar projects

PowerFactor System financed and warrantied for 10 years Revenues for financing

Developer fee developer pays instead of inverter purchase – structured as a lease with payments ½ to ¼ what inverter would have cost

Customer pays fee for backup power option PowerFactor system capable of dispatch into PJM ancillary services markets open courtesy

of FERC Order 755 -- revenues from market participation to investor Optional shared savings to customer for peak demand reduction & voltage/VAR correction MEA Grant ITC


Project Details

Grant secured in March 2013 Interconnection completed May 2013 (positive experience with utility – BGE) Standard Solar PV Project construction started June 2013 PowerFactor Systems delivered to site August 2013 – ready for PV DC

connections and AC connections to grid and critical loads circuits System started producing PV power in late Sept 2013


Project Commissioning

Ribbon cutting Oct. 2013 Policymakers: Maryland Governor Martin O’Malley and FERC Chairman Jon

Wellinghoff provided remarks – noted innovation of this new PV-based microgrid with grid support capabilities.

Press: “If you want to see the future of renewable energy in the U.S., you should check out the large container sitting next to a nondescript office building off the I-95 corridor in Maryland.” www.businessinsider.com/konterra-solar-2013-11#ixzz2kRizf1n9


http://www.businessinsider.com/konterra-solar-2013-11

http://www.businessinsider.com/konterra-solar-2013-11

Completed Projects

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Penn State GridSTAR Center Philadelphia Navy Yard – 150kW

WP Properties Hackettstown, NJ – 250kW

WP Properties Denville, NJ – 200kW

Konterra Headquarters Laurel, MD – 500kW


Making solar better

Ongoing Issues

Customers are understandably not experienced with identifying critical loads Evaluating customer load profile for peak demand reduction potential Integration of on-site existing diesel genset with PV + Storage

Genset must disconnect – delayed startup not compatible with battery UPS Evaluating battery ops on PV production – need to move to DC PV

measurement for PPA and SRECs Continue to educate on tax issues with “dual use” battery equipment Incentives to add storage to solar to provide backup capabilities during

extreme weather and other emergency events – like solar, cost of storage will come down with increased production


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Thank you

Joel Meister 202-222-8466

[email protected] www.solargridstorage.com


Making solar better

QUESTIONS?

(Moderated by Steve Zuretti, Manager, California, SEIA)


Integrating Energy Storage into the Grid: Expanding Solar...

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