Overview of Energy Storage Technology,

Challenges, and Policy Development

August 12, 2020

Jeremy Twitchell

Patrick Balducci

Kendall Mongird

Workshop for National Conference of State Legislatures’ Energy Storage Task Force

Acknowledgment

The work described in this presentation is made possible through the funding provided by the

U.S. Department of Energy’s Office of Electricity, through the Energy Storage Program under the direction of Dr.

Imre Gyuk.

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Agenda

Energy Storage Program Overview

Technology and Trends

Cost and Market Information

Benefits and Challenges of Energy Storage

Overview of State-Level Policies on Energy Storage

Energy Storage for Resilience

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Energy Storage Program Overview

The Department of Energy’s Grid Energy Storage report (2013) identified a four-pronged

strategy to facilitate energy storage deployment:

Cost-competitive energy storage technology

development;

Validated reliability and safety;

Equitable regulatory environment; and

Industry acceptance

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Energy Storage Program Engagements

AL, AR, CA, FL, GA, HI, ID, KY,

MD, MI, NC, NJ, NM, NV, ME,

OR, RI, UT, VA, WA

Laboratories

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Energy Storage Technologies and Trends

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Current Installed Capacity – U.S.

Pumped Hydro

(94.2%)

Thermal (2.5%)

Battery (2.9%)

Compressed Air (0.4%)

Source: DOE Global Energy Storage Database, https://energystorageexchange.org/.

Total Energy Storage Capacity

Total Battery Capacity Pumped Hydro 24.5 GW

Battery 0.7 GW

Thermal 0.7 GW

Compressed Air 0.1 GW

Total 26 GW

Lithium-Ion 631 MW

Lead Acid 52 MW

Nickel 27 MW

Sodium 26 MW

Flow 5 MW

Ultracapacitor 2 MW

Lithium-Ion (84.9%)

Sodium(3.4%)

Ultracapacitor (0.3%)

Nickel (3.6%)

Flow (0.7%)

Lead Acid (7%)

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Forecast Installations

Source: Wood Mackenzie Power & Renewables, U.S. Energy Storage Monitor Q4 2019

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U.S. Department of Energy Water Power Technologies Office, https://www.energy.gov/eere/water/pumped-storage-hydropower.

Pumped Storage

Advantages

Very long duration

(hours/days)

Very high capacity (GW scale)

Challenges

High capital costs

Permitting requirements

Geographic requirements

Key applications

Arbitrage

Long-duration storage

Transmission

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Battery technologies: Lithium-ion

Cell Pack Rack System

18650 Cell: Slightly thicker, longer than

a AA battery

Advantages

High energy density

Good cycle life

Decreasing costs – Stationary applications benefit from EV demand

Multiple vendors

Fast response

High round-trip efficiency (80% range)

Salem Smart Power Center, Greentech Media Challenges

Reliance on rare-earth minerals Key applications Recycling

Short - medium duration, high power Safety

Performance/useful life dependent on usage Frequency response, spinning reserves, peak shaving

GE

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Battery Technologies: Flow

Advantages

Long life, deep cycling

Power/energy decoupling

High recyclability

Safety (reduced fire risk)

Challenges

Limited experience

Complicated design

Lower energy density

Lower round-trip efficiency (60-70%)

Key Applications

Ancillary services

Peak shaving

Arbitrage

Basic flow battery schematic. Vanadium-based chemistries are

most common, but other chemistries (iron, etc.) also exist.

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Battery Technologies: Sodium

Sodium chemistries invert traditional battery structure, using

a solid electrolyte and a semisolid (molten) anode

Advantages

Low-cost, abundant materials

Good energy density

Long duration (4-6 hours)

Challenges

Very high operating temperatures (300 – 350 degrees Celsius)

Potential for thermal runaway

Key applications

Arbitrage

Capacity

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Battery Technologies: Lead-Acid

Advantages

Low cost/multiple providers

Significant experience with the technology

Challenges

Limited life (500 – 1,000 cycles)

Rapid degradation at deep discharge

Low energy density

Limited flexibility – overcharging/prolonged storage can

ruin the chemistry

Recent advances are addressing many of these

challenges

Key applications

Arbitrage

Light-duty applications (car battery, emergency backup)

The Ultrabattery, developed in Australia and sold by East Penn in the U.S., uses a different type of electrode to

increase power and cycle life.

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Current DOE-funded R&D Efforts

Reducing the cost and environmental impacts of energy storage is a key driver of Department of Energy-

sponsored research initiatives:

Recycling

Battery Recycling Prize: $1M in awards for companies that can demonstrate new innovations in battery collection,

separation & sorting, safe storage & transport, and logistics.

ReCell: First R&D center developed to lithium-ion battery recycling, hosted by Argonne National Laboratory

Reducing reliance on rare earth materials

Organic flow batteries: Improving the power density and life cycles of carbon-based flow battery electrolytes

Low-temperature sodium batteries: Current sodium-based battery technologies must be operated at very high

temperatures (300 degrees C); reducing operating temperatures to a safer range can improve safety and broaden

potential uses

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Cost and Market Information

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Elements of Battery Storage

Cell / Rack

• Storage device

• Battery Management & Protection (BMS)

• Racking

• $/KWh

• Efficiency

• Cycle life

Balance of Plant

• Housing

• Wiring

• Climate control

• Fire protection

• Permits

• $

Power Control System (PCS)

• Bi-directional Inverter

• Switchgear

• Transformer

• Interconnection

• $/KW

Energy management System (EMS)

• Charge / Discharge

• Load Management

• Ramp rate control

• Grid Stability

• Monitoring

• $

• DER control

• Synchronization

• Islanding

• Microgrid

• $

Site Management System (SMS)

NOTE: All–in cost may be 4x higher than cell cost.

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Lithium-ion Price Trends

When comparing prices for different

systems, ensure that it is done on

equal terms (cell, pack, installed)

As cell and pack prices fall, balance

of plant constitutes an increasing

share of total system costs

Balance of plant costs vary

significantly by site; installed cost

may be 4x or more the cell + pack

cost

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Current Cost Estimates – Batteries

Break down storage into comparable performance attributes:

Round-trip efficiency (RTE)

Lifespan

Number of cycles

Degradation rate

Point of interconnection

Response time

Energy to Power ratio (E/P)

Mongird et al, Energy Storage Technology and Cost Characterization Report. http://energystorage.pnnl.gov/pdf/PNNL-28866.pdf.

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Current Cost Estimates – Pumped Hydro

Attributes are not equivalent to selection and do not provide the complete context:

• Scale

• Costs vs. risk

• Speed of response or duration of response

• Commissioning timeframe

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Benefits and Challenges of Energy Storage

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Taxonomy of Energy Storage Services

Properly valuing energy storage is a complicated process of identifying and optimizing all value streams

Storage can do a lot of things, but it can’t do them all at once, and any time a service is selected, it comes with opportunity costs

Granular models are needed to understand those tradeoffs and optimize value

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Energy Storage Values and the Planning Process

Captured in

traditional

planning

models?

Y

N

N

N

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Specific Barriers to Energy Storage

The specific barriers to energy storage vary, to some degree, depending on my

regulatory paradigm:

Deregulated (regional markets):

Markets may not compensate for all

storage capabilities (FERC Order 841)

Federal (transmission system) and state

(distribution system) jurisdiction overlap

Transmission system planning doesn’t

capture storage benefits

Vertically integrated:

Resource planning tools don’t capture storage benefits

No clear market signal to inform storage dispatch

Transmission system planning doesn’t capture storage benefits

Report: Energy Storage in IRPs

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Overview of State-Level Policies on Energy Storage

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Recent Energy Storage Policy Activity

As energy storage costs (orange line)

have fallen in recent years, the amount

of new storage on the grid has rapidly

increased (blue wedge), and state policy

development has accelerated and

differentiated.

The article explores the different types of

polices that states are adopting, the

drivers for different approaches, and

early effects.

Report available at

https://link.springer.com/article/10.1007/s

40518-019-00128-1.

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Energy Storage Policy Database

In recent years, several states have begun to identify and address barriers to energy storage. PNNL

tracks these policies in an interactive database available at

https://energystorage.pnnl.gov/regulatoryactivities.asp:

The policy database tracks five types of

state-level energy storage policies, which

were also explored in a recent journal

article:

Procurement targets

Regulatory adaptation

Demonstration programs

Financial incentives

Consumer protection

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Procurement Targets

Generally adopted where a state identifies specific issues that energy storage is expected to address,

and current practices that may prevent storage from adoption in the normal course of business. Currently

adopted in seven states:

California: 1,325 MW by 2020; 500 MW (distribution-connected) by 2020

Oregon: 10 MWh by 2020

Massachusetts: 200 MW by 2020; 1,000 MWh by 2025

New Jersey: 600 MW by 2021; 2,000 MW by 2030

New York: 1,500 MW by 2025; 3,000 MW by 2030

Nevada: 1,000 MW by 2030 (Technically a goal)

Virginia: 3,100 MW by 2035

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Regulatory Adaptation

Several states have adapted regulations to account for the unique capabilities of energy storage and

other flexible, scalable technologies:

California: CPUC adopts 11 rules covering energy storage in planning

Washington: WUTC issues policy statement guiding storage modeling in IRPs

Hawaii: HPUC changes to interconnection requirements encourage storage; streamlined proceedings for

review of flexible resource investments

New Mexico: NMPRC amends IRP rule to require storage analysis

Virginia: Legislature requires distributed energy integration report

Maine: Legislature creates nonwires alternative coordinator to make recommendations for non-wire

investments in transmission and distribution systems

Target legislation in OR, MA, NJ also requires PUC to develop processes for evaluating, siting storage

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Demonstration Programs

Demonstration programs are state-directed initiatives in which the state authorizes, and often assists in

funding, energy storage projects intended to assist utilities in gaining operational understanding of

energy storage:

Massachusetts: ACES program provides $20 million to 26 projects

New York: REV initiative includes an open call for demonstration project proposals; four projects developed

Washington: CEF provides $14.3 million for five demonstration projects

Virginia: Legislation authorizes 40 MW of storage demonstration projects

Utah: Legislation authorizes energy storage demonstration project

Maryland: Legislation requires utilities to conduct demonstration projects testing various ownership models

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Financial Incentives

Six states offer state-funded programs that provide incentives, either as direct payments or tax rebates, to

customers who install energy storage:

California: Self-Generation Incentive Program set aside $378M for customer-sited energy storage projects

from 2017-2021

New York: The New York State Energy Research and Development Authority provides multiple grant programs

to support energy storage developments

Nevada: Legislation expands solar incentive program to include energy storage

Arizona: Regulators authorize $2M incentive program to assist large commercial customers in deploying

behind-the-meter storage for peak management

Vermont: Legislation makes storage eligible for Clean Energy Development Fund

Virginia: Solar development authority expanded to include energy storage

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Consumer Protection

Two states have adopted legislation that guarantees certain protections to customers who install energy

storage:

Nevada: Legislation establishes a right for customers to install energy storage in a timely manner, subject to

reasonable standards

Colorado: Legislation establishes a right for customers to install energy storage and directs the Colorado PUC

to develop interconnection rules

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Energy Storage and Decarbonization

Case Study: California’s Self-Generation Incentive Program (SGIP)

SGIP created in the wake of the

California Energy Crisis in 2001

to incent distributed generation

investments by customers

(primarily distributed solar)

SGIP-supported investments

contribute in large part to the

infamous “duck curve”:

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Energy Storage and Decarbonization

Case Study: California’s Self-Generation Incentive Program (SGIP)

In 2017, the California Public Utilities Corporation (CPUC) changed SGIP to include distributed energy storage

to help manage all of the distributed solar generation

Around this time, the debate over energy storage’s role in decarbonization starts to heat up in the energy

research community

In 2019, a study of the SGIP program found that SGIP-supported storage created a net increase in energy-

sector emissions

Residential storage projects (more likely to be charged by attached solar) generally reduced emissions

Non-residential storage projects (more likely to be charged by grid energy) generally increased emissions

Because non-residential projects are larger and more numerous, net effect was an increase in emissions

Result: CPUC changes SGIP in March 2020 to send a signal to participating storage projects when fossil fuel

usage increases on the grid

Incentives are pro-rated based on the device’s ability to follow the signal

Takeaway: Energy storage can contribute to decarbonization goals, but deliberate policy is needed 33

Energy Storage for Resilience

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Obstacles to Resilience

Problem Statement:

“Reliability” is an objective concept, defined by these standards: Mandatory Enforcement Standards (NERC has 100 of them),

Additional Voluntary Standards (NERC has 457 of them), and

Reporting Metrics (IEEE 1366-2012)

Standards facilitate the development of tangible planning objectives and make reliability a monetizable service.

Reliability standards are firm requirements that a utility must meet at the least cost.

“Resilience” is more subjective, lacking specific metrics and standards, or even an agreed-

upon definition. It is therefore difficult to develop planning objectives for resilience or to

monetize it.

Resilience, as a standalone application, is expensive and rarely needed

Resilience investments must provide other value-add services to the grid (e.g., energy storage)

Costs must be assigned based on benefits

Absent similar standards, resilience is a goal that is pursued subject to cost effectiveness.

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Storage and Resilience: A New Paradigm

The advent of cost-competitive energy storage options has enabled us to go from:

Economic Resilience Mission-critical resilience

• Capacity

• Energy

Limited opportunities for grid participation

High cost

Limited to facilities in which resilience is

mission critical

• Regulation

• Reserves

• Arbitrage

• Capacity

• Energy

• Energy

• …

• Capacity

to

• Fuel Savings

Increased opportunities for grid participation

Offsetting revenues reduce system costs

Viable resilience for broader range of facilities

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Where to Begin: Proposed Framework Overview

By approaching resilience from a local level, specific risks and optimal means of

addressing them may be more easily identified:

1. Identify risks ▪ What are the major events – historic and potential – that drive major outages at the site in question?

▪ Key point: Resilience risks are site-specific

2. Define critical loads ▪ What are the facility functions that must be maintained in the event of an outage, and for how long?

▪ What is the risk tolerance for not maintaining those loads?

▪ Key point: “Success” must be defined first. What are the resilient outcomes that planning should pursue?

3. Engage in iterative planning between project and grid levels ▪ Grid interface level: What are local grid conditions and needs? What communications and interconnection infrastructure

is needed to enable asset functionality?

▪ Project level: What are the various resource portfolios that will meet the identified need across multiple potential

futures? What are the values created by utility tariffs (demand charges, net metering, etc.)?

▪ Key point: Optimal configuration will vary by location

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Emerging Models for Resilience: Military

Marine Corps Air Station Yuma (AZ)

25 MW diesel generators

MCAS Yuma hosts the project

(in-kind donation of land)

Arizona Public Service built, operates the

equipment

As project host, MCAS Yuma is

guaranteed backup power

in the even of a grid outage

25 MW can support full facility

functionality

U.S. Marine Corps/APS

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Emerging Models for Resilience: Military

Pacific Missile Range Facility (HI)

19 MW PV array

70 MWh battery

PMRF provides land

AES Distributed Energy builds, owns

and operates the facility

Sells output to Kauai Island Utility

Cooperative during normal operations

(25-year power purchase agreement)

Supports PMRF during outages

Under development

U.S. Navy

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Emerging Models for Resilience: Civilian

Green Mountain Power (VT)

Distributed storage through cost sharing with

customers

Customers pay $1,500 up front or $15/month

Receive a 7kW/13.5kWh Tesla Powerwall

Utility controls the devices; uses them for peak

shaving

Shaved ~3.5 MW off 2018 peak; saved $500k

Customers receive backup power and time-of-use

rate management

Fully subscribed (2,000 customers)

Green Mountain Power

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Emerging Models for Resilience: Civilian

Sterling Municipal Light Department (MA)

2.4 MW Solar

2 MW/3.9 MWh battery

Provides emergency backup power to police station

and dispatch center

During normal operations, utility uses the microgrid

to reduce monthly peaks (reduces transmission

network charges) and annual peaks (ISO-NE

capacity market revenue)

Projected annual benefits: $400,000

Year one benefits: $419,000

Supported by $250,0000 grant from U.S. DoE and

analytical support from national labs

Projected 7-year payback

Clean Energy Group

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Emerging Models Summary

These projects represent a wide range of microgrid designs and uses.

Despite those differences, there are a number of consistencies between

successful projects:

Resilience benefits are hyperlocal

Limited to a single facility, in some cases as small as a single residence

Projects made economically feasible through grid services

Utility, grid operator, or knowledgeable third party operates projects to maximize value

Key grid value drives each project

Peak shaving, reduced operating costs, grid constraint management

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Resilience Conclusion

Resilience as a standalone service is expensive

Unlike reliability, we have no standards for resilience

Projects must pay their own way through other services

Energy storage represents a paradigm shift for resilience, microgrids

Flexible, scalable resource can provide a wide range of valuable grid services

Increased value reduces the net cost of resilience, broadens its availability

Deliberate planning is needed

Grid level: Local grid communication and controls must be identified; local grid values must be considered

Project level: Stochastic analysis necessary to ensure portfolio robustness; consider values created by

utility rate and tariff structures

Resilience can be done – and it is happening with increasing frequency

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Additional Resources

PNNL Energy Storage

(energystorage.pnnl.gov)

Sandia National Laboratories

(www.sandia.gov/ess/)

DOE Global Energy Storage

Database

(www.energystorageexchange.org)

Energy Storage Association

(www.energystorage.org)

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Thank you

Jeremy Twitchell

jeremy.twitchell@pnnl.gov

971-940-7104

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