critical factors for developing economically viable electricity storage projects

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Analyze.Simplify.Implement.

Critical Factors forDeveloping Economically ViableDeveloping Economically Viable

Electricity Storage Projects Presented by

Rahul Walawalkar Ph.D., CEM, CDSMSr. Energy Consultant

Customized Energy Solutions Ltd.1528 Walnut Street, 22nd FloorPhiladelphia, PA 19103 USA

Phone: 215‐875‐9440Fax: 215‐875‐9490info@ces‐ltd.com

Presented at thePresented at the

Storage WeekStorage WeekSan Diego, CaSan Diego, Ca

July 14July 14thth, 2009, 2009


Agenda:

Energy Storage Technologies & Electricity Markets

Factors affecting Economic viability of EESEES Design, performance & capabilities

Market Design, Rules & Barriers

Project FinancingOther Factors (Fuel price, environmental regulations & competition)

Questions ???

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Overview of Electricity Markets

3Source: FERC: http://www.ferc.gov/industries/electric/indus‐act/rto/rto‐map.asp


ts Available for commercial order

o Preconstruction and licensing period

C Finalized cost estimateDesign/construction period

EES for Electric Utility Applications

• Pumped Hydro Energy Storage

• Compressed Air Energy Storage Design/construction period

l First commercial service

at

I 2nd plant in service

pa 3rd plant

C <--estimate actual--> 4th plant 5th plant

t Development period

I cost estimate Mature plant cost---------->

n Simplif ied cost estimate w ith incomplete data

U

p gy g

• Sodium Sulfur (NAS)

• Flow Batteries (VRB/ZBB)

• Flywheels (Beacon)

• Li‐Ion Batteries (Altairnano/ A123)

NAS

4

ZBB

VRB/Prudent Energy

Flywheel

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Opportunities for Energy Storage

Energy Arbitrage Ancillary ServicesAncillary Services

Regulation Operating ReservesVoltage Support

Installed Capacity Deferral of investment in

P ki G tiPeaking Generation Transmission & Distribution

Supporting integration of renewables

5


Factors Affecting EES Economics

EES Design, Performance & CapabilitiesTechnology selectionPower & Energy ratingLife expectancy Round Trip EfficiencyResponse rate & any other operating considerationsResponse rate & any other operating considerationsFootprint & any special permitting requirementsCapability to meet requirements for different markets

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EES Selection: Discharge Time & System Power Rating

Source: Electricity Storage Association 7


Round Trip Efficiency & EES Utilization

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~51% increase over daily operation

Net Revenues with different CAES Configurations

CAES ConfigurationHeat Rate

ual Reven

ue $ / M

W

Heat RateEnergy RatioPower RatioRamp rate Response time Storage

0.50 0.75 1.00 (Daily) 1.00 (Monthly) Power Ratio

Ann

u

9

Duration



Market DesignAccess to various markets for

energy,

ancillary services

capacity

Generation Supply mix & Demand CurveMarket sizeLocational factors Electric transmission network & interconnection

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Comparison of ISOs/ RTOs

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Recent changes in Market Design

FERC Orders 890: open regulation markets to non‐gen resources 719: demand response and long term power contracts719: demand response and long term power contracts

PJM & NYISO opened up ancillary service markets for demand side resources during 2007‐08ISO‐NE initiated pilot program for alternative technologies participation in regulation marketCreation of a new category for ancillary services to g y yremove barriers for energy limited resources

NYISO: Limited Energy Storage Resources (LESR)MISO: Stored Energy Resource (SER)

CAISO has proposed a EES Pilot for ancillary services

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EES Revenues & Cost

On Peak Energy Revenues

Off Peak Charging Costs

Ancillary Service Revenues

Capacity revenues

Interconnection costs

Natural Gas price

13


NYISO Net Load - 2006

35000

NYISO - Net Load - Yr 2006

n

0

5000

10000

15000

20000

25000

30000

MW

1-Ja

n13

-Jan

25-J

an6-

Feb

18-F

eb1-

Mar

13-M

ar

25-M

ar

6-Ap

r

18-A

pr

30-A

pr

12-M

ay

24-M

ay

5-Ju

n

17-J

un

29-J

un

11-J

ul

23-J

ul

4-Au

g

16-A

ug

28-A

ug

9-S

ep

21-S

ep

3-O

ct

15-O

ct

27-O

ct

8-N

ov

20-N

ov

2-D

ec

14-D

ec

26-D

ec

S1S5S9S13S17S21Days in Year

Hrs in Day

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Short Run Marginal Cost Curve

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Location, Location, Location

• NYISO • PJM

NY WestNY

EastWest

Central

East

South

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NYC

• PJM East: AECO, DPL, JCPL, METED, PECO, PPL, PSEG, RECO

• PJM Central: PENELEC, APS• PJM South: DOM, BGE, PEPCO • PJM West: COMED, AEP, DAY, DUQ

• NYC: NYC, Long Island• NY East: Capital, Hudson Valley, Millwood,

Dunwoodie• NY West: West, Genesee, Central, Mohawk

Valley, North

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Congestion Example


NYISO & PJM LMP Profiles (2001-09*)

18* Partial year data as of June 2009

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Effect of Location & Efficiency on Net Revenue

19


Effect of Natural Gas Price in NYISO

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Average Daily LMP Curves for each month in NYC

21


Ancillary Service Revenue

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Regulation Price Profiles NYISO (2001-09)

23


Probability Curve for Expected Regulation Revenues

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Capacity Credit

NYISO has a locational ICAP requirement80% for NYC97.5% for Long Island

PJM uses Reliability Pricing Mechanism (RPM) to set up locational capacity pricesFuture capacity prices will be influenced by

demand growth Energy and ancillary service revenuesGeneration addition / retirements as well as DRCost of new generation technologies

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Other Factors Affecting EES Economics

Financing FactorsCapital CostsReal estate and taxes Cost of borrowingConstruction, permitting & interconnection period

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Impact of capital cost on economics of CAES in NY

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Other Factors Affecting EES Economics

Transmission / Distribution UpgradesImpact of wind & renewable integrationImpact of wind & renewable integrationImpact of environmental regulations

Renewable Portfolio Standard mandatesNYS 15x15 Program InitiativeCarbon Tax

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Transmission Infrastructure

29National Interest Electric Transmission Corridor


PJM: Proposed new transmission projects

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Source: PJM

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Impact of Renewables

PJM has 40GW + wind projects in interconnection queueCurrent wind penetration is 1.3 GW

NYISO is anticipating more than 3 GW of wind being added on the grid in next 3-4 years

Current wind penetration is 1 GWRepresents around 10% of peak load for NYISO

20-30% of off peak loadMay result in increased regulation and ancillary service requirementsCan improve the case for energy arbitrage by lowering off peak prices

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Occurrence of Negative LMPs in NYISO Zones

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Distribution of –ve LMPs

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Conclusions

• Electricity markets across US allow or are working on allowing EES to participate in energy, ancillary services & capacity markets.

• The economic feasibility of EES will depend on factors including– Design parameters

– Market Structure and location

– Ability to capture multiple revenue streams

– Financing

– Environmental regulations

– For large scale integration of EES it is important that technology developers and market participants, as well as potential investors understand these factor while determining value proposition of EES for different applications.

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Acknowledgements

Co‐authors & Colleagues Netra Thakur, Rick Mancini and Jim Harvilla

I would also like to thankDr. Jay Apt & Dr. Lester Lave (CMU)Dr. Peter Balash (NETL) Joseph Sayer & Mark Torpey (NYSERDA)Haresh Kamath & Robert Schainker (EPRI)

This analysis was supported in part byThis analysis was supported in part byCarnegie Mellon Electricity Industry Center (CEIC)New York State Energy Research Administration (NYSERDA)National Energy Technology Labs (NETL)

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QUESTIONS ???QUESTIONS ???Dr. Rahul WalawalkarDr. Rahul Walawalkar

215215‐‐875875‐‐94409440rahul@cesrahul@ces‐‐ltd.comltd.comwww.ceswww.ces‐‐ltd.com ltd.com

Customized Energy Solutions Ltd.1528 Walnut Street, 22nd FloorPhiladelphia, PA 19103 USA

Phone: 215‐875‐9440Fax: 215‐875‐9490info@ces‐ltd.com

critical factors for developing economically viable electricity storage projects

Documents

nyiso pjm lmp profiles

nyiso net load

capacity credit nyiso

nyiso net load yr

ny east

north pjm west

long island pjm east

ees economicsees design