Monday, February 18, 2019

Overheard at the Energy Storage Association Annual Conference

BOSTON — Energy storage deployment will likely grow to 35 GW by 2025 as consumers, businesses and government agencies increasingly support the technology, industry experts said last week.

Storage Deployment Energy Storage Association Annual Conference

Speakes-Backman | © RTO Insider

“Our industry created the momentum for the unanimous support to unleash the benefits of storage through FERC Order 841,” Energy Storage Association CEO Kelly Speakes-Backman said at her organization’s 28th annual conference. “This is a watershed moment, friends, this is our moment.” (See FERC Rules to Boost Storage Role in Markets.)

The industry’s growth will create hundreds of thousands of jobs, result in $4 billion in cumulative operational savings and avoid 3.6 million metric tons of CO2 emissions and 1,000 metric tons of CO2 equivalents, including nitrogen and sulfur oxide, Speakes-Backman said.

“On a regular basis, our teams are in contact with ISOs and RTOs who are seeking guidance in how to create markets and support rules that enable more storage on the transmission level, distribution level, in businesses and in homes,” she said.

Clean Peak Shaving

Storage Deployment Energy Storage Association Annual Conference

Baker | © RTO Insider

Massachusetts Gov. Charlie Baker opened the conference April 18 by saying that energy storage’s ability to shave peak demand “may be greater than anything else.”

Baker mentioned the “very unusual winter here in New England and in Massachusetts … where we had subzero temperatures for almost two weeks,” during which the region’s generators burned through nearly 2 million barrels of oil, more than twice the amount used during all of 2016. (See Van Welie: ISO-NE in ‘Race’ to Replace Retirements.)

“If you push storage all the way … you could be in a situation where you store during off-peak so that when you have a period like that, you’ve got enough capacity available to draw the storage and you don’t have to pay those huge prices during peak; you don’t have to use those far dirtier sources of energy,” Baker said.

The Baker administration filed legislation in March to spend more than $1.4 billion on climate change measures, including proposing a Clean Peak Standard mandating that utilities use a minimum level of clean energy to supply the highest-priced peak hours, or 10% of grid hours each year.

Baker on Wednesday highlighted the state’s “combo platter” of ambitious goals to solicit 9.45 TWh per year of hydro and Class I renewables (wind, solar or energy storage) and to develop 1,600 MW of offshore wind by 2030, with contracts for the former due later this month, about the same time the state plans to announce its offshore wind selection.

The scheduling conflict overtaxed the Department of Energy Resources, delaying the offshore selection until later this spring, Baker said.

The state in December awarded nearly $20 million in grants for 26 energy storage projects as part of its Energy Storage Initiative and Advancing Commonwealth Energy Storage program, funded by the DOER through alternative compliance payments and administered by the Massachusetts Clean Energy Center.

The storage projects are also drawing an additional $32 million in matching funds pledged by developers or host municipalities, “which in my view is always the right way for us to be investing in this stuff,” Baker said. (See Massachusetts Awards $20M in Energy Storage Grants.)

Commercially Viable

Storage Deployment Energy Storage Association Annual Conference

Parent | © RTO Insider

ISO-NE had no storage in its interconnection queue a couple years ago. It now has more than 500 MW of grid-scale energy storage proposals in the queue, a number that has been growing even in recent weeks, said Christopher Parent, the RTO’s director of market development.

“I think that speaks highly both to state policy in the region driving interest in storage,” Parent said, “but also to the fact that storage itself is becoming a more commercially viable product and can actually participate in the market, potentially on a merchant basis as its costs continue to decline.”

Dan Finn-Foley, senior energy storage analyst for GTM Research, said “energy storage costs have dropped dramatically over the past few years” and projected the trend to continue. ESA figures show the costs for large-scale storage systems declined by 50% since 2014, and Finn-Foley estimates those costs will drop an additional 35% by 2022.

“Storage’s participation in the wholesale market depends on size, location and function — what they want to do,” Parent said.

He noted the RTO is applying the same market cost allocation exemptions to storage that are applied to pumped hydro — uplift charges, for example — and for the same reasons: the reliability services they provide to the grid.

Galen Nelson, senior director for innovation and industry support at the Massachusetts Clean Energy Center, said, “I think it’s interesting to note that two out of three offshore wind applicants included storage in their 83-C proposals, so that community is seeing storage as a key asset to improve the economic viability and attractiveness of those proposals.”

Finn-Foley said there could be a 20-GW opportunity for storage to replace costly gas-fired peaker plants.

“In California, several natural gas peaking plants that were planned have been either scrapped or they’re being re-examined, with energy storage potential taking over there,” Finn-Foley said. “In addition, in Arizona they’re putting a moratorium on new natural gas plants, focusing on energy storage instead.”

Unique Storage

Storage is unique in many ways because it can participate in markets on so many different levels, Parent said.

“Eventually you could put storage behind commercial very easily and I think that’s where it becomes unique, because if someone comes to me and says, ‘I have this great storage project, I want to participate in your markets,’ [the] first question I ask is: ‘What is your project?’” he said.

Storage Deployment Energy Storage Association Annual Conference

Packed house for the Energy Storage Association’s 28th annual conference | © RTO Insider

The RTO must first understand how a project wants to participate, which is a function of its size, location and purpose, Parent said.

“Some project developers come to us and they don’t even want to participate in the markets, they just want to understand how to interconnect,” Parent said. “They’re focused on demand charge savings.”

Asked about how the RTO treats solar facilities with storage capabilities, Parent said its prefers to directly meter solar.

For smaller applications, “we feel we get a much more efficient outcome by modeling those facilities discretely, so we’re dispatching and taking full advantage of the capability of the battery, and also in effect letting the solar participate in the market based on its physical characteristics,” Parent said.

“What we see is when we start bundling facilities together, our ability to efficiently dispatch that facility and count ancillary services on it actually starts to disappear,” he said.

— Michael Kuser