the role of energy storage in the future electricity system

The Role of Energy Storage in the Future Electricity System

Lorenzo Kristov, Ph.D. Principal, Market & Infrastructure Policy Presentation for Portuguese National Committee of CIGRE March 17, 2017

Ideasinthispresenta-onareofferedfordiscussionpurposesonly,anddonotreflecttheviewsorpoliciesoftheCaliforniaISO.

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Topics of this presentation

Ø  Some facts about California ISO

Ø  California’s energy policies and policy objectives

Ø  Challenges to achieving the policy objectives

Ø  A diverse toolkit for addressing the challenges

Ø  Storage as the potential game changer

Ø  Challenges to bringing storage on at scale

Ø  How California is addressing these challenges

Ø  Big questions and works in progress

Ø  A vision of a possible future

California Independent System Operator

§ 71,800 MW of power plant capacity (installed capacity)

§ 50,270 MW record peak demand (July 24, 2006)

§ 27,488 market transactions per day (2015)

§ 25,685 circuit-miles of transmission lines

§ 30 million people served § 240 million megawatt-hours of

electricity delivered annually (2015) § Not-for-profit public benefit

corporation

Western Electricity Coordinating Council (WECC): •  38 of 76 balancing authorities are

in WECC •  Serves a population of

approximately 82.2 million •  Spans more than 1.8 million

square miles in all or part of 14 states

•  In 2014, the balancing authorities reported a total nameplate capacity of 275,400 MW

WECC

BC

WA

OR MT (p)

ID SD (p)

NV UT

AZ NM(p)

CO (p)

NE (p)

TX (p)

WY

CFE

CA

AB

Two-thirds of the United States is served by independent system operators (ISO/RTOs)

Quebec Interconnection

Interconnection

Eastern Interconnection

CAISO resource mix

California ISO is fully committed to achieving the state’s energy and environmental policy objectives.

California’s policy objectives:

–  Broad de-carbonization of the California economy

–  Low-carbon, reliable electricity system

–  Growth of distributed generation

–  Customer choice for adoption of distributed resources and devices of all types

–  Environmental justice

–  Greater resilience through community resources and micro-grids

Energy and environmental policy targets 2020 Policy Goals •  Greenhouse gas reductions to 1990 levels •  33% of load served by renewable generation •  12,000 MW of distributed generation •  End use of once-through cooling in coastal power plants •  1,325 MW of energy storage

2025 Policy Goal •  1.5 million electric vehicles

2030 Policy Goals •  50% of load served by renewable generation

•  Double energy efficiency of existing buildings

•  Greenhouse gas reductions to 40% below 1990 levels

New legislation introduced •  100% renewable generation by 2045

5,000 MW of additional transmission-connected renewables by 2020 (mostly Solar PV)

(IOU data through 2017 and RPS Calculator data 2018 – 2020)

Distributed Solar PV in California

2015 2016 2017 2018 2019 2020 2021BTM Solar PV 3,695 4,903 5,976 7,054 8,146 9,309 10,385

0

2,000

4,000

6,000

8,000

10,000

12,000

MW

Estimated Behind the Meter Solar PV Build-out through 2021

Achieving the objectives entails some challenges.

–  Severe system load shape effects – the “duck” curve

–  Real-time variability of renewable energy production

–  Zero marginal cost energy depresses prices in the wholesale spot market

–  Distributed energy resources (DER) in the wholesale market

–  Hard-to-forecast DER adoption and behavior

–  Regulatory frameworks, business models, industry culture are all based on the traditional paradigm: centralized generation and one-way power flows

Recent events surpass previous expectations of net load and afternoon ramp with higher solar generation.

Typical Spring Day

Net Load 11,663 MW on May 15,

2016

Slide 12

Actual 3-hour ramp 12,960 MW on Dec.

18, 2016

Solar production varies from one day to the next – first week of March 2014

-500

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1,000

1,500

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3,000

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Day_1 Day_2 Day_3 Day_4 Day_5 Day_6 Day_7 Average

Average

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Wind production varies from one day to the next – first week of March 2014

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500

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These challenges are all manageable with a toolkit of complementary strategies.

–  Integrate renewables with controllable/dispatchable renewables

–  Wholesale market models to enable DER and storage participation

–  New coordination framework between ISO and distribution utilities for T-D interface operations and integrated planning

–  Use DER to flatten load profiles and mitigate variability locally

–  Price signals to incentivize work-place EV charging and other uses of plentiful daytime solar energy

–  Aggregate DER for dynamic demand management

–  Regional coordination to optimize diversity benefits

–  Micro-grids for local resilience

–  Whole-system grid architecture for a more decentralized system

Storage could be the game changer.

•  Energy storage of various types and scales could meet the challenges of high-volume solar PV

–  At grid-scale: charge at low/negative over-gen prices & make good use of mid-day excess supply

–  Co-locate with utility-scale PV and wind to smooth output to the grid

–  Discharge to mitigate steep ramp & late afternoon peak

–  Provide 2-way demand response, frequency response and regulation

–  With rooftop PV: minimize back-flow on distribution, to increase circuit “hosting capacity”

–  Manage local variability locally & flatten load profiles

Bringing storage on at scale has some challenges, and requires paradigm shift to focus on energy uses.

•  Value storage services, not just kWh or kW –  Thermal storage in buildings –  De-carbonize transportation

•  Key values storage could offer are not yet valued financially or defined as revenue-producing services –  Resilience benefits –  Local mitigation of volatility and extreme load profiles

•  Storage can decentralize reliability –  Improve physical and cyber security –  Support self-optimizing local systems, micro-grids

•  Change in the electric system is being driven as much by bottom-up adoption as top-down policy –  Regulators have less control, must become facilitators,

enablers of change

CAISO’s wholesale market model for storage. v  “Non-Generator Resource” (NGR)

–  Designed for a resource that can move seamlessly between consuming and injecting energy at different times

–  Market optimization manages storage characteristics including state of charge (SOC), maximum charge amount (limit on total energy it can provide), maximum charge and discharge rates

–  Resource can choose to have ISO manage SOC, or manage itself and bid SOC

–  Can be used by transmission-connected and distribution-connected resources

–  Can interconnect to ISO grid under our normal interconnection procedures – as a generator with negative output

–  Can provide regulation and other ancillary services –  Visible to ISO and settled 24x7 (comparable to a generator) –  Does not use baselines to measure performance

Examples of NGRs operating today v  Utility-scale batteries

–  2014 market operational – Vaca Dixon 2 MW / 14 MWh NAS battery, 100% dedicated to ISO wholesale market participation

–  2016 market operational – Yerba Buena 4 MW / 28 MWh NAS battery, customer R&D facility, San Jose. Half energy reserved for islanding/backup for adjacent customer facility

–  2016 market operational – SCE Tehachapi wind farm, 8 MW/32MWh

v  Aggregation of electric vehicles: Los Angeles Air Force Base –  Bi-directional power flow (V2G) –  500-600 kW capacity –  V2G capable sedans, trucks, vans –  Began ISO market participation December 2015 –  Partnership effort between DOD, SCE, CPUC, CEC, ISO, Lawrence

Berkeley National Labs, Kisensum, and others.

Storage behind the meter can participate as demand response. v  Proxy Demand Resource (PDR)

–  Accommodates traditional load curtailment and behind-the-meter (BTM) devices such as energy storage

–  May be metered at load meter as traditional DR or via sub-metering of BTM devices to measure performance

–  In all cases DR performance is calculated against a baseline –  PDR can be an aggregation of service accounts in a sub-LAP –  DR cannot inject energy into the grid (only load modification) –  Currently can only be dispatched to reduce demand –  Not a 24x7 resource; only available when bid per program or

resource availability parameters

v  Future PDR enhancements: –  Dispatch to increase consumption; provision of regulation –  New performance evaluation baselines to fit diverse end-uses

Examples of PDR v  AMS model: Battery behind commercial building meter manages

demand charges –  Aggregation of multiple sites forms PDR in ISO market –  DR response is measured at the batteries, not the premises –  DR response is measured against “normal” battery operation

based on recent similar non-dispatch hours –  Energy consumed to charge battery is simply retail load

v  Future PDR enhancement example –  PDR bids to “consume energy” at negative wholesale prices

•  If the negative bid is economic, the ISO will dispatch and pay the PDR for energy consumed at the LMP

•  ISO payment partially offsets retail rate for load –  PDR can bid to provide regulation down by increasing

consumption

DERP is a market participant that aggregates DER. v  Distributed Energy Resource Provider (DERP)

–  Executes DERP agreement with ISO, may create multiple DER aggregations (DERAs), each containing different sub-resources

–  A DERA may mix DER types, as long as resource performance characteristics can be modeled in ISO market system

–  DERA and sub-resources are all directly metered: no baselines –  Sub-resources of a DERA must all be within a single sub-LAP –  Minimum DERA size is 0.5 MW; maximum size 20 MW if aggregating

across multiple p-nodes (LMP pricing nodes, T-D substations) –  Individual sub-resources must be less than 1.0 MW –  A DERA across multiple ISO p-nodes must specify distribution factors

and must follow same distribution factors in response to ISO dispatch –  Resource will utilize NGR model (allows injections, settled 24x7, does

not use baselines) –  Resource cannot contain sub-resources participating in NEM –  Resource cannot contain DR sub-resources using a baseline

Storage resources seek to provide multiple services and earn revenues at multiple levels of the system. v  Behind the end-use customer meter

–  Time of day load shifting, demand charge management, storage of excess solar generation

–  Service resilience – smart buildings, microgrids, critical loads v  Distribution system services

–  Deferral of new infrastructure –  Operational services – voltage, power quality

v  Transmission system & wholesale market –  ISO spot markets for energy, reserves, regulation –  Non-wires alternatives to transmission upgrades

v  Bilateral contracts with load-serving entities –  Resource adequacy capacity –  Renewable energy

High DER penetration requires enhanced operations coordination at T-D interfaces.

v  Diverse end-use devices and resources with diverse owners/operators will affect: o  Net end-use load shapes, peak demands, total energy o  Direction of energy flows, voltage variability, phase balance o  Variability and predictability of net loads and grid conditions

v  ISO market systems see DER at T-D substations, have no visibility to distribution grid conditions or impacts; distribution utility is not aware of DER bids and dispatches

v  DER providing services to customers and distribution system will affect the T-D interfaces; need accurate real-time forecasting and local management of DER variability

v  CAISO has been working with distribution utilities to develop an operations coordination framework for high penetration of DER

Big questions and works in progress v  Future revenue opportunities for storage

–  Synthetic inertia, primary frequency response (governor) –  Resilience – smart building, community micro-grid islanding –  Storage as transmission or distribution asset

v  Multiple-use applications (MUA) –  Resource can provide services to and earn revenue from more than

one entity (customer, distribution operator, transmission/wholesale) –  CAISO and CPUC are developing MUA rules for storage (e.g.,

dispatch priority; double payment; wholesale/retail)

v  DSOs, local electricity markets and micro-grid systems –  New distribution system operator (DSO) models may expand

opportunities for distribution-level storage –  We need an “open access” regulatory framework for DSOs analogous

to wholesale market framework for transmission –  We need a layered reliability framework to allow hand-off of reserve

and adequacy requirements from ISO to DSO at the T-D interface –  Revisit some federal-state regulatory structures (US)

DSO operates Local Distribution Area or Community Micro-grid

Regional Interconnection

A vision of a possible future: the electricity grid as a layered hierarchy of optimizing sub-systems.

Smart building

Micro-grid

Micro-grid

DSO

DSO

ISO Balancing Authority

Area

BAA BAA

Smart building

Smart building

•  Storage on premises can support self-optimizing local electricity systems

•  Each tier only needs to see interchange with next tier above and below, not the details inside other tiers

•  CAISO focuses on regional bulk system optimization while DSO coordinates DERs

•  Layered control structure reduces complexity, allows scalability, and increases resilience & security

Sources and resources Using renewables to integrate renewables •  http://www.caiso.com/Documents/UsingRenewablesToOperateLow-

CarbonGrid.pdf

Future Distribution Systems, Platforms and DSOs

•  http://doe-dspx.org

•  https://emp.lbl.gov/sites/all/files/FEUR_2%20distribution%20systems%2020151023.pdf

Grid Architecture

•  http://gridarchitecture.pnnl.gov

Decentralization and Layered Optimization

•  http://resnick.caltech.edu/docs/Two_Visions.pdf

•  https://www.academia.edu/12419512/A_Future_History_of_Tomorrows_Energy_Network

Thank you.

Lorenzo Kristov [email protected]

Market & Infrastructure Policy

the role of energy storage in the future electricity system

Technology