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Value of CSP with Storage

Reviewing the Latest

Data

November 2014, Daniel Schwab

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Why Storage for Sub Saharan Africa?

What is Storage?

The Value of CSP with Thermal Energy Storage

“Is PV with Batteries a threat to

CSP?”

Agenda

Conclusions

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Why Storage for Sub Saharan Africa?

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Why Storage for Sub Saharan Africa?

• Reliability and resilience

• Demand for cleaner energy

• Fuel savings and other economic benefits

• Utility and grid quality challenges

• Regulatory changes

There are many forces driving adoption of

storage systems:

• Zero or low carbon

• Commercially available, ready, low-risk

• Technologically mature

The best technology

combinations are:

CSP with Molten Salt Storage Fits These Requirements

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Why CSP for sub-Saharan Africa

High Energy Demand

• Energy demand grew by around 45% from 2000 to 2012, but accounts for only 4% of global demand despite being home to 13% of the global population. More than 620 million people (two-thirds of the population) in sub-Saharan Africa are without access to electricity.

High Use of Expensive Fossil Fuels

• Despite rising incomes, bioenergy consumption continues to rise: its growth since 2000 has been greater than that of all other fuels combined. Coal makes up 18% of total energy demand in 2012, followed by oil (15%) and natural gas (4%).

Unreliable, insufficient grid supply

• On-grid power generation capacity was 90 GW in 2012, with around half in South Africa. Insufficient, unreliable or inaccessible grid supply has resulted in large-scale private ownership of oil-fuelled generators and greater focus on developing mini- and off-grid power systems.

Excellent Solar Resource

• Huge renewable resources remain untapped; excellent solar across all of Africa

High Growth of RE

• By 2040, renewables are expected to account for nearly 45% of all power generation capacity in the region

6 Africa Energy Outlook October 2014 - OECD/IEA 2014

Projected Growth of Solar in Africa

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Technology Roadmap Solar Thermal Electricity International Energy Agency 2014 edition

CSP with TES Supports PV and Wind

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What is Storage?

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Classification Scheme for Energy Storage Tech

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Due to the current high installed capital costs of most energy storage systems, applications (for either utilities or end users) must be able to realize multiple operational uses across different parts of the energy value chain – an aggregation of complementary benefits known as “stacking.” Figure 12-1 illustrates this concept for many of the energy storage functions served by the key applications.

The Value of Energy Storage

Source: “Power Generation Technology Data for Integrated Resource Plan of South Africa” Figure 12-1 page 12-2, Energy Storage – Battery

Technologies - FINAL TECHNICAL UPDATE Electric Power Research Institute (EPRI) - April 2012, Michael Barry Project Manager

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• Cost on both power and energy bases

• Response time

• Discharge duration

• Depth of discharge and frequency of discharge

• Efficiency

• Operating ranges and characteristics (e.g., minimum generation levels, efficiency at different levels of operation)

• Performance degradation over time and use

• Environmental footprint

• Reactive Support

Important distinguishing attributes to consider in technology choice for potential

energy storage applications

include:

How to Evaluate Storage Solutions

Source: “Power Generation Technology Data for Integrated Resource Plan of South

Africa” Table 12-2 page 12-4, Energy Storage – Battery Technologies - FINAL

TECHNICAL UPDATE Electric Power Research Institute (EPRI) - April 2012, Michael

Barry Project Manager

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The Value of CSP with Thermal Energy Storage

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Different Resources Serve Different Needs

Source: California’s Electricity System Supply and Demand Overview, presentation by Jeffrey Byron, Commissioner, State Energy Resources Conservation and

Development Commission (energy commission), to the California State Assembly Utilities and Commerce Committee, Informational Hearing, March 29, 2007.

* According to the energy commission, 1 megawatt will provide electricity for approximately 750 homes.

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Wind & solar profiles — sample winter day in

2020

Source: CAISO Stakeholder Presentation, 9/5/2012

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Flexible resources Essential to Meet Net Load

Demand Curve

Sample winter day in 2020

Source: CAISO Stakeholder Presentation, 9/5/2012

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Net System Cost Used to Evaluate Cost Competitiveness of Resource Alternatives

Number of panels /

mirrors / equipment

Cost to make it

Installed cost adds labor

and materials

LCOE

Integration costs

Market value of energy

(and ancillary services)

Availability at peak

demand

Capital costs

Capacity factor

Degradation

Operating costs

Basic financing

Energy Cost

Levelized Cost of Energy

(LCOE)

Net System Cost

Least-Cost, Best-Fit

(LCBF)

What it takes to

generate electricity

What it takes to

keep the lights on

Considers only

hardware Considers

utility value

Considers additional

costs and energy

produced

Capital Cost

$ / W

What it takes to

make the hardware

Unlike other methodologies, Net System Cost

accounts for both costs and benefits

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Increasing capacity factor is a key driver of LCOE reductions over time

Levelized Cost of Energy (LCOE)

LCOE compares the cost per unit of energy (in $/MWh) across different

technology types. Accounts for:

Capital costs

Capacity factor

Fuel costs (if any)

O&M costs

Taxes

LCOE is essentially the total costs of a project over its lifetime divided by the total

megawatt hours of power it produces

LCOE = PV (Lifecycle costs)

PV (MWh Energy Production)

LCOE Amortizes Plant Costs Across Production

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Integration costs are additional services, such as ancillary services, a grid operator

must purchase to account for increased forecast uncertainty and variability

associated with wind and solar resources in order to meet grid reliability standards.

Reliable

power

Backup Power

Gas Plant PV/Wind

Renewable technologies which avoid integration costs are

competitively advantaged in a resource selection process

“It [is] important for Edison to keep its customers’ total costs in mind going forward,

which include the integration costs of solar panels. We know those costs are

real, and we’re trying to mitigate those by having a balanced portfolio.”

- - Marc Ulrich, Southern California Edison, VP of Alternative and Renewable Power (Bloomberg, November 2011)

Intermittent Resources, such as Wind and PV, Impose Integration Costs on Power Grids

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Integration costs are increasingly being assigned by utilities

to intermittent resources within the selection process

Chart Source: Wiser, Ryan and Bolinger, Mark, Lawrence Berkeley National Laboratory, “2009 Wind Technologies Market Report”, pg 65; and, Navigant Consulting et

al; Large Scale PV Integration Study, Prepared for NV Energy; July 2011 1"Competitive Market Analysis Prepared for BrightSource Energy" (E3, March 2012).

The California Public Utilities Commission Long Term Planning Process methodology applies $7.50/MWh, as a “penalty” for all wind and solar resources in resource ranking and selection.1

According to Energy and

Environmental Economic (E3),

while integration cost estimates

vary by study, there is a

clear upward trend in

integration costs,

per megawatt hour,

as renewables penetration

increases.1

CSP Avoids Real Integration Costs Imposed by Intermittent Resources

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Energy storage enables production during peak

price and demand hours after the sun sets

Storage is charged when excess steam generation is directed to a molten salt tank

Production output of PV and CSP are illustrative. Market Price / System Value are representative, not actual, prices.

Integrating Thermal Storage Extends Production to Capture Maximum Energy Value

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Capacity value refers to a power plant’s expected available production during peak demand

hours multiplied by forward capacity prices.

Capacity Value = On-Peak Availability Factor % × Plant Capacity (MW) × Capacity Price

Reliable resources, such as solar thermal and natural gas,

have higher capacity value

1On-peak availability factors used for planning from California’s 2010 Long Term Planning Process (LTPP), except Solar Thermal with Storage from Western Wind

and Solar Integration Study, Prepared for NREL by GE Energy, May 2010 and Simple Cycle Natural Gas is a BrightSource management estimate.

Capacity Value Varies According to the Availability of a Resource at System Peak

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NREL Estimates of System Cost and Benefit Variances

between CSP with Storage and PV1

Solar Thermal Provides Superior System Value

1 Denholm, Paul, (solar thermal forecasting & modeling analyst at NREL) “Tradeoffs and Synergies between CSP and PV at High Grid Penetration.” PowerPoint

presentation on July 5, 2011. Estimates are preliminary and are based on gas prices between $4.50 and $9.00 per mm BTU.

Range of Value ($ / MWh)

Low High

Energy Shifting & Ancillary Services $5 $10

Capacity Value $7 $20

Reduced Curtailment $3 $3

Avoided Integration Costs $1 $7

Total $16 $40

NREL estimates are consistent with growing number of third-party studies

on the system benefits associated with dispatchable solar thermal power

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“PV with Batteries: a threat to CSP?” Cost Competitive or Not?

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Understand other storage technologies and position CSP with TES in the appropriate market segment and with the appropriate value proposition

How can CSP Compete?

Source: http://www.altenergymag.com/emagazine/2014/10/pv-with-batteries-a-threat-to-csp/2342

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Many Companies focused on Storage

EnerVault

General Electric Storage

Solar City Grid Engineering

Solutions

Primus Power

NRG Energy

Sumitomo

GS Yuasa

Zinc hybrid cathode battery

Highview Power

Storage

French Total

Panasonic and NEC

Ecoult/East Penn

Eos Energy Storage

Xtreme Power

LightSail

Cryogenic energy storage (CES)

Li-ion batteries

compressed-air energy storage

Hitachi ESS

Silent Power System integrator of small systems

Exide

EnerSys

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CSP with TES is still by far the cheapest option for multi-megawatt scale plants in high direct normal irradiation areas.

The costs for battery storage rise in proportion with the size of a plant, whereas molten salt storage can scale without incurring much additional cost, since the main difference is the volume of the tank.

Molten salt storage is known to last for the lifetime of a plant, whereas the upper limit of battery life spans is unknown.

Conclusion is that it is unlikely PV with batteries will pose a challenge to grid-scale CSP with TES in the near future, even if battery technologies experience a drastic reduction in price

How does CSP Compare with these technologies?

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PV + Battery Remains Expensive and Risky

$-

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

$450.00

$500.00

0 1 2 3 4 5 6 7 8 9 10

$/M

Wh

de

live

red

Hours of Storage

PV+Battery $/MWh delivered

$300/kW + $300/kWh

$500/kW + $500/kWh

$1000/kW + $1000/kWh

Even the most optimistic near-term modeling of battery costs makes significant

hours of storage extremely expensive relative to CSP

Resource Storage Price/MWh

CSP 6 hours $160

PV 0 hours ~ $90

PV 6 hours $206-393

Inverter plus battery cost

Not modeled:

-- battery degradation over

time (not a factor for CSP)

-- battery usable life

unknown, but likely half that

of CSP

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Source: “Power Generation Technology Data for Integrated Resource Plan of South Africa” page 12-11, Energy Storage – Battery Technologies - FINAL TECHNICAL UPDATE Electric Power Research Institute (EPRI) - April 2012, Michael Barry Project Manager

How does CSP plus TES Compete?

- Electric Power Industry Needs for Grid‐Scale Storage Applications, Prepared by Nexight Group, Sponsored by U.S. Department of Energy, Office of

Electricity Delivery and Energy Reliability, and the Office of Energy Efficiency and Renewable Energy, Solar Technologies Program, and 2) Advanced Materials

and Devices for Stationary Electrical Energy Storage Applications, Prepared by Nexight Group, Sponsored by U.S. Department of Energy Office

of Electricity Delivery and Energy Reliability, and the Advanced Research Projects Agency, December 2010.

- For current cost information, see Chapter 2 of Akhil, A.A., Huff, G, Currier, A.B., Kaun, B.C, Rastler, D.M., Chen, S.B., … , Gauntlett, W.D. (2013). DOE/EPRI

2013 Electricity Storage Handbook in Collaboration with NRECA. Sandia National Laboratories Report,SAND2013‐5131.

Grid Energy Storage U.S. Department of Energy December 2013

Near Term Targets Long Term Targets Target for CSP -storage

systems

Target 1 Demonstrate AC energy storage systems involving

redox flow batteries, sodium-based

batteries, lead-carbon batteries, lithium-ion batteries

and other technologies to meet the

following electric grid performance and cost targets

Research and develop new technologies based on

advanced materials and chemistries to meet

the following AC energy storage system targets:

System capital

cost under $250/kWh under $150/kWh under $15/kWh

Levelized cost under 20 ¢/kWh/cycle under 10 ¢/kWh/cycle Under 5

¢/kWh/cycle

System

efficiency over 75% over 80% 95%

Cycle life more than 4,000 cycles more than 5,000 cycles 10,000 cycles

Target 2 Develop and optimize power technologies to meet

AC energy storage system capital cost

targets under $1,750/kW

Develop and optimize power technologies to meet

AC energy storage system capital cost

targets under $1,250/kW

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Closest competitors to CSP with TES are Pumped Hydro

and CAEs

Source: 36 Rev.0, July 2013 DOE/EPRI 2013 Electricity Storage Handbook in Collaboration with NRECA Chapter 2. Electricity

Storage Technologies: Cost, Performance, and Maturity

LCOE $/MWh for Pumped Hydro and CAES

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Conclusions

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CSP with Thermal Storage does not compete with PV and Wind. It supports penetration of Wind and PV

CSP with Thermal Storage is a mature, cost competitive, bankable technology

CSP with Thermal Storage is best suited for large utility scale applications

There are significant opportunities for cost reduction purely through scale up and minimal investment in R&D

Conclusions