Valuing Benefits of Pumped Hydro Storage

Francois Vitez, P.EngSenior VP – Power MarketsBBA Engineering

Through the rear view mirror

What are we doing TODAY that will sound absurd to the next generations?

Drivers for Energy Storage

Decreasing cost of Solar and Wind generation

Decarbonization- Reduction GHG (India 30% of 2005 emissions by 2030)- Retirement of thermal base load - Electrification of the economy

Paradigm Shift in Electricity Supply

Source: A Paradigm Shift in Electricity Supply (David Mills/ABC News)

Yesterday Tomorrow

Flexible Source (eg. Hydro, Storage)

Energy Storage Uses & Categories

Chemical BatteriesPumped Storage

Liquide AirThermal

Bulk

• Transmission decongestion

• Peaker replacement

• Frequency regulation

• Energy Arbitrage

• Operational reserves

Distribution

• Local generation capacity

• Frequency regulation

• Distribution Substation Investment Deferral

• Distribution Feeder Investment Deferral

• Operational reserves

Behind the meter• Microgrids

• Islanding

• Interconnection expansion deferral

• Time-of-day use

• Demand-side Management

Value of Storage

Energy storage can enhance the efficiency, cost-effectiveness, and reliability of the electricity grid. It can provide multiple services in one asset and can quickly and economically adapt to changing system needs

Pumped Hydro

- Represents 95% of the worlds Electricity Storage (130 GW)- Most were built 40 to 60 years ago along with Nuclear plants

Closed Loop vs Open Loop

Synchronous

• Traditional • Longer reaction time (minutes)• Less regulating and flexibility• Cheaper machines• Less submergence (lower cost)• Less benefits to the system

Variable Speed

- Faster reaction time (seconds)- Regulating and flexibility- More costly equipment- Deeper submergence (higher costs)- Great value to the system

Ternary Pumped Hydro Units - Turbine & Pump on a same shaft- Torque Converter (Clutch) - Allows for fastest reaction time - Most regulating and flexibility- Pricy equipment- Very large and complex powerhouse ($$$) - Complex Manifull ($$$)- Most benefits to the system

Business Case for PSPEnergy Market

(Arbitrage)Ancillary Services

Operating Reserve

Contingency Reserve

Spinning Reserve

Active

Standby

Non-Spinning (Supplemental) Reserve

Active

Standby

Regulating Reserve

Active

Standby

Demand Response Load-Shed Service Black Start Service

Arbitrage is great but its just not enough!

Business Case for PSP

ElectricityMarket

EnergyStorage System

ESS Revenue

OptimizerRound-Trip Efficiency

Life Cycle

Nominal Energy &

Power

Opex & Capex

Capacity Maintenance Agreement

Basic Parameters of ESS

Perfect Knowledge

Market Forecast

Probability of Dispatch

Market Parameters

Output

Day-Ahead Bid Schedule

Typical day operation Arbitrage Only

*Case study in Alberta, Canada. 10MW/20MWh unit

$0

$5

$10

$15

$20

$25

$30

$35

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$45

$50

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-10

-5

0

5

10

15

20

25

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MWh

Charge

Energy

SOC

Price

Typical day operation Revenue Stream Optimizer

-10

-5

0

5

10

15

20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MWh

Charge Energy Act Reg Act Spin Act Sup Stb Reg Stb Spin Stb Sup

• *Case study in Alberta, Canada. 10MW/20MWh unit

Annual average revenue

*Case study in Alberta, Canada. 10MW/20MWh unit

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Arbitrage ESS Revenue Optimizer

Perfect Knowledge Market Forecast

धन्यवाद

Back up slide – ES technology cost comp.

Levelized Cost of Energy ($/kWh) Lazard 2.0,

Highview

$116

$314

$342

$425

$267

$152

$301

$290

$227

$140

$690

$555

$933

$561

$198

$784

$348

$280

Compressed Air

Flow Battery

Flywheel

Lead-Acid

Lithium-Ion

Pumped Hydro

Sodium Sulphur

Molten Salt

Liquid Air

Technology Characteristics and market trends

19

Sources: Australian Renewable Energy Agency (ARENA), Government of South Australia, and Morgan Stanley

Australian Pumped Hydro Storage (PSP) Market

• 500MW of new pumped hydro projects by 2021, and another 2,300MW by 2030

• PSPs seen as critical element to support Australia’s ambitious renewable energy transition which has already caused 2 major blackouts in the country in recent years; and the renewables portion of the energy mix is set to grow to 50% by 2030!

• PSPs critical to manage the “duck curve” caused by Solar & Wind(i.e. low intraday demand/prices which need to be balanced)

• Gas prices are very high now in Australia, so pumped hydro energy storage is competitive and Clean.

KEY INITIATIVES

• $50M Grid Scale Storage Fund by the Government of South Australia and >$25M invested in studies on PHES alone by the Australian Renewable Energy Agency (ARENA)

• Recently, NSW Government announced its pumped hydro roadmap: Tasmania’s ‘Battery of the Nation’, and approved the “Snowy 2.0”plan to add 2,000 MW of new renewable pumped hydro capacity to the iconic Snowy Hydro Scheme.

• SNC-Lavalin is already involved in several projects and pursuits

• Early involvement through Government studies and ECI work for Baroota, Shoalhaven and Kanmantoo

• Strong renewable and pumped hydro potential is also spurring new T&D projects such as a second interconnector across the Bass Strait and other interconnection projects to unlock 400 MW of “latent dispatchable capacity”

AUSTRALIAN PUMPED HYDRO STORAGE MARKET OVERVIEW

Australia has identified Pumped hydro Energy Storage as a critical element for supporting its ambitious transition to renewable energy, with >3,000 MW in planned new hydro pumped storage capacity, representing >$5B in total value.

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