"California’s firmly in the pole position for electric vehicle and energy storage integration, so it’s only natural the two technologies would eventually combine to save forward-thinking customers money, right?
This week, Green Charge Networks announced that five California school districts, colleges, and universities are installing GreenStation intelligent energy storage–electric vehicle charging systems on their campuses.
Schoolchildren board their new all-electric school bus
Over 1,500 kilowatt-hours (kWh) of lithium-ion battery energy storage capacity will be installed across the Mountain View–Los Altos and Oak Park Unified School Districts, Butte and Peralta Community Colleges, and Cal-State Fullerton to balance their electricity supply and save up to $1 million on utility demand charges over the life of their projects – with no upfront costs.
Preventing Demand Charges From Spiking Utility Bills
Schools, like many other workplaces where people spend several hours at a time, are becoming hubs for EV charging. After all, what better time to charge your EV’s battery than during the daytime hours teachers, staff, and students spend in the classroom?
Evatran demonstrates wireless EV charging system.
As more EVs hit the road looking for a public place to charge up, schools increasingly need to consider the cost of charging, especially in a time of tight budgets. EV charging costs can be particularly concerning for customers facing demand charges – additional electricity costs for peak usage added to bills on top of total power usage.
Demand charges exist at varying rates in all 50 states, usually apply to commercial and industrial customers, and are based on the highest 15-minute average power usage within a given month. This may seem like an unfair situation, but they’re designed to cover a utility’s cost of providing power during the highest periods of demand, usually during the middle of the day when schools are in use.
Energy Storage Can Smooth Out EV Charging Costs
Using power consistently over the course of each month is a good way to lower demand charges, but if several EVs are plugged into a school’s network at once, demand can spike just when power costs are highest, and create an unexpectedly large bill at the end of a month – by one estimate, demand charges can total 50% or more of the electric bills for schools and administrative buildings.
EV charging costs
EV charging price spikes graph via Green Charge Networks
But if energy storage is installed, the batteries can charge when power is cheapest and discharge to meet building and EV demand when power is most expensive – exactly what the schools are aiming for. Indeed, the Mountain View–Los Altos School District estimates its demand charges will drop $43,000 per school year by installing the combined storage-charging systems at just two high schools.
Much like third-party solar installers, Green Charge Networks pays to install and maintain the storage-charging systems at the five schools in exchange for a portion of the savings on school electricity bills.
Learning a Lesson On Energy Storage and EV Charging?
California’s grid and state regulators recently unveiled a roadmap for grid-connected energy storage, and Southern California Edison is rolling out a pilot program to test the benefits of intelligent EV workplace charging, all while cleantech researchers work to drive down the cost of EV charging infrastructure.
This shift toward EVs is apparent across California, home to not only America’s biggest EV fleet purchase, but also the most EV-friendly US school.
Those efforts are smart, especially considering California is leading an 8-state charge to put 3.3 million EVs on US roads. But who knows – in time, the biggest lesson on saving money while expanding energy storage and charging infrastructure might just come from California classrooms. "
No Cost - No Risk - Just (Demand Charge) Savings - thru Power Efficiency Agreement
"US-based SunEdison, now the largest renewable energy company in the world, says it sees a $4 trillion value opportunity in the global wind and solar markets by 2020.
At its presentation to analysts overnight, SunEdison produced a 95-page display making the case for wind and solar energy.
The company argues that the combined capacity for wind and solar will be more than 1,450GW by 2020, about two-and-a-half times larger than the capacity at the end of 2014. The graph below illustrates how SunEdison believes it will be split between wind, large-scale solar, commercial solar, household solar and off-grid installations.
sunedison-capacity-590x415That is expected to translate into more than $US170 billion (CAFD) cash available for distribution annually by 2020. SunEdison says this will then translate into a value opportunity of $US4 trillion – the would-be value of any company that held 100 per cent of the market, according to CEO Ahmad Chatila.
That, of course, won’t happen. But Chatila used the hypothetical figure to highlight the opportunity, and underpin why SunEdison recently bought First Wind, and created the TerraForm yeildco venture that will own utility-scale projects. The biggest oil company in the world is worth around $US400 billion.
“That is what we are going after, it’s for the taking,” Chatila told the analysts. “No one should doubt the opportunities. The question becomes how that cake is divided.”
sunedison-value-590x403SunEdison says it is targeting the world’s 20 biggest power markets, with a particular emphasis on growth. Another graph, below, highlights some of these major markets (in orange). What was noticeable was that no figures accompanied Australia – possibly given the uncertainty around its renewable energy policies.
sunedison-presense-590x421But Australia is one of the big targets in rooftop solar. Chatila says Australia, along with the US and UK, is one of the three big target markets for distributed solar. Those three markets will be worth around 10GW by the end of 2020.
This graph below shows the growth that SunEdison expects in individual countries – US in shades of blue, UK in orange and Australia in green. It is interesting to see the anticipated contribution of commercial- and industrial-scale solar in the US and UK, particularly.
Reprinted with permission."
Less universally appreciated, perhaps, is the fact that pushing energy storage farther out onto the distribution system, in closer proximity to loads, maximizes its benefits. The closer energy storage is located to loads, the better job it will do increasing overall grid reliability, managing the variability associated with widely distributed, small-scale renewable energy generators, and integrating electric and hybrid electric vehicles into community grids. Electric vehicles and plug-in hybrid electric cars have the potential, indeed, to form a big part of local storage infrastructure, feeding power to the grid at times of peak demand and drawing it during the off-peak late evenings and nights.
At the system level, storage provides capacity relief, reactive power compensation and greater grid stability; it can also provide frequency regulation. But at the substation and feeder levels, storage provides peak shaving and load leveling, time-shifting of renewable energy, voltage stabilization, reduced cold loads and load transfers, and reactive power compensation. Locally, energy storage ensures power reliability through islanding, improves voltage control, provides extra energy for electric vehicle charging and much more.
The Presidio, Texas, project marked the first time a state public utilities commission had allowed a transmission company rate-based recovery for battery storage. In fact, it was the first time a state commission allowed recovery for any distributed storage project. The impact on utility customers was dramatic. The battery solved a sizable problem that could previously only be addressed by replacing transmission lines. But even replacement would not provide all the benefits of this landmark solution.
The Presidio project is substation-scale and, as such, is somewhat unusual. Community energy storage (CES) is more typical of present-day developments. CES units distribute discrete amounts of storage at the grid’s edge, closest to customer loads. They provide reliable backup power within communities when grid power is unavailable. CES systems integrate residential-scale renewables and manage their intermittency, thus improving voltage control and providing efficiency gains through power factor correction, virtually eliminating the need for fixed capacitor banks on distribution circuits. Through peak load shaving, CES provides asset relief, helping utilities defer capital expenditures for major substation and distribution system upgrades.
Community storage also enables the grid to perform more effective management of the larger peak loads associated with electric vehicle charging. Fleets of CES units can decrease the strain on distribution grid assets during peak demand periods. As electric vehicle loads increase, demand patterns will also be less predictable and more challenging to control even if most charging occurs at night, as studies by the Electric Power Research Institute and Sandia National Laboratory have found. Distribution transformers may become overloaded when an unusually large number of electric vehicles charge concurrently in the same geographic zone. CES units will be able to swiftly provide demand management: Though they are at the very edge of the grid, they are under the utility’s supervisory control and data acquisition (SCADA) system, which can peak shave or off-load customers to reduce overloads.
For these reasons, CES is being adopted increasingly as an effective smart grid solution. A number of utilities are already using or evaluating CES systems with large-scale deployments in mind. S&C, a leading supplier of distribution automation solutions, offers a radio-based system that controls fleets of up to 1,000 CES units for demand management and other grid services.
"“If you can get your levelized energy cost under 30 cents per kilowatt hour, you are in the game. If you can get under 20 cents per kilowatt hour you’ve got a home run. In many places around the world that works,” he said. While storage is gaining traction in the U.S., in states such as New York, California and Hawaii, there is still a ways to go in most other states.
‘Phenomenal opportunity’ and fundamental challenge
“There is phenomenal opportunity in California within the next 10 years,” said Watkins. Within that timeframe, the Imergy chief executive anticipates Californians will have access to affordable, renewably powered microgrids.
“It will change radically how we use energy in California.”
Watkins believes this will undermine utilities, even if some of them are engaging in microgrids.
But if the coming of age of battery-based energy storage represents a fundamental challenge for utilities, it will not be easy for energy storage companies either, said an industry participant during a workshop on Monday.
“Right now in the investing world, the hottest technology in terms of new investment is batteries,” said the participant, who spoke under the meeting’s Chatham House Rule of anonymity.
“We are funding more and more new battery startups. Everybody thinks they can solve the problem of creating low-cost batteries. The reality is at some point it will get scaled by the Chinese, Koreans, Japanese or maybe even by Tesla’s Gigafactory. Costs will get driven down very low. There will be massive carnage among the companies. Ultimately we will benefit. But that’s a tricky place for opportunities.”"
"Battery-based energy storage can play a valuable enabling role in renewable energy adoption, but storage also can do much more. Services such as peak shifting, backup power and ancillary grid services are a small subset of the larger matrix of potential future values that batteries can provide, but storage is still too expensive to cost-effectively provide these services in most U.S. markets.
However, energy storage may be reaching a tipping point. For example, analysts at GTM project that 318 MW of distributed solar plus storage may be installed by 2018. Also, California’s mandate to procure 1.3 GW of storage, combined with the Tesla Gigafactory and the general trend of moving towards prosumer-based electricity markets, is a testament to the size of the potential market.
Thanks to these projections and no shortage of media coverage (by our count, over 40 energy storage articles have been released over the past two months alone), an outsider could be led to believe that distributed storage, by participating in several kinds of electricity markets using a number of product configurations, is capable of solving many of our electricity system ills.
However, we’re not quite there yet. In reality the current state of the industry in the U.S. is still simple enough that it can be captured in a single chart that illustrates the two major challenges the energy storage industry is facing: high costs and limited avenues for capturing value.
In the following figure we’ve illustrated two things. The blue bars on the left show the installed cost for an energy storage system based on current system pricing and a 20-year system lifetime. The green and orange bars show how much money you can make using that energy storage system for the four primary use cases we see right now.
Costs, incentives, and case value streams of distributed energy in the U.S. in 2015
Expanding storage's net value
Any orange bar that climbs above the dotted black line indicates a profitable business case under current cost and rate structures. For any orange bar below the dotted black line, it’s currently not profitable to pursue that business case. For anyone following the energy storage industry, this makes intuitive sense: The frequency regulation market in PJM territory and the demand charge reduction market for commercial customers in California both offer cash-positive scenarios for energy storage companies such as STEM and Coda. But other opportunities, such as self-consumption in Arizona and rate arbitrage in California, have system costs that are too high and use case revenues that are too low to deliver a compelling value proposition.
But here’s the reason this chart explains the state of the entire U.S. energy storage industry: If you remove the green subsidy bar — here we use California’s Self-Generation Incentive Program and pretend it can be used in different states for various use cases — or move beyond regions with extremely generous compensation mechanisms (such as the PJM frequency market), none of these current business models offers anything close to a cash-positive scenario. This means that energy storage is either too expensive for widespread application or the revenue opportunities for energy storage simply aren’t big enough for the technology to capture value right now.
Following closely on the heels of Rocky Mountain Institute’s Battery Balance of System Charrette, our team is working to attack both the cost and value sides of this equation to make that blue bar a lot smaller and to make more of those orange bars (and we’d like to see many more of these, not just the four dominant ones we see today) climb well over the dotted black line in new markets across the U.S.
Right now, you can spend $29,000 (or $21,500 after incentives) for a 24 kilowatt-hour lithium ion battery pack — and you also get a car, because li-ion batteries at those prices and sizes are found in today’s electric vehicles (such as the Nissan Leaf).
Alternatively, you can spend nearly $34,000 for a similar battery pack without wheels. It also could take over 100 days for the utility to green-light you to use that wheel-less battery pack and your local jurisdiction might require a water-based fire extinguishing system to be installed (even if all that will do is fry your entire battery system).
During the charrette, we identified a host of similar, “easy to solve” challenges that could reduce costs as well as an array of more fundamental challenges, including: the lack of standardization in a variety of key elements; boutique interconnection protocols (how a battery is connected to the grid and what it is allowed to do); and lack of interoperability with other systems (how multiple batteries talk to each other and how batteries talk to other things, such as your solar system or home energy management system).
To help overcome these challenges and reduce the cost and time to market for energy storage systems, RMI is taking the lead on developing an energy storage cost roadmap framework in order to help industry, utilities and customers understand how much storage costs now, outline what an industry-wide “should cost” target looks like (analogous to similar targets in the PV, solar system and semiconductor industries), and map the various initiatives and research that will need to take place in order to reach the cost targets.
Furthermore, we’re taking a hard look at the EV industry’s effort to develop a standard EV plug to better understand how the energy storage industry could develop similar standardized physical interfaces for their products at the building and product levels.
Creating more and larger value streams
Solving one side of the energy storage equation — reducing costs — won’t automatically lead to the creation of a thriving energy storage ecosystem. In addition, our electricity system needs to evolve and allow energy storage systems to compete with other energy resources on a level playing field.
Unlike a residential solar PV customer, energy storage customers of all shapes and sizes are compensated differently depending on the market they participate in — if they’re even compensated at all. This, in spite of the fact that energy storage can or will be able to provide various grid services to millions of customers at a lower cost of service than today.
To help incubate a thriving energy storage ecosystem in the U.S. and more broadly, RMI is exploring partnership opportunities with regulators, utilities and energy storage companies to fully understand the costs and benefits of energy storage (analogous to the effort RMI embarked upon two years ago with our similar study on distributed PV). Over the next year, we hope to help utilities better understand how distributed energy storage can reduce costs on distribution systems in order to drive regulatory change and open up entire new markets for distributed storage.
Cost-effective distributed energy storage is capable of helping electricity systems transform into low-carbon, secure and reliable backbones of communities large and small. By focusing on the cost and value sides of the energy storage industry, we hope to help this technology reach unprecedented scale and contribute to RMI’s vision of the electricity future."
"Kenneth Munson of Sunverge Energy builds the business case for energy storage and its value for both electricity consumers and providers.
March 4, 2015
In hundreds of installations and over years of run-time, customer-sited energy storage technology has been proven to offer a multitude of benefits to the electricity supply chain. The challenge and opportunity are that the term “energy storage” can mean different things to different people; more often than not, it’s simply batteries in a box. From our perspective, customer-sited distributed storage means an integrated platform where best-in-class components are chosen for their reliability, safety and performance and integrated with cloud-based controls and algorithms into a UL-certified appliance intended for use as a grid asset. When aggregated and orchestrated to serve as a single resource -- a Virtual Power Plant -- this option represents an attractive, economically viable approach if all potential value streams are accounted for and properly compensated.
Building the business case for storage swimming upstream
For storage projects to pencil out and technologies to take hold, the business case needs to make sense. From a network perspective, a commonly acknowledged value stream is the avoided or deferred capital expenditure associated with conventional grid capacity augmentation or reinforcement. Through load shifting and solar smoothing, integrated energy storage platforms can reduce grid strain caused by high penetrations of renewables and help utilities defer costly distribution infrastructure improvements.
Other line-side potential sources of value include (in no particular order):
More efficient sources for upstream wholesale or market energy as compared to less-efficient peaker plants
More cost-effective management of grid operations resulting from increased intelligence installed at the edges of the grid
Resources to provide ancillary services to address market shortfalls
Ability to offer voltage regulation and power quality enhancement
Increased grid efficiency inherent with distributed storage resources as compared to central generation with its T&D losses
On the customer side of the equation, in addition to the societal value associated with reduced greenhouse-gas emissions (when paired with solar), lower grid operating costs can translate into bill reductions for ratepayers. Hybrid inverters ensure code-compliant, reliable and uninterrupted power during grid outages, and customer-sited storage offers the greatest degree of customer choice as to where and when the renewable energy is used.
Capturing and realizing these value streams requires the involvement of multiple participants across the energy delivery supply chain. Distribution network system providers must be involved to capture benefits of avoided capital expenditure and enhanced reliability; electric retailers and generators can aggregate customer-sited storage and derive value from participating in wholesale markets through portfolio investments or financial products to maximize customer revenues and minimize exposure to wholesale peak prices; and energy customers realize value through reduced bills and incentives, as well as by taking advantage of compelling programmatic offerings.
With all the opportunity on the table, how can integrated energy storage companies capture aggregated value in a disaggregated market to ensure the best outcomes across the whole value chain?
Answer: With evolved regulation policies that properly reflect granular locational/time-oriented electricity supply and delivery costs through residential customer electricity pricing and new business and ownership models. These policies must eliminate the barriers to value attribution that currently exist, while still preserving market competition and accessibility.
The platform for success
The parallel paths to success in energy storage markets involve two separate but equally important components. The first is a scalable, flexible and “utility-grade” solar-plus-storage platform capable of operational protocols that optimize the storage charge and discharge functions while supporting higher penetrations of local renewables with beneficial impacts on the grid. The second component is a business model that serves as the mechanism for ensuring value can be harmonized and shared across the energy supply chain.
Left unaddressed, as the number of distributed energy resources operating on the grid in an unstructured manner continues to grow, so does the potential to cause the grid more harm than good. Platforms which enable utilities to aggregate localized intelligent storage assets and orchestrate them as a fleet of units are critical to cost-effectively optimizing operations and addressing both system and localized needs. This virtual power plant (VPP) approach also achieves the business-model objective of unlocking value and harmonizing the benefits across homeowners, system owners/operators, and utilities. Access to the coordinated value streams ensures all participants are positioned to maximize their benefits from home to network.
Once in place, an integrated energy storage platform also serves as an effective “grid citizen,” working in concert with other prevalent smart technologies (e.g., metering, thermostats, EV chargers) and advanced analytical tools to proactively identify and address grid hot spots. A reliable utility-scale resource, VPPs are flexible and dynamic and can be reconfigured on the fly and deployed where resources are needed most.
As demand-disruptive technologies force utilities to evolve their business models from centralized generation to something more granular which effectively integrates distributed resources, the policies and regulations influencing technology adoption are as complex as the grid management technologies needed to manage them are sophisticated. These policies and regulations will and must evolve, enabling new service models and resources that will lower electricity costs and expand the adoption of renewables along the way. New policy regulations and mindsets are being developed to support the efficient operation of markets and adoption (and fair sharing) of benefits among all participants, including the following:
Residential time-of-use tariffs
New distributed energy resources (DER) interconnection rules and requirements for smart inverters
Smart metering and more granular usage data for residential customers
More sophisticated resource-planning models that zoom in on local distribution network constraints to discretely value capacity and operational needs
A focus on customer-centric reliability and grid resiliency
Opening up wholesale markets to aggregated pools of resources that can now be sited at residential properties
This bottom-up evolution in the way utilities do business will fundamentally transform how we make and use energy.
Sunverge subscribes to the belief that the grid and its operators (utilities) exist in part to serve the good of society. Regulatory policies encouraging more granular electricity cost correlation and value stream enablement using informed strategies, not merely uncorrelated technology subsidization, will accelerate industry adoption of innovative technologies.
For the energy consumer, it’s the beginning of a whole new world of choice."