Download Harnessing the Potential of Energy Storage

Harnessing the Potential
of Energy Storage
Storage Technologies, Services,
and Policy Recommendations
May 2017
Harnessing the Potential
Of Energy Storage
Storage Technologies, Services, and Policy
Recommendations
Prepared by:
Edison Electric Institute
May 2017
This report was prepared through a collaborative process by members of EEI's Energy Storage Task Force.
If you have any questions, comments or concerns, please contact:
Alison Williams
Manager, Clean Energy
202-508-5026
[email protected]
Lola Infante, PhD
Sr. Director, Generation Fuels and Market Analysis
202-508-5133
[email protected]
© 2017 by the Edison Electric Institute (EEI).
All rights reserved. Published 2017.
Printed in the United States of America.
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including
photocopying, recording, or any information storage or retrieval system or method, now known or hereinafter invented or
adopted, without the express prior written permission of the Edison Electric Institute.
Attribution Notice and Disclaimer
This work was prepared by the Edison Electric Institute (EEI). When used as a reference, attribution to EEI is requested. EEI,
any member of EEI, and any person acting on its behalf (a) does not make any warranty, express or implied, with respect to
the accuracy, completeness or usefulness of the information, advice or recommendations contained in this work, and (b) does
not assume and expressly disclaims any liability with respect to the use of, or for damages resulting from the use of any
information, advice or recommendations contained in this work.
The views and opinions expressed in this work do not necessarily reflect those of EEI or any member of EEI. This material
and its production, reproduction and distribution by EEI does not imply endorsement of the material.
Published by:
Edison Electric Institute
701 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2696
Phone: 202-508-5000
Web site: www.eei.org
Harnessing the Potential of Energy Storage
ExecutiveSummary
Energystoragetechnologies—includingbatteries,flywheels,compressedair,thermalstorage,
andpumpedhydropower—areoperationalacrosstheUnitedStates.Useofstorage,
particularlybatteries,isgrowingatarapidrate,withanestimated260megawatts(MW)
installedin2016alone,up300percentfrom2014.1Ofthemorethan24gigawatts(GW)of
operationalstorageintheUnitedStates,includingpumpedhydropower,electriccompaniesare
thelargestusersandoperators—representingmorethan98percentofactiveenergystorage
projects.2Theyareusingstorageforawiderangeofpurposesthatresultinimprovedoperation
oftheenergygrid;increasedreliability,resiliency,andoperationalflexibility;andthe
integrationofmoresolarandwindpower.
Whileinstalledcostsarestillrelativelyhighformanyenergystoragesystems,costsarerapidly
comingdownforsomestoragetechnologies.Atthesametime,policies,regulations,and
marketsdonotalwaysrecognizethebenefitsandflexibilitythatenergystoragecanprovideto
theenergygridandsociety.Aswelooktothefuture,itisimportanttorevisitpoliciesand
regulationstomaximizethevalueachievedbyenergystorage.Furthermore,withtechnical
improvementsindesignandcontrol,thevalueandusesofenergystoragewillcontinueto
evolve.Therefore,itisimportantforthenation’selectriccompaniestocontinuallyexplorethe
technicalperformanceofenergystoragetoensureappropriateplanninganddeploymentof
storagetechnologiesthatcanbestenhancethereliabilityandresiliencyoftheenergygridfor
thebenefitofallcustomers.
Tocontributetothediscussion,thispaperprovidesanoverviewofoperationalenergystorage
intheUnitedStates;itsownership,useby,andvaluetoelectriccompanies;andpotential
barriersandchallengestogreateradoption.Finally,thispaperofferspolicyrecommendations
onenergystorageforpolicymakersandregulators.
1
2
GTM/EnergyStorageAssociation,U.S.EnergyStorageMonitor,Q12017,March2017.
U.S.DepartmentofEnergy,GlobalEnergyStorageDatabase:http://www.energystorageexchange.org/.
Edison Electric Institute
1
Harnessing the Potential of Energy Storage
WhatIsEnergyStorage,andWhyIsItValuable?
Insimpleterms,energystorageprovidesawaytosavepreviouslygeneratedenergyanduseit
atalatertime.Thatenergycanbestoredaspotential,kinetic,chemical,orthermalenergyand
thencanbereleasedinvariousforms,mostcommonlyaselectricity.Theabilitytobankenergy
forlaterusemakesenergystorageausefulandversatile
resourceforelectriccompaniesandtheircustomers.
Forelectriccompanies,thelargestusersandoperators
ofenergystorageintheUnitedStates,theprimary
benefitsofenergystorageareaddedflexibility,
reliability,andresiliencyinoperatingtheenergygrid.
Morespecifically,energystorage,deployedatthe
appropriatescale,canbeusedinvariouswaysto
enhanceelectriccompanyoperations,optimizeand
supporttheenergygrid,andenhancethecustomer
experience.
Flexibility
Storageallowsenergygridoperatorstobettermanage
constantfluctuationsinsupplyanddemand.Aselectric
companiesintegratemorerenewableenergyresources,
likesolarandwind,intotheenergygrid,energystoragecanprovidemoreflexibilitybyhelping
tomanagethesevariableresources.
Energystoragecanhelpwithrenewablesintegrationintwoprimaryways.First,storagecan
helptoaddressthevariabilityofrenewableenergygeneration.Whileweatherforecastingis
improving,thereisstilluncertaintyaboutwhenthewindwillblowandthesunwillshine.
Energystorageprovidesanoptionforstoringwindorsolarenergythatmaybeinexcessof
immediatedemandandsavingituntildemandishighenoughtodischargeorreleaseitoutof
storage.Inthisway,certainstoragetechnologiescanallowavariablerenewableenergy
resourcetoperformlikeonethatislessvariableandmeasurablyreliable.
Second,therapidresponsetimeofsometypesofenergystoragemakesthemeffectivetools
formanagingchangesinenergyoutputthatcanoccurwithsomerenewables,suchaswhen
windspeedsfluctuateorcloudspassoversolarpanels.Inadditiontouncontrollableweather
changes,thereareinherentoperationalchallengeswithvariableenergyresources.For
example,whenthesunrises,outputfromsolarresourcesescalatesquickly(andviceversain
theevening),resultingineitherasteepincreaseordecreaseinoutputthatcanmakeit
2
Edison Electric Institute
Harnessing the Potential of Energy Storage
challengingtomatchavailableresourceswithloadrequirementsinreal-timeoperations.As
someformsofenergystoragecanrespondattheirdirectedcapacityinlessthanonesecond,
thespeedofoperationisakeyconsiderationwhenweighingstorageasanoptionforproviding
bothflexibilityandreliability.
Fast-RampingEnergyStorageCanHelpBalanceRenewableGenerationOutput
Somekindsofenergystoragecanhelpmanagespikesanddropsintheoutputofrenewables
generationbystoringexcessenergyorreleasingitonamoment-to-momentbasis.Thisabilitytoquicklyramp
uporrampdownmakessomestoragedevicesespeciallywell-suitedforbalancingfluctuationsinrenewable
energyoutput.
Reliability
Thereliabilityoftheenergygridisenhancedbyenergystorageinavarietyofways.Storagecan
provideahostofgrid-supportorancillaryservices—includingmanagingpeakload,essential
reliabilityservices(voltageandfrequencycontrol),reserves,andblackstart—thatarecriticalto
managingtheenergygridandmaintainingservicewithoutinterruption.
Oneuseofenergystorageisasaresourcetohelpmanagepeakload—aprocessalsocalled
peaksmoothingorpeakshaving.Traditionally,peakloadismetwithresourcesthatareableto
startquicklybutrunforlimitedtimes(i.e.,peakerplants)—mostoftensimple-cyclenaturalgas
combustionturbine(CT)plants.Whenproperlysizedforthisusecase,energystorage
technologiescanprovideanalternative.Storagesystemscanbedispatchedveryquicklyand
canholdseveralhoursofenergythatisgeneratedduringoff-peakhoursatlowercostandthen
deployedduringmorecostlyhigh-demandperiods—apracticeknownasenergytimeshifting.
Certaintypesofenergystoragecanbeimportanttoolsforgridoperatorswiththeirabilityto
meet,shift,orsmoothpeaksindemandforenergy.
Edison Electric Institute
3
Harnessing the Potential of Energy Storage
StorageCanHelpMaketheEnergyGridMoreReliableThroughPeakShifting
Energystoragecanhelptomanagepeakenergydemandbychargingatlowdemandtimesofday,suchas
atnight,andthendischarging(orreleasingenergy)duringpeakperiods,likeinlateafternoonandearly
evening.
Energystoragecanprovidetwoessentialreliabilityservices:frequencyregulationandvoltage
support.Frequencyregulationisthemoment-to-momentreactiontofrequencydeviations
fromthestandard60HzintheUnitedStates.Controlisnecessarytopreventacascadingfailure
ofthesystemandharmtocomputersandotherelectricaldevicesthatusethesystem.Some
typesofenergystorage,withnear-instantaneousresponsetimes,canplayakeyrolein
correctingforunintendedfluctuationsinoutputfromgeneratorsthatcancausefrequency
deviations.Voltagesupportisnecessarytomaintainproperoperationofequipment,prevent
damagetoconnectedgeneratorsfromoverheating,facilitateenergytransfers,andreduce
transmissionlosses.Energystoragecanservevoltagesupportbyprovidingorabsorbing
reactivepowerandbyhelpingtomaintainaspecificvoltagelevelontheenergygrid.
Reservecapacityisanotherimportantaspectofgridreliabilityinwhichenergystoragecanplay
arole.Electriccompaniesarerequiredtokeepcertainamountsofavailablegenerationcapacity
(knownasreserves)thatcanbeaccessedquicklyincaseofdisruptionorunexpectedswingsin
thedemandforenergy.Similartothewayitcanbedispatchedquicklyforpeakload
management,energystoragecanbeusedtohelpmeetorreducetheneedforthesereserve
requirements.
Resiliency
Electriccompaniesconstantlyplanandprepareforrestoringservicesafelyandefficientlyinthe
eventofdisruptions.Tore-energizetheenergygridafterapoweroutage,electriccompanies
useblack-startresourcestorestoreservicequickly.Someenergystoragetechnologieshave
4
Edison Electric Institute
Harnessing the Potential of Energy Storage
particularcharacteristicsthatfittherequirementsofblack-startresources.3Storagealso
providestheshort-termbenefitoffastresponse,acrucialattributeforquicklyrestoringpower
inablack-startsituation,althoughthedurationofdischargemaylimittheeffectivenessof
somestoragedevicesforthisapplication.
Energystoragealsocanserveasabackupenergysourcetoindividualloadsorevenentire
substationsintheeventofatransmissionordistributionoutage.Thismaybeaneffective
alternativetoatransmissionordistributionupgradeormayserveasaninterimsolutionwhilea
long-termplanisimplemented.Similarly,storageresourcesplayavitalroleinmicrogrids.These
standaloneenergysystems,whichusedistributedgeneration,canoperateinparallelwithor
independentlyoftheenergygrid.Thevalueofamicrogridisitsabilitytomaintainservicewhen
thebroaderenergygridexperiencesinterruptions.Electriccompanies,theU.S.military,several
industries,andcitiesandcommunitiesaroundthecountryareusingorconsideringmicrogrids
asawaytoincreasetheirresiliencyandtomanagetheirownenergyneeds.Inallofthese
systems,energystorageisavitalcomponent.
CustomerBenefits
Inadditiontothemanybenefitsthatenergystoragecanprovidetotheenergygrid,energy
storagetechnologiesalsocanprovideservicestocustomersdirectlyoneithersideofthemeter.
Asmentionedabove,resiliencyisanimportantservicevaluedbymanytypesofcustomers.
Othercustomerusesincludetheopportunitytomaximizethebenefitsofprivatesolar
productiontoreducethedemandforgrid-providedelectricitywithstorageusedtosmooth
productionanddemand,forexample.
EnergyStorageIsUsedToSupportAllPartsoftheEnergyGrid
Energy storage can provide benefits along all parts of the energy grid, including improving operations of generation,
transmission, and distribution, as well as serving residential, commercial, and industrial customers. Table 1 (below)
provides a list of storage services by customer and technology.
3
Blackstartistheprocessofbringingapowerplantbackonlinewithouthelpfromthetransmissionnetwork.Itis
anessentialservicetorestorepowerafteranoutage.
Edison Electric Institute
5
Harnessing the Potential of Energy Storage
Table 1. Storage Services by User and Technology
Application
User
Major Technologies Electric company
Batteries ISO/RTO
Flywheels
Electric company
Pumped hydro Batteries
Frequency Regulation
Reserve Capacity
Grid Asset Optimization
Electric company
Pumped hydro
ISO/RTO
Compressed Air
Batteries
Load levelling and peak shifting of grid assets
Electric company ISO/RTO
Batteries
Can provide a portion of peak demand that is served by transmission and distribution equipment whose capacity must be increased due to demand growth or whose life is to be extended Electric company
Batteries
ISO/RTO
Pumped Hydro
Electric company
Batteries
ISO/RTO
Compressed Air
Electric company
Batteries
ISO/RTO
Electric company
Batteries
ISO/RTO
Compressed Air
Commercial & Industrial (C&I)
Batteries
Residential
Thermal
May help reduce grid‐supplied electricity C&I
Batteries with solar
Same as load shifting, but with the ability to flatten load between battery and solar technologies
Residential
Helps provide steady emergency backup power
Emergency Backup
C&I
Residential
Batteries
Provides emergency power during outages such as grid failures and weather‐
related incidents
Microgrid Support
C&I
Batteries
Flywheel
Supports local power systems that can disconnect from the larger grid and operate autonomously
ISO/RTO
Transmission & Distribution Upgrade Deferral
Energy Arbitrage
Variable Resource Integration
Voltage Support
Other: Black Start, Power Quality/Harmonics, Inertia Response
Load Shifting
6
Contributes to electric company’s adequacy/reserve margin requirement Maintains system frequency stability during emergency operating conditions and unforeseen load swings
Spinning Reserve
Customer Services
Provides safety and decreases fluctuations in load managing the variability in the grid's frequency
Flywheels Batteries Compressed Air Electric company
Energy Grid Services
Description
Load Shifting with Solar
Edison Electric Institute
Allows electric companies to provide/buy power when electricity prices are highest/lowest
Reduces ramp rates and helps electric companies integrate higher levels of variable resources
Helps manage delivery of reactive power to maintain voltage
Suppresses system harmonics, supports system during system restoration, provides dynamic functional equivalent of synchronous generation
Peak shifting of residential or C&I loads to save on energy costs, such as demand charge reduction and time‐of‐use optimization
Harnessing the Potential of Energy Storage
EnergyStorage:ManyTypes,ManyUses
Giventhemanybeneficialattributesofenergystorage,electriccompaniesarebuilding,
procuring,andoperatingdifferenttypesofenergystoragesystemsinvariouspartsofthe
country.Itisimportanttonotethatenergystorageisnotasingletechnologybutratherahost
ofdifferenttechnologieswithvastlydifferentoperatingcharacteristics,coststructures,and
benefits.Thetechnologythatisdeployedinagivenlocationlargelyisdeterminedbythatarea’s
resources,needs,andmarketstructure.
Theenergystoragedescriptionsbelowareintendedtoshowthewidevarietyofoperating
technologies,howtheyareused,andexistingbarrierstogreateradoption.
PumpedHydro
Pumpedhydrostoragesystemsprimarilyworkinconjunctionwithmajorhydropowerdams—
calledanopen-loopsystem.Insimpleterms,waterispumpedfromalowareatoahigher
reservoirduringoff-peak(i.e.,lowcost)times.Thewateristhenstoreduntilitiseconomicalto
usetheresource.Atthatpointthewaterisreleased,spinningturbinestogenerateelectricity
thatissuppliedtotheenergygrid.ManyofthepumpedhydrosystemsintheUnitedStates
werecommissionedinthe1960sto1980s,withthemostrecentbecomingoperationalin2012
insouthernCalifornia.Duetoissuessuchasinitialcostandsitingdifficulties,onlyalimited
amountofnewpumpedhydroisexpectedtocomeonlineinthecomingyears.
Batteries
Batterytechnologiesarepartofthelargergroupofelectro-chemicalstorage.Therearetwo
categoriesofbattery:solidstateandflowbatteries.Solidstatebatteriessuchaslithium-ion
havesolidelectrodesandsolidelectrolytes.Incontrast,flowbatteries,orredox(reductionoxidation)batteries,operatewithtwochemicalcomponentsdissolvedinliquidsoften
separatedbyamembrane,astructurethatenablesnear-instantaneousrecharging.Ofallofthe
batterytypes,lithium-ionisthemostpopular.Theircostshavedeclinedsignificantlyinrecent
yearsand,asaresult,theyarefindingapplicationsinelectronics,electricvehicles,and
industrialoperations.Electriccompaniesprimarilyareusinglithium-ionandsomelead-acid
batteriesbecauseoftheiravailability,price,anddurability.Batterylifespanvariesbytype,with
solid-statebatteries(lithium-ion,zinc,etc.)typicallylasting5-15yearsandflowbatterieslasting
15-20years.4
4
Lazard’sLevelizedCostofStorageAnalysis—Version2.0,December2016.
Edison Electric Institute
7
Harnessing the Potential of Energy Storage
Thermal
Thermalstoragetechnologiesallowfortemporaryenergystorageintheformofthermalenergy
(heatorcold)—similartohowaninsulatedmugkeepsadrinkhotoricecubeskeepadrink
cold.Themostcommonformofheatstorageismoltensaltthermalstorage,althoughthereare
otherformssuchasmoltenglass.Moltensaltcurrentlyisusedinconjunctionwithparabolic
troughstostoreheatproducedviasolarpower.Inthesesystems,sunlightisfocusedvia
mirroredpanelstoheatsalttotemperaturesofupto1050⁰F.Themoltensaltisstoredin
insulatedtanksuntilenergyisneeded.Toconvertstoredheattoelectricenergy,themolten
saltturnswaterintosteaminheatexchangerswithsteamusedtogenerateelectricityina
steamturbine/generator.Heatstorageoftenisusedforstoringpowerduringlowdemand
periodsandreleasingitwhendemandincreases.Italsoisusedtohelpmanageminute-tominutefluctuationsinrenewablegeneration.Storedheatalsomaybeusedinmanufacturing
processesorbuildingspaceconditioningsystems.
Iceandchilled-waterthermalstorageuseexcesslow-costenergytochillorfreezewater,which
isthendeployedinavarietyofsystemsfromairconditioningsystemstofreezers.Thiscold
storagemostoftenisusedbycustomerstoreduceelectricdemandandbyelectriccompanies
fortimeshifting.
CompressedAirEnergyStorage(CAES)
Inacompressedairstoragesystem,atmosphericairiscompressedandstoredunderpressure
inundergroundgeologicalsitessuchasretiredminesorsaltcaverns.Whenenergyisrequired,
theundergroundcompressedairisreleased,drivinganexpansionturbinetogenerate
electricity.TheestimatedusefullifeofaCAESsystemis15-20years.5ThereisonlyonelargescaleoperationalCAESplantintheUnitedStates:a110-MWplantinMcIntosh,AL.6WhileCAES
useremainslimited,thereareseveralsuitablesitesforitsexpansionacrosstheUnitedStates.
Flywheels
Flywheelstoragesystemsuseelectricitytopoweramachine,actingasamotorthatspinsa
seriesofrotors.Astherotorsturn,electricenergyisstoredaskinetic(orrotational)energy.
Whenelectricityisneeded,theflywheelturnsthemachinenowactingasagenerator,
convertingthekineticenergyintoelectricitythatisfedtotheenergygrid.Tomaintain
efficiency,flywheelsoftenarecontainedinavacuumonmagneticbearingstoreducefriction.
Flywheelsgenerallyarelowmaintenance,havealonglife,andrespondquickly,makingthem
5
Lazard’sLevelizedCostofStorageAnalysis—Version2.0,December2016,
https://www.lazard.com/media/438042/lazard-levelized-cost-of-storage-v20.pdf.
6
PowerSouthCAES:http://www.powersouth.com/mcintosh_power_plant/compressed_air_energy.
8
Edison Electric Institute
Harnessing the Potential of Energy Storage
usefulforelectriccompaniesasspinningreservecapacityaswellasfrequencyandvoltage
support.Additionally,manydatacentersintheUnitedStatesrelyonflywheelstorageto
mitigateshort-termenergydisruptions.
CurrentDeployment
Ofthemorethan24GWofoperationalenergystorageintheUnitedStates,pumpedhydrois
byfarthemostcommon,representingmorethan93percentofinstalledstoragecapacityby
size.Thenextlargestsegmentisthermalstorage,followedbybatteries,compressedair,and
flywheels.Whilepumpedhydrostoragedwarfsotherenergystoragetechnologieswhen
consideringalloperationalstorageintheUnitedStates,batteriesaredrivingthestorage
markettodayintermsofthenumberofprojects.Large-scaleoruniversalsolarpowerplants
havegivenrisetoahandfuloflargethermalenergystoragesystems,makingthisstorage
technologythelargestplayerbysizeinrecentyears.
ComparisonofEnergyStorageProjectsByTechnologyType
ElectricCompaniesArePrimaryUsersofStorage
Electriccompaniesarethelargestownersandoperatorsofenergystorage.Theyuseenergy
storagefacilitiesthroughtheassetstheyowndirectlyandalsothroughthosethattheyprocure
vialong-termcontracts,orpowerpurchaseagreements.Manylarge-scalestorageprojects—
includingpumpedhydropowerstorageandthermalstorageprojects—wouldnotbeeconomical
Edison Electric Institute
9
Harnessing the Potential of Energy Storage
withoutaguaranteeofusebyelectriccompaniesintheformofalong-termcontract.According
totheU.S.DepartmentofEnergy,electriccompaniesrepresentmorethan98percentofenergy
storageprojectsintheUnitedStates,7includingpumpedhydropower,andareasignificant
contributortothesector’srapidgrowth.Lookingonlyatnewerenergystoragetechnologies,
andexcludinglarge-scalepumpedhydropowerstorageprojects,electriccompaniesremainthe
largestusersandoperators,representing75percentofU.S.energystoragecapacity.
Ofthe22electriccompany-ownedstorageprojectscommissionedin2015and2016,allbutone
wasabatterystoragesystem.Lithium-ionsystemsrepresented98percentofthebattery
projects,makingelectriccompaniesasignificantcontributortotheadoptionofthefastest
growingenergystoragetechnologyintheUnitedStates.8
Map1.OperationalandPlannedEnergyStorageProjects
Source:U.S.DOEGlobalEnergyStorageDatabase(AccessedonApril27,2017).
7
8
U.S.DepartmentofEnergy,GlobalEnergyStorageDatabase.
U.S.DepartmentofEnergy,GlobalEnergyStorageDatabase.
10
Edison Electric Institute
Harnessing the Potential of Energy Storage
StorageCostsAreDeclining
Energystoragecostsareasvariedasthetechnologiesthemselves.Broadly,however,energy
storagecostsarefalling.Batteriesarethemostcommontypeofenergystoragedeployed
today.Withinthiscategory,pricesvarywidelydependingonthespecifictechnology,thestage
ofdevelopmentandcommercialization,andthewaythetechnologywillbeused.Advancesin
technology,aswellaseconomiesofscale,havehelpedtodrivedownlithium-ionbatterycosts
inrecentyears.Themediancostoflithium-ionbatteriesfellbymorethan10percentfrom
2015to2016.9
Onalevelizedcostbasis,storagecostsareprojectedtocontinuetofallforbatteriesand
flywheelsbetweennowand2020.10Costsareexpectedtodropmostdramaticallyfor
batteries—especiallylithium-ionandflowbatteries.AccordingtoLazard’sindustrysurvey,over
thenextfiveyears,lithium-ionbatterypricesareexpectedtodropby50percent,flowbatteries
areexpectedtodropby40percent,andlead-acidbatteriesareexpectedtodrop25percent.11
Ifthesepricedeclinesarerealized,thethree
typesofbatteriescouldbecomemorewidely
deployed.
Theeconomicviabilityof
storagedependsonthewayits
Levelizedcostsarethemostprominent
comprehensivecostfiguresforevaluatingthe
valueiscalculatedandtheway economicsofenergystoragetechnologies,but
thisisanimperfect—andoftennotuseful—
servicesitprovidesare
metric.Althoughlevelizedcostanalysis
compensated.
providesonemeansofcomparingdifferent
storagetechnologiesandcompeting
technologies,levelizedcostsdonotaccountfor
themultiplewaysstoragecanbeusedand,therefore,donotcapturethemultiplevalue
streamsfromwhichenergystoragecouldbenefit.
Thestackedvalueofenergystorageisdeterminedbasedonthespecificationsandusesofthe
individualproject,makingitdifficulttocomparecostsacrossenergystorageprojects.Some
storagetechnologies,forexample,aremoreappropriateforintegratingrenewables;othersare
moreappropriateaspeakingplantreplacementsorforprovidingancillaryandessential
reliabilityservices.
9
Lazard’sLevelizedCostofStorageAnalysis—version2.0.
Ibid.
11
Ibid.
10
Edison Electric Institute
11
Harnessing the Potential of Energy Storage
Ultimately,thedecisiontobuildandfinanceenergystoragedependsonthetypeofstorage,
thewaythestoragesystemwillbeused,itssize,anditslocation.Further,theeconomic
viabilityofstoragedependsonthewayitsvalueiscalculatedandthewayservicesitprovides
arecompensated(intermsofusecases),aswellasonthecommercialbackingofthe
technologyprovider.
ChallengesToWiderDeploymentOfEnergyStorage
Despiteitsgrowingpopularity,energystoragecontinuestofacechallengesthatarepreventing
thesetechnologyoptionsfromachievingtheirmarketpotentialandmaximizingthebenefits
theycanprovidetocustomersandsociety.Today,themainchallengesforenergystorageare:
therelativelyhighcostforsometechnologies;limitedpublicknowledgeregardingtechnical
performance;regulatoryrequirements;andmarketrulesthatcanmakeitdifficultforthese
technologiestoparticipateinthemarketsonacomparablebasiswithotherresources.In
combination,thesefactorsareimpactingtheacceptanceandadoptionofsomeenergystorage
technologies.
Cost
Highcostsarestillachallengetowiderdeploymentofenergystoragesolutions.Althoughthe
costsofsometechnologiesaredeclining,energystoragedevicesremainexpensiverelativeto
othertechnologiesprovidingonlyoneservice.Whilesomestoragetechnologycostsare
decreasingrapidly,itiscriticaltoremoveotherbarrierstoenergystorageadoption,sothatthe
fullrangeofbenefitsofenergystoragecanberealizedastheseresourcesbecomemoreand
moreprominent.
Forelectriccompanyandwholesalemarketapplications,energystorageisfinancedeither
throughelectriccompanyinvestmentstoimprovesystemreliabilityandtoreducetheneedfor
transmissionanddistributionupgrades,orthroughparticipationinelectricitymarkets
(wholesaleenergy,capacity,andancillaryservices).Althoughenergystoragedevicesareableto
providemultipleenergygridservicesandtoparticipateindifferentmarkets,theyoftencannot
captureallvaluestreamsduetoexistingmarketperformancerequirementsandcode-ofconductrestrictions.Theabilityofenergystoragetobecomecost-competitiveandmeetthese
performancerequirementswouldhelpthemtomonetizeallvaluestreamsandrealizetheirfull
economicpotential.
TechnicalPerformance
Widespreadadoptionofenergystoragesystemsdependsupongreaterinformationand
certaintyabouttheirperformance.Experiencewithsomeofthenewertechnologiesislimited,
12
Edison Electric Institute
Harnessing the Potential of Energy Storage
sothereareincompleteorunreliabledataontheirperformanceinvarioussituationsandat
differentscales.Electriccompaniesandmarketsneedtohaveahighlevelofconfidenceinthe
performanceandtechnicalcharacteristicsoftheirassetssotheycanoptimizethemanagement
oftheenergygrid.
Technicalissuesgobeyondthestoragetechnologiesthemselves.Equallyimportantistheway
inwhichstorageisconnectedtotheenergygrid.Storageinterconnectionmaybeachallengein
someareas,andinfrastructureandregulationsmayneedtobeupgradedtoaccommodatetwowayflowsofelectricitysostoragecanchargeanddischargeenergyonthegrid.Thetechnical
aspectsofstorageinterconnectionarebeingtestedinpilotprogramsinmanypartsofthe
country.Furtherdeploymentofenergystoragewillrequirethatinterconnectionalsobe
addressedfromtheregulatoryperspective.
RegulatoryChallenges
Becauseexistingregulationsweredevelopedatatimewhenpumpedhydrowasessentiallythe
onlyformofenergystorage,theydonotaccountfortheparticularcharacteristicsandintrinsic
flexibilityofsomenewerstoragetechnologies:
• ClassificationandFlexibility:Classificationrulesatthestateandfederallevelsmayneed
tobeupdatedtoaccommodateresourceslikestoragethatareabletoprovidemultiple
services.Updatingtheseruleswillhelptoensurethathowaresourceisclassified(e.g.,
asgeneration,transmission,distribution,orload)doesnothamperorprecludeitsability
toprovideotherservicesonacomparablebasiswithotherresources.Marketrules
shouldbeclarifiedormodifiedsothatallresourcesthatarecapableofprovidinga
productareabletoparticipateinthatmarket.Marketproductsshouldbedefinedina
technology-neutralwaysothatmarketproductsandrulesaregearedtowardthe
serviceneededratherthantowardspecificresourcetypes.Thiswillhelptoensurethat
productrequirementsandeligibilityaretiedtotheunderlyingoperationalneedsofthe
systemandnotthecharacteristicsofspecifictypesofgeneration.TheFederalEnergy
RegulatoryCommission(FERC)andRegionalTransmissionOrganizations(RTOs)already
areworkingtowardmodifyingexistingrulessothatclassificationrulesaccommodate
multipleusesandallowenergystoragedevicestomaximizetheirapplicationsand,thus,
enhancetheirenergygridandsocietalbenefits.
• Ownership:Incertainareasofthecountrythathaverestructuredtheirelectricity
markets,electriccompaniesmaynotbeallowedtoowngenerationassets.Access
restrictionsderivedfromexistingassetclassificationrules(when,forexample,storageis
classifiedasagenerationasset),meanthatelectriccompaniesinsomepartsofthe
countrymaynotbeallowedtoinvestinenergystoragedevices.Yet,electriccompanies
Edison Electric Institute
13
Harnessing the Potential of Energy Storage
areresponsibleforensuringthereliabilityoftheenergygrid.Theirinabilitytoown
energystorageinsomecasestakesawayanoptiontoenhancethereliabilityand
resiliencyofthenation’senergygridtothebenefitofallcustomers.Forexample,
electriccompanies—withtheirextensiveknowledgeoftheelectricsystem—areinthe
bestpositiontobeabletoidentifythemostvaluableapplicationsandtheoptimal
locationstositeresourcesontheenergygrid.Thelocationmatterswhenitcomesto
thedeploymentofdistributionsystemassets,includingenergystorage.Thesame
resourcecanhelporhurtthereliabilityandresiliencyoftheenergygriddepending
uponwhereitislocated—byalleviatingcongestion,forexample.Thisisnotonly
importantforreliability,butitalsohasadirectimpactoncostsasnewtechnologies
havethepotentialtodeferortoreducetheneedforincrementalinvestmentsor,onthe
contrary,requireadditionalinvestmentsinnewcapacityordistributionupgrades.
• InterconnectionandOperation:Electriccompaniesareresponsibleforinterconnecting
andoperatingnewenergystoragedevicessafelyandreliably.Instudiesanalyzingthe
impactofthesenewinterconnections,energystoragedevicesgenerallyareassumedto
chargeanddischargeatlevelsandtimesthatareinconsistentwithactualoperations.
Integrationofdistributedenergyresources,suchasbatterystorage,intoelectric
transmissionanddistributionoperationsiscomplexandrequirestheadoptionof
additionaldistributionautomationtechnologies.Likeallresourcesthatinterconnectto
theenergygrid,energystoragedevicesshouldberequiredtodefinetheparameters
underwhichtheywilloperate.Forinstance,itshouldbeclearwhatservice(s)the
energystoragesystemwillprovide,whereitwilloperate(i.e.,transmissionor
distributionsystem),whenitwillbeavailableandforhowlong(duration),andhow
thesesystemswillaccomplishthosetaskscoordinatingwithelectricsystemsoperations.
Inaddition,regulationsshouldbeclarifiedorrevisitedtoallowforenergystorage.For
example,historically,regulationsaddressedconsumptionatgeneratingplantswithnet
deliveriestotheenergygrid.Thesetypesofregulationsarebeingappliedtostorage
devices,butareill-suitedtoaccommodateenergystoragesystemsthatreceive
electricitytostoreforlaterdischargetotheenergygrid.
FERC,RTOs,andindividualstatesshouldcontinuetoworktowardremovingbarriersthat
artificiallylimittheabilityofenergystorageresourcestoprovidetheservicestheyare
technicallycapableofproviding.Thiswouldallowenergystoragetomonetizemultiplevalue
streamsandmaximizeitsfullpotentialforcustomersandsociety.
14
Edison Electric Institute
Harnessing the Potential of Energy Storage
PolicyRecommendations
Expandingdeploymentofstoragerequiresovercominganumberoftechnical,economic,and
regulatorychallenges.Asresearch,testing,andusecontinuetodrivedowncosts,policyand
regulatorychangescanhelptoallowenergystorageresourcestoachievetheirfullpotential
andimprovestorage’scontributionstomarkets.Policiesandregulationsdonotalways
recognizethemanybenefitsenergystoragecanprovide.
Belowaresomepolicyrecommendationsforpolicymakersandregulatorstokeepinmindwhen
consideringenergystorage:
• Deploymentofenergystorageshouldbedoneinasafe,secure,reliable,andcosteffectivemannerthatrecognizesthebenefitsofstorage,includingreliabilitybenefits,
whetherinfrontoforbehindthemeter.
• Allelectriccompaniesshouldhavetheabilitytoownandmakeinvestmentsinenergy
storageregardlessofregulatorymodel.
• Regulationsandstandardsshouldrecognizetheflexibilityofthevarioustypesofenergy
storageandthebestwayseachcanbeusedandallowtheuseofenergystorage
technologies,onacomparablebasiswithotherresources,regardlessofwhetherthey
supportgeneration,transmission,distribution,and/ordemand-sideoperations.
• Regardlessofmarketdesignandregulatoryenvironment,marketproductslikeancillary
andessentialreliabilityservicesshouldbedefinedinatechnology-neutralwaysothat
marketproductsandrulesaregearedtowardtheserviceneededratherthantoward
specificresourcetypes.
• Thespecificbenefitattributesapplicabletovariousenergystoragetechnologiesare
dependentonwhichservicestheparticularstoragetechnologyiscapableofproviding.
Realizingthefullbenefitsofenergystoragewilldependontheresource’sabilityto
providemultipleservicesandtobecompensatedfairlyforservicesprovided.
Regulationsandstandardsshouldallowfortheprovisionofmultipleserviceswithout
compromisingsafety,security,andreliability.
• Whethertransmission-level,distribution-level,ordirectcustomerinterconnectionis
implemented,systemimpactsshouldbeassessedusingcriteriaappropriatetothe
technology,theintendedusesofthedevice,andtheelectricsysteminwhichthedevice
istobeutilized.
Edison Electric Institute
15
Harnessing the Potential of Energy Storage
• Whetherownedbyelectriccompanies,customers,orthirdparties,energystorage,
whendeployedinthedistributionsystem,shouldfollowthesameguidingprinciplesas
allothersimilarlysituatedresources:
o Ensureenergystoragesystemsareconnectedsafely.
o Ensurefair,economicallyviablecompensationofservices,whichwilldependon
regulatoryframeworkandmarketdesign.
o Ensurethatretailratemakingavoidscost-shiftingtocustomerswhodonotown
storagedevices.
o Enablefullparticipationbyelectriccompaniesintheownershipand/or
operationofdistributedstorageasdeterminedbytheelectriccompanyandto
supportitsbusinessmodel,includingmaximizingthevisibilityandcontrolof
distributedstoragebyelectriccompanies.
o Encourageoptimallocationandothertechnicalspecifications,whenpossible,to
increasethevaluethatdistributedstorageprovidestothedistributionsystem.
o Ensure,forplanningandoperatingpurposes,visibilitybyelectriccompanies,
impactassessment,andsomelevelofcompanyinputintoandcontrolofthe
energystorageresourcesthatareconnectedtothedistributionsystem.
o Encourageappropriatecoordinationamongthetransmissionanddistribution
systems(andfederalandstateregulators)totheextentthatdistributedstorage
willimpactthetransmissionsystem.
Movingforward,itisimportanttorecognizethemultiplevaluesandvariedusesofenergy
storagesothatthesetechnologiescanhelptoenhancetheflexibility,reliability,andresiliency
oftheenergygridforthebenefitofallcustomers.
16
Edison Electric Institute
The Edison Electric Institute (EEI) is the association that
represents all U.S. investor-owned electric companies. Our
U.S. members provide electricity for 220 million Americans
and operate in all 50 states and the District of Columbia.
EEI also has dozens of international electric companies as
International Members, and hundreds of industry suppliers
and related organizations as Associate Members.
Safe, reliable, affordable, and increasingly clean energy
enhances the lives of all Americans and powers the economy. As a whole, the electric power industry supports more
than 7 million jobs in communities across the United States
and contributes 5 percent to the nation’s GDP.
Organized in 1933, EEI provides public policy leadership,
strategic business intelligence, and essential conferences
and forums.
For more information, visit our Web site at www.eei.org.
Edison Electric Institute
701 Pennsylvania Avenue, NW
Washington, DC 20004-2696
202-508-5000 | www.eei.org