All Documents are copyright materials of India Energy Storage Alliance (IESA). Without proper permission and reference no files can be copied or reproduced in any manner

1. 7/17/2009
1
Analyze.
Simplify.
Implement.
Critical Factors for
Developing Economically ViableDeveloping Economically Viable
Electricity Storage Projects
Presented by
Rahul Walawalkar Ph.D., CEM, CDSM
Sr. Energy Consultant
Customized Energy Solutions Ltd.
1528 Walnut Street, 22nd Floor
Philadelphia, PA 19103 USA
Phone: 215‐875‐9440
Fax: 215‐875‐9490
info@ces‐ltd.com
Presented at thePresented at the
Storage WeekStorage Week
San Diego, CaSan Diego, Ca
July 14July 14thth, 2009, 2009
Analyze.
Simplify.
Implement.
Agenda:
Energy Storage Technologies & Electricity Markets
Factors affecting Economic viability of EES
EES Design, performance & capabilities
Market Design, Rules & Barriers
Project Financing
Other Factors (Fuel price, environmental regulations & competition)
Questions ???
2

2. 7/17/2009
2
Analyze.
Simplify.
Implement.
Overview of Electricity Markets
3
Source: FERC: http://www.ferc.gov/industries/electric/indus‐act/rto/rto‐map.asp
Analyze.
Simplify.
Implement.
ts
Available for commercial order
o
Preconstruction and licensing period
C
Finalized cost estimate
Design/construction period
EES for Electric Utility Applications
• Pumped Hydro Energy Storage
• Compressed Air Energy Storage Design/construction period
l
First commercial service
atI
2nd plant in service
pa
3rd plant
C
<--estimate actual--> 4th plant
5th plant
t
Development period
I
cost estimate Mature plant cost---------->
n
Simplified cost estimate w ith incomplete data
U
p gy g
• Sodium Sulfur (NAS)
• Flow Batteries (VRB/ZBB)
• Flywheels (Beacon)
• Li‐Ion Batteries (Altairnano/ A123)
NAS
4
ZBB
VRB/Prudent Energy
Flywheel

3. 7/17/2009
3
Analyze.
Simplify.
Implement.
Opportunities for Energy Storage
Energy Arbitrage
Ancillary ServicesAncillary Services
Regulation
Operating Reserves
Voltage Support
Installed Capacity
Deferral of investment in
P ki G tiPeaking Generation
Transmission & Distribution
Supporting integration of renewables
5
Analyze.
Simplify.
Implement.
Factors Affecting EES Economics
EES Design, Performance & Capabilities
Technology selection
Power & Energy rating
Life expectancy
Round Trip Efficiency
Response rate & any other operating considerationsResponse rate & any other operating considerations
Footprint & any special permitting requirements
Capability to meet requirements for different markets
6

4. 7/17/2009
4
Analyze.
Simplify.
Implement.
EES Selection: Discharge Time & System Power Rating
Source: Electricity Storage Association 7
Analyze.
Simplify.
Implement.
Round Trip Efficiency & EES Utilization
8

5. 7/17/2009
5
Analyze.
Simplify.
Implement.
~51% increase over daily operation
Net Revenues with different CAES Configurations
CAES Configuration
Heat Rate
ual Revenue $ / MW
Heat Rate
Energy Ratio
Power Ratio
Ramp rate
Response time
Storage
0.50 0.75 1.00 (Daily) 1.00 (Monthly)
Power Ratio
Annu
9
Duration
Analyze.
Simplify.
Implement.
Factors Affecting EES Economics
Market Design
Access to various markets for
energy,
ancillary services
capacity
Generation Supply mix & Demand Curve
Market size
Locational factors
Electric transmission network & interconnection
10

6. 7/17/2009
6
Analyze.
Simplify.
Implement.
Comparison of ISOs/ RTOs
11
Analyze.
Simplify.
Implement.
Recent changes in Market Design
FERC Orders
890: open regulation markets to non‐gen resources
719: demand response and long term power contracts719: demand response and long term power contracts
PJM & NYISO opened up ancillary service markets for
demand side resources during 2007‐08
ISO‐NE initiated pilot program for alternative
technologies participation in regulation market
Creation of a new category for ancillary services to g y y
remove barriers for energy limited resources
NYISO: Limited Energy Storage Resources (LESR)
MISO: Stored Energy Resource (SER)
CAISO has proposed a EES Pilot for ancillary services
12

7. 7/17/2009
7
Analyze.
Simplify.
Implement.
Factors Affecting EES Economics
EES Revenues & Cost
On Peak Energy Revenues
Off Peak Charging Costs
Ancillary Service Revenues
Capacity revenues
Interconnection costs
Natural Gas price
13
Analyze.
Simplify.
Implement.
NYISO Net Load - 2006
35000
NYISO - Net Load - Yr 2006
n
0
5000
10000
15000
20000
25000
30000
MW
1-Jan
13-Jan
25-Jan
6-Feb
18-Feb
1-Mar
13-Mar
25-Mar
6-Apr
18-Apr
30-Apr
12-May
24-May
5-Jun
17-Jun
29-Jun
11-Jul
23-Jul
4-Aug
16-Aug
28-Aug
9-Sep
21-Sep
3-Oct
15-Oct
27-Oct
8-Nov
20-Nov
2-Dec
14-Dec
26-Dec
S1
S5
S9
S13S17S21Days in Year
Hrs in
Day
1
4

8. 7/17/2009
8
Analyze.
Simplify.
Implement.
Short Run Marginal Cost Curve
15
Analyze.
Simplify.
Implement.
Location, Location, Location
• NYISO • PJM
NY West
NY
East
West
Central
East
South
16
NYC
• PJM East: AECO, DPL, JCPL, METED,
PECO, PPL, PSEG, RECO
• PJM Central: PENELEC, APS
• PJM South: DOM, BGE, PEPCO
• PJM West: COMED, AEP, DAY, DUQ
• NYC: NYC, Long Island
• NY East: Capital, Hudson Valley, Millwood,
Dunwoodie
• NY West: West, Genesee, Central, Mohawk
Valley, North

9. 7/17/2009
9
Analyze.
Simplify.
Implement.
Congestion Example
Analyze.
Simplify.
Implement.
NYISO & PJM LMP Profiles (2001-09*)
18
* Partial year data as of June 2009

10. 7/17/2009
10
Analyze.
Simplify.
Implement.
Effect of Location & Efficiency on Net Revenue
19
Analyze.
Simplify.
Implement.
Effect of Natural Gas Price in NYISO
20

11. 7/17/2009
11
Analyze.
Simplify.
Implement.
Average Daily LMP Curves for each month in NYC
21
Analyze.
Simplify.
Implement.
Ancillary Service Revenue
22

12. 7/17/2009
12
Analyze.
Simplify.
Implement.
Regulation Price Profiles NYISO (2001-09)
2
3
Analyze.
Simplify.
Implement.
Probability Curve for Expected Regulation Revenues
24

13. 7/17/2009
13
Analyze.
Simplify.
Implement.
Capacity Credit
NYISO has a locational ICAP requirement
80% for NYC
97.5% for Long Island
PJM uses Reliability Pricing Mechanism (RPM) to set
up locational capacity prices
Future capacity prices will be influenced by
demand growth
Energy and ancillary service revenues
Generation addition / retirements as well as DR
Cost of new generation technologies
25
Analyze.
Simplify.
Implement.
Other Factors Affecting EES Economics
Financing Factors
Capital Costs
Real estate and taxes
Cost of borrowing
Construction, permitting & interconnection period
26

14. 7/17/2009
14
Analyze.
Simplify.
Implement.
Impact of capital cost on economics of CAES in NY
27
Analyze.
Simplify.
Implement.
Other Factors Affecting EES Economics
Transmission / Distribution Upgrades
Impact of wind & renewable integrationImpact of wind & renewable integration
Impact of environmental regulations
Renewable Portfolio Standard mandates
NYS 15x15 Program Initiative
Carbon Tax
28

15. 7/17/2009
15
Analyze.
Simplify.
Implement.
Transmission Infrastructure
29National Interest Electric Transmission Corridor
Analyze.
Simplify.
Implement.
PJM: Proposed new transmission projects
30
Source: PJM

16. 7/17/2009
16
Analyze.
Simplify.
Implement.
Impact of Renewables
PJM has 40GW + wind projects in interconnection queue
Current wind penetration is 1.3 GW
NYISO is anticipating more than 3 GW of wind being
added on the grid in next 3-4 years
Current wind penetration is 1 GW
Represents around 10% of peak load for NYISO
20-30% of off peak load
May result in increased regulation and ancillary service
requirements
Can improve the case for energy arbitrage by lowering
off peak prices
31
Analyze.
Simplify.
Implement.
Occurrence of Negative LMPs in NYISO Zones
32

17. 7/17/2009
17
Analyze.
Simplify.
Implement.
Distribution of –ve LMPs
33
Analyze.
Simplify.
Implement.
Conclusions
• Electricity markets across US allow or are working on allowing
EES to participate in energy, ancillary services & capacity
markets.
• The economic feasibility of EES will depend on factors including
– Design parameters
– Market Structure and location
– Ability to capture multiple revenue streams
– Financing
– Environmental regulations
– For large scale integration of EES it is important that technology
developers and market participants, as well as potential
investors understand these factor while determining value
proposition of EES for different applications.
34

18. 7/17/2009
18
Analyze.
Simplify.
Implement.
Acknowledgements
Co‐authors & Colleagues
Netra Thakur, Rick Mancini and Jim Harvilla
I would also like to thank
Dr. Jay Apt & Dr. Lester Lave (CMU)
Dr. Peter Balash (NETL)
Joseph Sayer & Mark Torpey (NYSERDA)
Haresh Kamath & Robert Schainker (EPRI)
This analysis was supported in part byThis analysis was supported in part by
Carnegie Mellon Electricity Industry Center (CEIC)
New York State Energy Research Administration (NYSERDA)
National Energy Technology Labs (NETL)
35
Analyze.
Simplify.
Implement.
QUESTIONS ???QUESTIONS ???
Dr. Rahul WalawalkarDr. Rahul Walawalkar
215215‐‐875875‐‐94409440
rahul@cesrahul@ces‐‐ltd.comltd.com
www.ceswww.ces‐‐ltd.com ltd.com
Customized Energy Solutions Ltd.
1528 Walnut Street, 22nd Floor
Philadelphia, PA 19103 USA
Phone: 215‐875‐9440
Fax: 215‐875‐9490
info@ces‐ltd.com