Grid Energy Storage: Policies
John Martin, P. Eng. Senior Tariff and Special Projects Advisor Alberta Electric System Operator (AESO)
IEEE Northern Canada Section PES/IAS Chapter Seminar, 21 Nov 2017, Edmonton, Alberta Topics
Electric industry framework Existing policies applicable to energy storage Current activities to revise existing policies and develop new policies
Please ask questions during slides!
20 Nov 2017 Public 2 Alberta’s electricity regulations and policies do not specifically address energy storage
20 Nov 2017 Public 3 You’re wondering where existing policies are sufficient and where more clarity is needed
20 Nov 2017 Public 4 The existing electric industry framework does provide some guidance
20 Nov 2017 Public 5 The existing framework is evolving to more directly address energy storage
20 Nov 2017 Public 6 Opportunities exist for you to participate in changes to address energy storage
20 Nov 2017 Public 7 Energy storage doesn’t clearly fit within today’s electric industry framework
20 Nov 2017 Public 8 The existing framework reflects a “traditional” electric system structure
20 Nov 2017 Public 9 In Alberta, the current electric industry structure was created in the late 1990s
Wholesale Retail Independent competition competition system 2004 1996 Legislated 2001 Auction of operator hedges and power unit obligation purchase prices arrangements Transmission Administrator
20 Nov 2017 Public 10 Today’s structure reflects traditional electric industry functions
$2.6 Competitive Generation billion Market
$2.1 Cost-of-Service Transmission billion Regulation
$1.5 Performance-Based Distribution billion Regulation
Retail Competitive Market $0.4 billion
20 Nov 2017 Public Costs estimated for 2017 11 A set of interrelated acts and regulations establish the industry structure
Alberta • Fair, Efficient and Utilities Open Commission Competition Act Regulation
Hydro and Electric Energy Act Electric Utilities
• Transmission Act Regulation • Micro-Generation Regulation
20 Nov 2017 Public 12 The two-directional flows associated with energy storage do not align with the one-directional flows underlying the electric industry structure
20 Nov 2017 Public 13 In a traditional electric industry structure, electricity flows from generators to loads
Direct Connected Consumers
Transmission Distribution Distribution Generators Facility System Connected Owners Owners Consumers
20 Nov 2017 Public 14 Money flows in the opposite direction, from loads to generators
AESO Retailers
Direct Connected Consumers
Transmission Distribution Distribution Generators Facility System Connected Owners Owners Consumers
20 Nov 2017 Public 15 Energy storage doesn’t clearly fit this one- directional structure
20 Nov 2017 Public 16 Energy storage must comply with existing requirements even if applicability is unclear
20 Nov 2017 Public 17 Legislation sets general requirements, although not specifically for energy storage
Hydro and Electric Energy Act requires approval of the Commission to construct and operate a power plant Battery storage facility was found to be a power plant in Commission Decision 2010-012, Installation of a Battery System at ENMAX Place Electric Utilities Act establishes the AESO as the sole provider of system access service on the transmission system to exchange electric energy and ancillary services
20 Nov 2017 Public 18 Alberta Utilities Commission Rule 007 sets out requirements for facility applications
AUC Rule 007 Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations and Hydro Developments
20 Nov 2017 Public 19 AESO connection process sets out requirements for system access service
Market participants must identify the requirements of their projects and assist the AESO in placing the projects into an appropriate project category Market participants must apply to the AESO to be registered as a pool participant for the provision of energy or ancillary services or for the purchase of energy
20 Nov 2017 Public 20 Limitations of policies are being addressed and new policies are being developed
20 Nov 2017 Public 21 Legislation can provide some policy guidance
20 Nov 2017 Public 22 A market participant is generally able to act freely on owned property
Requirements for construction and operation of a power plant “do not apply to a person generating or proposing to generate electric energy solely for the person’s own use, unless the Commission otherwise directs.” — Hydro and Electric Energy Act, section 13(1) “The Commission may designate the whole or any part of an electric system as an industrial system.” — Hydro and Electric Energy Act, section 4(1)
20 Nov 2017 Public 23 Regulated functions must be separated from competitive functions
“There would appear to be no barriers to deployment of energy storage facilities as a non-regulated generation asset that could provide energy … and ancillary services …. Legislative or policy changes may be required to clarify whether energy storage technologies would be regulated as transmission or distribution assets or be left unregulated and deployed in the competitive generation market.” — Alberta Smart Grid Inquiry, 31 Jan 2011, page 15
20 Nov 2017 Public 24 Costs must be attributed in accordance with legislation and rate design principles
“The rates … must reflect the prudent costs that are reasonably attributable to each class of system access service.” — Electric Utilities Act, section 30(2) Costs of the transmission system must be wholly charged to loads and exporters — Transmission Regulation, section 47(a)(i) Rate design must satisfy principles of economic efficiency, equity, stability, and practicality — Commission Decision 2010-606, section 5
20 Nov 2017 Public 25 ISO rules set out requirements for participation of energy storage in competitive energy and ancillary services markets
20 Nov 2017 Public 26 Technical and operating requirements apply to facilities connected to the transmission system
20 Nov 2017 Public 27 “Market rules” govern participation in the energy and ancillary services markets
The AESO has a duty “to facilitate the operation of markets for electric energy in a manner that is fair and open and that gives all market participants wishing to participate in those markets and to exchange electric energy a reasonable opportunity to do so.” — Electric Utilities Act, section 17(b) Rule amendments to facilitate the integration of energy storage facilities are in final stage of consultation
20 Nov 2017 Public 28 Rules governing participation in competitive markets continue to be reviewed for technology neutrality
Defined term added in 2016 “energy storage facility” means a facility with technologies capable of storing and releasing electric energy References to “generating unit” and “load” in operating reserve rules are being replaced with technology-neutral definitions for “resources”
20 Nov 2017 Public 29 ISO tariff governs a connection to the transmission system for the exchange of energy and ancillary services
20 Nov 2017 Public 30 From an operating perspective, different facilities can have a similar Impact on the transmission system Generator Load
10 0
5 (5) 0 (10) 0 3 6 9 12 15 18 21 24 0 3 6 9 12 15 18 21 24 Generator and Load Storage
5 5
0 0 (5) (5) 0 3 6 9 12 15 18 21 24 0 3 6 9 12 15 18 21 24
20 Nov 2017 Public 31 Modelling suggests energy storage systems can withdraw from the transmission system to charge at any time
30%
20%
10%
0%
(10%) 95% Capacity of Rated ≥ (20%)
(30%) Frequency of Discharge at ≥95% of Rated Capacity
Percentage of Hours Discharging (40%)
(Charging) at Frequency of Charge at ≥95% of Rated Capacity (50%) 123456789101112131415161718192021222324 Hour of Day 20 Nov 2017 Public 32 AESO comparability study found similarities between storage and load-generation sites
150 120
100 100
50 80
0 60
(50) 40 Transmission System (MW) Transmission (100) 20 Net Supply to (Withdrawal From) From) Net Supply to (Withdrawal Energy Storage (left axis) Load-Generation Site (right axis) (150) 0 1 8 15 22 29 36 43 50 57 64 71 78 Day
20 Nov 2017 Public 33 Industry participants can help with existing policy revision and new policy development
20 Nov 2017 Public 34 Participate in AESO tariff development
20 Nov 2017 Public 35 ISO tariff proceeding provides opportunity to examine rate treatment
“[C]ost causation supports the application of Rate DTS [Demand Transmission Service] to energy storage facilities, in hours in which the energy storage facilities are withdrawing electricity from the transmission system (charging).” “In hours in which the energy storage facilities are supplying electricity to the transmission system, Rate STS [Supply Transmission Service] would apply.” 20 Nov 2017 Public 36 Many of the components of Rate DTS can be avoided or reduced through managed operation of an energy storage facility
Average 100% 20 MW Load-Only
Avoid 37% System Peak
Own Your 22% Substation
Contract for Both 21% DTS and STS
Hold Charge 12% Connection Charge to 10 MW Ancillary Services Charges
$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 Monthly Rate DTS Charges
20 Nov 2017 Public 37 Energy storage projects in the connection process accelerate identification of issues • Identify project 0 • Connection study scope 1 • Connection proposal 2 • NID and facility application 3 • Application filings and Commission approvals 4 • Construct and prepare to energize 5 • Energize, commission and close 6
20 Nov 2017 Public 38 Participate in AESO rule development
20 Nov 2017 Public 39 AESO is in final stage of amending operating reserve rules
Section 205.3, Restatements for Operating Reserve Section 205.4, Regulating Reserve Technical Requirements and Performance Standards Section 205.5, Spinning Reserve Technical Requirements and Performance Standards Section 205.6, Supplemental Reserve Technical Requirements and Performance Standards
20 Nov 2017 Public 40 AESO has formal consultation process for rules and standard development
AESO creates new ISO rules or amends existing ISO rules as needed To facilitate the safe, reliable and economic operation of the Alberta Interconnected Electric System To promote a fair, efficient and openly competitive wholesale market for electricity in Alberta Rules consultation process will be inclusive, transparent, fair and efficient and will be understood and accepted by all parties
20 Nov 2017 Public 41 Opportunities also exist to engage in consultation on capacity market development and other market initiatives
20 Nov 2017 Public 42 Continue to explore and advocate for integration of energy storage in the Alberta context
20 Nov 2017 Public 43 Energy storage may deliver “stacked” value but must be within legislated boundaries
Market Benefit Adapted from State of Charge: Energy Massachusetts Energy Storage System Benefit Market Initiative Study (Sep 2016) Price Provider Benefit Ancillary Services Market Price Renewable Generation Integration Generation Infrastructure
Wires Infrastructure
Capacity Market Price Cost of Storage
Revenue to Storage Provider
20 Nov 2017 Public 44 Declining costs suggest storage will become more economically feasible
0% Storage Battery -5% Balance of Storage System
-10%
-15%
-20%
-25%
-30% Adapted from Large-Scale Energy Storage Systems report Decline From Previous Year, % Year, Decline From Previous by GTM Research (Oct 2017) -35% 2013 2014 2015 2016
20 Nov 2017 Public 45 Some studies suggest optimal storage capacity is 10% of system load
10% 1,200 MW in Alberta
. Hossein Safaeia and David W. Keith, “How much bulk energy storage is needed to decarbonize electricity?”, Energy & Environmental Science (Sep 2015) . Mark Z. Jacobsen, et al., “Low-cost solution to the grid reliability problem with 100% penetration of intermittent wind, water, and solar for all purposes”, Proceedings of the National Academy of Sciences (Dec 2015)
20 Nov 2017 Public 46 The existing electric industry framework does provide some guidance
20 Nov 2017 Public 47 The existing framework is evolving to more directly address energy storage
20 Nov 2017 Public 48 Opportunities exist for you to participate in changes to address energy storage
20 Nov 2017 Public 49 Thank you
John Martin [email protected] 403-539-2465