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White paper storage: Moving toward commercialization

Energy storage will allow utilities to decouple generation from demand, increasing both grid flexibility and performance.

Evolution of the utility grid serve the constantly changing demand. acknowledged, “A system consisting The adoption of As a result, grid stability and safety have of weather variable and invariable and has rapidly become major issues. generation will require a highly responsive altered the way we generate and deliver demand side and/or the ability to store . However, with the increase in Fortunately, the latest energy storage electricity on a large scale.” [1] But once solar, wind, and other distributed energy systems and controls can address installed, energy storage will also allow resources (DERs), utilities are finding these issues, and that makes them an utilities to decouple generation from it increasingly difficult to manage their important next step in the evolution of demand, increasing both grid flexibility systems to ensure that these variable the smart grid. As the State and performance. sources of electricity are adequate to Public Service Commission recently Elements of an energy U.S. Energy Storage Deployments by Segment (MW) storage system

For typical electro-chemical storage devices, 900 there are three major components: a) a storage medium; b) a conversion system; and c) 800 advanced controls and software. However, at 700 present most utilities are looking at battery-based storage for the simple reason that batteries can 600 be located almost anywhere. 500 For typical electro-chemical storage devices, there 400 are two major components: a) a storage medium; and b) a power conversion system. [8] These are 300 supplemented by balance-of-plant components 200 including: 100 −− Monitoring and control systems. −− A building or containers. 2012 2013 2014 2015 2016 2017 2018 2019 −− Hardware, including: , , medium- and low- cables, and other Utility Non-Residential Residential ancillary devices.

Power converter – These are sized according to Figure 1: The U.S. energy storage market is expected to soar over the next five years. [2] the applications. For higher power requirements, several units can be connected in parallel to Indeed, in California, where solar is king, an 858 MW annual market in 2019. This provide dynamic control of active and reactive the state has mandated investor-owned would be 13 times the size of the 2014 power flow in both directions. utilities install 1.3 GW of storage by 2020. market and four times the size of the Control system – Allows manual and “Storage is also gaining interest in the 2015 market. (See Figure 1). automatic operation of all system components. protocols support remote control Northeast, but for different reasons,” and monitoring and accept load and weather said Pat Hayes, Energy Storage Business In 2014, the PJM region, which includes forecasts. Development Manager, ABB. “There, most of the mid-Atlantic states, was Protection equipment – Includes AC/DC circuit states are seeking protection from future the largest utility-scale market, with breakers, protective relays, current & voltage mega-storms like Hurricane Sandy, which 40.3 MW of energy storage deployed, sensors, built-in temperature monitoring ravaged power systems in 2012, and followed by California. While storage devices, etc. they’re doing that in part with , systems installed in PJM were largely Switchgear – For safe and reliable grid which rely on energy storage for emer- for regulation, the majority of connection and operation of the system. gency support.” California projects were utility-owned, Transformers – May include either liquid-filled transmission- and distribution-connected and/or dry-type transformers that meet ANSI, IEC, and other local standards. Overall, the U.S. installed nearly 62 MW storage systems. (See Sidebar: The

Batteries – Depending on the application, utilities of energy storage in 2014, up 40% from California and PJM experiences) can select from a variety of such as 2013, and completed 180 individual lithium-ion (li-ion), sodium-sulfur (NaS), nickel- installations – representing an investment But there’s more driving interest in energy (NiCd), -acid, or flow batteries. of $128 million. During the next five storage besides the California and the years the U.S. energy storage market is PJM markets. According to a recent expected to grow even faster, resulting in industry survey, more than half of the

The California and PJM experiences “California’s mandate, which requires utilities in that state to adopt 1.3 GW Consequently, two-thirds of the 62 MW of energy storage deployed in the U.S. in of energy storage by 2020, is compelling those same utilities to undertake a 2014 was located in PJM’s service territory to provide frequency regulation, i.e., massive program of acquisition and testing,” said Michelle Meyer, Senior Product to balance energy load and supply in real time. This need arose because of the Manager for Energy Storage, ABB. “Their goal is to encourage the development strain that the addition of intermittent renewable generation and complex loads – and integration of cost-effective energy storage systems.” In developing that such as large electric motors at manufacturing plants – placed on the grid. mandate, the state’s PUC had three guiding principles: In the past PJM utilities typically would either start up or shut down or −− Optimization of the grid, including peak reduction, contribution to reliability generators to balance load. However, the large rotating of needs, or deferment of transmission and distribution upgrade investments these assets take tens of seconds to ramp up and as a result cannot follow a −− Integration of renewable energy fast-moving electrical signal. In contrast, battery or energy storage, −− An 80% reduction in 1990 greenhouse gas emission levels by 2050 for example, can respond instantly (in milliseconds) to correct deviations in “PJM took a different approach,” said Meyer, “and the way it changed its frequency levels. compensation mechanisms for regulation services – basing them on speed and “To date, PJM is the only system operator to fully adopt and implement FERC accuracy – was a game changer for energy storage. Its ability to respond in Order 755, which requires ISOs to pay for performance,” added Meyer. “And as milliseconds resulted in higher payments, making storage for a single application a result, energy storage systems in that area receive much higher revenues per a lucrative investment.” MW for regulation.”

2 Energy storage | ABB white paper nation’s utility executives ranked energy Depending on a utility’s specific needs, storage as the top emerging technology energy storage systems can be employed Energy storage in which they believe their companies on either distribution or transmission should invest. [3] systems and for single-purpose or applications and benefits multiple-purpose operations, often with These may be combined into “As regulators and policy makers varying discharge times. (See Figure 2.) attractive value propositions. [4] develop the rules, the standards, and the incentives for energy storage, utilities are “Many of these benefits can be Electric supply just beginning to scratch the surface of combined to develop attractive value 1. Electric energy time-shift its true potential,” said Hayes. “They have propositions,” said Hayes. For instance, 2. Electric supply capacity begun to look at how energy storage storage that reduces an end-user’s Ancillary services can be integrated across their fleets time of use (TOU) energy charges could 3. Load following to optimize their entire systems.” For also reduce demand charges, provide 4. Area regulation these and other reasons, Hayes noted, dispatchable load control, or even reduce 5. Electric supply reserve capacity “utilities are coming to realize that energy T&D congestion. “That,” noted Hayes, 6. Voltage support storage – done right – not only offers “could defer both T&D expansion and strategic advantages in creating a more the investment that would require.” (See Grid system enhancements flexible grid, it also has the potential to Sidebar: “Energy storage applications 7. Transmission support strengthen the bottom line.” and benefits”) 8. Transmission congestion relief 9. Transmission & distribution (T&D) Identifying the benefits Taking a strategic approach Upgrade deferral Recent advances in energy storage Recognition of these benefits has 10. Substation on-site power technology and power electronics are a generated dynamic growth in the energy End user/utility customer benefits major reason for the increased interest storage market. However, to ensure the 11. Time-of-use (TOU) energy cost in energy storage. In fact, they enable cost-effective deployment of storage Management energy storage facilities to provide utilities systems, it has to be done right. This 12. Demand charge management at least 17 readily identifiable benefits means storage has to become an integral 13. Electric service reliability that fall into roughly five categories: [4] part of utility networks, not something 14. Electric service power quality −− Electric supply bolted on to meet an immediate local −− Ancillary services need. “Adding energy storage is more Renewables integration −− Grid system enhancements complicated than simply buying the 15. Renewables energy time-shift −− End user/utility customer benefits hardware, connecting it to the grid, and 16. Renewables capacity firming −− Renewables integration normalizing the voltage,” said Clinton 17. Renewables integration Davis, VP Renewable Solutions, Enterprise

1000 Spinning reserve Load leveling ramping energy abitrage 100 System stability VAR support Renewables - Wind - Solar 10 Frequency Peak shaving Power quality regulation and T&D deferral transmission Temporary power conjunction management 1.0 interruptions Power rating (MW) Remote island applications Village power applications

0.1 Cycle 10 Cycle 15 Second 15 Minutes 1 Hour 5 Hour

Figure 2: Energy discharge time (axis not to scale) [5]

ABB white paper | Energy storage 3 Software, ABB. “Utilities need to look enables utilities to employ communication DERs on the distribution grid while also beyond the tactical or local level and take and automation algorithms to set the employing advanced algorithms to analyze a holistic – or strategic – view of both times for both energy storage and the weather forecasts and projected load the physical and financial components of release of stored energy but also to profiles to help utilities optimize an energy energy storage – and that must be step change them day-to-day as required.” storage system’s charging and discharging one in the planning process.” schedules. This not only enhances On the financial side, utilities have to ask operational efficiency but also provides Davis recommends that when developing what products and services they want to immediate access to those who need to long-term resource plans to meet their provide and how profitable they will be. use energy storage resources.” portfolio goals, utilities not concern “That means predicting electricity prices, themselves initially with a particular then using those prices to forecast how As noted earlier, California utilities are energy storage technology. “They first often their energy storage facilities will run under a mandate to integrate 1.3 GW of have to determine how best to dispatch and how profitable they will be – say, over a energy storage by 2020, but Southern stored energy based on energy-price 10-year period,” Davis adds. “This involves California Edison (SCE) is way ahead of forecasts and, critically, the least-cost forecasts based on weather, industry schedule. In fact, the utility has already way to provide electricity.” (See “Southern knowledge, economics, the expected signed a total of more than 260 MW of California Edison’s Approach” below.) charging/discharging schedule, and both energy storage contracts, far exceeding its system lifetime and lifecycle costs.” mandated 2014 target of 50 MW. On the physical side, “utilities first need to identify the weak points on their networks Maximizing performance In addition, to aid the full adoption and where energy storage can help and Once this strategic analysis is complete, commercialization of energy storage, SCE determine the optimal point of common utilities will be in a position to determine is pushing the industry to move away connection for it,” Davis noted. “Then both the optimal technology and size from today’s highly customized and highly they can determine what it’s going to take for each energy storage application. engineered systems toward standardized, to integrate the storage facility and make “To get the maximum benefit from their “pre-engineered” battery energy storage it available in real time.” investment in energy storage,” Davis said, units. The utility is confident that – if “utilities have to employ it as efficiently as adopted industry-wide – this approach Fortunately, neither possible – and for the greatest return at would stimulate production, greater systems nor technology should be any given time.” That requires software economies of scale, and ultimately price an issue when assessing energy capable of monitoring and controlling reductions throughout the supply chain. storage integration needs, according more than just a single energy storage to Doug Voda, Medium Voltage Smart facility; it requires enterprise software that In addition to requesting more pre- Grid Segment Leader, ABB. “The enables grid operators to visualize their packaged energy storage systems, communication architecture required for entire network. SCE has also introduced a procurement energy storage is basically the same for framework designed to encourage an all distribution automation systems,” he “Enterprise software really is the glue economic evaluation of energy storage said. “Most energy storage systems are between the energy storage system and systems based on location, technology, connected to SCADA, which not only the consumer,” said Davis. “It can map cost, and application. SCE’s energy

4 Energy storage | ABB white paper Southern California Edison’s approach

Present Value & Develop Price Determine Consider Sum all Revenue Forecasts & Scenarios Revenue Streams Qualitative Factors Streams

Figure 3: Southern California Edison‘s proposal evaluation process. [6]

storage Request for Offers (RFO) this cost-benefit analysis will also need “Without a doubt,” noted Hayes, “as more evolution emulates its normal RFO to include both the operating profile and more utilities follow SCE’s lead and process and involves four major steps. and locational attributes of the energy adopt formal processes to define their (See Figure 3: Southern California storage system. energy storage needs, system providers Edison’s proposal evaluation process.) will be better able to standardize their Step 3: Present value and sum all solutions to meet the demands of the Step 1: Develop price forecasts revenue streams marketplace, both increasing deployments and scenarios All revenue streams based on a cost- and lowering prices.” SCE will prepare and evaluate forecasts benefit analysis include a 10% discount for day-ahead energy prices, resource rate to yield a single net present value Moving toward standardization adequacy (RA) prices, ancillary services (NPV) of the investment. In 2013 the Cowessess First Nation (AS) prices, and real-time energy prices installed an 800-kW wind over the expected project lifetime. Step 4: Consider qualitative factors along with a 400-kW, 744 kWh After the quantitative evaluation is lithium-ion battery storage system and Step 2: Determine revenue streams complete, SCE assesses the less tangible an ABB power conversion system (PCS) SCE carefully assesses both the qualities and characteristics of the on tribal land in Saskatchewan, Canada. benefits and the costs of each storage proposed energy storage system, such (See Figure 4.) Along with smoothing out system. With front-of-the-meter systems as project viability and project diversity in variations in power output, qualifying as eligible supply-side capacity “leading to the .” the storage system instantly dispatches and resources, SCE evaluates potential Finally, after thoroughly vetting the cost- revenue streams based on RA value, power at times of . benefit ratio of each project, SCE ranks ancillary services pricing, and money each RFO to determine which projects saved by deferring upgrades. Of course, To reduce installation time and cost, will be most beneficial to its grid. and to simplify the project layout, ABB

Figure 4: The battery energy storage system on Cowessess First Nation land in Saskatchewan, Canada. ABB white paper | Energy storage 5 and SAFT designed a fully integrated and microgrids is clear evidence that the “Stored energy – regardless of the tech- battery energy storage system (BESS) U.S. is in the early stage of an energy nology employed to store it – is absolutely that could be packaged in one container. revolution. And further, as more and essential for grid stability and reliability as (See Figure 5.) ABB’s PCS also came more regulators, utilities, and consumers electrical loads and generation become equipped with advanced controls and embrace energy storage, additional increasingly more dynamic,” said Hayes. software designed to integrate with the revenue streams will be identified, and Further, as the market moves toward utility’s network management system opportunities for project profitability will standard applications and uses, utilities and properly respond to periods of occur more often – and at a faster pace. will become better able to plan for, justify, peak demand, voltage variability, and and incorporate energy storage in their deviations in frequency levels. “Energy storage has the potential to systems, giving them a strategic advant- transform how the California electric age in how they operate their networks. On a day with strong winds the system is conceived, designed, and Cowessess system could theoretically operated,” the California PUC declared To gain that strategic advantage, dispatch 1.2 MW of electricity for a full in its order mandating the installation however, utilities have to do energy hour – 800 kW from the wind turbine of 1.3 GW of storage by 2020. [9] And storage right. As Davis noted earlier, and 400 kW from the batteries – but they aren’t the only ones thinking this that’s more complicated than simply at present the load is not that large. way. With PJM, Texas, and other regions buying and installing the hardware. However, the system can be employed joining California in adjusting market Fortunately, many utilities are beginning to firm the turbine’s output for extended rules and pushing both energy storage to take a holistic approach when periods. [7] installations and R&D, it’s no surprise evaluating energy storage, one that that U.S. energy storage installations considers how renewables, microgrids, Storage in the age of are predicted to jump 13 times the 2014 and communication protocols can commercialization market by 2019. Unquestionably, this is together with storage devices. The surge in growth of both renewables just the beginning.

Figure 5: Standard ABB Power Conversion Systems can be integrated into a larger container or e-house.

6 Energy storage | ABB white paper References ABB Inc. 1. “Proceeding on Motion of the Commission in Regard to Smart Grid Center of Excellence Reforming the Energy Vision, Order Adopting Regulatory Policy 1021 Main Campus Drive Framework and Implementation Plan,” State of New York Public Raleigh, NC 27606 Service Commission, Feb. 26, 2015. www.abb.com/smartgrids 2. “U.S. Energy Storage Monitor, Q2 2015: Executive Summary,” September 2015. Note: The information contained in this document is for general infor- 3. “2015 State of the Electric Utility,” Utility Dive, 2015. mation purposes only. While ABB strives to keep the information up to date and correct, it makes no representations or warran- 4. “Energy storage for the electricity grid: Benefits and market ties of any kind, express or implied, about the completeness, potential assessment guide, A study for the DOE Energy accuracy, reliability, suitability or availability with respect to the

Storage Systems Program,” Sandia Report, SAND2010-0815, information, products, services, or related graphics contained 9AAK10103A3838 February 2010. in the document for any purpose. Any reliance placed on such information is therefore strictly at your own risk. ABB reserves 5. “Functional requirements for electric energy storage the right to discontinue any product or service at any time. applications on the power system grid: What storage has to do to make sense,” Technical Update, EPRI, Palo Alto, CA, © Copyright 2015 ABB Inc. All rights reserved. December 2011.

6. “2014 energy storage request for offers, participant instructions,” Southern California Edison.

7. “Cowessess wind energy storage project a sign of things to come,” By David Dodge and Duncan Kinney, Pembina Institute, January 2015.

8. “DOE/EPRI 2013 Electricity Storage Handbook in Collaboration with NRECA,” Sandia Report, SAND2013-5131, July 2013.

9. Public Utilities Commission of the State Of California: “Decision adopting energy storage procurement framework and design program: Order instituting rulemaking pursuant to Assembly Bill 2514 to consider the adoption of procurement targets for viable and cost-effective energy storage systems,” rulemaking 10-12-007, issued Oct. 21, 2013.