Sie sind auf Seite 1von 179

EBC Energy Resources Program:

The Challenges of Expanding Renewable


Energy and Maintaining Grid Reliability

Environmental Business Council of New England


Energy Environment Economy

Welcome

John Wadsworth
Chair, EBC Energy Resources Committee

Partner, Brown Rudnick LLP


Environmental Business Council of New England
Energy Environment Economy

Introduction

Michael Ernst
Program Chair & Moderator
Executive Advisor
Power Advisory LLC
Environmental Business Council of New England
Energy Environment Economy

Meeting Renewable Energy Targets


While Ensuring Grid Reliability

Stephen J. Rourke
Vice President, Systems Planning
ISO New England
Environmental Business Council of New England
Energy Environment Economy

MARCH 29, 2016 | BOSTON, MA

Integrating Variable Energy Resources in


New England
Environmental Business Council of New England

Stephen J. Rourke
VICE PRESIDENT, SYSTEM PLANNING

ISO-NE PUBLIC

Presentation Topics
The role of ISO New England
Rapid transformation of the
resource mix, and key drivers
Whats on the horizon for new
resources on the grid, and
behind the meter

ISO-NE PUBLIC

ISO New England (ISO) Has Two Decades of


Experience Overseeing the Regions Restructured
Electric Power System
Regulated by the Federal
Energy Regulatory
Commission
Reliability Coordinator and
Planning Coordinator for
New England under the North
American Electric Reliability
Corporation
Independent of companies in
the marketplace and neutral
on technology
ISO-NE PUBLIC

Reliability Is the Core of ISO New Englands Mission


Fulfilled by three interconnected and interdependent responsibilities
Overseeing the day-to-day
operation of New Englands
electric power generation
and transmission system
Managing
comprehensive
regional power
system planning

Developing and
administering the
regions competitive
wholesale electricity
markets
ISO-NE PUBLIC

New England Has Seen Dramatic Changes in the


Energy Mix: From Coal and Oil to Natural Gas
Percent of Total Electric Energy Production by Fuel Type
(2000 vs. 2015)

2000
49%
31%30%
22%

18%
2%

Nuclear

Oil

15%

4%

Coal

Natural Gas

13%15%
Hydro
and Other

2% 1%
Pumped
Storage

Source: ISO New England Net Energy and Peak Load by Source
Other renewables include landfill gas, biomass, other biomass gas, wind, solar, municipal solid waste, and miscellaneous fuels
ISO-NE PUBLIC

Power Plant Emissions Have Declined with


Changes in the Fuel Mix
Reduction in Aggregate Emissions (ktons/yr)
Year

NOx

SO2

CO2

2001

59.73

200.01

52,991

2014

20.49

11.68

39,317

% Reduction,
20012014

66%

94%

26%

Reduction in Average Emission Rates (lb/MWh)


Year

NOx

SO2

CO2

1999

1.36

4.52

2014

0.38

0.22

% Reduction,
19992014

72%

95%

1,009
726
28%

Source: 2014 ISO New England Electric Generator Air Emissions Report, January 2016
ISO-NE PUBLIC

10

Natural Gas Is the Dominant Fuel Source for New


Generating Capacity in New England
Cumulative New Generating Capacity in New England
(MW)

Note: New generating capacity for years 2016 2019 includes resources clearing in recent Forward Capacity Auctions
ISO-NE PUBLIC

11

More Than 4,200 MW of Non-Gas Generation Have


Recently Retired or Announced Plans to Retire
More than 25% of the
generating fleet is
at risk for retirement

Megawatts (MW)

10,000

8,300

8,000

2,300
Coal

6,000
4,000

2,000
0

In one year (2014)


10% of the fleet
announced plans to
retire by 2017
(FCA #8 3,135 MW)

3,200
primarily
oil, coal
and
nuclear

Retired 1997 - 2012

Major Retirements:
Salem Harbor
Vermont Yankee
Norwalk Harbor
Brayton Point
Mount Tom
Pilgrim Nuclear

4,200
6,000
Oil
In December 2012, ISO-NE
identified
28 generators "at risk" for
retirement
(did not include nuclear)

ISO-NE PUBLIC

oil, coal
and
nuclear

Retired 2013 2015 or


announced retirements
through the FCM
for 2016 and beyond

12

States Have Set Goals to Increase Renewable Energy


and Reduce Greenhouse Gas Emissions
20%
10%

11% 12.5%

59%*

15%

Percent Reduction of
Greenhouse Gas (GHG)
ME* NH

ME

NH

RI

MA

CT

RI

MA CT*

VT

VT

State Renewable Portfolio


Standard (RPS) for Class I or
New Renewable Energy by
2020

75% 75%
80%
80% 80%
85%
80%

* Vermonts standard recognizes all forms of renewable energy,


and is unique in classifying large-scale hydro as renewable.

* Connecticuts goal is tied to 2001 levels. Maines goal is tied to 2003 levels.
ISO-NE PUBLIC

13

Electric Grid Will Look Very Different in 5 to 10 Years


Hybrid grid with grid-connected and distributed resources, and a
continued shift toward natural gas and renewable energy

ISO-NE PUBLIC

14

New England Has Significant Wind Potential, But


Resources Are Remote from Load Centers

The ISO identified zones with up to 12,000


MW of onshore and offshore wind
potential in a 2009 study for the New
England Governors

More than 4,000 MW are currently


proposed, mostly in northern New England

Transmission would be required to connect


potential wind resources to load centers

New England tariff structure looks to the


wholesale power markets to attract new
resources; new resources are responsible
for funding their interconnection to the
transmission network

Once interconnected, resources have open


access to the New England regional
network, and compete for use of the
network based on their energy offer price
ISO-NE PUBLIC

Source: ISO Generator Interconnection Queue (January 2016)


FERC Jurisdictional Proposals Only

15

Transmission Developers Are Proposing to Move


Renewable Energy to New England Load Centers

As of January 1, 2016, eleven elective


transmission projects had been
proposed in the ISO Interconnection
Queue, totaling more than 7,000 MW
of potential transfer capability

Primarily large-scale hydro


resources from eastern Canada
and wind resources from northern
New England and New York
Some of these projects are participating
in the CT, MA, RI Clean Energy RFP

Representative of the types of projects


announced for the region in recent years

These projects seek to address public


policy goals, not reliability needs; but
could be a factor in planning for public
policy under FERC Order 1000

Source: ISO Interconnection Queue (January 2016)


http://www.iso-ne.com/system-planning/transmission-planning/interconnection-request-queue
ISO-NE PUBLIC

16

New Energy Storage Is Emerging in the ISO Generator


Interconnection Study Queue
Over the past year, four
battery storage projects
totaling almost 150 MW of
capacity applied for
interconnection to the
regional power system
New England has greatly
benefited from energy
storage capabilities for
more than 40 years

ISO-NE PUBLIC

17

Region Has Successfully Utilized Pumped-Storage


Hydro and Flywheel Technologies for Energy Storage
In New England, the predominant
grid-scale energy storage is in the
form of pumped-storage hydro
Two large facilities built in the 1970s
can supply almost 2,000 MW of
capacity within 10 minutes
Initially developed to provide fastresponse capability in the event that a
nuclear power plant tripped offline

From 2008 through 2015, a flywheel system provided


regulation service in a pilot program helping balance the
instantaneous demand of the regional bulk power system
ISO-NE PUBLIC

18

ISO Paper Explains How Energy Storage Can


Participate in the Wholesale Electricity Markets
Opportunities exist for
various types of storage to
participate in the energy,
capacity, reserve, and
regulation markets
Energy storage is unique
because many of these
technologies can operate
both as a supply resource
and a load resource
See: http://www.iso-ne.com/static-assets/documents/2016/01/final_storage_letter_cover_paper.pdf
ISO-NE PUBLIC

19

New England Has Seen Significant Growth in Solar


Photovoltaic (PV) Resources
Solar PV installations across the region are predominantly small
(i.e., less than 5 MW) and interconnected to the distribution
system through state-jurisdictional interconnection standards
A majority of solar PV resources do not participate
in the region's wholesale power markets
Because the ISO cannot observe or dispatch most
solar PV in the region, these projects act as a
modifier of system load

Solar PV must be accurately forecasted to support


the efficient administration of the day-ahead market and the
reliable operation of the system in real time
The growth of solar PV in the region is due in large part to the
policies and programs put in place by the New England states
ISO-NE PUBLIC

20

ISO New England Forecasts Growth in Distributed


Generation Resources
Since 2013, the ISO has led a regional Distributed Generation
Forecast Working Group (DGFWG) to collect data on distributed
generation (DG) policies and implementation, and to forecast
long-term incremental DG growth in New England
The DGFWG focuses on the following types of DG resources:

Under 5 MW
Connected to the distribution system
Not visible to the ISO directly
Specifically solar PV resources,
the largest DG component

The ISO forecasts strong growth in solar


PV over the next 10 years
ISO-NE PUBLIC

21

ISO New England Forecasts Strong Growth in Solar PV

3,000

Cumulative Growth in Solar PV


through 2024 (MW*)

2,400

Megawatts (MW)

2,500

2,000
1,500

900

1,000
500
0

Draft 2016 Forecast projects more


than 3,200 MW installed by 2025

40
January
2010

Thru 2014

2024

Source: Final PV Forecast (April 2015); Note: MW values are AC nameplate


ISO-NE PUBLIC

22

Solar PV Installed Through December 2015


Statewide aggregate solar PV data from regional distribution companies
State

Nameplate Capacity (MWac)

Connecticut

188.01

Maine

15.34

Massachusetts

947.11*

New Hampshire

26.36

Rhode Island

23.59

Vermont

124.57*

Total

1,325.00

* Includes values based on MA SREC data associated with 43 MA municipalities and VT SPEED data for 3 VT municipalities that did not provide individual responses
http://www.iso-ne.com/static-assets/documents/2016/02/pvsurveyresults_20160224.pdf
ISO-NE PUBLIC

23

Solar Power Has a Significant Impact on New Englands


Electricity Demand
Solar Powers Effect on Regional Electricity Demand
May 23, 2015
Sunset

Sunrise

13,000
12,500
Megawatts (MW)

12,000
11,500
11,000
10,500
10,000
9,500
9,000

Series1

Demand Without Solar Power


ISO-NE PUBLIC

Electricity Demand Seen in Real Time


24

State Installed Solar PV Heat Maps

5+
5+

4.5
4.5

Understanding the spatial


distribution of existing solar PV
resources will be critical to the
ISOs ongoing integration
activities within both System
Planning and System Operations
Based on the data provided by
distribution owners, the ISO has
aggregated the installed
nameplate capacity by town
within each state, and generated
heat maps showing the results

4
4

3.5
3.5

3
3

2.5

2.5

1.5 1.5

0.5

0.5

Note: Heat map reflects solar PV installed through August 31, 2015.
ISO-NE PUBLIC

25

Massachusetts Installed Solar PV Heat Map

Note: Heat map reflects solar PV installed through August 31, 2015.
ISO-NE PUBLIC

26

The ISO Is Leading Efforts to Account for Solar


Resources Connected to the Distribution System
Forecasting Long-Term Solar Growth

The ISO tracks historical growth and predicts


levels of solar development 10 years into the
future
The solar forecast is used in transmission planning
and market needs assessments; solar PV impacts
are already accounted for in wholesale power
market requirements

Forecasting Short-Term Solar Performance

The ISO creates daily forecasts of solar generation


production to improve daily load forecasts and
situational awareness for grid operators

Improving Interconnection Rules

The ISO is engaged with industry stakeholders to


strengthen interconnection standards and reduce
reliability concerns
ISO-NE PUBLIC

27

The ISO Is Improving the Ability of Intermittent


Resources to Participate in the Wholesale Markets
Flexibility to Offer Negative Prices
Allows generators, like wind, the opportunity to operate during low-load
conditions when they otherwise might be curtailed

Updated Elective Transmission Upgrade (ETU) Rules


Improve the interconnection study process for ETUs and ensure these
resources are able to deliver capacity and energy into the wholesale
electricity markets

o Flexibility to Operate Up to a Certain Level


Allows the ISO to better manage transmission
congestion in a way that will maximize the use
of low-cost renewable resources and alleviate
the need for curtailments (effective May 2016)
Known as Do-not-Exceed Dispatch Order

ISO-NE PUBLIC

28

ISO Analysis on Integration of Renewable Resources


New England Wind Integration Study

http://www.iso-ne.com/staticassets/documents/committees/comm_wkgrps/prtcpnts_comm/pac/reports/2010/newis_report.pdf

Economic Study in support of New England Governors Renewable


Energy Blueprint

http://www.iso-ne.com/staticassets/documents/committees/comm_wkgrps/othr/clg/mtrls/2010/feb22010/governors_blueprint.pdf

ISO New England Energy-Efficiency Forecast Report for 2019 to


2024

http://www.iso-ne.com/static-assets/documents/2015/05/eef-report-2019-2024.pdf

Solar PV 2016 Forecast (draft)

http://www.iso-ne.com/static-assets/documents/2016/03/2016_draftpvforecast_20160224revised.pdf

2015 Economic Studies for On-shore and Off-shore wind

http://www.iso-ne.com/staticassets/documents/2016/03/a3_2015_economic_study_on_shore_wind_presentation.pdf
http://www.iso-ne.com/staticassets/documents/2016/03/a3_2015_economic_study_off_shore_wind_presentation.pdf
ISO-NE PUBLIC

29

Conclusions
New England is transitioning to a system with decreasing
amounts of traditional resources (coal, oil, nuclear) and
increasing amounts of renewable energy
Transmission investment will be required to incorporate large
amounts of wind

Improved access to solar PV data is needed for operations


and operations forecasting
Enhanced solar PV interconnection standards are required to
support reliability and get maximum benefit from solar PV
installations
The ISO is working with stakeholders to enable the successful
integration of these variable energy resources
ISO-NE PUBLIC

30

For More Information

Subscribe to the ISO Newswire

ISO Newswire is your source for regular news


about ISO New England and the wholesale
electricity industry within the six-state region

Log on to ISO Express

ISO Express provides real-time data on New


Englands wholesale electricity markets and
power system operations

Follow the ISO on Twitter

@isonewengland

Download the ISO to Go App

ISO to Go is a free mobile application that puts


real-time wholesale electricity pricing and
power grid information in the palm of your
hand

ISO-NE PUBLIC

31

ISO-NE PUBLIC

32

The ISO Accounted for Solar PV Resources in the Most


Recent Forward Capacity Auction
The Installed Capacity Requirement (ICR) for a Forward Capacity
Auction (FCA) is the minimum level of capacity required to meet
reliability requirements for the New England Control Area for the
relevant Capacity Commitment Period (three years in the future)
The ICR is based on three essential components: the load forecast,
resource availability, and tie benefits
In its order accepting the ICR for FCA #9, the
Federal Energy Regulatory Commission
(FERC) directed the ISO to fully explore the
incorporation of distributed generation
resources into the ICR calculation for FCA #10

ISO-NE PUBLIC

33

The ISO Accounted for Solar PV Resources in the Most


Recent Forward Capacity Auction, continued
The ISO worked with stakeholders through the DGFWG to develop
the 2015 solar PV forecast
Through that forecast, the ISO identified behind-the-meter solar PV
resources that are forecasted to be installed, or that have already
been installed, but are not yet reflected in historical loads
Referred to as behind-the-meter not-embedded-in-load
(BTMNEL) solar PV resources

The ISO adjusted the load forecast by the


forecasted BTMNEL solar PV resources,
resulting in a 390 MW reduction in the
ICR for FCA #10
ISO-NE PUBLIC

34

The ISO Accounted for Solar PV Resources in the Most


Recent Forward Capacity Auction, continued
On January 8, 2016, FERC
accepted the ICR for FCA #10 and
found that the ISO properly
incorporated BTMNEL solar PV
resources into the ICR calculation
On February 8, 2016, the ISO
conducted FCA #10, procuring the
capacity resources needed to
meet the ICR for the 2019-2020
Capacity Commitment Period
About 35,567 MW of capacity
cleared the auction to meet the
34,151 MW ICR for 2019-2020
ISO-NE PUBLIC

35

Meeting Renewable Energy Targets


While Ensuring Grid Reliability

Ronald T. Gerwatowski
Advising on Energy Policy Matters

Environmental Business Council of New England


Energy Environment Economy

Meeting Renewable Targets and


Maintaining Reliability at Reasonable Cost
Ron Gerwatowski
March 29, 2016

37

Massachusetts Driver of Policy: Aggressive Global


Warming Solutions Act goals

25% CO2 reductions below 1990 by 2020


80% CO2 reductions below 1990 by 2050
2020 goal achievable with full implementation of plan initiatives
Some stakeholders question whether the long-term goals can be
achieved, as practical matter
Large-scale hydro and other renewables are part of plan
Massachusetts Clean Energy and Climate Plan Update, 2015:
http://www.mass.gov/eea/docs/eea/energy/cecp-for-2020.pdf

38

Achieving a low carbon future


Studies directionally conclude: Radical electrification needed
Transportation
Heating and cooling sources

Jacobsen Study, Vision of 100% renewables:


http://web.stanford.edu/group/efmh/jacobson/Articles/I/USStatesWWS.pdf

39

Implications for Generation

Distributed generation plays a role


Energy Storage innovation assumed
Large-scale clean resources essential
Regional generation still important
Reliability must be maintained at the same time
need for base-load type resources for reliability

40

The Risks with Resource Mix


Reliability cannot be maintained with intermittent renewables alone
Storage has promise to address peaks, but not all issues
Distributed generation has limits, and CO2 emissions occur from
some technologies
Carbon-free nuclear plants will close
What replaces nuclear to act as base-load?
Likely choice is natural gas

Dilemma: if we increase reliance on natural gas it still has CO2


emissions
41

Implications for Grid Infrastructure


More dynamic distribution system needed to integrate
distributed generation
Important role for storage technologies
Need for transmission investments to reach large-scale clean
resources (hydro and wind)
Crossing interstate lines not easy

All of these investments must be funded and will have cost


impacts
Agreeing upon the allocation of costs among the states on
interstate projects is like herding cats
42

Energy Storage in Massachusetts


DOER and CEC sponsoring 2-part study to analyze the storage industry
landscape:
economic development
market opportunities
examining potential policies and programs that could be implemented to better support
energy storage deployment
providing policy and regulatory recommendations along with cost-benefit analysis for state
policy makers.

$10 million allocated for future market support


Mass.gov website has link to storage initiative:

http://www.mass.gov/eea/energy-utilities-

clean-tech/renewableenergy/energy-storage-initiative/

43

Adding Resources by Increasing Renewable


Targets?
The Massachusetts RPS program has increasing renewable
targets (15% by 2020 and growing by 1% per year beyond)
But RPS alone does not get renewable resources financed, without
more
Just increasing the RPS results in more certificates purchased by
suppliers in Massachusetts, but may not result in many new projects
built in the region

Statutory and regulatory requirements needed to actually


achieve the targets
44

Long Term Contracts


Large-scale clean resource projects need long-term contracts for
financing
Unit price of most large-scale clean resources will be above average
wholesale energy prices (no matter what they tell you . . .); thats the cost of
achieving the emission reduction objectives.
Electric transmission for renewable or clean resource projects
mandated for policy reasons also need long-term commitments
Gas capacity expansion for electric generation, if advanced, would
need long-term commitments from utilities
Costs on many projects borne locally, but benefits shared regionally
with free riders
45

Impact on Generators
Existing generators tend to be opposed to LTCs for new resources that can suppress
energy prices
Revenue losses occur when energy prices are lower and capacity prices are not high
enough to make up the difference
Policy battle emerging between existing generators (needed for reliability) and new
clean resources (needed to meet carbon reduction goals)
RGGI alone will not result in the broad emissions reduction goals being achieved
Current market structure is emissions blind
Risk: Not adequately compensating base-load generation threatens reliability and
impacts long-term costs

46

Impacts of Regulatory Models


Policies place heavy reliance on the financial viability of investor-owned
utilities, with costs passed through delivery rates over long periods
Risk: Programs and rate designs that provide incentives for customers to avoid paying the utility
can have long-term negative impacts

Paying for investments, programs, and initiatives create cost pressure on rates
Risk: Costs will be embedded in rates for 15 to 30 years, while innovation moves quickly,
potentially rendering some initiatives obsolete and infrastructure stranded

The current regional market structure is not completely aligned with emissions
reduction goals
Risk: The lights stay on, but will we be able to meet the carbon reduction goals?

47

The Challenge: Balancing Cost with Clean Resources, and then


choosing the Resources
Advocates for renewables are often accused of not caring about how
much it costs
Those concerned about the cost of electricity are often accused of
not caring about our environment
But everyone wants to keep the lights on
The challenge of driving a reasonable path down the middle is
before us
Making thoughtful judgments and choices is no easy task amidst a
multitude of strongly held opinions from different stakeholders on
highly complex issues
48

Peering through the


Cloudy Looking Glass
We dont have a great track record
on forecasting energy costs five years
or more out
Faced with retirements, emissions
reduction goals, and economic
development objectives, choices need to
be made today
Inaction is not acceptable
Actions have a cost and create risks
But will the choices we make be the right ones?
there is so much to argue about . . . .
49

Panel Discussion: Meeting Renewable Energy


Targets While Ensuring Grid Reliability
Moderator: Michael Ernst, Power Advisory LLC

Panelists:
Stephen J. Rourke, ISO New England
Ronald T. Gerwatowski

Environmental Business Council of New England


Energy Environment Economy

Providing Reliable Renewable


Energy and Storage

John Mosher
Vice President, Engineering and Design
Solect Energy Development
Environmental Business Council of New England
Energy Environment Economy

Solect Energy Development is a full service turnkey Solar


provider. Solect has built over 30MW of projects in
Massachusetts. In addition Solect services and manages
Solar for hundreds of clients.

Market Overview
What is driving the Storage Market?
o Technology Improvements and cost reductions
o Policy Support
o Financial Engineering

Technology Improvements
Cost Reduction

Lithium Ion is having the greatest impact as economies of


scale and advances drive the down cost.

Power density expected to double in the next year.

Cost per kWh expected to continue to decline to under


$350 per kW.

Flow batteries are a viable technology but have yet to


realize their economic potential.

Key point, Battery costs have come down but SYSTEM


costs will decline at a slower rate.

Cost per kWh Battery Electric Vehicles

Solar+Storage LCE vs Utility Retail Price

System Prices Continue to Decline

Q1 2015 System Price Ranges ($/kWh)

$2,500

Keeping with the trend of years prior, system prices are continuing
to see downward movement in 2015, driven by the following
$2,000

$2,000

$1,500

$1,500

$1,500

$1,250
$1,100
$1,000

$900

$1,300

factors, enabled by higher deployment volumes:


Reduction in battery-pack costs, including batteries, wiring, racking and
battery management systems
Improvements in system integration, required to get batteries running
with the power conversion systems (PCS) and the grid
Reduction in balance-of-system costs, in part due to cost pressure
from PCS vendors

$1,000

$800

These prices are not associated with specific projects deployed in Q1

$500

2015, since pricing data is considered sensitive by vendors and


developers, given the number of projects that are being deployed and
$0

Utility

Non-Residential

Residential

the varying project cycles. This system price data is instead estimated
for projects deployed today based on the results of the bottom-up cost

Utility-Scale

Non-Residential

Residential

$1,250

$1,500

$2,000

Median

$900

$1,100

$1,500

Low

$800

$1,000

$1,300

survey from eight interviews with vendors across the value chain,
including battery vendors, system integrators and developers.

High

All quoted prices are for systems using lithium-ion batteries


with 1-2 hour discharge durations and without any special
interconnection requirements.

Policy Support PJM (ex NJ)

Frequency Regulation

Supported by FERC order 755, signal response for faster


more accurate higher MW mileage resources.

Technology directly enabled PJM to depart from fossil fuel


response resources

Policy Support NY

NYSERDA (NYS Research and Development Authority) and


Con Edison partnership

$23M Investment in Upstate Battery R&D Center

Frequency Regulation market, FERC 755

Demand Reduction

Policy Support CA

3 Investment Owned Utilities tasked to procure 1.3 GW of


storage by 2020.

SGIP, Self Generation Incentive Program

Policy Support MA

ISONE, currently defining existing markets for storage.

ISONE does not have a Frequency Regulation market, no


immediate plans to develop that market.

DOER appropriated $10M to incentivize storage markets.


This is all inclusive, thermal, hydro, compressed air,
flywheel and batteries.

Customized Energy Solutions currently contracted to


produce a 2 part report on storage market development
in MA. Part 1 and 2 etd February/March.

Q3 Storage Comparison

Behind the Meter long term market?

Where is MA Market?
PJM and CA, 88% combined ms over 10 qtrs

Storage

Significant Storage Investment

Financial Engineering
Challenges

Lack of Regulations
Changing regulations
Inconsistent regulation interpretation per market
Market Caps
Continued/Future penetration of DG
Undefined revenue streams
Future proof or future vulnerable
Customer credit worthiness
Under 15% rate of return

Approaching a Dynamic Market


Challenges

Storage is new technology at residential and CI level

Utilities have an advantage in R&D (data) and customer


access

Financing consistently

Information to identify opportunities

Soft Costs

Delivery

Providing Reliable Renewable


Energy and Storage

John J. Keene, Jr.


Director, ISO Advocacy
SunEdison
Environmental Business Council of New England
Energy Environment Economy

Providing Reliable Renewable


Energy and Storage

Chet Lyons
Principal
Energy Strategies Group (ESG)
Environmental Business Council of New England
Energy Environment Economy

EBC Energy Resources


Program
Expanding Renewable Energy
Maintaining Grid Reliability
Helping save our planet

Renewable Energy and


Energy Storage
E NE RGY ST RAT EG IES G RO UP
CHET LYONS, PRINCIPAL
M A R C H 2 9 TH 2 0 1 6

NASA astronaut Scott Kelly took this


photo of the Earth at night highlighting
the green and red hues of an Aurora.

Energy Strategies Group (ESG)


Strategic Consulting
Assist storage manufacturers, utilities, project developers
and investors create an early, profitable and sustainable
role in the emerging global energy storage industry.

Project Development
ESG LLC can originate and develop battery
storage and battery plus solar PV projects.
Focus is utility-scale on the wholesale side;
including: frequency regulation, regional
peak power substitution, renewables
integration, microgrids, and transmission
and distribution deferral (or substitution).

ENERGY STRATEGIES GROUP

Why is electricity storage revolutionary?

Natural gas
peaker plant

Battery storage can replace


generators, especially peakers
primarily used to provide power
capacity versus energy
Storage can replace transmission and
distribution wires
Storage supports the integration of
renewables, especially solar PV

400 KVA
transmission line

Storage will ultimately displace


trillions of dollars in conventional
utility assets
Utility procurement practices and
business models are now changing
allowing battery storage to become an
important part of the utility asset mix
Source: Photos from Wikipedia Commons

ENERGY STRATEGIES GROUP

Utility Disruption is Underway


Utilities havent change much since this 1937 photo

Why are Utilities a Mess?


Utilities are just not that good at innovation.

Average capacity factor is 50-60% - grossly


inefficient by most industry standards.
Public policy and regulation are placing much
greater demand on utilities to improve their
environmental footprint.
Renewable technologies have become cheaper
and are starting to displace fossil generation at
a scale disruptive to utility business models.
Energy storage will follow solar PVs cost curve;
together renewables and energy storage will
obsolete a large fraction conventional utility
infrastructure, i.e., fossil generators and
wires.
Will utilities will go the way of draft horses?

Seven-horse disc used in cultivating corn in California


Source: Photo by Dorothea Lange, May 1937

No but the disruption is severe and will allow


new entrants that command new technologies
like energy storage and solar PV to steal a large
share of the global power and utility business.

ENERGY STRATEGIES GROUP

Market Drivers: Solar + Energy Storage


Today

High solar penetration increases need for short and long-term balancing energy
Example: California duck chart forecasting over-generation and fleet ramping issues
Coal plant retirements will create the need for new generation capacity
Capacity reserves may drop below desired limits causing reliability concerns
Solar cost tipping point will lead to a shift mainstream supply preferences
Wholesale LCOE for solar dips below coal and gas in 2-years in many parts of the US
Projected 2017 utility-scale solar PV installed costs of 4 cents/kWh in the East and 3
cents in the Southwest (20-year PPA, single axis tracker First Solar makes this claim)
Storage cost reduction will support a major shift in generation supply preferences
A longer duration storage technology (4 to 6 hours) also capable of doing short-term
frequency regulation may be an optimal combination
Clean Power Plan (CPP) will further influence the future utility generation mix
Future

ENERGY STRATEGIES GROUP

74

Radical Drop in Cost of Solar PV


Solar PV Module Cost Reduction: 1977 2015E

ENERGY STRATEGIES GROUP

75

Solar Price Tipping Point Storage to Follow


Global solar installations
(shown in blue) barely register
until a magic moment
somewhere between 2000
and 2005, when the price per
Watt reaches a tipping point.
Energy storage will undergo a
similar price tipping point
between now and 2020.
For some applications energy
storage is already more cost
effective than legacy fossilbased generation or
transmission and distribution
(wires) infrastructure.
Source: Earth Policy Institute, Bloomberg New Energy Finance

ENERGY STRATEGIES GROUP

76

Renewables are in the Passing Lane


Utilities havent changed much
since this photo
Utilities are grossly inefficient
Average asset capacity factor is 5060%
Energy storage, smart grid tech,
distributed generation will improve
efficiency
Asset base of utilities will likely
shrink
Revenues of regulated utilities will
likely contract
Renewables were
more than 50% of
new generation 2
years in a row this
is a tipping point.
Source: Bloomberg
New Energy Finance

16 GW of non-hydro renewables were added in the US in 2015, equal to 68% of all new generation.

ENERGY STRATEGIES GROUP

Solar is Growing Even Faster than Wind


Generation from nonhydropower renewables
grew to 306 TWh in 2015,
up from 289 TWh in 2014.
Wind makes up the bulk of
this generation (185TWh,
or 61%) but most growth
in 2015 came from a 45%
surge in solar generation.
Non-hydropower
renewables now account
for 7.4% of US electricity,
up from 7.0% in 2014.
Source: Bloomberg New Energy Finance

ENERGY STRATEGIES GROUP

78

Implications for a New Class of Storage


Large-scale pumped hydro (PH)
storage was driven by addition
of nuclear capacity.

Growth of Nuclear Energy and Pumped Hydro: 1960 2008

Solar PV is interconnected
mostly at distribution voltage
on the power grid.
A new class of energy storage is
needed to help cope with
intermittency and ramping
issues caused by solar PV.
Ideally, this new form of storage
should be located where solar
PV is causing stability issues,
i.e., on the low distribution grid.

Source: U.S. Energy Information Administration

ENERGY STRATEGIES GROUP

79

Distribution Circuit Concerns Due to High-Penetration


Solar PV
1. Load Issues

Protection settings for bi-directional flow


Inverter tripping during low voltage situations
Non-coincident peaking

2. Voltage Rise

Maintain customer voltage within ANSI C84.1, EN 50160


and Rule 2 (California) ranges
Keep voltage in lower half on circuits w/CVR

3. Voltage & Reactive


Power Variation

Voltage dips and swells on customer premises


Reduced line efficiency from reactive power
Under-protected utility/customer equipment

4. Rising Harmonics

Increased harmonics and unpredictable interaction of


digital and customer loads as more inverters penetrate
the distribution grid

Source: NYISO December 2013 Workshop; utility concerns ranked highest to lowest.
ENERGY STRATEGIES GROUP

80

Energy Storage Market Opportunities

Peaking Power

Replace simple cycle gas-fired CT peaker plants

Storage can replace gas peakers, especially in transmission constrained areas and areas where siting
new gas peakers is impractical or environmentally prohibitive.

Replace Wires

Transmission & distribution deferral / substitution

One-third of all utility infrastructure costs are for wires energy storage can replace much of this
wires infrastructure cost-effectively.

Renewable Capacity

Solar + energy storage to provide firm capacity

Projected 2017 installed costs for utility-scale solar PV are 4 cents/kWh in the East and 3 cents in the
Southwest; adding storage can de-carbonize base load energy.

ENERGY STRATEGIES GROUP

81

Storage is a More Flexible Resource


Per MW of nominal
nameplate capacity, energy
storage provides 2X (or
more) response capacity.

Storage has no minimum


generation requirement,
provides service across its
entire range, and is
available to operate in more
hours than a gas peaker
plant.
Coupled with its ability to
be dispatched in seconds,
storage resources are a
cost-effective source of
flexible resource adequacy.

Source: AES Energy Storage

ENERGY STRATEGIES GROUP

82

Storage Ramp Rate Advantages

ISOs place higher value on storage-based regulation assets because of their faster ramp rate and better
accuracy compared to slower thermal assets. *
2/17 9 MW LESR Actual Output vs. 9 MW Generator with Minimum Allowable

Frequency Regulation

9 MW Storage Resource
9 MW Generator
Response Time of vs.
5 minutes
*

10

Storage can ramp [up to] 200% its


nominal power rating in < 0.1 sec.
with accuracy. Storage transfers
more energy to/from the grid per
unit of time vs. thermal units.

6
4
2
0

Storage-based frequency regulation


resources are paid 2 to 3 times as
much as thermal generators.
FERC Order 784 builds on FERC
Order 755 by requiring utilities in
vertical markets to evaluate energy
storage for ancillary services.

-2
-4
-6

-8
-10
8:00

8:05

8:10

8:15

9 MW LESR Actual Output

8:20

8:25

8:30

8:35

8:40

8:45

8:50

8:55

9:00

9 MW Generator with Minimum Allowable Response Time of 5 minutes

9 MW Storage

9 MW Generator

Source: Performance data from New York ISO.

ENERGY STRATEGIES GROUP

83

Storage Speed/Accuracy Advantages


Storage can react to a major grid frequency event with [up to] 200% of its nominal power in < 0.1 second, making
storage [up to] 25 times more effective for Frequency Response Reserve than a CT thermal generator.

Frequency Response Reserve (FRR)

Frequency Response Event

Frequency Responsive Reserve (FRR) has


been supplied from the governor response
required of all on-line generators.
Thermal generator ramp rates are slow
compared to storage. Generators must
maintain a 5% governor droop which limits
them to ~ 8% of their rated capacity as FRR
assets even if they can ramp faster.
1 MW storage asset charging at full power
can switch to full discharge in < 0.1 second,
injecting 2 MW or 200% of its nominal power
rating into the grid. 200% 8% = 25 better!

Storage capacity is
exceptional as FRR
capacity due to its
near instantaneous
speed and accuracy
of response.

ENERGY STRATEGIES GROUP

84

Storage Distribution Advantages


One 50 MW
Combustion
Turbine

<
Central Station

DES capacity creates more value


Phased addition of storage
improves capacity economics.

Storage locations selected to


add other value streams, e.g.,
voltage and VAR control.

Ten 5 MW
units in the
Distribution Cloud

Storage located on the distribution grid can be aggregated


and controlled to deliver benefits to both the transmission
system and the local distribution circuit(s).

Locational value of storage


maximized based on grid
dynamics in time periods.
Availability and reliability of
storage higher due to shaft
risk of CT and start-up/shutdown time needed by CTs.
ENERGY STRATEGIES GROUP

85

Storage Environmental Advantages


Storage resources have:
Zero direct air emissions
No water requirements
Minimal sound
No fuel (gas) requirement

Translates to:
Full Environmental Impact Statement not normally required
Reduced time to plan, site, permit and build
Possible emissions cost benefit for storage

ENERGY STRATEGIES GROUP

86

Storage Reliability Advantages


Shaft risk is a resources probability contribution to loss of load based
on the failure of a single unit or piece of equipment; this risk is much
lower for storage given its modular /redundant architecture.
Modular architecture also allows maintenance of storage units to be
performed in sequence, further improving availability.

Availability of distributed storage fleet > 99 percent vs. 92% percent for
a single 50 MW central station gas-fired peaker CT.*

* Based on projected 350 hours per year start-up time and 350 hours per year
shut down time for a large gas-fired CT in California.
ENERGY STRATEGIES GROUP

87

Battery-based Peakers Will Happen


AES 100 MW, 4 MWh Peaker for SCE is an Early Indicator
Using storage to
meet the upper
region of daily peak
demand produces
very high value

ENERGY STRATEGIES GROUP

88

Annual Total Cost


(2012 $ million)

T&D Deferral / Substitution: Case Study


Annual Total Cost Comparison
T&D Upgrade vs. Energy Storage

$16
$12
$8
$4
$0

Yr 20

Energy Storage ($ million)

Yr 19

Yr 18

Yr 17

Yr 16

Yr 15

Yr 14

Yr 13

Yr 12

Yr 11

Yr 10

Yr 9

Yr 8

Yr 7

Yr 6

Yr 5

Yr 4

Yr 3

Yr 2

Yr 1

Yr 0

T&D Upgrade ($ million)

20-year Present
Value (PV) of
Storage was
$41M (cap cost +
O&M), while PV
of conventional
T&D option was
$59M. Note large
influence of 2step investment
in energy storage.

Annual Avoided Cost of conventional upgrade (AAC, orange) is like an annuity involving a series of
annual payments over the 20-year life of the equipment. Since AAC is expressed as equal annual
payments, it is often referred to as a levelized cost.
The economic decision between T&D build/upgrade or Storage (substitute) compares the PV of the
utilitys AAC to the PV of storage costs (including O&M).

ENERGY STRATEGIES GROUP

89

Con Edison: Brownsville T&D Deferral

Space constraints can make upgrading utility T&D infrastructure extremely expensive
Con Edison of New York plans to use energy storage to help avoid a US$1bn upgrade to a critical
utility substation; efficiency measures are also part of the solution
Storage portion likely to be 50 to 100MW with several hours of discharge duration

ENERGY STRATEGIES GROUP

90

NGrid NWA Pilot for Nantucket Island


Without a third cable, the island could
be at risk during times of peak demand.
National Grid has filed a non-wires
alternative (NWA) pilot with the
Massachusetts PUC.
Will delay expense of adding a third
undersea cable for a period of 7 years.
Nantucket Island relies on 2 undersea power
cables from the mainland.

NPV of the annual, avoided revenue


requirement over 7-years = $23.4 M.

July 2013, Nantuckets peak load hit 45 MW, a


12.5% increase over the prior year.

NTA proposal includes: efficiency, DR,


thermal (ice) storage

Peak demand has risen due to the addition of


air conditioning load from upscale homes.

NGrid also requested ability to recover


costs from the rate base.

ENERGY STRATEGIES GROUP

91

ESGs View on Storage Price Trends


Cost of grid-scale battery energy storage declining rapidly; lowest price grid-scale
battery storage today is about $550/kWh of installed capacity.*
Multiple manufacturers will achieve an installed capacity price of $350 to $450/kWh
within 2 to 3 years, e.g., Tesla Energy, LC Chem, Samsung, Panasonic.
Within 3 to 4 years, installed price will be < $300/kWh (ESG projection)*
At a $300/kWh installed price, storage will begin to compete with many simple cycle
combustion turbine (CT) peakers where 4 hours or less discharge duration is
required (and no more than two discharges per day).
Storage-based peakers with longer 5 to 6 hours of duration will be economically
feasible where location constraints inflate the cost of conventional gas-fired peakers
to the higher end of gas-fired CT price range, and/or other constraints exist, e.g.,
lack of water, local limitations on air pollution, etc.
* Includes batteries, power electronics, interconnection costs; excludes
land cost, interconnection upgrades, permits and fees.

ENERGY STRATEGIES GROUP

92

Storage Costs are Dropping Fast Li-ion


Cheaper Battery Storage
Li-ion cost will drop by more than
50% in 5 years

Current and Future Price of Lithium Ion


Battery Storage Systems

Impacts
Li-ion will substitute for some
central station peakers
Battery storage will be distributed
to capture locational benefits

Early Examples
AES 100 MW, 4-hr peaker
Oncor $5.2 B distributed storage
request to Texas PUC

Today

2020

Source: Energy Environ. Sci., 2014, 7, 34593477 | Robert M. Darling, Kevin G.


Gallagher, Jeffrey A. Kowalski, Seungbum Haac and Fikile R. Brushettad.

ENERGY STRATEGIES GROUP

24

Storage Costs Dropping Fast VRB Flow


Cheaper Battery Storage
Flow battery cost could drop by
more than 70% in 5 years

Current and Future Price of Flow


Battery Storage Systems

Impacts
Flow batteries will start to displace
simple cycle gas-fired peaker
plants and intermediate power
plants that currently operate from 4
to 8 hours per day

Early Examples
No current examples, but proposals
are being made
Source: Energy Environ. Sci., 2014, 7, 34593477 |
Robert M. Darling, Kevin G. Gallagher, Jeffrey A.
Kowalski, Seungbum Haac and Fikile R. Brushettad.

ENERGY STRATEGIES GROUP

25

Breakeven Price in California for Central Station Storage


Using Flow Battery
Key Assumptions

Flow Battery Cost Benefit


Analysis Results

California Market
50 MW, 4 hr battery
Energy and Ancillary Services prices escalated
3%/yr (CAISO 2011 base yr)
Capex = $1,772 / KW
No battery replacements
11.5% discount rate
75% round trip efficiency
Key Findings
Breakeven cost* = $2,657 / KW; $664 / kWh
Some flow batteries already below these values
Source: EPRI. Note that greater breakeven cost is better
because it means benefits are higher.

ENERGY STRATEGIES GROUP

95

Global stationary storage forecast: 2015-24


Source: Energy Strategies Group

Prior cumulative GW

50

Annual GW added

45

Gigawatts

40
35
30
25
20
15
10
5
0
2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

* Mobility storage excluded.


ENERGY STRATEGIES GROUP

96

Global stationary storage forecast: 2015-24


Source: Energy Strategies Group

35
30

(US$bn)

Direct investment in stationary battery


storage by application: 2015-24

Frequency regulation

Renewables integration
25
20

T&D deferral
Peak power substitution

Building energy management

15
10
5
0
2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Lifetime economic impact of investments in stationary storage will be higher than


the sum of initial capital investment, or about $150 billion.
ENERGY STRATEGIES GROUP

97

Global stationary storage forecast: 2015-24


Source: Energy Strategies Group

160

Gigawatts (cumulative)

140

Gigawatt hours (cumulative)


Cummulative value (US$bn)

120
100

Global forecast of stationary


storage in world markets: 2015-24

80
60
40
20
0
2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

As storage becomes cheaper and balancing requirements caused by renewables become


more acute, average discharge duration will climb from 1.5 hours today to 3.5 by 2024.

During the same period, average market price of storage will fall by nearly 80% from
US$750,000 per installed MWh of capacity in 2015 to US$160,000/MWh by 2024.
ENERGY STRATEGIES GROUP

98

Contact Information

Chet Lyons
Founder & Principal
Energy Strategies Group
chet@energystrategiesgroup.com
M: 978-886-3609
www.energystrategiesgroup.com

ENERGY STRATEGIES GROUP

99

Providing Reliable Renewable


Energy and Storage

Armond Cohen
Executive Director
Clean Air Task Force
Environmental Business Council of New England
Energy Environment Economy

Looking ahead: the need for zero carbon


firm capacity inDeveloping
an ultra-low
options for carbon
deep carbon
reductions: a pragmatic strategy
future
October 2015

Armond Cohen, Executive Director


Clean Air Task Force
EBC Energy Resources Program
The Challenges of Expanding Renewable Energy and Maintaining Grid Reliability
March 29, 2016

STABILIZING CLIMATE AT 2 DEGREES MEANS NEAR ZERO


EMISSIONS BY MID CENTURY

Developing options for deep carbon


reductions: a pragmatic strategyFuss et al
(2014)
October 2015

102

MANY SAY THIS CAN BE DONE ALL OR MOSTLY


ALL WITH ENERGY EFFICIENCY AND
Developing
deep carbon
RENEWABLES, PRIMARILY
WINDoptions
AND for
SOLAR
reductions: a pragmatic strategy

October 2015
WHAT WOULD THAT LOOK LIKE IN
NEW
ENGLAND?

103

New England Scenario

80% = half wind/half PV, by energy


Load data - NY ISO, adjusted
for New England
Peak
Energy
Developing
options for
deepand
carbon
reductions: a pragmatic strategy
Wind = actual ISO NE for 2014
Solar PV = NREL data
October 2015

104

MONTHLY CAPACITY FACTOR


NEW ENGLAND WIND AND SOLAR
2014 WIND DATA ISO-NE
NREL INSOLATION DATA FOR BOSTON
0.45
0.4

Developing options for deep carbon


reductions: a pragmatic strategy

0.35
0.3
0.25

October 2015
0.2
0.15
0.1
0.05
0
1

6
PV

10

11

12

WIND
105

ISO-NE SCENARIOS
INSTALLED CAPACITY (MW)
80,000

69,208

70,000

60,000

Developing options for deep carbon


reductions: a pragmatic strategy

50,000

40,000

October 2015
27,600

30,000

24,000
20,000

10,000

PEAK

CONVENTIONAL

RPS-80
106

ISO NE SCENARIOS
MAY ABUNDANT SURPLUS
RPS 80

MAXIMUM
CONVENTIONAL
CAPCITY
12,700 MW

DAILY SURPLUS PROVIDES SYSTEM NEEDS FROM MAY 4-22


TOTAL STORAGE REQUIRED = 383,241 MWH

40,000
35,000
30,000

Developing options for deep carbon


PV
reductions:
a pragmatic strategy

25,000

October 2015

20,000
15,000
10,000
5,000
WIND

1
20
39
58
77
96
115
134
153
172
191
210
229
248
267
286
305
324
343
362
381
400
419
438
457
476
495
514
533
552
571
590
609
628
647
666
685
704
723
742

107

383,241 MWH STORAGE?


55 million Tesla Powerwall batteries
$165 billion (at $3000 each installed
or <options
half of for
current
Developing
deepcost)
carbon
Four per capita
reductions: a pragmatic strategy
763 per square mile

46 new Northfield Mountain facilities

October 2015

108

ISO NE SCENARIOS
DECEMBER LITTLE SURPLUS
RPS 80
35,000

30,000

25,000

CONVENTIONAL
CAPACITY
16,220 MW

Developing options for deep carbon


reductions: a pragmatic strategy

20,000

October 2015
15,000

10,000

5,000

1
20
39
58
77
96
115
134
153
172
191
210
229
248
267
286
305
324
343
362
381
400
419
438
457
476
495
514
533
552
571
590
609
628
647
666
685
704
723
742

109

ISO NE SCENARIOS
ANNUAL ENERGY SUPPLY
140

120

28

Developing options44for deep carbon


reductions: a pragmatic strategy

100

TWH
80

51

October41
2015

60

40

20

51

41

PERFECT STORAGE
WIND

NO STORAGE
SOLAR

BALANCING
110

Demand response
Can substantial loads (e.g. industrial processes, heating
options
forweeks
deep carbon
and cooling, EV charging)Developing
be deferred
over
or
reductions: a pragmatic strategy
months?
Will major industrial capital investments
be made to
October 2015
operate only at low capacity factor (i.e. at times when
wind and sun surpluses are available)?

11
1

PJM EXPERIENCE DR 2009-2015

Average curtailment 4 X per year


Average duration = 3.5 hours
Developing options for deep carbon
reductions:
a pragmatic
Average annual total hours curtailed
= 14
hours strategy
Average curtailment = 1% of peak
October 2015
How much far we extrapolate this to more hours, multi-day
and week-long episodes?

112

Transmission doesnt solve the problem


Developing options for deep carbon
reductions: a pragmatic strategy
October 2015

Simulated daily wind capacity factors across


EU (May 2030)

113

Developing options for deep carbon


reductions: a pragmatic strategy
October 2015

114

The 100% WWS assumptions for MA

13 GW onshore wind
60 GW offshore wind (120 Cape
Winds)
Developing
options for deep carbon
reductions: a pragmatic strategy
1 GW wave (?!)
22 GW utility scale PV
October 2015

115

Maines high court puts end to Bowers


Developing
Mountain wind power
planoptions for deep carbon
a pragmatic
strategy
The project in Penobscot County wasreductions:
first proposed
six years ago,
but
never won regulators' approval a decision affirmed Thursday by the
October 2015
Maine Supreme Judicial Court.
BY MATT BYRNE STAFF WRITER
December 3, 2015

116

Developing options for deep carbon


reductions: a pragmatic strategy

Even acknowledging the possible contribution


of DSM,
October 2015
interconnectors and storage to firming up weather dependent
renewables, a deep decarbonisation of the grid will need a
significant penetration of zero carbon firm capacity.

117

remaining!in!the!energy!system!in!2050.8!The!average!median!value!across!cases!is!just!over!$300!billion.!!

Other analyses: UN DEEP DECARBONIZATION


OF US

Based!on!an!uncertainty!analysis!of!key!cost!parameters,!the!interquartile!range!of!incremental!energy!
system!costs!extends!from!negative!$250!billion!to!$1!trillion!across!all!cases!(Figure!12).!To!put!these!
numbers!in!context,!the!activity!drivers!in!PATHWAYS!that!drive!energy!service!demand!in!all!of!the!
cases!are!consistent!with!a!U.S.!GDP!that!grows!by!a!real!annual!average!rate!of!just!over!2%!per!year!
over!the!next!four!decades,!to!around!$40!trillion!in!2050.!The!average!75th!percentile!estimate!of!net!
incremental!energy!system!costs!($730!billion)!across!cases!is!equivalent!to!1.8%!of!this!GDP!level.!The!
average!25th!percentile!value!is!negative!$90!billion.!

Billions)

Figure)12.)Incremental)Energy)System)Costs)in)2050)

$1,200!

Developing options for deep carbon


reductions: a pragmatic strategy

$1,000!
$800!
$600!
$400!

October 2015

$200!
$0!
^$200!
^$400!
Mixed!

High!Renewables!

High!Nuclear!

High!CCS!

!
th

th

Note:!The!error!bars!in!the!figure!show!the!25 !and!75 !percentile!values.!

!
!

1
1

Summary of very high intermittent systems


Very large footprint additional cost
Is siting all this likely?

Developing options for deep carbon


Must maintain a very large shadow
system
to maintain
reductions:
a pragmatic
strategy

reliability
October 2015 variations
Storage cannot overcome weekly and seasonal
DR and transmission can help, but likely not solve the
problem
Deep decarbonization will be very unlikely without a zerocarbon firm capacity base.

119

Are we asking the wrong question?


How do we redesign the system to accommodate
high intermittency? Developing options for deep carbon
reductions: a pragmatic strategy
October 2015

What mix will give us low carbon emissions at the

lowest cost?
120

Where does dispatchable power play profitably?


ISO NE SCENARIOS
DECEMBER LITTLE SURPLUS
RPS 80
35,000

CONVENTIONAL
Developing
options for deep carbon
CAPACITY
reductions:
16,220 MW a pragmatic strategy

30,000
25,000

October 2015

20,000
15,000
10,000
5,000

1
23
45
67
89
111
133
155
177
199
221
243
265
287
309
331
353
375
397
419
441
463
485
507
529
551
573
595
617
639
661
683
705
727

121

Zero carbon balancing capacity options


Nuclear:

Existing Gen II
Developing options for deep carbon
Gen III+ (AP-1000)
reductions: a pragmatic strategy
Advanced non-light water reactors (e.g. molten salt reactors, sodium
pebble bed)
October 2015

Gas with carbon capture


CTs with decarbonized liquid fuel via CCS (e.g. ammonia)
High capacity factor renewables
Dispatchable renewables (e.g. wind/CAES)
122

National and state policies for zero carbon


firm capacity
#1 Up-front RD and D investment
to accelerate
Developing
optionsbetter,
for deepless
carbon
reductions:
a pragmatic
strategy
expensive zero carbon on-demand
power options
(better
storage,
CCS, advanced nuclear)
October 2015

123

#2 Zero carbon capacity procurement incentives


Long run zero carbon capacity market auctions?
Incentives for procurement of long-run firm zero
Developing options for deep carbon
carbon energy?
reductions: a pragmatic strategy
In generation-regulated jurisdictions, resource
October 2015
procurement adders for capacity
and dispatchability
value?
Special set aside procurements of zero carbon capacity,
similar to Californias solicitation of energy storage?
124

Making clean energy policies technologyneutral. Policies to consider would include:


for deep carbonin
Allowing nuclearDeveloping
and CCSoptions
to participate
reductions: a pragmatic strategy
state clean energy or RPS programs
Technology-neutral federal tax incentives
such as the ITC and PTC.
Revisiting nuclear-discriminatory provisions
in the CPP.
October 2015

125

Developing options for deep carbon


reductions: a pragmatic strategy

www.zerocarbongrid.org
October 2015

126

Panel Discussion: Providing Reliable Renewable


Energy and Storage
Moderator: Ronald T. Gerwatowski
Panelists:
John Mosher, Solect Energy Development
John J. Keene, Jr., SunEdison
Chet Lyons, ESG
Armond Cohen, Clean Air Task Force
Environmental Business Council of New England
Energy Environment Economy

Networking Break

Environmental Business Council of New England


Energy Environment Economy

Firming Renewable Energy and Meeting Future


Peak Energy Demand with Clean Energy

Carolyn OConnor
Director, External Affairs and
Communications HQ US
Hydro-Quebec
Environmental Business Council of New England
Energy Environment Economy

QUBEC HYDROPOWER
Carolyn OConnor
HQUS

Land areas of the United States and Qubec

Robust grid with state-of-the-art technology


Planned on a long-term basis and
designed to meet power needs in
winter
The most extensive transmission
system in North America
System length: 21,240 mi.
Number of substations: 530
15 interconnections with
neighboring systems

620 mi.

Annual investment: $1.6 billion


Detroit (MI)
Boston (MA)

North Americas largest clean energy producer


62 hydroelectric generating stations
27 reservoirs with a combined
storage capacity of 176 TWh/year with
multi-annual management plan
Installed capacity: 36,643 MW
High demand at peak periods:
Twice a day
Winter peak demand (historical peak:
39,240 MW on January 22, 2014)

Difference between Qubecs peak load


(winter) and summer load: 20,000 MW
Annual investment: $1.2 billion

Recent Hydropower Build Out


La Grande complex
16,000
MW

1,550
MW
Romaine complex

Eastmain-1, Eastmain-1-A, Sarcelle


and Rupert diversion
+
8.7%

Pribonka
385
MW

Toulnustouc
526
MW

Romaine-1 & 2
910 MW

Electricity Sales Outside Qubec


Hydroelectric generating stations
and reservoirs contribute to electricity market
efficiency in northeastern
North America
Peak power demand period in Qubec =
winter (for heating needs)
Peak power demand period in neighboring
markets = summer
(for A/C)

QUEBEC

ON

ELECTRICITY SALES
In Qubec
MARITIMES
NY

NE

TWh

2013

2014

173

175

32

27

Outside Qubec*

TWh

* U.S. markets, Maritimes and Ontario

Hydro-Qubecs Clean Energy Exports


35
30
6 TWh

25

TWh

20

New England exports (2010-2014)


accounted for around 40% of
annual exports (50% when
including the Vermont contract)

Other Markets

15
New England
10
5
0

New York exports (2010-2014)


accounted for 25-30% of annual
export quantities

New York
Contracts

2010

12 TWh

7 TWh
2 TWh

2011

2012

2013

2014

Growing Interest in Hydro-Qubec hydropower

Refurbishment
of nuclear
plants

QUEBEC

NEW
BRUNSWICK

ONTARIO

ME
NY
Clean Power Plan (?)

V NH
T
Plant closures
MA

Reliance on natural
gas and clean energy
needs

Hydro
Wind
Biomass
Coal
Natural Gas
Oil
Nuclear
Other

Qubec hydropower can contribute to New Englands energy


challenges
New England energy challenges

Qubec hydropower attributes

RELIABILITY

Heavy reliance on natural gas for power


production
Constrained natural gas pipeline system
Anticipated plant closures totalling 10,000 MW

Non gas source


Dispatchable and flexible, able to provide both
baseload and peaking supply

COST

Natural gas demand peaks in winter causing


natural gas and electricity prices to spike

Secure, renewable fuel source not subject


to the volatility and uncertainty of fuel markets

Reliance on oil/coal during winter peaks


Challenging GHG reduction goals for the
electric sector

Renewable power
Very low GHG

CLEAN
ENERGY

Clean Energy and Transmission Request for Proposals (RFP)

Three States (Connecticut, Massachusetts and


Rhode Island) launch a solicitation for proposals for
long term clean energy supply and associated
transmission projects
Objectives: diversified energy portfolio, long-term
environmental and economic benefits, increased
network reliability and more stable prices
Bids submitted January 28

Eligible Project Bids

Long-term contracts
for RPS eligible
resources based on
current state
procurement
authority

19 projects

Category 1 + separate
transmission project
component under a FERCfiled tariff

Proposals for new transmission


infrastructure in exchange for a
commitment to deliver a certain
volume of clean energy

9 projects

1 project

Incl. Vermont Green Line

NPT

Hydro-Qubec A Partner in Two RFP Bids

VERMONT GREEN LINE

NPT

Northern Pass Transmission Line


Within the RFP, NPT is the largest and most
advanced project.

RADISSON

QUEBEC

HQ commits to deliver:
A total of 6.3 TWh of clean energy annually.
1,090 MW at the times when New England
needs it most:
16 peak hours, Monday to Friday, in
January, February, July, August and
December

NEW
BRUNSWICK Electricity distribution companies in Connecticut,
DES CANTONS

ONTARIO

ME
NY

THE NORTHERN PASS

V NH
T
SANDY POND
MA

Massachusetts and Rhode Island to:


Fund the costs associated with the US portion
of the NPT project for the first 20 years (HQ to
fund the subsequent 20-year period)

Vermont Green Line


Wind and hydro combination to supply a clean block of incremental
renewable energy to New England over new DC transmission
St. Albans

Project Summary:
400 MW DC transmission project between Plattsburgh, NY and
New Haven, Vermont (60 miles, underground/underwater)
Developed by industry leading companies with proven capability:
Transmission Anbaric/National Grid
Wind Invenergy
Hydro HQUS
In service 2020
Wind and hydro suppliers will enter into long-term PPAs (up to 20
years) with New England utilities, utilizing existing renewable
contracting authority

Plattsburgh

Burlington

New Haven
Middlebury

Clean Energy RFP Timeline


Final RFP Issued
Proposal Submission Deadline
Winning Projects Selected
Contract Execution with EDCs
Contracts Submitted for
Regulatory Approval
Regulatory Approval

November 12, 2015


January 28, 2016
April 26 July 26, 2016
June 23 September 22, 2016
July 26 October 25, 2016
2016

Looking Ahead: Hydropower procurement legislation needed


Hydro-Qubec supports hydropower procurement legislation pending in
Massachusetts and urges timely passage this spring
No mechanism exists for Massachusetts to pursue increased levels of
hydropower on a scale that addresses energy challenges
Explicit authority for utilities to purchase hydropower is required

Power purchase agreements ensure development of new transmission,


greater hydro supply quantities and more beneficial terms for
customers
Clean energy/transmission coalition established to advocate for
legislation in support of utility scale clean energy
Massachusetts Clean Electricity Partnership

Firming Renewable Energy and Meeting Future


Peak Energy Demand with Clean Energy

Steve Leahy
Vice President, Policy
Northeast Gas Association
Environmental Business Council of New England
Energy Environment Economy

March 29, 2016


Boston, MA

Natural Gass
Role in Regions
Clean Energy Future
Remarks at:

Environmental Business Council Forum


Stephen Leahy
Northeast Gas Association
1.

About NGA

Non-profit trade association

Local gas utilities (LDCs) serving New


England, New York, New Jersey,
Pennsylvania

Several interstate pipeline companies

LNG importers (Distrigas, Repsol)


and LNG trucking companies

Over 300 associate member


companies, from industry suppliers
and contractors to electric grid
operators

www.northeastgas.org

2.

NGAS ANTITRUST COMPLIANCE PROCEDURES


Adopted by the NGA Board of Directors on June 4, 2003
Objective
The Northeast Gas Association (NGA) and its member companies are committed to full compliance with
all laws and regulations, and to maintaining the highest ethical standards in the way we conduct our
operations and activities. Our commitment includes strict compliance with federal and state antitrust laws,
which are designed to protect this countrys free competitive economy.

Responsibility for Antitrust Compliance


Compliance with the antitrust laws is a serious business. Antitrust violations may result in heavy fines for
corporations, and in fines and even imprisonment for individuals. While NGAs attorneys provide
guidance on antitrust matters, you bear the ultimate responsibility for assuring that your actions and the
actions of any of those under your direction comply with the antitrust laws.

Antitrust Guidelines
In all NGA operations and activities, you must avoid any discussions or conduct that might violate the
antitrust laws or even raise an appearance of impropriety. The following guidelines will help you do that:
Do consult counsel about any documents that touch on sensitive antitrust subjects such as pricing,
market allocations, refusals to deal with any company, and the like.

Continued on NGA web site


http://www.northeastgas.org/about-nga/antitrust-guidelines

3.

PNGTS
M&NE

Iroquois

Distrigas

Tennessee
Algonquin

Canaport
Copyright: Northeast Gas Association
Prepared by: Novara
March 2015

4.

Natural Gas Service /


Market Share in Region

For New England


Gas = 38% of home heating
Gas = 45% of power gen

Gas = 63% of proposed power


gen in ISO-NE queue
2.6 million gas customers
in the 6 states

5.

Massachusetts Natural
Gas System

For MA
Gas = 32% of primary energy
Gas = 51% of home heating
Gas = 49% of power gen
1.6 million gas customers

6.

Northeast States Lead U.S. in


Gas Efficiency Investments

9 Northeast states = $536


million investment in 2014

Equal to 37.5% of U.S. total


of $1.4 billion

Source: ACEEE, 2015 State Energy Efficiency Scorecard, released Oct. 2015

7.

2014 MA Legislation on
Natural Gas
H 4164, approved unanimously by Mass. House and Senate,
and signed by the Governor in June 2014

Photo: Office of Governor


Patrick

Upgrade gas leak classification standard


Accelerate the replacement of older, more leak-prone pipe
Encouraged utility proposals for increasing the availability of
natural gas service in the Commonwealth
8.

Progress in Reducing
Emissions

Emissions from natural gas systems in MA


have declined by over 50% since 1990,
according to MA EEAs recent GHG
assessment report. Chart above from report
MA DEP data source.
Natural gas systems = <1.5% of total state
GHG emissions.

Belmont, MA, March 25, 2016

9.

A Number of Proposals

Map: FERC presentation to NECPUC, 6-15

10.

Pending / Planned Projects


Year

Project

Company

2016

AIM

Algonquin/Spectra

2016

CT Expansion

Tennessee/Kinder Morgan

2016

Salem Lateral

Algonquin/Spectra

2016

New Market

Dominion

2016/2017

Garden State Expansion

Williams

2017

Constitution

Cabot/Williams

2017

Wright Interconnect

Iroquois

2017

Northern Access

National Fuel

2017

Valley Lateral

Millennium

2017

C2C

PNGTS

11.

Planned Projects (contd)


Year

Project

Company

2017

South to North

Iroquois

2017

Atlantic Bridge

Spectra

2017

New York Bay Expansion

Williams

2017

Ramapo Expansion

Millennium

2017/18

PennEast

NJ LDCs, Spectra

2018

Northeast Energy Direct

Tennessee/Kinder Morgan

2018

Access Northeast

Spectra, Eversource, Natl


Grid

2018

2018 Project

PNGTS

2018

Eastern System Upgrade

Millennium

12.

Algonquin Incremental Market


(AIM) Project: Spectra Energy
Project Scope:
Providing 342 MMcf/d of additional
capacity to move Marcellus
production to Algonquin City Gates

Customers:

Regiona
l Supply

UIL Holdings
Eversource Energy
National Grid
NiSource
City of Middleborough, MA
City of Norwich, CT

Project Status:
Received FERC certificate, Mar. 3,
2015
Under construction
In-service 2H16

Map and info: Spectra Energy

13.

Connecticut Expansion Project:


Kinder Morgan / TGP
Project Scope:
Providing 72 MMcf/d of
additional capacity to meet
utility demand

Customers:
UIL Holdings (CT Natural
Gas & Southern CT Gas)
Eversource (Yankee Gas)

Project Status:
FERC issued certificate,
Mar. 11, 2016
Proposed In-Service Date
November 2016
Source: Kinder Morgan

14.

Gas LDCs are committing to


infrastructure investments

Gas utilities are investing in


proposed pipeline projects to
meet future utility demand.

Over 1 billion cubic


feet per day of new
capacity
New England gas LDCs
commitment

15.

Gas Planned to Fuel More


Power Gen in Region
Proposed new gas plants in
development or construction in
MA, CT, RI = 3,200 MWs,
according to NEPGA.

Photos: Footprint Power

16.

New England Governors


Energy Initiatives

Starting in Dec. 2013, several joint


statements expressing concern over
regions high energy (electric) costs and
impacts on economy and energy
reliability.
NESCOE 2014 concept for regional
electric tariff for pipeline investment
did not advance.
States pursuing multi-state clean
energy RFP, and individual state
regulatory/legislative actions on electric
tariffs and pipeline investments.

Photo: Hartford Courant, April 2015

17.

Current State Processes


State

Process

Connecticut

Public Act 15-107, enacted 6-15


DEEP released draft gas capacity RFP, 3-9-16
Comments on draft due today

Maine

Legislature enacted energy bill, 6-13, with provision for possible state
investment in gas pipeline capacity up to 200 MMcf/d
PUC still investigating

Massachusetts

New Hampshire

Rhode Island

DPU issued policy decision in DPU 15-37, 10-15, finding that it has legal
authority to review and approve contracts filed by Electric Distribution
Companies (EDCs) for pipeline capacity.
States 2 largest EDCs Eversource and National Grid issued joint RFP for
gas capacity, 10-15
Eversource and National Grid separately filed for 20-year transportation
agreements on behalf of EDC customers, 1-16, requesting DPU response by
10-16
PUC staff report in Sept. 2015 concluded that the Commission may hold that
NH EDCs have authority to enter into gas capacity contracts for the benefit of
gas-fired generators
Eversource filed for gas transportation contract on behalf of EDC, 2-16
Office of Energy Resources (OER) issued RFP for consulting services, 11-15,
to advise on potential interstate gas capacity & infrastructure contracts which
may be filed pursuant to Affordable Clean Energy security (ACES) Act.

18.

Were Making Progress

19.

Firming Renewable Energy and Meeting Future


Peak Energy Demand with Clean Energy

Matthew A. Morrissey
Director
Offshore Wind Massachusetts
Environmental Business Council of New England
Energy Environment Economy

Firming Renewable Energy and Meeting Future


Peak Energy Demand with Clean Energy

Paul J. Hibbard
Vice President
Analysis Group
Environmental Business Council of New England
Energy Environment Economy

Meeting Future Energy Needs


EBC Renewables & Reliability

Paul Hibbard
March 2016

Regional Energy Challenges


The system is changing

EE/DG impact on peak demand; cost reductions in emerging tech


Retirement of legacy capacity (fossil fuel, nuclear)
Natural gas resource growth, price decline, transportation constraints
Increased gas-fired (primary) capacity
Reliability-focused market design changes
Climate imperative

We have seen this all before, right?


Not really
Some things are familiar: fluctuation in fuel resource expectations, price; EE
impacts; resource addition & attrition; emissions cap & trade
Others are new: EE/DG impacts at system scale (approaching 10 GW over
next decade); narrowing of resource options; lack of on-site fuel; disconnect
between carbon policy and resource outcomes

PAGE 169

Dependence
on Natural Gas
The Challenge

Winter fuel delivery problem is important, and could get worse


Not a problem for heating & commercial/industrial process needs (natural gas LDCs
are obligated to acquire resources to meet needs; backed by federal siting authority)
Resource changes will increase regions electric system need for gas
Fundamental economic/competition barrier remains to firm, year-round transportation
contracts for electricity generation

Additional gas-fired capacity will be added to replace legacy units;


nimble capacity will be needed as degree of system net variability
increase (due to changes in generation & load)
ISONE has taken steps within its purview focused on fuel-neutral
market solutions to deliver low-cost, efficient outcomes
Incentives for investments for fuel assurance and performance when needed FCM
PI, 7-year lock-in, sloping demand curve
Reserve levels and pricing; energy market timing and flexibility
Performance auditing, increased vision into gas system conditions

Left to market, reliable solutions will emerge

PAGE 170

Market-Driven
Outcomes
The Challenge

Conversion of existing assets to dual-fuel capability


Thousands of MW of existing gas-only capacity can add dual-fuel capability
Conversions have happened, and are underway
Failure to do so (and ensuring fuel on site) increases risk of capacity market
performance penalties

Building dual-fuel capability into new capacity


Likely makes economic sense at the time of construction (performance risk, potential
economic operation on oil)
Evidence is strong that the market is responding
FCA10 cleared 3 plants (1300 MW) in southern New England all dual fuel at a price of ~
$7/kW-m

Higher use of existing backfeed LNG capacity


Winter program has revealed interest, identified contracting structures

Contracting for firm, year-round, natural gas transportation capacity


Not likely an economic choice for many generating units; harms competitive standing in
regional market

PAGE 171

The Dilemma
New England Emissions vs. RGGI and Clean

Annual CO2 Emissions (Million Metric Tonnes)

32
30

2013

BAU?

28
2013
Emissions

26

Clean Power Plan, assuming

24
22

Unit Name

20
18

Operating (OP)/
Renewed License Dates

License
Expiration
Date

Reactor
Type

Electrical
Output
(a)
(MWe)

Millstone 2

September 26, 1975/


November 28, 2005

July 31, 2035

Pressurized
water

884

Millstone 3

January 31, 1986/


November 28, 2005

November 25,
2045

Pressurized
water

1,227

Pilgrim

June 8, 1972/
May 29, 2012

June 8, 2032

Boiling
water

Seabrook

OP: March 15, 1990

March 15,
2030

Pressurized
water

685
1,295

Reactor
Vendor/Type
Combustion
Engineering
(vendor)
Westinghouse/
four-loop
General Electric/
type 3
Westinghouse/
four-loop

Fitzpatrick, Ginna, Indian Point???

Potential RGGI Cap,


projected at current annual
reduction rate

16
2020

2021

2022

2023

2024

2025

2026

2027

Pilgrim replacement assumes 2014 Pilgrim output (5.8 TWh) at New England marginal emission rate (941 lb/MWh). Table from ISONE

2028

2029

2030

PAGE 172

The
Dilemma
The
Challenge

States are committed to deep cuts in carbon

Carbon price is not sufficient (at this time) to alter electric system
investment in a manner that will achieve state climate policy objectives

Alternatives
Relax climate policy goals
Increase carbon price (e.g., through more stringent RGGI cap trajectory or alternative
carbon pricing mechanism)
Implement complimentary resource planning requirements
E.g., long-term contracts, RPS, net metering, EE funding, socialized transmission investment

Carbon pricing mechanism lowest-cost outcome, seamless integration in


electricity markets
But potentially politically infeasible at this time

State resource planning alternatives


have their own set of challenges (ratepayer risk; distributional inequities; decreased
market efficiency)

PAGE 173

GHG
30
Annual CO2 Emissions (Million Metric Tonnes)

Clean Power Plan Goal


28

26

24

22

20

Potential RGGI Cap


18

16
2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Potential NE RGGI Cap

Clean Power Plan Final Goal (Existing and New)

Dual Fuel

Incremental Pipeline, 0.3 Bcf/d in 2024 and 0.12 Bcf/d in 2028

LNG

EE/DR

EE/Firm Imports (new or existing transmission)

Note: Pipeline solutions include an estimate for incremental in-region GHG emissions from fugitive methane leaks.
PAGE 174

Wrap up
New England faces challenging policy decisions, in a space
between commitments to competition and the desire to control
resource outcomes to achieve energy/environmental policy goals

Markets will produce reliable outcomes, but will not necessarily


produce outcomes consistent with policy maker objectives
State-driven resource planning policies (long-term contracts, net
metering, etc.) can help achieve policy goals, but are large
enough to interfere with market outcomes and transfer risk to
ratepayers
Something has to give

PAGE 175

Paul J. Hibbard
Vice President, Analysis Group Inc.
111 Huntington Avenue, 10th Floor
Boston, MA 20199
phibbard@analysisgroup.com
617-425-8171

PAGE 176

Panel Discussion: Firming Renewable Energy and


Meeting Future Peak Energy Demand with Clean Energy
Moderator: Paul Afonso, Brown Rudnick LLP
Panelists:
Carolyn OConnor, Hydro-Quebec
Steve Leahy, Northeast Gas Association
Matthew Morrissey, Offshore Wind Massachusetts
Paul Hibbard, Analysis Group
Environmental Business Council of New England
Energy Environment Economy

Closing Remarks

Michael Ernst
Program Chair & Moderator
Executive Advisor
Power Advisory LLC
Environmental Business Council of New England
Energy Environment Economy

EBC Energy Resources Program:

The Challenges of Expanding Renewable


Energy and Maintaining Grid Reliability

Environmental Business Council of New England


Energy Environment Economy