ba#ery energy storage market - clean energy group

Ba#eryEnergyStorageMarket:CommercialScale,Lithium-ionProjectsintheU.S.

FundedbytheDOESolarEnergyTechnologiesOfficeundertheSuNLaMPProject30379-1614

Solar-plus-Storage:CostReducJonthroughOpJmizaJonandMarketCharacterizaJon(FY16-17)

JoyceMcLaren,PieterGagnon,KateAnderson,EmmaElgqvist,RanFu,TimRemo

October,2016

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ThisslidedeckpresentstheresultsofdatacollecJononthecommercial-scaleli-ionbaZeryenergystoragemarket(currentasofAutumn2016).

Itincludes:•  mapofexisEngU.S.projectlocaEons•  li-ionenergystorageprojectcostdata(onakWandkWhbasis),basedondeveloperquotes•  projectcostbreakoutandlistofelementstypicallyincludedinprojectcostesEmates•  commonuse-casesandvaluestreamsforba#eryenergystorageprojects•  mapofelectricuElitydemandcharges(whichimpactba#eryenergystorageeconomics)•  howtheFederalInvestmentTaxCredit(ITC)andModifiedAcceleratedCostRecoverySystem

(MACRS)applytoenergystorageprojects•  summaryofNREL’sFY16-17solar+storageopEmizaEonmodelingproject

TheinformaJonpresentedintheseslideswascollectedtoinformtheinputsandassumpJonsforNREL'ssolar+storageopJmizaJonmodelinginFY17.Thenumberofprojectquotesmadeavailablewaslimitedandtheenergystoragemarketisrapidlychanging.Therefore,thisinformaJonshouldbeseenonlyasacomplimenttomarketdatafromothersources.

TableofContents

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ThismapindicatesthelocaJonsofallli-ionbaZeryprojectslistedontheDepartmentofEnergy(DOE)EnergyStorageDatabase.Projectspairedwithsolarphotovoltaics(PV)areshowasasun.Projectslistedashavingaresiliencyusecaseareshowninred.Projectsarecurrentlyclusteredonthewestandeastcoasts,duetofavorableelectricitymarketsandincenJves.

Li-ionEnergyStorageProjectLocaJons

Source:DOEGlobalEnergyStorageDatabaseasof27September2016.hZp://www.energystorageexchange.org/Sizesrangefrom1kW-100MWandarebehindandin-frontofthemeter.DatashowsoperaJonal,contractedandannouncedlithium-ionbaZeryprojectscommissionedbeginningJanuary,2009.

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NRELDataCollecJon

Thefollowingslidespresentcurrentmarketbaselinedataforbehind-the-meter,commercial-scalebaZery(li-ion)energystorage.TheinformaJonisbasedonprojectquotesthatweresharedwithNRELbyindustryparJcipantsbetweenApril–May2016.

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ProjectSizes(NRELDataCollecJon)

ProjectCount:28BaZeryDuraJonHoursAverage: 1.9Minimum: 0.3Maximum: 3.2kWAverage: 30.7Minimum: 5Maximum: 96kWhAverage: 37.1Minimum: 8Maximum: 90

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TotalProjectCostperkW(NRELDataCollecJon)

Count: 28TotalProjectCostAverage: $55,282Minimum: $10,200Maximum: $164,131BaZeryDuraJon(Hours)Average: 1.9Minimum: 0.3Maximum: 3.2kWAverage: 30.7Minimum: 5Maximum: 96

Forthe28projectsforwhichdatawascollected,theaveragecostoftheprojectsis$55k.TheaverageduraJonofthebaZeryprojectsisjustunder2hours.TheaveragepowerraJngoftheprojectsis30kW.

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TotalProjectCostperkWh(NRELDataCollecJon)

Count: 28TotalProjectCostAverage: $55,282Minimum: $10,200Maximum: $164,131BaZeryDuraJon(Hours)Average: 1.9Minimum: 0.3Maximum: 3.2kWhAverage: 37.1Minimum: 8Maximum: 90

Forthe28projectsforwhichdatawascollected,theaveragecostoftheprojectsis$55k.TheaverageduraJonofthebaZeryprojectsisjustunder2hours.TheaverageenergyraJngoftheprojectsis37kWh.

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TotalProjectCost–Normalized(NRELDataCollecJon)

Count: 28BaZeryDuraJon(Hours)Average: 1.9Minimum: 0.3Maximum: 3.2kWAverage: 30.7Minimum: 5Maximum: 96TotalProjectCost/kWAverage: $2,338Minimum: $1,073Maximum: $4,323

NormalizingthedatapointsbythekWraJngshowsthedecreaseincostperkWwithincreaseinthesystempower.TheaveragecostperkWis$2,338.ThewiderangeofcostsisindicaJveofthefactthatdisplayingthedatainthiswaydoesnotdepictanyinformaJonaboutthekWhraJngofthebaZery,whichcanvarygreatlyacrossanygivenkWraJng.

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ComparisonofNRELstoragecostdatavs.projectcostsreportedtoCaliforniaSelf-GeneraJonIncenJveProgramSystemquotesprovidedtoNREL,whileslightlylower,donotdiffersignificantlyfromthosereportedtotheCaliforniaSGIPandmayreflectreducJonsinsystemcostsinthelastyear.ThetrendsshownintheseplotsaredependentontheenergyraJngofthebaZeries.Allthingsbeingequal,aporloliowithlargerenergyraJngwouldshowahigher$/kWtrend.SincetheenergyraJngsinthedatapointsarenotidenJcal,thesegraphsshouldnotbeinterpretedasacomparisonofprojectcosts,butsimplyasadepicJonofthetrendofonemetricacrosstwodifferentporlolios.

Yearofquote2016

10

60%20%

9%

11%

BaZeryHardwareEngineering,Procurement,ConstrucJonDevelopment/SonCosts

StorageProjectCostBreakdown

Ba#eryHardware•  Inverter-PowerConversion

• ContainerorHousing• Containerextras(insulaJon/walls)

•  ElectricalConduit(insideofcontainer)

• CommunicaJonDevice• HVAC• Meter(revenuegrade)•  FireDetecJon•  FireSuppression•  Labor• ACMainPanel• DCdisconnect•  IsolaJonTransformer• AUXPower(lighJng)

Engineering,Procurement,ConstrucEon(EPC)

•  ControlSystem/SCADA•  SitePreparaJon•  Loading&DrivefromOEMsite•  Lining&HoisJng(bycraneonsite)

•  PEstampedcalculaJons/drawings

•  OEMtesJngandcommissioning

•  ElectricalBOSoutsideofcontainer(conduit,wiring,DCcable)

•  ElectricalLabor•  StructuralBOS(fencing)•  EPCOverhead&ProfitDevelopment/So^Costs

•  CustomerAcquisiJon•  DeveloperOverhead&Profit•  InterconnecJon

ProjectCostBreakout500kW/1000kWhcommercialscalecontainerizedli-ionbaZerysystem

TotalProjectCost=$883,427

DevelopedbyRanFu&TimothyRemoDataasof09/30/2016aspartofNREL’sBoZom-upCostModel

underDOESuNLaMPagreementnumber29839.

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Use-cases&ValueStreams

Thefollowingslidessummarize:•  commonusecasesandvaluestreamsforenergy

storage•  uJlitydemandchargesacrosstheUS•  howthefederalITCandMACRSapplytoenergy

storage

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BaZeryStorageUse-cases&ValueStreamsBaZerysystemdesignanddispatchstrategiesdifferdependingontheuse-caseandthevaluestreamsthatarebeingtapped.WhilethekWhdispatchedmaybethesameinthecaseoftwodifferentprojects(orevenbythesameprojectatdifferentJmes),themonetaryvalue($/kWh)gainedfromthatdispatchmaybeverydifferent.DependingonthemarketstructureinaparJcularlocaJon,commercial-scale,behind-the-meterbaZeryprojectsmaytapintooneormoreofthevaluestreamsbelow.

ValueStream Reasonfordispatch Value

DemandChargeReducJon Reduceon-siteloadtoshavepeaksinusage Lowerretailelectricitybillvialower

demandcharge

Time-of-Use/EnergyArbitrage

BaZerydispatchedtomeeton-siteloadduringJmesofdaywhenretailenergypricesarehigh

Lowerretailelectricitybillvialowerenergycharge

Capacity/DemandResponse

DispatchpowertogridinresponsetoeventsdefinedbytheuJlity/IndependentSystemOperator

Paymentforcapacityservice

FrequencyRegulaJon BaZeryinjects/absorbspowertofollowregulaJonsignal PaymentforregulaJonservices

EnergySales DispatchpowertogridduringJmesthatlocaJonalmarginalprices(LMP)arehigh LMPpriceforenergy

Resiliency BaZerydispatchedtoprovidepowertocriJcalfaciliJesduringoutages. AvoidedcostofinterrupJon.

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CurrentCommercial/IndustrialUJlityDemandCharges

DatashownarebasedoncommercialuJlitytariffsfromtheUJlityRateDatabase,asofAugust2016.ThedatabasewasupdatedbetweenSept2015and

Sept2016.Tariffsthatareavailableonlytospecific

customertypes–suchasschoolsoragriculturalpumping–are

excluded.

ThismapshowsthehighestdemandchargeobservedineachuJlityterritory.InregionswhereuJlitydemandchargesarehigh,behind-the-meterstoragemayyieldelectricitybillsavingstotheconsumerbyshavingloadduringpeaks.ThesheernumberofuJlityratestructuresacrosstheU.S.hasposedachallengetoidenJfyingopportuniJesfordeployingstoragefordemandchargesavings.

Source:UJlityRateDatabase

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*We assume energy storage can be added to an existing PV system based on a IRS Private Letter Ruling that allowed owner of a wind turbine to add energy storage to existing facility and claim the tax benefit.  We believe that the PV and energy storage would need to be in close proximity and under common ownership (same taxpayer). We believe a replacement battery (e.g. at 10 years) does not qualify for the ITC, but does qualify for 5 year MACRS.

ITC&MACRSforsolarandstorageprojectsTheInvestmentTaxCredit(ITC)andModifiedAcceleratedCostRecoverySystem(MACRS)arenaJonallevelincenJvesthatcanimprovebaZeryenergystorageprojecteconomics.

Battery system ownership

Tax credits for battery components

PV system charging the battery

PV system on site

7 year MACRS

5 year MACRS Portion of 30% ITC

5 year MACRS 30% ITC

5 year MACRS

7 year MACRS

*

Private

No PV system

Existing PV system

New PV system

Public (university, federal)

Battery charged by PV 50%-75%

Battery charged by PV 75%-99%

Battery charged by PV 100%

Battery charged by PV < 50%

none

Credit: Emma Elgqvist, NREL Sources: IRS Regs. Sec. 1.48-9(d)(6); IRS Notice 2015-70; IRS Publication 946; IRS PLR 201308005 IRS PLR-121432122012; IRS PLR-201142005; IRS PLR 201208035; IRS CCA 201122018

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Methodologyconsidersdifferent:

•  BuildingTypes•  OwnershipModels•  End-UseCases•  UJlityRateTariffs•  TechnologyCosts•  ElectricityMarkets•  IncenJves/Policies•  ClimateZones

PROJECTSUMMARY

ThroughdatacollecJon,innovaJvemodelingandanalysisthisproject:•  Developsprojectcostbaselinestorefinemodelinginputsbasedoncurrentmarketdata

•  IdenJfiescost-opJmaltechnologycombinaJonsofsolarandstorageforavarietyofbuildingtypesandmarketcondiJons

•  ExploresmethodstovaluethecontribuJonofsolar-plus-storagetoelectricsystemresiliency

•  CharacterizesmarketpotenJalformulJpletechnologyandpolicytrajectories•  SupportsidenJficaJonofpolicyandregulatoryopJonstosupportsolar-plus-storagedeployment

Finalresultsavailableautumn2017.ProjectWebsite:hZp://www.cleanegroup.org/ceg-projects/solar-storage-opJmizaJon/

Solar-plus-Storage: Cost Reductions through Optimization and Market Characterization

QUESTIONS ADDRESSED •  At what technology costs are projects economical? •  What policy changes would encourage the formation of new markets? •  How can system owners capture multiple value streams? •  How can we value energy resiliency in economic calculations? •  Where will solar with storage be cost-effective in the near-term? Longer-term?

²  DemandchargereducJon²  Energyarbitrage²  Ancillaryservices(frequency

regulaJon)²  Resiliency

VALUESTREAMSCONSIDERED²  DemandchargereducJon

²  Energyarbitrage²  RegulaJon/Capacity²  DemandResponse²  Resiliency

Principal Investigator: Joyce McLaren joyce.mclaren@nrel.gov

Funded by the DOE Solar Energy Technologies Office (SETO) as SuNLaMP Project 30379-1614 (FY16-17)

•  AlphaEnergy•  CAIRN•  CenterforSustainableEnergy•  CleanEnergyGroup•  ConnecJcutGreenBank•  CUNY•  FosterraCleanEnergyConsulJng•  Geli•  NYSERDA•  Sonnen•  STEM•  Sunverge

AppreciaJontotheorganizaJonsthatprovidedinformaJonandpeerreviews,including: