transforming the electric power system - roger caldwell
DESCRIPTION
Presentations from the International Workshop on Energy Storage Technologies and Applications, April 2013, ADB Headquarters, ManilaTRANSCRIPT
© 2013 Strategen Consul3ng, LLC
Thomas Edison on Storage circa 1920
1
Thomas Edison
“When we learn how to store electricity, we will cease being apes ourselves; unAl then we are tailless orangutans. You see, we should uAlize natural forces and thus get all of our power. Sunshine is a form of energy, and the winds and the Ades are manifestaAons of energy. Do we use them? Oh, no! We burn up wood and coal, as renters burn up the front fence for fuel. We live like squaLers, not as if we owned the property. I hope we don't have to wait unAl oil and coal run out before we tackle that”…. Thomas Edison in conversa0on with Henry Ford and Harvey Firestone (c1920)
Confiden3al
Clean Tech Manufacturers & Service Providers
Private Equity / VC Firms InvesAng in Clean Tech
CorporaAons Exploring Clean Energy OpportuniAes
A sampling of our clients:
We combine strategic thinking with deep industry exper0se to create profitable clean energy businesses
U.S. Department of Energy
Who we serve:
Next GeneraAon Real Estate Developers and Campuses
The Energy Storage Community (CESA)
About Strategen
© 2013 Strategen Consul3ng, LLC
CESA – Strength Through Diversity & CollaboraAon
3
Steering CommiMee
General Members
© 2013 Strategen Consul3ng, LLC
Grid-‐Connected Energy Storage is a Different ‘Market’
4
U.S. ConsAtuAon
Congress
FERC
RTOs/ISOs NERC
WECC
State ConsAtuAons
POUs PUCs
Applica0on Diversity There are dozens of applicaAons, each with its own value proposiAon, demand curves, and business structure. Each applicaAon can have 2-‐4 ownership models.
Most applica0ons have mul0ple benefit streams
The rules governing the benefit streams are different for each of the different users (uAlity types, states, ISOs), and are governed by vastly different groups.
Regulatory/Policy/ Incen0ve Complexity
Many of the benefit streams are dependent upon regulaAon, policy, or incenAves that are sAll be determined. New incenAves, regulaAons, or policies could completely change the landscape.
Geographic Diversity Benefits, regulaAons, and payment structures vary widely by state and region.
Immature Market/Growing Pains
Many of the companies are sAll unproven. Reliability and costs of new technologies is ohen unknown, even to providers themselves. Markets are immature, requires turnkey ‘soluAon’ – systems integraAon skills, and regulatory intervenAon
» AB2514 implementa0on » FITC implementa0on » Storage system reliability » Storage system cost » FERC Rulemakings
Major Variables
Key Differences Between Energy Storage and Tradi0onal Markets
© 2013 Strategen Consul3ng, LLC
5
Source: SANDIA Report SAND2010-‐0815, Energy Storage for the Electricity Grid: Benefits and Market Poten3al Assessment Guide, Jim Eyer & Garth Corey (February 2010); ease to deployment developed by Strategen
ApplicaAon LifeAme Value ($/kW for 10yr Project Life)
Ease of D
eploym
ent
The U.S. market potenAal based on uAlity spending is promising at $238B over 10 years, but certain applicaAons dominate
Market Reference Size = $10,000 M
Electric Energy Time-‐shih Electric Supply Capacity
Load Following
Frequency RegulaAon
Electric Supply Reserve Capacity
Voltage Support
Transmission Support Transmission
CongesAon Relief
T&D Upgrade Deferral 50th percenAle
T&D Upgrade Deferral 90th percenAle SubstaAon
On-‐site Power
Electric Bill Cost Management
$98.4B Electric Service Reliability
Electric Service Power Quality
Renewables Energy Time-‐shih
Renewables Capacity Firming
Wind GeneraAon Grid IntegraAon, Short DuraAon
Wind GeneraAon Grid IntegraAon, Long DuraAon
Tremendous PotenAal: U.S. Market, by Benefit Stream
5
$0 $500 $1000 $1500 $2000 $2500 $3000
© 2013 Strategen Consul3ng, LLC
Estimated Global Installed Capacity of Energy Storage (MW)
Pumped Hydro, 135,009
UPS*, 64,820
Thermal**, 1,000
Flywheel, 42
Solar Thermal, 601
Compressed Air, 440
BaMeries***, 594
Global Total (Incl. UPS): 202,506 MW
Non-Pumped Hydro or UPS: 2,677 MW
The Grid Connected Energy Storage Market is Large
* UPS is primarily Lead Acid. Global UPS size extrapolated from 2011 Global Data UPS Market Revenue report (Assume $250/kWh avg. cost, 2 year replacement cycle) ** Thermal energy storage esAmates include storage for cooling only. *** BaLeries include Flow, Lithium Ion, Sodium Sulfur, Nickel Cadmium, Lead Acid (not Incl. UPS & standby power), and Ultra BaLeries
Source: Strategen ConsulAng, LLC research; thermal storage installed and announced capacity esAmated by Ice Energy and Calmac. EsAmates are current as of August 2012
6
© 2013 Strategen Consul3ng, LLC 7
Key Forces Driving the AdopAon of Energy Storage Variable Genera0on from Renewables
Rising Energy Costs
Variable Energy Consump0on
Peak Load Growth & T&D constraint
!"#$%
!&#$%
&#$%
"#$%
'#$%
(#$%
)#$%
&&#$%
&"#$%
&))#%
&))&%
&))*%
&))"%
&))+%
&))'%
&)),%
&))(%
&))-%
&)))%
*###%
*##&%
*##*%
*##"%
*##+%
*##'%
*##,%
*##(%
*##-%
*##)%
*#&#%
*#&&%
*#&*%
./01/2345/%67425/%82%9/:8;/2<4=%>=/1308183?%.081/:%@821/%&))#%AB% CD%E9% F6%GB% GH%DI% JI%JF% HK%JB% 6I%IC% HL%BF% GD%JC% @6%F>% KM%GM% JH%J>% CA%6E% IN%DH% CO%6H% BC%C>% CM%PL% J@%9B% QH%EK% EA%.H% K@%@F% CF%C6% BH%RI% JE%CJ% HS%BL% LH%
!"#
$!"#
%!"#
&!"#
'!"#
(!"#
)!"#
*!"#
+!"#
,!"#
$!!"#
$# %# &# '# (# )# *# +# ,# $!#
$$#
$%#
$&#
$'#
$(#
$)#
$*#
$+#
$,#
%!#
%$#
%%#
%&#
%'#
-./01#
0.0
2.0
4.0
6.0
8.0
10.0
0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00
Reside
n0al Dem
and (kW) ResidenAal Baseline Load
EV Charging (Level 2)
© 2013 Strategen Consul3ng, LLC
Biggest Driver: Regulatory IntervenAon!
8
Policy MaMers! Local interven0on is needed for storage par0cipa0on
European Association for the Storage of Energy (EASE) Founded
German Energy Storage Association Founded
California Energy Storage Alliance (CESA) Founded
Texas Energy Storage Alliance (TESA) Founded
Energy Storage Association (ESA) Advocacy Council Created
India Energy Storage Alliance (IESA) Founded
China Energy Storage Alliance (CNESA) Founded
2011 2012 2009 2010 2013
Ontario Energy Storage Alliance (OESA) Founded
© 2013 Strategen Consul3ng, LLC 9
However, Markets are Global
Global fragmentation is a challenge for energy storage stakeholders (current Storage Alliance members)
» Most energy storage companies have limited budget and Ame, forcing them to prioriAze markets, and thus storage alliance parAcipaAon
» No global ‘markets’ have emerged so far … but we are close!
» Markets driven by legislaAve change take Ame to develop, forcing many energy storage companies to lose money and downsize prior to market acceleraAon
» Just at the Ame we need to double down and invest, available resources from energy storage incumbents are becoming increasingly scarce….
Source:
Fundraising competition among existing ESA’s becomes a ‘red ocean’ – each chasing scarcer resources
© 2013 Strategen Consul3ng, LLC 10
An AlternaAve: Blue Ocean Strategy
Success at this critical time requires focus on accelerating market expansion
» Achieve faster market results for the storage industry -‐-‐ work smart and leverage combined resources; 1+1=3 § Develop and share best pracAces – energy storage market development ‘tool kit’ § Improve advocacy/operaAonal efficiency § Reduce transacAon/cost/hassle for common member companies
» Expand funding pool § Bring new stakeholders to the market development scene – such as NGO’s, foundaAons, large
global corporaAons interested in adjacent markets § AddiAonal funding can expand ‘toolkit’ creaAng virtuous cycle
» Successful implementaAon of blue ocean strategy will result in a larger market …. Faster!
© 2013 Strategen Consul3ng, LLC 11
Working together, we are stronger
The rationale of local storage alliances applies globally
» No single storage alliance can ‘afford’ to spearhead global advocacy efforts
» Global advocacy efforts will always be seen as more credible if sponsored by mulAple alliances vs. by a single alliance
» MulA-‐party input results in the best market structures
» Certain acAviAes will, by definiAon, be much more successful if led and managed at the global level (eg. Tool Kit, Development of specific energy storage definiAons, standards and protocols)
» CESA’s focus is in California, but we are acutely aware that our members companies’ focus is global
Source:
© 2013 Strategen Consul3ng, LLC 12
GESA Mission and Goals
Make energy storage a mainstream resource which accelerates the adoption of renewable energy and promotes a more efficient, reliable, affordable and secure
global electric power system
» Support and replicate local and regional energy storage alliances
» Advance educaAon, knowledge and proven frameworks about the benefits of energy storage and how to incorporate it into the electric power system in a cost effecAve way
» Recruit new global stakeholders to support and promote GESA’s mission
» Foster collaboraAon among key stakeholders including policy makers, uAliAes, renewable energy community, financial insAtuAons and environmental organizaAons
» Establish standards and protocols to advance energy storage interoperability worldwide
© 2013 Strategen Consul3ng, LLC 13
GESA Principles
Transformation to a clean energy economy requires: diversity, competition and collaboration
» Encourage Market Diversity § Support all forms of energy storage
• Chemical • Mechanical • Thermal • GravitaAonal
§ Support all applicaAons of energy storage – throughout the electric power system § Support all ownership models
• UAlity owned • Third party owned • Customer owned
» Explicitly help advance renewable energy, but collaboraAvely integrate with all exisAng resources » Culture of collaboraAon – proacAvely seek ‘win win’ soluAons » Culture of commitment to results – we’re in it for the long haul!
© 2013 Strategen Consul3ng, LLC 14
CollaboraAon is the key to success
Not only among ESAs, but also more broadly within and across industries and stakeholders
Source:
© 2013 Strategen Consul3ng, LLC
QuesAons?
15
Janice Lin Founder and Managing Partner 2150 Allston Way, Suite 210 Berkeley, CA 94704 www.strategen.com
O 510 665 7811 M 415 595 8301 F 888 453 0018