EPRI/Sandia PV Systems Symposium, May 2016Kevin Christy

Incorporating Energy Storage into PV System Design

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Overview

New & evolving segment

Interconnection issues

Retrofitting complications

Financing issues for storage

Operational issues for storage

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Interconnection issues-new systems

If batteries are charged with DC energy from the PV system, then the BESS is “an enhancement of the renewable generator” and can export If batteries are charged with AC

energy from the grid, then the BESS is considered a non-NEM device and cannot export Specific interconnection

application guidelines must be followed

SCE external memorandum dated 7/22/13 Re: Battery-Backed Storage System and Net Metering Eligibility

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Can only address one retrofit system with which I’m familiar:

• Existing NEM PV system in SCE territory

• Addition of non-export BESS after the fact

Required shared interconnect facility and approval & cooperation of PV system owner and installer

Utility will need to be satisfied of non-export controls on BESS

Interconnection issues-retrofit

Storage Financing Issues

Moving from Balance Sheet to Non-Recourse Finance

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Foundational Issue: Joint Financeability

Will need to find financier willing to finance both solar and storage at acceptable cost of capital

May need Joint Facilities Agreement where equipment/agreements are shared (e.g., interconnection) to allow solar to go to one financier and storage to go to another

A number of experienced solar financiers are expressing interest in financing storage, but it is very early days for non-recourse storage finance

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Supplier Bankability

Battery & BMS provider

Bidirectional inverter provider

Integrator

Warranty provider

DCR/Fleet management software providers

Operator & Operations schemes

Line up your IE reports

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Degradation of Li-ion Batteries Note DC/AC conversion losses in battery kWh nameplate rating Long-term financing question: how long will these last? Predictable rate of degradation? Can performance-based agreements be written to reflect

degradation?

Source: NREL, Predictive Models of Li-ion Battery Lifetime, Sept 2014

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Methods of Managing Degradation Impacts1. Oversize

• Chevy Volt depth of discharge “buffer” experience: 1st gen vs. 2nd

gen

• Expect stationary manufacturers to adopt this approach as costs decrease & energy density increases

2. Capacity Maintenance• Pay up front/over time for beefed up warranty

3. Underwrite to Expected Degradation• PV experience:

Straightline to 80% warranty, increased to 90%

Observed degradation, tighter banding

• Would require suppliers to back linear warranties

• Over time, underwrite to experience vs. warranty

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Independent Performance Estimates? BESS systems have no industry-standard PVsyst equivalent—

this is a major hamstring to modeling & financing efficiency

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Storage Modeling Efforts in Flight

NREL System Advisor Model (SAM) PV + storage module

Flow battery module in development

EPRI Energy Storage Valuation Tool

StorageVET successor tool in development for 2nd half 2016 release

Developed under guidance of the Energy Storage Integration Council (ESIC)

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Key Parameters for Storage Performance Modeling

Ratio of DC/AC capacity (kWh-equivalent) Round trip conversion efficiencies Parasitic losses (HVAC, tare) Depth-of-discharge limits Operating temperature profiles Cycle/year profile of application Availability

For flow:• Additional pump parasitic losses• Electrolyte consumption

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Contracted vs. Uncontracted Revenue

Only contracted revenue from creditworthy counterparties can get the lowest cost of capital

Source: RMI

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ITC Eligibility for BESS + PV

BESS eligible for ITC as long as the batteries are charged by the solar energy (does not require direct DC coupling)

Proportional loss of ITC if up to 25% of the energy used to charge the batteries comes from the grid

Cliff at 25%--anything more and you lose the ITC

Expect financiers to want solid guarantees that grid energy will not be used to charge batteries

Note: Conclusions based on private letter rulings, final rules not formed and released.

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O&M Issues for Solar + Storage BESS maintenance is more time-sensitive:

• Brittle nature of demand charge management• LDs associated with capacity/RA contracts• Consider spares• Consider response time commitments Operations will be more hands on:

• Closer monitoring of battery status• Faster resolution of comm outages• Need to be able to respond to fleet dispatch orders under

capacity/RA or frequency regulation May need backup providers:

• Software for DCR, fleet management• Operations provider

Questions?