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Solar + Storage – Here to StayOpportunities, Trends, and Challenges the Applications Presents to Our Grid

DNV GL Utility of the Future Conference

Richard FioravantiHead of SectionDistributed Energy ResourcesDNV GL Energy

June 2-3, 2015

Washington, DC

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Globally, storage is rapidly expanding beyond grid – going off shore

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Storage Applications

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Storage Services

USA

Germany

UK Spain

Netherlands

France

Italy

Japan

Korea

China

Australia 

South East Asia

Frequency Regulation & Spinning Reserve

               

PV + Storage System

Wind + Storage System              

Community Energy Storage        

C&I Customer Backup                  

Substation Support          

Residential Storage                

                     

Overview of Global Storage Applications

Application Interest the Result of Continuing Price Declines in Both Solar and Storage Systems

Very Active somewhat active Source: DNV GL

Solar Storage in Today’s Marketplace

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PV and Battery Cost are both dropping rapidly

Limited consensus in price forecasts other than it will continue its decline – for storage, much more rapidly than anticipated even two years ago!

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What is driving Current Surge in Storage Activities?

On October 17th, 2013, the California CPUC voted 5-0 to implement the targets shown in the chart

May 1st, 2015: Tesla Announcement of the Power Wall Application

Of all changes in the market, there is no longer skepticism to energy storage being a part of our future.

Courtesy: Tesla Power Wall

California CPUC Storage Ruling

Solar Storage in Today’s Marketplace

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What is driving the interest in Solar-Storage? Grid Needs

Market Drivers for Solar Storage

One of the more pressing needs is due to the “Duck” Curve in California

Leading industry stakeholders, such as Julie Blunden in her January article for long duration storage, note that California is 5 years ahead of this curve

Solar + storage has advantages that can allow the application to be used as a tool to “flatten” the curve with smart charging/discharging of solar

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Recent natural disasters have increased visibility of electric power systems and their interdependence

After Hurricane Sandy, New York utilities restored power to 95 percent of customers 13 days after peak outage reporting

Extended outages result in economic, security and consumer confidence problems

What is driving the interest in Solar-Storage? Resiliency

Solar + Storage is able to supply critical loads day and night absent electric and gas infrastructure

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What is driving the interest in Solar-Storage? Customers

Market Drivers for Solar Storage

“Every Solar City Customer will get a battery back-up for their solar systems within 5-10 years” – CEO Solar City

On the residential side of the meter, the system will be utilized for (1) Peak reduction, (2) Energy arbitrage, and (3) PV time shifting

The storage system will also allow solar to be used as a grid asset, guaranteeing and locking in the production of the system for grid use

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What Major Trends are Emerging from this activity?

– Storage technologies: Will changes accelerate the adoption of new technologies and create a niche for longer duration storage technologies?

– Business model for utilities: Where should the device be placed, what is really on the line for this application?

– Needs that still need to be addressed for applications

– Financing, understanding storage characteristics

– Safety of the system

Trends, Opportunities, Challenges

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Storage Market Still Needs a “Multi-hour” Application

Drivers:

– High penetration of renewables

– Decreasing storage cost

– Ability to offer multiple stacked values

– New Utility markets, multi-hour peaks

Technology Trends

– Major push will be whether longer duration technologies have the ability to keep pricing competitive with lithium activity

– Example of the GE Durathon Battery unable to keep pace

– UniEnergy, Eos Energy Storage latest entrants

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Trends, Opportunities, Challenges

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Mapping Technologies and Solar + Storage Applications Needs

Utility / Customer Needs vs. Technology Capabilities

• For utilities, multi-hour applications are desired because their “peaks” are longer than one hour, in fact, can extend to 6-10 hours

• Customers may desire full backup, but the systems are only capable of carrying the overnight load for a brief period of time or limited to only critical loads thru the night

For technology comparisons, it still comes down to cost and proven performance

• Lithium is on a rapid price decline, but this doesn’t mean all storage technologies are on a rapid price decline

• Will lithium’s price decline “overcome” its limitation in duration or will longer duration technologies commercialize and compete?

Trends, Opportunities, Challenges

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We are still in a position where the technology being chosen may not be the best

for the application. The current technology of choice

may win by overwhelming alternatives

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Where is Solar + Storage Going to be Located?

Trends, Opportunities, Challenges

Today it’s targeted at residential & commercial locations. A customer segment is going to want a battery coupled with solar on their premise – is this the best location?

Where to place solar + storage is not be an either/or discussion but rather a discussion of where is the best place for the application – or piece of the application

Despite business and financing models being set up for residential and commercial deployment by manufacturers, such as YieldCos, does it really matter to a manufacturer where it is sold?

Best location for Solar-Storage?

Wind Farms Photo Voltaic

Generation Transmission Distribution Consumer

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How should utilities view the Solar + Storage app?

– Will solar storage have a negative impact on the utility business model?

Only if utilities follow the “do nothing” alternative. Utilities may want to view the application as part of grid modernization and attempt to capture the corresponding funding

– Is there a way to rate base this application?

We see possibilities around resiliency. Precedent is being set in CA, Texas, New York for defining storage as a resiliency tool. Dollar values are potentially in the $Billions

Stakeholders are looking at Solar + Storage from different perspectives. DNV GL is completing a Use Case for Shared Resources in CA - solar on one side of the meter and storage on the utility side of the meter, or simply the utility gaining control of the storage device

– From a financing perspective, it can introduce opportunities to share funding as well between public-private financing options

– States, such as MA and NY, are looking at applications through such a lens

Are Utility Business Models Being Challenged by Solar + Storage?

Trends, Opportunities, Challenges

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Solar technologies have been around for over 25 years, large scale, advanced storage has not. However, storage technologies are trying to get wrapped into the same financing discussion

– Do financiers believe the lifetime promises being made by manufacturers?

– Are warranty packages being made available to cover the first 10 years of operation?

– Are the degradation factors understood in the market, based on time, duty cycle, and the potential to conduct multiple applications?

DNV GL is looking to help provide guidance in this area

– Financing entities are “calling” to manufacturers to get their Technology Reviews or “bankability” studies done immediately

– DNV GL is developing a tool, Battery XT, to help understand the degradation characteristics of batteries

Financing Challenges For Solar-Storage Applications

Financing and Testing

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As in financing of solar+storage applications, because storage is being “coupled” with solar, it doesn’t mean that storage has the hours of operation that solar has

Testing of the applications! There are differing technologies and one conclusion can’t extrapolate to all technologies.

Activities occurring in this area

• Safety

– Storage is being placed on the residential side of the meter. In response, working groups such as the Energy Storage Safety Working Group (ESSWG), led by the DOE and supported by DNV GL, are providing guidance to installers to ensure safe operation and installation

• Verification of systems and components

–Labs, such as BEST Commercialization & Test Center and Solar Facilities are starting to examine the combined applications to verify operations of the batteries as well as components such as inverters.

Testing is Still Needed in These Applications!

Financing and Testing

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Solar+Storage applications are beginning to fit economic models

The combined application is also defining itself as a grid asset that can solve grid problems as well as provide value to customers

At this stage, its deployment is going to be part of our future, and there are actions that need to be taken today to address this scenario

– Utilities need to plan for how they are going to approach the market and their customers

– New business models will be introduced with the application and analysis needs to be conducted

– As the application commercializes, 3rd party financing and requirements are being mapped onto storage systems

– Storage is still relatively immature for larger applications, more testing and understanding of its operation is needed

Conclusions

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Thank you.Learn more about DNV GL’s solar storage expertise here.

Richard FioravantiHead of SectionDistributed Energy ResourcesDNV GL Energy