CPUC Revamp Trying to Kill Advanced Energy Storage?

The California Public Utility Commission (CPUC) is revamping the rules for the Self Generation Incentive Program (SGIP) with a major, and completely inappropriate, performance requirement for Advanced Energy Storage.

The SGIP provides rebates for various on-site distributed energy resources (DER).  Energy Storage was added to the list of DER's several years ago after much work by VRB Energy (the former manufacturer of the VRB-ESS® now made by Prudent Energy) Strategen and Utility Savings & Refund, LLC (US&R).    One requirement of a qualifying Advanced Energy Storage system (AES) was the ability to provide at least 4 hours of energy and be capable of hundreds of daily charge and discharge cycles.  Strategen, representing the California Energy Storage Alliance (CESA), later tried to ease these performance requirements to a single charge-discharge cycle once every three days.  The CPUC relaxed the cycling requirement for fuel cell applications but retained the 100's of cycles performance for wind applications.  In addition, the CPUC required metering for energy storage to record performance - which was not required for other technologies.

However, the CPUC never required the AES to cycle every day or otherwise "perform" to certain criteria, simply to be able to perform.  This was important for the application of AES to the specific on-site load profile of an end-user and the applicable utility tariffs.  For example, if the facility was closed on the weekend, then it would be pointless to charge and discharge the AES during the weekend.  However, if the electric load was widely variable during the day, then the ability to partially charge and discharge repeatedly would help the facility smooth out its load profile and avoid increasing it's demand on the utility system.

The CPUC has been criticized for funding many projects under the SGIP that produced little electric generation, some being abandoned shortly after installation, so they've decided to condition part of the funding on performance (see pg 32 and 68 of the draft).  That may make sense for a traditional generator, like cogen or solar, but is completely inappropriate for storage.  Energy storage "stores" energy, it does not "generate".  Some energy is lost in the charge - discharge process, which is not important if electricity is being shifted from a lower value time period to a higher value period - like a summer night to a summer hot day.

The CPUC is now requiring a 20% capacity factor for storage, which essentially means it must average a discharge of 4.8 hours per day (24 hours per day * 20% = 4.8 hours).This is a major performance change for storage and may further discourage AES installations.  Not only has the performance standard been increased 20% from 4 hours to 4.8 hours of electricity, but cycling every day would cause the installation to lose money.  For example, the E-20 industrial tariff for PG&E has a kWhr charge of $.078 at night and $.087 during the day.  Assuming 70% efficiency for the charge cycle, comparable to pumped hydro, The AES would need 10 kWhrs of electricity at night ($.78) to deliver 7 kWhrs during the day ($.609). This results in a loss of -$.017 per kWhr delivered!

An arbitray performance standard like this disincentivizes AES installations.  Without the imposed standard, the end user will optimize the AES to reduce utility bill demand charges, summer on-peak kWhr costs, improve power quality and reliability, and make the AES available for other grid support services.  Requiring daily cycles, in excess of current capacity requirements, will impose additional costs on the installation and require the AES to be operated nearly half the 24 hour cycle (charge and discharge), thus reducing its availability for other valuable grid services such as demand response or emergency power.

The CPUC haslong  recognized AES as a valuable DER that needs to be encouraged, but imposing new and costly additional requirements will not encourage new installations and may kill-off the necessary demonstration and pilot projects the SGIP is meant to encourage.

CPUC Issues Rebate Revamp for Storage

Well, they've done it. After much delay, the California Public Utilities Commission (CPUC) has finally issued their draft decision in Rulemaking 10-05-004 to modify the Self Generation Incentive Program (SGIP) and the rebates available for Advanced Energy Storage (AES).

The California SGIP program was originally based on state legislation designed to reduce peak energy demand. SGIP rebates were made available to many variations of on-site generation, including solar and natural gas co-generation. Subsequent legislation significantly altered the program, limiting rebates to wind and fuel cell projects. US&R successfully worked with VRB Power, Inc. and Strategen to include rebates for AES. US&R helped develop over 32 MWH of SGIP eligible projects in 2010.

However, recent legislation, SB 412 (2009), required a makeover of the program, basing incentives on green house gas (GHG) reductions instead of reducing peak demand. In addition, certain fuel cell developers, utilizing off-site bio-gas, began to monopolize the program. This resulted in a complete suspension of the program December 2010 until the new rules could be implemented.

The recent decision will be subject to further comments and workshops before it becomes final. We cannot know when new applications will be accepted, but we hope it will be soon. Here are the key points affecting AES:

1. Energy storage will still be an eligible technology in spite of some efforts to disqualify it based on no GHG reductions.
2. In addition, the draft decision will incentivize stand alone installations. The original program required AES to be associated with fuel cells or wind. This will remove that restriction.
3. The incentive will remain at $2 per Watt = $2,000 kW. Other technologies have had their incentives reduced, but storage will retain their previous incentive level.
4. Measurement and verification will increased, but the extent and cost will be determined in subsequent workshops.
5. Size limit restrictions have been lifted. Incentives are based on the first 3 MW of capacity, but installations over 5 MW had been disqualified entirely. That will no longer apply.
6. Generation will be allowed to be exported, with up to 25% not used on-site.
7. Substantial application fees will be required.
8. The SGIP incentive cannot pay for more than 30% of project cost - unless the project is ineligible for a tax credit.
9. Energy efficiency audits will be required - although the project will not be required to implement any recommendations.
10. Payment of the SGIP will no longer be 100% upon completion of the project. Instead, only 50% will be paid up front, with the remainder paid over 5 years based on kWh production. A capacity factor of 20% will be used for AES.

These are substantial changes for the SGIP program. We will be tracking and reporting on the final revisions.

CESA v. Itron, How Hard is it to Put Energy Storage in a Box?

The California Public Utilities Commission hired Itron, Inc. to prepare a report on the “Cost-Effectiveness of Distributed Generation Technologies” as part of their on-going project to revise the Self Generation Incentive Program, which has provided rebates for energy storage installations. According to the California Energy Storage Alliance (CESA), they got it completely wrong when it comes to energy storage.

Legislation funding and defining the SGIP was changed by California Senate Bill 412 (SB412), and that has thrown a monkey-wrench into the program. (History of the SGIP program here...) US&R worked with VRB Power Systems, Inc. to open the SGIP for energy storage in 2008. Challenges to the energy storage provisions, the demise of VRB Power and subsequent purchase by Prudent Energy, and the ARRA stimulus program confused implementation, but things finally started to role in 2010 as the Gills Onions project was announced, and at least 5 energy storage projects were approved for the SGIP. However, the new legislation required the CPUC to revise and open the program to additional technologies, and all new applications were suspended to prevent the existing funds from being depleted before the CPUC finished their work.

The Itron report was supposed to provide a basis for evaluation. However, an analysis is only as good as it's assumptions, and Itron created a false energy storage straw man for evaluation, leading to cost effectiveness conclusions that severely reduced the apparent value of energy storage for SGIP incentives.

Some of the points made by CESA in their filing to the CPUC:

• "...the Itron Report incorrectly assumes that Li-ion technology, one specific type of electrochemical battery storage technology, is representative of all energy storage technologies. This is done even though the Itron Report itself says that advanced lead acid, Zn/Br flow batteries and emerging Zn/air and Fe/Cr were generally found to have potential for low capital expenditure and the smallest gaps to support the energy storage business case. The Itron Report also arbitrarily and inexplicably assumes that Li-ion is a good match for an application that requires a four-hour duration for load shifting purposes."
• "Generally speaking, however, Li-ion is not the most cost-effective solution for long duration, multi-hour peak shifting, nor are Li-ion’s relatively minor volumetric advantages particularly needed for grid storage applications."
• Also, "The discussion of energy storage in the Itron Report makes it painfully clear that the report’s authors failed to understand the sources of value that would truly compensate system owners for their investment in grid connected energy storage. The Itron model does not simulate the way a storage system owner would operate the system in real-world scenarios. Such projects would rely entirely on electric bill savings results from shifting consumption of electricity from peak to off-peak periods, customer demand charge savings, and the SGIP incentive itself."

Essentially, CESA points out that the SGIP is used to incentivize customer installations. However, Itron used an energy storage technology currently being deployed, with good success, at utility scale, and for applications (frequency regulation) that are irrelevant for the end-user.

The SGIP revision process, which began in January 2010, now appears to be stuck in a quagmire of expensive consultant reports that are trying to compare apples to bananas, and not just energy storage bananas. In the meantime, projects that could be addressing the peak load management objectives of the program are stalled while the consultants fight over the GHG emission reduction benefits of various technologies.

CESA points out that energy storage has already been evaluated for the SGIP. Systems like the VRB® meet those requirements and have already been approved for funding. Unfortunately, until the current process is brought to a close, the opportunity to install and evaluate new storage technologies has been severely reduced.

Emission Off-Sets or Energy Storage?

The California Public Utilities Commission (CPUC) is currently dealing with the problem of disappearing electric generation in the Southern California area. Due to environmental concerns - emissions and water - many older fossil fueled plants are being retired,and it's not possible to permit new plants. 12,000 MW of capacity is at risk and system reliability is a great concern of the CAISO (California Independent System Operator). More information can be found here...

The only answer seems to be finding some exemption for new plants with emission off-sets.

However, the California Energy Storage Alliance (CESA) has suggested considering energy storage as a partial solution to the problem. "Grid storage displaces less efficient, dirtier peaker generation by time-shifting more efficient, cleaner base-load generation to peak periods. This results in substantial system-wide air quality benefits."

Janice Lin, co-founder and director of CESA, has prepared a white paper that details he benefits of grid connected energy storage. The CESA comments and the white paper can be found here...

The VRB-ESS(tm) would be an ideal asset to address the need for on-peak power in Southern California. Here's hoping that the staff at the various alphabet soup energy agencies include energy storage in their studies.

Note: The Vanadium Redox Flow Battery - VRB(R) - by Prudent Energy has a long life of 10 - 20 years and is not diminished by multiple charge - discharge cycles to 100% of its SOC (state of charge). The VRB flow battery can be distributed in MW size where needed, with minimal permitting and no air quality impacts. Hours of MW storage are available, with fast response, and the vanadium redox technology is not at risk for fire, explosion or damage from over or undercharging. More information is at our website - Utility-Savings.com.

CAISO Report - Integration of Renewable Resources

CAISO - the California Independent System Operator - is constantly worrying about the impact of renewable wind and solar generation on the California grid. It's their job as the grid operator - gotta keep the grid stable and the lights on. The problem with intermittent - oops, sorry, variable generation - "variable" is the new PC term for intermittent - it just sounds so much better - the problem with variable generation is that it is "variable". The grid can't dispatch it when it is needed, like a natural gas peaker plant. It just happens when it wants to happen, whether it is convenient or useful or not.

As a result, CAISO is always studying the problem, and the latest report just came out. Here are some of the highlights:

• First, you'll be happy to know, is that the California grid can handle 20% penetration of renewable resources. Of course, there are some caveats. For example, the increased production of solar and wind energy will displace traditional thermal generators, so their revenue will decrease. In other words, we are likely to put the current generators out of business. Hope you are not invested in one!
• At the same time, we are going to need to keep those plants that are now uneconomic, because we need them to balance out the rapidly changing wind / solar PV generation.

"The integration of variable energy resources will require increased operational flexibility—notably capability to provide load-following and regulation in wider operating ranges and at ramp rates that are faster and of longer sustained duration than are currently experienced. Forecast uncertainty associated with wind and solar production will increase the need for reservation of resource capacity to ensure that these requirements are met in real-time operations...In providing these capabilities, the existing and planned generation fleet will likely need to operate longer at lower minimum operating levels and provide more frequent starts, stops and cycling over the operating day."

Exec. Sumary, pg. iii.

Again, the existing fleet of generators is going to loose money, "The lower capacity factors combined with the reduced energy prices under 20 percent RPS may result in a significant drop in energy market revenues for the gas fleet in all hours of the day and in all seasons." - pg xiv, but we need the entire fleet to keep renewables from crashing the grid, "The additional regulation requirements appear to be well within the capabilities of the existing generation fleet."

So, as long as we keep the current, money - loosing generators, and work them harder, for less money, we can add variable wind and solar without black-outs. Of course, ramping them up and down so much will increase their cost - for less revenue - and increase their emissions - adding pollution when the renewables are supposed to be reducing emissions.

The trade-off on emissions is supposed to come from lower over-all energy generation. Since they will produce less energy, the increased emissions from inefficient ramping will still be less than if they were at full production, although the impact from this type of operation was not calculated."The table also shows a reduction in CO2 emissions from combined cycle generators due to the reduction in operations, although this was calculated using a single emissions factor multiplied by energy output, and did not consider the potential for higher emissions at less efficient levels of operations." pg.86.

And the report made certain assumptions about the status of this generation fleet, that it will increase in capacity, not decrease:

• "Table 2.10 shows the new and planned thermal resources that were included in the analysis. These resources were included as they are currently under construction and have little or no risk of not being available in the 2012 timeframe. No resource retirements were modeled, nor were sensitivities conducted for the status of once-through cooling (OTC) plants. OTC plants are slated to be retrofitted or shut down after 2013 and are not expected to affect the 20 percent RPS integration. However, they could affect renewable integration after 2013, and hence are being examined in the ISO’s 33 percent RPS operational study."

So, the bottom-line seems to be that we should be okay until 2012, because we can thrash our current peaker plants up and down and avoid grid collapse. But all bets are off for any increase over that.

We think increased penetration of energy storage is a better balancing strategy then building more natural gas peaker plants. Using energy storage, like the VRB-ESS™, allows variable resources to be fully integrated without increasing emissions. As we plan for 2020, we hope the regulatory agencies will continue to look toward clean technology resources to integrate renewables, and keep clean energy "clean".

Efficiency of Pumped Hydro Contest - Dud!

My contest to try and get some real figures on the round-trip efficiency of pumped hydro was a dud! No studies, no real world numbers. I heard from a few helpful readers that had projected efficiency numbers based on new turbines from Japan, but no information on existing projects. I find this highly interesting because new advanced energy storage systems, like the VRB-ESS(tm), are being compared, sometimes unfavorably, against pumped hydro. If PH is the gold standard for highly efficient time-shifting power generation, then one would think there would be substantial and easily accessed information on real-world experience.

I may try this again. In the meantime, if any reader has any resources on the subject, please leave a comment.

While we're on the subject, here are a couple of interesting points on the electricity in - electricity out efficiency of the VRB. The standard metric is 65% - 75%, AC-AC. However, the actual round-trip efficiency depends on the application.

For example, the lithium battery providers, like A123 and Altairnano, and flywheel providers, like Beacon Power, are advertising 90% efficiency. However, this is for a very limited pulse of power in the middle of their state of charge (SOS). The application is used for balancing the 60Hz frequency of the grid by pulsing to full capacity - in megawatt size - for only 15 minutes. Apparently, just about any battery system, including lead acid, could pulse like this, in the middle of their SOC, with high efficiency and many cycles.

This applies to the VRB-ESS as well. The greatest efficiency loss occurs at the end of the charge cycle, as it takes more work to find "uncharged" vanadium ions to "fill up the tank". In other words, if a facility had installed enough tanks of electrolyte to store 8 hours of energy, but only used the first 6 hours, then the round-trip efficiency would be closer to 80% than 70%, and if the VRB-ESS was used for the same application as the lithium systems, the efficiency would be the same - in the 90% range. However, one of the key distinctives of the VRB is the ability to fully cycle a nearly unlimited number of times without loss of capacity. Capacity is dependent on the amount of electrolyte. So, an application could chose 30 minutes of storage or 8 hours; it's simply a function of how much electrolyte is stored in the tank. After thousands of full cycles, whether on a 30 minute tank of electrolyte, or an 8 hour tank, the VRB is still able to provide full capacity and for the same amount of energy.

Contest! Prizes! Discover Efficiency of Pumped Hydro!

Please help us ferret out (apologies to mink and weasel lovers!) information on what appears to be a great mystery - the round trip efficiency of Pumped Hydro Energy Storage. Prizes will be awarded!

The round trip efficiency of storage technologies are of great interest and discussion. Some are concerned about "wasting energy" when storing electricity. "Losing" 30% of the electricity going into a storage facility is a "non-starter" for them. However, others counter by pointing out the greater value of electricity delivered on-peak, even if some energy is lost by storing off-peak power.

The number one storage technology in use today is pumped hydro. These are, usually, massive projects, where water is pumped up to a reservoir at night, when power is cheaper, and allowed to flow downhill during the day. The turbine used to pump the water uphill is then spun backwards by the water coming downhill, generating electricity. Whenever energy storage is discussed, pumped hydro is held up as the ideal answer due to it's large storage capacity, low emissions (although some have begun to be concerned about the amount of methane released from underwater biomass), fast response (although only when generating electricity) and high efficiency. However, your humble blogger has had a difficult time finding authoritative literature on pumped hydro efficiency, and I'm hoping to tap the resources of other, more knowledable members of the industry, by tempting them with fame and fortune.

As an example of what appears to be unsupported but accepted wisdom, NREL recently published their technical report on energy storage, and said this about pumped hydro:

"PHS plants can achieve round-trip efficiencies that exceed 75% and may have capacities that exceed 20 hours of discharge capacity. (pg 43)" However, even though this is supposed to be a technical report, no citation was offered.

Again, the Electricty Storage Association indicates efficiencies in the 70 - 85% range, but no authorities or links are provided.

I would tend to accept these statements as accurate, not knowing any better, but I have been at conferences where such claims have been hooted at by participants, with counter claims of less than 65%. This has piqued my interest in getting some authoritative answers, especially since the VRB-ESS achieves efficiencies in the 70 - 75% range when used for the same purposes as PHS. Obviously, if efficiencies of 70% or less are not a problem when applied to PHS, then higher efficiencies from a flow battery, like the VRB-ESS, would be even more desireable. If, however, PHS is much less than 70%, then alternative storage systems become even more attractive. But we need to know the facts before we can have an informed discussion.

Hence my contest. We will award prizes and fame to those that provide the most useful resources discussing PHS efficiency. Unless you wish to remain anonymous, we will announce the three commentators that provide the best citations or other authoritative resources. And, the winners will receive their choice of the Enerdynamics publications, "Understanding Today's Electricity Business" or "Understanding Today's Natural Gas Business". Both publications are valued over $60!

As a bonus, anyone that also provides authoritative analysis resources on the actual per kWhr cost of PHS will receive both books = $120!

I'm having a little bit of fun with this, but it looks like a good project given the dearth of information, or so it seems to me, on pumped hydro storage efficiency. Your comments will be posted below, therefore contributing to the general store of knowledge, unless you prefer to email your offerings to ctoca@utility-savings.com. I will be the sole judge of the winners - since it's my contest - and we will close the contest on Thursday, April 15th, so we won't continue to "tax" your patience!

Please click the "Post a Comment" link below or email your replies. Thanks for the help!