[Senate Hearing 111-335]
[From the U.S. Government Publishing Office]
S. Hrg. 111-335
GRID-SCALE ENERGY STORAGE
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HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE ROLE OF GRID-SCALE ENERGY STORAGE IN MEETING
OUR ENERGY AND CLIMATE GOALS
__________
DECEMBER 10, 2009
Printed for the use of the
Committee on Energy and Natural Resources
U.S. GOVERNMENT PRINTING OFFICE
55-677 PDF WASHINGTON : 2010
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska
RON WYDEN, Oregon RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
EVAN BAYH, Indiana JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Huber, Kenneth, Senior Technology and Education Principal, PJM
Interconnection................................................ 42
Koonin, Steven, Under Secretary for Science, Department of Energy 5
Mainzer, Elliot, Executive Vice President for Corporate Strategy,
Bonneville Power Administration................................ 49
Masiello, Ralph D., Senior Vice President, Energy Systems
Consulting, KEMA, Inc.......................................... 30
McGrath, Robert, Deputy Laboratory Director, Science and
Technology, National Renewable Energy Laboratory, Golden, CO... 37
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
Udall, Hon. Mark, U.S. Senator From Colorado..................... 4
Wellinghoff, Jon, Chairman, Federal Energy Regulatory Commission. 13
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 3
APPENDIXES
Appendix I
Responses to additional questions................................ 63
Appendix II
Additional material submitted for the record..................... 91
GRID-SCALE ENERGY STORAGE
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THURSDAY, DECEMBER 10, 2009
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:01 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. OK. Why don't we go ahead and get started?
Thank you all for being here. We have had several hearings
in this committee on the topic of energy storage, but those
hearings were primarily focused on energy storage technologies
for the transportation sector.
This morning, we are turning our attention to the role of
energy storage for the grid. Let me just initially indicate
there has been a lot of interest here in the committee on it.
Senator Wyden has urged that we have this hearing. Senator
Udall has urged that we have this hearing. I appreciate them
and Senator Corker all being here. I know Senator Murkowski is
on her way as well and will be here shortly.
We are told that grid-scale energy storage technologies
have the potential to transform our grid, enabling energy to be
delivered exactly when it is needed, regardless of when it was
produced, and providing a new toolbox of capabilities for
managing the grid. These capabilities will allow us to run our
grid more efficiently and reliably and provide better power to
customers.
They will allow us to maximize the capacity of our existing
generation and transmission and distribution assets, reducing
the need to build more, and we are also learning that energy
storage technologies will be instrumental in achieving large
amounts of renewable generation on the grid by acting as shock
absorber for fluctuations in power and providing firm
dispatchable energy.
The Recovery Act that was passed by Congress only 10 months
ago has been instrumental in jumpstarting the development of
these grid-scale energy storage technologies. The Department of
Energy's Office of Electricity last week announced funding for
16 utility-scale energy storage demonstration projects aimed at
proving out the technical feasibility benefits and business
case for these technologies.
My own State is participating in two of those demonstration
grants to demonstrate the use of flow batteries for firming up
renewable power. I also know that the Department of Energy is
pursuing several breakthrough grid storage projects through
ARPA-E and through the Office of Science.
These efforts are positioning our country as a world leader
in grid-scale energy storage research and development, ensuring
that the capabilities of these technologies are used to our
best advantage and swiftly deployed on the grid where it makes
sense to do so and where it will help us to meet our clean
energy goals, but will also ensure that we remain leaders in
this area.
So I look forward to hearing from our witnesses. We have
two distinguished panels today--first, a panel of Government
officials who can tell us the state of policy and action in the
executive branch and then a second panel of experts as well.
Let me defer to Senator Murkowski for any comments she has.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman.
Good morning. Welcome to our witnesses, and I appreciate
the opportunity this morning to continue our series of very
informative discussions. The topic this morning, grid-scale
energy storage has the potential to transform the way that we
generate and receive electricity.
Energy storage capability has already changed the way that
we live. If you look at those of us around here with our
BlackBerrys and our cell phones. I think we recognize how
frustrating it is when we forget to charge it up, and make sure
that we have it functioning at full capacity every day. But it
is easy to forget that it wasn't too long ago that we actually
had pay phones here in the Dirksen building. My kids don't even
know what a pay phone is.
For about a half a century now, our Nation's power delivery
system has operated by carefully balancing in real time
generation and load, and we have been using the just-in-time
delivery system for immediate generation and delivery. That is
all about to change. It has to, because we are changing the way
that we use the grid.
As we seek to lower our emissions, we have an ever-
increasing amount of renewables and distributed generation that
are coming online. We are also moving toward the
electrification of our transportation sector. Integrating
variable resources like wind and solar has challenged our grid
operators by often producing too much energy when it is not
needed or not enough energy when it is needed. We need to make
our grid smarter and change how we manage and control the
delivery of electric power.
Cost-effective grid-scale energy storage is part of the
solution to these energy challenges. Energy storage can firm up
intermittent renewable energy sources and promises to improve
the efficiency, the reliability, as well as the security of
delivering energy.
Just as we need a diverse energy supply, we need a wide
array of energy storage technologies, everything from pumped
hydro, flywheels, and batteries to compressed air energy
storage. Even plug-in vehicles can play an important role in
shifting load to off-peak hours.
Coming from Alaska, I can certainly appreciate that pumped
hydro has been the energy storage workhorse, providing the most
storage capacity that can deliver power during peak demands. It
often doesn't get the credit that it deserves. Today, in
addition to learning about the emerging technologies, I would
like to hear a little bit more about increased opportunities
for this effective and proven resource.
As you note, Mr. Chairman, we have got an impressive panel
of witnesses today. I welcome you, Chairman Wellinghoff, and
Dr. Koonin, back to the committee and look forward to the
testimony that we will hear. I again look forward to helping
establish the path forward on the development of policies that
will support the development, the deployment, and the
regulation of grid-scale energy storage systems.
Thank you.
The Chairman. I know there is a lot of interest here by
members. Let me just allow each member to make any statement
they would like to at this point.
Senator Wyden, did you want to make a statement?
STATEMENT OF HON. RON WYDEN, U.S. SENATOR
FROM OREGON
Senator Wyden. I did, Mr. Chairman. Thank you for your
thoughtfulness. I know we have got witnesses we want to go on
to.
I think this is an extraordinarily important topic because
I don't think the people of this country, nor those of us in
public office recognize that we are wasting so much of our
treasure trove, this extraordinary array of renewable energy
resources. We want to have carbon-free wind turbines and solar
cells and, in my part of the country, wave and tidal energy.
Yet we fritter away so much of this extraordinary resource
because we have not set in place, as Senator Murkowski notes,
the full array of storage technologies that would allow us to
capture the full potential of these renewable resources.
There is something pretty bizarre, even by the standards of
the Beltway, of throwing away the economic value, for example,
of renewable energy because the wind is blowing or the tide is
changing at 3 in the morning when demand is low.
So what we have got to do is figure out a way to not
devalue, for example, the full potential of renewable energy,
which is what you do because we can't sell it when prices are
highest. We shouldn't end up spending more integrating it with
nonstorage technologies, which is what Senator Murkowski talked
about, and I think we can do this in a bipartisan way.
Earlier this year, Senator Menendez, Senator Collins, and I
introduced legislation--S. 1091, the Storage Act--to provide
tax incentives to deploy storage energy technologies. I note we
have got a number of colleagues from both the Energy and
Finance Committees. Senator Shaheen, Senator Dorgan, Senator
Kerry, recently Congressman Thompson from California recently
introduced the legislation. I think we can move forward in the
storage area in a bipartisan way.
Our bill provides a 20 percent investment tax credit for
grid-connected energy storage systems. It is technology neutral
so that all of the various technologies--pumped hydro,
compressed air, batteries, flywheels, and new technologies--all
of them would have a chance to compete in an open marketplace.
The bill provides incentives for businesses and homeowners to
install their own energy storage systems to store renewable or
off-peak energy, including plug-in vehicles.
So I think the point is, as we move forward, and I believe
this can be done in a bipartisan way to build a clean energy
economy, let us make sure we do it in a way that is smart and
not wasteful.
A key part of that equation is what you and Senator
Murkowski are examining today, and I very much appreciate your
holding the hearing.
The Chairman. Very good.
Senator Corker, did you have any comments you would like to
make?
Senator Corker. I think you know the answer to that. I look
forward to hearing from the witnesses.
Thank you.
The Chairman. All right. Senator Udall, how about you?
STATEMENT OF HON. MARK UDALL, U.S. SENATOR
FROM COLORADO
Senator Udall. Thank you, Mr. Chairman.
If I might, I have a longer statement I would like to ask
unanimous consent to include in the record.
The Chairman. We will do that.
Senator Udall. Let me make a few brief comments. I want to
thank you and the ranking member for holding this hearing.
I would like to associate myself with Senator Wyden's
remarks. I know that these topics can seem dry. But to use a
phrase that has been in the parlance this year, this could very
well be a game-changer.
In the 2009 National Electricity Delivery Forum here in DC,
participants were asked what will be the most transformative
technology for the electricity industry. The answer, the most
frequent answer was energy storage technologies, including
plug-in hybrids. It wasn't an integrated smart grid, as
important as that is, or transmission superhighways.
I am glad that the chairman of the FERC is here because I
want to hear his thoughts on regulatory issues. I have come to
understand that the technologies are almost more advanced than
the regulatory questions that we have to answer, that there are
a lot of disincentives in the systems right now to using
storage technologies.
Then I am also pleased to see the Under Secretary here, and
I am keen to hear about the Recovery Act storage projects and
where we stand with those.
But again, Mr. Chairman and Ranking Member Murkowski, thank
you for holding this important hearing.
[The prepared statement of Senator Mark Udall follows:]
Prepared Statement of Hon. Mark Udall, U.S. Senator From Colorado
Thank you Mr. Chairman. I appreciate your agreeing to hold this
hearing and of course all the hard work of your staff. I requested it
to draw attention to what the federal government is doing to advance
storage technologies as well as what regulatory changes might be
appropriate for storage facilities on the electrical grid.
I recognize that these topics may seem dry, but what we are talking
about today is potentially game-changing. If we find a way to store the
power generated from the sun and the wind, really all energy resources,
then we can transform the energy industry forever.
At the 2009 National Electricity Delivery Forum here in DC earlier
this year, participants were asked, ``What will be the most
transformative technology for the electricity industry?'' The most
frequent response was ``Energy storage technologies, including plug-in
hybrids.'' It scored higher than every other technology, including ``An
integrated Smart Grid'' and ``Transmission superhighways.''
Energy storage can address problems that are already occurring that
impact our economy and security. Power interruptions cost the United
States economy roughly $80 billion per year. And these power outages do
not have to last long. Two-thirds of those losses came from
interruptions lasting less than five minutes. Storage can help reduce
those outages, increase our economic productivity, and save consumers
and businesses money.
I am glad that Chairman Wellinghoff is here to talk with us about
regulatory issues related to energy storage. I am especially interested
to hear his thoughts on how best to structure cost recovery for storage
projects to account for all the benefits that storage provides to the
electrical grid.
I am also pleased to see Undersecretary Koonin here to talk about
what the Department of Energy is doing to advance energy storage
technology, including the recently announced Recovery Act funding for
storage projects. Getting those initial projects built and operating
will provide extremely valuable experience for future investments.
It just seems to me that energy storage is poised to help us no
matter what our energy supply mix is going forward--wind, solar,
nuclear, natural gas, or coal with carbon capture and sequestration.
Whether it is making the electrical grid more reliable, deferring new
line construction, or reducing transmission and distribution
congestion--energy storage has a role to play. Or maybe the goal is
reducing carbon emissions, meeting peak demand, or integrating greater
amounts of renewable energy--energy storage can help us face those
challenges as well.
I look forward to today's testimony to hear ways of partnering
together to solve these challenges. I also look forward to hearing
ideas of how to effectively bring energy storage technologies to the
marketplace.
Thank you, Mr. Chairman.
The Chairman. Senator Shaheen.
Senator Shaheen. Thank you, Mr. Chairman. I will reserve my
comments for the questioning period.
The Chairman. Very good.
Let me introduce the first panel. It is Dr. Steven Koonin,
who is the Under Secretary for Science in the Department of
Energy. Thank you for being here.
The Honorable Jon Wellinghoff, who is chairman of the
Federal Energy Regulatory Commission. Thank you for being here.
Dr. Koonin, did you want to start and take 6 or 8 minutes,
whatever time you need to make the points you think we need to
understand? Then I am sure we will have questions.
STATEMENT OF STEVEN KOONIN, UNDER SECRETARY FOR SCIENCE,
DEPARTMENT OF ENERGY
Mr. Koonin. Sure. Thank you.
Chairman Bingaman, Ranking Member Murkowski, members of the
committee, I appreciate the opportunity to discuss grid-scale
electric storage with you this morning.
Electricity is the cleanest and most convenient form of
energy available for residential and commercial use. For that
reason, it continues to grow significantly relative to other
forms of energy in those sectors. Challenges in generating and
using electricity stem from the great variation of demand
during the day, which can double from early morning to late
afternoon.
Since flowing electricity is perishable in that unused
current cannot easily be stored for later use, generators must
successively be turned on during the day as demand increases
and then idled again in the evening. Grid assets are, thus,
idle roughly half the time, and the system must be designed for
a rarely achieved peak demand.
Indeed, our power system operates at only about 40 percent
of its capacity. Yet it continues to require additional
resources as demand grows.
A broader deployment of energy storage technologies well
integrated into the grid would smooth the daily load cycle and
allow our current infrastructure to be used much more
efficiently. Storage on shorter timescales could provide for
frequency regulation, peak shaving, and regional balancing.
Reduced losses, improved power quality, increased capacity
factors, and deferred capital investment would all result.
Grid-scale storage would enable a more complete exportation
of the intermittent wind and solar generation that we aspire to
increase. The optimal grid-scale energy storage technology
would be rapidly charged and discharged with small losses of
energy, durable over many cycles, physically compact, and
significantly less expensive than the generation capacity that
it supplements.
Unfortunately, we are not yet close to that ideal in part
because of fundamental physical obstacles. The simplest and
most common grid-scale storage technology is to raise or lower
water. The challenge for such pumped hydro systems is that
gravity is pretty feeble.
Raising 1 cubic foot of water by a typical 300 feet stores
less than 1/100 of a kilowatt hour. So, to do this at scale,
you need a suitable topography, and you also need a lot of
water.
Another possibility is underground storage of compressed
air for which appropriate geology probably exists in much of
the Nation. Although this technology has been demonstrated for
decades, 1 cubic foot of air at a typical 150 atmospheres still
stores only 2/10 of a kilowatt hour of energy. So, again, you
need a lot of air.
A cubic foot of batteries can store 100 times more energy
than that in its electrons and ions, although at roughly 100
times the cost currently.
All of these technologies should be compared to the 1
kilowatt hour of chemical energy contained in a cubic foot of
natural gas, which costs just a penny and weighs essentially
nothing. Of course, that chemical energy in the gas is
extracted irreversibly and with a carbon footprint.
So despite the challenges and current high cost, storage
technologies can be of value in managing the grid. So what do
we need to do in order to realize more effectively the
potential for storage in managing the grid?
First, because utilities are appropriately cautious, we
need to better demonstrate the potential of existing
technologies. Department of Energy demonstrations under the
Recovery Act are boosting such activities 50-fold and
encompassing the complete range of technologies and scales from
a single battery project in Pennsylvania to a 300-megawatt
compressed air project in California.
These projects will provide much more operational
experience and define best practices, and these will facilitate
greater storage deployment efforts nationwide. They will also
help us better quantify the economic dimension of the storage
issue.
Second, we should be pursuing basic research to enable the
next generation of storage solutions. Material science to
synthesize and understand novel nanoscale materials tailored to
specific electrochemical properties is the highest priority
here. An out-of-the-box aspiration would be the reversible
storage of electrical energy in chemical bonds.
You know, right now, we can use electrical energy to
electrolyze water and produce hydrogen, compress and store that
hydrogen, and then convert that hydrogen back into electricity
using a fuel cell, for example. However, it is terribly
inefficient currently and consequently uneconomic.
Research to do that electricity to chemistry back to
electricity transformation would be truly game-changing. Such
work would lead to low-cost storage devices with higher energy
densities, cycle lifetimes, and reliabilities.
Then, finally, we need a deeper and more integrated
systems-based understanding of grid structure and dynamics.
Storage, demand management, peaking generation, real-time
analytics, and real-time grid control are all tools that can be
deployed to create a better grid. Understanding the synergies
among them and their optimal deployment through data
collection, analysis, and deployment is a task that we are only
beginning to attend to through programs underway in the
Department of Energy.
You know, as a theoretical physicist, I have been looking
carefully for the last months for a theory of the grid, a
simple, synthetic framework that you can use to get your arms
around the concept, and I am sad to say I haven't yet found it.
So, I look forward to helping perhaps stimulate programs to
develop that so we can better understand how to integrate
storage peaking generation, transmission grid management,
demand management into a much more efficient system than we
have currently.
With that, thanks for your attention.
[The prepared statement of Mr. Koonin follows:]
Prepared Statement of Steven Koonin, Under Secretary for Science,
Department of Energy
Thank you, Chairman Bingaman and members of the Committee, for this
opportunity to testify before you on grid-scale energy storage and its
role in achieving U.S. energy and climate goals.
Enhancing our national energy storage capability is an important
tool to improve electric grid reliability and resiliency. Adequate
deployment of storage technologies can materially reduce power
fluctuations, enhance system flexibility, and enable greater
integration of variable generation renewable energy resources such as
wind and solar power. Each of these is critical for achieving the
Nation's clean energy goals. Energy storage can also help stabilize the
price spikes that occur during times of peak demand, and can delay or
potentially avoid the need to construct capital intensive facilities
and infrastructure that use conventional fuels and produce greenhouse
gases.
The core function of energy storage is to bridge the gap that
exists between the characteristics of the generation and load
technologies within our electrical system. While some have identified
this gap as a challenge inherent only to variable generation renewable
energy technologies such as wind and solar, gaps and mismatches in
characteristics exist throughout the grid that stress our
infrastructure; these areas would benefit from the system flexibility
that could be introduced with deployment of grid scale energy storage
technologies. Power quality disturbances resulting from voltage and
frequency fluctuation are but one indication of the stresses that exist
in today's grid that could be ameliorated by increased energy storage.
However, the functional requirements of energy storage for power
conditioning are necessarily different than the functional requirements
of energy storage for load shifting or variable generation firming, and
it is therefore no surprise that different applications require
different storage technologies.
It is important to recognize that despite the large number of
existing energy storage technologies, there are only a limited number
of known fundamental phenomena that can be exploited to store energy;
currently these phenomena include gravity, electron movement and
storage, mechanical conversion, chemical manipulation of materials, and
thermal storage. The conversion process between energy states that
enables storage also defines the characteristics of each storage
technology, as well as the applications for which the technology is
best suited. Gravity storage via pumped water, where each acre foot of
water pumped contains more than 1 kilowatt-hour of potential energy for
each foot of elevation increase\1\, has the potential to store great
amounts of energy and is well suited for large energy applications such
as load leveling. Yet the requirement that water be moved limits the
short time response capability of the technology. Conversely,
mechanical kinetic energy storage via flywheels is particularly well
suited to the short term requirements of power conditioning; and while
flywheel systems can achieve very high energy densities\2\, the
physical constraints on flywheel size limit energy storage for extended
activities such as peak shifting. Given the variety of conversion
processes involved, it is critical that energy storage technologies be
matched to potential applications.
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\1\ Potential energy is calculated to the theoretical limit and
does not include efficiency losses from conversion between energy
states. The theoretical potential energy for an acre foot of water is
1.02 kilowatt-hours per foot of elevation increase.
\2\ Castelvecchi, D. (2007). Spinning into control. Science News,
vol. 171, pp. 312-313.
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The power requirements for energy storage range from of a few watts
for personal electronics, up to 100 kilowatts for hybrid vehicles, tens
of megawatts for ships, and hundreds of megawatts for electric utility
applications. The duration requirements for these same applications
covers a similarly broad range, from sub-second for power quality and
voltage regulation to hours or even a day when peak shaving and load
leveling. Among the most important requirements for stationary utility
storage, which ranges from half a megawatt to hundreds of megawatts,
are storage technologies that are low-cost and have a high cycle life,
meaning a large number of charge and discharge cycles. High
reliability, efficiency, environmental acceptability, and safety are
also important. Unlike requirements for electric vehicles where energy
density for conventional fuels is held as the benchmark against which
storage technologies are compared, energy density and footprint are
less important for utility storage.
Grid-scale energy storage received a significant boost through the
American Recovery and Reinvestment Act. On Nov. 24, 2009, the
Department announced it would award grants totaling $185 million to 16
energy storage demonstration projects\3\. This investment will
substantially accelerate the development and deployment of utility-
scale storage technologies, enhancing their market readiness in the
U.S.
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\3\ Project list available at http://www.energy.gov/news2009/
documents2009/SG_Demo_Project_List_11.24.09.pdf.
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The Department of Energy's Office of Electricity Delivery and
Energy Reliability has the lead within the Department for energy
storage research, development, analysis, and demonstrations associated
with the electric grid. The program works with numerous utilities to
ensure that projects reflect the industry's needs, and close
collaboration with the states has resulted in many jointly funded
demonstration projects. In addition, the Office of Science selected six
Energy Frontier Research Centers in the area of energy storage\4\ to
perform fundamental research relevant to battery technology. The
Advanced Research Projects Agency-Energy (ARPA-E) has also selected six
energy storage projects\5\ as part of its first solicitation for
breakthrough technologies. In fact, one project in the first ARPA-E
tranche that has captured people's imagination is a storage technology,
the liquid metal battery, so it is possible that storage is an area
where truly creative thinking is possible.
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\4\ Center for Electrical Energy Storage Center for
Electrocatalysis, Transport Phenomena and Materials for Innovative
Energy Storage Energy Materials Center at Cornell Northeastern Chemical
Energy Storage Center Center for Science of Precision Multifunctional
Nanostructures for Electrical Energy Storage Heterogeneous Functional
Materials Center
\5\ High-Amperage Energy Storage Device-Energy Storage for the
Neighborhood Planar Na-beta Batteries for Renewable Integration and
Grid Applications Low Cost, High Energy and Power Density, Nanotube-
Enhanced Ultracapacitors Metal-Air Ionic Liquid (MAIL) Batteries
Silicone Coated Nanofiber Paper as a Lithium-Ion Anode High Energy
Density Lithium Batteries
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grid reliability and frequency regulation
Reliability and power quality have become a necessity for the
modern digital society because digital equipment is extremely
vulnerable to short outages and even small voltage fluctuations.
Studies have shown that momentary outages, lasting less than 5 minutes,
cost the U.S. some $52 billion annually\6\. Energy storage with high
frequency characteristics and response rate enables seamless continuity
of power supply for a range of customers. One system of valve regulated
lead-acid batteries, that was developed with Department of Energy
funding, can protect energy intensive and highly sensitive facilities
like microchip plants with 10 megawatts or more for 30 seconds, after
which a back-up diesel generator can provide the necessary power.
Similar systems are widely used for high tech manufacturing, financial
institutions, and server farms. On a larger scale, a single 27 megawatt
nickel cadmium battery safeguards the transmission line from Anchorage
to Fairbanks by giving voltage support, preventing outages, and
providing reactive power locally.
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\6\ Hamachi-LaCommare, Eto. Understanding the Cost of Power
Interruptions to U.S. Electricity Customers. Lawrence Berkeley National
Laboratory (2004).
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The need for frequency regulation arises because generation and
demand are almost always out of synch. The resultant grid system is one
which regional operators are required to balance by adjusting the
frequency. Current management involves sending periodic signals that
allow participating fossil fuel generators to increase or decrease
production and reset the frequency. Fast storage performs this function
considerably better. Studies have shown that regulating frequency by
battery or flywheel storage is at least twice as effective and has a 70
percent reduced carbon footprint compared to use of fossil fuel
generation\7\. Technical feasibility was shown by flywheel
demonstrations funded by the Department jointly with state agencies in
California and New York. Currently there are six 1 megawatt
demonstration units operating on the grid, and through the Loan
Guarantee Program the Department has entered into a conditional
commitment for the development and deployment of a twenty megawatt
flywheel energy storage facility in New York\8\. Meanwhile, under the
guidance of the Federal Energy Regulatory Commission grid operators are
developing new control signals, tariffs, and market rules to allow
frequency regulation by fast storage to be deployed in a cost effective
manner. With increased deployment of variable generation renewable
energy assets, the need for frequency regulation on the grid will
increase considerably.
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\7\ Makarov, Ma, Lu, and Nguyen. PNNL Report #17632: Assessing the
Value of Regulation Resources Based on Their Time Response
Characteristics, Pacific Northwest National Laboratory (June 2008)
Fioravanti and Enslin. KEMA Report #BPCC.0003.001: Emissions Comparison
for a 20MW Flywheel-based Frequency Regulation Plant (2007)
\8\ $43 million conditional commitment for a loan guarantee to
Beacon Power (http://www.lgprogram.energy.gov/press/070209.pdf)
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asset utilization and renewable integration
It is well known that generation, transmission, and distribution
are not efficiently utilized. Assets such as substations and
transmission lines have to be sized for peak demand with ample capacity
to spare for a hot day. One quarter of a facility's capacity is devoted
to maintaining service during a 5 percent peak period. The goal of
energy storage is to supply this peak load from energy stored during
periods of least demand, thereby allowing for more complete and cost
effective utilization of grid assets.
In particular, substation load can easily outgrow the original unit
target size. Instead of an immediate and costly upgrade, installation
of energy storage can be more economical and flexible, and is therefore
finding favor with utilities. The first application in the U.S. was
sponsored by the Department of Energy and American Electric Power in
2006 at a substation in West Virginia. The substation had been reaching
its capacity limit and an upgrade was needed quickly to handle the
overload during peak periods. Instead, energy storage was installed, so
that energy is stored at night when the substation is not stressed and
electricity is less expensive, and then released over a 6-hour period
during peak load times. The system, using a sodium sulfur battery, has
performed well and installation of storage will defer substation
upgrades by 5 to 6 years. Seven more megawatts have since been deployed
in similar installations at several utilities. Other utilities are
planning to test flow batteries or lead-carbon batteries in efforts to
defer substation upgrades.
While energy storage is important for reliability and efficiency of
the grid, it is expected to become increasingly important for
complementing and buffering increasing amounts of variable generation.
Variability of wind and solar generation comes in three different time
scales. Short term fluctuations of seconds or minutes are similar to
the fluctuations created by load variability, and these fluctuations
can be handled effectively by fast storage facilities placed on the
grid for frequency regulation. Ramping over the course of hours--as
sometimes occurs with wind generation--is an important issue for
utilities, and energy storage can be used to address this challenge.
With energy storage equivalent to a one hour reserve, the number of gas
turbines required for ramp control could be reduced, thereby improving
the economics of wind energy generation.
Another challenge results from the wind patterns that occur in
areas where strong nighttime winds are common. Because night load is
small when compared to daytime load, in such a scenario renewable
resources can have a larger share of the generation mix during the
night than during the day, resulting in periods when the value of
continued generation of wind energy is challenged. In West Texas, for
example, over nine hundred 15 minute intervals of negative pricing
occurred during one month in 2008, and a number of wind developers in
the area are beginning to realize that energy storage might lead to
economic advantages and better utilization of wind energy.
Although interest is increasing, the United States has only a few
megawatt-sized demonstrations of storage for the integration of
renewable resources. In Japan, by contrast, a 34 megawatt/7 hour
sodium-sulfur storage facility has been constructed in conjunction with
a 51 megawatt wind farm. All excess night time generation is absorbed
by the battery, resulting in completely dispatchable wind power during
the day. While Japan encourages construction of energy storage
associated directly with wind development, storage in the United States
is viewed as a grid requirement which might be placed anywhere within a
region. One hundred megawatt battery farms have been proposed
domestically, but none has yet been constructed. An alternative
approach which has been suggested is the introduction of community
energy storage. Relatively small storage units of some 25 kilowatts
would serve a cluster of 4-to-5 residences to provide emergency backup
or to serve as a platform for installed photovoltaics. Individual units
would also be aggregated into a centrally dispatchable fleet. This
would provide the utility with a sizable resource for ramping, spinning
or stand-by reserve, or other ancillary services.
For yet larger amounts of energy, compressed air energy storage
(CAES) can be used. For this technology, air is compressed off peak and
stored in salt domes, man made caverns, or deep aquifers. When extra
energy is required during peak periods, air is released and fed
directly into natural gas combustion turbines, eliminating the need for
a compressor. While the current technology does not eliminate the need
for fuel, it increases the efficiency of the turbines substantially,
thereby reducing the carbon intensity of the generated electricity.
There is also ongoing research into the use of adiabatic CAES
technology, which does not require combustion of fossil fuels as the
stored energy is converted back into electricity\9\. There are two CAES
units in existence--one in Germany (290 megawatts) and one in Alabama
(110 megawatts), and both facilities use salt domes formed by solution
mining. CAES units could be used to take advantage of day-night power
pricing arbitrage or as spinning reserve. Most proposed new plants
intend to charge entirely with available wind energy, resulting in a
very favorable carbon footprint. Besides producing electricity during
peak periods, the plants can also provide system flexibility by
absorbing excess energy whenever a wind increase occurs. This would
eliminate the need for fossil fuel standby peaking plants.
---------------------------------------------------------------------------
\9\ Bullough, Gatzen, Jakiel, Koller, Nowi, and Zunft. Advanced
Adiabatic Compressed Air Energy Storage for the Integration of Wind
Energy. EWEC 2004, London UK.
---------------------------------------------------------------------------
Currently the best form of energy storage to handle really large
quantities of energy is pumped hydro. Using reversible turbines, water
is pumped into an upper reservoir during periods of inexpensive night
power and released during periods of peak load to generate electricity.
Some 20 gigawatts of pumped storage hydro plants are in use by
utilities in the United States, which amounts to about 2.5 percent of
the total U.S. electrical capacity. Europe has about 32 gigawatts of
pumped hydro, or 10 percent of capacity, and Japan has as much as 15
percent which results in a very resilient grid capable of absorbing
substantial amounts of renewable energy\10\.
---------------------------------------------------------------------------
\10\ 22% of generation capacity in Japan was attributed to
renewable energy technologies during 2007, including hydropower
(source: World Energy Outlook 2009, IEA).
---------------------------------------------------------------------------
An impressive 440 megawatt pumped storage hydro plant in Missouri
is scheduled for completion in 2010, and an additional 15 gigawatts of
pumped hydro are either planned or in the permitting stage in the
United States. Further new construction is hampered, however, by
environmental concerns, the current price of cement and steel, and a
very lengthy permitting process extending over many years.
grid-scale energy storage demonstrations under the american recovery
and reinvestment act
The American Recovery and Reinvestment Act of 2009 provided
unprecedented opportunity to accelerate the deployment of grid scale
energy storage. On November 24, 2009, Secretary Chu announced the
selection of 16 energy storage demonstration projects in conjunction
with selection of Smart Grid demonstration projects\11\. The selected
energy storage projects ranged over the entire spectrum of grid
applications and will enhance grid reliability and efficiency, enable
community energy storage options, and allow for greater use of
renewable energy resources. Technologies include advanced batteries,
flywheels, and compressed air energy storage. The selected awards total
$185 million in Recovery Act funding but represent a total project
value of $770 million based on substantial recipient cost sharing of
between 50 to 80 percent of total project cost. The awards fall into
five areas:
---------------------------------------------------------------------------
\11\ Project list available at http://www.energy.gov/news2009/
documents2009/SG_Demo_Project_List_11.24.09.pdf
Peak Reduction and Wind Farm Integration--three projects
were selected with a federal cost of $61 million. The selected
projects are intended to demonstrate the potential for battery
storage to improve asset utilization, allowing better use of
night time wind energy and grid integration of intermittent
resources, thus increasing their share of the generation mix.
These demonstrations in California and Texas will fund battery
facilities in the 8 to 25 megawatt scale, a magnitude larger
than current installations.
Frequency Regulation Services for Stabilization of the Power
Load--one project was selected for an award of $24 million.
Electricity generation and load are never exactly synchronized.
To balance them, regional system operators slightly shift the
load frequency, by either increasing or decreasing power
production. Using fast storage devices for these adjustments is
twice as effective as using fossil fuel plants. A 20 megawatt
flywheel system to be located in Illinois is ten times larger
than existing demonstration units.
Distributed Energy/Community Storage--five projects were
selected totaling $20 million, which will allow utilities to
experiment with smaller scale storage. Distributed energy
storage strengthens and buffers the grid and allows utilities
to deal effectively with load fluctuations or renewable
generation. Utilities can use storage to provide peaking power
during periods of high demand. The selected projects include a
3 megawatt installation in Pennsylvania to provide up to four
hours of peak shaving, backup storage for a photovoltaic system
in New Mexico, and aggregation of smaller systems into a
community energy storage effort in Michigan.
Compressed Air Energy Storage (CAES)--two projects for
grants totaling $54 million have been selected. A 150 megawatt
CAES facility will be constructed in New York State using an
existing salt cavern. The plant will have sufficient storage to
allow full operation in support of the transmission system and
market needs and support some 3,800 megawatts of wind planned
in the area. A second CAES project will be sited in California.
The 300 megawatt plant, using a saline porous rock formation,
is situated next to a transmission line receiving power from an
expected 4,000 megawatts of new wind. Together, the two new
plants will double the world's CAES capacity and provide
invaluable experience for developing a fleet of such plants
throughout the U.S.
Promising, emerging technologies--five projects were
selected for grants totaling $25 million. These new storage
technologies are in their initial stage of development. Funding
is intended to bring them to the prototype stage and ready for
the market place. Among the projects are a Lithium-Ion battery
with nanostructured polymer electrolyte, an iron-chromium based
flow battery, and an isothermal compressed air technology that
needs no extra fuel.
Successful implementation of these Recovery Act projects will
depend not only on the diligence of the utilities and entrepreneurs
involved, but also on the readiness of public utility commissions and
regional system operators to accept the new technologies. As the new
projects develop, they will be carefully monitored and fully integrated
into the existing energy storage program at the Department of Energy.
Results will provide a basis for analytical studies and economic
modeling on the role of storage in a more sustainable electric grid.
barriers to deployment
Technological barriers to improved energy storage systems range
from gaps in fundamental knowledge to operational limitations in
current technology. The Department of Energy's Office of Science has
the lead for fundamental research to develop new concepts and
approaches for energy storage necessary to meet the long-term needs of
our nation. Significant advances in our understanding of basic physical
and chemical properties of electrical energy storage are needed, and
recent developments in nanoscience are opening promising scientific
avenues that require further exploration. Fundamental research provides
continually developing insights which enable the pursuit of new energy
storage technologies to address the operational weaknesses of today's
technologies, including: rate of system charge and discharge, safety
hazards from over-charging or discharging, environmental hazards from
toxic materials, and short lifetimes.
Widespread deployment of energy storage systems is impeded by the
lack of uniform standards identifying operational parameters across
applications. These and other issues, including additional regulatory
and market barriers, have been identified previously\12\.
---------------------------------------------------------------------------
\12\ Electric Advisory Committee report--Bottling Electricity:
Storage as a Strategic Tool for Managing Variability and Capacity
Concerns in the Modern Grid--December 2008. (http://www.oe.energy.gov/
DocumentsandMedia/final-energy-storage_12-16-08.pdf)
---------------------------------------------------------------------------
The final barrier to deployment is economics. Current costs are too
high to allow reasonable rates of return for investors in most
applications, which can range from $1500/kW to $4500/kW depending on
the technology. Although systems are beginning to enter the market at
$2200-$2500/kW for high value applications, additional cost reduction
is necessary to increase penetration; cost targets are application
specific. Some cost reduction will be achieved through economies of
scale as production numbers increase, but much will have to come from
improved systems. Novel materials and components for energy storage
applications, from batteries to flywheels, must be developed to enable
long system lifetimes while using low cost base materials and
inexpensive manufacturing processes.
conclusions
Energy storage offers a diverse portfolio of technologies for a
wide spectrum of applications. It allows us to optimize operation of
the grid to make the most of our resources. Energy storage can:
Provide power quality and reliability;
Provide voltage and frequency regulation;
Smooth integration of variable generation renewable energy
technologies into the grid;
Allow better asset utilization for generation and
transmission;
Provide relief to customers and utilities during peak load
periods; and
Provide spinning reserve and energy management to make
renewable energy technologies more dispatchable.
Our basic research is leading fundamental scientific advances
needed for leadership in developing the next generation energy storage
technologies, and advances in energy storage are an international
interest. Besides the U.S., the European Union, Canada, Australia, and
Japan have sizable storage efforts. China recently initiated a
substantial storage program focused on flow batteries.
Other emerging technologies have the potential of enhancing or
augmenting storage. Smart grid concepts, for example, could link
storage to demand response and enable aggregation of distributed
storage. Plug-in hybrids and, perhaps eventuallybattery electric
vehicles, add a whole new dimension by linking transportation to energy
management. Utilities are increasingly becoming involved in energy
storage, and states like California and New York continue to work with
the Department in funding new projects. Recovery Act funding is
supporting frequency regulation and wind integration projects on a
commercial scale. The investment community is becoming interested in
providing venture capital for companies developing new technologies and
in funding ambitious large scale projects. Industry appears poised to
move from single megawatt scale applications to utility grade projects
in the hundreds of megawatts. The eventual goal is to make energy
storage ubiquitous and thus to contribute to the development of a
greener and more resilient grid.
This concludes my statement. Thank you for the opportunity to
testify, and I look forward to answering any questions you and your
colleagues may have.
The Chairman. Thank you very much.
Chairman Wellinghoff, go right ahead.
STATEMENT OF JON WELLINGHOFF, CHAIRMAN, FEDERAL ENERGY
REGULATORY COMMISSION
Mr. Wellinghoff. Thank you, Chairman Bingaman, Ranking
Member Murkowski, and members of the committee. I appreciate
the opportunity to speak here today.
My testimony addresses regulatory and technical issues
related to the integration of energy storage into the
electricity grid. Mr. Chairman, I would request that my full
testimony be entered into the record, and I will summarize it
here.
The Chairman. It will, and the full testimony of all
witnesses will be included in the record.
Mr. Wellinghoff. Thank you.
The proliferation and adoption of renewable energy
standards promise the Nation greater fuel diversity and lower
emissions. But those goals cannot be achieved unless we also
can ensure that new energy resources are integrated into the
transmission system in a manner consistent with the reliable
operation of the grid.
Integrating large amounts of new locationally dispersed
energy resources will require system operators to alter
traditional assumptions and balance load and resources in a way
that accounts for the variable nature for renewable energy
resources such as wind and solar. Storage can provide energy
when these renewable resources cannot do so directly. Storage
can do this by providing what is called regulation service,
which is an essential service that supports the reliable
operation of the grid.
The need for regulation service can dramatically increase
the amount of variable renewable resources, and relevant to our
discussion here today, it has been demonstrated that
distributed resources, such as storage, providing regulation
services are faster, generally cheaper, and have lower carbon
footprint than the traditional power plant provided ancillary
regulation services.
To date, the most used bulk electricity storage technology
has been pumped hydro electric technology. But other storage
technologies, such as the closed-loop pumped storage,
flywheels, and grid-scale batteries, could provide substantial
value to the electric grid. Even the batteries onboard electric
vehicles or hybrid plug-in electric vehicles can provide
regulation service to the grid and serve as mobile distributed
storage.
With storage technologies at various stages of development,
the commission already has had several opportunities to address
grid-scale storage. For example, the commission recently
accepted a proposal by the New York Independent System
Operator, NYISO, to integrate energy storage devices into its
day-ahead and real-time regulation services markets.
In the Midwest ISO market, FERC currently is considering
the proposal to better accommodate stored energy resources.
In New England, in the New England ISO, they have recently
sought to extend a pilot project that pays new storage
technologies for regulation service based upon the speed of its
response.
In the mid-Atlantic ISO, PJM, it has allowed a storage
device, which includes battery power from three electric cars,
to enter into the frequency regulation market with no tariff or
technical manual revisions.
In California, the California Independent System Operator
has identified storage as one technology solution to facilitate
renewable integration.
But I don't think we should stop there. We at FERC should
look at industry-wide methods to remove regulatory barriers to
the adoption of storage technology. In October, I provided
Congress with the commission's strategic plan for fiscal years
2009 through 2014, which it reflects my intention to pursue
market reforms that will allow renewable resources to compete
in jurisdictional markets.
There are two main elements of this effort. First, the
unique characteristics of storage technologies could require
different market bidding parameters and telemetry requirements
for providing energy and ancillary services than those
established based on characteristics of traditional generators.
Furthermore, the potential integration and synergies of
renewable resources, storage, and demand response resources
call for new ways to operate the electric system to take
advantage of these resources for cost-effective, reliable,
cleaner, and more efficiently produced electricity.
But some transmission tariffs may not yet allow storage
technologies to either enter wholesale markets in a manner
comparable to generation or be used as a substitute or
complement to transmission investment.
Second, a key element of comparable tariff treatment is
compensation. Some storage technologies appear to be able to
provide near instantaneous response to regulation signals in a
manner that is also more accurate than conventional resources,
such as combustion turbine generators.
Most existing tariffs or markets do not compensate
resources for superior speed or accuracy of regulation
response. But such payments may be appropriate as system
operators gain experience with the capabilities of storage
technologies.
In conclusion, at FERC, our challenge as regulators is to
remove barriers that impede the vast potential of energy
storage to support our national energy goals. FERC can strive
to ensure that regulatory barriers are removed, and
compensation and tariff treatment are appropriately gauged to
match the value of the services the storage can provide.
Thank you. I would be happy to answer any questions.
[The prepared statement of Mr. Wellinghoff follows:]
Prepared Statement of Jon Wellinghoff, Chairman, Federal Energy
Regulatory Commission
i. introduction
Chairman Bingaman, Ranking Member Murkowski, and members of the
Committee, thank you for the opportunity to speak here today. My name
is Jon Wellinghoff, and I am the Chairman of the Federal Energy
Regulatory Commission (FERC or Commission). My testimony addresses
regulatory and technical issues related to the integration of energy
storage into the electricity grid. I will begin my testimony by briefly
describing the need for energy storage technology and then discuss some
of the technical and regulatory issues that arise when integrating
storage into the grid. I will conclude by discussing FERC's role in
removing barriers to the development of grid-scale storage.
With the proliferation and adoption of renewable energy standards,
the nation is showing itself increasingly committed to achieving
climate change goals and a future in which clean, affordable,
sustainable, and reliable energy is the everyday norm. Thirty states
have adopted policies requiring fuel diversity and encouraging a move
to lower-emissions energy sources, and Congress is considering a
national renewable energy portfolio standard.
But greater fuel diversity and lower emissions cannot be achieved
unless we ensure that the new energy resources are integrated into the
transmission system in a manner consistent with reliable operation of
the grid. With these concerns in mind, we at the Federal Energy
Regulatory Commission are exploring our statutory authority to find
ways to ensure that the reliable integration of these new energy
resources reflects consumer decisions in the marketplace for
electricity and meets policy goals.
One critical strategy for integrating new energy resources involves
matching load and resource variations through the intelligent
deployment of demand response and other distributed resources such as
energy storage.
ii. use of storage
For the most part, electricity must be produced just in time to be
consumed. Energy storage offers the ability to ``warehouse'' electrons
for consumption later or to balance the variability of some renewable
resources. It alters the traditional assumption of a linear electrical
network, which assumes that centralized generators send electrons
through transmission and distribution systems to instantaneously match
need.
Integrating large amounts of new, locationally-dispersed energy
resources into the grid will require system operators to alter
traditional assumptions and balance load and resources in a way that
accounts for the variable nature of renewable energy resources such as
wind and solar power. Storage of renewable power can provide energy
when these renewable resources cannot do so directly. For example,
storage can be charged or filled off-peak by renewable energy and later
provide a source of power during peak demand periods or periods when
the sun or wind is not available, either through direct injection of
energy into the grid or by enabling demand response.
And storage can do more than just balance the variable nature of
solar and wind resources. The Energy Advisory Committee on Storage,
convened by the Energy Policy Act of 2005, found that storage can:
improve grid optimization for bulk power production via energy
arbitrage; defer the need for investments in transmission and
distribution infrastructure to meet peak loads; provide backup power to
buildings; and provide ancillary services directly to the grid or
market operators. My testimony will focus on the ability of storage to
provide ancillary services, since that is the function most frequently
addressed by FERC, and the function that may be of the most value to
the integration of variable resources such as wind and solar.
Ancillary services help support the reliable operation of the grid.
One such ancillary service is regulation service, which resources like
storage can efficiently provide. Regulation service is the micro load-
following service that increases generation supply when demand or load
increases, and decreases supply when demand decreases. Regulation must
be provided constantly, and it is one of the most expensive services on
the grid.
Ancillary services like regulation service are essential to keep
the system balanced and prevent it from cascading into a blackout. The
need for regulation services can dramatically increase as the amount of
variable renewable resources is increased. And it turns out that local
storage is among the best means to ensure we can reliably integrate
renewable energy resources into the grid.
Regulation service is usually provided by combustion turbine gas-
fired generators. But while such generators can generally follow the
minute-by-minute variations in load to keep the system in overall
balance, the frequency excursions that are the subject of Regulation
service actually occur on even shorter time intervals. Indeed, it has
been demonstrated that distributed resources such as storage are more
efficient than central station fast response natural gas fired
generators at matching load variations and providing ancillary services
needed to ensure grid reliability.\1\ They are faster, generally
cheaper, and have a lower carbon footprint than the traditional power-
plant-provided ancillary service.
---------------------------------------------------------------------------
\1\ See, e.g., http://www.beaconpower.com/files/PNNL--Report--
Assessing--Value--Regulation--Resources--June%202008.pdf at 26
(``Experiments also showed that an average 1 MW of flywheel regulation
capacity can substitute for about 2 MW of the traditional regulation
mix . . .'').
---------------------------------------------------------------------------
iii. storage technologies
To date, the most used bulk electricity storage technology has been
pumped storage hydroelectric technology. Presently, there are 24 pumped
storage projects around the nation with an installed capacity of over
19,500 MW. But new storage technologies are under development, and in
some cases being deployed, that could provide substantial value to the
electric grid. Building on experience with existing technology, closed-
loop pumped storage uses two reservoirs that are ``closed'' to natural
aquatic ecosystems. Other than initial filling and occasional topping
off to offset evaporation or leakage losses, no natural river or stream
would be used. This allows operational flexibility not available with a
traditional pumped storage hydropower system, which uses natural rivers
and reservoirs and must regulate flow to avoid harming local
ecosystems. Currently, the Commission has issued preliminary permits
for pumped storage--both traditional and closed-loop--totaling over
27,000 MW of capacity. Over one-quarter of this capacity is closed-
loop.
A newer technology for providing storage for the electric grid is
the flywheel, which works by accelerating a cylindrical assembly called
a rotor (or flywheel) to a very high speed with low friction
components, and maintaining the energy in the system as rotational
energy. The energy is converted back by slowing down the flywheel.
Flywheels have been successfully piloted in the U.S., and their speed
is particularly useful for regulation service. For example, for the
past year, ISO-NE has been conducting a pilot program to test how
alternative technologies such as flywheels are able to provide
regulation service.
Another promising storage technology is the grid-scale battery,
which works like a giant consumer electronics battery. The battery
takes energy in, and then with some small conversion losses, releases
it later. Batteries for MW-scale storage have had successful pilots
domestically for several applications. Like flywheels, batteries can
respond more quickly and accurately than traditional generators to
signals to increase or decrease the injection of energy into the grid
when load changes. They can respond for short or long (multi-hour)
periods of time, depending on the size and the controls of the battery.
They can thus provide a variety of ancillary services or serve to defer
the need for alternative transmission or distribution line investments.
The batteries onboard electric vehicles likewise can provide
services to the grid. For purposes of this discussion, an electric
vehicle is one that requires periodic re-charging of its propulsion
battery from the electric grid. It may or may not also be a ``hybrid,''
additionally capable of re-charging with a fuel-driven generator or by
other mechanical means.
In the future, electric vehicles can provide ancillary services,
like regulation service, to the grid and serve as mobile distributed
storage. The evolving nature of electric vehicles' role and their
market penetration curve create a unique set of challenges for
integrating electric vehicles into electric markets as a grid service
provider.
Although you may not think that a single electric vehicle could be
providing an important ancillary service to the grid, researchers at
the University of Delaware proved just that with a car that they parked
outside of FERC headquarters that was providing regulation service to
the PJM grid. More to the point here, the same researchers believe
that, using this technology, parked electric cars connected and
aggregated in large numbers in places like parking garages could be
made available as energy storage to support grid operations, including
balancing the variability of renewable resources such as wind and
solar.
Each of these storage technologies--closed-loop pump storage,
flywheels, batteries, and electric vehicles--are at various stages of
development. Flywheels and chemical batteries have recently achieved
technology maturity, and are well on the road to full scale
implementation both here and abroad. Unlike flywheels and batteries,
electric vehicles will not be commercially available for another year
or two. Though there are several thousand electric vehicles on the road
in the U.S. and abroad today, mass commercialization is expected to
begin in 2010, and the U.S. has set a goal of having at least 1 million
on the road by 2015.
iv. tariff activities already underway
With storage technologies at various stages of deployment, the
Commission already has had several opportunities to address grid-scale
storage in regions operated by regional transmission organization or
independent system operators, or RTOs and ISOs.
The Commission recently accepted a proposal by the New York
Independent System Operator (NYISO) to integrate energy storage devices
into its day-ahead and real-time regulation service markets. (127 FERC
Sec. 61,135). There we recognized that energy storage devices can help
integrate wind resources, and that their integration in the regulation
service market should help NYISO meet or exceed NERC control
performance criteria. The Commission specifically pointed to the very
fast response times of storage resources as a benefit to NYISO.
FERC currently is considering a proposal to better accommodate
stored energy resources in the Midwest ISO markets. The Midwest ISO
tariff revisions would allow short-term energy storage devices to
enter, in a limited fashion, the frequency regulation market.
In the Northeast, ISO New England (ISO-NE) has recently sought to
extend a pilot project for testing the ability of different storage
technologies to participate in the regulation market. The pilot pays
storage based on the speed of its response.
In the Mid-Atlantic, PJM Interconnection (PJM) has allowed a
storage device to enter into the frequency regulation market with no
tariff or technical manual revisions. AES installed a 1 MW battery at
PJM headquarters to provide frequency regulation. PJM bundles that
battery with the batteries of three electric cars, each of which
purchase electricity at retail rates. The batteries then sell into the
frequency regulation market. PJM has stated that it expects larger
batteries to be able to enter other ancillary service markets or energy
markets without significant tariff revisions.
Other areas of the country are examining the potential of demand
response and other distributed resources to reliably integrate
renewable energy resources into the grid. For example, this summer, the
CAISO issued a white paper that identified storage as one technology
solution to facilitate renewable integration.
v. ferc efforts
Beyond the case-specific applications just described, we at FERC
are already looking at methods to remove regulatory barriers to the
adoption of storage technology. In October, I provided Congress with
the Commission's Strategic Plan for FY2009-2014 and committed to take
additional steps to address possible barriers to development of
renewable resources, including the implementation of tools like storage
to support reliable integration of renewable resources. And earlier
this year, the Commission adopted a policy statement on the smart grid,
which included storage as a key functionality of the smart grid. It is
the Commission's expectation that this policy statement, which seeks
greater interoperability and functionality of smart grid technologies
through the adoption of standards, will help accelerate the development
and promulgation of newer storage technologies.
And FERC will continue to monitor the development of storage
technologies to ensure that they receive tariff treatment comparable to
other resources and receive compensation commensurate with the value of
the services they provide to wholesale markets and the grid.
Regarding compensation, some storage technologies appear able to
provide a nearly instantaneous response to regulation signals, in a
manner that is also more accurate than conventional resources. These
two characteristics can reduce the size, and hence overall expense, of
the regulation market. Most existing tariffs or markets do not
compensate resources for superior speed or accuracy of regulation
response, but such payment may be appropriate in the future as system
operators gain experience with the capabilities of storage
technologies. In the meantime however, the unique characteristics of
storage technologies could require different market bidding parameters
and telemetry requirements for providing energy and ancillary services
than those established based on the characteristics of traditional
generators. Furthermore, the potential interaction and synergies of
renewable resources, storage and demand response resources call for new
ways to operate the electric system to take advantage of these
resources for cost-effective, reliable, cleaner and more efficiently
produced electricity. This would ensure that consumers have access to
the lowest cost resources needed to provide electricity service.
As for transmission tariffs, some tariffs may not yet allow storage
technologies to enter wholesale markets in a manner comparable to
generation or to use storage as a substitute, or complement, to
transmission investment. FERC will monitor these developments and, when
appropriate, ensure best practices for development and use of storage
for all of its various purposes.
vi. conclusion
In conclusion, at FERC, our challenge as regulators is to remove
barriers that impede the vast potential of energy storage to support
our national energy goals. With the appropriate compensation and tariff
treatment, storage resources will have the opportunity to proliferate.
While energy storage offers ample benefits just in improving grid
operation and efficiency, it can also make integration of renewable
energy resources not only reliable, but efficient and cost-effective as
well. Fully opening wholesale electric markets to resources like
storage will make it easier to meet renewable energy standards by
efficiently matching renewable energy resources and demand resources
with distributed storage resources to smooth variations in resource
output. In this way, these resources can complement each other to
ensure a stable and reliable grid. FERC can strive to ensure that
regulatory barriers are removed and compensation and tariff treatment
are appropriately gauged to match the value of the services that
storage provides.
The Chairman. Thank you both very much.
Let me start with a few questions. Dr. Koonin, I should
understand this subject better to be asking questions about it.
But at any rate, I remember a couple of years ago getting a
briefing at Los Alamos National Laboratory on the issue of the
research, basic research they were doing on the subject of
capacitors and the belief that at least the folks briefing me
had that capacitors have substantial capability to help us with
storage issues in the future.
I don't know if you have a view on that subject, if that is
something you are trying to support, that type of research in
the department?
Mr. Koonin. We are supporting work on super and ultra
capacitors. Capacitors are, in many ways, complementary to
batteries. Like batteries, you can move the energy in and out
very quickly, capacitors even more quickly than batteries. So,
they are useful for delivering energy in a short time, a surge,
if you like.
Their drawback is that we currently can't store very much
energy in them. So, in vehicles, for example, they are fine for
boosting power when you need it, but not for long-term power
storage and quite complementary to batteries.
The Chairman. OK. Let me ask an obvious question. You
indicated that by virtue of the funding that you have in the
Recovery Act, you have been able to increase the expenditures
of the Department of Energy on storage by 50 times. What
happens now that the Recovery Act is going to be over with?
I mean, is this something that we can maintain a focus on
and maintain funding for, this kind of research and development
in this area, or does this fall back to a second-tier pursuit?
Mr. Koonin. You know, the array of projects that we have
lined up right now, and hopefully will begin delivering on
soon, I think nicely spans an array of technologies and
applications, and we need to get experience in operating these,
deploying them, understanding how to use them. They need to be
well instrumented so that we collect appropriate data to inform
our path going forward.
Then it really becomes a question of can we have gotten far
enough down the road so that it becomes attractive for a
utility to pick it up, and we move toward full-scale commercial
deployment? So I am a bit agnostic at the moment as to how much
more demonstration we need to do. I would like to see how this
first round goes.
The Chairman. OK. I know the subject of our hearing is
grid-scale energy storage, but one of the issues that we have
dealt with now for many years is the whole issue of centralized
generation versus distributed generation. It would seem to me
that there is an obvious analogy between centralized storage
and distributed storage. I don't know either you, Chairman
Wellinghoff, or Dr. Koonin, if you have thought through which
of these focuses makes the most sense?
Mr. Wellinghoff. Mr. Chairman, if I may? I think we
certainly need to look at the economics of both. When you teed
up this hearing as grid-scale storage, I tell you that I gave
it a very broad definition. I believe that distributed storage
can be grid-scale in the sense that things like plug-in hybrid
and plug-in electric vehicles I think can significantly
contribute to storage on the grid, as well as other
technologies.
There are companies out there, for example, right now that
are doing significant ice storage that can be used to shave
peaks and effectively store energy from off-peak times and use
that cooling to cool our homes and businesses in the Southwest
and other areas of the country.
But that doesn't mean that we should ignore in any way
larger centralized storage. Like pumped hydro, as Senator
Murkowski indicated, is a very not only viable, but very proven
storage technology that is here today. Although we need to
understand, again, relative economics and look at relative
costs and benefits.
For example, one statistic I heard the other day is that
there is more storage available in all the electric hot water
heaters in the United States than there is pumped hydro storage
currently. So I thought that was a pretty interesting
statistic.
So, again, it is a matter of looking at cost benefits and
relative economics and determining what are the most viable
things to start with.
The Chairman. Dr. Koonin, did you have a comment on that?
Mr. Koonin. Yes, I do. You know, there are sometimes
unanticipated systems issues that are well worth being aware
of, and let me just take the plug-in hybrid example that looks
so attractive as we try to merge transportation and power.
I would just add a couple of cautions that we probably need
to think through as we go down that road. One is what is the
impact of the grid ebb and flow into the battery in terms of
its battery performance and lifetime beyond what you would get
in an ordinary drive cycle?
The second is if we are talking battery vehicles, we
shouldn't leave the battery vehicles high and dry. If you drain
my battery during the afternoon to manage the peak, I may have
a hard time getting home late in the afternoon.
Then, finally, if the net effect of integration of PHEVs
into the grid is to turn liquid fuel into electricity for the
grid, that would be, I think, quite foolish because we have, in
fact, worked very hard to get oil out of the power sector over
the last 30 years.
So, these are all interesting systems management issues
that we need to be thinking about as we look to distributed
storage, for example, and PHEVs.
The Chairman. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Dr. Koonin, I have been expressing concern about our
reliance as a Nation on other countries, particularly China,
with regards to the rare earth minerals and recognizing that it
is these rare earth minerals that we need for purposes of our
battery technologies, for the magnets that are used in the
electric motors.
Are there alternatives that currently exist to utilizing
the rare earth minerals for batteries and for the permanent
magnets?
Mr. Koonin. Yes. So the rare earths--I agree that we don't
want to become addicted to imported rare earths in the same way
that we have for oil. For the batteries, the rare earths are
not an issue. Some of the precious metals or transition metals
are an issue, but not for the rare earths. The rare earths----
Senator Murkowski. An issue for the batteries is----
Mr. Koonin. The transition metals are. But the rare earths
are not. The rare earths are an issue for electric motor
technologies. There, you know, I have a great faith both in
supply curves and in technology to help us around that problem.
There are resources for rare earths in the U.S. They are not
quite as economically attractive as what we have in China, but
with sufficient impetus, we could be tapping into those
resources.
Second, the technology may be able to come into help with
the rare earths. We don't need necessarily, for example, bulk
rare earth materials, but we might be able to get by with just
surface coatings on our----
Senator Murkowski. So we are looking to these alternatives
to----
Mr. Koonin. We are starting to look very seriously at
those.
Senator Murkowski. Let me ask you, Commissioner
Wellinghoff, you have mentioned that it is important to remove
the regulatory barriers. Whether it is regulatory barriers or
just regulatory uncertainty, how much does this hinder the
development of energy storage technologies? How big of a
contributing factor is that to what we are dealing with right
now?
Mr. Wellinghoff. Certainly to the extent that these
technologies want to scale and start into commercial operation,
they are going to want to know that there is a revenue stream
to support them. So, for example, flywheel storage technology
is currently being paid under a tariff in New York, which is a
good thing.
Ultimately, they have some certainty that they know they
can provide regulation service into the New York grid and get a
sufficient revenue stream to support a business model. In the
PJM area, right now battery technology is getting paid to
support the grid, and again, they know under a tariff they have
a revenue stream to do that.
So what we are trying to do is encourage the ISOs and RTOs
that are under our jurisdiction to formulate these tariffs that
will compensate storage technologies in a way that they can
develop a business model that can be sustainable that
ultimately can grow that business. I think it is very important
to have that regulatory certainty to make sure that those
industries will grow.
Senator Murkowski. When we were having the discussion here
in the committee with our energy bill and the discussion about
renewable electricity standard, you came before us and
testified in support of a 25 percent RES. I understand that the
FERC is underway with a study that looks to determine exactly
how effective the grid is in its ability to integrate renewable
resources. Can you give me any update or status on that study
and what we might expect?
You have spoken to this in the past, but do we know at this
point in time what percentage of renewables we believe that the
grid, as it exists today, can reasonably accommodate?
Mr. Wellinghoff. I don't think we have that number. I can't
give you an update, per se, from our study. I hope that our
results will be out in March or April.
I will tell you that I got a briefing yesterday, however,
on a very interesting study that is funded by DOE through NREL
called EWITS that did look at a 20 percent renewable level in
the grid and looked at how that would be accommodated. They
seemed to believe that it could be accommodated.
We would like to validate that with the study that we are
doing at FERC looking at regulation and frequency response in
the grid and how that may be balanced. But these are things
that I think we need to look at.
I had an opportunity to speak to a number of European
legislators this last weekend, and they are looking at levels
of renewables in their grid of 15 to 20 percent or more and are
managing it currently in places like Spain, where they
actually--at times of the day actually have over 50 percent of
their total load supplied by wind energy.
So we need to learn from these examples. But storage is
going to play a very critical role there because, ultimately,
the storage will be necessary to balance out the variations
that we see if we are going to be meeting these higher levels
of 20, 25 percent and more.
The Chairman. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
Thank you both.
Dr. Koonin, I want to make sure I understand what you were
saying to Chairman Bingaman because your answer, I will tell
you, troubles me. He asked you what is going to happen next,
and you essentially said our position is wait and see.
I mean, wait and see is not the kind of activist strategy
that I think this country needs to tap the full potential for
these energy storage technologies. I don't see this as
primarily a question of just spending money. I am certainly not
advocating going out and spending money on dubious ideas. But I
do want to see a game plan for tapping the full potential.
If what happens now is your agency, in effect, waits to see
what happens, as I think you were saying to Chairman Bingaman,
we could be waiting around for years and years and have a lot
of foot-dragging when we really want a research game plan and
activist strategy for tapping the full potential.
I don't think you would do that in the physics area, which
I know you know lots about as well. So let me give you a chance
to go at this area once again in terms of how we are actually
going to get the kind of activist research plan that the
country needs.
Mr. Koonin. So what I have come to understand about energy
after 5 or 6 years' worth of experience is that what we really
need are well-chosen, consistent policies that move
aggressively toward the goals that we are after. In science,
you always look to assess what you have learned in order to let
you move confidently and quickly to the next steps.
So I think we need to balance. I agree that there is an
urgency, but we also need to make sure that we are making the
right steps, the right technology choices, making the
technology accessible for the utilities in the sense of giving
them confidence to deploy.
I would hope that the round that we have got underway will
do that and let us see what happens. I understand the urgency,
but at the same time, we must learn from what we are doing.
Senator Wyden. I am all for learning. It is just I see a
lot of ``wait and see'' here, and what I want is something that
is much more aggressive because I think waiting and seeing is a
prescription in this town for a lot more delay, and I don't
think the country can afford it.
Can you get us a document that describes what your research
blueprint is and incorporates your ideas about trying to
evaluate these projects? When could we see that?
Mr. Koonin. I would be happy to get that for you. We can
certainly do that as quickly as we can. I would be happy to
get----
Senator Wyden. Months? Is that in 60 days?
Mr. Koonin. Yes. We can do that.
Senator Wyden. Great. OK. Your research blueprint for
tapping the full potential of storage technology, and that is
very helpful.
Mr. Koonin. Very good.
Senator Wyden. One question for you, Mr. Wellinghoff. You
essentially described the agency getting into it, in effect,
when others bring it to you, these independent--the ISOs. We
looked at the strategic plan, which essentially describes
FERC's priorities, and energy storage is not mentioned in the
strategic plan. Can you all go back and amend the strategic
plan and lay out for us what the priorities would be for the
agency?
Mr. Wellinghoff. We would be happy to go through the
strategic plan and probably point out for you aspects of it
that relate to storage that may not specifically say the word
``storage.'' But certainly to the extent that we are, in that
strategic plan, I think very clear about trying to integrate
resources on the demand side into markets, storage is a big
part of that, in my mind.
So it wasn't any intent to leave out storage from that
strategic plan. It was subsumed by things like demand-side
resources, which would include storage, energy efficiency,
demand response, photovoltaics, distributed generation. All
those things we need to figure out how to better integrate into
the grid, how to make sure that they are paid their economic
value for being integrated in the grid, and it was all intended
as part of our strategic plan.
Senator Wyden. Then have staff fill us in on the parts of
the document that show us that this is going to be a major
priority for the agency because that is what I----
Mr. Wellinghoff. We will do that. We will give you a
response that shows that.
Senator Wyden. We will look forward to working with both of
you.
Thank you, Mr. Chairman.
Mr. Wellinghoff. Be happy to do that, Senator.
The Chairman. Thank you.
Senator Corker.
Senator Corker. Mr. Chairman, thank you. Thank you for this
hearing and the testimony of our witnesses.
My hometown community benefits right now from hydro
storage, and I look forward to the day in the future when the
batteries that are inside vehicles, which also are being
produced in Tennessee, I might add, are used as storage at
night. Base load power being used at night, lesser expensive,
whether it is nuclear or other, nuclear power ultimately
powering vehicles and, at the same time, during the day using
that storage to lessen the load on the grid. That is an
exciting development that I hope happens, and I appreciate my
colleagues pursuing that.
I do want to ask Chairman Wellinghoff about a related grid
issue. I offered an amendment during our energy debate that
wanted to make sure that when we make these allocations of the
cost of the grid, that people that are actually having to pay
for that receive a benefit, and it did not go beyond that.
The original bill did not define benefits from the
standpoint of allocation. I offered an amendment that passed--
Senator Wyden and others supported it, it was bipartisan--that
made sure we were talking about reliability and economic
benefits, which doesn't really move beyond existing policy as
it relates to the grid.
In the event we do want to shift costs for the grid to
people who are not receiving a benefit, it seems to me that
those of us in Congress should decide that and not FERC. I know
there has been comments about the fact that, well, something
happening some other place because it is environmentally good
benefits mankind. So everybody should pay for it. But I think
all of us are wanting to make sure that our constituents are
paying for the power that they are receiving.
I am not anti-renewable and very excited about many of the
developments that are taking place in our country. I know
Governors from Senator Shaheen's area and Governors from
Senator Wyden's area were very concerned that the bill that was
before us didn't have those defined elements, and therefore, I
added it in, which, again, is just current practice.
I wanted to ask the chairman, since you have had some
choice comments about that in other settings, I wondered if you
had some concern about your ability to implement current policy
as it relates to that?
Mr. Wellinghoff. We have concern about the issue of
precisely quantifying benefits because we have to be sure
that--and I certainly agree with you that with respect to
allocation of costs and transmission that we should, in fact,
do that in a way that somehow fairly spreads the benefits and
costs.
Senator Corker. You mean fairly allocate when you say
``spread?''
Mr. Wellinghoff. Yes.
Senator Corker. That word concerns me. I assume you mean
making sure that those who are receiving benefit pay for it. Is
that what you are saying?
Mr. Wellinghoff. Yes, I am.
Senator Corker. OK.
Mr. Wellinghoff. However, my concern, I guess, is precisely
quantifying it, in that your problem is you can have benefits
today for one set of customers or one set of transmission
customers or rate payers and those benefits will change next
year because the nature of the grid will change. So the problem
is it is a moving target. If we are required to precisely
quantify it, at one point in time, we are going to be wrong.
So that is my main concern, I think, Senator, with your----
Senator Corker. I thought you would say that, and I wanted
you to know my amendment did not require you to be precise. As
a matter of fact, it was current--the 7th Circuit had a ruling
recently----
Mr. Wellinghoff. Right.
Senator Corker [continuing]. That said you had, and they
said we do not suggest the commission has to calculate benefits
to the last penny. You seemed to like that because your
response was that it leaves the door open for you to be able to
analyze who benefits from that. Nothing about our amendment
said it had to be precise.
As a matter of fact, I would say it is very much in keeping
with the 7th Circuit ruling that you seem to support. So I just
want to say that your responses to the 7th Circuit seemed to
indicate you felt like you could, to a reasonable degree,
determine whether people were benefiting from certain grid
expenditures or not. Is that true?
Mr. Wellinghoff. Yes. That is correct. I did not read your
amendment to be necessarily consistent with the 7th Circuit,
and if you are indicating that it is, that is, I think,
something that the 7th Circuit decision does provide us that
flexibility, I think, because it does very specifically say
that quantification of benefits does not have to be precise. It
gives quite a range in that 7th Circuit decision.
Senator Corker. I think what we would like to do, and the
reason I am bringing this up--I know it is something that
Senator Bingaman and I and others will be working on at some
point before it goes to the floor. I think our concern is that
having some grid going to some remote area in North Dakota,
which is going to have no benefit for anybody up here, that we
end up, our constituents end up paying for that. I think that
is what we are trying to keep from happening.
Mr. Wellinghoff. Certainly.
Senator Corker. What I would love to do is work with you to
see if there is a way that we might end up with some language
that would keep it that way. I don't want folks in Tennessee
paying for some transmission grid to some mesa someplace that
has no benefit.
I will say in closing. I know my time is up, and the
chairman is always generous. There have been comments made by
associates and folks who have been concerned about this
amendment that we should know that, look, this benefits all of
mankind, and everybody should pay for this.
I don't think that is an appropriate way of looking at
reliability and economic benefit, and I just hope that you can
work with us to form more closely if our amendment is not--if
you can't work with that, I don't know why you couldn't because
the 7th Circuit ruling that you applauded just said the same
thing.
But I would love to work with you and Chairman Bingaman and
others who might want to work on this to ensure that we don't
spread these costs around to mankind, but that people actually
are receiving a benefit pay for it.
Mr. Wellinghoff. Senator, I would be happy to do that.
Thank you very much.
Senator Corker. Great. Thank you.
The Chairman. Senator Udall.
Senator Udall. Thank you, Mr. Chairman.
Welcome again. Let me start, Chairman Wellinghoff, with you
and build some specificity into the line of questioning that
Senator Corker just directed your way.
Cost structures for storage activities--are there any other
cost structures that you think should be considered that would
provide storage facilities with compensation for all or at
least several of the different values they add to the grid?
Mr. Wellinghoff. Senator Udall, primarily in my testimony,
I was referring to cost compensation in organized wholesale
markets. There certainly needs to be some type of cost
structures that would primarily be in the purview of State
regulatory commissions in those areas where we don't have
organized wholesale markets with respect to those utilities in
those jurisdictions incorporating storage into their
operations.
So that would be something that individual utilities and
State commissions would have to work through as to how to
recover costs for those storage investments, whether it be
through expensing or rate basing those costs. But it would,
again, primarily be within the purview of the State
jurisdictions.
Senator Udall. Thank you for that insight.
I wanted to pursue this line of questioning. As I
understand, interruptions to our power systems cost us about
$80 billion annually. They don't have to last for a very long
time. Two-thirds of the losses come from interruptions that are
less than 5 minutes. That is astounding to me, and this seems
to be a real opportunity for storage because storage can help
reduce those outages, increases productivity, and saves
consumers money because those replacement electrons are very,
very expensive.
Could each of you talk about the source of those outages
and to what extent storage could help alleviate them? Let me
start with you, Chairman.
Mr. Wellinghoff. My understanding is that the large
majority of those outages--and I don't have a specific
percentage figure, but it is probably much higher than 50
percent. It may be as high as 80 percent of those outages are
at the distribution level.
So to the extent that we can incorporate in storage and
other distributed resources at the distribution level--
distributed generation, photovoltaics, et cetera--and certainly
storage, we can probably reduce substantially the amount of
those outages. But again, those are going to be primarily
within the purview of State commissions to work with State
utilities at the distribution level to build up those systems,
make those grids at the distribution level smarter and also
more responsive with incorporating storage.
Mr. Koonin. I am not enough of an expert to comment on the
source of the grid outages, but I can just note that extreme
distributed storage at the household level, for example, at
current battery costs seems quite feasible. At $500 a kilowatt
hour for batteries, as we have with lithium ion batteries, for
example, you could easily store 10 kilowatt hours in a house
and use that to handle outages as long as 10 or 20 hours.
So I think uninterruptible power supply seems perfectively
feasible if outages became a significant problem.
Senator Udall. Would you foresee a future where utilities,
other power providers would help consumers actually put those
batteries onsite because of the advantage you just referred to?
Mr. Koonin. I think if outages became a significant
problem, you could imagine broad programs to do that. Again,
the plug-in hybrid battery, say, of order of 17 kilowatt hours
or so, 10 kilowatt hours, would be such a device that you could
use in an emergency when the outage occurred.
Senator Udall. Chairman Wellinghoff, let me turn back to
you in the remaining time I have. In my initial remarks, I
mentioned I had been surprised in some of the briefings that I
have held to find that although that--and I should clarify what
I said earlier, technology still has a long ways to go, that
some of the challenges in the regulatory space are almost equal
to those in the technological space.
Is there anything else FERC can do? More hearings or
reports to help us identify these regulatory barriers and
identify solutions along with them?
Mr. Wellinghoff. We do have the opportunity to hold
technical conferences, which we do periodically. We have had a
number of them and would continue to do so. We are continually
looking at what we need to do in these organized wholesale
markets to change tariffs and to change rules, market rules in
ways that will provide a level playing field for these kinds of
technologies because, traditionally, these markets have been
set up for central generation.
What we want to do is ensure that those markets give equal
consideration to and, in fact, higher consideration to more
valuable services like storage. So one thing is certainly
holding the technical conference, which we have done in the
past, with respect to storage specifically. But we want to
continue to do this and want to continue to do everything we
can to help integrate storage into the grid.
Senator Udall. I would urge you to do so. I wonder if there
wouldn't be a day where we, as we now today talk about
generation, transmission, and distribution, GTD, that ``S'' for
``storage'' would not be on a level playing field as we
consider the opportunity there. Or whether it would be
generation-storage, distribution-storage, transmission-storage
as how we think about them and then how we manage and how we--
--
Mr. Wellinghoff. The storage does have a role to play in
all of those aspects.
Senator Udall. In all of those.
Mr. Wellinghoff. That is true.
Senator Udall. Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Shaheen.
Senator Shaheen. Thank you, Mr. Chairman. Thank you for
holding this hearing.
My view is that as we think about our energy future, one of
the areas that has not gotten as much attention as it should is
the area of energy efficiency, and obviously, storage is a big
part of that. If we look at what is the fastest, cheapest way
to deal with our energy future, it is obviously energy
efficiency and conservation and energy storage, as you all
point out.
I think this is a question for you, Mr. Koonin. Can you
tell us how--what other countries are doing in the development
of energy storage technologies and how we currently rank
compared to other countries in this area?
Mr. Koonin. We are, I think, certainly the leader in
storage concepts among the nations. You see a large deployment
in other countries of pumped hydro, but if you look at some of
the more advanced concepts, this country is significantly
ahead. The Recovery Act, which I referred to before, the
funding has helped significantly in mounting those
demonstrations. For example, in compressed air storage, the
projects that we have defined will double the world's capacity
and experience in compressed air storage.
China, one naturally looks to these days as a sense of what
the rest of the world is doing. They have a $100 million
storage effort that is focused on both research and deployment,
largely on flow batteries, and there is a potential there, I
think, for an interesting collaboration with the Chinese on
that technology.
Other countries not so active in the advanced concepts. So
we are, with the stimulus money, significantly ahead of other
folks.
Senator Shaheen. What about Europe? You didn't mention
Europe.
Mr. Koonin. A lot of pumped hydro in Europe right now. Some
experience with flow batteries and other technologies, but I
think we are pushing harder than the Europeans.
Senator Shaheen. You talked about the jumpstart that the
Recovery Act has given to some of those initiatives. Is there
more that we ought to be doing? I appreciated the exchange with
Senator Wyden because I think having a plan is always the
beginning of anything that we ought to be doing.
But are there other things that we should do as a Congress
and as an administration to incentivize these new technologies
and encourage their development?
Mr. Koonin. Again, I would distinguish between research and
deployment. I think deployment is, in the end, where it
happens, and that very much depends upon how Congress sets the
playing field or the incentives that we were talking about.
You could imagine--I will invent. I know little about
regulation. But you could imagine an extra credit for putting
energy that has been stored for some period of time into the
grid rather than simply giving tax credits for the capital.
Again, you would have to define that carefully to make sure you
got the results you wanted. But you could imagine something
like that.
On the research side, I would like to see more invested in
the basic material science. So much of what we need to do in
energy not only for electrical storage, but many other things
has got to do with materials, our ability to characterize,
synthesize, predict the properties of materials has grown
greatly. There are so many materials to explore out there. I
would like to see us doing more of that as well.
Senator Shaheen. Thank you.
Apropos your mentioning regulations, Chairman Wellinghoff,
as we are thinking about a new grid and upgrading the Nation's
grid, one of the concerns that I have had, and I think many of
us in the Northeast have had, is that we are looking at the
potential for building a new grid or upgrading our current grid
in a way that could bring us solar and wind energy from the
West and that that will have a negative impact on the potential
perhaps to develop some of those resources, new energy
resources in the Northeast--offshore wind, other issues.
What should we be thinking about as we are thinking about
upgrading our grid? Also, how do we look at the potential for
distributed energy, and does it make sense, if that is our
future, to develop a whole new transmission grid that is not
going to address that?
Mr. Wellinghoff. Senator, I think we ultimately need to
look again at sort of like what I was talking to Senator Corker
about costs and benefits. Certainly, there may be substantial
benefits to the local economy by developing distributed
resources and developing local renewable resources, and I think
the States and the regions certainly should take that as a
priority.
But ultimately, what is going to get developed is where the
capital flows. So I think the markets are ultimately going to
decide between and among the various resource options. So what
we need to do is make sure that we get the markets right, that
we incorporate into the markets things like the price of carbon
and other things that will ensure that, as those markets are
structured, they can produce the policies, both the State and
the national policies that we need to achieve our goals.
Senator Shaheen. Could I follow up on this, Mr. Chairman?
I appreciate that. On the other hand, the fact that the
Government invested significantly in the Tennessee Valley
Authority probably has a lot to do with the fact that Senator
Corker is concerned about maintaining their low energy prices.
The fact that we don't have a similar project in the Northeast
means that we have some of the highest energy prices in the
country.
So, Government regulatory policy is obviously going to have
a major impact on what happens in those markets.
Mr. Wellinghoff. Right.
Senator Shaheen [continuing]. If what we do is to have a
Government policy that says we are going to build a new
transmission grid that is going to ignore storage or ignore
distributed generation or ignore where those potential
renewable energy sources are coming from, doesn't that put in
place the potential to create a market that is going to have a
different impact than if we did something different with our
Government policy?
Mr. Wellinghoff. That is why I think we need to look at it
from an analysis of cost and benefits. I saw a study yesterday
from the National Renewable Energy Lab called EWITS that was an
eastern interconnect-wide study looking at 20 percent wind,
four different scenarios.
One scenario was to take most of the wind out of the
Midwest and deliver it to the Northeast. The other scenario was
to take a lot of offshore wind and deliver it to the Northeast.
The cheapest scenario was to take the Midwest wind and deliver
it to the Northeast.
So, again, I mean, people in the States need to decide do
they want lower rates for their consumers, or do they want more
local development of renewable resources? I don't think these
decisions will be ones that will be made by the Federal
Government because, right now, ultimately investments in
transmission are made by the private sector.
So the private sector is the one who, through the markets,
is going to decide what are the most appropriate investments to
make. I don't know of anyone right now who is suggesting that
there should be massive amounts of Federal money going into
build transmission lines throughout the country. The money, as
I understand it, will be coming from the private sector, and
the markets will drive where that money goes.
Senator Shaheen. Thank you. My time is up.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
We have a second panel of expert witnesses which I would go
ahead to unless--Senator Udall, did you have another question?
Senator Udall. Mr. Chairman, if I might? No, I would like
to get to the second panel, but I would like to submit a
question for the record to Chairman Wellinghoff that focuses on
independent system operators and regional transmission
organizations. If I could do that?
The Chairman. That would be fine. Sure.
Senator Udall. Thank you.
The Chairman. Thank you both very much for your testimony.
It has been very informative, and we appreciate it.
Let me call the second panel forward. The second panel, let
me introduce three of the members, and then Senator Udall
wanted to make one of the introductions on this panel.
Dr. Ralph Masiello, who is senior vice president for energy
systems consulting with KEMA, Inc., in Chalfont, Pennsylvania.
Mr. Kenneth Huber, who is senior technology and education
principal with PJM Interconnection in Valley Forge,
Pennsylvania.
Mr. Elliot Mainzer, who is executive vice president with
corporate strategy in Bonneville Power Administration in
Portland, Oregon.
Thank you all for being here. Dr. McGrath--I believe,
Senator Udall, you wish to make an introduction of Dr. McGrath?
Senator Udall. I do. Thank you, Mr. Chairman.
I am pleased to introduce Dr. McGrath of the National
Renewable Energy Laboratory in my home State, located in
Golden, Colorado. It is NREL. That is a real treasure, and I
have always appreciated both the hard work they do and the
Department of Energy's support of their work.
My understanding is that Dr. McGrath, here under the
auspices of NREL, will expand upon an intriguing aspect of
energy storage technologies, the role that they can play in
facilitating the integration of renewable energy into the
electric grid.
Thank you, Dr. McGrath, for making the long trip here to
Washington, DC.
Thank you, Mr. Chairman, for bringing everybody on this
panel here.
The Chairman. Thank you all for being here, and why don't
we just start with you, Dr. Masiello? Is that the right
pronunciation?
Mr. Masiello. That is fine. Yes, sir.
The Chairman. Go ahead and tell me the right--why don't you
tell us the right pronunciation, and we will try to----
Mr. Masiello. Masiello is exactly correct.
The Chairman. Masiello.
Mr. Masiello. Yes, thank you.
The Chairman. Masiello. OK, thank you for being here, and
please go right ahead. If each of you could take 5 or 6 minutes
and give us the main points we need to understand, we will
include your full statements in the record.
STATEMENT OF RALPH D. MASIELLO, SENIOR VICE PRESIDENT, ENERGY
SYSTEMS CONSULTING, KEMA, INC
Dr. Masiello. Good. Mr. Chairman, Senator Murkowski,
Senator Udall, thanks very much for the opportunity to
contribute today. I hope I can shed some light.
Rather than repeat the comments of the commissioner and the
Under Secretary, let me offer a few data points and then some
thoughts on policy.
We are concluding a study for the California Energy
Commission and the California ISO on the question of what
happens at 20 and 30 percent renewables and how can storage be
used? Confirming comments we heard earlier, 20 percent is
manageable with today's engineering apparently, although the
amount of ancillary services, meaning regulation, reserves, and
so on, that would have to be procured by the market operator
could double or triple with attendant impact, of course, on
costs and emissions.
Thirty percent becomes much less manageable due to the
characteristics of when the solar energy disappears in the late
afternoon and when the wind energy picks up. Storage is maybe
twice as effective as conventional generation at mitigating
this. In fact, we concluded that a fast battery is two to three
times as effective as a combustion turbine for purposes of
regulation and ramping.
A second kind of highly technical point about a high
renewable penetration that is, I think, just on the radar
screen, most renewables are inverter based, meaning the power
is produced by the wind mill. It goes through power electronics
and an AC-to-DC-to-AC conversion as opposed to conventional
generation that has a rotating AC generator.
At high renewables, 30 percent annual target could mean 50
percent at a given moment. The amount of rotating inertia in
the system and the Governor response, the autonomous response
of the generators to system frequency is down by half. If that
statement held true, we lost half the inertia, it would mean
that the transient stability planning that is done for the
transmission grid in the interconnection has to be done over,
and the stability is decreased.
I bring it up because fast storage offers the potential to
use power electronics to perform a synthetic form of inertia
and Governor response and neatly avoid this problem. Of course,
if the storage is used in conjunction with renewables, it is
almost a free benefit from an infrastructure standpoint.
An alternative to managing renewables' variability and
ramping, of course, is demand response. Smart grid certainly
offers us the opportunity for increased demand response,
consumer price response. I would like to suggest, however, that
30 percent demand response at 6 p.m. will not prove popular,
and storage is a good way to avoid this.
Coming to the subject of distribution reliability, American
Electric Power Corporation has a brilliant concept and, in
fact, will be doing a DOE demonstration project called
Community Storage. The really clever thing in their concept is
to take used batteries out of electric vehicles as these become
available, reconfigure them, and deploy them at distribution
transformers, protecting the reliability of a small cluster of
homes. They believe that with this, they can dramatically
improve distribution reliability.
Finally, storage offers the opportunity to reduce emissions
and provide benefits instead of backup power generation. Brad
Roberts, the chairman of the Energy Storage Association, who is
here today, would tell you that in their data center business,
they are starting to deploy large batteries as backup power for
50-and 90-megawatt data centers. This avoids the need to store
diesel, to run generation, avoids the emissions, and the
batteries can be used for peak shaving.
If I might, I would like to throw out a couple of
additional policy points for consideration. The efficiency of
the storage system, how much energy is lost charging the
battery and discharging, or whatever other storage medium is
there, is very important, especially when you look at daily use
with renewables or ancillary services. Efficiency of 70 percent
in a storage system sounds good, but that means 30 percent of
the renewables are lost and end up as heat in the storage
system.
So if incentives over time or DOE research could be
directed to improve the efficiency, this could be something to
think about.
Second, we frequently get asked by manufacturers and
developers to test storage technologies in our labs. There are
IEC and IEEE standards for batteries, for instance, but these
are aimed at laptop computers, power electronics, power tools.
Standards don't exist yet for the physical performance of grid-
scale connected storage. This will become important down the
road if utilities are to procure it, to be able to specify it
and know that their specifications have been complied with.
Another policy issue that will be in the way of deployment
of storage, there are not accepted planning methodologies that
utilities can use to determine how much to put where. Absent
that, regulators can't approve the investments as being
prudent, whether it is transmission or distribution.
If we had a date, say, by 2011, where we could say new
transmissions proposed should demonstrate that the use of
storage was considered in the design and the economics of the
transmission, this would stimulate awareness, interest. It
would stimulate the small software companies that support that
capability for utilities to develop the capability.
So those are my comments. Thank you again for the
opportunity.
[The prepared statement of Mr. Masiello follows:]
Prepared Statement of Ralph D. Masiello, Senior Vice President, Energy
Systems Consulting, KEMA, Inc.
Chairman Bingaman, Senator Murkowski, and members of the Committee,
thank you for the opportunity to participate in today's hearing on the
role of grid-scale energy storage in meeting energy and climate goals.
My name is Ralph Masiello. I am senior vice president of energy systems
consulting at KEMA and I am responsible for innovation management
within the company. I have been engaged in a number of energy storage
related activities while at KEMA including serving on the U.S.
Department of Energy ``Energy Advisory Committee'' and the Smart Grid
and Storage subcommittees.
KEMA is an independent, global provider of business and technical
consulting, operational support, measurement and inspection, and
testing and certification for the energy and utility industry. We have
over 1,400 professionals worldwide with 600 in the United States. KEMA,
Inc. serves energy clients throughout the Americas and Caribbean. We
have offices in 13 states, including Arizona, Michigan, North Carolina,
and Oregon, and operate the only independent high voltage power
apparatus testing lab in the United States.
KEMA has been actively engaged in projects across the energy
storage value chain, ranging from technology development and evaluation
to the advancement of large-scale storage applications. KEMA has worked
to expand understanding of energy storage capabilities by developing
analytic tools needed to plan for its use. We have been performing
storage consulting and testing activities for manufacturers,
developers, utilities, and the U.S. Army and the U.S. Navy via NATO for
some time. While we are generally true believers in the many benefits
that storage can bring to the electric power industry, we have no
vested interest in any particular technologies or solutions.
Today, I will provide a brief overview of what storage is and how
it relates to the electricity industry, including potential benefits of
storage and current barriers. First, I will discuss storage's role in
the electricity system. Then, I will provide an overview of storage
technologies and applications. Finally, I will briefly discuss policy
issues to consider regarding storage.
energy and storage--what it is and where we are
At the turn of the 20th century, early electric power developers
used batteries as part of the electricity generation and delivery
infrastructure. However, batteries were quickly surpassed by other
generation, transmission, and distribution technologies. For the past
100 years, electricity has been the only major commodity that is not
stored anywhere in the value chain. As such, the electricity industry
has been operating under a just-in-time delivery system, where power is
produced on demand as energy consumers need it and where all that is
produced is delivered. To maintain operations, grid operators must
balance generation to match load in real-time.
The lack of storage in the electricity industry has led to
relatively low capacity utilization throughout the production and
delivery of electricity--capacity is built and maintained to support
peak needs with adequate reserves against contingencies. Overall
utilization may be as low as 30% for some parts of the system. In the
case of production, peaking resources are often the most expensive and
their use just a few hours a year leads to very high spot prices of
electric power in the wholesale markets. Were we able to store
electricity effectively, this expensive model of planning and operation
could be much more efficient.
In addition to improving system efficiency, storage could help
address grid management challenges stemming from the integration of
variable resources. Unlike traditional fuelbased generation, many
renewable resources are variable over time and are not easily
controlled. With relatively small amounts of variable generation, load
has been the main source of variability. However, as renewable
penetration increases, grid operators will need to account for larger
variability in supply. The current system has a certain degree of
flexibility which it uses to balance demand and supply in real-time.
Additional sources would help the system absorb increasing amounts of
renewables. Storage, in particular, is one potential source of
flexibility that acts as a bridge, buffer, and reliability component.
storage future: changing the game
Renewables Resources
The industry is beginning to conclude that some increase in the use
of ancillary services will be necessary to integrate renewable
resources. Pacific Northwest National Labs, KEMA, and others have
conducted studies on the impact of high levels of renewables on system
operations and the results more or less agree on this point. While
ancillary services traditionally have been provided by fossil-based
generation, new sources are beginning to contribute. According to the
results of a recent KEMA study with the California Independent System
Operator (CAISO), a fast battery is two to three times as effective as
a combustion turbine at providing regulation and ramping services. In
addition, even where traditional generation sources are used for
ancillary services, storage appears to be beneficial. Virtual power
plants which integrate storage and production could supply ancillary
services more efficiently. This enables a plant to supply regulation or
reserves even while running near peak output.
Smart grid also offers ways to manage the demand side of the
equation--whether by demand response programs controlled by the grid
operator or via dynamic pricing schemes that induce consumer behavioral
change or both. Though they are valuable resources, it is likely that
demand response and dynamic pricing will not suffice at certain
renewable penetration levels.
Storage can offer additional benefits for renewable generation
beyond integration. With storage, producers of renewable energy could
time-shift production from periods of low demand to higher demand when
it is more valuable to the producer. Also, storage allows remote (and
often renewable) resources to escape curtailments due to transmission
congestion with the attendant cost exposure. Financially, the benefits
of storage may be considerable in such applications. Today, storage is
already proving itself economical for some of these applications in
market environments, to the extent that the markets are correctly
valuing the services. It is therefore likely to be economic in
regulated environments as well. Nevertheless, due to high upfront
costs, the challenge of investing in storage can compound existing
challenges for renewable investment.
Storage and Emissions
Overall, the potential of storage to improve system efficiency and
to facilitate renewables integration means that it can significantly
reduce emissions as compared to ancillary provision from fossil
generation. As noted earlier, storage's ability to quickly absorb the
variable output of renewable generation makes it a strong integration
tool for renewables. By any means, storage is able to provide a
service--storing and dispatching energy--with fewer emissions than any
comparable generation device. Examples of these savings are seen in the
one of the more prominent applications of storage today, frequency
regulation. A study by KEMA has shown that when replacing traditional
fossil-fuel generation, storage technologies such as flywheels and
fast-response storage systems can greatly reduce carbon dioxide
emissions compared to the incumbent technologies.
Storage could feasibly reduce emissions associated with backup
generation as well. KEMA recently performed a study for the California
Energy Commission in which it was determined that 3,800 MW of backup
generation, if replaced by battery storage, would result in reduction
of the annual emissions attributable to backup generation of as much as
40%. Here, emissions associated with the backup generation of non-
residential customers outweigh those associated with the grid-based
portfolio powering replacement batteries.
While it is becoming clear that storage can offer reductions in
emissions associated with the electricity system, further research is
needed to better define potential reductions across the host of storage
applications. Such reductions are likely to be specific to the region
and the storage technology, as emissions associated with storage depend
on the portfolio of generation used to power it and on the efficiency
of the technology.
storage technologies and applications
Storage Characteristics
Many electric storage technologies are available today and more are
forthcoming. Advanced lead-acid batteries, large format Lithium Ion,
and grid-scale Sodium Sulfur batteries are all commercially available.
There are many more emerging battery technologies from numerous
established and start-up manufacturers around the country. DOE has
awarded R&D Energy Frontier Research Centers funding and smart grid
demonstration funding to a number of these.
No single storage technology fits every application and
technologies have varying capabilities. However, advancements in
storage technology are resulting in characteristics that increase the
applicability of storage as a whole. These include:
Fast Response: For regulation and some other ancillary
services as well as transmission reliability applications, the
storage device must be able to respond to control signals and
change its charge / discharge power level near instantaneously;
some technologies easily support this.
Cycle durability: Some technologies can provide multi-
thousand range cycles, allowing them to be used for longer
periods of time in applications that require frequent use.
Duration: In some applications, storage devices must be able
to sustain full charging or discharging power levels for 2 to 6
hours. Shifting the diurnal production cycles of wind
production typically requires durations in this range, for
instance.
Transportability: Where devices are somewhat mobile, the
range of possible applications increases and re-use becomes
more feasible. Substation batteries used for reliability and
peak load management can be moved once station capacity
expansion is justified and re-used at another substation, for
instance.
Scalability: The ability of a technology to maintain its
characteristics regardless of size makes designing its use more
flexible.
As storage technology evolves, storage will likely have many
applications. Each technology will likely have its own niche depending
on which combination of the above characteristics define the device.
Performance and cost ultimately determine which type of storage is
right for which applications.
Application Areas for Advanced Electricity Storage
In addition to the generation-related applications of storage noted
above, electricity storage can provide value at the transmission,
distribution, and end-use levels of the electricity system. Currently,
developers and utilities are aggressively pursuing storage for
ancillary services provision, localized transmission reliability, and
community or utility-side backup reliability as well as more
traditional backup power applications.
Distribution
In many parts of the United States, distribution reliability is
such that consumers can expect to be without power an hour or more each
year--this significantly lags behind other countries, including Japan
and most of Europe. It is more than an inconvenience for someone
working at home and leads to consumers acquiring backup generators.
Storage, however, is a tool that could help improve reliability. In
particular, at the substation, storage can provide local ride-through
if sub-transmission failures limit service to the station. Substation-
based storage could also provide contingency coverage in the event of
transformer failures at peak load. This allows deferral of transformer
upgrade or replacement and avoids load curtailment.
On the feeder, storage can provide the same benefit at either
primary or secondary voltage--providing power to customers that would
be without service as a result of a feeder outage. This can be a
tremendous benefit, given that distribution feeder outages are the
greatest source of power outages. System average interruption duration
index (SAIDI) can be reduced dramatically by community energy storage
system. Storage out on the feeder can also be a way to temporally
provide extra capacity during load roll-over to alternate feeder
configurations--a way of enhancing reliability or deferring expansion.
The Community Storage concept as envisioned by AEP, a national
electricity generator and transmission system owner, would re-use
electric vehicle batteries (or other technologies) to provide one or
two hours of service to homes clustered around each distribution
transformer. This potentially has favorable impacts on the cost of
ownership of electric vehicles and is of interest to the automotive
community as well.
Transmission
Congestion relief, stability enhancement and capital deferral are
some of the benefits storage can offer the transmission system. Storage
can relieve congestion by timeshifting the energy in location as well--
taking production off peak and storing it near the load center--
downstream of the congestion point instead of at the generator. In
market environments, congestion costs are applied in principle to the
entire load in the congested zones or nodes. In this case, the benefit
of storage can be leveraged several times the value of the direct
megawatt shifted.
When the peak load in the congested area exceeds the production
available plus the production transmitted in, storage can serve as a
way to meet peak load and thus can be a means to defer transmission
expansion. (Generation expansion in many congested areas is impractical
for siting reasons as congestion points typically occur in dense, urban
areas).
The congestion problem will usually show up first as a contingency
limit, not a direct lack of transmission capacity. Storage is a way to
mitigate these contingency limits, with the fast storage picking up the
load before the generation can be started. Furthermore, it is
especially cost effective, as it avoids having to build transmission to
provide redundancy, and it provides emission benefits, as it allows the
use of downstream, uneconomic resources only after a contingency has
occurred.
Finally, in some specialized problem areas, where stability
concerns impose transfer limits that are more restrictive than the
inherent transmission capacity limits, fast storage can be used as a
stability enhancement device to relieve these stability constraints.
The value of this in a particular instance is potentially very great
and this application is worthy of serious engineering analysis and
study.
End User
When storage is a more economical way to provide ancillaries, it
reduces costs for everyone in the market. If enough storage is present
to affect the clearing price, it reduces the price for all suppliers of
the particular product. Similarly, by time-shifting lower cost
generation to peak periods, it reduces the need for expensive peaking
generation and reduces peak power prices. When storage reduces
congestion this is inherently a market benefit.
The ability of storage to perform in certain applications is not
limited to utility-scale devices. Generally, electricity storage is
unique in the ease with which the technologies can be scaled. Whether
the device is packaged as a kilowatt-scale application or a megawatt-
scale application, the performance characteristics of the device can
stay the same. For example, the same batteries that are being used in
utility-scale megawatt devices are being used in today's electric
vehicles.
policy issues and actions for consideration
Beyond the technical and economic hurdles that a new technology in
a new application has to overcome, there are a number of storage-
specific policy issues worth considering. As storage becomes more
versatile and commercially available, fitting storage into the existing
policy framework becomes more challenging. For example, how best to
classify storage, as a regulated or unregulated asset, is a primary
concern as the classification can determine how to allocate costs and
benefits. In addition, state utility commissions have to determine
appropriate depreciation schedules and prudent expenditures for
regulated distribution assets. The difficulty lies in the fact that a
single device can serve multiple functions, and may at times play the
roles of a regulated asset and an unregulated one.
Classifying the Type of Application
As noted above, storage can be used for many applications
throughout the value chain--from generation to transmission and
distribution to end-use. As such, a single storage asset can play the
roles of what are currently distinct regulated and unregulated assets.
Specifying the rules of engagement, in part to allocate costs and
revenues, must therefore account for function as well as ownership. The
example below discusses a case where transmission-based storage can
serve multiple purposes.
Example: Transmission Storage--Multiple Services
When storage is used for transmission congestion relief by shifting
energy in both time (off peak to peak) and location (remote to
congested zone near the load), the storage increases the energy's value
by both displacements. In essence, storage sets the marginal energy
clearing price. If the storage is financed and operated as a purely
merchant asset then the pricing, revenue sources, and cost allocations
are clear. In this case, the primary regulatory concern would be
whether the storage has undue pricing power or market concentration and
must be subject to the same treatment as a ``reliability must run''
(RMR) unit.
If the storage asset is proposed as a transmission asset with a
regulatory rate of return to the transmission owner then the question
of the allocation of the profits from time and location shifting are
very real. In effect it is allowing the transmission owner a share of
the congestion rents that the storage device can garner. This is
familiar ground to the industry; the new wrinkle here is that the
storage device could also easily access ancillary markets as well as
congestion. Storage deployed to relieve congestion is almost a perfect
merchant transmission asset. There are no questions of loop flows or
free rider usage. If the congestion relief economically justifies
storage then the best regulatory role might be to provide some level of
incentives or guarantees rather than to construct it as a regulatory
asset.
However, the conundrum is that the most advantageous solution
overall may be a level of storage deployment that reduces congestion
costs to the level needed to justify the storage investment and no
more. Whether market entrants will deploy the last increments of
storage against diminishing returns is always unclear. If storage
capital costs are on a decreasing curve it could be expected that new
entrants might drive out existing facilities as is normal with high
technology assets. That argues that merchant investors will want faster
economic depreciation recovery rather than standards imposed by
regulators. What is clear is that large-scale storage offers the first
real opportunity for a kind of merchant transmission in a way that is
environmentally and economically benign--and that we need the right
regulatory and market solutions to facilitate it and not create a new
form of regulated monopoly.
Some have argued that time shifting or locational storage uses more
environmentally unfriendly resources; it is also as likely that storage
fills in for intermittent renewable supplies. An interesting study
would examine these empirical trade-offs. Because gridscale storage
will involve utility interconnection requests and technical
requirements, these aspects have to be monitored carefully--and may
prohibit the co-existence of regulatory and merchant assets in the same
congestion zone. Another interesting corollary is the value of
additional transmission when new renewable generation resources in
addition to storage are sited. Does storage compete directly with
transmission or is it the combination of renewables and storage that
may obviate transmission benefits? Have we skirted the issue of
benefits allocations through transmission upgrades or merely postponed
it?
Is there an Industry Precedent?
The gas transmission industry offers one precedent which would not
necessarily be attractive to today's merchant storage entrepreneurs.
The storage asset is a regulated asset which earns a regulated rate of
return based on a tariff for gas stored. The energy shipper/trader that
contracts to use the storage pays a reservation fee and a storage fee
based on usage with penalties for over or under scheduling; the time
arbitrage gains on the stored gas are the profit or loss for the
shipper/trader. This model neatly separates the questions raised by
asset classification raised above. However, in this model it is not
clear what the electricity industry economics would be for the storage
investor. And as noted, the merchant electric storage operators today
would find this discouraging.
One aspect of the natural gas industry which bears examination
relative to electricity storage is the use of storage as part of
transportation to meet just in time delivery needs. Independent
marketers have more efficiently used both storage and pipeline capacity
to deliver fuel to generators. Storage operators and transmission
purchases can be bundled with energy to provide load. For the gas
industry, this has contributed to price volatility as weather or
outages have put pressure on local gas prices.
Other Barriers
The biggest challenge that faces adoption and deployment of storage
is lack of routine methodologies about how to incorporate storage into
system planning and operations. At the transmission level, this is
largely within FERC's purview. At the distribution level, it is a
matter for the states, of course.
NIST is developing standards for the interconnection of storage
with the grid and its smart grid interoperability. KEMA assisted the
ISO RTO Council in preparing the draft wholesale standards for storage
this fall. Beyond these standards, we need standards developed for the
description of storage in terms of efficiency, performance, life
cycles, and the like. Manufacturers are asking us to test their new
products in our laboratories in Pennsylvania and in Europe; most
storage testing standards have been developed for electronic devices,
back up power, and the like--and not for grid connected storage.
Tools to incentivize storage devices must be considered carefully.
An Investment Tax Credit for storage, for example, likely has limited
incentive for merchant developers and start ups as they cannot exploit
these themselves because they have little or no income to offset.
Rather, they arrange sale-leaseback with financial institutions that
can utilize the tax credits. The number of financial institutions
interested in these arrangements, however, is somewhat reduced right
now. Loan guarantees might be a more effective tool for such markets.
Careful consideration of how to allocate the emissions benefits of
storage is also important. Right now, when a regulated utility's
storage investment leads to emission improvements, the credit will flow
to the power production sector. Attribution of reliability improvements
is also complicated, but would serve to help spur reliabilityrelated
storage investments.
conclusion
The electricity grid is in the midst of historic transformation--
modernizing its technologies and changing its generation mix to include
a larger percentage of renewable resources. In the meantime, KEMA has
observed that advanced electricity storage technologies have drawn
attention from utilities, developers, governmental agencies, and
consumers across the globe. Additional factors, such as the rapid
growth in renewable generation investments and the increasing
penetration of electric vehicles and plug-in hybrid electric vehicles,
have increased the need for information that can help individuals
navigate the wave of attention being placed on storage to address grid-
related changes.
In the long-term, the implications of widespread, mass deployment
of electricity storage across the power system are profound. It holds
promise of dramatically increasing capacity utilizations of the
generation and transmission and distribution system--essentially
enabling a deferral of capital spending. Storage also can help
significantly improve reliability, especially at the distribution
level.
KEMA is heavily involved in expanding the understanding and
capabilities of storage technologies by grid simulation. Through our
studies on the business of storage and electrical vehicle integration
in the grid, our knowledge of storage technology and its potential, our
testing facilities for small-scale storage systems like batteries, our
Flexible Power Grid Laboratory for grid integration of storage systems,
and our knowledge of safety, environmental and customer aspects--we
have been involved in formulating the key questions around the economy
and efficacy of storage, and in developing the analytical and economic
tools necessary to plan for its use. The level of industry interest in
electricity storage is increasing very rapidly, and the policy sector
is taking up the need for and design of incentive and regulatory
structures for storage development.
Thank you for the opportunity to present electricity storage. I
appreciate the Committee's interest in this topic and I look forward to
answering your questions.
The Chairman. Thank you very much for your testimony.
Mr. McGrath.
STATEMENT OF ROBERT MCGRATH, DEPUTY LABORATORY DIRECTOR,
SCIENCE AND TECHNOLOGY, NATIONAL RENEWABLE ENERGY LABORATORY,
GOLDEN, CO
Mr. McGrath. Senator Bingaman, Senator Murkowski, Senator
Udall, thank you for the opportunity to discuss how grid-scale
energy storage can help achieve U.S. energy and climate goals
by enabling extensive and cost-effective deployment of large
amounts of renewable electricity generation.
I am fortunate to serve as the Deputy Laboratory Director
for the National Renewable Energy Laboratory, the Department of
Energy's primary laboratory for research and development on
renewable energy and energy efficiency technologies. Addressing
today's topic, earlier this year, the IEEE, in its national
energy policy recommendations, emphatically stated that if wind
and solar are to reach their full potential to contribute to
the Nation's power requirements, the technology for large-scale
energy storage must be developed and deployed.
For our electric grid, utility-scale storage not only can
help increase penetration of renewable energy from variable
sources, such as wind and solar, it can also enable renewable
technologies to replace fossil-fueled base power loads, enhance
the stability, reliability, and power quality of the electric
grid, and optimize the performance of an electric modernized
infrastructure.
At my laboratory, NREL, our researchers led for the
Department of Energy a definitive examination of the potential
for wind generation. Entitled ``Twenty Percent Wind Energy by
2030,'' that study showed that with ample grid capacity, wind
penetration to 20 percent of U.S. electrical generation is
feasible even without additional large-scale storage.
This study was addressing I think Senator Wyden's concern
around a wait and see attitude. The study was aimed
specifically at trying to understand what can we do immediately
to advance wind energy penetration into the grid?
NREL analysts have also examined the impact of solar
photovoltaics at high penetration. Those studies found that
photovoltaic-generated electricity become increasingly
difficult to manage beyond 20 percent penetration without
substantial changes in the grid, including storage.
Consequently, as higher penetrations of wind and solar find
their way onto the grid, the availability of cost-effective
energy storage systems become more and more important.
From a grid planning and operational perspective, renewable
generation, transmission, and storage are inextricably
intertwined. Given that complex coupling, as Dr. Koonin
mentioned, we need improved analysis tools and forward-thinking
policies to optimize investments needed to modernize and expand
the electric grid. These tools would serve as assets for
utilities, energy planners, and policymakers, helping them with
decisions on how much, when, and in what mix grid-scale energy
storage technologies should be deployed.
As wind power becomes more ubiquitous, it is likely, as we
have heard earlier this morning, that the first storage
technologies to be expanded will be compressed air and pumped
hydro. Nonetheless, continued research and development efforts
to improve flow batteries, superconductors, thermal storage,
and hydrogen storage will make those options more cost
competitive as well.
There are opportunities for improved science in
nanostructured materials, proton exchange membranes, and
chemistries to develop longer lived, higher capacity, and lower
cost electrochemical batteries.
NREL and others are also looking at harnessing renewable
electricity generation to meet the Nation's massive
transportation needs. By combining an electric vehicle fleet
with storage-backed renewable electricity, we can potentially
tap the vast resources of wind and solar to support low-carbon,
if not carbon-free, transportation.
Today, R&D efforts around energy storage are limited.
Pacific Northwest Laboratories, Sandia National Laboratories,
Oak Ridge Laboratories, and others are supporting DOE's current
storage program. At my laboratory, NREL, our new Energy Systems
Integration Facility, scheduled for completion in 2012, will be
dedicated exclusively to addressing the integration of
renewable energy sources with distribution, storage, energy
efficiency, and transportation.
In summary, starting from a very modest space of only 4
percent renewable generation, the current electricity system
can absorb much greater quantities of renewable power without
large new energy storage. However, research and development is
needed now if we are to have cost-effective storage solutions
that aid at optimizing deployment of renewable sources required
for a clean and secure energy future.
Thank you for this opportunity to address the committee
this morning.
[The prepared statement of Mr. McGrath follows:]
Prepared Statement of Robert McGrath, Deputy Laboratory Director,
Science and Technology, National Renewable Energy Laboratory, Golden,
CO
Mr. Chairman, members of the Committee, thank you for this
opportunity to discuss the role that energy storage can play in meeting
our nation's future energy needs, and in reducing carbon emissions
through greatly expanded use of clean, domestic renewable energy
resources. I am Robert McGrath, deputy director of the National
Renewable Energy Laboratory (NREL), the Department of Energy's primary
laboratory for research and development of renewable energy and energy
efficiency technologies.
At NREL, our mission is clear. We provide research, development and
support deployment to enhance our nation's energy security and reduce
greenhouse gas emissions, through large-scale production of electrical
power from renewable sources, through utilization of biofuels to
replace fossil-based transportation fuels, and through improved energy
efficiency in building, transportation and industrial processes.
Currently, electricity generation accounts for approximately 40% of
U.S. primary energy resource consumption. According to the U.S.
Environmental Protection Agency, electrical generation also produces
about one-third (34.2%) of our nation's CO2 emissions, roughly 2.5
billion metric tons per year (2,445 MMTons/yr)\1\.
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\1\ U.S. Environmental Protection Agency (2009) http://www.epa.gov/
climatechange/emissions/downloads09/GHG2007entire_report-508.pdf
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Consequently, increasing generation from renewable sources is
essential if we are to effectively mitigate climate change. Importantly
too, the innovation and job creation associated with development,
manufacturing, installation and operation of advanced solar, wind and
other renewable energy sources are vital to our nation's global
competitiveness and continued economic vitality.
My testimony today will focus on how grid-scale energy storage can
help achieve U.S. energy and climate goals by enabling extensive and
cost-effective deployment of large amounts of renewable electricity
generation.
Within our present grid, electricity is for the most part generated
and then instantly consumed. This has been a result of the economies of
scale for coal and nuclear central power stations. But as we move
toward a clean, low-carbon energy future, that will change. The
National Energy Policy Recommendations published by IEEE earlier this
year state that if distributed and variable ``sources of electrical
power, such as wind and solar, are to reach their full potential to
contribute to the nation's power requirements, technologies for large
scale energy storage must be developed and deployed.''\2\
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\2\ IEEE-USA Policy Statement, Jan, 2009 www.IEEEUSA.ORG/POLICY/
ENERGYPLAN
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The theoretical potential of renewable power from wind and solar
resources is vast--estimated to be more than 600 terrawatts of power
available from wind and solar alone, worldwide. That compares with
today's maximum worldwide estimated demand of about 12.5 terrawatts.
While plentiful, renewable resources vary by time and by region. Fully
accessing those resources will require a more adaptive, flexible
distribution system. A more adaptive grid will in turn require improved
transmission and storage systems.
storage technologies can provide many benefits
Large-scale energy storage technologies will have many benefits,
including:
Facilitating large scale penetration of renewable energy
from variable sources such as wind or solar;
Enabling renewable energy technologies to replace fossil
fueled base-load power sources;
Enhancing the stability, reliability and power quality of
the electric grid;
Optimizing the performance of a modernized electric
infrastructure.
While the promise of energy storage is well recognized, there are
many technology and policy challenges which must be solved.
Technologies, such as zinc-bromine, lead-sulfide, sodium-sulfide,
lithium-ion, nickel-cadmium batteries and high-energy-density super
capacitors, are being developed for grid-scale storage. Additional
research and development is essential, however, to lower costs and to
increase their durability, power density and energy efficiency.
Detailed technology assessments and associated system integration
analysis tools are needed to assist utilities, energy planners and
policy makers as they decide how much, when, and in what mix, grid-
scale energy storage technologies will be deployed.
Even when the advantages of storage technology are clearly evident,
utilities may not be willing to make needed investments in energy
storage systems unless the complex economic and operational
interrelationships between new renewable energy generation, grid
improvement, and an array of other considerations, are understood as
well. The 2008 Electricity Advisory Committee (EAC) report on energy
storage called for a robust national program for research, development
of cost-effective, efficient, large-scale energy storage technologies,
along with greatly improved analysis for optimizing generation,
storage, transmission and grid management.
At my laboratory, NREL, researchers are supporting the Department
of Energy's Offices of Energy Efficiency and Renewable Energy, and
Electricity Delivery and Energy Reliability in assessing the potential
for, and projected costs of a broad spectrum of renewable energy
electricity generation options. Recently, our specialists led for the
Department of Energy one of the most definitive examinations of the
potential for wind power generation ever produced for the United
States. This report, entitled 20% Wind Energy by 2030\3\, showed that
with ample grid capacity for transmitting power from regions of high
quality wind to load centers on the coasts, wind penetration to 20% of
U.S. electrical capacity is possible within the next two decades
without the necessity of large-scale storage.
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\3\ 20% Wind Energy by 2030, Increasing Wind Energy's Contribution
to U.S. Electricity Supply, DOE/GO-102008-2578, Dec 2008
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The new transmission lines that are needed to take advantage of
available wind resources can be cost effective when considered purely
from the standpoint of construction and operation. Siting, regulatory
and legal issues, however, can pose costly delays and uncertainty for
even the most well planned new transmission projects. The lesson is
that new renewable generation, transmission and storage are
inextricably intertwined, and we will require clear analysis and
forward-thinking policies to ensure we reap the full benefits of our
abundant renewable resources.
Wind is the largest and fastest growing sector of the U.S.
renewable energy generation market. Nonetheless, non-hydro renewable
generation represents less than 4 percent of the total U.S. generation
capacity, or just over 31 GW. To achieve 20 percent wind penetration by
2030 consequently requires more than a ten-fold increase in wind
production, to more than 300 GW. (Studies suggest wind development to
that level will require an investment approximately 2 percent higher
than would occur without the wind power build out.) This will require
annual installation of 16 GW of new wind turbines each year for the
next two decades. By comparison, new wind turbine installations reached
a record level during 2008 of 8 GW.
NREL researchers find that additional deployment of wind generation
can be aggressively pursued in the near-term even without accompanying
deployment of energy storage. However, as higher and higher
penetrations of wind and solar find their way onto the grid, cost-
effective energy storage systems may become more and more imperative.
NREL analysts have also examined the impact of solar photovoltaics
(PV) at high penetration.\4\ These studies found that photovoltaic-
generated electricity becomes increasingly difficult to utilize beyond
20% penetration without substantial changes to the grid, such as
incorporation of storage to enable temporal shifts in utilization of PV
produced energy during periods of lower solar output. It should be
noted, too, that the thermal working fluid inherent within
concentrating solar power (CSP) can effectively facilitate thermal
storage, which can add four to six hours of sustained generation
capacity\5\, and thus make CSP a more cost-effective technology.
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\4\ Denholm, P., and R. M. Margolis. (2007) ``Evaluating the Limits
of Solar Photovoltaics (PV) in Electric Power Systems Utilizing Energy
Storage and Other Enabling Technologies''. Energy Policy. 35, 4424-4433
\5\ Sioshansi, R. and P. Denholm (2009) ``The Value of
Concentrating Solar Power and Thermal Energy Storage.'' NREL/TP-6A2-
45833
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Taken together, the emerging analytical consensus provides
confidence that renewable energy can expand well beyond the niche role
it has played to date, and is capable of providing at least 20 percent,
and perhaps much more, of nation's electricity needs.
As wind and solar capacities continue to expand, the periods of
time during which renewable generation exceeds the instantaneous
consumption will become more prevalent--especially within regional and
localized markets. At that point, the value of storage rises, because
storage allows renewable resources to be captured when they are
available, and shifted temporally to meet peak demands.
energy storage technologies are varied, solutions are complex
Additional, detailed studies, conducted using sophisticated
analytical models, are needed to address the question of how our nation
can best develop the full benefits of renewable energy, and in
particular, how energy storage can support that development. For
example, at present, the U.S. electrical system operates with about 21
GW of energy storage, provided almost exclusively via pumped hydro.
This represents only about 2 percent of the total 1,000 GW U.S.
electricity generation capacity.
As wind and solar power become more ubiquitous, it is likely that
the first storage technologies to be expanded will be compressed air
energy storage, since this technology may be geographically
distributed, and where regionally feasible, some expansion of pumped
hydro storage.
Continued research and development efforts to improve flow
batteries, super capacitors, thermal storage and hydrogen storage, will
make these options more cost competitive, and thereby give utilities
greater flexibility to improve the stability, reliability, flexibility
and power quality of the electrical grid. Although it may be some time
before renewable energy options are deployed to the extent where
utility-scale energy storage is unavoidable, a significant research and
development program must be ongoing if we are to have cost-effective
storage solutions when they are truly needed.
Given the broad array of storage technology options available, it
is difficult to briefly summarize the development state and potential
of each. It is clear, however, that additional research and development
is needed to yield storage technologies with the improved performance
and lower costs we will require. For example, new sciences for nano-
structured materials, membranes and chemistries are needed for
development of longer-lived, higher capacity, and lower cost
electrochemical batteries, for new electrolytes and electrodes for
higher voltage, greater capacity and lower cost capacitors, and for new
power electronic devices supporting effective integration of storage
devices into the electric grid. Even more mature technologies will
benefit substantially from additional R&D. For example, advanced
engineering on water and air turbines may improve efficiencies in
pumped hydro and compressed air storage systems, and stronger materials
and reduced friction in bearings will result in longer life and lower
cost flywheels.
Another promising area of research and development at the utility
scale uses hydrogen as an energy storage medium. At NREL's National
Wind Technology Center, we have teamed with Xcel Energy, the nation's
largest wind power utility, in a wind-to-hydrogen demonstration
project, in which wind turbines are used to power hydrogen producing
electrolyzers. The hydrogen can then be stored for later use in
electricity generation, or as energy for hydrogen powered vehicles.
This brings us to another area of tremendous challenge and
opportunity: harnessing renewable electricity generation, transmission
and storage to meet the nation's massive transportation needs.
Electrically powered vehicles have great potential to reduce our
dependence on imported fossil fuels. By combining an electrical vehicle
fleet with storage-backed renewable electricity, we can potentially tap
the vast resources of wind and solar to support low-carbon, or carbon-
free, transportation. Studies at NREL confirm that integration of plug-
in hybrid electric vehicles (PHEVs) into the grid can not only reduce
dependence on petroleum and stabilize carbon emissions 6 7,
but can also be used to provide grid services\8\, while further
enabling renewable technologies.\9\
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\6\ Denholm, P., and W. Short. (2006) ``An Evaluation of Utility
System Impacts and Benefits of Optimally Dispatched Plug-In Hybrid
Electric Vehicles'' NREL/TP-620-40293.
\7\ Parks, K, P. Denholm, and T. Markel (2007) ``Costs and
Emissions Associated with Plug-In Hybrid Electric Vehicle Charging in
the Xcel Energy Colorado Service Territory'' NREL/TP-640-41410.
\8\ Letendre, Steven, P. Denholm, and P. Lilienthal. (2006)
``Electric and Plug-In Hybrid Cars'' New Load, or New Resource?''
Public Utilities Fortnightly. 28-37.
\9\ Short, Walter, and P. Denholm. (2006) ``A Preliminary
Assessment of Plug-In Hybrid Electric Vehicles on Wind Energy Markets''
NREL/TP-620-39729.
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Advanced battery technology is paving the way for gas-saving
hybrids and the next generation of plug-in hybrid cars and trucks. As
Dr. Koonin has mentioned, DOE is wisely investing in advanced
technology development and manufacturing of batteries for
transportation as well as for grid-level storage, exploring a broad
array of promising options. Continued investments in development and
demonstration projects for grid-scale energy storage, and for
integration of the nation's vehicles, buildings, and electricity grid
are important for achieving our national goals for a clean and secure
energy future.
current r&d status
With very limited resources, DOE is doing a good job of leveraging
efforts of state, federal and international organizations in order to
keep storage development moving forward. Several national laboratories
are investing internal R&D funds in forward-looking energy storage
solutions such as nanomaterials for batteries. Partnerships among the
national labs are leveraging capabilities and resources to accelerate
the development of energy storage solutions. For example, Pacific
Northwest National Lab (PNNL) and Sandia National Labs (SNL) are
combining grid operations and controls expertise with materials and
systems integration talents in support of DOE's energy storage program,
and NREL and SNL have a newly established partnership in high
performance computing that will be applied to energy storage technology
development and system integration analysis.
While significant work is underway, NREL will be able more
aggressively and comprehensively address storage research and
development through the new capabilities of its Energy Systems
Integration Facility (ESIF). The ESIF will be a 180,000-square-foot
laboratory dedicated to solving issues related to the integration of
renewable energy and energy efficiency technologies deployed at scale.
Anchored by a 400 teraflop high-performance computer, the ESIF will
enable complex systems R&D that fully integrates the most advanced
simulation, data analysis, engineering, and evaluation techniques to
accelerate the integration of new energy technologies generally, and
the broad deployment of storage technologies specifically. Using the
ESIF's modeling and simulation capacity, new materials will be explored
more rapidly, and existing materials can be improved for performance
and cost. The high performance computer will also enable highly focused
simulations of complex electric systems to optimize the deployment of
new generation technologies that are coupled with storage to ensure the
most cost-effective approach and to determine approaches that will
maintain and even enhance the reliability of the electricity system.
Having these fully interactive simulation, testing, and evaluation
facilities in one laboratory will move grid integration and storage
forward on the fastest path possible.
From the national perspective, ongoing research is critically
needed in two broad areas. First, research and development is needed
for storage materials and techniques, including: new storage materials
for electrochemical storage; new mechanical energy storage techniques;
increased energy densities in storage media; increased cycling/
lifetimes; all to greatly reduce costs. Second, research is needed on
the integration of storage into the grid: grid simulations and
optimizations to explore what types of storage are needed, where they
should interconnect in the system, and how to operate storage assets;
development of new power electronics for integrating storage; and,
development of new communications and control technologies for charging
and discharging storage in an optimal fashion (smart grid technologies
for storage).
conclusion
The current electricity system can absorb much greater quantities
of renewable generation than are currently deployed without significant
increases in the deployment of storage technologies. As penetration
levels increase in the future, storage will play a key enabling role
for penetrations of variable generation in excess of 30 percent.
Currently, storage technologies do not exist that can be cost-
effectively deployed in the diversity of applications that are
anticipated. To prepare for the time when is needed at scale, we must
increase our research and development efforts in the near term.
Our nation will be served if recommendations from this year's IEEE-
USA Policy Position Statement are implemented. According to IEEE, the
U.S. will need significant and sustained research to develop affordable
energy storage technologies to effectively move renewable energy onto
the electric system. The IEEE statement urged Congress to fully fund
the energy storage R&D program authorized in the Energy Independence
and Security Act of 2007.
Thank you for the opportunity to address the Committee on this
important topic.
The Chairman. Thank you very much.
Mr. Huber, please go ahead.
STATEMENT OF KENNETH HUBER, SENIOR TECHNOLOGY AND EDUCATION
PRINCIPAL, PJM INTERCONNECTION
Mr. Huber. Good morning. Thank you, Chairman Bingaman and
Ranking Member Murkowski.
PJM is honored to be invited to this important hearing on
energy storage this morning. Thank you.
We certainly have been pursuing--PJM, that is--the
opportunities on everything from pumped storage, compressed
air, battery systems, flywheels, ice making, even use of
refrigeration systems in homes as opportunities for storage.
All these are viable opportunities that we are pursuing and
attempting to demo.
But I am going to take my time this morning and hone in on
the opportunities of plug-in vehicles and how it pertains to
grid storage capabilities that really look exciting to us.
When 1 million vehicles are deployed in the United States,
hopefully, in 5 years or less, 18 percent of those, if we do it
by population, will end up in the PJM territory. That means a
distribution of storage capabilities extending from Illinois to
New Jersey, down into Tennessee and North Carolina, including
District of Columbia. The PJM territory will have 180,000
vehicles that are distributed energy sources for us to tap
into.
The ability to aggregate those resources and have them act
the same as stationary battery systems is underway already.
Aggregators like General Motors, OnStar, regular aggregators,
convergers, et cetera, are all pursuing how to do this. In
fact, I will talk a little bit of an example where we are doing
that today.
Almost more interesting than residential use of plug-in
vehicles is fleet use. If you think about a local delivery
vehicle and what it is doing today and its runs of stop/start,
very low mileage per gallon usage, idling constantly. If you
were to electrify those local delivery fleets, and we are
pursuing opportunities and discussions with several of those,
what you are talking about is a fleet with pretty regular
routes that run the system the same way every day, return
almost always to the same location, that allows the
infrastructure for those fleets to be put in place and allows a
capability for two-way communications and control back into the
grid that really provides a reliable capability for storage
when it is needed.
Now I will talk about smart charging incentive, both for
the residential and for the fleet vehicles. The ability to
deliver price signals, to deliver information about renewables,
to deliver information about reliability of the grid to
aggregators and then on to vehicles is really where we are
working hard to obtain.
I was just with General Motors yesterday in Detroit talking
about this smart charging capability. We really do believe that
if you give the right information to the individual, they will
be incented to respond to those. You know, people respond to
the incentives they are given. The charging will happen at the
times that is needed, and it will result in good usage of the
automobile and good usage for the grid.
Let me flip over and talk about one other area of storage
that is very important to us, which is frequency regulation.
The ability to keep the frequency at 60 hertz at all times is
an important operation within the PJM facility.
In 2007, PJM joined a consortium--the University of
Delaware; Pepco Holdings, Pepco Electricity here in Washington;
California converter company AC Propulsion; and a couple
others--and produced a vehicle that has been operating to the
PJM regulation signal since October 2007. For 2 years, we have
experienced what it means for a vehicle to not only charge and
discharge on a 4-second signal sent to it, and we are seeing
and gathering that data.
That vehicle has been operating to the market, but not in
the market. It is too small. It is only 18 kilowatts. A very
good occurrence happened over the course of 2008. AES, the
generation company, brought into the PJM territory 1 megawatt
of batteries, very, very similar to automotive batteries in
their structure, and it entered the market in November 2008 and
has been continuously in the PJM market since May 2009.
So 24 hours a day, 7 days a week, we are getting 1 megawatt
of battery power responding to our 4-second regulation signal.
The celebration that we are sort of having right now is that we
have taken that vehicle, that MAGICC--Mid-Atlantic Grid
Interactive Car Consortium--vehicle and its two sister vehicles
and have now integrated them and aggregated with the batteries
of the AES stationary system. So we now have 1.054 megawatts of
energy in the regulation system.
So the batteries in the stationary system are being paid
somewhere between $700 to $900 a day for just responding to our
signal, and each of the three vehicles is now getting paid
about $10 a day for doing the exact same thing. Just
demonstrating the fact that the batteries can be distributed.
They happen to be in Delaware, and the stationary battery
system happens to be in Pennsylvania.
So a really exciting experiment of what we can do as we
start seeing these vehicles become prevalent throughout our
system. I will just end and talk about the one policy area.
Certainly--I will talk about two.
The ability to standardize the communications, the two-way
communications and the control from the RTO/ISO through the
utility or the aggregator into the consumer is certainly
important. There is very good activities being directed by DOE
and done by NIST, National Institute of Standards and
Technology, today that are addressing that.
The automotive companies are there. The utilities are
there. It is a very good forum. We need to make that all happen
so that we have the communications and the robustness that we
need.
We need to work together, the automotive companies and the
utilities, to develop the smart charging capability that--I
mean, everyone talks about everyone is going to go home at 5
and plug their vehicles in. The automobiles are smart. The
system is smart. There is no reason for that to happen with the
right incentives in place.
Thank you very much for your time.
[The prepared statement of Mr. Huber follows:]
Prepared Statement of Kenneth Huber, Senior Technology and Education
Principal, PJM Interconnection
executive summary
In the attached testimony, Kenneth Huber, Senior Technology and
Education Principal at PJM Interconnection (PJM) details the activities
presently underway within PJM's 13-state footprint regarding the
potential of plug-in hybrid electric vehicles (PHEVs) serving as an
energy storage resource. PJM is the Federal Energy Regulatory
Commission (FERC) approved Regional Transmission Organization (RTO)
serving all or parts of the states of Illinois, Michigan, Indiana,
Ohio, Kentucky, Tennessee, West Virginia, North Carolina, Virginia,
Maryland, Delaware, Pennsylvania and New Jersey as well as the District
of Columbia. PJM operates the bulk power grid in this region, plans
transmission expansion and operates the largest competitive wholesale
electricity market in the world.
The batteries within PHEVs carry with them the promise of serving
as a new and highly effective, distributed energy storage resource. If
done right, plug-in hybrid vehicles can enhance the efficiency of the
grid by shifting load to off-peak nighttime hours -- the very time when
certain renewable resources, such as wind power, are most available. On
the other hand, if customers plug in their cars at 6 p.m. and there are
no economic incentives or communication and control technology to drive
different customer behavior, then the nation could be worse off both in
terms of efficient grid operation and in controlling emissions from
fossil generation.
Mr. Huber details PJM's participation in three projects
demonstrating and evaluating use of PHEVs for grid storage-- the
University of Delaware's Mid-Atlantic Grid Interactive Car Consortium
(MAGICC), The Ohio State University's SMART@CAR initiative and the
North Carolina State Freedom Engineering Research Center. The first
MAGICC plug-in electric vehicle has been responding in real-time to the
PJM regulation signal since October 2007 and has provided a wealth of
data on the use and value of vehicle-to-grid operation. This month,
AES, PJM and the University of Delaware will be aggregating three 18 KW
vehicles with a 1 MW stationary battery trailer. This is the first
demonstration of vehicleto-grid plug-in electric vehicles actively
participating in any regulation market and providing a cash return to
the vehicle owners. The three vehicles will be earning between $7-10
each for the 18-20 hours they are plugged in and contributing to the
regulation storage needs of the grid. The batteries in plug-in electric
vehicles become a source of regulation service that is more distributed
and therefore provide the same, and in some cases, superior regulation
service to what is today provide by central station generation.
Mr. Huber concludes his testimony by outlining some of the policy
challenges associated with wide scale deployment of PHEVs. These
include: (1) ensuring coordination between the transportation and
electric industries on vehicle design and development; (2) addressing
ownership rights associated with infrastructure and the sale of
electricity to PHEVs; (3) ensuring seamless ``roaming'' and ability of
back-office billing and settlement systems to match cars with electric
customers; and (4) the role of enforcement of interoperability
protocols being developed through the National Institute of Standards
and Technology (NIST) process. Mr. Huber suggests that continued
Committee oversight and focus on these issues will help to underscore
the national and international policy benefits of ``smart'' plug-in
hybrid electric vehicle technology.
testimony of kenneth huber, senior technology and education principal
On behalf of PJM Interconnection, L.L.C. (PJM), I want to thank the
Committee for the opportunity to participate in this important
discussion of the role of grid-scale energy storage in meeting the
energy and climate goals of the United States. My name is Kenneth Huber
and I am Senior Technology & Education Principal at PJM. My goal today
is to discuss the reliability and economic value of grid-scale storage
both for today's grid operation and for forecasting future grid
operations. I will also discuss the value of storage as it relates to
the anticipated emergence of renewable energy resources.
PJM is a Regional Transmission Organization (RTO) and one of the
seven Independent System Operators (ISOs) and RTOs located throughout
the country. PJM is responsible for the reliability of the bulk power
grid in a 13-state region which encompasses over 51 million Americans.
PJM operates the bulk power grid in this region, plans transmission
expansion and operates the largest competitive wholesale electricity
market in the world. Over two thirds of the nation is served by RTOs
and ISOs. As an independent entity, we are dedicated to ensuring open
access to the grid and embracing many new and sometimes competing
technologies. PJM was privileged recently to be a recipient of one of
the Department of Energy's Smart Grid grants -- a grant for the
installation of phasor measurement units to enhance the overall
visibility of grid conditions on a minute-byminute basis and to improve
the overall efficiency of the grid operations.
To keep the lights on, PJM must perform the real-time balancing of
the electrical grid -- every second of every minute of every day, PJM
matches electricity demand with the `least-cost group' of electricity
generation and demand response resources. The dispatch of over 1,200
generators on our system must be undertaken with recognition of the
physical constraints of the electric transmission system and the need
to ensure adequate reserves available to keep the lights on in the
event of a sudden loss of generation or transmission. This challenging
balancing of the grid is complicated by the unique physics of
electricity. Electricity is not like oil which can be refined and
stored easily for long periods until the time it is needed. Electricity
must be generated at the near moment that it is required. I will
discuss how grid storage, with a particular focus on plug-in electric
vehicles, can and is being used to assist in this system balancing
requirement. I will also highlight the specific activities PJM is
undertaking to jump start the deployment of ``smart'' plug-in hybrid
vehicles in our footprint, as well as, briefly address some of the
policy challenges that will affect further deployment of plug in hybrid
electric vehicles.
the state of the grid today
Contrary to the beliefs of some, the bulk power grid already is
very interactive and ``smart''. Today, we have more sophisticated
operations and market-based tools to manage flows on the grid than ever
before. These tools include our state estimator which monitors and
reports on the state of the system every two minutes. They include our
ability to redispatch generation to proactively clear congestion before
reliability is threatened by overloads on a given transmission line or
set of lines. In short, we have been able to utilize technology to help
manage power flow more efficiently than in years past.
new opportunities--a smarter grid
Although the bulk power grid can be considered ``smart'' today,
emerging technologies and enhanced communication will put in place an
even more robust grid. Advanced technology will open a new frontier for
the grid in many ways. A grid that is based on smart grid technology,
when coupled with electrification of transportation and the delivery of
more real-time information, will provide new opportunities to better
manage the grid and control both for price and environmental
externalities. PJM is actively working on the agreement of and the
eventual creation of the capabilities and role of the RTO/ISOs that
will deliver that smarter grid. We are accomplishing this goal through
active participation in the National Institute of Standards and
Technology (NIST) Smart Grid Interoperability Panel, the North American
Electric Reliability Council (NERC) Smart Grid Standards Task Force and
the North American Energy Standards Board (NAESB) Smart Grid Standards
Task Force. I have been focusing my participation in the NIST Priority
Action Plans for Storage and Electric Transportation and am a voting
member of the Society of Automotive Engineers (SAE) standards process.
grid storage--a key element of a smarter grid
PJM Interconnection supports projects of all types to expand the
electricity storage capability of the electric grid. More storage
capacity will be needed to deal with the forecasted major expansion of
intermittent renewable energy sources and their potential impact on
system reliability.
One of the challenges facing grid operators like PJM is the
inability to ``store'' electricity for use at times of high demand or
when certain generation may be operationally or environmentally
constrained. However, new technologies are being developed and tested
that offer the promise of more widespread storage options for grid
operators and utilities. These technologies will become even more
important as intermittent renewable energy sources play a greater role
in the nation's electricity supply.
Today, additional options for storing electricity are emerging and
are being tested. These technologies--such things as battery arrays,
flywheels, compressed air energy storage and even PHEVs\1\--may give
grid operators additional flexibility in their efforts to ensure the
reliability of the electric system. After outlining the general storage
needs of the grid, I will be concentrating the bulk of my testimony on
the grid storage applications afforded by PHEVs.
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\1\ The term PHEV used in this testimony refers to different types
of plug in electric vehicles including plug-in hybrid vehicles,
extended range electric vehicles and battery extended vehicles.
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There are a number of reasons why additional storage capacity is
needed on the grid. The dramatic expected increase in the penetration
of renewable generation resources is the primary driver. These sources
typically are intermittent--their production isn't available all the
time, for example, when the wind isn't blowing or the sun isn't
shining--and their output may not be available at times of peak demand
when it is needed most.
In recent years, the nameplate capacity value of wind generation
projects entering the PJM interconnection queues has steeply increased.
There are currently 3,300 MW of nameplate wind capacity in operation,
1,500 MW under construction and approximately 42,000 MW nameplate
capacity of wind generation in the interconnection queue in PJM.
Taking full advantage of renewable sources while dealing with the
reliability challenges of the sources' power fluctuations will require
a significant increase in storage on the grid.
Although the PJM system is one of the nation's largest and thus
able to absorb a greater degree of intermittency than smaller systems,
the lack of sufficient storage already is causing issues for PJM. In
some areas, abundant wind production in the off-peak (night-time) hours
has forced electricity prices into the negative range. During low load
periods, storage will become critical to prevent curtailment of this
wind generation. Figure 5 is illustrative of a common occurrence in PJM
in which the wind output is rapidly declining just at the time (5:00
a.m. in this example) when the grid load is beginning its morning
period of rapid load increase. Negative prices for wholesale
electricity frequently result from these conditions. In this example
the Locational Marginal Price of electricity in Chicago fell to minus
$8. On this day at this hour, in order to maintain the system's load to
generation balance, a storage facility would have been paid to store
energy. From a PHEV perspective, the vehicle owner would be paid to
charge their car during that hour.
Given the states' requirements for renewable energy and economic
incentives for the development of renewable projects, the expected
expansion of renewable power will magnify this situation, along with
the challenges for grid operators to maintain reliability during such
periods of fluctuations in the output of these power sources.
new battery and vehicle grid storage technologies
Battery storage.--A one-megawatt (MW) array of lithium-ion
batteries began offering regulation service in the PJM market in May of
this year. The batteries, housed in a trailer on the PJM campus, are
owned by AES Energy Services LLC, a subsidiary of The AES Corp., a PJM
member. The facility can help PJM quickly balance variations in load to
regulate frequency as an alternative to adjusting the output of fossil-
fuel generators; it is capable of changing its output in less than one
second. In response to PJM requests to balance the grid, the battery
unit can supply power into the grid by discharging its batteries or
store excess electricity from the grid to charge its batteries. Thirty
four MWs of battery storage have been put in the PJM generation queues
for 2010.
PHEVs.--The dual use of PHEV batteries to support both
transportation (when the vehicle is being driven) and the grid (when
the vehicle is parked and plugged in) is particularly attractive. Most
vehicles are driven only several hours per day and are plugged in and
available to provide grid support for the remaining time in the day.
Fleet vehicles, while driven 8-12 hours per day, are typically returned
to the same location and available for grid services the remaining 12-
16 hours of the day.
Off-peak electricity from the grid could charge PHEVs, shifting
load to the night-time hours. In addition, PHEVs also could provide
regulation services to the grid whenever parked.
Regulation service, provided today principally by central station
generators, matches generation and load and adjusts generation output
to maintain the desired 60 Hz frequency. Regulation service corrects
for short-term changes in electricity use that might affect the
stability of the power system. Regulation is needed throughout the day
and night to ensure system frequency despite constant fluctuation in
demand and generation. Grid operators must continuously match the
generation of power to the consumption. Regulation requires a
generating facility that can ramp power up or down under real time
control of the grid operator.
PJM is part of three initiatives -- the University of Delaware's
Mid-Atlantic Grid Interactive Car Consortium (MAGICC), The Ohio State
University's SMART@CAR initiative and the North Carolina State Freedom
Engineering Research Center--each of which is analyzing, demonstrating
and evaluating use of PHEVs for grid storage. The MAGICC vehicle has
been responding to the PJM regulation signal since October 2007 and has
been evaluating the vehicle-to-grid (V2G) approach, which enables PHEVs
to discharge their stored power to the grid based on regulation signals
from PJM. This month AES, PJM and the University of Delaware will be
aggregating three 18 KW vehicles with the 1 MW stationary battery
trailer (Figure 6). This is the first realization of the `cash-back'
vehicle\2\ as the three vehicles will be actively participating in the
PJM regulation market and earning between $7--$10 each for the 18-20
hours they are plugged in and contributing to the regulation storage
needs of the grid. The annual payment for each of these vehicles will
be in the order of $2,500 to $3,500.
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\2\ ``How To Improve The Efficiency Of The World's Biggest
Machine--While Solving A Few Other Problems Along The Way,'' Jon
Wellinghoff, Commissioner, Federal Energy Regulatory Commission, May 7,
2007.
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Of particular interest is the opportunity for automotive fleets to
become an early adopter of PHEVs and showcase the direct economic and
environmental value for both transportation and grid support. Local
delivery fleets suffer from low fuel mileage, idle a large percentage
of their time and are economically impacted by any increase in price of
gasoline. As PHEVs, these fleet vehicles would charge at night with
inexpensive electric, be available for regulation services and market
revenues and would deliver green transportation while serving our
neighborhoods.
Plug-in hybrid vehicles represent an exciting new opportunity to
provide both ancillary services to the grid and utilize the power
system assets more efficiently. If done right, plug-in hybrid vehicles
can enhance the efficiency of the grid by shifting load to off-peak
nighttime hours. On the other hand, if everyone plugs in their car at 5
p.m. and there are no economic incentives or communication and control
technology to drive different customer behavior, a much higher peak
load would have to be supported by high cost generation.
Figure 9 shows the minimal impact of 180,000 PHEVs (1,000,000
vehicles times the 18% of the nation's population that resides in the
PJM territory). It also illustrates the potential for supporting 25
million PHEVs if the charging is done at off peak times.
The auto industry and the electric industry also must work together
to make the future PHEVs deliver on their potential to reduce oil
imports, to reduce carbon dioxide and to reduce the cost of
transportation. The automobile manufactures, the local utilities, the
RTO/ISOs and the Electric Power Research Institute (EPRI) are meeting
regularly to discuss and work through the needs of our industries and
of the end-use consumer to provide reliable, clean and economic
transportation and electricity use.
A mixture of all of these storage technologies will help grid
operators and utilities address the impact of a large-scale addition of
renewable energy sources to the electricity system, including the
intermittent nature of renewables, the off-peak timing of much wind
energy output and the potential impact on the loading levels of
baseload coal and nuclear plants.
policy challenges
While today we are seeing aftermarket conversions of plug-in hybrid
electric vehicles (e.g. the BMW Mini) production vehicles from original
equipment manufacturers will begin with the deployment of plug in
hybrid electric vehicles in 2010, such as the Chevrolet Volt. As I
mentioned previously, to truly realize the full benefit of PHEVs rather
than simply swapping one set of increased emissions for another, we
will need to ensure that there is smart charging of the vehicle with
two way communications available between the vehicle and the grid. The
customer remains in control. However, through appropriate price and
control signals, parked plug-in hybrid electric vehicle, can provide a
source of distributed generation that can better help us to manage the
grid than we can today with large central station generators distant
from the loads. And by using price signals to incent vehicle owners to
charge their cars in off-peak times, we can avoid creating a whole new
set of system peaks at the very time we are seeking to reduce carbon
emissions and otherwise smooth out fluctuations in peak demand.
To achieve this vision, we will need to address a number of policy
issues, some of which are well on their way to resolution and others
which are only first being identified. Let me outline a few for the
Committee's consideration:
Cooperation and coordination between the electric and
transportation industries--These industries have traditionally
not had to adjust their product to meet the needs of the other.
However, both industries have now recognized the need to
collaborate on infrastructure requirements, data exchange and
ensuring a positive, holistic experience for the PHEV customer.
The industries are working together in many forums, including
the Society of Automotive Engineers standards activities, the
EPRI PHEV collaboration programs and many local deployment
projects. To truly realize the benefits of PHEVs, these
collaborations will need to result in agreements on the minimal
information that must be exchanged, the ownership of the data
and how usage and revenue will be measured and verified.
Infrastructure Deployment--As part of the deployment of the
smart grid, we will need to tackle issues such as who owns the
infrastructure down to the outlet and what constitutes a
permissible vs. impermissible sale for resale of electricity.
For example, would the outlets deployed at a Walmart
sm \3\ parking lot be owned by Walmart, a separate
aggregator or the local utility? Would Walmart serve as the
intermediary between the utility and the customer and aggregate
the purchase of electricity to vehicles on its lots during the
day. For residential uses, can a landlord of an apartment
building insist that he or she own the infrastructure? Does a
customer have a ``right'' to connect in order to charge their
battery (so long as they are financially in good standing with
the electric company) just as customers have a right to
electric service under state law today? The industry is
beginning to consider these regulatory and policy issues. Let
me give an example of a working system today; AES has
aggregated its 1 MW stationary battery system with the three 18
KW plug-in electric vehicles in the University of Delaware. The
total energy of 1.054 MW participates in the PJM Regulation
Market. AES allocates approximately 5% of the PJM market
payment to the University of Delaware and AES is allocated 95%.
The University vehicles are plugged in at home and at the
university and the net usage of the vehicle is measured on
standard utility meters and usage payments are made to the
local utility (Delmarva Power and Light). A retail net metering
tariff completes the picture allowing the customer to
participate in the service he or she is providing to the grid.
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\3\ Walmart is a service mark of Wal-Mart Stores, Inc
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To tackle these questions more broadly, we will all need to
look at the typical utility tariff in a new light and determine
what is the best legal relationship that is fair to the
utility, the vehicle owner and the owner of the garage or
parking lot itself.
Roaming--Although the plethora of different electricity rates
by geography is often cited as an impediment to properly
linking mobile cars to customer accounts, I do believe that
technology development from the transportation and
telecommunication industries has provided us clear guidance in
this area. Today, states still have a variety of different toll
rates on their highways just as different cellular companies
have different rates and plans. The advent of the E-Z Pass
demonstrates that these different state and utility
requirements can be harmonized and a system of billing and
collection can be managed for vehicles. We will need the
``smart'' grid to be able to identify vehicles and their
location and match them to utility customers. We will further
need to develop new inter-utility billing and settlement
systems to manage this mobile fleet. But, at least from a
technology viewpoint, the path forward on this issue has
already been demonstrated.
Need for Comprehensive Interoperability Standards -- The
Smart Grid Interoperability Panel work of the NIST with
cooperation of the automotive companies, utilities and the RTO/
ISO is actively addressing and coordinating this need in the
NIST Electric Transportation Priority Action Plan. Of critical
importance is the need for deployment that conforms to the NIST
interoperability agreements and for appropriate enforcement at
the state and federal level.
Need to Retain Policy Focus -- The future of PHEVs as an
energy storage resource is highly dependent on close
coordination between the electricity and transportation
industries -- two industries that have had limited interaction
in the past. Moreover, the infrastructure needed to be deployed
potentially spans the traditional jurisdictional reach of both
federal and state regulators and policymakers. As a result,
continued Congressional oversight on this issue and the
progress being made would be helpful to underscore the
importance of PHEV deployment to meet national (and even
international) policy goals We at PJM look forward to working
with this Committee and the Congress as a whole as we move
forward in this important area.
[All figures have been retained in committee files.]
The Chairman. Thank you very much.
Mr. Mainzer.
STATEMENT OF ELLIOT MAINZER, EXECUTIVE VICE PRESIDENT FOR
CORPORATE STRATEGY, BONNEVILLE POWER ADMINISTRATION
Mr. Mainzer. Thank you, Chairman Bingaman, Ranking Member
Murkowski. I really appreciate the opportunity to be here this
morning.
My comments today are focused on the role that storage
technologies could play in the context of a set of initiatives
we are undertaking to improve our ability to integrate variable
renewable generation into the Federal Columbia River Power
System.
As of this morning, we now have 2,500 megawatts of wind
energy connected to our system, having seen another 200
megawatts come online just this past week. We are planning for
3,000 megawatts by the end of 2010 and as much as 6,000
megawatts by 2013. Figure 2 of my written testimony portrays
this rapid pace of growth.
Like our colleagues at PJM, as we integrate this variable
supply of renewable energy, we must maintain system
reliability. When actual wind generation varies from scheduled
generation, we must dispatch or curtail other generation in
very short time to maintain system balance.
With 2,500 megawatts of wind, we have seen swings of more
than 1,000 megawatts in less than an hour on our system, and
there is limited correlation between wind generation and system
demand, often leading to surpluses of wind generation during
off-peak periods. Figure 3 in my written testimony illustrates
the type of variability we are seeing on our system.
To date, we have been able to use our existing hydro assets
to manage the variable output of the wind on our system, but we
do not expect to be able to integrate all of the expected wind
generation without making some infrastructure investments as
well as commercial and operational changes.
As a result, we are working on three categories of actions
to increase the amount of wind that could be interconnected to
the BPA system. These include, first of all, constructing
additional transmission capacity; second, developing mechanisms
to stretch the balancing capacity of our existing hydro assets
as far as possible; and third, exploring the development of new
resources to provide generating capacity and flexibility.
With respect to transmission, BPA has proposed three new
transmission projects that will facilitate collectively 1,800
megawatts of new wind generation. We have begun the
environmental review process for those three projects. With
additional borrowing authority provided by the American
Recovery and Reinvestment Act, we are ahead of schedule on the
construction of a fourth line that will support 575 megawatts
of additional wind generation.
These transmission projects resulted from the completion of
our 2008 network open season process. The network open season
allowed us to efficiently process our queue of transmission
service requests and set priorities for financing and building
transmission projects. This was a significant development
because it addressed planning and financing barriers that
impede transmission construction for renewable energy
development across the Nation.
It also allowed us to confirm the most efficient use of our
existing transmission system before proposing new construction.
On the reliability and operations front, BPA has established a
wind integration team that is working with the wind community
on a set of initiatives designed to increase the amount of wind
generation that can be supported from the existing capacity of
the Federal hydro system.
These initiatives include developing new operating
protocols to manage extreme wind variability, investing in new
wind forecasting applications, developing new scheduling
practices to manage generation imbalances, and enabling
customers to seek sources of wind integration services from
other suppliers besides BPA.
More broadly, we are collaborating with other balancing
authorities in the western interconnection to pool resources
and increase the availability of cost effective balancing
services. These types of collaborative activities are an
essential part of an effective renewable integration strategy
for the Western United States.
Ultimately, although we do intend to wring all of the
efficiencies that can be wrung from the existing system, it is
likely that the region will need to add additional capacity and
flexibility resources to assist with the management of variable
generation. To prepare for that day, we have begun to explore
storage options. We are working with the Pacific Northwest
National Laboratory on their study of various storage
technologies, including pumped storage, compressed air,
batteries, and flywheels.
We are looking forward to seeing the results of this
analysis and giving further consideration to such variables as
cost, sustained capacity, location, and lead times that will
impact the economic viability of these technologies in the
Pacific Northwest. Given the hydroelectric profile of our
generating resources, we are placing particular emphasis on
pumped storage. Pumped storage has potential to provide a
variety of grid support services and to shape the variable
output of wind and other renewable resources into firm blocks
of power with energy and capacity value.
BPA is working with our partners at the Bureau of
Reclamation and Army Corps of Engineers to explore the
potential for additional pumped storage in the Pacific
Northwest. We expect to have an initial evaluation complete in
mid 2010.
Mr. Chairman and Ranking Member Murkowski, I appreciate the
opportunity to be here with you today and relate our experience
in leveraging the capabilities of the Federal Columbia River
Power System in support of new renewable electric generation. I
am happy to respond to any questions.
Thank you.
[The prepared statement of Mr. Mainzer follows:]
Prepared Statement of Elliot Mainzer, Executive Vice President for
Corporate Strategy, Bonneville Power Administration
Thank you, Mr. Chairman. My name is Elliot Mainzer and I am the
Executive Vice President for Corporate Strategy for the Bonneville
Power Administration (BPA). I am pleased to be here today to describe
the significance of BPA's efforts to facilitate wind energy into the
Western transmission system and the role storage technologies could
play as one tool in the suite of initiatives we are developing to
improve our ability to integrate variable renewable generation into our
grid.
background
BPA, established in 1937 by an Act of Congress, is a power
marketing agency within the Department of Energy. Our headquarters are
in the Pacific Northwest, where we operate about three-quarters of the
high voltage transmission system and market the power from 31 federal
dams in the Columbia River Basin as well as the output of one nuclear
plant. We supply about 40 percent of the Northwest's electricity,
selling at wholesale and at cost.
Our service area covers Washington, Oregon, Idaho, western Montana,
and small parts of eastern Montana, California, Nevada, Utah, and
Wyoming. BPA is a self-financed agency that recovers its full costs and
repayment obligations from power and transmission rates. Our power
customers include Northwest cooperatives, municipalities, public
utility districts, federal agencies, investor-owned utilities, direct-
service industries, port districts, irrigation districts, and tribal
utilities.
We sell transmission and related services to more than 200
utilities, power generators (including wind generators), and power
marketers. Pursuant to our open access tariff, BPA provides
transmission services to all customer utilities, power generators and
marketers under the same rates, terms, and conditions that it applies
to its own Power Services business line for use of transmission
services.
renewables development in the pacific northwest
BPA is maintaining a remarkable pace of connecting new renewable
wind generation to its transmission system. All but one of the states
in our service territory have enacted renewable electric generation
standards for their retail utilities. These requirements, coupled with
those of other Western states, have brought developers to our area
looking for opportunities to develop and sell new renewable generation.
They come to us for transmission services because of the capacity of
our existing transmission system and the proximity of reasonably good
sites for wind generation. To date we have almost 2,300 megawatts of
wind generation connected to our system.
Figure 1* shows the three categories of actions we are working on
to expand wind power interconnection to the BPA system: 1) constructing
additional transmission capacity; 2) developing the means to provide
additional balancing services for reliability from existing system
assets, and; 3) exploring the development of new resources that provide
capacity and flexibility.
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* Figures 1-3 have been retained in committee files.
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transmission
The large amount of new wind generation in our region, combined
with increases in electricity demand due to a growing population and
changing patterns of seasonal energy use, has led BPA to propose three
new transmission projects that will collectively facilitate about 1,800
megawatts of new wind generation. We have begun the environmental
review process for those projects. With additional borrowing authority
provided by the American Recovery and Reinvestment Act of 2009 (ARRA),
we are ahead of schedule on the construction of a fourth line--the
McNary to John Day 500-kilovolt transmission line that will support 575
megawatts of additional wind generation.
Our proposals for these projects, and the decision to begin
construction on the McNary to John Day project, resulted from the
completion of our first-in-the-nation 2008 Network Open Season. The
Network Open Season is a new commercial approach to manage transmission
requests and set priorities for financing and building transmission
projects. BPA's first Network Open Season resulted in 6,410 megawatts
of transmission service requests with financial commitments by the
customers who asked for the service. Three-quarters of the requested
service capacity were for wind generation. Because we were able to
clarify commitments to take transmission service, we were able to
accommodate more than 20 percent of the requests with existing
capacity. We were also able to offer a new Conditional Firm service to
provide still more transmission service from the existing capacity of
the system. These approaches are significant because they resolved
planning and financing barriers that impeded transmission planning for
renewable energy development across the Nation. They also allowed us to
confirm the most efficient use of our existing system to serve new
renewable generation before proposing new construction. We are
completing our second Network Open Season and will continue to conduct
the process annually.
reliability
The pace of wind development and its concentration in our balancing
authority, as shown in Figure 2, was initially surprising to us. Only
five years ago, the Northwest Power and Conservation Council (Council),
the four-state entity responsible for long-range energy resource
planning in our region, projected that the region could support 6,000
megawatts of wind development by 2025. In response, BPA and the Council
convened the Northwest Wind Integration Forum, a regional steering
committee and technical work group, to evaluate wind integration issues
and develop a Wind Integration Action Plan. The Plan emphasized that
wind energy is a renewable resource that can lower the fuel consumption
and environmental emissions of other resources, but that wind energy
cannot provide reliable electric service on its own. The Plan said that
wind generation, with its natural variability and uncertainty,
increases the need for flexible resources or dispatchable loads to
maintain utility system reliability.
Almost five years after the Council's projection, we now expect we
could be asked to connect 6,000 megawatts to our system alone and as
soon as within the next four years. Much of that development remains
concentrated in areas of Washington and Oregon east of the Columbia
River Gorge. We have among the highest penetration in the country of
wind generation relative to peak load on our system.
The substantial amount of wind on our system has given us
significant insight into the challenges of maintaining reliability with
a large amount of variable generating resource. The nature of wind
generation is, of course, that it increases and decreases depending on
the weather. On our system that can mean swings of more than 1,000
megawatts in less than an hour. We have also found that there is
limited correlation between wind generation and system demand, often
leading to surpluses of wind generation during off-peak periods. When
the wind generation is concentrated as geographically as it is in the
Pacific Northwest, it intensifies the magnitudes of its peaks, valleys
and ramps, as Figure 3 illustrates. Electric power systems must
perfectly balance generation and load in real time. We must dispatch or
curtail other generation in very short time frames when actual wind
generation varies from scheduled generation. This type of balancing is
necessary to maintain electric system reliability.
Balancing variable generation using the flexibility of the existing
hydro system has been a major focus for us. To date, we have been able
to use our existing hydro assets to manage the variable output of the
wind on our system. In essence, we are able to operate the
hydroelectric system as a giant storage battery for the variable output
of the wind while simultaneously meeting regional power demands
consistent with our obligations to protect, mitigate, and enhance fish
and wildlife. However, the system has its limits if reliability is to
be maintained.
The greater the amount of hydro capacity we must maintain to
support the growing wind resource, the more significant are the cost
implications for our public power customers, and the greater are the
reliability implications for the transmission system. The cost issues
stem from the changes in system operations we must make in order to
ensure we have sufficient reserve capacity to meet demand if the wind
generation forecasted by the wind operators does not closely match
actual generation. Until last year, the costs of carrying such reserves
were paid by our public power customers. Because the amount of reserve
capacity needed to support the burgeoning wind resource also grew, the
cost to our public power customers also increased. This concern was
exacerbated by the fact that approximately 80 percent of the wind
interconnected to our system is sold for delivery to utilities outside
of our balancing authority. Consequently, the cost of balancing wind
generation is a concern for our public power customers who do not use
the resource, yet were covering the cost of integrating it. In 2008,
BPA began to charge the wind generators a portion of the cost of
holding the reserves needed to manage the variability of the wind
generation. When a revised wind integration rate was first proposed for
2009, it represented a significant increase in the cost of integrating
wind for the wind developers. This was primarily due to the fact that
we now had more wind on the system and it was creating additional
costs. In response, BPA and the wind developers held many discussions
that resulted in several new initiatives designed to maintain the
reliability of the transmission system, yet at a lower cost to the wind
generators and their customers.
Establishing a rate for wind integration also sent a price signal
for the cost of wind integration services that is encouraging wind
operators to more efficiently use those services. This stretches the
capability of the existing system, allowing more wind to interconnect
to our system.
The decisions in this last rate case have already bought us time
relative to the need to secure new generating resources for balancing
services. In addition, we are exploring additional strategies to
increase the amount of wind we can reliably integrate into the system.
We have agreed with the wind community on a set of initiatives we
expect will allow still more wind to connect to our system without
building new balancing resources. The initiatives we agreed to pursue
hold promise to secure additional breathing room by allowing us to
wring more efficiencies from operational improvements, and from
collaboration with the wind generators and our neighboring transmission
systems.
These initiatives encompass developing new operating protocols for
our system, working with our partners in the Western Interconnection to
pool resources and increase the availability of balancing services, and
working with our customers to improve the accuracy of wind forecasting
to allow a larger amount of wind generation to be supported from the
existing reserve capacity of the hydrosystem. We think these
initiatives can make a significant dent in the amount of balancing
reserves needed to support a tripling of the wind generation supported
by our system, allowing more wind to be connected to our system, and
limiting the costs to the wind generators and their utility customers.
operating protocols and improved forecasting initiatives
BPA has established an internal Wind Integration Team (WIT) to
implement new operational and forecasting tools. Earlier this year, BPA
met with its stakeholders, including wind developers, to determine
which of the WIT initiatives are of the highest priority to the region.
BPA reached agreement on pursuing several high-value initiatives with
an estimated cost for completion of up to $15 million over two years.
The accelerated initiatives include:
Wind Forecasting: In October 2009, BPA completed installing
14 new wind measurement sites. We will share the new wind
measurement data in real-time with all interested parties. We
expect to develop a complete wind forecasting system by March
2010. By September 2010, we will give BPA dispatchers displays
of real-time wind generation and next-hour wind forecasts so
dispatchers can better anticipate changes in wind output and
adjust generation to make more efficient use of combined wind,
hydro, and other available resources.
Dynamic Transfer Limits Study and Pilot Project: We are
working with our neighboring transmission systems to develop
new methods to determine the transmission available to allow
one of our utilities to remotely control and manage a power
plant in another utility's transmission system. This is known
as dynamic transfer, and such capability would allow us to
serve more variable generation than the hydro system could
otherwise support. We expect this study to be completed by mid-
February 2010. Shortly thereafter, we will launch a test of
such capability on a set of Pacific Northwest transmission
interconnections to gain experience in the operational
technology.
Wind Generators' Self-Supply of Reserves: BPA is also
planning to use the results of the Dynamic Transfer Limits
Study to allow wind projects to purchase balancing reserves
from suppliers other than BPA. This enables wind projects to
manage their own costs in acquiring balancing services. BPA,
the receiving utility and the appropriate wind project all must
install significant control and communications equipment to
make this work. By October 2010, BPA will launch the first
pilot project for self-supply of generation imbalance reserves.
Intra-Hour Scheduling: Our current transmission scheduling is
based on 60 minute delivery schedules. We are developing tools
to allow power schedules to change at the half-hour as well as
the hour to let customers sell power from fast changes in wind
output. This would help reduce reserve requirements and
maintain the transmission system's reliability. Last week, we
initiated a pilot project to test such practices.
operating protocols
In the power and transmission rate cases for Fiscal Years 2010 and
2011, we worked with wind developers on an operating protocol that
allows us to maintain lower levels of reserves while at the same time
protecting system reliability. This protocol defines procedures that go
into place when we are close to depleting our reserves because of the
gap between actual wind generation and what was scheduled. We began
implementing the protocol this fall and, in return, the customers' rate
for balancing services is lower by nearly a half than we originally
proposed. Essentially, the wind customers accepted more risk in return
for a lower rate. They have also responded by investing in improving
the accuracy of their scheduling. We appreciate the effort they made to
help us reach these outcomes.
smart grid
We are also a partner in two significant regional smart grid
efforts that have recently won funding from the Department of Energy.
The first is the $53 million Western Electricity Coordinating Council
(WECC) project that will test a large-scale synchrophasor measurement
system with smart grid functions. The benefits would include increased
transfer capability, better congestion management, and improved
efficiency and lower costs for supporting variable renewable
generation. The second is the Pacific Northwest Smart Grid
Demonstration Project led by the Battelle Memorial Institute. That
project received $89 million in ARRA funds from the Department of
Energy. It spans five states and includes 12 utilities. The objectives
of this demonstration project include validation of new smart grid
technologies and businesses, quantifying smart grid costs and benefits,
improving transmission system resiliency, and advancing
interoperability standards and cyber security requirements for smart
grid devices and systems. Both initiatives have the potential to
significantly improve the regional transmission system's ability to
facilitate variable renewable energy generation.
adding new capacity
Ultimately, though we will wring all the efficiencies that can be
wrung from the existing system, it is quite likely that the region will
need to add additional resources to provide balancing services for
variable renewable resources. To prepare for that day, we have begun to
explore storage options. From a broad perspective, we are working with
the Pacific Northwest National Laboratory on their study of various
storage options including pumped storage, compressed air storage,
batteries, and flywheels.
At the same time, we are placing a particular emphasis on
evaluating pumped storage. Given the hydroelectric profile of our
generating resources, pumped storage appears to be particularly
attractive to our region. Secretary of Energy Steven Chu emphasized
this in his response to a letter written earlier this year by the four
Pacific Northwest Governors, saying, ``Pumped storage has unique
potential in the Pacific Northwest where a higher percentage of wind
generation has already been integrated into the region's transmission
system than anywhere else in the Nation.''
Pumped storage facilities have been in commercial operation for
decades. The technology was originally conceived as a means of using
low value surplus energy generated during nighttime hours to store
water that could then be used to generate more valuable energy during
heavy load hours. Systems that rely on large centralized coal and
nuclear generation anticipated the need for pumped storage much earlier
than hydro-oriented systems. This was because thermal generation was
difficult to reduce during periods of low demand and to ramp up quickly
to meet the next peak demand. In the WECC area--encompassing 14 Western
states plus Alberta and British Columbia, Canada--the thermal dominated
systems are located primarily in California and the inland Southwest.
That's why the large, existing pumped storage plants in WECC are
located in those regions.
The only existing pumped storage facility in the Pacific Northwest
is in the state of Washington at Banks Lake, which is part of the
Federal Columbia River Power System's (FCRPS) Grand Coulee complex. Its
operation is largely dedicated to pumping water from Lake Roosevelt
into Banks Lake to meet Bureau of Reclamation irrigation obligations.
With the large recent penetration of variable renewable resources such
as wind in the WECC area, pumped storage has the potential to be an
additional resource that could be used to manage the variable output of
wind projects and other renewable resources. BPA is currently exploring
the potential for pumped storage in the Pacific Northwest, and expects
to have its initial evaluation completed in mid-2010.
conclusion
Mr. Chairman, I appreciate the opportunity to be here with you
today and relate our experience in leveraging the reserve capabilities
of the Columbia River power system in support of new renewable electric
generation. We, our customers, wind developers, and our partner systems
in the Western Interconnection have been on a steep learning curve. We
will stay focused on the suite of measures I have described and
continue our role in meeting the region's demand for new carbon-free
resources. I am happy to respond to any questions from the Committee.
The Chairman. Thank you all very much. Thanks for the
valuable testimony.
Let me start. Mr. Huber, I had breakfast with some folks
this morning who were concerned--these are folks in the
automobile industry, and they were saying that one of the
challenges that we face in trying to move to plug-in hybrids is
the lack of standardization and just the physical making
available of the power to power the vehicles, I guess.
They were saying not only is there variation between
communities and between States. There is also variation from
building to building within communities. Now I don't know if
this standardization of communications that you referred to
with NIST doing, are they trying to address that type of a
concrete issue as well as the other types of standards that are
needed to get to a smart grid?
Mr. Huber. Mr. Chairman, there are many issues on the
standards front, and some of them are being addressed by the
Society of Automotive Engineers. That is the actual plug that
is acceptable such that you can have public charging types of
things.
The actual communications between the vehicle and its
connection point is another standard that is being addressed by
the Society of Automotive Engineers. NIST and EPRI and others
are working together to do the communications capability to
bring the information from the grid to the vehicle. So there is
an awful lot of activity there.
There is a lot of concerns by the automotive companies, and
my own perspective would be that the first generation of
vehicles are not going to be as smart as what we would really
like. But we are working closely with them, and I believe the
evolution of those vehicles, when they start to become
predominant, will be there.
The Chairman. OK. I think, Mr. Masiello, you were talking
about the need for planning methodologies for the use of
storage in meeting our energy needs, I guess. It would seem
that as the demand, as the peak demand for a utility continued
to rise, a logical thing to do to meet the additional peak
requirement--a logical thing would be to make a judgment.
Should we meet that additional peak requirement through
additional generation or meet that additional peak requirement
through storage of some kind?
As I am understanding you, you are saying that is not
happening now, that kind of judgment is not made, or is it just
that the options available for storage of power are
insufficient to make that a real question?
Dr. Masiello. What I was trying to say is that the utility
planning engineers who are doing the design of distribution
circuits or new transmission lines or capacity increases in
substations rely on well-established methodologies. They use
software tools, proven, available from a handful of suppliers,
and the regulatory commissions are accustomed to seeing the
results of those studies.
Today, innovative utilities will start to look at storage
as a solution. For instance, in west Texas, AEP put a 6-
megawatt battery in a substation to solve a transmission
reliability problem, and it was much more economical than
putting in a redundant transmission line.
So the innovators are able to do it. But it is a very
conservative industry, and utilities that don't have the
engineering staff to solve the problems when they can't
purchase the tools, say, will move more slowly.
The Chairman. So what was your suggestion as to how we get
these planning methodologies developed?
Mr. Masiello. My suggestion was that, for instance, FERC
could identify a point in time and say that as of,
hypothetically, 2011 proposed new transmission projects, the
plans for them should demonstrate that storage was considered
as an alternative. Not necessarily approved or justified, but
just that it was considered. I think that alone would trigger a
lot of awareness and learning.
The Chairman. OK.
Senator Murkowski.
Senator Murkowski. To continue, Mr. Masiello, you mentioned
the issue of efficiency within storage and that is an area that
we can really be looking to. I think you said about 70 percent
efficiencies, but then you are losing 30. Are there any
emerging technologies that we have either talked about here
today or that are available that are more promising in terms of
their level of efficiencies than others?
I know we don't want to be picking winners and losers, but
I am curious to know where we might see some gains.
Mr. Masiello. Certainly. The advanced lithium ion
technologies are well over 90 percent. The battery that Mr.
Huber described in the PJM parking lot is one such. For
regulation service in particular, high efficiency is very
desirable.
A storage system that is purely backup power that is only
charged and discharged once or twice a year has a completely
different problem, which is you don't want it to lose energy
through self-discharge the way a car battery can. So the answer
I think is there are technologies with different
characteristics, and we are still learning which ones are best
suited for which application.
Senator Murkowski. Mr. Huber, you and the chairman were
talking about standardization. Just in terms of necessary
infrastructure to accommodate the integration of plug-in
vehicles, where there is the charging stations, the electric
metering, what do we really need in terms of meeting the
infrastructure requirements to fully integrate? I know that is
loosely defined, but how do we integrate the plug-in vehicles
into the system. How much do we need in terms of investment
infusion?
Mr. Huber. Yes. A lot of that infrastructure is in place
today. The communications capability with the utility is in
place. There are well-defined standards. We have to find the
acceptance from all the players, the RTOs and ISOs, the
utilities, and the vehicles, to actually adopt those standards.
The wireless communications to the vehicle is there to
allow the communications. The charging infrastructure, the
vehicles initially and even throughout are going to be
primarily charged at home. So one of the infrastructure issues
is for level one charging, 120 volts, to be able to plug in is
pretty straightforward.
When they go to level two charging, where I need 240 volts
in my garage or I need it where it is made available, that is
going to be one of the early challenges from an infrastructure
point of view.
Senator Murkowski. You mentioned the fleet vehicles and how
we deal with that.
Mr. Huber. Yes, very attractive because if I am fleet
owner, I can construct the infrastructure in my facility, have
it optimized to my actual devices and the communications, have
direct communications, even private communications back into
the grid. So that is a very attractive alternative.
Senator Murkowski. In my opening comments, I mentioned
specifically my interest in the pumped hydro and recognized
that it has been the workhorse for utility-scale energy
storage. But we recognize that suitable locations for pumped
hydro are considered limited.
Mr. Masiello, when was the last survey that we have had
insofar as the potential sites for locating new pumped hydro?
Do we have anything current out there that identifies?
Mr. Masiello. I believe so, but I think Dr. McGrath
probably is better equipped to answer that.
Senator Murkowski. OK. We will punt to you, Dr. McGrath.
Mr. McGrath. Yes, our laboratory is concentrating on
identifying the resource base. More specifically, we tend to
concentrate on non-hydro renewables. But as we heard earlier
this morning, what is needed is an integrated simulation and
model that can help us assess all of these capacities that are
out there. These----
Senator Murkowski. Do we have that model currently?
Mr. McGrath. I don't have the answer to your specific
question around where are the resources for pumped hydro. In
many respects, they are largely in place, as we heard from our
friends at Bonneville Power. Many of the existing operations
have some of that capacity in place. I believe the number is 21
gigawatts total of storage that is available currently across
the country.
Senator Murkowski. I assume we can add pumped storage
stations to the existing hydro facilities. Is that correct, Mr.
Mainzer?
Mr. Mainzer. We are certainly looking at that. We have an
existing pumped storage facility at the Grand Coulee complex
known as Bank's Lake. It is about 315 megawatts of capacity,
and part of our assessment is to see if it would be possible to
expand the capacity of that facility. So we are going to be
getting a good look at that between now and the middle of next
year.
More broadly, we are looking at the broader footprint of
the Columbia River Power System to see if there are some other
potential sites for pumped storage.
Senator Murkowski. A follow-up questions because you
prompted this, Dr. McGrath. At NREL, you have indicated that
you are not really focused on the hydro side. Does the NREL
model include the availability to add pumped hydro or the
advanced battery technology?
Mr. McGrath. Absolutely, Senator. One of the things that we
have done is to establish partnerships, very specific and
detailed partnerships with, for example, the Idaho National
Laboratory, that has responsibility for--specifically for
commercial nuclear power, for the National Energy Technology
Laboratory and their responsibility for fossil. So we are
trying to work with our sister laboratories and with
researchers around the country to pull together a comprehensive
plan.
Within our Energy Systems Integration Facility, as I
mentioned, we have advice coming from all of those different
groups, looking to bring forward a collective system of energy
information. I will use the word ``Google'' because we are, in
fact, talking with them around putting together an energy
information system that will allow planners and policymakers
and technologists to access what are the potentials, where are
the resources, how do we get at them, what is the state of the
development of technology for their utilization?
As Dr. Koonin mentioned this morning, what would help us
tremendously is that overarching model of this rather
complicated system and all the variables and options that come
forward. So, we are looking forward to developing those models
further in cooperation with experts from all areas.
Senator Murkowski. Thank you. My time has expired, Mr.
Chairman.
The Chairman. Senator Udall.
Senator Udall. Thank you, Mr. Chairman.
Welcome to the panel. Dr. Masiello, thank you for your
important testimony. Thank you also for taking some time to
further educate me. I thought in your testimony, toward the
end, there was a nugget of insight that really presents the
opportunity that we have in front of us where you pointed out
that the long-term implications of widespread mass deployment
of storage across our power systems are profound.
It holds the promise of dramatically increasing capacity
utilizations of the generation, transmission, and distribution
system and essentially enabling a deferral of capital spending,
which could go to other uses that our society identifies. It
also, I think, would result in an ideal setting where consumer
prices would remain steady, perhaps even you would see benefits
there to the consumer.
So, in that spirit, I wanted to ask you about your
testimony. You talked about loan guarantees would be a more
effective tool than a tax credit. Do you envision such a loan
guarantee program as supporting all types of storage, and could
you expand?
Mr. Masiello. I offered that thought because merchant
developers, whether it is wind or storage, usually can't make
direct use of a tax credit. The practice was that they would do
a sale leaseback or some other arrangement with, say, Citicorp
who would then take advantage of the tax credit, and the
developer would get that reflected somehow in the financing.
But the number of financial institutions in a position to
take advantage of a tax credit has decreased, and consequently,
developers can't create the same kind of financial packages to
finance a wind farm or concentrating solar plant. So I was
simply saying there may be other financial mechanisms, loan
guarantees being one.
I am a power engineer more than a financial engineer. So I
am not sure I can get too much beyond that.
Senator Udall. Thank you for that thought.
Mr. McGrath, you mentioned that for renewable energy to
really reach its full potential you have to have technologies
for large energy storage developed and deployed. Can you expand
a little bit on what NREL is working on to help us understand
what type of technologies would be necessary and then how you
would integrate those into the grid?
Mr. McGrath. As has been mentioned earlier, there are a
variety of technologies ranging from flywheels to flow
batteries and to larger systems such as pumped hydro and
compressed air storage. We are working with a number of groups,
the Electrical Power Research Institution among them, to look
at these various technologies.
On the planning and policy side, the question also does
come up again around where is the best place to deploy such
storage? Is it large-scale storage at the point of origin of
the power? For example, adjacent to the large-scale wind farm.
If you put the stored energy there, then you potentially can
confront congestion on the distribution system.
Alternatively, the power or energy can be distributed and
stored at the substation level or even at the community and
residential level. So, there are tradeoffs both with cost and
efficiency and system integration issues that come into play in
all of those areas. Again, we are working with experts in all
areas, trying to coordinate that type of analysis and planning.
Senator Udall. So, at this point, you are exploring both
the idea of a centralized storage approach and a decentralized
storage approach. I understand you are currently working on a
report that would touch on these issues. Is that correct?
Mr. McGrath. We have been tasked by the Department of
Energy to have a look at the renewable energy futures study,
which asks us to try to envision what large-scale deployment of
renewable resources would look like at the scale of 50 or even
80 percent of our electric generation capacity. The question is
what does such a State look like? What are the key elements of
such a State?
Of course, storage is a high priority and necessary part of
such a situation. But we are excited about conducting that work
this year and next.
Senator Udall. I am, too. I look forward to receiving a
copy of it when you complete it.
Mr. Huber, if I could turn to you, you say that 34
megawatts of battery storage has been put into the PJM
generation queue for 2010. Do you anticipate more storage after
2010? If so, how much? What do you expect the effect of that
would be on the price of regulation services?
Mr. Huber. Excellent, Senator. Actually, I anticipate more
in 2010. Those are the initial two battery organizations who
have come to us. One is lithium ion. The other is zinc air. We
have been talking to many battery manufacturers who are looking
at our regulation signal. We have got a test signal for them to
look at.
So I believe there will be more coming in 2010. Some of the
DOE grants actually had requested 100 megawatts of battery
storage in the PJM territory that were not successful in the
grant proposal. I foresee--I am not a good forecaster--hundreds
in the next--I would say 500, 700 megawatts of battery in the
PJM system is not unreasonable to expect. We are a huge system,
probably at 90,000 megawatts today as our peak for a day like
today.
There was another part of your question, and I----
Senator Udall. The effect on the price of regulation
services.
Mr. Huber. Very interesting because certainly the
automotive companies are looking at this well. What happens
when we exhaust this? Because it is a very lucrative market
today, and it is a very attractive market to enter into first.
I believe the transition will happen from that type of
immediate regulation service to extended services, either early
morning compensation for loss of wind or throughout the day
compensation. Using these batteries for storage in the evening
and discharge during the peak periods will be the evolution of
this technology over time.
Senator Udall. Dr. Masiello is nodding vigorously along
with you in agreement.
Thank you again to this panel. This has been a very
important hearing. I want to again thank the chairman and the
ranking member for taking the time to convene us all and
explore this real opportunity in front of us.
Thank you.
The Chairman. Thank you.
Senator Shaheen.
Senator Shaheen. Yes, I will echo Senator Udall's comments
and everyone's here, really, on the panel. Thank you all very
much for being here.
Given the interconnection between renewables that we are
trying to incentivize and get deployed and energy storage,
should we find a way to link promotion and deployment of energy
storage to the incentives that we are trying to provide for
renewables? I will just throw that out for any and all of you
if you have a view of it?
Mr. McGrath. I will begin. But, yes, I think they are
linked, and I think your question was around linking the
incentives. Correct?
Senator Shaheen. Right.
Mr. McGrath. So, I would have to defer to some of my more
skilled regulatory and financial colleagues. But certainly, I
think our studies indicate that you can only get so far. Twenty
percent wind may be a little beyond that, and then we are going
to need storage.
It is a bit of a--right now, we are using natural gas and
gas-fired generators effectively as our backup storage. That
has some advantages and disadvantages, one of them being carbon
footprint. The other one being, as we heard from Senator Wyden
this morning, there is a lot of wind blowing out there. Let us
not let it get away.
So if we are to capture it and save it for appropriate
peak-hour use, obviously, we are going to need storage.
Clearly, our policies need to incentivize that and help make it
affordable, and then issues around who pays for what portion of
it, of course, need to be thought through carefully.
So we need both technology development, sound and clear
policy, and then real careful analysis tools that help us guide
how both of those are developed.
Senator Shaheen. I don't know if--this is a follow-up to
you. But as we are thinking about that, particularly the cost
piece and how that is shared, are there examples--for all of
you who are in the market now, are there examples that you can
look to and say this is the way it is working that we think is
working very well?
Mr. Masiello. There is a model to look at in the natural
gas industry where gas storage resources, whether it is in the
physical pipeline or in an actual cavern, say, are an asset
that is operated by the storage owner. The merchant side--the
gas producers, the gas traders--pay a fee for the use of the
storage. But they retain the equity ownership of the gas.
That model could apply, for instance, if a regulated
transmission company had storage on the grid which was a
regulated asset, regulated cost recovery, and the merchant side
of the power equation, the generators and the traders, made use
of that on a fee basis. Because right now, there is a lack of
clarity in policy and regulatory treatment in the deregulated
electric power markets over that problem.
The regulated wires company is taking delivery of the
electricity at night when it is cheap and redelivering it to
consumers during the day when it is expensive. That arbitrage
profit in today's world should be on the merchant side.
That lack of clarity is another hurdle, shall we say, to
moving forward, and I believe FERC is taking it up and plans to
resolve it.
Senator Shaheen. Just to be clear, the example that you are
talking about, the cost is on the rate base for the ultimate
end-users of the power?
Mr. Masiello. That is really a good question. If it is a
rate-based asset, then the transmission utility is charging a
rate per megawatt hour on the grid, and that is ultimately
borne by the consumer. If it is not a rate-based asset, then a
merchant operator of storage is trying to make money on it, and
the generator or the trader would mark up the cost of the
wholesale energy, which is, again, passed to the consumer. So
it is different mechanisms.
Senator Shaheen. Thank you. My time is up.
The Chairman. I did not have additional questions. Did you
have anything else you wanted to ask ofthis panel?
Senator Shaheen. Actually, if I could just follow up on one
other issue that you raised earlier?
The Chairman. Go ahead.
Senator Shaheen. You talked about, Dr. Masiello again, that
FERC--that one example you used was requiring FERC to consider
storage before approving new generation. In that kind of a
consideration, are there other things that ought to be looked
at other than just the cost? So, as we are thinking about
generation, we look at environmental impacts, lots of other
things. What else, as we are thinking about storage----
Mr. Masiello. Yes, I actually should have been more clear.
I was saying in the context of transmission planning, I believe
that the generation developers will be pretty aggressive at
looking at it if they think they can make money. The difficulty
is when it is a transmission or a distribution asset, and the
regulatory approval process is today unable to make an informed
decision. So that is what I was saying. It would be one
mechanism to spur it along.
Senator Shaheen. Great. Thank you for the clarification.
Did anybody else want to add to that?
[No response.]
Senator Shaheen. OK, thanks very much.
The Chairman. Thank you all very much.
This has been useful testimony, and I think it has been a
good hearing.
Thank you very much. That will conclude our hearing.
[Whereupon, at 11:57 a.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of Steven E. Koonin to Questions From Senator Bingaman
Question 1. Under Secretary Koonin, where does the US stand
compared to China/Japan/Korea in developing grid scale energy storage
technologies? It is my understanding that these countries are now
investing heavily in this area, leveraging their significant expertise
and capacity in the vehicle battery sector.
a. How much are we spending on grid-scale energy storage
research, development and demonstration compared to those
nations?
b. What we need to do maintain our leadership in this area?
Answer. (a). The Departmental approach to energy storage spans the
full RD&D chain, from basic research through technology demonstration
projects. The Office of Electricity Delivery and Energy Reliability
(OE) is the focal point for development and demonstration of grid-scale
energy storage technologies within the Department of Energy. Funding
for OE's energy storage program was $3.5 million in Fiscal Year (FY)
2009 and $14 million in FY 2010. In addition, under the American
Recovery and Reinvestment (Recovery Act), the Department awarded $185
million for grid storage demonstration projects, and $30 million to
date for Advanced Research Projects Agency-Energy's (ARPA-E) advanced
battery research. Further, while not specifically investing in grid-
level applications, the Office of Science is supporting basic research
by funding a host of projects including six Energy Frontier Research
Centers that are directly related to energy storage, and the Office of
Energy Efficiency and Renewable Energy funded $39 million of research
in 2009 to move the state of the art for vehicular electrochemical
batteries.
Private industry and several States are also actively investing in
the development of new grid-level storage technologies; the investment
community is becoming interested in providing venture capital for
companies developing new technologies and in funding ambitious large
scale projects; and utilities are increasingly considering storage
demonstration projects.
The Chinese government is investing approximately $100 million in
energy storage research annually. Chinese researchers are investigating
sodium sulfur batteries and several flow battery systems. In addition,
the Chinese Academy of Science just announced development of a 650 amp-
hour sodium sulfur battery by the Shanghai Ceramic Institute.
The Japanese government mandates that new wind developments can be
built only with appropriate energy storage capability installed.
However Japan provides one-third of the cost of a new storage facility
to the owner. Research is carried out by Japanese industry on sodium
sulfur batteries, flow batteries, and lead carbon batteries.
Answer. (b). Key performance characteristics such as cost,
durability, energy density, and power must be improved if the U.S. is
to maintain leadership in grid energy storage technology. These
improvements will be enabled by continued Departmental efforts ranging
from basic research to demonstration projects for promising storage
technologies. In addition to these technology advances, significant
improvements are necessary in the analytic tools data and parameters
used to characterize storage technologies in modeling the grid.
In deregulated energy markets, where generation, transmission, and
distribution assets can be owned and operated by different groups, the
economic and operational value of individual storage technologies must
be fully characterized for each application. Without such detailed
understanding, and until these benefits can be fully modeled and
incorporated into economic and operational planning tools for the grid,
deployment rates for grid scale storage will not reach potential.
Question 2. Under Secretary Koonin, concerning the DOE Energy
Storage Demonstration Grants, how soon can we expect the Department to
obligate funds to the award winners so that these projects can proceed?
Answer. Selections of Recovery Act demonstration projects were
announced by Secretary Chu on November 25, 2009. Grants are expected to
be awarded by the second quarter of FY 2010.
Question 3. Under Secretary Koonin, some of the commercial software
that grid planners use today grew out of previous DOE-funded research.
What is DOE doing to help develop grid planning software that takes
account of energy storage and renewable energy? What are the national
labs doing to support transmission planning models and software? How
much funding is going towards this work now, and how does this compare
to past funding levels?
Answer. The Department's Energy Storage Program in the Office of
Electricity Delivery and Energy Reliability will fund a new project
beginning in FY 2010 to develop energy storage modules for commercial
grid planning software. A second project will utilize existing grid
modeling software at a national laboratory to analyze the applicability
of storage in specific sections of the transmission grid, such as the
Bonneville Power Authority system. These efforts are funded at a level
of $650,000 in FY 2010; FY 2009 funding for these type of activities
was $50,000. In addition, through Recovery Act funding the Department
recently announced grants totaling $60 million for interconnection-
level infrastructure planning; the planning effort, which will make use
of national laboratory support, will incorporate energy storage as one
of a range of technological options. The Department's Office of Energy
Efficiency and Renewable Energy has begun a study to evaluate the
barriers and opportunities associated with significantly increasing the
integration of multiple sources of renewable electricity into the
electric grid. The study, planned to be completed in 2010, will
evaluate and quantify the need for energy storage in scenarios with
very high penetration of renewable energy generation.
Question 4. What data does the Federal government collect on grid-
scale energy storage? Does it fit into the data collection forms used
by the EIA and the FERC? If not, what work is underway to add energy
storage to these data collection forms?
Answer. The U.S. Energy Information Administration (EIA) currently
collects some limited electricity storage data. Additional collection
of storage data is planned for EIA's updated electricity surveys that
are scheduled for deployment starting in January 2011.
Electricity storage data are currently collected by EIA for pumped
hydroelectric and compressed air energy storage (CAES). The most recent
annual net summer capacity data (2007) show that the United States has
21,886 megawatts (MW) of hydroelectric pumped storage capacity.
Operational data for 2008 show pumped hydro generated 25.3 million
megawatt-hours (MIMI) and required 29.6 million MWh for pumping.
EIA's proposed revisions to electricity surveys were in the public-
comment phase in the fall of 2009 (see the October 15, 2009, Federal
Register Notice at http://www.eia.doe.govicneaf/e1ectricity/page/
fednotice/elect_2011.html ); the comment period closed on January 15,
2010. Storage-related proposals include:
storage associated with dispersed and distributed generation
data (by fuel type categories); and
capacity and generation for flywheel, thermal, and battery
technologies that supply electricity to the grid and have at
least 1 MW of capacity.
The Federal Energy Regulatory Commission (FERC) also addresses
energy storage in its data collection. The FERC ``Annual Report of
Major Electric Utilities, Licensees and Others'' and ``Annual Report of
Nonmajor Public Utilities and Licensees'' contain financial and
operational data for pumped storage. This information includes plant
identities, depreciation and amortization charges, generation data,
construction year, operational year, and other specifics. Balance sheet
information (i.e., electric plant in service and additions) is also
available for ``storage battery equipment.'' EIA defers to FERC for
additional information on its energy storage data activities.
Question 5. How are DOE and FERC working together to develop and
deploy grid-scale energy storage technologies?
Answer. Department of Energy (DOE) develops energy storage
technologies. The Federal Energy Regulatory Commission (FERC) regulates
interstate transmission and sale of electricity. FERC has been
proactive in evaluating the potential for energy storage, devising
market mechanisms appropriate for energy storage technologies, and
directing Regional Transmission Organizations to provide a level
playing field for the application of storage technologies. In response,
the New York Independent System Operator (NYISO) requested FERC
approval for new storage-oriented market rules, which FERC approved in
May 2009, and a 20 megawatt flywheel system in NYSIO has been issued a
conditional comittrnent under DOE's Title XVII loan guarantee program.
In addition, in FY 2010, the DOE Wind Program is supporting the FERC
Office of Energy Policy with a full-time expert from the National
Renewable Energy Laboratory who provides renewable grid integration and
transmission technical and analytical expertise.
FERC and DOE are aware of activities in each other's programs.
Successful introduction of energy storage technologies into the grid
depends on the success of efforts by both organizations.
Responses of Steven E. Koonin to Questions From Senator Murkowski
Question 1a. Many of the battery technologies and the magnets used
in electric motors utilize rare earth minerals, much of which are
currently imported from China.
If so, does the government have a role in researching alternatives
to the use of rare earth minerals in batteries and magnets?
Answer. Rare earth materials are not a major issue for battery
technology (although transition metal availability is important for
batteries). However, for electric motor technologies, availability of
rare earth materials is a significant issue. There are some options
that can help minimize the impact of rare earth minerals' availability.
One option is induction motor technology, which can be practical for
certain applications but tends to be less efficient. Improving the
efficiency of induction motor technology is one area of research
underway in the Department's Vehicle Technologies Program.
Even for traditional motor technology the need for rare earth
materials can be minimized, or perhaps even eliminated, through
research and development (R&D). Because alternative magnet compositions
that do not have rare earth materials are typically not strong enough
to be practical, the Department has initiated R&D to both minimize rare
earth content and improve the performance of non-rare earth magnets
(the subject of a recent ARPA-E project grant).
Additional research has been initiated by the Department and
others, including the Department of Defense, and studies have been
conducted by the U.S. Geological Survey and the National Academies in
this area.
Question 1b. Given the importance of rare earth minerals for energy
storage applications, do we have sufficient knowledge of the
availability of rare earth mineral deposits in the U.S.?
Answer. There is a reasonable knowledge of U.S. rare earth mineral
resources through the U.S. Geological Survey. Undeveloped deposits in
the U.S. and across the world have been identified (although these are
typically not as favorable as the Chinese deposits). One excellent U.S.
deposit is the Molycorp site in Mountain Pass, California, near the
Nevada border. This site was active until a few years ago and is
attempting to restart mining operations. The Department is
collaborating with Molycorp through work at Ames National Laboratory.
This work is aimed at improving the performance of rare earth magnets,
as well as minimizing the processing required to produce magnets which
is a major cost factor.
Question 2. In your testimony, you reference a situation in West
Texas during one month in 2008 where wind generation resulted in over
nine hundred 15 minute intervals of negative pricing. ``Negative
pricing'' essentially means that you have more generation than demand
since, and is supposed to serve as a signal not to produce electricity
at that time. However, I understand that in Texas, wind generators will
continue to offer their energy at negative prices in order to get the
federal Production Tax Credit and the value of a state Renewable Energy
Credit. Additionally, due to transmission constraints, wind developers
can be paid to remove their production from the grid. Please comment on
this situation.
Answer. Negative pricing in energy markets sends a variety of
signals to market participants and is an artifact of transmission
constraints within a system. Even during periods of negative pricing,
positive pricing exists beyond the transmission constrained wind energy
areas, thereby indicating a demand opportunity for energy exists. The
transmission system operator within Texas, the Electric Reliability
Council of Texas (ERCOT), is currently working though its Competitive
Renewable Energy Zone process to upgrade the transmission system in
West Texas and increase the transfer capacity for wind energy. These
upgrades are expected to greatly reduce occurrences of negative pricing
in the region. There is also considerable interest in energy storage in
the area, including a 20 megawatt demonstration project recently
selected for an American Recovery and Reinvestment Act award.
Question 3. Compressed air energy systems are considered an energy
storage mechanism because electrical energy is used to compress air
that is stored in a pressurized reservoir. Given the fact that
compressed air energy systems require some method to use the compressed
air to make electricity, should these systems be classified as a
generation technology or a transmission and distribution technology?
Answer. Compressed Air Energy Storage (CABS) systems differ from
other energy storage technologies in that many use natural gas to heat
the compressed air prior to generating electricity. This is similar to
a generator except that, in effect, two-thirds of the electricity
generated by a CAES system was stored at an earlier time through
physical compression of air. Additionally, while the most common
current implementations of CAES systems use both compressed air and
natural gas synergistically, the compression and storage of air is a
significant and necessary aspect of system function while combustion is
not. Furthermore, new forms of CABS currently under development will
require little-to-no natural gas in order to transition the stored
energy from compressed air back to electricity.
Grid scale energy storage is neither a generation asset nor a
transmission and distribution (T&D) asset, but is in a category of its
own. Categorizing storage either as a generation or T&D asset limits
the possible uses of energy storage. In some areas, classifying storage
as a generation asset would prevent transmission or distribution
utilities from owning storage and obtaining the benefits storage can
provide.
Question 4. You testified that several types of rechargeable
batteries are being tested and installed in pilot projects by the
utility industry. What is the typical useful life of rechargeable
batteries as compared to other forms of grid-scale energy storage? How
does the per-kilowatt cost of a battery compare to existing pumped
storage systems and compressed air energy storage systems?
Answer. The expected life of rechargeable batteries varies and
depends on the type: sodium sulfur batteries have an expected lifetime
of 20 years; lead acid battery systems typically need cell replacement
every 4 to 6 years, depending on the application; and flow batteries
and lithium-based batteries have minimum expected lifetimes of 10 years
or greater. Ongoing research is exploring a new class of lead carbon
batteries with greatly increased lifetime as well. The current cost of
sodium sulfur systems is approximately $2500 per kilowatt (kW), Flow
batteries (an emerging technology) range from $800 to $4,000 per kW;
pumped hydro systems cost approximately $200 to $800 per kW depending
on size and terrain; and CABS are estimated to cost $800 to $1000 per
kW. However, these storage technologies have different storage periods,
and many of these cost figures are estimates only since the
technologies are not yet fully commercial.
Responses of Steven E. Koonin to Questions From Senator Wyden
Question 1. As we discussed in the hearing, energy storage
technologies have many promising applications--from enabling deployment
of large amounts of intermittent renewables, to helping meeting peak
demand, to more effectively managing the electric grid, to deployment
in hybrid and plug-in vehicles. As noted in your testimony, no less
than four separate offices within the Department are engaged in some
form of research and demonstration efforts involving storage
technologies. You committed to provide a road map--an overall
strategy--for how the Department is going to pursue the development of
storage technologies. I expect this road map to cover research,
development, and demonstration projects of energy storage technologies,
including integration technologies, over the next few years. I also
expect the road map to address the full range of potential storage
technologies and applications, not just those technologies that are not
currently in the DOE's portfolio. You committed to providing this plan
within 60 days, admittedly an ambitious schedule. Please confirm your
commitment on behalf of the Department to provide this plan.
Answer. The Office of Electricity Delivery and Energy Reliability
(OE) is working with the Offices of Science, Advanced Research Projects
Agency-Energy, and Energy Efficiency and Renewable Energy to develop a
strategy for supporting research, development, and deployment of grid
storage technologies, in response to this request. The Department
expects to provide the strategy to the Committee within 60 days.
Question 2. Your written testimony of the issues surrounding energy
storage was fairly complete, touching on the important issues. However,
there were some noticeable gaps in some of the technologies and
applications, particularly fuel cells, hydrogen, and on-premises
storage.
Answer. The Department's recent analysis concluded that additional
research and development will be required to make hydrogen economically
competitive as an energy storage medium. The study compared the life
cycle costs of energy storage technologies including: pumped hydro,
compressed air energy storage (CAES), nickel-cadmium batteries, sodium-
sulfur batteries, vanadium flow batteries, and hydrogen combustion
turbines. The report can be found at www.osti.gov/servlets/pur1/968186-
wRSj x1/.
Current hydrogen and fuel cell R&D efforts focus on reducing the
cost and increasing the performance and durability of both water
electrolyzers and fuel cells. With success in these efforts, hydrogen
as an energy storage technology could be competitive with batteries but
may not be competitive with the largest scale systems that use CAES or
pumped hydro.
Question 3. The DOE's hydrogen program was recently restored after
originally being cut earlier this year. Please describe the
relationship between the hydrogen program and the energy storage
program. What will the Department be doing in the future to integrate
them? How much emphasis will the Department be placing on fuel cell
technology, both for generating hydrogen as stored energy and for
generating electricity for power? Will the Department look at the
potential for transporting hydrogen through pipelines as an alternative
to building electric transmission lines?
Answer. The hydrogen and energy storage programs continue to
coordinate related activities. To evaluate the feasibility of hydrogen
for energy storage, the Department's hydrogen program is operating a
small scale water electrolyzer with hydrogen storage and electricity
generation at the National Renewable Energy Laboratory in collaboration
with Xcel Energy. The Department's Hydrogen and Fuel Cell Technologies
Program is also identifying regions where hydrogen and fuel cells may
be a viable option for energy storage or combined heat and power for
distributed generation due to high electricity costs and available
power from renewable energy sources. These activities will help guide
research and development for hydrogen technologies while providing
useful information on the challenges of using hydrogen as grid energy
storage. To address hydrogen infrastructure and transmission issues the
Department is evaluating a number of options, including hydrogen
delivery through pipelines as a potential long-term approach.
Question 4. Your written testimony discussed grid-connected
distributed energy storage. However, other than a passing mention of
electric vehicles, you did not mention any research or development
activities related to on-premises storage; i.e., on the customer side
of the meter. There are many opportunities for innovative solutions,
including ice-storage systems running at night instead of air-
conditioning compressors running during peak times of the day. End-
users who install solar panels or small wind turbines may benefit from
on-site storage for the same reasons that utilities do for intermittent
renewables. What will be the DOE's program for extending energy-storage
research and development into systems that might be on customers'
premises?
Answer. The economic cost points for on-premises energy storage of
distributed generation would likely be significantly less than those
for advanced electric vehicle applications. Suitable technological
solutions could come from the current candidates for vehicle batteries,
large scale utility battery systems, or a new breakthrough technology.
The Department's programs are exploring options, including on-premises
active and passive thermal energy storage systems. As these programs
progress, the Department will use the results to develop specific
initiatives that address the challenging requirements of distributed
storage. Active and passive solutions such as running ice-storage
systems at night instead of air-conditioning during the day or using a
building's mass for thermal storage have the potential to reduce
building energy use and result in lower peak electricity demand.
Pacific Northwest National Laboratory's work on Efficient Low-Lift
Baseload Cooling Equipment offers increased energy saving by cooling a
building at night and using the building mass for theiinal storage.
Question 5. In his testimony, the Deputy Director of NREL--Bob
McGrath--stated that electrical energy produced by wind up ``to 20% of
U.S. capacity'' can be integrated into the grid without the need for
storage, which was based on an NREL study. By repeating this statement,
which is also prominently used by the American Wind Energy Association
(AWEA), DOE gives the impression that the grid does not yet need energy
storage. Yet Bonneville Power Administration has already experienced
operational problems at current levels of wind generation, and wind
farms in Texas are paying customers to buy the electricity they produce
at certain times during the night because there is inadequate demand at
that time.
Answer. DOE's 20% Wind Energy by 2030 report is based on an
analysis scenario that assumes power system operators utilize a broad
suite of other available, typically less capital-intensive, sources of
system flexibility to accommodate wind energy's added variability.
These sources of flexibility can include the use of larger balancing
authorities, the use of sub-hourly energy scheduling, and the addition
of new gas-fired generation. In addition, pumped hydro is used by many
utilities, providing 2.5 percent of the Nation's generation capacity.
There is also considerable interest in Compressed Air Energy Storage,
including two demonstration projects totaling 450 megawatts recently
selected for American Recovery and Reinvestment Act awards. In
addition, a growing need for frequency regulation can be cost
effectively met by fast storage.
System operators, such as the Bonneville Power Administration, are
currently evaluating how to best incorporate system flexibility options
into their operations. As more of these operational changes are
implemented, higher levels of wind energy and other variable energy
sources can be integrated at lowest cost. Storage technologies are also
under consideration as an option for augmenting integration capability
beyond that available from operational changes. Under certain
circumstances, the addition of storage may be required to balance the
variability associated with wind generation.
Question 6. Furthermore, the NREL study did not address
combinations of inteimittent technologies; e.g., is storage needed if
wind is 15%, but solar rises to 10%? The ``Eastern Wind Integration and
Transmission Study'' suffers from the same lack of breadth; again, we
do not know if there are better solutions that use storage technologies
unless they are actually included in these sorts of Department
sponsored studies. What steps will DOE take to ensure that storage
technologies be considered in future work on the electrical
infrastructure?
Answer. The analysis tools and datasets necessary to perform
integrated reliability studies incorporating multiple variable
generation technologies are continually being developed and improved.
Only recently have these tools achieved a level of maturity which
allows for the creation of meaningful results, and studies that are
still being completed will include evaluation of multiple variable
generation and energy storage technology options. For example, DOE's
Western Wind and Solar Integration Study will evaluate energy
penetrations of up to 30 percent wind energy and five percent solar
energy. This study will include analysis of the energy storage
capabilities of concentrating solar power systems and existing and
planned pumped hydroelectric storage. Another study currently underway
is the Renewable Energy Futures Study, which will analyze the barriers
and opportunities associated with significantly increasing the
integration of multiple sources of renewable electricity into the
electric grid. The study, planned to be completed in 2010, will
evaluate and quantify the need for energy storage in scenarios with
very high penetration of renewable energy generation. Finally, the
Department also seeks to support interconnection-wide transmission
planning that will include analysis of energy storage opportunities.
Through evaluation of the energy storage deployment projects funded
through the Recovery Act, knowledge of grid-scale storage technologies
and associated characteristics will improve thereby enhancing the value
of current and future integrated technology analyses.
______
Responses of Elliot Mainzer to Questions From Senator Murkowski
Question 1. Of the 2,300 MW of wind now connected to BPA's system,
what is the actual percentage of electricity that is produced from that
nameplate capacity?
Answer. Actual generation compared to plant nameplate capacity
averaged 28 percent in the twelve months ending November 2009. Also, as
of January 12, 2010, with the recent addition of three more
interconnections totaling nearly 400 megawatts, we now support a total
of 2,680 megawatts of wind capacity.
Question 2. In order to deal with the variable nature of wind
energy, BPA is now using its hydroelectric system as a giant storage
battery. Is there a limit to the amount of wind energy that you can
accommodate given its intermittency while also maintaining the
reliability of your electricity transmission? How can pumped storage
assist BPA?
Answer. There will be a limit to the amount of hydroelectric system
flexibility BPA can use to balance variable resources. BPA has been
able to utilize the capability of our hydroelectric system to
accommodate wind generation increases through the implementation of the
initiatives I described in our testimony and as the wind industry
responds to new operating protocols and improves their scheduling
accuracy. With all of these improvements, we estimate that using our
hydrosystem alone we can reliably integrate approximately 4,000
megawatts of wind generation capacity. We expect that amount to
continue to increase as we succeed in implementing our priority wind
integration initiatives.
Pumped storage offers potential value when we have exhausted the
operational protocols that we can implement and need additional storage
capacity to support a higher level of variable generation. As I
mentioned in my testimony, BPA is studying the feasibility of pumped
storage in the Columbia River Power System, and we expect to have more
information in mid-2010.
Question 3. Of course maintaining an additional reserve capacity to
support the wind resources now in the BPA system has resulted in
increased costs for consumers. To address these costs, BPA has imposed
a wind integration rate on wind generators that was not without
controversy. I understand that BPA believes this price signal for wind
integration costs has encouraged wind operators to operate more
efficiently. Please elaborate on the amount of the increased costs and
the wind generators' response.
Answer. BPA believes that the efforts we undertook in the last rate
case did in fact motivate wind operators to improve their scheduling
accuracy, which resulted in lower costs to BPA and a lower rate to the
wind generators. Our cost of providing generating reserves to support
variable wind generation is the primary driver for the wind integration
rate. When we conducted the rate case for fiscal years 2010 and 2011,
we noted that those costs are significantly affected by the wind
plants' scheduling accuracy. The closer actual generation matches
schedules, the smaller the amount of generation reserves we need to
maintain relative to the amount of wind generation connected to our
system. Our initial rate case proposal for the wind rate was $2.72 per
kilowatt/month. We worked with the wind industry on measures to improve
scheduling accuracies, and they accepted more risk that their
generation could be curtailed at certain times if their schedules were
not sufficiently accurate. Our final rate of $1.29 per kilowatt/month--
less than half of our initially proposed rate--was significantly
influenced by these agreements that allowed us to reduce the amount of
reserves required for wind generation.
Response of Elliot Mainzer to Question From Senator Wyden
Question 1. BPA's Strategic Objectives include the statement,
``Climate change concerns also are driving major new investments in
renewables, energy efficiency, smart grid, new large-scale storage and
the electrification of transportation.'' As noted in your testimony,
pumped hydro storage is also being considered as part of BPA's wind
integration efforts. However, there are many other types of storage
technologies, such as compressed air, fly wheels, and batteries that
are being developed to store and manage grid-connected energy systems.
What are BPA's specific plans for examining and deploying energy
storage technologies for both grid management and to help bring more
renewable energy into the grid? Please provide copies of the applicable
plans and planning documents.
Answer. BPA is examining energy storage options through a set of
evaluations that will be conducted through mid-2010. The Pacific
Northwest National Laboratory (PNNL) conducted a nationwide evaluation
of storage technologies to accommodate large amounts of variable
renewable generation. This evaluation included a variety of storage
technologies. BPA has asked PNNL to use this information for an
evaluation of the application of a broad array of storage technologies,
including pumped hydro and compressed air, to the characteristics of
the Pacific Northwest. With this information, BPA will complete a study
of the potential for pumped storage in the Pacific Northwest as one
option. These studies will consider power system requirements for
capacity and ramp rates for the various storage technologies. BPA will
share this analysis with you upon its completion.
BPA's draft Resource Program forecasts what resources it may need
to meet its power supply obligations in the next ten years. The draft
Resource Program concludes BPA should be able to meet its near term
requirements through energy conservation and that longer term
requirements depend on a number of uncertainties, one of which is, the
amount of additional load its preference customers ask it to supply
under the terms of the Regional Dialogue. The draft Resource Program
identifies BPA's need to provide balancing services for wind and energy
in Heavy Load Hours as being the largest and most likely power need
after conservation.
The draft Resource Program identifies pumped storage as a unique
opportunity to meet those needs, and points to the evaluations
described above as needed to assess this potential. The draft Resource
Program also discusses how BPA's wind integration activities provide
more efficient use of BPA's existing capacity reserves before it needs
to develop new generating capacity resources to support variable
renewable generation. We have attached a copy of the draft Resource
Program. The draft BPA Resources Program Plan can be found at: http://
www.bpa.gov/power/P/ResourceProgram/documents/2009-
0930_DraftResourceProgram.pdf.
______
Responses of Jon Wellinghoff to Questions From Senator Bingaman
Question 1. Chairman Wellinghoff, in your testimony, you discussed
the need for considering energy storage in transmission planning.
S.1462 includes energy storage as an alternative that must be
considered in transmission planning. Is this sufficient? What other
legislative language may be necessary?
Answer. As you note, I believe that it is appropriate to consider
energy storage as part of the transmission planning process. The
requirement in S.1462 that energy storage must be considered as an
alternative in transmission planning is sufficient for this purpose and
is an important reinforcement of the Commission's actions.
The Commission took an important step to promote such consideration
in February 2007, when it issued Order No. 890. In Order No. 890, the
Commission required all transmission providers to develop a regional
transmission planning process that satisfies nine principles, one of
which is comparability. To reflect that principle, the Commission
required transmission providers to outline in their tariffs how they
will treat comparably in the transmission planning process all
resources, including nontraditional resources that could impact the
need for transmission expansion.
I would also note that the Strategic Plan that I provided to
Congress this fall states that as transmission providers refine their
transmission planning processes, the Commission will assess best
practices, including the potential for collaborative decision making,
and adopt reforms as necessary to its transmission planning process
requirements. Toward that end, Commission Staff this fall completed a
series of conferences held around the country to review how well the
transmission planning requirements of Order No. 890 are meeting the
needs of our Nation, and to collect input as to how the Commission can
improve upon the regional transmission planning processes.
The Commission is now in the process of reviewing comments that
were submitted in response to questions that Commission Staff posed as
a follow-up to the conferences held this fall. Among many other issues,
commenters discussed the relationship between the regional transmission
planning processes that must satisfy the principles established in
Order No. 890 and the integrated resource planning processes through
which load-serving entities in some states, and often their retail
regulators, identify appropriate investments to meet consumers' long-
term resource needs. That issue may be particularly relevant for energy
storage, which has some characteristics that resemble generation and
some characteristics that resemble transmission. In addition, because
energy storage often interconnects at relatively low voltages,
considering these resources in the transmission planning process often
requires information about the portion of the electric system for which
disputes are most likely to arise as to classification as transmission
or distribution facilities.
Question 2. Chairman Wellinghoff, how is energy storage currently
addressed in transmission and generation planning processes? What
planning, analysis, and modeling tools do we need to develop to be able
to determine where to best site storage technologies?
Answer. As discussed above in my response to your first question,
the Commission in Order No. 890 required transmission providers to
treat comparably in the transmission planning process all resources,
including non-traditional resources that could impact the need for
transmission expansion. More specifically, energy storage technologies
are considered by transmission and generation planners as part of the
portfolio of potential solutions to manage costs, assure resource
adequacy to serve load, and maintain the reliability of the grid.
Energy storage technologies also may be attractive to independent
developers in light of their potential to provide profits through the
differences in energy prices between off-peak and peak periods. In
addition, there is a close relationship between the development and
implementation of energy storage and our Nation's ability to harness
the potential of our renewable energy resources.
Planners and developers regularly use power flow studies (or load
flow studies) to determine the limitations of the grid when
interconnecting new customer loads and generation sources and when
anticipating growth in demand from existing customers. For a power
system to accept the new load and/or generation, it must be deemed
reliable and therefore resilient enough to withstand pre-defined
events. Power flow studies are used to determine whether transmission
overloads would result if these events occurred and whether system
improvements such as new transmission are needed to achieve the desired
performance.
Planning studies traditionally have focused on peak load conditions
to ensure that there would be adequate generation and transmission
capacity to meet the maximum forecasted demand. However, the
development and deployment of significant levels of renewable energy
resources requires a new focus on the capability of the grid to accept
variable generation when it is being produced. For some types of
renewable energy resources and in some areas, that production is likely
to be greater during periods of relatively low demand; energy storage
can play an important role in addressing that issue. In addition, the
development and implementation of improved forecasting tools could
assist system operators in reliably and efficiently utilizing renewable
energy resources in conjunction with dispatching and replacing stored
energy.
Question 3. Chairman Wellinghoff, what kinds of system information-
sharing and collaboration must exist, to ensure that storage and
distributed renewable generation (two sides of the same coin) can be
effectively dispatched such that the bulk power grid is managed most
reliably and efficiently? What role must interoperability and
cybersecurity standards play, to ensure this becomes a reality? How do
transmission system operators need to change their practices and
software to accommodate efficient dispatch of energy storage?
Answer. I agree that there is a close relationship between the
development and implementation of energy storage and our Nation's
ability to harness the potential of our renewable energy resources. As
I stated in my December 10, 2009 testimony to this Committee, energy
storage can make integration of renewable energy resources not only
reliable, but also efficient and cost-effective.
Illustrating this point, I noted in my December 10, 2009 testimony
that some energy storage technologies appear able to provide a nearly
instantaneous response to regulation signals, in a manner that is also
more accurate than traditional resources. These characteristics could
reduce the size and overall expense of the regulation market. Most
existing tariffs or markets do not compensate resources for superior
speed or accuracy of regulation response, but such payment may be
appropriate in the future as system operators gain experience with the
capabilities of storage technologies. In the meantime, the unique
characteristics of energy storage technologies could warrant different
market rules for providing energy and ancillary services than those
established based on the characteristics of traditional resources.
I also agree that increased information sharing and collaboration
are important to ensuring that renewable energy and energy storage
resources are incorporated into the electric system and dispatched in a
reliable and efficient manner. For example, modeling for the type of
power flow studies that I noted above in response to your second
question will need to include these resources and will require
information sharing. Energy management system equipment and software
may need to be revised to properl y model energy storage facilities,
such as to indicate time to respond to dispatch signals, time-to-
depletion, or time remaining until full storage.
Another example of information sharing and collaboration stems from
the distributed nature and relatively small scale of many energy
storage resources. To ensure their reliable and efficient use, such
resources may need to be aggregated and remotely dispatched and
verified. These needs could be met through two-way communications
between the energy storage resource and the local balancing authority's
control center (where generation and load are balanced) to monitor the
availability of the resource and to issue commands for the resource to
generate or store electricity.
It is noteworthy that the combination of dispersed locations and
two-way communications presents both physical and cyber security
issues. For example, it is essential to ensure that communications with
the local balancing authority's control center are secured to prevent
the use of those communications as an entry point to evade the control
center's cyber security protection measures. The mandatory and
enforceable cyber security standards applicable to the electric
industry are the Critical Infrastructure Protection (CIP) reliability
standards developed by the North American Electric Reliability
Corporation (NERC) and eight Regional Entities, subject to the
Commission's oversight. However, these standards apply to only the bulk
power system, thereby excluding facilities, including some energy
storage and distributed generation resources, which are interconnected
to the distribution system. Moreover, the Commission has directed that
NERC make major modifications to the CIP reliability standards, and
until such time as those revisions are completed, the standards are
inadequate to assure protection of the bulk power system.
Separate from the NERC process for developing mandatory and
enforceable reliability standards, the Energy Independence and Security
Act of 2007 (EISA) directs the National Institute of Standards and
Technology (Institute) to coordinate the development of a framework to
achieve interoperability of smart grid devices and systems. The EISA
also directs the Commission, once it is satisfied that the Institute's
work has led to ``sufficient consensus'' on interoperability standards,
to institute a rulemaking proceeding to adopt such standards and
protocols as may be necessary to ensure smart grid functionality and
interoperability in interstate transmission of electric power and
regional and wholesale electric markets. It is unclear at this time to
what extent the standards that result from the Institute's process will
address the cyber security or physical security of distributed smart
grid devices and systems.
In July 2009, the Commission issued a Smart Grid Policy Statement
that discussed its above-noted responsibility pursuant to EISA. Among
other steps, the Smart Grid Policy Statement identified the development
of cyber security standards as a key priority in protecting the grid
and identified electric storage as a key functionality of the smart
grid, stating that standards related to storage should be treated as a
priority in the Institute's process. The Smart Grid Policy Statement
also noted that EISA does not make any standards mandatory and does not
give the Commission authority to enforce any such standards. Although
the Commission will not itself develop or enforce these standards, the
Commission continues to encourage the Institute and standards
development organizations (SDOs) participating in the Institute's
process to ensure that the reliability and security, both cyber and
physical, of the bulk power system is a priority in their standard
development work.
Question 4. Chairman Wellinghoff, how are DOE and FERC working
together to develop and deploy grid-scale energy storage technologies?
Answer. DOE and the Commission play different but complementary
roles on this issue. As Under Secretary Koonin described at this
Committee's December 10, 2009 hearing, DOE is directly supporting
research and development and pilot projects for energy storage and
related technologies. The Commission's role, meanwhile, involves in
part ensuring appropriate treatment of and compensation for energy
storage resources that participate in Commission-jurisdictional
markets.
Such roles are among those recognized in the Memorandum of
Understanding (MOU) that DOE and the Commission entered in December
2009 with respect to the Resource Assessment and Interconnection
Planning project funded by the American Recovery and Reinvestment Act
of 2009. The MOU observes that energy storage and other non-traditional
resources will play an increasing role in meeting the energy needs of
consumers. The MOU also states that the long-term transmission plans to
be developed through the Resource Assessment and Interconnection
Planning project should achieve and balance several objectives, while
maintaining reliability. Those objectives include considering all
available technologies, including energy storage technologies, to the
extent that they may become commercially viable and economic.
Additionally, as I noted above in response to your third question,
the Commission has identified electric storage as a key functionality
of the smart grid. The Commission is working with DOE and other federal
agencies, as well as state regulators and many other interested
entities, on smart grid issues, including standards development.
Question 5. Chairman Wellinghoff, what data does the Federal
government collect on gridscale energy storage? Does it fit into the
data collection forms used by the FERC? Ifnot, what work is underway to
add energy storage to these data collection forms?
Answer. The Energy Information Administration Form No. 860 collects
energy storage data on pumped storage and compressed air energy systems
for all electricity producers. In addition, the Commission collects
pumped storage generating plant statistics for individual companies in
the FERC Form No.1, Annual Report. This data includes certain
statistical and historical information about the property and its
operation during a given year. Apart from pumped storage, however, the
FERC Form No.1 generally collects cost accounting information on a
company-wide basis and does not break down such data by type of
technology. Moreover, companies authorized to sell at market-based
rates, rather than at cost-based rates, generally are not required to
file the FERC Form No.1. The Commission does require all public utility
sellers to file Electric Quarterly Reports including all wholesale
power sales. While not broken out separately, this information could
include sales from storage.
The Commission has begun a review of barriers that may inhibit
participation by energy storage resources in Commission-jurisdictional
markets. As that review progresses and as the role of storage in
wholesale electric markets expands, the Commission will also consider
whether developing additional reporting requirements is appropriate.
Responses of Jon Wellinghoff to Questions From Senator Murkowski
Question 1a. In your testimony you indicated that FERC has issued
preliminary permits for an additional 27,000 MW of pumped storage
capacity.
How many preliminary permits for pumped storage systems has FERC
issued in the past year?
Answer. During calendar year 2009, the Commission issued 17
preliminary permits for pumped storage projects that would have a total
installed capacity of 16,411 megawatts (MW).
Question 1b. What percentage of preliminary permits in the past has
resulted in actual license applications for pumped storage systems?
Answer. In the past three years, the Commission has issued 36
preliminary permits for pumped storage projects. To date, one
permittee, Eagle Crest Energy Company Inc., has filed a license
application, for the L300-MW Eagle Mountain Pumped Storage Project No.
13123. to be located in Riverside County, California. In addition, five
permittees for pumped storage projects, having a proposed total
installed capacity of 3,732 MW, have begun preparing license
applications by filing notices of intent to do so, along with
preliminary application documents that contain all currently-available
project information.
Question 1c. What is the typical time period for licensing a pumped
storage system? For how long is a pumped storage system license valid?
Answer. The time period for licensing a pumped storage project is
largely site-specific and may vary widely depending upon the
configuration of the project, whether closed loop (i.e., using off-
stream and/or underground upper and lower reservoirs) or conventional
(i.e., using a new upper reservoir and an existing lower reservoir that
is located on a river). The relative potential for impacts on
environmental resources will weigh heavily on the process length. Under
existing licensing procedures, it is possible that an appropriately-
sited pumped storage project having minimal potential for environmental
impacts could be licensed in 1.5 years or less from the filing of an
acceptable license application. The process would likely be longer if
the project had the potential to cause significant adverse effects on
cultural resources or environmental resources including, but not
limited to, endangered species or their habitats, or water quality.
Also, delays in receiving authorizations from other Federal or state
agencies (pursuant to, for example, the Clean Water Act or the
Endangered Species Act) might delay a final Commission licensing
action.
The Federal Power Act authorizes the Commission to issue original
licenses for a period not to exceed 50 years. Original pumped storage
project licenses have typically been issued for a 50-year term.
Question 1d. How many of the existing pumped storage facilities
have been relicensed by FERC? What is the typical time period for re-
licensing?
Answer. To date, the Commission has relicensed three pumped storage
projects. The time period for relicensing those projects has averaged
2.6 years from the filing of the application to the issuance of the
license.
Question 2. Much of the new pumped storage development proposals
are for off-river, closed-loop systems that are low impact. Currently,
these projects must navigate the federal licensing process, which can
take several years. With the immediate needs we have for energy
storage, what can FERC do to achieve a more efficient licensing
timeframe for these types of pumped storage projects?
Answer. As discussed above in my response to your Question 1 (c),
proposed pumped storage projects using off-river, closed-loop systems
that are low impact likely could be processed in 1.5 years or less from
application filing. Where consensus can be reached with Federal and
state agencies and other stakeholders that project impacts will be
minor, the Commission may be able to waive various procedural
regulations and thus reduce the length of the licensing process.
Question 3. In your testimony, you reference a situation in West
Texas during one month in 2008 where wind generation resulted in over
nine hundred 15 minute intervals of negative pricing. ``Negative
pricing'' essentially means that you have more generation than demand
since, and is supposed to serve as a signal not to produce electricity
at that time. However, I understand that in Texas, wind generators will
continue to offer their energy at negative prices in order to get the
federal Production Tax Credit and the value of a state Renewable Energy
Credit. Additionally, due to transmission constraints, wind developers
can be paid to remove their production from the grid. Please comment on
this situation.
Answer. A negative price need not signal only that electricity
production should be reduced. It could also signal that using more
electricity during such periods would be appropriate. Energy storage
could be particularly valuable in responding to such a signal, in that
energy could be retained for use at a time when demand would otherwise
outstrip supply or would require use of higher-cost generation. Much as
one application of demand response involves ``load shifting,'' this
application of energy storage resources could be viewed as ``generation
shifting.''
I would note that wind generation is not the only potential
contributor to negative pncmg. Certain base-load generators that must
operate at a more or less steady state around the clock (i.e., they
have inflexible dispatch characteristics) may have a strong incentive
to continue generating even when there is not enough load to balance
their output. Thus, they also may contribute to the incidence of
negative pricing.
Question 4. Compressed air energy systems are considered an energy
storage mechanism because electrical energy is used to compress air
that is stored in a pressurized reservoir. Given the fact that
compressed air energy systems require some method to use the compressed
air to make electricity, should these systems be classified as a
generation technology or a transmission and distribution technology?
Answer. Traditional generation, transmission, and distribution
resources are associated with well understood functions and methods of
rate recovery. At a high level, generators are used to produce
electricity, transmission lines move that electricity to the
distribution grid, and distribution lines move that electricity to end-
use consumers.
Energy storage technologies, by contrast, have some characteristics
that resemble generation and some characteristics that resemble
transmission. For example, like a generator, an energy storage resource
may be able to act as a power marketer, arbitraging differences in peak
and off-peak energy prices or selling ancillary services. The same
energy storage resource also may be able to support transmission
service, such as by supporting voltage on a transmission line, in which
case it might be categorized as transmission, much as some static VAR
compensators and capacitor banks already are. In addition, energy
storage resources may be used as a substitute, temporary or otherwise,
for traditional resources in some circumstances. For example, where
peak period transmission congestion might prevent the importation of
sufficient power to serve peak load, but where there is available off-
peak transmission capacity that could be used to charge an energy
storage resource, that energy storage resource could be used to
maintain uninterrupted electric service until additional transmission
or generation assets could be installed.
Thus, energy storage resources, including those that involve energy
conversion steps like compressed air energy systems and hydro pumped
storage, can perform different functions on the grid. In light of these
characteristics, the Commission has not yet made a generally applicable
classification of compressed air energy systems, nor has the Commission
determined whether such a generally applicable classification would be
appropriate.
Responses of Jon Wellinghoff to Questions From Senator Shaheen
Question 1. As we think about policies to support the development
of new transmission lines to connect location-constrained resources,
such as wind and solar resources, how should energy storage be
considered?
Answer. I believe that effective transmission planning is an
important step in the development of new transmission lines designed
primarily to connect location-constrained resources such as generators
of wind and solar energy. I also believe that it is appropriate to
consider energy storage as part of the transmission planning process.
In February 2007, the Commission issued Order No. 890, which marked
an important step to promote consideration of energy storage in the
transmission planning process. In Order No. 890, the Commission
required all transmission providers to develop a regional transmission
planning process that satisfies nine principles, one of which is
comparability. To reflect that principle, the Commission required
transmission providers to outline in their tariffs how they will treat
comparably in the transmission planning process all resources,
including non-traditional resources that could impact the need for
transmission expansion. Such an impact might arise, for example, where
it is practical to use energy storage resources as a substitute,
temporary or otherwise, for new transmission facilities.
I would also note that the Strategic Plan that I provided to
Congress this fall states that as transmission providers refine their
transmission planning processes, the Commission will assess best
practices, including the potential for collaborative decision making,
and adopt reforms as necessary to its transmission planning process
requirements. Toward that end, Commission Staff this fall completed a
series of conferences held around the country to review how well the
transmission planning requirements of Order No. 890 are meeting the
needs of our Nation, and to collect input as to how the Commission can
improve upon the regional transmission planning processes. The
Commission is now in the process of reviewing comments that were
submitted in response to questions that Commission Staff posed as a
follow-up to the conferences held this fall.
Question 2. One of the proposals put forward to connect these
resources with new transmission lines is to spread out or
``regionalize'' the costs of these new transmission investments.
Question 3. If we regionalize the cost of new high voltage
transmission lines for renewables as a part of transmission rates
without storage, we could end up with a big transmission line with a
relatively low capacity factor because of the intermittent nature of
many renewable resources. When a lower overall cost option might be to
have storage near the intermittent generation, like a wind farm, and a
smaller transmission line with a higher capacity factor and higher
utilization rate.
Question 4. As Congress considers policies to connect our renewable
resources to the grid, how can we achieve that objective in a cost-
effective manner? How should energy storage technologies be
incentivized under broader transmission and renewable policies?
Answer. I agree that decisions related to development of new
transmission lines should be made based on meeting energy needs in a
cost-effective way. Toward this end, it is important to promote
effective transmission planning, as discussed above in my response to
your first question. It is also important to carefully consider a
proposed project's costs and benefits. As you know, cost allocation is
often a threshold consideration in the development of transmission
facilities. For example, there are often significant costs associated
with building the transmission facilities needed to deliver power from
remote renewable energy resources. If the resource developer or the
host utility is compelled to bear all of the cost of such transmission
facilities, regardless of benefits to others, then it is less likely
that the associated renewable energy resources will be developed. A
closely related point is that the Commission must and, I believe, does
ensure that costs of new transmission lines are allocated fairly to the
appropriate entities that benefit from the projects.
With regard to incentivizing energy storage technologies, I would
note first that some such technologies appear able to provide a nearly
instantaneous response to regulation signals, in a manner that is also
more accurate than traditional resources. These characteristics could
reduce the size and overall expense of the regulation market. Most
existing tariffs or markets do not compensate resources for superior
speed or accuracy of regulation response, but such payment may be
appropriate in the future as system operators gain experience with the
capabilities of storage technologies. In the meantime, the unique
characteristics of energy storage technologies could warrant different
market rules for providing energy and ancillary services than those
established based on the characteristics of traditional resources.
I would also note that in section 1223 of the Energy Policy Act of
2005 (EP Act 2005), Congress identified ``energy storage devices'' as
an ``advanced transmission technology'' and also stated that in
carrying out the Federal Power Act (FPA), the Commission shall
``encourage, as appropriate'' the deployment of advanced transmission
technologies. The Commission has recognized that Congress envisioned a
connection between section 1223 and section 1241 of EP Act 2005, which
added section 219 to the FPA and directed the Commission to establish,
by rule, incentive-based rate treatments to promote capital investment
in transmission infrastructure. The Commission subsequently issued
Order No. 679, which set forth the criteria by which a public utility
may obtain transmission rate incentives pursuant to FP A section 219.
The Commission has carefully considered applications for such
incentives filed by energy storage developers and will continue to do
so.
Question 5. As you may know, an amendment pertaining to cost
allocation was adopted during consideration of the transmission title
of the S. 1462, American Clean Energy Leadership Act. The provision
reads:
Sec. 121 (i)--COST ALLOCATION
. `(B) may permit allocation ofcosts for high-priority
national transmission projects to load-serving entities within
all or a part ofa region, except that costs shall not be
allocated to a region, or subregion, unless the costs are
reasonably proportionate to measurable economic and reliability
benefits; ''
If approved, how would this policy affect, if any, New England's
existing cost allocation methodology for reliability-based and
participant-funded transmission infrastructure improvements? As you
know, the methodology, established in 2004, provides for regional cost
support of regionally planned transmission upgrades that provide
region-wide benefits. I am interested in how the cost allocation
language in S. 1462 may affect New England's existing policies for
transmission improvements necessary for reliability purposes.
Answer. In my view, the first clause of the language that you
quoted from S.1462 includes an important clarification to the
Commission's authority in the area of transmission cost allocation. It
is critically important that the Commission continue to have the
flexibility to approve cost allocation methods that meet local and
regional needs in a manner that provides just and reasonable rates for
consumers as well as nondiscriminatory access to the transmission
system. It is also appropriate that Congress clarify that the
Commission has authority to allocate transmission costs to all
loadserving entities within an interconnection or part of an
interconnection where it is appropriate to do so. Of course, as I noted
above in response to your previous question, the Commission would need
to ensure, as it does today, that the costs are allocated fairly to the
appropriate entities.
However, I am very concerned about another aspect of the language
that you quoted from S.1462. Legislation should avoid unduly
restrictive language on cost allocation, particularly language that
could be read as imposing a requirement to calculate the precise
monetary benefits expected to accrue from a new transmission facility.
It is possible that ISO New England's existing cost allocation method
would be found inconsistent with the restrictive language in S.1462
that requires a showing that ``costs are reasonably proportionate to
measurable economic and reliability benefits.''
Question 6. As you may know, thermal energy storage--that is the
thermal momentum of buildings, both heating and cooling, can mimic the
same characteristics of electric energy storage technology--like pumped
storage, air compression, flywheels or battery technologies.
Do you consider thermal storage technologies, such as offpeak
cooling with thermal energy storage, as an electricity storage
technology like pumped storage, air compression, flywheel and battery
technologies? Ifnot, why not?
Answer. I generally agree that thermal energy storage can be
classified as an energy storage technology. It is noteworthy that there
are a variety of thermal energy storage technologies and applications,
which can be located on different parts of the electric system. For
example, some large concentrating solar thermal electricity generation
plants can be designed to include on-site thermal storage capability
for excess heat to permit electricity generation to continue after the
sun has set. Another form of thermal storage can involve controlled
cooling at large refrigeration plants that serve industrial,
commercial, or residential cooling loads. Yet another technology
involves smaller distributed thermal energy storage for shifting
cooling loads from peak to offpeak periods. Each of these technologies
could constitute an ``energy storage device'' and thus could also be
considered as possible ``advanced transmission technologies'' as
defined in section 1223 of EPAct 2005.
Question 7. Considering that 40% of the summer peak demand in New
England consists of air conditioning and cooling loads, what can we do
to promote offpeak cooling with thermal energy storage, such as ice
energy, to avoid paying more for transmission and generation capacity
that is only used a few hours per year?
Answer. Because thermal energy storage for cooling requires the
storage to be located at the cooling location, support for distributed
thermal storage or possibly some type of district cooling (e.g., large
thermal ponds at the neighborhood level) may have particular promise.
In both cases, this equipment would likely be located at the retail end
of the electric grid. Given that location, in circumstances where a
developer of a distributed thermal storage technology chooses to work
with an electric utility to encourage consumers to adopt that
technology, retail regulators could promote that use of distributed
thermal storage by permitting the utility to recover the cost of such
investments in bundled retail rates. Where a developer of a distributed
thermal storage technology does not choose to work with an electric
utility, changes in retail rate design or other policies such as tax
credits could make investments in such technologies more attractive to
prospective users. In addition, to the extent that a developer of a
distributed thermal storage technology does not choose to work with an
electric utility, it may be possible to develop tariffs for wholesale
markets under which users could receive compensation for the demand
reductions they achieve by deploying such technologies. I would be
supportive of exploring such mechanisms.
Question 8. Anyone who has spent time studying renewable energy
sources and how they work knows that having grid-scale energy storage
assets will be crucial to the effectiveness and extent of renewable
integration into our electrical power system. When you want power from
a generator that burns fossil fuels, you turn it on. Solar panels and
windmills, however, require sun to shine and wind to blow to generate
power. Since that might not happen at exactly the moment that power is
needed, the capability to store the energy and use it at a later time,
whether it's 10 seconds or 10 hours later, is crucial.
Question 9. As we increase the amount of renewable on the grid, how
much energy storage and what type of storage, will be required to meet
our goals? I say what type of storage, because I understand there are
two types of challenges to making the renewable generation system work
effectively. One relates to balancing the supply and demand of power on
the grid at any moment, called regulation. Regulation requires energy
storage that can absorb and inject energy into the grid very quickly.
The other relates to what's called diurnal storage--storing energy when
the wind blows, for example, and using it when the wind dies down but
demand for electricity stays high.
Question 10. How much of each type of storage do we need to make
our renewables, both current and planned, work most effectively?
Question 11. Is there a clear ratio that we need to achieve between
storage and renewable resources?
Answer. I agree that there is a close relationship between the
development and implementation of energy storage and our Nation's
ability to harness the potential of our renewable energy resources. As
I stated in my December 10, 2009 testimony to this Committee, energy
storage can make integration of renewable energy resources not only
reliable, but also efficient and cost-effective.
I would note that I have directed Commission Staff to conduct a
study to determine the appropriate metrics for use in assessing the
reliability impact of integrating large amounts of variable renewable
energy into the grid. That study, which is being undertaken by Lawrence
Berkeley National Laboratory and overseen by Commission Staff, is due
to be completed in the spring of 201O. When the study is complete, it
will help to inform policy makers about the current limitations of the
grid, and to identify what investments will be necessary to reliably
accommodate continued growth of renewable energy resources.
However, generalizing about either the amount or type of storage
needed to integrate renewable energy most effectively into the electric
system is difficult given the variances in renewable generation types
(e.g., solar as compared to wind) and the varying capacity factors of
each resource depending on location and other characteristics (e.g.,
on-shore wind as compared to off-shore wind). The Commission also has
not identified a ratio as to the amount of energy storage needed per
amount of a particular type of renewable energy. In addition, I would
note that other non-traditional resources, such as demand response,
also can contribute to the reliable, efficient, and cost-effective
integration of renewable energy resources.
Question 12. Is energy storage keeping up with renewables
deployment, or do we have to ramp up the rate at which energy storage
is made available to keep pace with our plans and goals for integration
of renewables?
Answer. The recent expansion of our Nation's reliance on renewable
energy resources has progressed more quickly than deployment of energy
storage. Several factors have helped to accommodate this expansion,
such as pre-existing flexibility in the system and, in some regions,
greater use of demand response in coordination with variable renewable
energy resources. With pre-existing system flexibility diminishing,
however, and for the reasons discussed above in response to several of
your previous questions, I believe that there are substantial potential
benefits to increasing the pace of deployment for energy storage
resources. The lag in development of energy storage resources is also
one of the primary reasons why, as noted in my response to your
previous question, I directed Commission Staff to conduct a study to
determine the appropriate metrics for use in assessing the reliability
impact of integrating large amounts of variable renewable energy into
the grid. I am hopeful that the results of that study will provide
information to assist in assessing what investments in energy storage
and other types of resources will be necessary to reliably accommodate
continued growth of renewable energy resources.
Question 13. Do we need to find a way to link the promotion and
deployment of energy storage to the incentives we provide for
renewables? It seems that renew abIes and energy storage are
complementary components of a single system.
Answer. Yes. It would be ideal if we could associate sufficient
energy storage with each new megawatt of variable renewable energy
resource developed to ensure the consistent capacity factor necessary
to deliver the energy when and where needed. However, we should not
lose sight of the fact that energy storage is not the only mechanism to
accomplish this task. For example, transmission can provide for
delivery of energy from diverse and non-coincident renewable energy
resources and, therefore, also should be linked to that complementary
single system. Thus, the aim should be to develop a market incentive
system supported by federal policy that encourages the appropriate
development of renewable energy resources, supports storage and other
appropriate resources for balancing and delivering those renewable
energy resources when needed, and a transmission system that enables
that delivery from any of the renewable energy resource, a non-
coincident alternative resource, or storage.
Question 14. FERC Order 890 mandates that all independent system
operators open their markets to non-generation resources to provide
grid ancillary services, such as grid regulation. Electricity storage
has been cited as one technology that can provide some of these
services, with one company already using a flywheel energy storage
system to provide grid regulation in Massachusetts, by which I mean the
process of balancing the power injected into the grid with the level of
power consumed at any given moment. I understand from the experience of
this company, Beacon Power, that the extent of compliance with Order
890 varies greatly among the ISOs. Some ISOs have moved relatively
quickly to adjust their tariffs and control technologies to meet this
new technology, whereas others have been more resistant to FERC's
mandate.
Question 15. Do you agree with this characterization?
Question 16. What is the FERC doing to enforce compliance with
Order 890?
Answer. In Order No. 890, the Commission modified most ancillary
services schedules of the pro forma Open Access Transmission Tariff to
indicate that those ancillary services may be provided by generating
units as well as non-generation resources, such as demand resources,
where appropriate. The Commission also stated that sales of those
ancillary services by load resources should be permitted where
appropriate on a comparable basis to service provided by generation
resources.
I agree with the characterization in your question to the extent
that it recognizes that various regional transmission organizations
(RTO) and independent system operators (ISO) are at different stages of
developing appropriate tariff mechanisms for energy storage resources
to provide ancillary services. All of the RTOs and ISOs that operate
energy and ancillary services markets are working with their
stakeholders to determine how non-generation resources, including
energy storage resources, can provide ancillary services in those
markets. As I described in my December lO, 2009 testimony to this
Committee, some of the RTOs and ISOs have also made or proposed
specific tariff changes, while others have established pilot programs.
Achieving compliance with major initiatives such as Order No. 890 often
involves an iterative process, rather than a single compliance filing.
I would also note that the Strategic Plan that I provided to
Congress this fall sets as a long-term performance goal that all
resources technically capable of providing ancillary services wil1 have
the opportunity to provide those services. Toward that end, the
Commission will consider instituting formal proceedings that may
address the modification or creation of ancillary services. as well as
the removal of additional barriers that may exist to any resource
capable of providing an ancillary service from having the opportunity
to do so.
Responses of Jon Wellinghoff to Questions From Senator Udall
Question 1. Chairman Wellinghoff, how would you assess the changes
that Independent System Operators and Regional Transmission
Organizations have made in recent years to allow storage to compete in
their markets? Would you judge that they have made significant
progress? What do you think is still left to do?
Answer. Various regional transmission organizations (RTO) and
independent system operators (ISO) are at different stages of
developing appropriate tariff mechanisms for energy storage resources
to provide ancillary services. All of the RTOs and ISOs that operate
energy and ancillary services markets are working with their
stakeholders to determine how non-generation resources, including
energy storage resources, can provide ancillary services in those
markets. As I described in my December 10, 2009 testimony to this
Committee, some of the RTOs and ISOs have also made or proposed
specific tariff changes, while others have established pilot programs.
I believe that these actions taken by the RTOs and ISOs constitute
significant progress. Nonetheless, I would note that the Strategic Plan
that I provided to Congress this fall sets as a long-term performance
goal that all resources technically capable of providing ancillary
services will have the opportunity to provide those services. Toward
that end, the Commission will consider instituting formal proceedings
that may address the modification or creation of ancillary services, as
well as the removal of additional barriers that may exist to any
resource capable of providing an ancillary service from having the
opportunity to do so.
I also stated in my December 10, 2009 testimony that some energy
storage technologies appear able to provide a nearly instantaneous
response to regulation signals, in a manner that is also more accurate
than traditional resources. These characteristics could reduce the size
and overall expense of the regulation market. Most existing tariffs or
markets do not compensate resources for superior speed or accuracy of
regulation response, but such payment may be appropriate in the future
as system operators gain experience with the capabilities of storage
technologies. In the meantime, the unique characteristics of energy
storage technologies could warrant different market rules for providing
energy and ancillary services than those established based on the
characteristics of traditional resources.
Question 2. Chairman Wellinghoff, what is your view on how rate
recovery should be done for storage projects that are built to defer
the need for new investments in transmission infrastructure or to
relieve transmission congestion?
Answer. Energy storage technologies have some characteristics that
resemble generation and some characteristics that resemble
transmission. For example, like a generator, an energy storage resource
may be able to act as a power marketer, arbitraging differences in peak
and off-peak energy prices or selling ancillary services. The same
energy storage resource also may be able to support transmission
service, such as by supporting voltage on a transmission line, in which
case it might be categorized as transmission, much as some static VAR
compensators and capacitor banks already are. In addition, energy
storage resources may be used as a substitute, temporary or otherwise,
for traditional resources in some circumstances. For example, where
peak period transmission congestion might prevent the importation of
sufficient power to serve peak load, but where there is available off-
peak transmission capacity that could be used to charge an energy
storage resource, that energy storage resource could be used to
maintain unintelTupted electric service until additional transmission
or generation assets could be installed. In light of these
characteristics, the Commission has not yet made a generally applicable
classification of energy storage resources for purposes of cost
recovery, nor has the Commission determined whether such a generally
applicable classification would be appropriate.
Responses of Jon Wellinghoff to Questions From Senator Stabenow
Question 1. I appreciate the opportunity to hear more about the
potential for energy storage technology usage in our energy grid.
Continuing to pursue energy storage technologies like those
mentioned in your testimony will help make our grid more efficient,
connect renewable technologies to our systems, and ultimately lead to
less greenhouse gas emissions and more jobs for our workers.
I would like to point out a connection between grid energy storage
issues to another interest important to my state of Michigan--advanced
batteries for vehicles.
Advanced electric vehicles provide two benefits for the electricity
grid. First, vehicle battery technology can improve store energy for
the grid. Second, those vehicles can communicate with the grid and use
more energy at low demand periods when energy is cheaper or more
renewables are available.
I was proud to help provide funding for advanced batteries in the
Recovery Act which provided nearly $2.3 billion for advanced battery
manufacturing. :Many companies and universities in Michigan, such as
A123 systems and the University of Michigan, have used this funding to
make Michigan and the United States a leader in advanced battery
technology development. A123 is also working with our Michigan utility,
Detroit Edison, to demonstrate its battery technology for grid storage.
Certainly energy storage technology and cost will depend on both
the vehicle and electrical industries. Please provide examples of the
need for government R&D efforts and these two industries to continue to
work together to develop the next generation of advanced batteries
required by both industries.
Answer. I agree that both the electric and vehicle industries will
benefit from the development of advanced batteries that can enhance the
operation of electric transportation, as will consumers who purchase
electric vehicles. I also agree that to fully realize such benefits,
government support for research and development in this area is
appropriate, and cooperation between the electric and vehicle
industries is essential.
As you know, there are many examples of technologies that
originally emerged from research and development that was conducted
with Federal government support. Indeed, much of today' s existing
battery technology for electric vehicles could be placed in that
category, although to date much subsequent development and
commercialization of that technology has occurred outside of the United
States. I believe that continuing the Nation's commitment to research
and development in this area offers the promise of further technology
breakthroughs.
One illustration of the need for cooperation between the electric
and vehicle industries is related to the potential for the batteries in
electric vehicles to provide services to the grid. As I stated in my
December 10, 2009 testimony to this Committee, researchers at the
University of Delaware have demonstrated that electric vehicles can
provide regulation service. In fact, P1M Interconnection (P1M) is
currently paying electric vehicles to do so. P1M aggregates a 1
megawatt battery that a utility installed at P1M headquarters with the
batteries of three electric cars associated with the University of
Delaware's research. The batteries then sell into P1M's regulation
market.
The University of Delaware researchers believe that, using this
technology, parked electric vehicles connected and aggregated in large
numbers in places like parking garages could be made available as
energy storage to support grid operations. Achieving that larger-scale
potential will involve increased cooperation between the electric and
vehicle industries, such that electric vehicles are equipped with
appropriate vehicle-to-grid (V2G) technology that allows the necessary
two-way communication and bidirectional controlled flow between the
vehicle and the grid.
Question 2. How critical are auto technologies to the electrical
industry and infrastructure as we strive to use energy more efficiently
and tap into more renewable sources?
Answer. I believe that energy storage resources have great
potential to complement our Nation's efforts to reliably incorporate
into the grid increased output from variable renewable energy
resources. With increasing commercial availability, electric vehicles
could become a widespread energy storage resource and contribute to
reaching that goal. For example, as I noted above in response to your
first question, electric vehicles can provide ancillary services, like
regulation service, to the grid and thus assist system operators in
balancing the variability of many renewable energy resources.
Question 3. In addition, are there any regulatory or statutory
barriers that would make FERC's efforts to integrate this kind of
technology more effective?
Answer. As I stated in my December 10 testimony, the Commission
recognizes and is taking steps to address the challenge of removing
regulatory barriers that impede the vast potential of energy storage to
support our national energy goals.
For example, the Strategic Plan that I provided to Congress this
fall sets as a long-term performance goal that all resources
technically capable of providing ancillary services will have the
opportunity to provide those services. Toward that end, the Commission
will consider instituting formal proceedings that may address the
modification or creation of ancillary services, as well as the removal
of additional barriers that may exist to any resource capable of
providing an ancillary service from having the opportunity to do so.
More specifically, I would note that most existing tariffs or
markets do not compensate resources for superior speed or accuracy of
regulation response. Such payment may be appropriate in the future as
system operators gain experience with the capabilities of storage
technologies. In the meantime, the unique characteristics of energy
storage technologies, including electric vehicles, could warrant
different market rules for providing energy and ancillary services than
those established based on the characteristics of traditional
resources. The Commission is working toward removal of such barriers to
market participation by energy storage resources.
Question 4. Does FERC require any additional authority to advance
energy storage technology and use?
Answer. PJM's compensation of electric vehicles for providing
regulation service demonstrates that it is possible under existing
authority to integrate electric vehicles into Commission-jurisdictional
markets. Removing the types of barriers described in my response to
your previous question will create additional opportunities for market
participation by electric vehicles and other energy storage resources.
It also should be noted that retail regulatory authorities have an
important opportunity to directly support the widespread adoption of
energy storage technologies, including electric vehicles. To date,
states have led the way in pushing for increased reliance on our
Nation's still largely untapped renewable energy resources, and in
light of the potential for energy storage to complement those often
variable resources, retail regulators may come to see benefits of
supporting storage development through retail rate recovery. The
Commission will look for ways to work with the states to ensure that
innovative retail rates do not raise concerns for the operation of
Commission jurisdictional wholesale markets.
______
Responses of Ralph D. Masiello to Questions From Senator Bingaman
Question 1. Dr. Masiello, in your testimony you discussed the need
for considering energy storage in transmission planning. S.1462
includes energy storage as an alternative that must be considered in
transmission planning. Is this sufficient? What other legislative
language may be necessary?
Answer. Storage on the distribution system offers new capabilities
that can affect the need for transmission capacity expansion. This
poses the challenge that transmission planning would have to include
some consideration of how storage at the distribution level can be a
transmission resource. Given that many renewable resources are
developed as ``distributed generation'' on the distribution system,
this will become an increasingly important consideration. Ideally,
transmission planning would have to show quantitative evaluation of
energy storage as an alternative in transmission planning, including
its impacts on reliability and congestion.
I cannot speak as an expert as to how best to implement the
requirement via legislation or regulation. It may be that requiring how
to demonstrate consideration of energy storage is something FERC would
do via a regulatory process. However, FERC oversight today generally
does not extend to distribution systems though we now have the
potential for transmission assets on the distribution system to be a
factor in transmission planning.
Question 2. Dr. Masiello, how is energy storage currently addressed
in transmission and generation planning processes? What planning,
analysis, and modeling tools do we need to develop to be able to
determine where to best site storage technologies?
Answer. Storage is already considered in generation planning
processes today where known storage alternatives to generation such as
pumped hydroelectric storage are viable resources. Generally speaking,
however, storage is not a routine consideration today in transmission
planning either from a reliability perspective or a transmission
congestion perspective. Storage is beginning to be considered in the
context of renewable generation that is subject to transmission
congestion, as in the case of remote wind farms.
To allow for storage to be routinely considered in system planning,
the industry needs to have standard models for storage systems which
can be parameterized to represent different technologies and sizes.
This is the case today with generation systems and with transmission
apparatus--there are formal standards from the Institute of Electrical
and Electronics Engineers (IEEE) for models of different equipment
classes that are identified as suitable for particular planning
purposes such as transient stability, load flow, and other analyses.
These standard models allow for the exchange of planning data as well
as a degree of compatibility across different software applications
from different vendors. One key step, therefore, is the development of
similar standards for storage systems so that they may be consistently
represented in the various planning models and tools. Because many
storage technologies are novel and somewhat developmental, and because
the life expectancy of storage systems as a function of their usage is
central to the economic analysis of different applications,
considerable work is required to develop methodologies for
characterizing and modeling storage system life cycles as well as
validating those characterizations over time.
A key inherent benefit of storage systems is in the ability to
shift energy delivery in time; that is to deliver energy at a time
later than when it is generated. In general, transmission studies today
analyze a ``shapshot'' of the system at a moment in time (usually
assumed to be at peak loading) as opposed to analyzing conditions over
a period of time. Determining the optimal size of a storage system
requires that the transmission planning analysis look at system
performance over a time period during which the storage system is
optimally used. Thus, new methodologies for optimization and simulation
are required and these must be incorporated into transmission planning
tools. Storage inherently transforms the ``economic dispatch''
problem--how to best allocate generation at a given moment in time--to
a ``unit commitment'' problem--how to best allocate resources over
time. As such, it will require that transmission planning must also
consider these time dynamics.
Question 3. Dr. Masiello, what kinds of system information-sharing
and collaboration must exist, to ensure that storage and distributed
renewable generation (two sides of the same coin) can be effectively
dispatched such that the bulk power grid is managed most reliably and
efficiently? What role must interoperability and cybersecurity
standards play, to ensure this becomes a reality? How do transmission
system operators need to change their practices and software to
accommodate efficient dispatch of energy storage?
Answer. The ISO RTO Council of North American Independent System
Operators is developing proposed business process, data model, and
interoperability standards for storage and distributed generation as
inputs to the National Institute of Standards and Technology (NIST)
Smart Grid interoperability standards process. These will include
proposals for what information must be exchanged and with what
periodicity for different reliability, dispatching, and control
purposes at the wholesale or transmission level. These proposed
standards will be reviewed by the appropriate teams and working groups
within the NIST standards framework, and will have to be compatible and
compliant with the broader set of NIST interoperability standards,
including cyber security provisions.
The key issues for distributed resources and renewable resources
are: forecasting, visibility or monitoring, and control. At low levels
of penetration inaccurate forecasts of renewable production and a lack
of direct visibility are manageable. At high levels of penetration
(i.e., over 20%), the system operators will require more accurate
forecasts of production and real time visibility of actual production
of both grid connected and distributed resources. Controlling renewable
resources requires the means to avoid unanticipated and sudden fall
offs in production. This implies that a grid operator might require
renewable resources to ``ramp down'' or be curtailed in anticipation of
near-term weather changes. Alternatively, storage as a local resource
or as a grid service could help resolve sudden drops in renewable
generation.
The variable nature of renewable resources will add more
uncertainty to the daily and hourly scheduling processes. Grid
operators will have to adapt to this via changed protocols for
scheduling reserves and perhaps ``ramping'' capability in the system.
The algorithms used by market operators or by vertically integrated
utilities to optimally schedule day-ahead, hour-ahead, and real-time
generation will all have to be able to consider and optimize the
ability of storage to shift energy demand and production in time. In
general, this is a difficult problem which is addressed today only in
specific cases of hydro thermal scheduling that have incorporated
models of particular pumped hydroelectric facilities. Even in these
cases, because existing pumped hydroelectric storage is not
controllable when pumping, the solutions are not at the level of
sophistication that will be required in the presence of high renewable
production and large amounts of available and distributed storage.
Responses of Ralph D. Masiello to Questions From Senator Murkowski
Question 1. In your written testimony, you indicated that demand
response and dynamic pricing cannot be maintained at certain renewable
penetration levels. The energy bill passed by this Committee would
require up to 15% of the electricity supply from renewable sources or
energy efficiency by 2021. Is this percentage practically achievable if
the energy storage technologies are not deployed on a large scale given
the intermittency of the renewable sources? Will development and
deployment of energy storage technologies proceed at a pace sufficient
to match the need for meeting a federal renewable mandate?
Answer. To clarify this point, my intention was to say that
managing the production characteristics and variability of renewable
resources when they are over 20% of the portfolio may be difficult with
demand response and dynamic pricing alone, as it is not clear what
level of demand control the public might accept. (This is a personal
opinion of mine). In conjunction with demand response and dynamic
pricing, storage offers another resource for mitigating the
intermittent behavior of renewables.
For storage development to proceed as rapidly as mandated renewable
development, the technology must be proven and either the economics
must be attractive (such as with the time arbitrage of energy for the
renewable developer or storage developer). Today, there is no easy way
for a storage developer to anticipate what the time arbitrage of energy
prices will be under high renewable levels if demand response or
dynamic pricing is the key determinant in setting marginal prices--
there is not sufficient data to understand what consumer price levels
for demand response will need to be to achieve high levels of demand
control. The tradeoffs between high levels of renewables, demand
response or dynamic pricing, and storage are not well understood
economically. Studies are needed to identify the various tradeoffs and
begin to assess the quantitative economics.
Question 2a. Pumped hydro has been the workhorse for utility-scale
energy storage and provides 21 gigaWatts (GW) of electrical capacity.
However, suitable locations for pumped hydro are considered limited.
Of the nearly 80,000 dams in the U.S., how many have hydroelectric
generating capabilities?
Answer. Though KEMA has expertise in hydroelectric generation, the
national labs appear to have developed national assessments of
hydropower potential in the U.S. In particular, Idaho National
Laboratories (INL) has completed a series of reports over the past
decade to assess hydropower potential in the U.S. and have developed
tools for modeling the potential and the economics of a given site. Dr.
McGrath of (NREL) may also be able to provide better information on
national inventories. However, it appears that according to the Army
Corp of Engineers, 2,400 of the nearly 80,000 dams in the U.S. have
hydroelectric generating capabilities.
Question 2b. If so, how much additional capacity could be obtained
in doing so?
Answer. The 2003 INL report identified potential conventional
hydropower capacity additions of 30,000 MW by developing feasible sites
to full potential. Other analyses may differ, especially in the
weighting factors used to assess issues such as environmental and land
use factors. This estimate includes run-of-the-river hydropower as well
as other hydropower sources not typically conducive to pumped storage.
As such, these studies do not explicitly identify potential
hydroelectric pumped storage project potentials.
Other sources identify significant numbers of projects in the
permitting stage for the construction of above-ground and cavern-based
pumped storage--as much as 31,000 MW of pumped storage capacity.
Whether these projects will pass federal, state, and local
environmental, land use, and eminent domain reviews and processes and
proceed to construction is difficult to assess, as is predicting the
timeline for such approvals.
Pumped storage can be the most economically attractive large scale
storage technology (00's to 000's of MWh) if the siting provides
sufficient elevation difference between low and high reservoirs and
sufficient acreage for large amounts of storage. Efficiencies can be as
high as 80% overall if elevation differences are great enough and if
the reservoirs do not lose water to leakage into the water table or to
evaporation. Unfortunately, most existing hydroelectric generation
facilities are not suitable for pumped storage applications due to lack
of a sizable reservoir below the dam. One notable exception to this is
at Niagra Falls where a very large pumped storage facility has been
proposed. There are obvious environmental and public factors that come
into play in such a location.
______
Responses of Robert McGrath to Questions From Senator Bingaman
Question 1. Dr. McGrath, what planning, analysis, and modeling
tools do we need to develop to be able to determine where to site
storage technologies that may be able to defer or negate the need for
distribution and transmission upgrades or even the need for new
generation/transmission/distribution?
Answer. Analysis is required at multiple scales to quantify the
need for energy storage and to develop the appropriate decision-making
tools sufficient to balance trade-offs among new transmission,
generation, load management (e.g. SmartGrid) and energy storage.
Because energy storage can be considered by utilities and grid
operators as either a central (large) or distributed source of
dispatchable generation, modeling and simulation will need to cover a
range of scales from single renewable energy sources to regional zones
and the entire grid. Analysis is needed to understand the options under
a number of potential scenarios at regional and national scale, to
determine the scale(s) and timeframe(s) required for energy storage
technology development and deployment, and provide the necessary
information for market assessments. The need for a more holistic
national-scale study is made all the more acute by the proliferation of
renewable portfolio standards at the state level.
For scenarios that look at increasing the use of Variable-Resource
Renewable Energy (VRRE) options such as wind and solar, significant
improvements are needed to quantitatively describe the actual electric
grid and power flows to incorporate the complexities of storage and
transmission technology options for planning scenarios. These improved
analysis tools are needed to address a variety of problems ranging from
long-term planning for capacity expansion decisions, to hourly
decisions supporting least-cost system operation, and finally to sub-
hourly decisions affecting emissions, reliability, ramping and reserve
considerations.
DOE has funded the development of significant electric grid
modeling and analysis capabilities at national laboratories, e.g. ORNL,
PNNL, SNL, LANL, and LBNL, mainly to address questions related to
overall grid reliability and homeland security. NREL has developed
collaborations with these national laboratories to specifically apply
their data and analytic capability to studies of renewable energy
penetration into the electric grid for multiple regions and scales.
A number of efforts are underway to assess the interrelationship of
storage and transmission and generation, but no significant large-scale
studies have been completed. The bulk of the work to date has been to
demonstrate that renewable energy can be integrated into the electric
grid. Little work has been targeted to date at developing optimal
solutions. Additional efforts should be directed at large-scale,
detailed models, using large datasets. These models can then be used to
draft broad potential scenarios, and reveal the proper balance of
storage and transmission upgrades.
As an example of work specific to renewable energy integration,
NREL has developed the Regional Energy Deployment Systems (ReEDS) model
for the long-term capacity expansion modeling at the national level.
This model includes in considerable detail Variable-Resource Renewable
Energy options (VRREs), along with more simplified analytical
descriptions of storage and transmission. NREL is in the process of
improving how transmission is represented in the ReEDS model, to better
represent actual power flows. Detailed descriptions of distribution and
storage considerations, however, remain outside the present scope of
the model. Additional investments are required, supporting work at NREL
and other sites, to develop, validate and integrate detailed
descriptions of storage, transmission and distribution into models such
as ReEDS in order to support long-term grid planning and associated
national policy formation.
For least-cost system operation throughout a year at the individual
utility, regional reliability entity, or ISO/RTO level, there are a
number of existing commercially-available optimal power flow models
that address renewables and generation/transmission/storage tradeoffs,
with varying degrees of accuracy. Providing these models with valid
hourly renewable resource data, obtained from actual operation over
multiple years, is an ongoing challenge now being addressed by NREL.
Approximating these detailed hourly model results in the capacity
expansion models described in the preceding paragraph is another
crucial ongoing modeling effort. Modeling at the sub-hourly level for
system reliability, carbon and local air emissions, ramping, and
reserves, in a system with large amounts of VRREs, will be critical as
we look to the future--though limited funding has kept such effort in
its infancy. Finally, it is important to recall that the authority for
generation, transmission and distribution approval is largely in the
purview of state government.
Question 2. Dr. McGrath, some of the commercial software that grid
planners use today grew out of previous DOE-funded research. What is
DOE doing to help develop grid planning software that takes account of
energy storage and renewable energy? What are the national labs doing
to support transmission planning models and software? How much funding
is going towards this work now, and how does this compare to past
funding levels?
Answer. Energy storage will be an important element in the
extremely complex process of integrating large quantities of renewable
energy into the electric grid. As pointed out by Undersecretary Koonin,
a national grid-scale energy storage RD&D program aimed at developing
and implementing cost-effective, energy-efficient, large-scale energy
storage technologies will require a serious commitment to grid
optimization analysis, as well as to energy storage technology
development.
In the area of grid analysis, the DOE Office of Electricity funds
several national laboratories, including NREL, PNNL, ORNL, LBNL and ANL
as well as universities to advance tools, develop methods, and perform
specific studies. For example, ORNL and PNNL have developed extensive
visualization capabilities in collaboration with utilities. Los Alamos
and Sandia have developed extensive physics-based models of the
existing national electric grid that include real-time power generation
and flows to predict the impacts of disruptions, either natural or man-
made, on the electric grid. This model was developed initially through
DOE-OE, then through the Department of Homeland Security's National
Infrastructure Simulation and Analysis Center (NISAC). DOE-EERE is
supporting data development and looking at needed advancements to
accurately capture the characteristics and effects of variable
renewable energy sources.
NREL has specifically been engaged in grid analysis for renewable
energy integration and has developed collaborations with a number of
national laboratories and companies to apply their models and data to
studies of renewable energy penetration into the electric grid for
multiple regions and scales. In the Western Wind and Solar Integration
Study (WWSIS), NREL is working with GE and its GE-MAPS software to
examine the potential synergies between pumped hydro storage and VRREs.
In another effort, the Renewable Electricity Futures Study, NREL is
working with ABB to use and improve their GridView model for assessing
the role of transmission and storage under high renewable penetration
scenarios. In a third effort, the Western Renewable Energy Zone (WREZ)
initiative, NREL provided highly detailed VRRE data maps, then worked
with western states, Canadian provinces, and Mexico (which encompass
the western grid interconnection), for assessing renewable resource
potential, and transmission requirements necessary to deliver these
resources to load centers.
Recently, NREL has been collaborating with Los Alamos National
Laboratory through funding from the DOE-EERE wind program to
incorporate models and data from LANL's large DHS-funded NISAC. These
models use power flows on the existing grid and will allow for detailed
``what-if'' analysis as to when, where, and how best to enhance the
grid for maximum integration of renewable energy.
NREL has been working with Western Electricity Coordinating Council
(WECC) to create a support partnership with national laboratories that
will draw upon prior work and existing capabilities across the national
lab complex. WECC was notified by DOE on Dec. 18 that it has been
selected for an award to research options for alternative electricity
supplies and associated transmission requirements, in an integrated
approach to the western grid that could involve several laboratories in
addition to NREL. The goal of this effort would be to create a tool
that would allow for ``what if'' assessments for the effective
integration of renewable energy into the existing and future electric
grid. A total of about $80 million in Recovery Act funding is to be
obligated by DOE toward this and other projects also selected in
December. Through ARRA funding, DOE has additionally funded a number of
relevant solicitations, including studies on high penetration of solar
energy and two large blocks of grants on SmartGrid at the distribution
level.
To realize the goal of high penetration of renewable energy and
enable utility companies to meet their goals, understand their options
(including integration, storage, or new transmission capacity), and
assess the impacts and economics of future scenarios over multiple
timescales, additional investment is needed both for applying current
models to renewable energy integration scenarios (in multiple regions
and at the national level), and for developing more quantitative models
and processing large complex datasets. Akin to the emerging partnership
NREL has helped facilitate between WECC and National Laboratories, DOE
and its National Laboratories can play a particularly important role in
objective planning over longer timeframes (i.e., greater than 10 years)
in integrating among planning groups across regions. DOE and its
National Laboratories can also assist by making available, in a non-
regulatory environment, the massive amounts of data and information
that will be generated from large renewable energy installations, from
the SmartGrid and from utilities in general. Decision-making tools
would also be valuable for analysis of future government investment and
policy options.
Responses of Robert McGrath to Questions From Senator Murkowski
Question 1. In your testimony you state that ``To achieve 20
percent wind penetration by 2030 consequently requires more than a ten-
fold increase in wind production, to more than 300 GW.''
a. For this additional 300GW of actual electricity that would need
to be produced, what would be the total name plate capacity? Do you
have cost estimates for the production of this much electricity from
wind?
b. What is the projected cost of the additional transmission and
distribution assets for utilizing this much wind power?
Answer. Based on analysis conducted for the DOE 20 Percent Wind
Energy by 2030 report, 300 GW of wind nameplate generation capacity
would provide 20 percent (1200 TWh annually) of the projected US
electricity demand in 2030. Total system cost (including capital
investment for conventional and wind generation technology, fuel costs,
operation and maintenance cost, and transmission expansion costs) for a
scenario encompassing 300 GW of wind capacity was compared to the total
system cost for a scenario with essentially no additional wind
capacity. It was found that the 20 Percent Wind Scenario requires
higher initial capital costs, yet offers lower ongoing energy costs for
operations, maintenance and fuel. Overall, a 20 Percent Wind Scenario
was estimated to cost about 2% more than a scenario that did not
include new wind capacity.
The proposed transmission expansion associated with the addition of
300 GW of wind capacity is estimated at $20 billion in net present
value (NPV). The actual grid investment required could involve
additional costs for permitting delays, construction of grid extensions
to remote areas with wind resources, and investments in advanced grid
controls, as well as training to enable regional load balancing of wind
resources. This estimate is similar to a conceptual transmission plan
that provides for 19,000 miles of new 765 kV transmission line at an
NPV cost of $26 billion. Distribution asset cost was not included in
this analysis. As electric demand grows in the future, distribution
assets will also require upgrading, regardless of the central
generation technology that supplies the electricity.
Question 2. In your testimony you state that the current
electricity system can absorb much greater quantities of renewable
generation than are currently deployed without significant increases in
storage technologies. But, given the experiences in West Texas in which
excess wind generation in off-peak hours resulted in negative pricing
is it prudent to pursue broader deployment of renewable technologies
when the electricity produced cannot or is not stored? Should wind
generators produce electricity only in order to get the federal
production tax credit?
Answer. Short-term negative prices in West Texas are a result of
excess generation from an area where transmission to load in East Texas
is currently inadequate. The Electric Reliability Council of Texas
recognized the problem, and in anticipation of further wind generation
deployment to meet the state-mandated Renewable Portfolio Standard,
conceived and is implementing what is known as the Competitive
Renewable Energy Zone process. The Texas CREZ proactively identifies
renewable resource areas, then plans and builds long-lead time
transmission in advance of short-lead time specific renewable
generation projects.
The DOE 20 Percent Wind report states that there are no fundamental
technical barriers to the integration of 20 percent wind energy into
the nation's electrical system. However, there needs to be a continuing
evolution of transmission planning and system operation policy and
market development if this is to be economically achieved. CREZ is a
good example of the non-traditional, creative thinking that will be
necessary to economically integrate large amounts of variable renewable
power onto the grid. Storage is another, albeit relatively high-cost,
option to bring more flexibility to grid operations. In a future that
may progress beyond 20-30 percent variable renewable generation,
storage may play an increasingly important role--particularly if
storage technology costs can be reduced and efficiency increased.
In all cases today, negative pricing and curtailment are not common
or widespread issues. Continued transmission expansion, electricity
market practice revision and perhaps broader use of storage and other
grid flexibility technology options in the future, are issues that NREL
continues to analyze as part of our work to anticipate an expansion of
renewable power's role. For example, NREL and Oak Ridge National
Laboratory researchers have shown that market practice revisions that
permit cooperation among larger balancing areas within an
interconnection (and even between interconnections) can help mitigate
the changing output of large numbers of variable generators.
With regard to your final question, production of electricity with
the sole purpose of receiving tax credits is not in the national
interest. Isolated occurrences like the negative pricing that occurred
in West Texas, points out the need to diligently determine the most
economic ways to integrate increasing amounts of renewable electricity
onto the grid. NREL will continue to be a resource to the DOE and to
the public interest in this ongoing endeavor.
Moreover, the broader deployment of renewables should be directed
at satisfying multiple policy goals, including energy security,
environmental protection and climate change mitigation, as well as
economic prosperity and job creation.
Question 3. Pumped hydropower storage is an existing and readily
deployable large-scale energy storage technology. Currently, the U.S.
has over 20,000 MW of pumped storage capacity with dozens of new
projects under consideration, particularly in the West. Yet pumped
storage is often overlooked in the discussion of energy storage options
for this country. Please discuss the role you believe pumped storage
can play as we look to increase and integrate intermittent renewable
resources, such as wind and solar, as well as provide other grid
services.
Answer. Pumped Storage can be an economic technology that is
currently available. Future expansion of this technology may be limited
by geography, but advanced concepts now under development may make
pumped hydro attractive across more regions of the country. Pumped
hydro may be able to play an extremely important role in integration of
variable renewables. In Colorado, Xcel Energy has examined the value of
more frequent cycling of an existing pumped hydro plant to take
advantage of increased wind deployment, and found integration costs can
be decreased by approximately one-third at penetration of 10 percent
wind.
NREL is currently completing a Western Wind and Solar Integration
Study examining integration issues across the Western electric grid.
The production cost simulation modeling being performed by GE shows
that for high-penetration scenarios (up to 30 percent wind and 5
percent solar), the existing pumped hydro fleet can play an important
role in economic renewables integration. Pumped hydro appears to be an
underappreciated technology and a potentially valuable resource toward
meeting grid ancillary services and contingency and operational reserve
needs.
Question 4. What kind of work is NREL undertaking on hydropower in
general and pumped storage in particular?
Answer. NREL has no current research underway with respect to
conventional hydropower and pumped storage facilities, each of which
uses impoundments such as dams. Other organizations such as the
Electric Power Research Institute have projects underway to develop and
test more ``fish-friendly'' and efficient turbines to help mitigate
environmental impact from conventional facilities. NREL is, however,
using its unique and long-standing expertise in wind energy to help
meet the research and development needs of a new class of renewable
energy technologies--wave, tidal, river current and ocean thermal
energy conversion. These technologies are not related to conventional
hydropower technologies. Many of these technologies more resemble wind
turbines and are often thus referred to as marine hydrokinetic energy
converters because they convert the kinetic energy of moving water or
the thermal energy of hot water into electrical energy.
NREL has been funded by DOE through a competitive solicitation to
perform R&D to accelerate the development and deployment of these
marine and hydrokinetic technologies by providing industry with the
support it needs to model machine dynamic performance, increase device
efficiency and capacity factors, and reduce capital costs. This is
expected to increase investment and regulatory confidence in this
emerging field and hasten the deployment by 2015 of what will be the
first commercial marine hydrokinetic energy technologies in the U.S.
Regarding continued development and deployment of pumped hydro
storage, in the many regions where this option is geographically and
ecologically feasible, pumped hydro will continue to be a desirable
approach--even as costs are reduced for other storage technologies such
as batteries. Consequently, continued research and development efforts
are needed on advanced engineering of water turbines to improve
efficiencies, methods and technologies to lower excavation and
construction costs, and on continued resource assessment to determine
when and where additional pumped hydro storage represents the most cost
effective and reliable addition to local electricity generation,
storage and delivery systems. Clearly, mountainous regions with ample
precipitation, such as the Rocky Mountain and Pacific Rim States
represent regions well suited for potential deployment of additional
pumped hydro storage.
______
Response of Kenneth Huber to Question From Senator Bingaman
Question 1. Mr. Huber, in your testimony you state that 34
megawatts of battery storage have been put in the PJM generation queues
for 2010. Given that storage has inherently different capabilities and
characteristics than generation resources, can the generation queue
process appropriately and expeditiously accommodate energy storage
technologies (especially since storage technologies rely on a two-way
flow of energy) or does storage need its own process?
Answer. PJM's current interconnection process accommodates both
generation technologies and storage technologies. To date, one battery
and four flywheel storage systems have gone through this
interconnection process. The one battery storage system, a 1 MW system,
has been interconnected with the PJM grid. Recently, two battery
systems (one 20 MW and one 14 MW) have entered into the PJM generation
queues and are being evaluated by PJM to determine their impact, if
any, on the transmission grid.
The PJM System Planning interconnection process is a three-phase
process utilizing network studies to test for a proposed project's
impact on the grid in meeting reliability standards promulgated by the
North American Electric Reliability Corporation (NERC) and approved by
the Federal Energy Regulatory Commission (FERC). Phase one, the
Feasibility Study, consists of analyses of deliverability and short
circuit reliability. PJM's FERC-approved tariff allows, as a guideline,
that this phase be completed within three months of the end of the
queue in which the project is submitted. For storage system requests
below 10 MW, this would likely be the conclusion of the analyses, thus
providing the developer with critical information on system impacts and
costs, which it can consider in deciding whether to proceed with
entering into a formal interconnection agreement. Larger and more
complex systems would proceed to phase two, the Impact Study. Here the
analyses are expanded to include stability and multiple contingency
studies; with guidelines for completion in 150 days (30 days for
signatures on an agreement to proceed and 120 days for analyses). There
is a third phase, the Facilities Study, that would likely not be
required for storage systems unless significant network upgrades are
identified during the Impact Study phase. In short, although there is
no separate expedited process for storage analyses and an
interconnection agreement can be completed within a half-year of the
close of the queue in which the application is received.
PJM does not believe that establishing a separate interconnection
queue for energy storage would be beneficial to the development of
innovative cost-effective solutions that benefit the grid and
consumers. Specifically, a common queue allows for all resource
solutions to be considered without artificially ``choosing'' one
technology solution over the other. As directed by FERC, PJM maintains
a common queue that is available to all resources and options including
generation and merchant transmission, as well as energy storage
solutions. This reflects the fact that all generators have a two-way
flow of energy that must be considered. (In the case of traditional
generation technologies, the two-way flow is represented by the energy
used for auxiliary power and for unit start-up and shutdown). By
considering all projects in a given queue, the value of each resource
can then be recognized through the awarding of financial transmission
rights to reflect the value, in the form of congestion relief,
associated with the particular upgrade in question. A separate queue
for energy storage would disrupt the analysis of various competing
resources that is inherent in the existing queue process and would
advance one technology over others without the benefit of analysis of
the site-specific facts and circumstances that are so important to the
location of generation or energy storage devices.
The generator interconnection process was established by FERC based
on the assumption that resources interconnecting to the grid should
bear the costs of any grid upgrades needed to accommodate their request
while maintaining system reliability in accordance with NERC standards.
The FERC is presently considering whether to modify its present cost
allocation policies. Proponents of socializing interconnection costs
argue that the present system, which is grounded in principles of cost
causation, may be an impediment to the development of renewable
technologies. On the other hand, opponents of broad socialization of
such costs argue that ratepayers should not bear the costs of
facilities and resources that cannot be shown to be beneficial to them.
Any changes ordered by FERC to its present cost allocation policies
could affect whether energy storage resources remain subject to the
cost allocation policies inherent in the queue process.
Response of Kenneth Huber to Question From Senator Murkowski
Question 1. In your written testimony, you indicated that variable
renewable energy sources present a reliability challenge. You also
indicate that the lack of storage is already causing concern for PJM.
a. What is the current percentage of renewable electricity
produced in the PJM region?
b. Will development and deployment of energy storage
technologies in PJM proceed at a pace sufficient to match the
need for meeting a federal renewable electricity standard or
will the utilities in the PJM region utilize more fossil-based
backup to renewable energy sources?
Answer. PJM embraces the growth of renewable generation as it
satisfies a number of public policy goals, including existing state
renewable portfolio standards which already exist in 10 of our 13
states. More than half of the new generation in the PJM Interconnection
Queue can be categorized as renewable generation, with a particular
heavy emphasis on wind generation. However, renewable sources such as
wind and solar are a challenge and concern because of their
intermittent nature -- particularly in a region with the wind and
weather patterns that we see in the PJM Mid-Atlantic and Midwest
footprint. PJM is encouraging the installation of storage technologies
to make the power generated by renewable resources available to
consumers during times when it is most needed.
a. The current total generation capacity in PJM is 165,000
megawatts. Renewables including wind, runof-river hydro, pumped
hydro and solid waste currently total 9,419 megawatts or
approximately 6% of PJM's total capacity.
The 2008 annual energy produced in PJM is 735,244 gigawatt-
hours. Renewables including wind, runof-river hydro, pumped
hydro and solid waste total 28,635 gigawatt-hours or
approximated 4% of PJM's total annual energy produced.
The chart* below shows the amount of megawatt-hours of
renewable energy by fuel source produced in PJM for each year
since tracking began in late 2005.
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* Graphic has been retained in committee files.
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The future generation currently being proposed in the PJM
generation queues is 82,151 megawatts with over 55% being
renewable generation.
b. PJM is aggressively working with energy storage providers
and our member companies to facilitate the delivery of energy
storage systems in the PJM territory. We are actively pursuing
and assisting in pilots of storage technologies that include
flywheels, various types of battery systems, compressed air,
large building controls, hot water heaters, plug-in hybrid
electric vehicles and refrigeration. Renewable generation and
energy storage systems are in their early adoption phase. The
growth and maturity of both will depend on technology advances,
economics and government policy. Forecasting the pace of these
many variables is difficult. Current discussions with storage
technology entrepreneurs, vendors and venture capitalists
provide some insight of expected future storage systems to be
installed in PJM: 1) near-term implementations, one to three
years out, will likely be battery and flywheel systems with
capacity amounts in the 500 MW to 700 MW range; 2) mid-term
implementations, four to six years out, should see compressed
air storage systems and the aggregation of building and
residential energy systems in the 1,000 MW to 1,500 MW range;
and 3) beyond 6 years PJM anticipates plug-in hybrid electric
vehicle storage within PJM will be available in significant
amounts that could provide an additional 1,000 MW to 1,500 MW.
If the storage systems are not available in the volume needed,
PJM will utilize both its demand resources, as well as its
fossil based resources to maintain system reliability.
Appendix II
Additional Material Submitted for the Record
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Statement of the Coalition to Advance Renewable Energy Through Bulk
Energy Storage (``CAREBS'')
The Coalition to Advance Renewable Energy Through Bulk Energy
Storage (``CAREBS'') applauds the Committee on Energy and Natural
Resources for its December 10, 2009 hearing on the topic of grid-scale
energy storage and appreciates the opportunity to provide additional
comments for the record.
CAREBS is a coalition formed to educate legislators, regulators,
other policy makers, and the public about the enormous benefits that
bulk energy storage--including compressed air energy storage (``CAES'')
and pumped storage hydroelectric facilities--can provide in
facilitating the development of renewable energy resources and
increasing the efficiency and reliability of the Nation's electric
grid. As the Department of Energy's National Energy Technology
Laboratory has noted, grid-scale energy storage, which balances large
variations in load and generation, is essential if the Nation is ``[t]o
reap the full benefits of Smart Grid technologies. . . .''
Specifically, bulk energy storage can:
enable greater supplies of renewable energy to be
incorporated into the grid, by converting these variable
resources into firm, dispatchable resources;
enhance grid stability by balancing large variations in load
and generations; and
increase overall efficiency by optimizing the use of
existing and planned transmission infrastructure
CAREBS commends the Committee for focusing on how best to incent
energy storage and strongly supports Senator Wyden's legislation, S.
1091, which would provide a 20 percent investment tax credit for grid-
connected energy storage systems, This technology-neutral legislation
would have a tremendous impact on accelerating the deployment of energy
storage. Greater commercialization of bulk energy storage also offers
the benefit of adding clean jobs to our existing domestic manufacturing
base, solidifying the U.S. position as a leader in turbine and
compressor equipment for bulk energy storage facilities.
CAREBS also concurs with comments made by several Senators that the
regulatory challenges may be as significant as any technical challenges
to energy storage. Bulk energy storage provides a lower cost solution
to reliability problems than traditional approaches such as
transmission upgrades or the construction of new generation. At two of
the recent Federal Energy Regulatory Commission (``FERC'') technical
conferences, held on September 3, 2009 in Phoenix, Arizona and held on
September 21, 2009 in Philadelphia, Pennsylvania, CAREBS
representatives emphasized the importance of ensuring bulk energy
storage solutions are considered on equal footing with new-build
transmission and other solutions in the transmission planning process.
Other electricity organizations are recognizing the vital role bulk
storage can play in our nation's electricity infrastructure. In its
April 2009 report, ``Accommodating High Levels of Variable
Generation,'' The North American Electric Reliability Corporation,
Princeton, NJ, concluded that ``Additional flexible resources, such as
demand response, plug-in electric hybrid vehicles, and storage
capacity, e.g. compressed air energy storage (CAES), may help to
balance the steep ramps associated with variable generation.''
CAREBS is eager to work with the Committee and with regulators to
advance the deployment of bulk energy storage to advance renewable
resources, increase energy efficiency, optimize electricity
infrastructure, and promote a self-healing energy grid.
About CAREBS: CAREBS supports policies that will accelerate the
development and commercial deployment of CAES, pumped storage
hydroelectric, and other bulk energy storage technologies. CAREBS
members include: (1) Norton Energy Storage, LLC (``NES''), which is
developing a CAES facility at the site of an abandoned limestone quarry
in Norton, Ohio; (2) Magnum Development, LLC (``Magnum''), which is
developing a CAES facility in Milford County, Utah, as part of the
Western Energy Hub Concept, which also includes a proposed natural gas
storage facility; (3) Texas CAES, LLC (``Texas CAES''), which is
evaluating several sites for a planned CAES facility in Texas; (4)
Haddington Ventures, L.L.C., a private equity firm based in Houston,
Texas that pioneered the development of high-deliverability natural gas
storage projects and that is currently participating in the development
of various CAES projects, including those being developed by Magnum and
Texas CAES; (5) Dresser-Rand Corporation, a corporation based in
Houston, Texas that is, among other things, a U.S. manufacturer of
equipment that is used for CAES; (6) Iowa Stored Energy Plant Agency,
an Iowa corporation formed by interested members of the Iowa
Association of Municipal Utilities that is developing a CAES facility
in Iowa known as the Iowa Stored Energy Park; and (7) HDR/DTA, a
consulting firm based in Portland, Maine that provides hydropower and
related renewable energy consulting services to utility, industry and
government clients.
______
Statement of the Pentadyne Power Corporation
Mr. Chairman and members of the Committee, Pentadyne Power
Corporation appreciates your interest in energy storage by recently
holding a hearing to discuss the role of grid-scale energy storage
impact on energy and climate goals. Pentadyne Power Corporation
encourages the Committee to also consider the role of smaller, non-grid
energy storage systems in meeting energy and climate goals. We believe
that smaller, non-grid energy storage systems also play a very
important role in meeting energy needs.
Pentadyne Power Corporation would appreciate the opportunity to
explain the role that smaller flywheels play in the energy storage
arena. Our impact can provide immediate help to recycling energy for
mass transit facilities that have outlasted their original life span,
but are still counted on to delivery passengers. Many of this country's
transit systems have exceeded the capacity of their electric systems
and flywheels can help keep these systems operating by storing the
energy and then sending it back into the system when it is needed.
While grid-scale energy storage plays an important role in a smart
grid's system ability to meet energy goals, smaller energy storage
systems like flywheel can also play a vital role in recycling energy in
high electric use industries.
As mentioned at the hearing, Pentadyne Power Corporation encourages
the committee to take an active role discussing and developing policy
to promote energy storage. As you well know, energy storage is the key
to developing the renewable energy industry. We encourage the committee
to take a comprehensive view of energy storage to prevent a perception
in the industry of a ``two-tier pursuit''.
As you heard from your panels at the hearing on December 10th, both
government and industry officials agree for renewable energy industry
to grow and help cut green house gas production, a wide variety of
energy storage devices need to be developed. We would encourage the
Committee to active push energy storage policy.
Start up companies, prevalent in new industry like energy storage,
faces many hurdles in perfecting our technology and implementing a
successful business plan. Under today's financial conditions, we face
significant hurdles and would gladly come explain to the committee and
its staff how those hurdles that prevent clean energy from breaking
into the market.
Pentadyne is the world's leading manufacturer of flywheel energy
storage systems. Designed to provide high power output and energy
storage in a compact, self contained package, Pentadyne's flywheel
products are a long lasting, low maintenance, lightweight, and
environmentally sound alternative to lead-acid batteries, capacitors,
and steel flywheels.
The company shipped its first commercial production flywheel in
2004, and has sold more than 725 since then. The company also has a
multiyear direct supply agreement with a Department of Defense
contractor for the purchase of more than 500 Pentadyne flywheel
systems. Our flywheels have logged more than 4 million hours of
reliable fleet operation. Pentadyne was recently named a ``Global
Cleantech 100'' company by Guardian News and Media and Cleantech Group,
LLC. We were also named to the 2008 ``Inc. 500'' list and a Technology
Pioneer by the World Economic Forum in 2007. Our flywheels have won
numerous awards, including being named a 2009 Top-10 Green Product by
both BuildingGreen and GreenSource Magazine & Architectural Record.
That is why we were pleased by the many positive statements made by
the two federal witnesses at this hearing:
Dr. Steven E. Koonin, DOE Under Secretary for Science:
[M]echanical kinetic energy storage via flywheels is
particularly well suited to the short term requirements of
power conditioning; and while flywheel systems can achieve very
high energy densities2, the physical constraints on flywheel
size limit energy storage for extended activities such as peak
shifting.''
* * *
Among the most important requirements for stationary utility
storage, which ranges from half a megawatt to hundreds of
megawatts, are storage technologies that are low-cost and have
a high cycle life, meaning a large number of charge and
discharge cycles. High reliability, efficiency, environmental
acceptability, and safety are also important.
Mr. Jon Wellinghoff, Federal Energy Regulatory Commission
Chairman:
[L]ocal storage is among the best means to ensure we can
reliably integrate renewable energy resources into the grid . .
. Regulation service is usually provided by combustion turbine
gas-fired generators. But while such generators can generally
follow the minute-by-minute variations in load to keep the
system in overall balance, the frequency excursions that are
the subject of Regulation service actually occur on even
shorter time intervals. Indeed, it has been demonstrated that
distributed resources such as storage are more efficient than
central station fast response natural gas fired generators at
matching load variations and providing ancillary services
needed to ensure grid reliability. They are faster, generally
cheaper, and have a lower carbon footprint than the traditional
power-plant-provided ancillary service.
* * *
A newer technology for providing storage for the electric
grid is the flywheel, which works by accelerating a cylindrical
assembly called a rotor (or flywheel) to a very high speed with
low friction components, and maintaining the energy in the
system as rotational energy. The energy is converted back by
slowing down the flywheel. Flywheels have been successfully
piloted in the U.S., and their speed is particularly useful for
regulation service. For example, for the past year, ISO-NE has
been conducting a pilot program to test how alternative
technologies such as flywheels are able to provide regulation
service.
Both Dr. Koonin and Mr. Wellinghoff understand the role that
flywheels can play in improving the efficiency of America's electric
grids. We believe that significant hurdles exist to prefect energy
storage and encourage the Committee to take a comprehensive review of
the industry.
______
Statement of Audrey Zibelman, President and Chief Executive Officer,
Viridity Energy, Inc.
demand response as a storage solution
My name is Audrey Zibelman. I am the President and Chief Executive
Officer of Viridity Energy Inc. Prior to founding Viridity in 2009 I
was the Chief Operating Officer of PJM Interconnection, the largest
integrated electric grid in the world. My responsibilities at PJM
included overseeing operations to insure that the grid remained in
physical balance at all times. As such I managed operations involving
the dispatch of thousands of generating units with different fuel types
and different operating characteristics.
Viridity is a Curtailment Services or Demand Response Provider
specializing in the integration of customer controllable loads and
customer owned generation into grid operations. The service we provide
transforms a customer's controllable load and owned generation into a
virtual power plant which grid operators can rely upon and dispatch to
maintain the grid in balance. The purpose of my testimony is to
describe how Demand Response can function as an energy storage resource
to be used in conjunction with intermittent generating resources such
as wind power. The use of Demand Response with renewable power and
storage capability allows the aggregation of many small, distributed
resources into a new, powerful component of our energy strategy, which
can deliver both economic and system stability benefits.
The principal responsibility of all grid operators is to maintain
the physical balance between electric consumption (load or demand) and
generation (supply). This balance must be maintained continuously and
instantaneously. As the Committee is aware, energy storage was not
feasible in significant amounts until quite recently. However, recent
advances in technology and communications (generally referred to as the
Smart Grid) have made storage and Demand Response a viable tool for
maintaining the grid in balance. As described below, Demand Response is
one of the storage techniques made possible by the Smart Grid.
Historically, grid operators have maintained balance by use of a
protocol known as Security Constrained Economic Dispatch. Simply
stated, this means that as load increased the grid operators would turn
on (dispatch) more generating units so as to match the load. They would
dispatch the least expensive unit available but not currently running.
Thus, the newly dispatched unit is necessarily more expensive than the
last unit that was dispatched before the increase in load. This regime
of simply turning on the next generating unit in the queue is now
giving way to a more sophisticated, environmentally-sound, consumer-
friendly, approach to maintaining the grid in balance.
A key characteristic of any mechanism used to maintain balance is
its ability to respond to directions from the grid operator; it must be
dispatchable. This means that a generating unit must be capable of
increasing or decreasing its output upon direction by the grid operator
to do so. One of the issues associated with wind power for example is
that it is not dispatchable. The power is available only when the wind
is blowing, and the output of wind generation cannot be ramped up or
down on command, as can generation from other sources such as storage
resources or natural gas fueled generating units. The ability to be
dispatched--to be capable of responding to signals--is an important
attribute of a resource. Energy storage and demand response resources
both have this important attribute. Many customer loads are
dispatchable.
Many customers are ready and willing to reduce their consumption of
electricity upon direction by the grid operator. Thus, increasing
output from expensive or dirty generating units is not the only means
available to grid operators to balance the grid. Customers can reduce
their load upon a signal from the grid operator either by pre-
arrangement or in real time.
Grid operators have traditionally maintained balance by arranging
for sufficient generation to come on line as needed throughout the day,
based upon the next day's forecast load. The supply is committed a day
in advance. Generators who are advised that they will be running on the
next day stay stand ready to respond to signals from the operator. The
advent of the Smart Grid, sophisticated software, and
telecommunications technology have now made it possible for customers
to respond in the same way. Customers who are willing to reduce load in
exchange for compensation can respond to a signal from the grid to
reduce their consumption, or they can dispatch their storage resources.
This `demand response' can be pre-arranged on a day-ahead basis.
Similarly, to the extent that demand exceeds the forecasted load,
increased supply, in the form of storage resources, can be called for
by the grid operator in real time. Again, however, those customers who
are willing to reduce their consumption can also do so in real time, in
response to an instruction from the grid operator. Storage and demand
response can be called upon in tandem to maintain the grid in balance.
A Smart Grid enabled example of energy storage, renewable energy,
and demand response working in tandem would be the use of Customer-
owned solar power to charge a customer-owned battery when or where
energy loads are low, and the discharge of that energy into the grid
when/where the load is high. The discharge of the battery would allow
the customer to reduce its load served by the grid; that is, to engage
in demand response, and to provide power to the grid where and when it
is needed.
Demand response can be a useful tool aiding in the integration of
intermittent power sources, such as wind power, onto the grid. For
example, fast-response customer load reductions can be called for as
wind generation drops. This demand response will match the reduced
level of wind generation and thus maintain the grid's balance.
Similarly, to the extent reductions in wind power become increasingly
predictable with improved remote monitoring, pre-arranged reductions in
load can be relied upon to maintain the necessary balance.
Grid balance can be maintained either by increases in generation or
by reductions in load and grid operators should be generally
indifferent as to the source providing the balance. However, there are
several clear advantages associated with maintaining balance via Demand
Response that should be noted. First, Demand Response is a less
expensive means of maintaining balance than is dispatch of greater
quantities of electric generation. This has been demonstrated time and
again in the United States, most dramatically in PJM in August 2006.
During that month, the dispatch of demand response instead of added
generation, reduced the prices paid by customers by $650 million. The
physical balance of the PJM grid was maintained by customers who
reduced their consumption in response to a signal from the PJM
dispatcher. This allowed PJM to avoid having to dispatch more expensive
generating units. Hence, the savings noted above. Second, there are no
green house gas emissions associated with Demand Response, unlike the
emissions caused by dispatch of fossil-fueled generating units. The
dispatch of coal or gas fired generating units necessarily results in
emissions. The dispatch of demand response--that is, reductions in use
by customers when called for by the grid--avoids emissions, much like
all exercises in energy efficiency and conservation.
The provision of energy storage and demand response service to the
grid by customers requires an investment by those customers. That
investment constitutes a barrier to the deployment of these
technologies. Customers will only make that investment if they can
expect a reasonable return on their investment. However, an appropriate
regulatory regime which provides fair, non-discriminatory compensation
to customers who are willing to make that investment would constitute a
regulatory policy that could eliminate the barrier to deployment. At
present, the grid rules do not provide such compensation to customers
willing to make the investment. A change in the rules such that
customers were compensated for the service they provide through such
investments would significantly enhance the level of deployment.
______
Statement of Stephen C. Byrd, President and CEO, Energy Storage and
Power, LLC
introduction
Energy Storage and Power (ES&P) would like to thank the Committee
for providing the opportunity to submit testimony describing how grid
scale energy storage can meet the country's energy and climate goals,
ES&P exclusively markets, designs, licenses and technically supervises
the delivery of energy storage and power augmentation projects. ES&P's
patented second generation compressed air energy storage, or CAES,
technology enables the widespread deployment of renewable generation
such as wind and solar, stabilizes the transmission grid and is the
most cost effective storage solution available. ES&P is a joint venture
between Public Service Enterprise Group, a Fortune 200 company with
over a hundred years' history in the power industry and Dr. Michael
Nakharnkin, the leading voice worldwide in the Compressed Air Energy
Storage field for over two decades.
A number of power companies are pursuing the development of second
generation CAES plants, most notably Pacific Gas & Electric (PG&E),
which is developing a 300MW CABS plant, and New York State Electric and
Gas's (NYSEG) which is developing a 150MW CAES plant. PG&E and NYSEG
were recently awarded $ 25 million and $29.4 million, respectively, in
grants from the Department of Energy for demonstration projects. These
two projects alone are leveraging 73% of the total private capital
associated with the 16 energy storage grants recently awarded by the
Department of Energy.
ES&P recently won Platts 2009 Sustainable Technology Innovation of
the Year Award for its second generation CAES technology. For a more
detailed overview of ES&P, please see Appendix A.*
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* Appendixes A-C have been retained in committee files.
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executive summary
Investments in energy storage at this time are absolutely critical.
Energy storage will increase the usage of renewable generation and
reduce greenhousegas emissions, will enhance grid reliability, and
reduce overall customer power costs.
question 1: what are the principal goals of storage--least cost
generation, greenhouse gas reductions, or grid reliability?
Grid scale (i.e., large-scale) energy storage accomplishes a wide
range of important objectives, namely the ability to (i) reduce
greenhouse gas emissions, (ii) significantly enhance grid reliability,
(iii) reduce the cost of power to customers and iv) reduces the need
for additional transmission.
Firming Renewables and Shifting Their Output to Peak Demand Periods
Will Reduce Greenhouse Gas Emissions
Incorporating energy storage solves the intermittent and
unpredictable nature of renewable resources such as wind and solar and
converts them into firm, dispatchable resources. Large scale energy
storage enables the electricity generated from wind power to be
provided when it's needed (on-peak), not when it's windy (predominantly
off-peak)\1\. Without energy storage, substantial amounts of renewable
generation, particularly wind power, will be unused because there will
be insufficient demand for the product during off-peak power demand
periods, when the majority of wind power is produced. Energy storage
will enable renewables to be fully utilized, resulting in the
displacement of fossil-fueled generation and the reduction in
greenhouse gas emissions. The economics of a wind farm will improve as
a result of energy storage, because the stored wind power output would
be sold during peak demand periods, when powerprices are higher.
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\1\ The Midwest Model Building Subcommittee (a group formed by the
Midwest Reliability Organization, one of eight regional entities in
North America operating under their delegated authority from regulators
in the United States and Canada) assumes that only 20% of nameplate
wind turbine capacity will be available during peak time periods.
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Significantly Enhances Grid Reliability
Another important goal of energy storage is to enhance grid
reliability. This will become critically important as intermittent
renewable resources such as wind and solar become an even larger
portion of the power supply mix in the future. Because wind variability
can be so extreme\2\, substantial balancing reserves are required in
the event there's a rapid drop in wind power output. In addition,
existing power plants will have to cycle their output up and down to
compensate for the changing winds; this constant cycling causes
maintenance and operational issues for baseload power plants\3\. In
addition, the range of options available to grid operators to enhance
grid reliability is larger than what's typically understood. Grid
operators require reliability service with response time within
minutes, not milliseconds\4\. CAES technology meets grid operators'
ancillary services requirements at a much lower cost than batteries.
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\2\ Historically, the Midwest ISO has recorded a minimum and
maximum output from wind power during peak periods equal to
approximately 2 percent and 65 percent of wind nameplate capacity,
respectively.
\3\ ``Cycling operations can be very damaging to power generation
equipment.'' Stephen Lefton and Bill Besuner, Power Plant O&M and Asset
Optimization.
\4\ For example, in PJM, the largest Independent System Operator in
the U.S., the ancillary service known as synchronized reserve (formerly
spinning reserves) is defined as capacity (generation or usage
reduction) that is available in 10 minutes.
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Reduces Cost of Power to Customers
Large scale energy storage will reduce the cost of power to
consumers because more costly peaking generation will not be utilized
during the day.\5\ Large scale energy storage will shift renewable
generation output (that has no variable cost of production) from off-
peak periods to peak demand periods, which will in turn avoid the need
to run very high cost, high emission peaking generation. This role
played by large scale energy storage is akin to ``peak shaving''
technologies designed to shift demand for power from peak periods to
off-peak periods; energy storage is essentially shifting the supply
side rather than the demand side. This will result in a reduction in
system-wide power costs and a resulting reduction in customers'
electricity bills. CAES is particularly effective in this role because
its capital cost is an order of magnitude cheaper than other storage
options such as batteries. Further, CAES consistently has a lower
overall cost of power than conventional generation options, such as
coal and natural gas, under a variety of market and commodity price
scenarios.
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\5\ Dr. Robert Schainker, a Senior Technical Executive at the
Electric Power Research Institute (EPRI), stated in October 2009 at the
EESAT conference in Seattle, Washington that the addition of between
20% and 40% of anticipated future wind capacity in the form of
compressed air energy storage would result in a reduction in overall
customer power costs.
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Reduces Need for Additional Transmission
Large scale energy storage reduces the need for additional
transmission and utilizes transmission more efficiently. Because second
generation CAES can be built and integrated at various junctures in the
delivery of electricity, transmission benefits can be realized. For
example, a utility customer can build a CAES plant near load pockets to
minimize the use of both constrained transmission lines and expensive
local power resources. Also, a transmission grid operator (or wind farm
owner) can build a CAES plant near generation to reduce or eliminate
transmission congestion and increase efficiency of the grid because
energy will be released when wind plants are at low output and
transmission capacity is available.
question 2: how can energy storage technologies help utilities meet
state renewable portfolio standards (rps) and peak demand reduction
targets?
Energy storage will be critical for states to meet RPS
requirements. Energy storage enables renewables to be used as a
controllable, on-peak power source, improving renewable project
economics and improving grid reliability. Energy storage also helps to
avoid the usage of high cost, high emissions peaking generation.
By its very nature, energy storage enables renewables to account
for a larger portion of the overall power generated. Energy storage
will be critical to enabling states to meet their individual RPS and
any federally instituted RPS requirements. For example, with wind
power, storage will enable power produced by wind farms during off-peak
periods to be used during peak demand periods; this will result in
improved returns for renewable generation and provide an economic
signal to build further renewable projects.
Energy storage shifts the generation of power away from high cost,
high emissions peaking generation and towards more efficient, lower
emission renewable power sources. In a similar way to demand response
technology, large scale storage reduces the need for peaking
generation; this ability is often referred to as ``peak shaving.'' This
reduces the cost of power to consumers because more costly peaking
generation will not be utilized during the day.
question 3: what is the total us potential for energy storage?
The potential for energy storage in the United States is
significant, and its deployment is in thevery early stages. If enough
cost-effective storage is built, EPRI has indicated that the cost of
power to consumers will be reduced.\6\ Numerous parties have already
begun making sizeable investments in energy storage.
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\6\ Dr. Robert Schainkera, Senior Technical Executive at the
Electric Power Research Institute (EPRI), stated in October 2009 at the
EESAT conference in Seattle, Washington that the addition of between
20% and 40% of anticipated future wind capacity in the form of
compressed air energy storage would result in a reduction in overall
customer power costs.
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Several sources have discussed the potential for large scale energy
storage. Estimates of market size vary, but all agree storage is
needed. . .and a lot of it. The American Institute of Chemical
Engineers published a study in 2008 forecasting that if wind and solar
accounted for 20% of the power generated in the United States, 114,000
MW of storage would be required. This represents a $342 billion market
opportunity according to their calculations.\7\ Others have more
specifically defined the sizeable market opportunity for CAES. In a
recent presentation, EPRI discussed a CAES to wind ratio of 20% to 40%
reducing the overall cost of power for customers. Assuming the
projected installed capacity for 2009 by the American Wind Energy
Association of approximately 32,500 MW, a 30% CAES to wind ratio, 9,750
MW of CAES could be built in the United States. Whichever assumption is
used to estimate the size of the large potential domestic jobs.
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\7\ ``Massive Electricity Storage,'' Bernard Lee and David Gushee,
June 2008.
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A number of utilities and merchant power generators have already
recognized the potential for storage and have begun to make substantial
investments. For example, Pacific Gas & Electric is developing a 300 MW
CAES plant (expected cost: $356 million) and New York State Electric &
Gas (NYSEG) is developing a 150 MW CAES plant (expected cost: $125
million). Both of these projects have received grants from the American
Recovery and Reinvestment Act of 2009 ($25 million for PG&E and $29.6
million for NYSEG). In conjunction with the awards to PG&E and NYSEG,
the Department of Energy recently made 16 grant awards for a total of
$185 million to fund ``utility-scale energy storage projects that will
enhance the reliability and efficiency of the grid, while reducing the
need for new electricity plants.''
question 4: what are the most promising technologies?
There are a number of technologies available for electricity
storage. However, some are better suited for large scale storage and
are more economical. Technology like batteries, flywheels and
supercapacitors are best suited for small scale storage in situations
where instantaneous response is required. For large scale energy
storage, CAES and pumped hydro are the technologies of choice.
Of these two alternatives, we believe that CAES holds advantages
from the perspectives of cost,time required to deploy and number of
suitable locations. Batteries, flywheels and supercapacitors are
significantly more expensive on a capital cost basis and cannot be
built at the scale required. Unlike CAES or pumped hydro, these
technologies are better suited for distributed storage or ancillary
services that require an instantaneous response. It is rare to have a
battery built bigger than 5 MW, but a CAES plant can be built up to 450
MW.
Overview of CAES
CAES stores low cost, off-peak wind energy in the form of
compressed air primarily in anunderground reservoir, but it can also be
stored in above-ground canisters. During peak hours,the air is released
and heated with the exhaust heat from a standard natural gas-fired
combustionturbine. This heated air is passed through expansion turbines
to produce electricity. The exhaustair from the expansion turbines is
then used to increase the output of the combustion turbine
byapproximately 10% and create ``free green megawatts.'' The second
generation CAES technology has a ``heat rate'' (a measure of energy
usage per unit of electricity output) that is three times as efficient
as that of a coal plant or a combustion turbine when renewable
generation is used as its power input. (See Appendix B for a graphical
depiction and a detailed description of the technology).
Improvements to the CAES technology ensure that it is adjustable to
meet specific customer smart grid requirements, utilizes standard,
proven components, has a very low emissions design, and has
significantly lower capital and operating costs than other storate
technologies, and is a lower cost generator than coal and natural gas-
fired power plants.\8\
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\8\ The Western sub-region of the Texas power market, known as
Western ERCOT, provides an excellent example of how 2nd generation CAES
can be (1) highly efficient relative to conventional fossil fuel fired
generation and (2) enhance the value of renewable generation. As a
result of substantial wind generation construction in Western ERCOT,
wind generation economics have deteriorated in the region. Because
there is so much wind capacity in Western ERCOT and its power is
generated mostly at night when demand for power is low, off-peak power
prices are often negative due to the utilization of the Production Tax
Credit for wind. Wind generation in Western ERCOT is often being
curtailed substantially at night because the volume of generation is
greater than demand which obviously wastes a resource with no
incremental cost. 2nd generation CAES enhances the value of wind
generation while producing on-peak power at a cost lower than
conventional natural gas-fired generation. The variable cost of
generation is substantially lower than the most efficient combined
cycle generation. In addition, 2nd generation CAES has a positive
economic impact on wind generation by providing an incremental source
of demand for the output of the wind generation.
To calculate the variable cost of generation, assume a $10 off-
peak power price and a $5/mmBtu cost of natural gas. The 2nd generation
CAES variable cost of generation would be $26 per megawatt-hour (($10
off-peak power price x .7 energy ratio) + (3,810 heat rate x $5/mmBtu/
1000) + $2/MWh variable operations and maintenance cost). For the most
efficient combined cycle generation the variable cost of generation
would equal $38 per megawatt-hour ((7,000 heat rate x $5/mmBtu/1000) +
($3/MWh variable operations and maintenance)).
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There are several other characteristics of CAES that make it a
straightforward technology to deploy on a widespread basis. Suitable
geology exists in a large portion (approximately 80%) of the United
States.\9\ The CAES technology is proven and it works.
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\9\ EPRI.
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question 5: what are the obstacles, technical, regulatory and
legislative, to commercial deployment of storage technologies?
There are numerous obstacles currently preventing the wide-scale
deployment of storage technologies. However, we believe these obstacles
can be overcome with coordinated efforts among industry, legislators
and regulators. No technical obstacles have been identified relating to
the construction and operation of CAES plants. Appropriate investment
incentives should be instituted for storage. Storage is in the very
early adoption phase, but further catalysts are needed to move from the
demonstration phase to the mass deployment phase. Constrained financing
environment is still limiting investment in storage. Certain parties
have posited that energy storage isn't necessary as renewable
penetration increases, contrary to consensus among grid operators and
other entities responsible for grid reliability.
technical obstacles
There are no technical obstacles to the widespread deployment of
second generation CAES plants. The technology and geology for CAES
exists and it works. The first generation CAES technology has been in
operation since 1991 and has had an availability factor above 95%. A
variety of parties that have reviewed the second generation CAES
technology have signed off on all technical specifications and agree
it's a significant improvement over first generation CAES.
regulatory and legislative obstacles
There are a number actions that could be taken by regulators and
legislators that could acceleratethe adoption of storage. The
successful deployment of energy storage technology requires regulatory
and legislative certainty, (including passage of the energy and climate
bills) and would be aided by the adoption of the Clean Energy
Deployment Administration.. CAES investments currently receive no
federal tax incentives. The institution of an Investment Tax Credit for
storage would help spur investment. Additionally, energy storage can
result in the loss of production tax credits otherwise available to
certain non-CO2 generators, such as wind generators. The tax
code needs to be amended to ensure that there is no loss of the
Production Tax Credit (PTC) for energy stored prior to delivery to
grid.
A FERC technical conference on storage should be held to discuss
integrating storage in competitive and regulated areas; the benefits of
storage to the grid; quantifying energy storage required to maintain
grid reliability and reduce system-wide power costs; and availability
of FERC incentives depending on how storage is classified -- whether as
a transmission or generation asset, or some combination thereof.
Industry Obstacles
A very small number of industry players have said that with 20%
wind penetration, storage is not needed.\10\ We strongly disagree with
that assertion. There are already issues with integrating wind in many
regions, and wind accounted for only 1.3%\11\ of the power produced in
the United States in 2008. These issues will become far more severe and
pronounced when wind becomes 20% of the energy mix, as some parties
have suggested may occur. Based on the problems associated with the
integration of wind in their respective regions, ERCOT and MISO
strongly believe energy storage is needed. Terry Boston, CEO of PJM
Interconnection, has stated that energy storage helps grid operators
deal with the intermittency of renewable generation sources such as
wind and solar. The intermittent nature of wind, with resulting
negative effects on both grid reliability and the ability to deliver
power when it is needed, will only be exacerbated as wind's share of
the power generation mix continues to increase. Ignoring or downplaying
the grid reliability issues caused by renewable generation, and the
grid reliability benefits offered byenergy storage, is contrary to the
thinking of transmission system operators, utilities, merchant power
generators and Members of this Committee. In fact, large scale storage
will increase the development of wind farms in the long run becauses
toragew ill significantlye nhancew ind farmeconomics as wind evolves
into a dependable power resource.\12\
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\10\ The American Wind Energy Association (AWEA) has stated that``
[w]hile continuing advances in energy storage technology can make it
more economically competitive as a provider of grid flexibility, it is
important to remember that resources like wind energy can already be
cost-effectively and reliably integrated with the electric grid without
energy storage.''
\11\ Derived from data from the US Energy Information
Administration.
\12\ Richard Baxter, ``A Call for Back-up: How Energy Storage Could
Make a Valuable Contribution to Renewables.''
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conclusion
ES&P would like to thank the Committee again for this opportunity.
Investments in large scale energy storage at this time are absolutely
critical. With the proper investment incentives in place, energy
storage can play a critical role in helping the United States meet its
renewable portfolio standards, enhance grid reliability, reduce
greenhouse gas emissions, save consumers money and create jobs.