The installation of battery energy storage in behind-the-meter applications is poised for exponential growth over the next few years. Batteries can be combined with solar to form grid-connected microgrids meaning that these assets can be used for economic benefit when the grid is operating and then provide resiliency during grid outages. The key to making such hybrid systems economically viable is to stack revenue from multiple applications, such as peak demand charge reduction, energy arbitrage, providing ancillary services to the grid, and participating in demand response programs, among others.

1. Maximize Your Solar Investment
by Adding Battery Energy Storage
Host: Tim Montague, M.S. Speaker: Travis Simpkins, PhD
Continental Electrical muGrid Analytics
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2. Maximize Your Solar Investment by
Adding Battery Energy Storage
October 30, 2018 Travis Simpkins, PhD
travis@mugrid.com

3. Meet muGrid Analytics
• Tech / Consulting company focused on providing bankable techno-economic
analysis of renewable energy, energy storage, and micro grids to project
developers, financiers, component manufacturers, and property owners
• Redcloud Modeling Platform: Techno-economic mathematical optimization for
energy systems
We solve wicked problems at the intersection of
energy technology and economics
using math and modeling.

4. Bottom Line Up Front
• Batteries can enhance the economics of a
solar project with multiple revenue streams
• Multiple revenue streams make optimal battery
dispatching a hard problem to solve
• The key to economic solar-plus-storage is
effective dispatching

5. Mindset shift: solar vs. storage
• Solar is straightforward
o Sun shines – electrons flow
• Batteries require decisions
o When to charge, discharge, idle
• How do we solve with that complexity?
Mathematical optimization
o Every time there was a decision to make, there was
something optimal that should have been done.

6. A Battery is a Bucket
• Considerations:
o How fast can we fill it?
o How fast can we empty it?
o How much does it cost?
o How long will it last?
o What causes it to fail?
• Decisions:
o How big of a bucket?
o When to fill the bucket?
o When to empty it?
Energy we take out must be worth
more than the energy we put in.

7. Battery Power vs. Battery Energy
• Power
How fast you can charge or discharge the battery?
• Energy Capacity
How much energy can it store?
• Duration
o How long can the battery sustain it’s rated power
output?
Which of these containers is more useful?
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2 "#
= 4 ℎ()* +)*,-.(/

8. Energy Storage Applications
• Demand charge reduction
• Energy arbitrage / time-shifting of
generation
• Ancillary services
o Frequency response
o Volt / VAR optimization
• Demand response
• Reliability
o Energy security
o Resiliency /
o Backup power
o Black start
• Capacity markets
• Transmission and distribution upgrade
deferral
“The Economics of Battery Energy Storage,” Rocky Mountain Institute

9. Battery Revenue Stacking
• Batteries can serve one application at a
time
• Serving one application may preclude it
from serving other applications at the
same time (or in the immediate future)
• Battery dispatch optimization is the
process of determining which applications
a battery should serve, and when it should
serve them
6PM6AM12 AM 12 PM
Arbitrage Peak ShavingFrequency Reg.
12 AM
Freq. Reg.Demand Response
“State Policies to Fully Charge Advanced Energy Storage,” Interstate Renewable Energy Council

10. Overview of Utility Rate Tariffs
• Fixed charges
oSame cost every month, just to
have service
oExample: $30 / month
• Energy charges
oHow much energy (kWh) you
use
oEx: $0.10 / kWh
• Demand charges
oThe maximum rate at which you
use energy (kW)
oEx: $20 / kW / month
Both energy and demand may be subject to time-of-use, which adds complexity.

11. How Prevalent Are Demand Tariffs?
©2016 Renewable Energy Analytics
“Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges”, NREL

12. Mt. Princeton 14,196
Mt. Yale 14,199’
How does peak shaving work?

14. Case Study
Office Building in Los Angeles

15. Case Study: Office in Los Angeles
• Site: Office complex in Los Angeles
• Utility: Southern California Edison
• Electrical load : 15-minute data
• Objective:
o Analyze site for energy storage
potential
o Determine optimal battery sizing
and dispatching
• Applications
o Peak shaving
o Energy arbitrage

16. What do we need to know?
• Battery characteristics
o Installed costs of
$800 / kW, $300 / kWh
o Round-trip efficiency = 85%
• Electrical load profile
• Available applications
• Utility rates

17. SCE Rate Tariff
Winter Summer
Time-of-Use Hours Demand Usage Hours Demand Usage
Peak 12p-6p $17.42 $0.14
Part Peak 8a-9p $0.09 8a-12p,
6p-11p
$3.43 $0.09
Off Peak 9p-8a $0.07 11p-8a $0.07
Monthly $17.81 $17.81

18. Case 1: Optimal Sizing
Battery size
Power 310 kW
Energy 473 kWh
Installed Cost $284,000
1st year savings $76,843
Demand savings $75,502
Energy savings $1,341
NPV $187,789
IRR 24%1.5-hour battery
Loads Rates
Costs Specs
Inputs

19. Case 1: Dispatch Strategy
• Discharging
o Mostly during peak hours
o Some part-peak
• Charging
o Mostly off-peak
o Some part-peak
• Model finds demand target levels
for all 20 demand periods
• Decides when to arbitrage and
peak-shave
• Strategy varies day-to-day, hour-
to-hour

20. Case 1: Demand Charge Savings
• Power rating of battery sets
upper limit on demand
reduction in each period
• Need enough energy capacity
to deliver power for duration of
demand spike
• Summer months are critical for
battery payback
310kW
310
246
310
302
189
261
310
178
202
189
310
310
310
178
202
310
216
123
81
Total Savings: $76,843

21. Case 2: 4-Hour Battery
Optimal 4-Hour
Battery size
Power 310 kW 1527
Energy 473 kWh 381
Duration 1.5-hour 4-hour
Installed cost $284,000 $577,011
1st year savings $76,843 $109,724
Demand charges $75,502 $105,562
Energy charges $1,341 $4,162
NPV $187,789 $117,196
IRR 24% 15%
Size matters!!

22. Dispatch Comparison
Case 1: Optimal (1.5-hour) Case 2: 4-hour battery
• Additional energy of case 2 battery does not result in much additional demand savings
• Some energy arbitrage, but it’s not that lucrative
• Results in lower NPV / IRR

23. Savings Comparison
Case 1: Optimal (1.5-hour) Case 2: 4-hour battery

24. Solar Plus Storage
©2016 Renewable Energy Analytics
Battery Only Battery + Solar
Battery size 473 kWh : 310 kW 374 kWh : 300 kW
Solar size 354 kW
Utility savings $76,843 $146,018
NPV $187,789 $280,002

25. • Remember to think about power
and energy when talking about
batteries
• Batteries like high demand
charges and peaky load profiles
• Battery sizing and dispatch
optimization can make or break a
project
• It’s a fascinating time in the field of
energy!
Conclusions
©2016 Renewable Energy Analytics

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27. Tim Montague, M.S. Travis Simpkins, PhD
tmontague@cecco.com travis@mugrid.com
Thank You!
www.cecco.com/solarwebinarOct 30, 2018
Solar Works for Illinois!
Maximize Your Solar Investment
by Adding Battery Energy Storage