Playing Well with Others - Market for Storage Hybrids

woodmac.comTrusted intelligence
Playing well with others
The evolving market for storage hybrids
Daniel Finn-Foley
Senior Analyst, Energy Storage
@DanFinnFoley

Enhance vs. disrupt
Storage as a hybrid asset does not fit into conventional
energy market wisdom

Gradual evolution and sudden disruption shape the natural world
Environment
Organisms
Genetic
variation and
natural
selection
Invasive
species

Evolution provides a model for interpreting the energy ecosystem
Environment
Organisms
Iterative
technological,
operational,
financial
changes
Invasive
species
Genetic
variation and
natural
selection
Disruptive
Technology

Evolving resources and technologies can have dramatic impacts
Iterative
technological,
operational,
financial
changes

How does energy storage fit into this cycle?
Iterative
technological,
operational,
financial
changes
Disruptive
Technology
Environment
Organisms

How does energy storage fit into this cycle?
Iterative
technological,
operational,
financial
changes
Disruptive
Technology
Environment
Organisms
Energy storage can enhance existing
players or disrupt markets by itself
Energy storage is
unique

Solar-plus-storage

Solar-plus-storage deployments driven by utilities in the front-of-the-
meter space and incentives behind-the-meter
Source: Wood Mackenzie Power & Renewables
135 MW of FTM energy storage in the
US is solar-paired.

US is solar-paired.
• 6 states (including Puerto Rico) have
more than 10 MW of solar-paired
storage.

US is solar-paired.
storage.
• 6 more have 1 MW or more.

US is solar-paired.
storage.
• 6 more have 1 MW or more.
• Eight states have more than 547 MW of
solar-paired storage contracted or under
procurement
Solar-plus-storage’s reach is widening, but much of
its value outside incentive states is contingent on
the ITC

Solar and storage are still a match made in heaven – and
Massachusetts is their honeymoon destination
In Massachusetts, the SMART storage adder is nearly 3x oversubscribed after only one week
Source: MA DOER, Wood Mackenzie Power & Renewables
• SMART program had roughly 630 MW of solar projects
submitted
• 209 MW of solar projects applied for the storage adder
• Only 80 MW of storage-adder capacity available in first
block
• Storage submitted totals 345 MWh – one third of MA’s
storage target
• Future timeline uncertain but may be accelerated based on
interest
208
0.7
0
50
100
150
200
250
MW
Large (>25 kW) Small (<25 kW)
First SMART storage block limit
(80 MW)

Solar-plus-storage forecast – market growth to accelerate over the
next five years
By 2023, more than 60%
of storage deployments
in the US will be paired with
solar
0
500
1,000
1,500
2,000
2,500
2018E 2019E 2020E 2021E 2022E 2023EAnnualStorageCapacityPairedwithSolar
Residential Non-Residential Front of the Meter

Wind-plus-storage

Co-sited wind-plus-storage historically has been limited
to pilot projects
Notrees – 36 MW
Tehachapi Wind-
Storage – 8 MW
Kaheawa Hawaii BESS 1&2 –
21 MW
XCEL MinnWind
- 1 MW
Texas Waves 1&2
– 10 MW
Revolution Wind –
Proposed 40 MWh
Total U.S. Wind-Charged Storage Deployments:
• 73.8 MW, 82.4 MWh Operational
• 45 MW, 125 MWh Pipeline
Historical projects
• Have not demonstrated bankability at scale
• Generally short duration
Pipeline
• Small and highly speculative
• Could accelerate given incentives
• 3-5 years from scale
• ISO interconnection queue requests show increased
interest

Where will the opportunity emerge for wind-plus-storage?
Source: Wood Mackenzie Power & Renewables, installed wind data AWEA
California and
Southwest – storage
investment, but solar
remains best pairing
Texas – biggest
opportunity, but no
clear business model
Northeast – storage
mandates, clean
peak, new offshore
wind, large
opportunity
Midwest – excellent
wind resource, few
incentives for storage
AK
62
WA
3,072
OR
3,213
CA
5,686
NV
152
AZ
268
ID
973
MT
720
WY
1,489
UT
391
CO
3,106
NM
1,682
TX
22,799
OK
7,495
KS
5,110
NE
1,415
SD
977
ND
2,996 MN
3,699
IA
7,31
2
MO
959
AR
LA
MS AL GA
FL
SC
NC
208TN 29
KY
VA
IL
4,332
IN
2,117
OH
617
WV
686
PA
1,369
WI
746 MI
1,904
NY
1,829
VT 149 ME
923
NH 185
MA 113
RI 54
CT 5
NJ 9
DE
2MD 191
HI
206
GU
<1
PR 125
0 to 100MW
> 100MW to 1,000MW
> 1,000MW to 5,000MW
> 5,000MW to 10,000MW
> 10,000MW

Cost savings are critical for energy storage’s competitiveness
Co-siting provides a myriad of benefits outside of the ITC
• Software and controls represent ~20% of hardware
and controls costs
• Co-siting reduces costs for site preparation - not a
significant driver of storage system costs.
• Interconnection costs vary dramatically but can
exceed $140/kW, with as much as $80/kW added for
high voltage connections.
• Using an existing interconnection can reduce the
cost of a project by as much as 5-15%, depending on
regional interconnection rules.
52%
45% 43%
13% 32% 40%
35%
23%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
30-minute 2-hour 4-hour
%ofTotalSystemCost-2018BOSStack
Hardware & Controls Cost EPC Cost
Interconnection Cost

0
2
4
6
8
10
12
1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 0:00
CombinedWindplusStorage
SystemOutput
Wind Power Available During Peak Energy Storage Deficit Needed Wind Power Available for Charging
Some wind power is available during peak hours, reducing the
need for storage
The light blue represents the deficit needed to cover the peak obligation
The system can meet the peak if the sum of the previous 20 hours exceeds the system deficit during
peak hours
Peak hours
with nameplate
capacity
obligation
In this case, the deficit is 31.6 MWh, while the wind farm generated 48.9 MWh over the previous 20
hours
Wind energy “firming” – baseload power is unreasonable, but what if
a system is only needed during peak hours?

The percent of peaks
successfully captured
depends on the peak
obligation duration –
the more time needed,
the more wind energy
needed during the day
Shorter run times (1 hour) have
90%+ performance across
geographies 0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
0 1 2 3 4 5 6 7 8 9 10
%ofpeaksmissed Capacity runtime obligation
ISO-NE Offshore (MA) ISO-NE Onshore (MA) PJM Offshore (NJ)
PJM Onshore (WV) SPP Onshore (OK)
4 hour obligations are hard to meet in most regions, but feasible in high-
wind regions

The percent of peaks
successfully captured
depends on the peak
obligation duration –
the more time needed,
the more wind energy
needed during the day
Reducing the target capacity to 50%
of nameplate dramatically increases
effectiveness
In windy regions, such as Oklahoma, 4 hour obligations at 50% nameplate
capacity can be met with surprising effectiveness
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
0 1 2 3 4 5 6 7 8 9 10
%ofpeaksmissed Capacity runtime obligation
ISO-NE Offshore (MA) ISO-NE Onshore (MA) PJM Offshore (NJ)
PJM Onshore (WV) SPP Onshore (OK)

The future for hybrid energy storage
Recognizing storage’s value is critical to scaling the hybrid
market

The new foundation for hybrid energy storage systems –
recognizing value
True value for hybrid storage systems lies at the intersection of green policy and system needs
• As you move in either direction,
either towards valuing renewables,
or valuing delivery during peak
hours, storage’s value increases.
• As you move in both directions,
valuing renewables during certain
hours, storage’s value increases
exponentially.
• The clean peak standard, if it
becomes a model as capacity
markets and the RPS did, could
drive massive storage growth.
National Energy Policy Act – 1992
Deregulating energy markets
Example market – Texas
Iowa launches the first Renewable
Portfolio Standard - 1983
Example market – Hawaii (100%)
Reliability Pricing Model – 2007
PJM capacity market acknowledges
that availability during peak times
matters
Example market - Kentucky
Massachusetts’s An Act to Advance
Clean Energy – 2018
Example market – only Massachusetts
(for now!)
Competitive markets can help drive
down costs
Not all MWh are created equal…
Keep it
simple –
secure
MWh of
energy
Not all
hours
have the
same
need…

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Peak
Hours
Wood Mackenzie
Power & Renewables
fuel mix forecasts
through 2040 for
Massachusetts show
the potential for clean
peak standards to
drive storage
As peak hours move later, storage
will be needed to shift solar and wind
Massachusetts’s Summer Fuel Mix
Note – does not include storage charge / discharge
2018 Clean Peak Percent – 3.5%
Generation(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Wood Mackenzie
Power & Renewables
fuel mix forecasts
through 2040 for
Massachusetts show
peak standards to
drive storage
2024 Clean Peak Percent – 17%
Peak
Hours
Generation(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Wood Mackenzie
Power & Renewables
fuel mix forecasts
through 2040 for
Massachusetts show
peak standards to
drive storage
Peak
Hours
Generation(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Wood Mackenzie
Power & Renewables
fuel mix forecasts
through 2040 for
Massachusetts show
peak standards to
drive storage
Peak Hours
Generation(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Clean peak
unanswered questions
– how is the peak
defined?
System net, or net solar
“duck curve”, net storage, etc., all
affect need for storage
Peak
Hours
Generation(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Clean peak
unanswered questions
– how is the peak
defined?
System net, or net solar
“duck curve”, net storage, etc., all
affect need for storage
Peak
Hours
Massachusetts’s Summer Total Demand
Demand(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Wood Mackenzie
Power & Renewables
fuel mix forecasts
through 2040 for
Massachusetts show
peak standards to
drive storage
2018 Clean Peak Percent – 0.6%
Massachusetts’s Winter Fuel Mix
Peak
Hours
Generation(MW)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Wood Mackenzie
Power & Renewables
fuel mix forecasts
through 2040 for
Massachusetts show
peak standards to
drive storage
Peak
Hours
Generation(MW)

Key takeaways – hybrid energy storage has multiple avenues to
scale, but recognition of value remains the key barrier.
• Solar and storage deployments will continue to grow in the short term due to the favorable
economics driven by the ITC
• Wind and storage is still 3-5 years away from emerging at true scale
• If Massachusetts’s clean peak serves as a model nationally then hybrid storage-plus-renewables
will become the new standard
• Complexity and change will be the norm

Thank You!
Questions?
Daniel Finn-Foley
Senior Analyst, Energy Storage
daniel.finn-foley@woodmac.com

Playing Well with Others - Market for Storage Hybrids

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Playing Well with Others - Market for Storage Hybrids

Similar to Playing Well with Others - Market for Storage Hybrids (20)

More from Jill Kirkpatrick

More from Jill Kirkpatrick (20)

Recently uploaded

Recently uploaded (16)

Playing Well with Others - Market for Storage Hybrids