Renewable Energy Storage: Implementing Projects, Overcoming - - PowerPoint PPT Presentation

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Renewable Energy Storage: Implementing Projects, Overcoming Co-Location Challenges, and Mitigating Risks

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, JULY 25, 2017

Becky H. Diffen, Esq., McGuireWoods, Austin, Texas Brian Orion, Of Counsel, Stoel Rives, San Diego Joseph D. (Seph) Petta, Esq., Shute Mihaly & Weinberger, San Francisco

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Renewable Energy Storage

Joseph D. (Seph) Petta Shute Mihaly & Weinberger petta@smwlaw.com

Energy Storage Technologies

• Solid State Batteries - a range of electrochemical storage

solutions, including advanced chemistry batteries and capacitors

• Flow Batteries - batteries where the energy is stored

directly in the electrolyte solution for longer cycle life, and quick response times

• Flywheels - mechanical devices that harness rotational

energy to deliver instantaneous electricity

• Compressed Air Energy Storage - utilizing compressed air

to create a potent energy reserve

• Thermal - capturing heat and cold to create energy on

demand

• Pumped Hydro-Power - creating large-scale reservoirs of

energy with water

Source: Energy Storage Association, http://energystorage.org/energy- storage/energy-storage-technologies

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Costs Continue to Decline

2016 2017 2018 2019 2020 Uppe r $ 1,814 $ 1,549 $ 1,337 $ 1,209 $ 1,083 Lowe r $ 1,660 $ 1,315 $ 1,056 $ 911 $ 774

Figure 3 Forecast Installed Cost, 100 MW / 4-Hour Lithium-Ion Storage

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2016 2017 2018 2019 2020 Installed Cost ($/kW)

Upper: GTM install costs, BNEF experience curve (low end, 14%), Navigant global installs Lower: IHS install costs, BNEF experience curve (high end, 19%), Navigant global installs

Forecast Installed Cost, 100 MW / 4-hour Lithium-Ion

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Energy Storage – Applications and Services

Generation Applications

• Bulk Energy Services
• Electric Time Shift
• Electric Supply Capacity
• Renewables Integration
• Firming
• Curtailment Avoidance
• Spinning and Non-

Spinning Reserve Capacity

• Ancillary Services
• Frequency Response &

Regulation

• Ramping / Load

Following

• Voltage/VAR Support

Infrastructure Applications

• Transmission Services
• Network Capacity
• Congestion Relief
• Distribution Services
• Network Capacity
• Voltage/VAR Support
• T&D Upgrade Deferral
• Increased Hosting

Capacity

• Area Regulation

Cross-cutting Applications

• Peak Demand Reduction
• Energy Management

Services

• Time-Varying Rate

Management

• Demand Charge

Management

• Reliability Services
• Back-up Power
• Black Start
• System Flexibility
• Power Quality

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Cost-Benefit Analysis

• Massachusetts’ State of Charge Report an excellent example of

storage cost-benefit analysis

Source: MA DOER State of Charge Report, 2016. Note: Graph recreated from

• riginal “State of Charge” report.

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State Policy & Regulatory Actions on Energy Storage

DC

Note: Map is not reflective of all state activities on energy storage. Certain early stage policy/regulatory efforts, grant programs and/or pilot projects may not be reflected. 11

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Barriers to Storage’s Deployment

VALUE STREAM CLASSIFICATION & OWNERSHIP GRID ACCESS PLANNING

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Types of Storage Policy Support

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States with Storage Incentives

• California: SGIP program modified in 2016 to focus on storage,

and more incentives under consideration this legislative session

• Maryland: Legislature passed first-of-its-kind tax incentive bill

(SB 758) in 2017 session

• Massachusetts: SMART incentive program includes adder for

systems with storage

• Nevada: Legislature passed AB 145 for storage in the solar

incentive program (SESIP)

• New Jersey: Renewable Energy Storage Incentive Program for

customer-sited storage at critical facilities

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States with Procurement Targets

• California: First-in-the-nation 1.325 GW procurement target for

storage by 2020; later increased by 500 MWs

• Oregon: Legislature passed HB 2193 in 2015 calling on the

Commission to set 2020 procurement targets up to 1% of peak load; currently being implemented

• Massachusetts: State legislature considering 2030 targets and

DOER just released target for 200 MWh by Jan 1, 2020

• New York: Regulator ordered initial procurements (2 projects

per utility) and legislature passed SB 5190 / A 6571 to create 2030 procurement targets

• Nevada: Legislature passed SB 204 calling on a study to inform

biennial increasing procurement targets in 2017

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IRPs and Storage

• IRPs are used in ~25 states
• Utilities planning to invest billions of dollars in

new and replacement capacity over the next several years

• Planning models not granular enough to

capture operations of advanced storage

• Models use inaccurate and out-of-date cost

information

• Models should ensure storage is included as

eligible technology and ensure stacked benefits (net cost of capacity) are considered

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Why Does Interconnection Matter?

• Without permission to interconnect a system has no

access to the market. And storage systems need interconnection approval even for purely behind-the- meter services

• Interconnection Rules were not written with storage

resources in mind (focused solely on “generation”)

• Easy solutions:
• Include storage in procedures
• Ensure rules about jurisdiction are clear
• Don’t apply 20th century assumptions to 21st

century technologies

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States Advancing Storage Access

• States updating their interconnection

procedures to include storage:

• California – Rule 21
• Hawaii – Rule 14H and Rule 22
• Nevada – Rule 15 update
• Maryland – PC 44 interconnection working

group

• NC, MN, AZ, and others considering revisiting

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Renewable Energy Storage: Implementing Projects, Overcoming Co-Location Challenges, and Mitigating Risks

Presented by Becky H. Diffen, McGuireWoods LLP

bdiffen@mcguirewoods.com

Brian Orion, Stoel Rives LLP

brian.orion@stoel.com

July 25, 2017

Co-location of energy storage with wind and renewable energy

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STORAGE AND THE ITC

Source: NREL (Jan. 2017)

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STORAGE AND THE ITC

Source: NREL (Jan. 2017)

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STORAGE DEVELOPMENT CONTRACTS

Source: NREL (Jan. 2017)

• Equipment Supply
• Engineering, Procurement and Construction (EPC)
• Operation and Maintenance (O&M)
• Energy Services / Shared Savings Agreements

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PARTICIPATING PARTIES

• Role of various entities

– More parties = more complication – Special purpose entity

• Credit support & solutions

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COMPLETION SCHEDULE

• Project milestones and schedule

– Permitting – Interconnection

• Delays

– Owner Caused Delay – Third Party Delay

• Liquidated damages

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CHANGES

• Change in Law
• Regulatory
• Force Majeure
• Change Orders

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INTELLECTUAL PROPERTY ISSUES

• Hardware vs. software
• Ownership of inventions
• License to project data
• Privacy issues

30

WARRANTIES

• Hardware
• Software
• ITC warranty

31

GUARANTEES

• Part of O&M or Energy Services Agreement
• Savings guarantee
• Exclusions

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INDEMNITIES

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OWNERSHIP OF INCENTIVES

• Direct sale - Customer owns
• Energy Services – may be shared
• Covenant to cooperate
• Consequential damage waiver

Potential Pitfalls with Co-Location