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ENERGY STORAGE: LOOKING AT BOTH POLES OF THE BATTERY (+ & -) SCOTTMADDEN, INC. | 18 What is the value of energy storage, and what is it anyway—generation, distribution, transmission, or something else? California Dreamin’: The Golden State’s Energy Storage Goals Different Technologies Offer Different Applications for Storage “Seconds to Minutes” Short-term energy storage systems E2P ratio: 0-.25h Batteries, supercapacitors, flywheels, etc. “Daily Storage” Medium-term energy storage systems E2P ratio: 1-10h Batteries, pumped hydropower storage, CAES/ LAES, thermochecmical, redox flow, etc. “Weekly to Monthly” Long-term energy storage systems E2P ratio: 50-500h Sensible/latent thermal, PtG, etc. Currently in Queue: 3,500 MWs Target: 1,325 MWs Duration and frequency of power supply Current: 60 MWs Source: GTM Research • Grid services • Compensation for day-night load imbalance • Peak shaving, valley filling, load shifting • Correction of forecast errors of renewable producers • Prevention of re-dispatch • Opportunity of spot market price fluctuations • Future application to bridge periods of low wind and photovoltaic generation • Seasonal storage for thermal energy Source: World Energy Council Tsunami Waiting to Happen Much Talk About Cost, But What About Value? • Energy storage capacity continues to grow, adding 221 MWs in 2015, with 112 MWs coming in Q4 alone. One forecaster anticipates that installed storage capacity will cross the 1-GW threshold in 2019 • California is a significant market for storage, much driven by its state mandate (1,325 MWs by 2020). While it added only about 60 MWs since 2013, it has 3.5 GWs in the interconnection queue for 2016–2018 • While behind-the-meter installations have grown, most of the significant activity expected in the near term are front- of-meter installations pursuant to utility solicitations and providing ancillary services and similar support • Levelized cost of storage is a useful barometer of its economics, but increasingly, value is seen in storage for capacity and ancillary services rather than solely for energy applications • Critical to economic success of storage is the potential for multiple revenue streams such as capacity, regulation service, and energy price arbitrage • Industry stakeholders have commented on the need to develop common performance specifications for different storage use cases NOTES: E2P ratio is energy-to-power ratio or discharge time; CAES is Compressed Air Energy Storage; LAES is Liquid Air Energy Storage; PtG is power-to-gas.