Advanced Energy Storage

hello and welcome to the I / energy seminar for spring 2013 we are very happy to have Janice Lin with us today I want to also welcome those who are watching via the webcast as well as those who are watching from the different campuses that Davis Merced and Santa Cruz and for those who might be watching this later on that via YouTube I’ve asked Ron Hoffman to introduce Janice and without any further ado I’m gonna ask him to come up and give her a nice warm welcome so so good afternoon everybody it’s my real pleasure to introduce Janice who I’ve known for over 15 years and and it’s been a wonderful association over all of those years I feel that Janice is both my friend and my colleague Janice and I got to know each other back in the mid-90s when Janice was working on a project in China for Generation Ventures and so was I and so from that day forth I’ve had the joy of knowing Janice since that time Janice has become a recognized thought leader in energy storage and renewables in the electricity sector and I think today we are honored to have her here to get her thoughts on what’s going on with respect to storage I should tell you that Janice’s background includes the starting of companies so those of you that are entrepreneurial will appreciate Janice’s background she started strategy and consulting in 2005 which is a strategy consulting company that works in clean energy in 2009 she started the California energy storage Alliance she co-founded that with her partner and she says it is known I believe now has close to 40 members or something in that how many 60 members you see it’s viral prior to strategy Janice got involved in the Renewable sector about the turn of the century and she worked for power light and became the VP of business development their power light was eventually acquired by Sun power and a lot of the things that Janice worked on have become recognized as pioneering in the early days of commercial solar Janice has a BS from Wharton School at the University of Pennsylvania and she also has an MBA from Stanford graduate school we won’t hold that against her today Janice will talk about how energy storage is transforming the electric power system please join me in welcoming her to you see you guys hear me it’s working good afternoon I’d like to thank Therese and Carl folks at citrus and CIE for the opportunity to come and speak to all of you today and the folks who are in the wider network it’s really a pleasure to do this and I’m thrilled to be here so I’m gonna start with a story but stay with me okay in 2006 you could not buy dental floss in China anywhere Beijing Shanghai how do I know this because I was on a business trip in China and I forgot to bring my dental floss and I looked and I looked and I was a you know pretty junior analyst working with this venture capital firm and what are you gonna do there’s five days on this trip I got to get some dental floss somewhere am I gonna ask the partner no no no bad idea so I asked the next best person who was available and that person was Ron Hoffman and that was actually 17 years ago not 15 years ago and over those 17 years Ron has become a dear friend and a real mentor for me and it’s because of Ron that I got into renewable energy I got into the electric power system and if it weren’t for his patient guidance answering all my zillions of questions and really advice all these years I don’t think I would be where I am today why am I telling you this as I assume there’s a bunch of students out there and when I was a student myself nobody told me how important it was to have a mentor mentors really make a lot of difference so I want to encourage all of you guys to be open to your dental floss moment because that mentor might show up when you least expect it and and to remember that you know you have the power to change the world today I truly have my dream job I work with super smart people I get to work on the issues I’m deeply passionate about and I

get to change the world and I believe each and every one of you in this audience has that potential – and I hope you find your passion and I hope through maybe in the next 45 minutes just maybe one of your passions will become renewable energy and energy storage and and hopefully you’ll see how there’s so much opportunity here and how this game-changer this amazing asset class energy storage has the potential to change the electric power system and change the world okay okay I thought this was an appropriate place to start what we’re talking about is underutilized assets it’s not a new idea I mean you guys probably know this better than me Airbnb car-sharing Zipcar I mean there’s all these assets around that we can share if an assets not being utilized to its fullest extent it’s kind of a loss it’s a waste right and here The Economist that’s talking about the era we’re getting into is the sharing economy you can share everything your car your truck an extra room in the house I even heard there’s a startup that’s now sharing kitchens where you can do like serve dinners for people through the internet this is exactly what we have with the electric power system we have this tremendous asset where trillions of dollars we spend in California alone probably five to seven billion every year keeping this asset up-to-date and functioning yet we only use it about half the time our average load factor is about fifty fifty five percent what you see here is a chart that on the y-axis is our system load here in California on the x-axis these are the months of the year and as you can see the average the average loads about 55% in this little peak which happens maybe a few hours of the year this we are building our electric system generation transmission and distribution capacity to meet that point in time because electricity unlike many other industries and many other assets as an asset that needs to be used in real time supply must always equal demand this I would argue represents huge opportunity another opportunity with optimizing that picture is improving the greenhouse gas emissions so imagine if our electric power system was just purely fossil fuel units the emissions profile of a combined cycle gas peaker which is this blue line down here is much less you our co2 emissions tonnes per megawatt-hour done the brown line which is the emissions from the pker the pker is something that’s used intermittently it’s only used certain amount of year it’s ramping up and down it’s less efficient so imagine with energy storage and here’s the concept with energy storage you can take energy from one period of time they store it from this base load much cleaner fossil fuel plan to displace some of this stuff this pker generation you will achieve and net savings you’ll achieve greater efficiency in the system overall and lower co2 emissions and the savings can be quite significant the other point to make is that our system is not composed of just combined cycle gas pkers we have other things in the system especially things that are super clean like solar and wind and in California particularly at night time we have a lot of wind so imagine using more wind to displace that peaking stuff Net GHG benefit so what is energy storage this is often a point of confusion among a lot of people some folks when you say storage they immediately go to their pocket and they think about the battery and their cell phone the battery in their laptop probably each and every one of us probably has touched at least three or four batteries today if you drove here you have a battery in your car when we talk about storage on the grid it’s a very broad asset class just as broad as say the asset class called generation you know there’s nuclear gas biomass renewable solar wind storage is the same way there is chemical storage for example batteries many different types of batteries flow batteries solid-state batteries there’s mechanical storage which is storing energy through some kind of mechanical in this case it’s a flywheel there’s both mechanical storage compressed air this is compressing air in an underground cavern uncompressing it for use at a later time thermal storage which has been used for many many many years dating back to the Prairie times there’s ice chilled water

and molten salt which is often combined with concentrating solar power and finally bulk gravitational storage which can be accomplished through pumped hydro or more recently there’s some innovative technologies around using rocks of bringing rocks up a hill and bringing them back down a hill so many many different forms of storage what’s the beauty of storage is with that diversity there’s tremendous tremendous diversity in the solutions tremendous diversity and the the ability of these solutions to perform different services on the grid and many types of energy storage are very modular modular meaning think legos building blocks some are small some are bigger and these building blocks mean that building blocks and the diversity means that energy storage can be deployed in many many parts of our grid today so it has broad electric power system applicability and what you see here this is a chart from every shows how storage can be put you know use at the transmission level for ancillary services for bulk storage maybe shifting a lot of energy from one period to the next distributed storage sited at a substation commercial storage behind the meter in a commercial facility to help with power quality reliability peak shaving possibly in a neighborhood as well so there’s many many different applications and with that many different ways or business models of deploying storage on the grid so one thing we often talk about with storage is this message to think about this asset class and what it can do not in terms of unit cost but really to look at the benefits that it can provide and a simple comparison that everybody can understand even if you’re not a power system engineer is that let’s look at a 15 megawatt conventional gas peaked LAN on the left and say a hypothetical 50 megawatt energy storage system on the right the first thing to point out is that this 50 megawatt gas plant which is typically the asset used today for peeking spinning reserved and ancillary services has a maximum range of 40 megawatts so these are today’s state-of-the-art gas peakers this unit can go from 50 to 10 megawatts you know reasonably well this is what we’re using to balance our grid the energy storage device on the other hand this 50 megawatts represents a hundred megawatts of range why because it can charge 50 megawatts and it can discharge 50 megawatts that’s two and a half times the range of service that can be delivered another thing to think about with energy storage the certain types of storage are very fast much faster in fact than that companion or status quo alternative called the natural gas speaker what you see here is an a the AGC signal from say the system operator I think this data is from CAI so and this dotted green line is the signal that kaizo sends out to its fleet of gas peakers saying give me some regulation give me some frequency regulation the red line is the response of the generator you can see it’s kind of slow it takes a while to ramp up and then that effect is it doesn’t do the job quite that well so the system ends up needing to over compensate it either buys too much or not enough and it’s constantly going back and forth on the other hand and this this example on the right could be a fast battery it could be a flywheel the beauty of this is you look at this system the signal this dotted green line and you can’t even see the red line because it matches it so perfectly storage systems can respond within cycles can be exact that’s a lot more effective and we’ll go into why and what the benefits are in a minute okay so finally and this is the final key point that I’d like to impart with you about likewise energy storage this amazing new thing this is an asset that can be utilized throughout the year there are many different services that a single asset deployed at a particular location operated in a particular way can provide again back to our pker example utilization of Ag a speaker on an annual basis mm maybe about four percent energy storage ninety-nine point seven percent what is that storage device doing throughout the year and this is actually a model of real data this was done oops wrong button this data over here my little Reds okay here we go so this is a chart that shows the utilization of the storage device through the course of a year and the different services that it’s providing that add up to the benefits its delivering so when you think about that

you got more range a faster response and more benefits storage is the better way to do things it’s not how we’ve been doing things but it’s the better way to do certain things certain services that are needed on the grid today so what that will do is if we had some storage throughout our electric power system we can take that that previously poorly utilized system and flatten our load curve the goal is that we want to utilize the existing assets we have much more efficiency let’s take that average load factor up from 50 percent to 75 or 80% that’s low-hanging fruit here are some examples of storage facilities that are being developed today this is a low battery the inside look what does one of these batteries look like slow battery this was a 600 kW six hour unit that was installed in Southern California and an onion plant its operating today primarily to provide peak shaving services and greater reliability this behind the meter industrial customer this is a lithium ion system battery system it’s a megawatt one hour and duration installed and operated by Samsung SDI one of the leading battery manufacturers globally for the power electronics industry the electronics industry and they’re using this system at their factory to also provide load shifting capture demand charges and we would be remiss not to give you an example of bulk storage this is an example of a closed-loop pumped hydro system installed in Michigan to give you an idea of the scale this is one thousand eight hundred and seventy two megawatts they call it a I love it it’s a it’s a giant you know water battery one of the world’s biggest electric batteries and what it does is it stores a lot of water when you need it you pump it up when you need that electricity later you let the water fall through and and generate electricity through a turbine okay that’s today so that’s what storage can do today a framework for why it’s powerful how it can be used in the electric power system and what storage is but what I want to talk about with all of you is what can storage do in the future you know what is this what you know where can we go from here and how many of you in the audience are students just a quick show of hands okay good great so often when we think about the future it is important to look back where we came from to our roots to look at the values of where we came from because sometimes that gives us a clue of where we need to go and what better place to look on the future of the electric power system than the Father early electric electric power system himself mr. Thomas Edison and I quote for you and this isn’t a real quote about circa 1920 Edison says and this is in a conversation I love it with Henry Ford and Harvey Firestone right these are the fathers of the great Industrial Revolution and he says when we learn how to store electricity we will cease being Apes ourselves until then we are tailless orangutangs you see we should utilize natural forces and thus get all of our power sunshine is a form of energy and the winds and the tides are manifestations of energy do we use them oh no we burn up wood and coal as renters burn up the fence for fuel we live like squatters not as if we own the property I love this part he says I hope we don’t have to wait until oil and coal run out before we tackle that so here we are almost a century later we’re still cranking through those oil and coal reserves but it’s not too late and that’s where all of you come in even for those of you who don’t believe in global warming there is an economic reason for doing this you know put aside the global warming debate and that is the cost of renewable energy versus traditional generators it’s just more cost effect it’s going to be more cost effective it’s getting there in certain parts of the world solar energy is the most cost effective form electricity today what we have on the left is a comparison this is these are instant upfront cost I believe in 2009 dollars of a solar solar PV system system single axis tracker and this bottom line here is the forecasted cost I believe this is from the Energy Commission California Energy

Commission of a conventional simple cycle gas turbine what are you interesting things you’ll notice is that the you know the costs are converging this doesn’t even factor in the fuel cost so when you think about it as the capital cost of this comes down this asset has free fuel meanwhile on the right this is an actual forecast from Nieto which is the Department of Energy of Japan I believe the Department of Energy also contributed this forecast in 2010 that showed and this is a again it’s an example it’s one type of energy storage it’s lithium ion which is commonly used for consumer electronics and electric vehicles and it shows the cap the capital expenditure of a cost of lithium ion per kilowatt hour in twenty twelve dollars and what’s happening by 2020 there’s a pretty massive cost reductions so when you put these trends together renewable energy getting cheaper storage getting cheaper fossil fuel sources getting more expensive you do the math this is the future this is where we need to go about a month ago Angelina gali Chava who’s wonderful person she’s one of the she’s on the one of the board members of the California Independent System Operator she is also the co-founder of an organization called renewables 100 and it’s a nonprofit whose mission is to look at ways we can achieve the pathway to 100% renewable energy and Angelina asked me she said Janice what are the ways how can energy storage help enable a pathway to 100 percent renewable energy so I’d love to talk about that so these are some slides from her conference two weeks ago who has seen this chart this is the famous duck chart anybody familiar with this we got one to two people three this famous duck chart was presented by the California Independent System Operator at an on bunk so a meeting where they got together with the PUC and the legislature and and they were talking about sort of California’s capacity needs going into the future and Kai so came and they presented this and they said this is this is our concern what we have here is here’s again the antis forecasted load California over the course of a day 0 to 24 hours so 24 hours in one day and what this is a forecast of the net load starting with 2012 and the subsequent lines in color show the forecast through to 2020 and this is what they say is a tip go March day an hourly resolution and what queso presented at this conference was that our net load shape is changing dramatically here in California and flexibility is needed sooner than later maybe as soon as 2015 and the reason the Ducks crying here is because kaizo who has to balance the grid has to deal with this tremendous ramp and this potential issue of over generation now as a renewable advocate we love the fact that this looks like a duck because what this big duck belly means here is that that’s a lot of solar generation and renewable generation that’s happening in the middle of the day that’s good that’s where we want to go but the reason it’s crying is it creates kind of a challenge for the systems operator so how can energy storage help California achieve this vision and go even beyond that well the first thing it can do energy storage deployed throughout the grid can provide a load can provide a place for all that extra renewable generation to go in the middle of the day you know what we like to say we say storage can put that duck on a diet and trim his belly loop move it right up take that renewable generation and shift it move it to when you still need it when there’s still a system peak and in this case that’s to flatten the Ducks head and that remember that overall transmission chart that’s how each he achieve greater system utilization you get a flatter load shape and that means the existing assets we have generation transmission distribution can be utilized more fully so that at a very high level is how energy storage can enable a pathway to more and more utilization of renewable energy but this isn’t an hourly scale and we all know that some forms of renewable energy are not so predictable this is one of the great challenges for us as we look into the future these charts have been presented in many other talks but for those of you who haven’t seen them this is one month’s power from a wind farm I don’t remember exactly which wind farm it is but you can see it’s

pretty much all over the map this springerville Arizona chart shows the production output of a solar system at 10 second resolution on a cloudy day so these these inclusions here these white tips those are the clouds coming across the solar system these types of very significant dips and output from you know say 4 megawatts down to a megawatt if you scale it up and there’s a lot of this this can be challenging for the system operator so what happens is you know that smooth line that you saw at an hourly resolution when you look at it sub hourly or minute by minute or second to second can be you know actually not that smooth and these sort of minute to minute fluctuations remember our fast response chart this is something that storage is really really good at so here it is again I like it so much I’m going to show it to you one more time and you know these that those issues those you know Breann P and sort of minute to minute balancing issues would you rather have this resource achieving that or that one I say the one on the right is a better way to go and here’s an example so it’s not just talk it’s not just an idea about I said I want to say a month ago a 36 megawatt battery was commissioned at a wind farm in Texas at a place called no trees it’s called no trees because there really aren’t any trees and this particular battery system is provided providing renewables capacity firming that frequency regulation service that you you saw and it’s it’s a really great project that we should be celebrating this is not the only one there’s projects of this size and scope being implemented and deployed all over the world I think a couple months before that there was a couple of these installed in Chile South America so what did we learn so far one that energy storage can drastically improve grid efficiency improve existing asset utilization and reduce GHG emissions two we’ve learned that energy storage can provide multiple benefit streams from a single asset much more so than its status quo fossil fuel counterparts and three we’ve learned that energy storage can be instrumental in helping to integrate renewable energy and help us achieve a pathway to greater and greater renewable adoption so what’s the problem why if it’s so great isn’t there more energy storage installed on the grid today you know why think about it well for starters I want to say there is some that’s the good news some and that’s why the some is in italics here we have about you know I’ll say anywhere from 140 to 150 gigawatts of storage throughout the world and by the way that does not include energy storage used for ups and emergency backup applications we estimate globally that’s probably about 60 to 65 mostly 60 to 65 gigawatts mostly led acid think about that I mean that’s a fleet of assets that’s just laying around waiting for a power quality event remember that thing about multiple benefit streams mean maybe there’s a way we can convert that fleet into doing something more than just a reliability once in a while thing but bottom line is there is a lot of storage most of its pumped hydro that’s been used for a long long time but more recently there is what we’re calling this non pumped hydro or advanced energy storage slice that is growing and growing and that is the subject that I want to now turn to so getting back to the question of why I think to answer this question why we need to start looking at how the electric power sector is governed and one curious thing about the electric power sector is you know it’s been around for a very very long time and it’s governed in silos the familiar generation transmission distribution and load within each of these silos the rules are formed and decisions in these silos determine how resources are compensated now when you take a step back and you look at that you say well you know that’s kind of cool there’s all these jurisdictions there’s FERC and the different state level policies I don’t want to go into that but at the simplest level there’s these four silos and the question is we’re in a storage fit and it you know that you know sort of a

rhetorical question and you know and when you think about it it’s the asset classes greatest assets its greatest strengths but it is also its greatest liability because we’re flexible storage can service generation it can be transmission it can be distribution it can even be load remember how it can provide a sink for that duck belly well the problem is it does fit everywhere and because it fits everywhere it doesn’t have a hull and within each of these silos you know there’s proceedings there’s activities underway and everybody agrees it’s which could be an interesting thing but it’s not in their top 50 things that they look at so what you focus on is what you get and until we started sisa in January of 2009 there was no organized regulatory activity for energy storage on the grid anywhere in the planet 2009 think about that so my point is regulatory intervention is necessary to allow fair compensation mechanisms for storage as a new asset class in the electric power system fortunately grassroots change is underway we started CSUN January of o 9 and since then a number of new regional storage advocacy groups have been formed the most recent which is Ontario energy storage Alliance they don’t even have a logo yet but they’re going strong we have first it was sea cement ISA for Texas then Sinisa China after China then we had a European Association and then the electricity storage Association started a national effort to focus on federal issues Germany was for India and then Germany reforms soon thereafter so this is this kind of change this grassroots changes underway and you know just talk of another one starting in Hawaii yesterday I was talking to somebody about doing one in Japan this is a movement that’s happening all over the world and this is the start of the change it happens when people like me or you get interested get involved and start making a difference for sisa we started this in January of oh nine it was actually at the suggestion of the Public Utilities Commission we were involved in some regulatory activity on behalf of some of our storage clients and somebody at the PUC asked Don Ladell my co-founder and I if we would consider starting an advocacy group for storage because it was getting kind of relevant and interesting in a number of areas and they didn’t want to talk to 50 different companies so we started sisa in 2009 with one member company and we’re now as Ron said up to close to sixty sisa represents every form of grid storage here in California all the different subclasses but what’s interesting is our membership also includes some very very successful renewable energy developers firms like let’s see here next era where are they well can’t find them here but next year at energy res America’s very large wind and solar developers electrical contractors what we’re trying to do our mission is to make energy storage a mainstream resource to accelerate the adoption of renewable energy and create a more affordable cleaner and reliable electric power system in California and we’re building the coalition and the ecosystem to make that happen so I’m going to go through in the next series of slides just a quick overview of what’s happening on the policy front that’s enabling this change of course innovation and technology is always welcome but the hypothesis and one of the takeaways that I hope all of you will walk out of here taking with you today is that the problem with energy storage is not one of technology we have a lot of technologies that are commercially viable and being deployed today the problem is really more of a market design it’s a regulatory problem and the good news is that’s something that we can do something about and we don’t need some huge new invention to make it happen so the first thing that happened that’s pretty significant is an order that came from FERC I believe in 2010 four-quarter 755 where FERC took a look at that chart I was showing you before for the frequency regulation and they said wow you know all the balancing authorities all over the country have tariffs and tariffs compensate resources for providing frequency regulation but the way the tariff is structured it assumes that everyone’s a fossil

generator it assumes you’re super slow and so what FERC said is this kind of compensation mechanism we’ve done since the dawn of time is discriminatory because if you’re faster and you’re better you’re not getting paid for your performance so they issued FERC order 755 it’s called pay-for-performance where FERC required the system operators under their jurisdiction to come up with a new tariff that rewards fast performance and that has been fully implemented and PJM that’s an Independent System Operator in the Northeast one of the largest it will soon be implemented in KY so but this is a date this is data that shows you the impact of how regulation makes a difference FERC order implemented October 1 2012 this is the pricing the dark bar is the 2011 pricing this is dollars per megawatt-hour that’s paid in the PJM market between September to October the the average monthly regular regulation price SIM you know went up two and a half times state hi kind of stabilized meanwhile during the same time period these are the active storage projects when you when you participate in these markets you have to file for interconnection those are the storage projects that are in the queue so you can see that this one change had a dramatic impact in that market no new technology was invented between 2010 and 2011 it was a market change that made that happen so I said it’s happening soon for Chi so so PGM went live in 2012 midwest i so soon thereafter california independent system operators expected next month in june new york i so similarly and then finally new england in 2015 so these changes all across the country are creating an attractive value proposition for fast storage projects all over the country another key development you may have heard of Assembly Bill 25 14 I know this is kind of a text heavy slide this bill is really big folks for a number of reasons one this bill was sponsored by Jerry Brown when he was Attorney General this was the first piece of legislation that Jerry Brown sponsored and probably two decades maybe since the last time he was governor Jerry then ran for office we know we all know how that turned out and the bill authored by assembly member Nancy Skinner we are in her district was signed into law by Governor Schwarzenegger but you know it was truly kind of when you think about it a bipartisan thing and what this bill does is it requires the Public Utilities Commission to open a rulemaking a proceeding to specifically focus on energy storage and look at all the ways that storage can be deployed in California’s electric power system and if found to be commercially viable and cost-effective to establish procurement targets for load serving entities by October of 2013 and those procurement targets should be for 2015 and 2020 and for the publicly owned utilities that would be 2016 and 2021 so it was a pretty massive all-encompassing bill squarely focused on storage the first of its kind anywhere in the world we had the privilege of supporting and helping the Attorney General during this time to see this bill successfully enacted and now we’re deeply engaged with multiple stakeholders at the Public Utilities Commission all the utilities and other interested stakeholders and a successful outcome with this bill what this bill does is it gives us that focus we need on storage you know storage when it used to be priority number 49 and the smart grid rulemaking now has a home where it’s priority number one and we’re making great progress so one of the things I’d like to share with you from the massive body of work that’s coming out of the implementation of this bill is preliminary results on cost-effectiveness remember earlier we talked about how storage has this amazing benefit ability to perform multiple services from the same assets well the first application we looked at and I say we meaning sisa PUC and the utilities in close coordination with every was this application called pker substitution or a bulk application how do we use pker and how do we use storage and lieu of that pker that we looked at before and after weeks and weeks of discovering and discussing and debating the assumptions the results came out surprise surprise in virtually all of

the cases all of the scenarios analyzed the benefit to cost ratio for energy storage as compared to the gas pker in this application was greater than one the pker by the way it’s bass case was a point eight five that means translated in virtually all the scenarios for this preliminary analysis storage is more cost-effective than what we do today as our status quo knee-jerk this is what we do day in day out this I would argue is huge nowhere on the planet has this happened where we had a systematic approach to looking at how storage is used what the benefits are and how it compares to a fossil fuel alternative and that with this first look we are finding that storage is more cost-effective so this work being done today though it’s California focus will have reverberations and impacts throughout the world anywhere we have a developed grid oh and the important thing to mention is this analysis didn’t even factor in the GHG benefits so if anything it’s conservative I think in part because of the exciting findings coming out of this Commissioner Peterman who’s the POC Commissioner in charge of this rulemaking has announced that within soon within the coming weeks she will be issuing a proposal on procurement targets pursuant to this bill so stay tuned for that it’ll be interesting to see what happens next another interesting thing that’s happened recently we in California have this other rulemaking called long-term procurement planning and this is the process this is the proceeding whereby the state in partnership with the utilities figure out how much capacity and energy is needed over the next 10 years and in the recent decision under phase one where they were looking at Southern California the Public Utilities Commission Commissioner Florio was in charge of this proceeding came out with a decision a final decision might I add that requires Southern California Edison to procure at least 50 megawatts of energy storage in the LA basin for local capacity and reliability what’s exciting is that same decision says they they must procure an additional up to an additional 600 megawatts of capacity from preferred resources no preferred resources have been defined by our loading order and probably many of you are familiar with that that loading order was created from multi agency CEC PUC Kai so governor’s office loading order at the time sisa didn’t exist storage wasn’t on the landscape so storage isn’t in the loading order so because the definition of preferred resources at that time did not include energy storage the decision went on to say the 600 megawatts has to be preferred resource including energy storage that is significant so our view on the loading order is that you know it is what it is but when you think about it storage should be at every place of the loading order storage can be used in conjunction with distributed generation with renewable energy with demand response so everywhere that different resources show up in that preference and that loading order preference when storage is used for that purpose it should be in there too and this decision enforces that finally Governor Brown some of you may have heard has an executive order out there seeking to accomplish 1.5 million v’s by 2025 so 1 million by 2020 and 1.5 million by 2025 I’ve been told by utility colleagues folks smarter and much smarter than me that each Evi you know when plugged in can represent as much as the load of an additional house and when you plug in that many new electric consuming vehicles you can imagine there’s some challenges associated with that when you charge how you charge how quickly you charge energy storage stationary energy storage of course there’s energy storage in the cars but stationary energy storage can be used to help mitigate and manage some of the impacts of all those new v’s plugging into the grid so that’s my recap about what’s happening on the policy front which as we said before is

the barrier it’s a more adoption and now I want to get to my most favorite part of my presentation which is what does this mean for all of you where are the opportunities so what does the future look like energy storage is transforming our electric power system what you’re seeing here is a screenshot of the do-e international energy storage database it’s a new freely accessible public database of energy storage projects deployed around the world currently it has approximately to 200 systems in there scaning steam and you can see there all over the globe we’ve been working on this project in partnership with Sandia and Department of Energy for the last year or so so I encourage all of you to go check it out you can find projects you can look at them by technology by application you can see pictures of them this database also has a companion part which itemizes policies that are in effect in the United States so not only is this happening as a trend around the world but this is energy storage is not only impacting the electric power system this is an interesting time in history doesn’t happen too often where you have one asset class that’s at the epicenter of massive change affecting many many industries titans and it’s in the middle you know we’re talking about the grid we’re talking about change off grid I mean this was mostly a developed country centric presentation but we could have a similar one our president and just how energy storage is enabling the electron-electron interaction energy demand side management energy storage is in the middle and when you see such tectonic changes happening in so many very big industries it’s not too much of a leap to realize that there’s going to be huge opportunity huge opportunity for all of you startup entrepreneur types and students I hope you will consider this so the first opportunity clearly is in what is an energy storage system how does an energy storage system get delivered onto the grid now there’s several components you know on the equipment side there’s the storage device itself there’s power electronics controls you’ve got to package it there’s some grid periphery transformers and other equipment to plug it in there’s another piece of an energy storage system which is what we call controls and profit optimization so this is the brains how do you operate it do you discharge now or do you discharge later what information do you take in to make smart decisions there are so many cool startups that are emerging just on that alone and as you can imagine interesting new business models to go along with it and finally there’s plenty of services project development sales financing engineering procurement construction our prediction is that traditional renewable energy industries solar wind are now going to turn their attention not only from doing renewable energy but all those skills that are necessary and renewable energy can now be applied to an addition energy storage as part of the offering that they provide and then finally there’s tremendous opportunities in Grid deployment and system-wide integration so we can look at a storage system in isolation or its role in the grid overall and there I would say there’s huge opportunity and policy you know folks if you’re interested come on down the street we’d love to get some helpers because there’s a lot of work that needs to be done there lots of policy development when you think about all those applications at storage touches grid integration from a utility standpoint you know what are the physical interconnection and protection protocols when you’re putting an asset on the grid that can charge and discharge power system modeling what is going to be the impact to the system distribution and transmission systems from having this kind of resource available especially one that’s controllable we just don’t know and finally you know what are the communication and control systems and protocols that are needed to manage this amazing new asset class this new capability what are the contractual obligations the security obligations what are those algorithms that we need at a system level to really optimize these different resources so regardless of your background whether you’re coming

from economics engineering system whatever there’s something here for everybody and finally you know in our short time together you know we can only maybe touch the surface this is such a rich dynamic and very complicated field so if you’d like to learn more come to energy storage North America this is going to be the first conference and Expo held here in San Jose this September to focus exclusively on how energy storage can be applied to the grid across transmission distribution and the electrification of Transportation what are the applications what are the Bisma business models who are the movers and shakers that are going to make this happen so there’s more information at es na Expo I also brought some flyers in the back you want to grab one of those and we’ve already lined up a great section of speakers and sponsors and supporting partners so it should be a great event and it’s so close to home so finally in summary just want to recap what some of our key takeaways are today one energy storage is not a new technology class yes there is a tremendous amount of innovation happening today some right up the street here at Cal but it is not new and there’s technologies that are available to be commercially deployed right now and are being deployed around the world it has the potential to optimize our electric power system save money for ratepayers reduce greenhouse gases greenhouse gas emissions and help facilitate the integration of more and more renewable energy you know what when we can do that that’s going to help with you know global security and really the key barrier to achieving these benefits of energy storage is our regulatory framework it’s the ability or our current inability to monetize all of these wonderful benefits that storage provides so we need your help regulatory intervention is the way to go and to have a lot of near-term impact so I challenge all of you remember policy matters learn the issues get involved and change the world thank you I realize that we’ve gone a little bit over time so those of you that need to leave please feel filled to do feel free to do so Janice is available to answer questions so for those who you have questions hi I had a question about your cost effectiveness studies that you showed for the storage versus the peaking plants is that in light of the new regulatory changes in the paper pay-for-performance or was that before that they modeled a couple of cases so they modeled no pay for performance and with pay for performance and pay for performance does make a big difference though it’s not required in all of the cases I guess my question is you know conventional wisdom dictates that they will if there’s a cheaper way to do it that they will find a way so why why aren’t the implementing storage if it is cheaper than the peaking plants oh yes so heard there’s a boy that’s a multi-faceted answer okay okay so take frequency regulation for example until about a year ago it wasn’t even possible for storage to talk to KY so how about the California independent system operators software because it wasn’t there software wasn’t set up to deal with a resource that could charge and discharge so we needed to intervene and kaizo implemented something called regulation energy management they had to change their software so an asset that has this discharge discharge capability could even talk to it that’s an example of a fundamental change that needed to happen before you could even participate secondly on the procurement like through the PC how energy and capacity is procured today is typically through the LT PP process and the utilities each have their own procurement process they call it an are fo a request for offer one of the things we did is part of the LT PP proceeding at the PUC you as we took one as an example and went through it and if you read through the RFP no storage developer and their right mind would ever even because it’s it’s clearly if there is no clear pathway to having a different type of resource provide a bid it’s so squarely meant for fossil resources so

what we are dealing with is changing status quo we’re changing behavior we’re changing software we’re changing procurement methodologies we’re changing you know pretty much everything so these are the things that need to happen and that cost-effectiveness looked at the system benefits that storage device can provide and and it tried to stick to the ones that are monetized today you’ll notice there was a benefit not even on there called capacity there is a capacity value it wasn’t even on there because we don’t have a capacity market for storage so I hope that answered your question I like to first agree with you that energy storage is definitely the game changer and it brings about a tremendous value to energy producers consumers and society overall if it can be done cheaply and easily because I think it basically addresses the fundament the the physical and economic fundamentals of many of the energy commodities that they are either impossible or very difficult or very expensive to store or and they are they have in the elastic demand so it’s has a really high price volatility so I guess my question is that since the energy industry has been evolving around this fact that and in many indigenous commodities such as electricity or hard to transport trend or transmit or it’s store giving you a business background well what would you envision that the energy market will have to kind of restructure to make energy storage a reality like easily implementable so so one of the challenges is every energy market is different well we have a different market here than in the Northeast it’s different in China and India that is a challenge it’s complicated for as an example we were just talking about capacity value for storage there’s really no way now for storage to to earn revenue for its capacity value in the system some of the ways and this requires grassroots intervention through resource adequacy and long term procurement planning we have been advocating that not only can storage participate in this but that some of the requirements be changed like historically in California for resource adequacy it was a minimum of a four hour duration you know it’s a four hour window and it’s only a year ahead it’s a contract a year ahead if you’re trying to develop an asset that’s a you know very capital intensive and you’re trying to raise money to finance that asset and you can just get a contract for one year chances are you’re probably not going to secure that financing so not only do we need storage to be able to participate in you know the ra product the product probably shouldn’t be just limited to four hours I mean storage can provide capacity at any increment and three we need more than a year contract we need multi years how about like a 10-year contract these are the things that will enable commercial adoption of storage another way to go with capacity is just to create a capacity market and there’s talk of doing that say here in California it exists elsewhere but the bottom line is we need to develop market structures where you can developers and investors can secure a bankable cash flow for their investment in this asset that’s the name of the game any other questions when when will private customers be able to trade energy just like stocks like when will the technology we’re ready and you know everything that is required well you know that that’s actually possible today you know there are free competitive wholesale markets not necessarily down to the consumer level but there is talk of that where the you know individuals can maybe sell energy I would say I would put the question back to you as a student here dreaming up what the future could look like you know but it’s an interesting idea and maybe another way to achieve the same result and and in some ways distributed generation is enabling this right because as a consumer what are your choices today you buy electricity from your local utility in certain markets you have a choice of utilities here in

California we do not another alternative is potentially generate your own power another alternative is generate your own power with energy storage so now you can add an additional dimension of reliability so there are choices and I do believe that as that you know as we make progress that it will fundamentally change the competitive landscape for how people where and how they procure their energy and energy reliability needs so you have mentioned the lecture vehicles as a huge load for a future power grid so do you have any vision to make it also in resources as energy storage in the future because sometimes the electric vehicles can fit power back to the grid oh yes so they call that is your question about v2g can these electric vehicles provide services to the grid in fact there’s some very successful demonstrations for that happening right now I believe there’s one with energy and evie grid and the University of Delaware where electric vehicles are actually providing frequency regulation services into the PJM marketplace and getting paid there’s I believe at least one or two other demos of that here in California I think the fundamental challenge with that is overcoming the battery warranty for the car but I can tell you you know as the car industry and the OEMs become more involved in the electric power sector who knows what could happen I mean right now there’s this range anxiety issue and making sure the battery works but this is an example where we may see tectonic shifts you know like could it be that a car manufacturer is going to come in because they’re there they’re gonna be in touch with their energy storage system in that car could it be possible that a car manufacturer could retain ownership of that battery use it for other services interact with you as a consumer to let you use that for transportation but maybe you when that battery is not being used to power your car use it for other things I can see how that could happen absolutely we’re gonna cover that and energy storage in North America any any final questions maybe one more okay let’s give Jen