Copyright © 2017 The Brattle Group, Inc.Copyright © 2019 The Brattle Group, Inc.

Achieving High Penetration Renewables in New England

PRESENTED TO

NECA Renewable Energy Conference

PRESENTED BY

Judy Chang

March 7, 2019

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Content

– Changes in the industry toward clean energy

– Experiences integrating large scale renewable energy

– Role of storage

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Cheaper: New Technologies Offer Rapid Cost Declines

As costs drop, we observe more and more renewable generation added to the system

Wind Solar Batteries Gas CCs

Competes primarily to sell….Energy

Clean AttributesEnergy

Clean Attributes Capacity

“Prius Effect” (Rooftop)

CapacityFlexibility/Shifting

T&DPower Quality

EnergyCapacityFlexibility

63%2005-2030

Sources: Brattle research; Wiser, Ryan H, and Mark Bolinger, 2017 Wind Technologies Market Report, DOE 2018; PJM CONE Studies; Fu, Ran, Feldman, David, Margolis, Robert, Woodhouse, Mike, and Ardani, Kristen. Fri . "U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017". United States. doi:10.2172/1395932

31%2015-2022

67%2008-2017

80%2010-2017

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Cleaner: Clean Energy Development Is Rapidly Overtaking Traditional Supply

Data Source: Velocity Suite, ABB Inc. (US and Canadian generation) and Brattle research (US-only distributed resource and storage).

2010-2022 Cumulative Retirements

RetirementsPrimarily from

Traditional Supply

OtherOilGas CTGas STNuclearCoal

2010-2022 Cumulative Additions

New BuildsFocused on Cleaner

ResourcesBattery StorageEV Charging DemandDemand ResponseOtherRooftop SolarGrid Scale Solar

Wind

Gas CCs

Gas CTsNuclearCoal

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Smarter: The “Edge” of the Grid is Already Smarter Than We Know

Adoption of “smart-ready” devices has outpaced the grid’s ability to use them…. They will continue to improve their applications!

060

1,200

2013 2017 2022

7

70

90

2007 2017 2020

0

250,000

1,200,000

2010 2017 2025

Distributed Storage(U.S. capacity, MW)

Smart Meters(U.S. meters, millions)

Electric Vehicles(U.S. annual sales)

Smart Appliances(U.S. homes, millions)

Source: GTM Research, US Energy Storage Monitor 2017 Year-In-Review, March 2018

Institute for Energy Innovation (IEI), ElectricCompany Smart Meter Deployments, Oct,

2016

Edison Electric Institute and IEI, Plug-In Electric Vehicle Sales Forecast Through 2025

and the Charging Infrastructure Required, June 2017

GreenTech Media and Parks Associates, More than 100 million U.S. households do not have

a smart home device, May 2017

CAGR: 82% (2017-22)20x total growth in 5 yrs

CAGR: 22% (2007-20)13x total growth in 13 yrs

CAGR: 22% (2017-25)5x total growth in 8 yrs

CAGR: 53% (2017-20)4x total growth in 3 yrs

0

14

50

2007 2017 2020

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Accelerated Shifts Toward Clean Energy

Recently announced clean energy goals in MISO suggest an increasing shift towards renewable supply, beyond state-level requirements

Utility Goal or Announcement

NIPSCO Eliminate coal-fired generation within 10 years

Ameren MissouriReduce carbon emissions 80% by 2050, and increaseinvestments in wind (700 megawatts by 2020) and solar capacity (50 MW by 2025)

Duke Energy Reduce carbon emissions 40% by 2030 by investing in cleaner electricity generation

AEPCut carbon emissions 80% from 2000 levels by 2050through investments in energy efficiency, renewable resources, and other cleaner energy investments.

Xcel EnergyCarbon free by 2050

First Energy Reduce carbon emissions at least 90% from 2005 levels by 2045

WEC Reduce carbon emissions by 40% by 2030 and 80% by 2050

MidAmerican Energy

Reach 100% renewables in the early 2020s

ND: 10%x 2015

MN:26.5% x 2025 (IOUs)

31.5% x 2020 (Xcel)

MI: 15%x 2021

WI: 10% 2015

MO:15%x 2021

IA: 105 MW

IN: 10% x 2025

IL: 25%x 2026

OH: 12.5%x 2026

SD: 10%x 2015

MISO Zones and State Renewable Portfolio Standards

Recently-Announced Utility Clean Energy Goals

Sources: DSIRE, Renewable Portfolio Standards; MISO using Velocity Suite, ABB Inc. Sources: Company Websites; NIPSCO, Ameren, Duke, AEP, Excel, First Energy,

WEC, MidAmerican

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Impact of Resource Mix Change Across North America

– The growing level of renewables increases net load variability, uncertainty, and ramping, requiring more flexibility from the system

– The increase in renewables pushes down minimum net load levels, which puts pressure on generators to operate at lower levels or go offline

Example of Load Net of Wind and Solar Output Average of All Hours in July (MW)

2

1

2

Wind and solar day-ahead forecast error (uncertainty) exceed load forecast error in percentage terms11

Day-ahead and Real-Time Load, Wind, and SolarIllustrative three-day period (% of max day-ahead)2

1

Net load peak moves from

5:30pm to 8pm

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Changes in Energy Market Prices

– Energy prices fluctuate between greater price ranges as supply mix evolves• Variability of prices

increase• Net load volatility

increases: higher prices during net load peak, lower prices or negative during periods of high renewables generation

• Flexible resources can effectively respond to the signals

• Energy price fluctuations would likely be higher taking into account transmission constraints

Illustrative Day-ahead Price Duration Curves ($/MWh)

20402031

More negative priced hours in 20402

Higher prices during most

hours

Greater price fluctuation

brattle.com | 9Sources: Wang et al. (2016), “Ramp Capability Modeling in MISO Dispatch and Pricing,” FERC Technical Conference on Increasing Real-Time and Day-Ahead Market Efficiency through Improved Software, June 2016.

An example of MISO’s ramp productNet Load

Procurement of ramp-up at 8:10… Time

…Ramp Up: Ensures ability to meet expected net load (plus an unexpectedramp uncertainty margin) at 8:20(No ramp-down is needed in this interval)

Forecasted Net Load

Net Load Uncertainty

Ramping capability procured in the current interval ensures the ability to meet expected plus unexpected ramping needs in future intervals. MISO and CAISO have both introduced a ramp product. SPP is in the process of proposing one.

• Ramp up: Holds back sufficient “headroom” to meet load in upcoming intervals & avoid scarcity events

• Ramp down: Mitigates the potential for minimum generation events (zero quantity procured in this example)

Ramp Up and Down Needs Increases with Renewables

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MISO has implemented several flexibility enhancementsto help absorb wind intermittency, including:

MISO Ancillary Service Products

Sources: MISO (2014), “Level 200, Energy and Operating Reserve Markets”, April 2014.MISO (2016), “ Ramp Capability Product Development”, June 2016.MISO (2017), “ Improved Contingency Reserve Demand Curve that reflects VOLL”, June 2017.MISO (2017), “Short-Term Capacity Pricing and Reliability Requirements, June 2017.

Ramp Capacity Products (Implemented in 2016)

New Reserve Product (Under Consideration)

10 Minute Up or Down Ramping Capability

30 Minute Response Time

New Ancillary Services for

Flexibility

Original Ancillary Services

MISO Ancillary Service Products– 2010: Day-ahead headroom constraints• Added headroom constraints in unit commitment

and dispatch software to reserve ramp capacity

• As an out-of-market constraint, it introduced problems including make-whole payments, price suppression, and lack of transparency

– 2016: Up and down ramp products• The development of up and down ramp capacity

products ensures that each 5-minute interval meets energy requirement, plus holds back sufficient ramp capability for the subsequent 10 minutes

• The maximum price (i.e., penalty factor for falling short of ramping capability) is $5/MWh

– Current efforts:• Improve the shortage pricing by revising the

operating reserve demand curve

• Expand ancillary services with an additional 30-minute reserve product

MISO: Example of Multiple Operating Reserves (Flexibility) Enhancements

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Simulations of storage operations mirror the changes in system needs for ramping and flexibility

– Storage’s operations can shift considerably based on net load shapes, for example, in a solar-heavy region:• Storage shifts its charging from

night to mid-day• Storage shifts discharging from

late afternoon to evening peaks

– As renewable deployment increases, storage tends to operate at higher charging and generating capabilities

Illustrative Storage Dispatch (MW)

Charging

Generating

Pump shifts to mid-day

Generation more concentratedin the evening ramp period

Future 1Future 2

Current

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Key Storage Value Drivers

We quantify four key value drivers:– Production Cost Savings: Changes in cost of providing energy and ancillary services– Avoided Capacity Investments: Reduction in generation capacity needed to meet peak load– Deferred T&D Investment: Value of deploying storage to defer upcoming T&D investments– Avoided Distribution Outages: Reductions in load shedding by locating storage on certain

distribution feeders

Our approach accounts for likely limitations in the ability to “stack” these values, including:– Location limitations: Storage can be deployed at certain distribution grid locations either to

defer T&D investment or avoid distribution outages, but may not capture both simultaneously– Operational constraints: Discharging storage to provide one service (e.g. to defer T&D

investment) can limit its ability to provide other services

We use Brattle’s bSTORE model to evaluate the key drivers of storage value as increasing amounts of renewable energy is added.

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Brattle’s bSTORE Storage Modeling Platform

www.brattle.com/storage

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We Estimated 1,000 MW Nevada Storage Potential (50,000 MW US-Wide!)

Note: All values are in nominal dollars

In 2020, storage benefits are less than costs if more than 200 MW deployed. In 2030, benefits exceed costs beyond 1,000 MW.

Bene

fits &

Cos

ts

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PRESENTED BY

Judy ChangPrincipal, Boston+1.617-864-7900Judy.chang@brattle.com

Ms. Judy Chang is an energy economist and policy expert with a background in electrical engineering, and has over 20 years of experience in advising energy companies on regulatory and financial issues, with a focus on power sector investment decisions in clean energy, electric transmission, and energy storage. Ms. Chang has submitted expert testimonies to the U.S. Federal Energy Regulatory Commission, and U.S. state and Canadian provincial regulatory authorities on topics related to resource planning, power purchase and sale agreements, and transmission planning, access, and pricing. She has authored numerous reports and articles on the economic issues associated with generation and transmission investments, clean energy development, energy storage investments, and systems planning. In addition, she has led teams of energy company executives and board members in comprehensive organizational strategic and business planning.

Ms. Chang holds a Bachelor of Science in Electrical Engineering and Computer Science from University of California, Davis and a Master of Public Policy from Harvard Kennedy School. She is the founding board member of the New England Women in Energy and the Environment.

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Additional Reading on Storage

“Maximizing the Market Value of Flexible Hydro Generation ,” Pablo Ruiz, James A. Read, Jr., Johannes Pfeifenberger, Roger Lueken, and Judy Chang, Comments in Response to DOE's Request for Information DE-FOA-0001886, April 4, 2018

“Getting to 50 GW? The Role of FERC Order 841, RTOs, States, and Utilities in Unlocking Storage's Potential,” Roger Lueken, Judy Chang, Johannes P. Pfeifenberger, Pablo Ruiz, and Heidi Bishop, Presented at InfocastStorage Week, February 22, 2018

“Battery Storage Development: Regulatory and Market Environments,” Michael Hagerty and Judy Chang, Presented to the Philadelphia Area Municipal Analyst Society, January 18, 2018

“U.S. Federal and State Regulations: Opportunities and Challenges for Electricity Storage,” Romkaew Broehm, Presented at BIT Congress, Inc.'s 7th World Congress of Smart Energy, November 2, 2017

“Stacked Benefits: Comprehensively Valuing Battery Storage in California,” Ryan Hledik, Roger Lueken, Colin McIntyre, and Heidi Bishop, Prepared for Eos Energy Storage, September 12, 2017

“The Hidden Battery: Opportunities in Electric Water Heating,” Ryan Hledik, Judy Chang, and Roger Lueken, Prepared for the National Rural Electric Cooperative Association (NRECA), the Natural Resources Defense Council (NRDC), and the Peak Load Management Alliance (PLMA), February 10, 2016

“Impacts of Distributed Storage on Electricity Markets, Utility Operations, and Customers,” Johannes Pfeifenberger, Judy Chang, Kathleen Spees, and Matthew Davis, Presented at the 2015 MIT Energy Initiative Associate Member Symposium, May 1, 2015

“The Value of Distributed Electricity Storage in Texas - Proposed Policy for Enabling Grid-Integrated Storage Investments,” Ioanna Karkatsouli, James Mashal, Lauren Regan, Judy Chang, Matthew Davis, Johannes Pfeifenberger, and Kathleen Spees, Prepared for Oncor, March 2015