non-solar distributed generation market research

NON‐SOLAR DISTRIBUTED GENERATION MARKET RESEARCH B&V PROJECT NO. 186018 B&V FILE NO. 40.0000

PREPARED FOR

Portland General Electric

24 SEPTEMBER 2015

®

®

©Black & Veatch Holding Company 2014. All rights reserved.

Portland General Electric | Non‐Solar Distributed Generation Market Research

BLACK & VEATCH | Table of Contents i

Table of Contents LegalNotice..............................................................................................................................................................11.0 ExecutiveSummary............................................................................................................................1‐1

1.1 TechnologyCharacteristicsandCosts.........................................................................................1‐11.2 FinancialAssessment.........................................................................................................................1‐31.3 AchievablePotential...........................................................................................................................1‐6

2.0 Introduction..........................................................................................................................................2‐13.0 TechnicalCharacteristicsandCosts.............................................................................................3‐1

3.1 BatteryEnergyStorageSystems....................................................................................................3‐13.1.1 TechnicalCharacteristics...............................................................................................3‐13.1.2 BESSCosts............................................................................................................................3‐8

3.2 FuelCells................................................................................................................................................3‐113.2.1 TechnicalCharacteristics.............................................................................................3‐123.2.2 FuelCellCosts...................................................................................................................3‐20

3.3 Microturbines......................................................................................................................................3‐233.3.1 TechnicalCharacteristics.............................................................................................3‐233.3.2 MicroturbineCosts.........................................................................................................3‐26

4.0 FinancialAssessment.........................................................................................................................4‐14.1 ModelAssumptions.............................................................................................................................4‐1

4.1.1 TechnicalandCostAssumptions................................................................................4‐14.1.2 FinancialandIncentiveAssumptions.......................................................................4‐54.1.3 CustomerLoad...................................................................................................................4‐6

4.2 EnergyStorage......................................................................................................................................4‐84.2.1 SystemSize..........................................................................................................................4‐94.2.2 Results.................................................................................................................................4‐10

4.3 FuelCells................................................................................................................................................4‐144.3.1 SystemSizing....................................................................................................................4‐144.3.2 Results.................................................................................................................................4‐15

4.4 Microturbines......................................................................................................................................4‐164.4.1 SystemSizing....................................................................................................................4‐164.4.2 Results.................................................................................................................................4‐17

5.0 AchievablePotential..........................................................................................................................5‐1

LIST OF TABLES Table1‐1 BESSTechnicalCharacteristics......................................................................................................1‐1Table1‐2 FuelCellsandMicroturbinesTechnicalCharacteristics......................................................1‐2Table1‐3 TechnicalandFinancialAssumptions‐BESS(2014$).........................................................1‐2Table1‐4 TechnicalandFinancialAssumptions‐FuelCellsandMicroturbines

(2014$).....................................................................................................................................................1‐3


BLACK & VEATCH | Table of Contents ii

Table1‐5 SummaryofLevelizedCostofEnergyforFuelCellsandMicroturbines(2014$/kWh).........................................................................................................................................1‐5

Table1‐6 ForecastedAnnualBESSAdoption...............................................................................................1‐6Table3‐1 BESSComponents................................................................................................................................3‐3Table3‐2 TypicalLithiumIonBatteryPerformanceParameters........................................................3‐6Table3‐3 VanadiumRedoxFlowBatteryVersusLithiumIonBattery..............................................3‐8Table3‐4 EnergyStorageSystemConceptualEPCCostsfor2015(2014$)..................................3‐10Table3‐5 DistinguishingFeaturesofFuelCellTechnologies..............................................................3‐12Table3‐6 TypicalApplicationsforFuelCells..............................................................................................3‐13Table3‐7 PerformanceCharacteristicsofBloomEnergyFuelCellSystems.................................3‐16Table3‐8 PerformanceCharacteristicsofFuelCellEnergyFuelCellSystems..............................3‐18Table3‐9 PerformanceCharacteristicsofDoosanPureCellModel400..........................................3‐19Table3‐10 FuelCellProjectsApplyingforSGIPFundingin2012to2014.......................................3‐21Table3‐11 PerformanceCharacteristicsofCapstoneC65Microturbine..........................................3‐25Table3‐12 MicroturbineProjectsApplyingforSGIPFundingin2011to2014.............................3‐26Table4‐1 TechnicalandFinancialAssumptions‐BESS(2014$).........................................................4‐1Table4‐2 TechnicalandFinancialAssumptions‐FuelCellsandMicroturbines

(2014$).....................................................................................................................................................4‐2Table4‐3 SystemLossSummaryforFuelCellsandMicroturbines....................................................4‐2Table4‐4 NaturalGasWholesaleandRetailCommercialForecast(2014$)...................................4‐4Table4‐5 AvailableFinancialIncentivesin2016Cases...........................................................................4‐5Table4‐6 FinancialModelingAssumptions..................................................................................................4‐6Table4‐7 CommercialCustomerTypeLoadSummary............................................................................4‐7Table4‐8 PGECommercialRateScheduleSummary(2014Rates)....................................................4‐8Table4‐9 SolarPVSystemSizebyCustomerType....................................................................................4‐9Table4‐10 BESSOnlySystemPaybackSummarybyCustomerType...............................................4‐12Table4‐11 FuelCellCustomerTypeandSystemSize...............................................................................4‐14Table4‐12 FuelCellSystemPaybackbyCustomerType,CPI+1Case,BaseFuelCost..............4‐15Table4‐13 FuelCellRealLevelizedCostofEnergyEstimates(2014$/kWh).................................4‐15Table4‐14 MicroturbineCustomerTypeandSystemSize......................................................................4‐16Table4‐15 MicroturbineLevelizedCostofEnergy(2014$/kWh).......................................................4‐17Table5‐1 ForecastedAnnualBESSAdoption...............................................................................................5‐2

LIST OF FIGURES Figure1‐1 BESSOnlyPaybackbyCustomerType.......................................................................................1‐4Figure3‐1 EnergyStorageApplicationsAcrosstheElectricUtilitySystem......................................3‐1Figure3‐2 LithiumIonBatteryShowingDifferentElectrodeConfigurations..................................3‐4Figure3‐3 LithiumIonBatteryEnergyStorageSystemLocatedatBlack&VeatchHQ...............3‐5Figure3‐4 DiagramofVanadiumRedoxFlowBattery(Source:DOE/ElectricPower

ResearchInstitute[EPRI]2013ElectricityStorageHandbookin


BLACK & VEATCH | Table of Contents iii

CollaborationwithNationalRuralElectricCooperativeAssociation[NRECA]).................................................................................................................................................3‐6

Figure3‐5 VanadiumRedoxFlowBattery(Source:PrudentEnergybrochure).............................3‐7Figure3‐6 ContainerizedFlowBattery(Source:UniEnergy)..................................................................3‐7Figure3‐7 CaliforniaSGIPHistoricalEnergyStorageCosts($perkWh)(Source:SGIP

Database).................................................................................................................................................3‐9Figure3‐8 SchematicofaHydrogen‐FueledFuelCell(Source:

www.fuelcelltoday.com).................................................................................................................3‐11Figure3‐9 FuelCellFlowDiagram....................................................................................................................3‐14Figure3‐10 StationaryFuelCellInstalledCost(withandwithoutincentives)–2003to

2013(Source:NREL)........................................................................................................................3‐20Figure3‐11 Cut‐AwayofMicroturbine(left)andTypicalMicroturbineInstallation

(right)withHeatRecoveryModule............................................................................................3‐23Figure4‐1 RetailNaturalGasForecast,BaseandLowCases(2014$).................................................4‐3Figure4‐2 IllustrativeExampleofaLargeHotelUsing400kWhBESSandPV..............................4‐8Figure4‐3 BESSPaybackCurves,2035CPI+1.............................................................................................4‐10Figure4‐4 BESSOnlyPaybackbyCustomerType.....................................................................................4‐11Figure4‐5 BESSplusPVSystemPaybackbyCustomerType................................................................4‐13Figure5‐1 SolarPVMaximumMarketPenetrationCurveRelativetoPaybackPeriod................5‐1


BLACK & VEATCH | Legal Notice LN‐1

Legal Notice ThisreportwaspreparedforPortlandGeneralElectric(PGE)byBlack&VeatchCorporation(Black&Veatch)andisbasedoninformationnotwithinthecontrolofBlack&Veatch.Black&Veatchhasassumedthattheinformationprovidedbyothers,bothverbalandwritten,iscompleteandcorrectandhasnotindependentlyverifiedthisinformation.Whileitisbelievedthattheinformation,data,andopinionscontainedhereinwillbereliableundertheconditionsandsubjecttothelimitationssetforthherein,Black&Veatchdoesnotguaranteetheaccuracythereof.SinceBlack&Veatchhasnocontroloverthecostoflabor,materials,orequipmentfurnishedbyothers,orovertheresourcesprovidedbyotherstomeetprojectschedules,Black&Veatch’sopinionofprobablecostsandofprojectschedulesshallbemadeonthebasisofexperienceandqualificationsasaprofessionalengineer.Black&Veatchdoesnotguaranteethatproposals,bids,oractualprojectcostswillnotvaryfromBlack&Veatch’scostestimatesorthatactualscheduleswillnotvaryfromBlack&Veatch’sprojectedschedules.

UseofthisreportoranyinformationcontainedthereinbyanypartyotherthanPGE,shallconstituteawaiverandreleasebysuchthirdpartyofBlack&Veatchfromandagainstallclaimsandliability,including,butnotlimitedto,liabilityforspecial,incidental,indirect,orconsequentialdamagesinconnectionwithsuchuse.Inaddition,useofthisreportoranyinformationcontainedhereinbyanypartyotherthanPGEshallconstituteagreementbysuchthirdpartytodefendandindemnifyBlack&Veatchfromandagainstanyclaimsandliability,including,butnotlimitedto,liabilityforspecial,incidental,indirect,orconsequentialdamagesinconnectionwithsuchuse.Tothefullestextentpermittedbylaw,suchwaiverandreleaseandindemnificationshallapplynotwithstandingthenegligence,strictliability,fault,breachofwarranty,orbreachofcontractofBlack&Veatch.Thebenefitofsuchreleases,waivers,orlimitationsofliabilityshallextendtotherelatedcompaniesandsubcontractorsofanytierofBlack&Veatch,andtheshareholders,directors,officers,partners,employees,andagentsofallreleasedorindemnifiedparties.


BLACK & VEATCH | Executive Summary 1‐1

1.0 Executive Summary Black&VeatchwascommissionedbyPortlandGeneralElectric(PGE)toassessthepotentialdeploymentofsolarandotherdistributedgeneration(DG)technologies,giventechnical,financialandotherachievabilitycriteria.Thisreportexaminesthepotentialofthreeclassesofnon‐solarDGforelectricity‐onlyapplications:batteryenergystoragesystems(BESS),fuelcells,andmicroturbines.Theassessmentcoveredvarioustechnologieswithineachclassthataremostpracticalforbehind‐the‐meter,customer‐sitedapplicationsforcommercialcustomers.Thesetechnologiesincludethefollowing:

1. BatteryEnergyStorageSystems(BESS)

a. Lithiumion

b. Vanadiumredoxflowbattery

2. FuelCells(NaturalGas)

a. Solidoxidefuelcells(SOFC)

b. Moltencarbonatefuelcells(MCFC)

c. Phosphoricacidfuelcells(PAFC)

3. Microturbines(NaturalGas)

Whilethereareothertechnologiesthatexist,theywerenotincludedbecauseeithertheyarenotsuitableforstationaryapplicationsortheyarestillinrelativelyearlystagesofcommercialization.Black&Veatchalsofocusedonthepotentialforusingnaturalgasasthefuelinput,asbiogasutilizationwouldbehighlysite‐specificandwouldposeadditionalissuesaroundmaintenanceforthesetechnologies.Combinedheatandpower(CHP)applicationswerenotincludedinthescopeofthisstudy,astheyrequirecustomerandsitespecificevaluations

1.1 TECHNOLOGY CHARACTERISTICS AND COSTS Thestudyfirstconsideredthetechnicalcharacteristics,thestatusofeachofthetechnologies,andcurrentandforecastedcostsofthevarioustechnologies.AsummaryofthesystemcharacteristicsandstatusofdeploymentforthevarioustechnologiesisprovidedinTable1‐1andTable1‐2.ForBESS,theroundtripefficiencyreflectstheoverallefficiencylossesincurredduringbothcharginganddischargingofthesystem.

Table 1‐1 BESS Technical Characteristics

COMMERCIALSTATUS APPLICATION

SYSTEMSIZING(KWH)

ROUNDTRIPEFFICIENCY

BESS

LithiumIon Advanced PeakShaving/LoadShifting

5to32,000 75to90percent

VanadiumRedox Emerging PeakShaving/LoadShifting

200to8,000 65to75percent

kWh‐kilowatt‐hour



Table 1‐2 Fuel Cells and Microturbines Technical Characteristics

COMMERCIALSTATUS APPLICATION

MINIMUMUNITSIZE(KW)

ELECTRICALEFFICIENCY(HHV),%

FuelCells

SOFC Emerging Baseload 210‐262.5 47to54

MCFC Advanced Baseload 300‐1400 43

PAFC Advanced Baseload 400 42

Microturbines Mature Baseload/Dispatchable(limited)

65 25

kW‐kilowattHHV‐higherheatingvalue

Asfarastechnicalfeasibility,allofthesetechnologieshavealreadybeendeployedinsomecapacitynationallyandinternationally,sotheyaretechnicallyfeasible,andtheirpotentialarenotlimitedbyresourceavailability,asisthecasewithsolarandwindresources.Thegreaterconstraintsareassociatedwiththeeconomicsofthesystems.

ThecostassumptionsusedforthevarioustechnologiesareshowninTable1‐3andTable1‐4.Itshouldbenotedthatdramaticcostdeclinesareassumedforalltechnologiesbetween2016and2035,exceptformicroturbines.Whilethereisconsiderableuncertaintywhetherthesetechnologiescanachievethoselowercostlevels,Black&Veatchwantedtotestwhetherthesesystemswouldbefinanciallyviableatthoselowerlevels.

Table 1‐3 Technical and Financial Assumptions ‐ BESS (2014$)

TECHNOLOGYSIZE(KWH)

2016 2035

CAPITALCOST($/KW)

FIXEDO&M($/KW‐YR)

ROUND‐TRIP

EFFICIENCY(%)

CAPITALCOST($/KW)

FIXEDO&M

($/KW‐YR)

ROUND‐TRIP

EFFICIENCY(%)

BESS 10 1500 20 87 400 20 87

$/kW‐dollarsperkilowatt‐hourO&M‐operationsandmaintenance



Table 1‐4 Technical and Financial Assumptions ‐ Fuel Cells and Microturbines (2014$)

TECHNOLOGYSIZE(KW)

2016 2035

CAPITALCOST($/KW)

FIXEDO&M($/KW‐YR)

HEATRATE(BTU/KWH)

CAPITALCOST($/KW)

FIXEDO&M($/KW‐YR)

HEATRATE(BTU/KWH)

SOFC 210 8000 1000 7000 1500 150 5600

MCFC 300 4000 300 8000 1500 150 8000

PAFC 400 6000 150 9000 1500 150 9000

Microturbine 65 4000 170 13400 4000 170 13400

Btu/kWh‐Britishthermalunitperkilowatt‐hour

1.2 FINANCIAL ASSESSMENT Tounderstandprojectfinancials,Black&VeatchmodeledeachofthetechnologiesforanumberofcommercialcustomertypesusingamodifiedscriptingoftheNationalRenewableEnergyLaboratory(NREL)SystemAdvisorModel(SAM)software.Themodelincorporatestechnicalperformanceparameters,systemcapitalandO&Mcosts,projectfinancingandtaxes,incentives,andutilityratedata,togetherwithcustomerloaddata,toproduceasuiteofresultsincludingnetpresentvalue(NPV),paybackperiod,levelizedcostofenergy(LCOE),annualcashflow,andannualenergysavings.Black&Veatchmodeledscenariosfor2016and2035foralltechnologiesandcustomertypes.ForBESS,thesystemwastestedwithandwithoutsolarphotovoltaic(PV).Also,itwasimportanttousedifferentcustomertypestounderstandhowdifferentloadshapesmaybenefitthroughelectricitybillreductionsforbothdemandandenergycharges,undereachoftheirrespectiverateclasses.Foreachcustomertype,eachofthetechnologieswasalsosizedtomeeteitherthecustomerloadorminimumtechnologyunitsize.Forboththe2016and2035cases,Black&Veatchalsotestedtwoutilityratesescalatingtwoways:attheConsumerPriceIndex(CPI)of2percent,andatCPIplus1percent(CPI+1).Additionally,fuelcellsandmicroturbinesweretestedunderbaseandlowgaspricescenarios.

Ingeneral,noneoftheBESSoptionsevaluatedarefinanciallyviableinthe2016timeframe,definedaspaybackoffewerthan20years,givenestimatedcosts,performance,availableincentives,andutilityrates.Asidefromcostofthesystems,anexaminationofPGE’scommercialretailratesshowedthatthereislittleornobenefitinloadshiftingbetweenpeakandoff‐peakhours,astheround‐tripefficiencyofBESSwashesoutthetimeofuse(TOU)pricedifferentialbetweenpeakandoff‐peakhours.Thus,demandchargereductionistheonlysourceofbillsavings,andPGEdemandchargesforcommercialcustomersaresomewhatlowcomparedtootherpartsofthecountrywhereBESSarebeingdeployed.By2035,assumingdramaticinstalledcostdeclines,BESSoptionsdoappeartobecomefinanciallyviable.Thepaybacksforthecustomersrangefrom5to10yearsformostcustomers.RefertoFigure1‐1.



Figure 1‐1 BESS Only Payback by Customer Type

Theanalysisoffuelcellsandmicroturbinesinallcases,includinglownaturalgaspricecases,showedthatnoneofthesetechnologiesresultinpaybackslessthanthelifeoftheproject.Oneexceptionisthecaseforsecondaryschoolsin2035deployingSOFC,underalownaturalgaspricescenariowithratesthatincreaseatCPI+1,resultsinapaybackperiodlessthanthelifeoftheproject.However,thisassumesthattheinstalledsystemandO&Mcostsdropsubstantiallyandefficiencygainsareachievedforthetechnology,whichishighlyuncertaingiventhetechnologystatustoday.AsidefromcapitalandO&Mcost,thefinancialsofthesetechnologiesrelativetoutility‐suppliedpowerarepenalizedintwoways:higherheatratescomparedtoPGE’ssystemheatrateandnaturalgaspricedatretailrates.Thesedrawbacksareunlikelytochangeunderanycondition.RefertoTable1‐5forthelevelizedcostofenergy.

0 5 10 15 20 25

FullServiceRestaurant

Hospital

LargeHotel

LargeOffice

MediumOffice

Outpatient

PrimarySchool

SecondarySchool

QuickServiceRestaurant

SmallHotel

SmallOffice

StandAloneRetail

StripMall

Supermarket

Warehouse

ES2035

ES2016

20‐YearSystem Life



Table 1‐5 Summary of Levelized Cost of Energy for Fuel Cells and Microturbines (2014$/kWh)

YEARNATURALGAS

CASE SOFC MCFC PAFC MICROTURBINE

2016Base $0.24 $0.13 $0.13 $0.16

Low $0.23 $0.12 $0.12 $0.14

2035Base $0.08 $0.10 $0.11 $0.18

Low $0.07 $0.09 $0.10 $0.15



1.3 ACHIEVABLE POTENTIAL DevelopingestimatesofachievablepotentialfortheDGtechnologiesexaminedinthisstudyischallenginginthatthesetechnologiesarenotfinanciallyviableinthenear‐termundercurrentfinancialconditions,andthelong‐termcostoutlookisquiteuncertainformanyofthesetechnologies.Anotheraddedcomplexityisthatappropriatelysizingofthesystems,matchedtoacustomer’sloadshape,reallydrivesthefinancials.Inorderforthetechnologiestobefinanciallyviable,technologycostswouldneedtodropsubstantially,additionalpoliciesandincentiveswouldneedtobeputinplace,andchangesinratestructureareneededtopromoteadoption.Absentthoseconditions,Black&Veatchforecastsminimaladoptionofthesetechnologiesoverthestudyperiod.Ifanyadoptionoccurs,itwouldbetowardsthelatterdecade(2026to2035)oftheanalysisperiodwhenbetterclarityoncostsisavailable.TheonemajorcaveatinthisstudyisthatBlack&Veatchfocusedontheimpactofthesesystemsoncustomerelectricitybillsbutdidnotaccountforthevalueofreliabilityandpowerqualitytothecustomer.Thesefactorsaremuchmoredifficulttovalueandcouldvarywidelybycustomertype.PGEmaywanttoconsiderstudyingthesevaluestocustomersfurtherinfutureanalysis.

Asdiscussedinthefinancialassessmentsection,onlyBESStechnologymakessomefinancialsenseby2035.Black&Veatchestimatesthatduringthe2025to2035timeframe,approximately2.6to5.1MWperyearofenergystorageinstallationsmaybepossibleifcostsdofalltoforecastedlevelsandthefinanciallyoptimalsystemsizeis10kWhpercustomer.Adoptionmaybehigherifcertaincustomertypes,suchascriticalfacilities(hospitals,schools,etc.),placesomevalueonreliabilityandpowerqualityassociatedwithinstallingBESSand,thus,installlargersystemsand/orhavewideradoptiondespitepoorpaybacks.However,thismetricwasnotstudiedinthisanalysis.

Table 1‐6 Forecasted Annual BESS Adoption

BESSCAPACITY(MW/MWH)

2016TO2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

LowAdoption

0 2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

HighAdoption

0 5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

FortheBESSplussolarPVcases,itwasdeterminedthattheadditionofBESStoasolarinstallationdoesnotimprovethefinancialsofthecombinedsystem,and,infact,inthe2016cases,BESScausespaybacktoincrease.Therefore,inthenear‐term,giventhatsolarPVinstallationsareabletonetmeter,thereisnoincrementalbenefittodeployinganenergystoragesystemwithPVuntilnetmeteringisnolongeravailable.By2035,BESScostswillhavefallenenoughthatBESSinstallations,combinedwithsolarPV,wouldnotalterthepaybacksignificantlycomparedtosolarPValone.However,thisalsoimpliesthatacustomerwouldbeambivalenttoinstallingaBESSwithitssolarPVsystem,unlessnetmeteringpolicychangesinthefuture.Ifnetmeteringisreplacedwithotherpolicies,thedeploymentofBESSaspartofasolarPVsystemmaybecomefinanciallyviablebutwilldependontherulesaroundthealternativeratestructures.



Asnotedpreviously,electricity‐onlyapplicationsforfuelcellsandmicroturbinesarenotfinanciallyviableinalmostallcases.Thesetechnologiescouldbeconfiguredtoprovidecombinedheat‐and‐powertohelpwiththefinancialsofthesystems.WhileCHPmayimprovethesetechnologies’financialsoverelectricity‐onlyoperation,CHPapplicationsarelimitedtospecificcustomersthatcanutilizeboththeenergyandheat.AdditionalstudiesexaminingspecificcustomerloadwouldbeneededtoassessthepotentialoffuelcellsandmicroturbinesforCHPapplications.


BLACK & VEATCH | Introduction 2‐1

2.0 Introduction Black&VeatchwascommissionedbyPortlandGeneralElectric(PGE)toassessthepotentialdeploymentofsolarandotherdistributedgeneration(DG)technologies,giventechnical,financialandotherachievabilitycriteria.Thisreportexaminesthepotentialofthreeclassesofnon‐solarDGforelectricity‐onlyapplications:batteryenergystoragesystems(BESS),fuelcells,andmicroturbines.Theassessmentcoveredvarioustechnologieswithineachclassthataremostpracticalforbehind‐the‐meter,customer‐sitedapplicationsforcommercialcustomers.Thesetechnologiesincludethefollowing:

1. BatteryEnergyStorageSystems(BESS)

a. Lithiumion

b. Vanadiumredoxflowbattery

2. FuelCells(NaturalGas)

a. Solidoxidefuelcells(SOFC)

b. Moltencarbonatefuelcells(MCFC)

c. Phosphoricacidfuelcells(PAFC)

3. Microturbines(NaturalGas)

Whilethereareothertechnologiesthatexist,theywerenotincludedbecauseeithertheyarenotsuitableforstationaryapplicationsortheyarestillinrelativelyearlystagesofcommercialization.Black&Veatchalsofocusedonthepotentialforusingnaturalgasasthefuelinput,asbiogasutilizationwouldbehighlysite‐specificandwouldposeadditionalissuesaroundmaintenanceforthesetechnologies.Combinedheatandpower(CHP)applicationswerenotincludedinthescopeofthisstudy,astheyrequirecustomerandsitespecificevaluations.


BLACK & VEATCH | Technical Characteristics and Costs 3‐1

3.0 Technical Characteristics and Costs ThissectioncoversthetechnicalcharacteristicsofthevariousDGtechnologiesthatwerereviewedandtheirtypicaloperatingmodes.CurrentestimatedcostsarealsopresentedforeachoftheDGtechnologiesbasedonBlack&Veatch’sengineering,procurement,andconstruction(EPC)experience,industrysurveys,and/orinstalledcostdatafrompubliclyavailablesources.Sincemanyofthesetechnologiesdonothavealargeinstalledbase,thenumberofdatapointsmaybelimited.

3.1 BATTERY ENERGY STORAGE SYSTEMS BESSarebecomingamoreprevalentgridresourceoptioninrecentyearsastheneedformoreflexiblecapacityisemerging,bothatthetransmissionaswellasthedistributionlevel.Newpoliciesinanumberofstates,suchasCalifornia,NewYork,andHawaii,aredrivinggrowthinthissectorthroughincentivesorstaterequirements.Companies,suchasTesla,anelectricvehiclecompany,areseekingwaystomassproducebatteriesinordertodrivecostsdownforbothtransportationandstationaryapplications.ThissectioncoversthetechnicalcharacteristicsandcostsassociatedwiththeBESStechnologiesthatwerereviewed,currentcosts,andforecastedcosts.

Sincethefocusofthisreportisonbehind‐the‐meter,stationarycustomerapplications,lithiumionandvanadiumredoxflowbatteriesaretwopracticaltechnologiestoconsiderforstationaryenergystorage.

3.1.1 Technical Characteristics

Althoughitisnotagenerationresource,energystoragecanperformmanyofthesameapplicationsasatraditionalgeneratorbyusingstoredenergyfromthegridorfromotherdistributedgenerationresources.Theseapplicationsrangefromtraditionalusessuchasprovidingcapacityorancillaryservicestomoreuniqueapplicationssuchasmicrogridsorrenewableintegrationapplications.AsnapshotofvariousenergystorageapplicationsacrosstheelectricutilitysystemcanbefoundonFigure3‐1.

Figure 3‐1 Energy Storage Applications Across the Electric Utility System



Generallyspeaking,energystoragecanserveanumberofroles:

TimeofUse(TOU)EnergyManagement(ElectricalEnergyTime‐Shift):Energystoragecanchargeenergywhenelectricitypricesarelowanddischargetosupplyloadwhenelectricitypricesarehigh.

DemandChargeManagement:Energystoragecandischargeduringexpensivepeakdemandtimestoreduceacustomer’smonthlydemandcharges.

ElectricServiceReliability:Energystoragecanimprovethereliabilityofacustomer’selectricserviceandhelpreducethenumberofoutagesforcustomers.Thisapplicationcanincludeemergencybackuppower.

PowerQuality:Energystoragecanprotectloadsagainstshortdurationevents(i.e.,voltageflickers,frequencydeviations)thataffectthequalityofpowerdeliveredtotheload.

FrequencyRegulation:Energystoragecanbeusedtomitigateloadandgenerationimbalancesonthesecondtominuteintervaltomaintaingridfrequency.

VoltageSupport:Theenergystorageconvertercanprovidereactivepowerforvoltagesupportandrespondtovoltagecontrolsignalsfromthegrid.

VariableEnergyResourceCapacityFirming:Energystoragecanbeusedtofirmenergygenerationofavariableenergyresourcesothatoutputreachesaspecifiedlevelatcertaintimesoftheday.

VariableEnergyResourceRampRateControl:Rampratecontrolcanbeusedtolimittheramprateofavariableenergyresourcetolimittheimpacttothegrid.

Energystorageapplicationscanbegroupedintoeitherpowerorenergyapplications.Powerapplicationsaregenerallyshorterduration(approximately30minutesto1hour)applicationsthatmayinvolvefrequentrapidresponsesorcycles.Frequencyregulationorotherrenewableintegrationapplicationssuchasrampratecontrol/smoothingaregoodexamplesofpowerapplications.Energyapplicationsgenerallyrequirelongerduration(approximately2hoursormore)energystoragesystems.

Forthepurposesofthisreport,Black&Veatchfocusedoncustomer‐sitedstoragethatisconnectedbehindtheelectricitymeterforcommercialandindustrialcustomers(alsocalledbehind‐the‐meterenergystorage).Theapplicationsspecificallyrelatedtobehind‐the‐meterenergystorageareasubsetofallthepotentialapplicationsstoragesystemscanperform.

TheprimarypurposeoftheenergystoragedevicesconsideredinthisreportwouldbetoprovideTOUenergymanagementanddemandchargemanagement,whichwouldbeprimarilyanenergyapplication.TOUenergymanagementanddemandchargemanagementtogethercanbecalledend‐userbillmanagementapplications.Whilethestoragesystemsareversatileandcanperformotherapplications,theend‐userbillmanagementapplicationsarethemostcommonapplicationsperformedbybehind‐the‐meterenergystoragesystemsseentoday.Thisisbecauseavoidingexpensivedemandcharges(thatcanvarybyregionandutility)canprovidereasonablevaluetothecustomer.Moredetailedanalysisonend‐userbillmanagementcanbefoundinlatersectionsofthisreport.Theotherapplicationscanbeperformedbybehind‐the‐meterenergystorage,butoftenvaluingtheseparticularapplicationsisdifficultandishighlysiteandmarket‐specific.



AfullyoperationalBESScomprisesanenergystoragesystemthatiscombinedwithabidirectionalconverter(alsocalledapowerconversionsystem).TheBESSalsocontainsabatterymanagementsystem(BMS)andsiteorBESScontroller(Table3‐1).

Table 3‐1 BESS Components

COMPONENT DEFINITION

EnergyStorageSystem(ESS)

TheESSconsistsofthebatterymodulesorcomponentsaswellastheracking,mechanicalcomponents,andelectricalconnectionsbetweenthevariouscomponents.

PowerConversionSystem(PCS)

ThePCSisabidirectionalconverterthatconvertsalternatingcurrent(ac)todirectcurrent(dc)anddctoac.ThePCSalsocommunicateswiththeBMSandBESScontroller.

BatteryManagementSystem(BMS)

TheBMScanbecomposedofvariousBMSunitsatthecell,module,andsystemlevel.TheBMSmonitorsandmanagesthebatterystateofchange(SOC)andchargeanddischargeoftheESS.

BESS/SiteController TheBESScontrollercommunicateswithallthecomponentsandisalsotheutilitycommunicationinterface.MostoftheadvancedalgorithmsandcontroloftheBESSresidesintheBESS/sitecontroller.

Whenconsideringdifferentenergystoragetechnologies,thereareanumberofkeyperformanceparameterstounderstand:

PowerRating:Theratedpoweroutput(MW)oftheentireenergystoragesystem.

EnergyRating:Theenergystoragecapacity(MWh)oftheentireenergystoragesystem.

DischargeDuration:ThetypicaldurationthattheBESScandischargeatitspowerrating.

ResponseTime:HowquicklyanESScanreachitspowerrating(typicallyinmilliseconds).

Charge/DischargeRate(C‐rate):AmeasureoftherateatwhichtheESScancharge/dischargerelativetotherateatwhichitwillcompletelycharge/dischargethebatteryin1hour.A1hourcharge/dischargerateisa1Crate.Furthermore,a2Cratecompletelycharges/dischargestheESSin30minutes.

RoundTripEfficiency(RTE):TheamountofenergythatcanbedischargedfromanESSrelativetotheamountofenergythatwentintothebatteryduringcharging(asapercentage).TypicallystatedatthepointofinterconnectionandincludestheESS,PCS,andtransformerefficiencies.

DepthofDischarge(DoD):Theamountofenergydischargedasapercentageofitsoverallenergyrating.

StateofCharge(SOC):Theamountofenergyanenergystorageresourcehaschargedrelativetoitsenergyrating,notedasapercentage.

CycleLife:Thesearereportedat80percentand10percentofDoDandcorrelatetothenumberofcyclestheESScanundergobeforetheenergystoragesystemdegradesto80percentofitsinitialenergyrating(kWh).ThecyclelifecanvaryforvariousDoDs.



Sincethefocusofthisreportisonbehind‐the‐meter,stationarycustomerapplications,lithiumionandvanadiumredoxflowbatteriesaretwopracticaltechnologiestoconsiderforstationaryenergystorage.Mostofthestationaryenergystorageactivityintheindustryiscurrentlybasedonthelithiumionbatterytechnology.Lithiumionbatteriesarethedominantplayerinbatteryenergystorage,andtheirdemonstratedexperienceisgrowing.AccordingtotheDepartmentofEnergy(DOE)GlobalEnergyStorageDatabase,over80MWoflithiumioninstallationsareoperationalintheUnitedStates.Lithiumionbatteriesareprojectedtobeamajorindustryplayerintheyearstocomeandarewellsuitedforbothpowerandcyclingapplicationsaswellassomeenergyapplications.

Vanadiumredoxflowbatteryinstallationsaremorelimited,butworldwideinstallationstotalover17MW,includinginstallationscurrentlybeingverified.1Vanadiumredoxflowbatteriesarealsoprojectedtolikelyhaveaconsiderablemarketshareforlargestationaryapplicationsinthefutureandarebestsuitedforenergyapplicationsthatrequirelongerdurationsofdischarge.

Abasicdescriptionofthesetwotechnologiesisprovidedinthefollowingsections.

3.1.1.1 Lithium Ion Batteries

Lithiumionbatteriesareaformofenergystoragewherealltheenergyisstoredelectrochemicallywithineachcell.Duringchargingordischarging,lithiumionsarecreatedandarethemechanismforchargetransferthroughtheelectrolyteofthebattery.Ingeneral,thesesystemsvaryfromvendortovendorbythecompositionofthecathodeortheanode.SomeexamplesofcathodeandanodecombinationsareshownonFigure3‐2.

Figure 3‐2 Lithium Ion Battery Showing Different Electrode Configurations

Thebatterycellsareintegratedtoproducemodules.Thesemodulesarethenstrungtogetherinseries/paralleltoachievetheappropriatepowerandenergyratingtobecoupledtothePCS.

1 DOE Global Energy Storage Database, http://www.energystorageexchange.org/.



AnimageofanexamplelithiumionBESScanbefoundonFigure3‐3.

Figure 3‐3 Lithium Ion Battery Energy Storage System Located at Black & Veatch HQ

Lithiumionbatterystoragesystemscanbeusedforbothpowerandenergyapplications.Onekeystrengthoflithiumionbatteriesistheirstrongcyclelife(refertoTable3‐2).Forshallow,frequentcycles,whicharequitecommonforpowerapplications,lithiumionsystemsdemonstrateexcellentcycle‐lifecharacteristics.Additionally,lithiumionsystemsdemonstrategoodcycle‐lifecharacteristicsfordeeperdischargescommonforenergyapplications.Overall,thistechnologyoffersthefollowingbenefits:

ExcellentCycleLife:Lithiumiontechnologieshaveacyclingabilitysuperiortootherbatterytechnologiessuchasleadacid.

FastResponseTime:Lithiumiontechnologieshaveafastresponsetimethatistypicallylessthan100milliseconds.

HighRoundTripEfficiency:Lithiumionenergyconversionisefficientandhasuptoa90percentroundtripefficiency(dc‐dc).

Versatility:Lithiumionsolutionscanprovidemanyrelevantoperatingfunctions.

CommercialAvailability:Therearedozensoflithiumionbatterymanufacturers.

EnergyDensity:Lithiumionsolutionshaveahighenergydensitytomeetspaceconstraints.



Table 3‐2 Typical Lithium Ion Battery Performance Parameters

PARAMETER LITHIUMIONBATTERY

Powerrating,MW 0.005to32

Energyrating,MWh 0.005to32

Dischargeduration,hours 0.25to4

Responsetime,milliseconds <100

Roundtripefficiency(ac‐ac),% 75to90

Cyclelife,cyclesat80%DoD 1,200to4,000

Cyclelife,cyclesat10%DoD 60,000to200,000

3.1.1.2 Vanadium Redox Flow Batteries

Vanadiumredoxflowbatteriesareanotherformofelectrochemicalstorage.Vanadiumredoxflowbatteriesarethemostcommerciallydevelopedtechnologyofthevariousflowbatterytechnologies.Inthistechnology,theenergyforthesesystemsisstoredwithinaliquidelectrolytethatistypicallystoredinlargetanks.Theelectrolytecanbescaledtoproducethedesiredenergystoragecapacity;thepowercells(wherethereactionshappen)canbescaledtoproducethedesiredpoweroutput.AdiagramofavanadiumredoxflowbatterycanbefoundonFigure3‐4.

Figure 3‐4 Diagram of Vanadium Redox Flow Battery (Source: DOE/Electric Power Research Institute [EPRI] 2013 Electricity Storage Handbook in Collaboration with National Rural Electric Cooperative Association [NRECA])



ThistechnologyisalsointegratedwithaPCStoformtheoverallBESS.Vanadiumredoxbatteriesaremoretypicallyusedforenergyapplications,astheycanmoreeffectivelybescaledtolongerdischargeperiodsthanlithiumionbatteries.However,onedrawbackwithflowbatteriesisthespacerequirementsforthesesystems.Thevanadiumredoxflowbatteriesrequiremorespacefortheinstallationthanlithiumionbatteries.VanadiumredoxBESScanbemodular,asshownonFigure3‐5,andcontainerizedsystems,asshownonFigure3‐6.

Figure 3‐5 Vanadium Redox Flow Battery (Source: Prudent Energy brochure)

Figure 3‐6 Containerized Flow Battery (Source: UniEnergy)



AcomparisonoflithiumionandflowbatterytechnologiesisprovidedinTable3‐3.Comparedtolithiumionbatteries,flowbatteriesarebettersuitedtoprovidinglongerdischargedurationsandhavealongercyclelifeat80percentofDoD.Ontheotherhand,vanadiumredoxflowbatteriessufferfromlowerroundtripefficiencies.Additionally,flowbatteriesdonotperformaswellatshallow10percentDoDcycles.Whiletheelectrolyteinflowbatteriesdoesnotdegrade,manufacturerinformationindicatesthatthepowercellcomponentofthebatterymayneedtobereplacedafter5to10years.

Table 3‐3 Vanadium Redox Flow Battery Versus Lithium Ion Battery

PARAMETER LITHIUMIONBATTERYVANADIUMREDOXFLOWBATTERY

Powerrating,MW 0.005to32 0.050to4

Energyrating,MWh 0.005to32 0.200to8

Dischargeduration,hours 0.25to4 3to8

Responsetime,milliseconds <100 <100

Roundtripefficiency,% 75to90 65to75

Cyclelife,cyclesat80%DoD 1,200to4,000 10,000to15,000(notDoDdependent)

Cyclelife,cyclesat10%DoD 60,000to200,000 10,000to15,000(notDoDdependent)

3.1.2 BESS Costs

Black&Veatchleverageditsexperienceintheenergystorageindustryanddeepvendorknowledgetoprovidehigh‐levelcostsforthetwotechnologiesofinterest.

Inadditiontothis,Black&VeatchreviewedSandiaNationalLaboratory’sreporttitled“DOE/EPRIElectricityStorageHandbookinCollaborationwithNRECA,”whichincludescostsgatheredthroughextensivesurveysofanumberofvendors.2Black&VeatchalsoreviewedtheDOEGlobalEnergyStorageDatabase,whichisacompilationofmanyexistingenergystorageprojects.3Furthermore,historicaldatafromtheCaliforniaSelf‐GenerationIncentiveProgram(SGIP)wasalsoreviewed.SGIPprogramdatashowcostshavedeclinedsignificantlysince2009‐2010buthavebeengenerallyflatbetween2011and2014(Figure3‐7).

2 DOE/EPRI 2013 Electricity Storage Handbook in Collaboration with NRECA, http://www.sandia.gov/ess/handbook.php. 3 DOE Global Energy Storage Database, http://www.energystorageexchange.org/.



Figure 3‐7 California SGIP Historical Energy Storage Costs ($ per kWh) (Source: SGIP Database)

3.1.2.1 Current Energy Storage Costs

Reportedcostsofenergystoragesystemscanvarywidely,dependingonsizeanduniquesiteconditions,andareoftenreportedinconsistently.Costsmaybereportedforthebatteriesaloneorfortotalinstalledcost.Furthermore,installedcostsforBESSmaybereportedincostperkW(power)orcostperkWh(energy).Sincetheapplicationsconsideredinthisanalysisareprimarilyenergyapplications,costsarepresentedonadollarsperkWhbasis.

Currentreportedequipmentpricingforlithiumionbatteriesalonerangefrom$500to$750perkWhandtotalinstalledcostsrangingfrom$700to$3000perkWh,withsmallerbehind‐the‐metersystemsatthehigherend.4Vanadiumredoxflowbatteriesarefarmoreintegratedsystems,socostsaretypicallyreportedastotalinstalledcost.

Black&Veatchdevelopedarangeofinstalledcoststhatincludethefollowingcomponents:

Batterymodules.

PCS.

BMS.

Controller.

4 “The Value of Distributed Electricity Storage in Texas,” Brattle Group, 2014. http://www.brattle.com/system/news/pdfs/000/000/749/original/The_Value_of_Distributed_Electricity_Storage_in_Texas.pdf?1415631708.

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2009 2010 2011 2012 2013 2014

SGIPInstalledCosts($perkWh)

Wtd.AverageCost

WtdAveCostAfterIncentives



Balance‐of‐systems,includinginterconnectingelectricalequipment,racking,andwiring.

Engineeringanddesign,includingnecessarypermittingandconstructionmanagement.

Installation,includinglabor.

Contractormargin.

VarioussizesofenergystoragesystemsareshowninTable3‐4thatrepresentareasonablerangeofsizesforthestoragesystemsstudiedinthisreport.ThecostsarepresentedintermsofdollarsperinstalledkWhbasedontheenergystorageability,whichiswhatwillbeusedinthemodelingexercisepresentedlaterinthisstudy.

Table 3‐4 Energy Storage System Conceptual EPC Costs for 2015 (2014$)

TECHNOLOGYPOWER,KW

ENERGY,KWH

INSTALLEDCOST,$/KWH

FIXEDO&M,$/KW‐YR

VARIABLEO&M,$/KWH

Lithiumionbattery

5 10 1,500–2,000 20‐25 0.0010–0.0015

100 400 1,250–1,750 20–25 0.0010–0.0015

1,000 4,000 1,000–1,300 8–10 0.0010–0.0015

Vanadiumredoxflowbattery

200 700 1,400–1,600 15‐20 0.0015–0.0020

1,200 4,000 900–1,100 7‐9 0.0015–0.0020

Fixedandvariableoperationsandmaintenance(O&M)costsforlithiumionandflowbatteriesarealsopresentedinTable3‐4.FixedO&Mincludesroutinemaintenanceontheequipmentandelectronics,andvariableO&Mdependsonhowmuchthestoragesystemisusedthroughoutthecourseofitsoperation.SincetheO&Misdependentontheexpectedoperation,theoperationofthesesystemsisassumedtobeonefullchargeanddischargedailyfor365daysoftheyear.Thisisareasonableassumptionfortheexpectedapplicationsconsideredinthisreport.TheO&Mcostsdonotincludebatteryreplacementsorcomponentreplacementsovertime.Furthermore,thenumberofcyclesinoperationwilldeterminetheiroveralllife,whichisestimatedtobeapproximately10yearsifcycleddaily,andproportionatelylongerifthesystemisnotcycleddaily.

3.1.2.2 Forecasted Energy Storage Costs

Basedonindustryworkshops,theDOEhasestablishedgoalsofreducingtheinstalledsystemcapitalcostforBESSinthenear‐term(by2019)to$250perkWh.5Additionally,theDOEhasalongerterm2024goalof$150perkWh.Otherindustryreportsprojectbattery‐alonecoststodropto$100to$250perkWhinthenear‐term(5to10years)andtotalinstalledcoststobeaslowas$350perkWhby2020,whichismorereasonablethantheDOEgoals.Inallcases,thesecostsareforlargerutility‐scaleinstallations.

Forsmaller‐scalesystemsbeingconsideredforbehind‐the‐meterapplications,Black&VeatchbelievesthesetargetsareoverlyoptimisticforcompleteBESSinstallations.Therefore,forthe

5 Grid Energy Storage, U.S. Department of Energy, December 2013 (http://energy.gov/oe/downloads/grid‐energy‐storage‐december‐2013).



10yearhorizon,Black&Veatchexpectsatotalinstalledcosttobemoreintherangeof$400to$500perkWhin2014$andthencoststodeclinemoreslowlybeyondthattimeframe.

3.2 FUEL CELLS Fuelcellsconverthydrogendirectlytoelectricitythroughanelectrochemicalreaction,asshownonFigure3‐8.Hydrogen‐richfuelssuchasnaturalgasordigestergasmaybetransformedintohydrogeninaprocesscalledreformingpriortouseincertaintypesoffuelcells.Fuelcelltechnologieshaveanumberofoperationaladvantagesincludingrelativelyhighconversionefficiency(i.e.,greaterthan40percent),lowemissions,andquietoperation.Utilizationofheatrecoveryforcombinedheatandpoweroperationscanincreasetheoverallefficiencytomorethan80percent.However,fuelcellscurrentlysufferfromanumberofshortcomingsincludinghighcapitalcost,shortfuelcellstacklifeof3to5years(whichincreasesO&Mcosts),andcorrosionandbreakdownofcellcomponents,resultinginperformancedegradationovertime.Duetothelongstartuptimesforfuelcells,theyalsooperatemostlyasbaseloadgenerationandcannotbedispatchedtofollowload.

Figure 3‐8 Schematic of a Hydrogen‐Fueled Fuel Cell (Source: www.fuelcelltoday.com)

Thediscussioninthissectionfocusesonstationaryfuelcellsforelectricity‐onlyapplications.Thetechnologiesthatarereviewedinclude:

SOFC

MCFC

PAFC

Onlyahandfulofmanufacturerssupplythesetechnologies,sothekeysuppliersarediscussedinthissection.Itisimportanttonotethatnoneofthefuelcellsuppliersareprofitabletoday,andaswillbeshowninthecostdiscussion,fuelcellcostshavenotshownanydeclineinthepast10years.




Fuelcellsarecomposedoftwoelectrodesseparatedbyanelectrolyte.Thespecificreactionsthatoccurattheelectrodedependonthetypeofelectrolyteemployedwithinthefuelcell.However,ingeneral,ionsarecreatedateithertheanodeorcathode,thenpassthroughtheelectrolyte;simultaneously,electronsflowbetweentheelectrodesthroughanexternalcircuit,producinganelectricalcurrent.Catalystsareoftenemployedtospeedupthereactionsattheelectrodes.

Therearesixprominenttypesoffuelcells,typicallydistinguishedbythematerialthatservesastheelectrolytewithinthefuelcell:

SOFC

MCFC

PAFC

Protonexchangemembranefuelcells(PEMFC)

Directmethanolfuelcells(DMFC)

Alkalinefuelcells(AFC)

DistinguishingfeaturesforthesetechnologiesarelistedinTable3‐5.

Table 3‐5 Distinguishing Features of Fuel Cell Technologies

FUELCELLTECHNOLOGY ELECTROLYTE

ELECTRODECATALYST

MOBILEION

OPERATINGTEMPERATURE(°C)

POTENTIALFUELS

PEMFC Water‐based,acidicpolymermembrane

Platinum H+ <100 Hydrogen

DMFC Polymermembrane Platinum‐Ruthenium

H+ 60to130 Methanol

AFC Potassiumhydroxideinwater

Nickel OH‐ 70to100 Hydrogen

PAFC Phosphoricacidinsiliconcarbidestructure

Platinum H+ 180 Hydrogen

MCFC Liquidcarbonatesaltsuspendedinporousceramic

None CO32‐ 650 Hydrogen,naturalgas,biogas

SOFC Solidceramic(e.g.,zirconiumoxide/yttriumoxide)

None O2‐ 800to1,000 Hydrogen,naturalgas,biogas

Source:FuelCellToday(www.fuelcelltoday.com).



AsshowninTable3‐5,PEMFCandDMFCtechnologiesaretypicallyemployedforportableandtransportationapplications,whileMCFC,PAFC,andSOFCtechnologiesareemployedforbehind‐the‐meter,stationarypowergenerationapplications.WhiletherearesomecasesofPEMFCusedinstationaryapplications,thetechnologyrequiresverypurehydrogentominimizecontamination,whichwouldbechallengingforcustomer‐sitedprojects.Therefore,intheremainderofthisdiscussionregardingfuelcells,Black&VeatchhasfocusedonMCFC,PAFC,andSOFCtechnologies.NotethatMCFCandSOFCtechnologiesarealsomorepracticalforstationaryapplicationsbecausetheyareabletousenaturalgasdirectlyastheinputfuel,ratherthanhydrogen.

Table 3‐6 Typical Applications for Fuel Cells

PORTABLE

APPLICATIONSSTATIONARYAPPLICATIONS

TRANSPORTATIONAPPLICATIONS

TypicalPowerRange,kW 0.005to20 0.5to400 1to100

PotentialFuelCellTechnology PEMFCDMFC

MCFCPAFCSOFC

PEMFCDMFC

Examples Personalelectronics;militaryapplications

Powergeneration;uninterruptedpower

supplies(UPS)

Materialhandlingvehicles;automobiles,trucks,andbuses

Source:FuelCellToday,FuelCellIndustryReview2013.

Hydrogen‐richfuelssuchasnaturalgasordigestergasmaybetransformedintohydrogeninaprocesscalledreforming.Acommonmethodofreformingintroducessteamtothefuelstream;thechemicalformulaofthisreformingreactionfornaturalgascomposedprimarilyofmethane(CH4)isasfollows:

CH4+2H2O=>CO2+4H2

MCFCandSOFCtechnologiesoperateathightemperatures(650°Candhigher)and,therefore,areabletoreformgaseousfuelsinternally.Lowertemperaturefuelcells,suchasPAFC,requireanexternalreformer,whichaddstothesystemcost.Whenfuelgases(e.g.,naturalgasordigestergas)areused,certainconstituentsinthefuelgas(e.g.,moisture,hydrogensulfide(H2S),andsiloxanes)mustberemovedbeforethegasisusedinfuelcellstoavoiddamagetointernalcomponentsofthefuelcells.

Afterreforming,hydrogenissuppliedtothefuelcellstack.A“stack”isagroupoffuelcells(eachconsistingofananodeandacathodeseparatedbyanion‐conductingelectrolyte)thatareconnectedinserieswithinthefuelcellmodule.Thenumberoffuelcellsinthestackdeterminesthetotalvoltage,andthesurfaceareaofeachcelldeterminesthetotalcurrent.Multiplyingthevoltagebythecurrentyieldsthetotalelectricalpowergenerated.Theelectricityproducedisintheformofdc,whichisconvertedtoacbyaninverter.



Thisoverallprocess,includingthereformationofnaturalgasandgenerationofelectricity,isillustratedonFigure3‐9.

Figure 3‐9 Fuel Cell Flow Diagram

Operationaladvantagesoffuelcelltechnologiesincludehighefficiency(i.e.,greaterthan40percent),lowemissions,andquietoperation.Thehigherefficienciesareachievablebecausethefuelcellprocessdoesnotinvolvecombustionandis,therefore,notlimitedbyCarnotcycleefficiency.Inaddition,fuelcellscansustainhighefficiencyoperationsevenunderpartialloadconditions(generallyconstantabove60percentofmaximumload).Utilizationofheatrecoveryforcombinedheatandpower(CHP)operationscanincreasetheoverallefficiencytomorethan80percent.Asaresultofthesehighoperatingefficienciesandthelackofcombustion,fuelcellsemitfewergreenhousegasesperunitofpowergeneratedthanotherDGtechnologiessuchasinternalcombustionenginesandmicroturbines.Thecombustion‐freeprocessalsoproducesfewerbyproductsthantheotheralternatives,whichreducescriteriaairpollutantemissions(notablynitrogenoxides[NOx]andsulfuroxides[SOx]).

Disadvantagesoffuelcellsvarybytype.Highcapitalcost,longstartuptime,ashortfuelcellstacklifeof3to5years(whichincreasesO&Mcosts),lowpowerdensity,andperformancedegradationovertimeresultingfromcorrosionandbreakdownofcellcomponentsaretheprimarydisadvantagesoffuelcellsystemsandarethefocusofresearchanddevelopment.



Dependingonthetypeoffuelcellemployedandthenatureofthefuelgas,fuelcellsrequiremaintenance,includingthefollowing:

Replacingthecontaminantadsorbentsinthepretreatmentmoduletwotofourtimesannually.

Conductinganannualshutdownforreplacementoffiltersandforservicingothercomponentssuchasblowers.

Replacingfuelcellstacksevery3to10years,dependingonthetype.

Overhaulingthefuelprocessorafter5to10yearsofuse.

3.2.1.1 Solid Oxide

SOFCutilizeasolid,nonporousceramicmetaloxideelectrolyte,typicallyYttriaStabilizedZirconia(YSZ).SOFCoperateatrelativelyhightemperatures(500to1000°C)andcanachieveelectricalefficienciesintherangeof60percent.Whenusedonlargerscales,theexpelledheatcanbeutilizedtogenerateadditionalenergy.TheresultingCHPefficiencymaybebetween70and80percent.

Thehigheroperatingtemperaturesallowforinternalreformingofawiderangeoffuels,includingnaturalgasandotherhydrocarbonrenewableandfossilfuels,withouttheuseofareformingcatalyst.Theabsenceofacatalysteliminatestheneedforpreciousmetals(suchasplatinumgroupmetals)intheirconstruction.Conversely,thehigheroperatingtemperaturespresentengineeringanddesignchallenges.Todate,SOFCoperationallifeisusuallylimitedtoapproximately25,000hoursbecauseofdurabilityissuesassociatedwiththematerialtolerancestotemperature,particularlywhenusedinacyclicalapplication.Becauseoftheshorterlifespan,cellreplacementisnecessaryonamorefrequentbasisandO&McostsassociatedwithSOFCareestimatedtobehigh,approximately$1000/kW‐yr,basedonreportedextendedwarrantycosts.6

CurrentSOFCdevelopmenteffortsarefocusedonreducingoperatingtemperaturesthroughtheuseofadifferentorimprovedelectrolyteandelectrodes,whilemaintaininghighefficiency.Loweroperatingtemperaturesshouldprovideextendedoperationallifeandallowtheuseoflessexpensivematerialsinthestackconstructionandelectricalinterconnections.SuchachievementscouldeffectivelyreducebothcapitalandO&Mcosts.

SOFC Technology Supplier: Bloom Energy

BloomEnergy,basedinSunnyvale,California,providesmodularSOFCsystemsforelectricity‐onlyapplications.Thecompanywasfoundedin2001,growingfromtheworkofcompanyfounderDr.K.R.SridharfortheNationalAeronauticsandSpaceAdministration(NASA)Marsprogram.BloomacknowledgesthechallengesassociatedwithSOFCandclaimstohavesolvedthosechallengeswithbreakthroughsinmaterialscienceandsystemdesign.BloomEnergy’sproductsarenamed“EnergyServers”andareavailableatnameplatecapacitiesof210and262.5kW(modelsES‐5700andES‐5710,respectively).

UnderCalifornia’sSGIPprogram,Bloomsystemshaveaccountedforover100MWofcapacityinthestatesince2007,withindividualsystemsranginginsizefrom210kWto4.2MW.BloomhassupplieditssystemstoseveralFortune500companies,banks,anddatacenters.InJuly2014

6 GreenTech Media, “Stat of the Day: Fuel Cell Costs From Bloom and UTC” May 13, 2013. Available online at: http://www.greentechmedia.com/articles/read/Stat‐of‐the‐Day‐Fuel‐Cell‐Costs‐From‐Bloom‐and‐UTC.



BloompartneredwithExcelontodevelop21MWoffuelcellprojectstosupplypowertocustomersthroughouttheUnitedStates.

PerformancecharacteristicsoftheBloomEnergyServersareshowninTable3‐7.

Table 3‐7 Performance Characteristics of Bloom Energy Fuel Cell Systems

BLOOMENERGY:ES‐

5700BLOOMENERGY:ES‐

5710

UnitRatings

GrossPowerOutput,kW 210 262.5

OutputVoltage,V 480 480

OperatingParameters

SystemEfficiency(1)

HeatRate(HHV),Btu/kWh 6,925‐7,990 6,925‐7,990

ElectricalEfficiency(HHVnetAC),% 47‐54 47‐54

EmissionRates

CarbonDioxide,lb/MWh 735‐849 735‐849

NitrogenOxides,lb/MWh <0.01 <0.01

SulfurOxides,lb/MWh Negligible Negligible

VolatileOrganicCompounds(VOCs) <0.02 <0.02

CarbonMonoxide,lb/MWh <0.10 <0.10

ParticulateMatter(PM10),lb/MWh NA NA

Source:BloomEnergyNotes:

1. Heatrateandelectricalefficiencyareestimatedoverprojectlife.

3.2.1.2 Molten Carbonate

MCFCoperateattemperaturesnear650°C,providingbalancebetweentheelectrolyteconductivityandatemperaturerangesuitableforlowercostmetals.TheelectrolyteinanMCFCisamoltencarbonatesaltmixture,suspendedinaporousceramic.Thehigheroperatingtemperaturesallowforinternalreformingofarangeoffuels,includingnaturalgasandcoalsyngas.MCFCachieveelectricalefficienciesintherangeof45to50percent.Often,MCFCsaredeployedinCHPapplications,whereevenfurtherenergyrecoveryfromthesystemisaccomplished,achievingupwardsof85percentoverallenergyefficiency.ModerncommercialMCFCstackshavelifespansestimatedaround40,000hours,withO&Mcostsofapproximately$300/kW‐yr.



TheuseofnonpreciousmetalsandtheabilitytointernallyreformthefuelbothreducethecostofMCFC.WhileMCFCruncoolerthanSOFC,thehighoperatingtemperaturesstillleadtosomedurabilitychallengesandreducedoperatinglifespan.InthecaseoftheMCFC,thecorrosivepropertyoftheelectrolytehasbeenseentofurtherdecreasecelllife.Currentresearchanddevelopment(R&D)effortsinthefieldofMCFCarefocusedonincreasedcellandstacklifethroughelectrolyteadvancesandtheuseofmorerobustelectrodematerials.

MCFC Technology Supplier: FuelCell Energy

FuelCellEnergy,originallyfoundedin1969asEnergyResearchCorporation,hasbeenproducingMCFCsincethe1980s,withthefirstcommercialplantinstalledin2003utilizingits250kWstack.Thecompany’sproductionfacilityislocatedinTorrington,Connecticut,and,asof2012,itproduces56MWofMCFCannually.In2013,thecompanyinstalleda59MWfacilityinSouthKorea,currentlythelargestfuelcellplantintheworld.Accordingtothecompany’swebsite,FuelCellEnergyhas“morethan300MWofpowergenerationcapacityinstalledorinbacklog,”andthecompany’spowergenerationfacilitieshavegeneratedmorethan2.5billionkilowatt‐hoursofelectricity.

FuelCellEnergyprovidesthreeproductsinitsDirectFuelCell(DFC)line:the2.8MWDFC3000,the1.4MWDFC1500,andthe300kWDFC300.Thecompanyalsoprovidesits“Multi‐MWDFC‐ERG”(DirectFuelCellEnergyRecoveryGeneration)system,whichcouplesagasexpansionturbineutilizingthenaturalgaspipelinepressuretodrivetheturbinepriortosupplyingthefuelcells.Inthisconfiguration,thesystemincreasesitselectricalefficiencyfrom43percent(HHV,DFC3000andDFC1500)to55percentorhigher.

PerformancecharacteristicsofFuelCellEnergysystemsarelistedinTable3‐8.

3.2.1.3 Phosphoric Acid (PAFC)

PAFCisalong‐establishedfuelcelltechnologywithmanyyearsofdevelopmentandoperationalhistory.Thistypeoffuelcellutilizesaliquidphosphoricacidelectrolyteandcarbonpaperanodeswithaplatinum‐basedcatalyst.PAFChaveanelectricalefficiencyof40to50percent,thoughtheyaretypicallyutilizedinCHPapplications,accomplishingacombinedelectricalandthermalefficiencyashighas80to90percent.Duetorelativelylowoperatingtemperatures,around200°C,cellcorrosionanddegradationislimited,andPAFChavedemonstratedlongoperatinglifespansashighas80,000hours.However,theuseofexpensivecatalystmaterialandstackdesignresultsinarelativelyhighcostforthistechnology.

CurrentPAFCdevelopmenteffortsarefocusedonincreasedcatalystperformanceandlowercostmaterials.Bothofthesegoalswouldleadtolowercostsona$/kWbasisforPAFCsystems.Currently,commercialPAFCsystemsoperateonlifespansaround60,000hours.DuetothelongerstacklifecomparedtoMCFCandSOFC,O&McostsforcommercialPAFCsystemsareestimatedtobeapproximately$150/kW‐yr.

PAFC Technology Supplier: Doosan Fuel Cell America, Inc.

DoosanFuelCell,basedinSouthWindsor,Connecticut,isawell‐establishedcommercialproviderofPAFCsystems.DoosanacquiredClearEdgePower,afteritfiledforbankruptcy,anditsPureCellfuelcellinJuly2014.Priortothat,ClearEdgehadpurchasedUTCPowerin2013;UTCwasoriginallyfoundedin1958andprovidedfuelcellstoearlyNASAmissions.



Table 3‐8 Performance Characteristics of FuelCell Energy Fuel Cell Systems

FUELCELLENERGY:

DFC3000FUELCELLENERGY:

DFC1500

UnitRatings

GrossPowerOutput,kW 300 1,400

OutputVoltage,V 480 480

OperatingParameters

FuelandWaterConsumption/Discharge

NaturalGasConsumption,scfm 39 181

NaturalGasConsumption(1),MMBtu/h(HHV) 2.39 11.1

WaterConsumption(average),gpm 0.9 4.5

WaterDischarge(average),gpm 0.45 2.25

SystemEfficiency(2)

HeatRate(HHV),Btu/kWh 7,950 7,950

ElectricalEfficiency,% 43 43

EmissionRates

CarbonDioxide(electricityonly),lb/MWh 980 980

NitrogenOxides,lb/MWh 0.01 0.01

SulfurOxides,lb/MWh 0.001 0.0001

ParticulateMatter(PM10),lb/MWh 0.00002 0.00002

Source:FuelCellEnergyNotes:

1. AssumesHHVofnaturalgasof1,023Britishthermalunitperstandardcubicfoot(Btu/scf).2. Systemefficiencyassumeselectricity‐onlyoperation(i.e.,nowasteheatrecoveryorCHP

operation).scmf‐standardcubicfeetperminuteMMBtu/h‐millionBritishthermalunitsperhourgpm‐gallonsperminute



ThePureCellModel400isa400kWPAFCsystemconsistingofafuelreformer,thePAFCstack,andapowerconditionertosupplyACpower.Processheatisalsoavailableand,whencombinedwithelectricitygeneration,thePureCellachievesanoverallefficiencyof90percent.ThePureCellismarketedtowardandutilizedprimarilyinCHPapplicationstomaximizethesystem’stotalenergyproduct.DoosanstatesthatthePureCellproductlinehasover11millionfleetoperatinghours,withtheModel400(introducedin2012)recentlysurpassing1millionfleetoperatinghours.

PerformancecharacteristicsofthePureCellareshowninTable3‐9.

Table 3‐9 Performance Characteristics of Doosan PureCell Model 400

PURECELLMODEL400

UnitRatings

GrossPowerOutput,kW 400

OutputVoltage,V 480

OperatingParameters(1)


NaturalGasConsumption,scfm 58.6

NaturalGasConsumption,MMBtu/h(HHV) 3.6

WaterConsumption(average),gpm None

WaterDischarge(average),gpm None

SystemEfficiency(2,3)

HeatRate(HHV),Btu/kWh 9,000

ElectricalEfficiency,% 42

EmissionRates(4)

CarbonDioxide(electricityonly),lb/MWh 1,049

NitrogenOxides,lb/MWh 0.01

SulfurOxides,lb/MWh Negligible

ParticulateMatter(PM10),lb/MWh Negligible

Source:DoosanFuelCellNotes:1. Averageperformanceduringfirstyearofoperation.2. AssumesHHVofnaturalgasof1,025Btu/scf.3. Systemefficiencyassumeselectricity‐onlyoperation(i.e.,nowasteheatrecovery

orCHPoperation).4. Performanceandemissionsbasedon400kWoperation.



3.2.2 Fuel Cell Costs

Uponreviewingvarioussourcesofdataforfuelcellcosts,Black&VeatchdeterminedthatthebestsourceofcurrentfuelcellcostscomefromtheSelf‐GenerationIncentiveProgram(SGIP)offeredbythestateofCalifornia,whichhasfundedasignificantportionofthefuelcellinstallationsintheUnitedStates.

Figure3‐10illustrateshistoricalSGIPdataonfuelcellcostscompiledbytheNREL.7Thecostdatahavebeennormalizedforallyearsto2010dollars.Thisfigureshowsthattheinstalledcostoffuelcellsincreased(in2010dollars)overtheperiodfrom2003to2013,whichwouldseemtoindicatethateconomiesofscalehavenotyetbeenachievedbyanyofthefuelcelltechnologiesdescribedpreviously.Thistrendappearedinallsizecategories(i.e.,lessthan500kW,500to1,000kW,andgreaterthan1,000kW).

Figure 3‐10 Stationary Fuel Cell Installed Cost (with and without incentives) – 2003 to 2013 (Source: NREL)

7 Wilpe, et al. “Evaluation of Stationary Fuel Cell Deployments, Costs and Fuels,” 2013 Fuel Cell Seminar and Energy Exposition, Columbus, Ohio, October 23, 2013.



3.2.2.1 Current Costs

TheCaliforniaPublicUtilitiesCommission(CPUC)publisheseligibleprojectscostsinformationbyproject.8Eligiblecostsincludeavarietyofprojectcosts:engineeringcosts,permittingcosts,costofequipmentandinstallation,andinterconnectioncosts.

WithintheSGIPdatabase,thereare143fuelcellprojectsthatappliedforSGIPfundingin2012,2013,and2014.9Thevastmajorityofthese2012to2014projects(i.e.,130projects)areelectricity‐onlyprojectsemployingfuelcellssuppliedbyBloom.TheremainderoftheseprojectsareCHPprojectsemployingfuelcellssuppliedbyDoosan(11projectsundertheClearEdgeandUTCbrandnames)orFuelCellEnergy(2projects).Capitalcostsfortheseprojects,basedonthetotaleligiblecostslistedintheSGIPdatabase,aresummarizedinTable3‐10.

Table 3‐10 Fuel Cell Projects Applying for SGIP Funding in 2012 to 2014

TECHNOLOGY SUPPLIER APPLICATIONNUMBEROFPROJECTS(1)

TOTALINSTALLEDCAPACITY(MW)

AVERAGEPROJECTSIZE(KW)

AVERAGEPROJECTCOST(2)($/KW)

SOFC Bloom Electricity‐only

130 52 400 12,000

PAFC(small‐scale)(3)

Doosan(4) CHP 6 0.18 30 17,400

PAFC(large‐scale)(3)

Doosan(4) CHP 5 4.0 800 9,200

MCFC FuelCellEnergy

CHP 2 2.8 1,400 6,200

Source:CPUC,SGIPQuarterlyProjectsReport(http://www.cpuc.ca.gov/PUC/energy/DistGen/sgip/).Notes:1. NumberofprojectsidentifiesprojectsthathaveappliedforSGIPfundingin2012,2013,and2014(excluding

projectswithstatusof“canceled”or“suspended.”)2. AverageprojectcostisbasedontotaleligiblecostslistedinSGIPdatabase.3. Becauseofsignificantvariationsinscales,PAFCprojectsaresplitintotwocategories:small‐scaleprojectsranging

insizefrom15to80kWandlarge‐scaleprojectsranginginsizefrom400to1,200kW.4. DoosanincludesprojectssuppliedbyUTCandClearEdge.

8 California Public Utility Commission, Self‐Generation Incentive Program, http://www.cpuc.ca.gov/PUC/energy/DistGen/sgip/. 9 This total excludes projects that have either been canceled or are currently suspended.



ForBloom’selectricity‐onlySOFCprojects,ratedcapacitiesoftheprojectsrangedfrom210kWto1,050kW,withmostprojectsreportingcostsbetween$11,000/kWand$13,000/kW.ProjectcostsforPAFCsystemsweresplitintotwocategories:smallerscale(i.e.,lessthan100kW)andlargerscale(i.e.,greaterthan400kW).TheseprojectsaredefinedasCHPprojectswithintheSGIPdatabase.Totaleligiblecostsforthesmallerscalecategoryaverage$17,400/kW,whiletotaleligiblecostsforthelargerscalecategoryaverage$9,200.

ProjectcostsforMCFCsystemsarebasedontwoprojectsidentifiedasCHPprojects.Theeligiblecostsforthesetwoprojects(eachratedat1,400kW)werereportedas$5,700/kWand$6,700/kW,respectively.

BasedontheinformationsummarizedinTable3‐10,thecapitalcostofSOFCsystemsaregreaterthanthoseofPAFCandMCFC.ThisistrueeventhoughtheSOFCsystemsprovideonlyelectricity,whilePAFCandMCFCprojectslistedintheSGIPdatabasehaveCHPapplications.

WhiletheSGIPdatarepresentinstalledsystemcosts,Black&Veatchconsidersthesevaluestobesomewhatinflatedinordertomaximizeinvestmenttaxcredit(ITC)payment.FuelcellsareeligibleforanITCpaymentof30percentofsystemcosts,upto$3,000/kW,effectivelyallowingthefull30percentcreditforsystemcostsupto$10,000/kW.Forexample,theSGIPdataforSOFCprojectsshowsystemcostsrangingfromapproximately$11,000/kWto$13,000/kW,whileBloom’spublishedsystemquotesarearound$8,000/kW10.Balance‐of‐systemcostsareacknowledgedtoaccountforsomeofthatgap.Furthercomplicatingtheestimationofactualfuelcellsystemcostsarestatementsfrommajorfuelcellsuppliers,includingBloomandFuelCellEnergy,implyingnegativeprofitabilitytodate.Thelackofcosttransparencyaddssignificantuncertaintytocurrentandforecastedfuelcellcostestimates.

3.2.2.2 Forecasted Costs

CurrentcapitalcostsgreatlyexceedtargetsforfuelcellsidentifiedbytheDOE,whichset2020targetsat$1,500/kWforoperationonnaturalgas.11

Severaltechnicalgapshavebeenidentifiedasareasforsignificantcostreductions,andrecenthistoricalcosttrendsindicatethatitwillrequireadramaticnear‐termreductionincostforfuelcellsupplierstoachieveDOEcosttargets.Althoughnotcommerciallyavailable,RedoxPower,aSOFCmanufacturerwhoiscurrentlyworkingtocommercializeitstechnologywithMicrosoftunderaDOEgrant,claimstohaveachievedabreakthroughdesign,loweringcoststoabout10percentofcurrentcommercialSOFCcosts12,13.SeveralothermanufacturersincludingToyota,Mitsubishi,andHondaarecurrentlydevelopingtheirownSOFCtechnologies.ThismarketmomentummayreducesystemcostsforSOFCand,inturn,drivedowncostsforMCFCandPAFC.Whilefuelcellcostforecastsareuncertain,andevencurrentcostsareconsideredtobevague(asdiscussedinSubsection3.2.2.1),Black&VeatchhasconcludedthatfuelcellsystemcostsreportedbySGIParesomewhatinflatedand,therefore,hasassumedforanalysispurposesthat2016costsareaboutone‐thirdlowerthanSGIPreports.Totestwhetheradramaticdropincostswouldbefinanciallyviable,Black&Veatchassumedthatthemarketgoalof$1500/kWwouldbemetforallfuelcell

10 http://www.seattle.gov/light/news/issues/irp/docs/dbg_538_app_i_5.pdf. 11 U.S. DOE, Fuel Cell Technologies Office Multi‐Year Research, Development, and Demonstration Plan (2012). 12 http://www.technologyreview.com/news/518516/an‐inexpensive‐fuel‐cell‐generator/. 13 http://www.dailytech.com/Microsofts+New+Fuel+Cell+Partner+is+Ready+to+Blow+Away+ the+Bloom+Box/article36118.htm.



technologiesby2035.Thiscostforecastisnotnecessarilysupportedbytherecenthistoricalmarkettrends;however,withoutasignificantcostreduction,thesetechnologieswillnotbefinanciallyfeasibleinDGapplicationssuchasthoseconsideredinthisassessment.

3.3 MICROTURBINES Microturbinesaresmallcombustionturbinesthatoperateatveryhighspeeds(i.e.,morethan40,000revolutionsperminute[rpm]andupto100,000rpm).Microturbines,asshownonFigure3‐11,aretypicallyratedatlessthan250kW,butmultipleunitscanbeinstalledinparallelforhighercapacity.Theyareavailableasmodularpackagedunitsthatincludethecombustor,theturbine,thegenerator,andthecoolingandheatrecoveryequipment.Becauseofthesmallsystemfootprints,microturbineunitsareattractiveforsmall‐tomedium‐sizedapplications.


Figure 3‐11 Cut‐Away of Microturbine (left) and Typical Microturbine Installation (right) with Heat Recovery Module

Withinamicroturbine,thefuelgasiscompressedandmixedwithairinthecombustor;combustionofthefuel/airmixturegeneratesheatthatcausesthegasestoexpand.Theexpandinggasesdrivetheturbine,whichinturndrivesageneratorproducingelectricity.Heatfromtheturbineexhaustisrecoveredinarecuperatorandisusedtopreheatincomingcombustionair.Thishelpsimprovetheoveralloperatingefficiencyoftheunit.



Comparedtoreciprocatingenginesandengine‐drivenequipment,microturbineshavethefollowingoperatingcharacteristics:

Lowerefficiencies.

Loweremissions.

Greaterinletgaspressurerequirements(rangingfrom75to100poundspersquareinchgauge[psig]).

Greaterfuelgastreatmentrequirements(e.g.,H2Scontentmustbereducedtolessthan5000partspermillionvolumetric[ppmv]).

Thethermalefficiencyofmicroturbineunitsisintherangeof25to30percent(onalowerheatvalue[LHV]basis),dependingonthemanufacturer,ambientconditions,andtheneedforfuelcompression.Similartocombustionturbines,efficienciesarereducedtosomeextentwhenoperatingathigherambienttemperatures(asthemassflowofcombustionisreducedathigherambienttemperatures).

Microturbinesarebestoperatedcontinuouslyatfullloadasfrequentstart/stopcyclesincreasethefrequencyofperiodicmaintenanceandreduceavailability.Thesemachinescanoperateatpartialloads,althoughpart‐loadoperationnegativelyaffectsefficiency.Forexample,operationat50percentloadwouldresultinathermalefficiencyreductionto25percent(relativeto30percentefficiencyatfullload).

Capstone C65 System

Atpresent,therearetwoprimaryvendorsformicroturbinesystems:CapstoneTurbineCorporationandFlexEnergy.Forthepurposesofthischaracterization,Black&VeatchwillprovideinformationonCapstone’sC65system,whichhasaratedoutputof65kW.PerformanceofthismachineissummarizedinTable3‐11.

RegardingO&Mcosts,Capstoneoffersservicepackagesatvariouslevelsofservice(uptoandincludingcompletepartsandlaborforallmaintenanceactivities).Lumpsumfeesforthisservicearepaidonanannualbasis.TheannualfeeforthecompleteO&Mservicepackageisequivalenttoapproximately$170/kW‐yr.



Table 3‐11 Performance Characteristics of Capstone C65 Microturbine

CAPSTONEC65MICROTURBINE

UnitRatings

GrossPowerOutput,kW 65

OutputVoltage,V 480

OperatingParameters


NaturalGasConsumption,scfm 14.2

NaturalGasConsumption,MMBtu/h(HHV) 0.87

WaterConsumption(average),gpm None

WaterDischarge(average),gpm None

SystemEfficiency(1)(2)

HeatRate(HHV),Btu/kWh 13,400

ElectricalEfficiency,% 25

EmissionRates

CarbonDioxide(electricityonly),lb/MWh 1,375

NitrogenOxides,lb/MWh 0.05

SulfurOxides,lb/MWh Negligible

ParticulateMatter(PM10),lb/MWh Negligible

Source:CapstoneTurbineCorporationNotes:1. AssumesHHVofnaturalgasof1,025Btu/scf.2. Systemefficiencyassumeselectricity‐onlyoperation(i.e.,nowasteheatrecovery

orCHPoperation).



3.3.2 Microturbine Costs

Intheperiodfrom2011to2014,only8microturbineprojectswerefundedthroughSGIP.TheseprojectsaresummarizedinTable3‐12.

Table 3‐12 Microturbine Projects Applying for SGIP Funding in 2011 to 2014

TECHNOLOGY SUPPLIERYEAROF

APPLICATION

RATEDCAPACITY(KW)

ELIGIBLEPROJECTCOST(1)($)

ELIGIBLEPROJECTCOST(1)($/KW)

Microturbine FlexEnergy 2011 726 2,831,300 3,900

Microturbine Capstone 2012 65 504,200 7,750

Microturbine Capstone 2012 65 504,200 7,750

Microturbine Capstone 2012 585 2,510,100 4,290

Microturbine Capstone 2012 600 1,129,600 1,880

Microturbine FlexEnergy 2012 750 3,310,500 4,410

Microturbine Capstone 2012 1,000 4,541,300 4,540

Microturbine Capstone 2013 1,000 3,067,100 3,070

Source:CPUC,SGIPQuarterlyProjectsReport(http://www.cpuc.ca.gov/PUC/energy/DistGen/sgip/).Notes:1. EligibleprojectcostisbasedontotaleligiblecostslistedinSGIPdatabase.

FortheCapstoneinstallationsof65kW,costswerereportedtobe$7,750perkWin2012,whilelargersystems(greaterthan500kW)rangedfrom$3,000to$4,500perkW,withtheexceptionofthe600kWCapstonesystemwithareportedcostof$1,880perkW.

BasedonrecentpricequotationsobtainedbyBlack&Veatchformicroturbinesandancillaryequipment,equipmentcostsareapproximately$2,500perkWto$3,000perkW.Therefore,whenaddingprojectdevelopmentandinstallationcosts,thereportedcostsfromSGIPwouldbeconsistentwiththeserecentequipmentquotationsandberepresentativeofcurrentinstalledcosts.

3.3.2.1 Forecasted Costs

Becauseoftherelativelymaturestateofmicroturbinetechnology,Black&Veatchdoesnotforeseesignificantcostreductionsinmicroturbineprojectcostsoverthelongterm.Therefore,theseprojectcostsareanticipatedtobeflatoverthemodeledprojectperiodinrealdollars.


BLACK & VEATCH | Financial Assessment 4‐1

4.0 Financial Assessment Tomodelprojectfinancials,Black&VeatchmodeledeachofthetechnologiesforanumberofcommercialcustomertypesusingamodifiedscriptingofNREL’sSAMsoftware.Themodelincorporatestechnicalperformanceparameters,systemcapitalandO&Mcosts,projectfinancingandtaxes,incentives,andutilityratedata,togetherwithcustomerloaddata,toproduceasuiteofresultsincludingnetpresentvalue(NPV),paybackperiod,levelizedcostofenergy(LCOE),annualcashflow,andannualenergysavings.Black&Veatchmodeledscenariosfor2016and2035foralltechnologiesandcustomertypes.ForBESS,thesystemwastestedwithandwithoutsolarPV.Also,itwasimportanttousedifferentcustomertypestounderstandhowdifferentloadshapesmaybenefitthroughelectricitybillreductionsforbothdemandandenergycharges,undereachoftheirrespectiverateclasses.Foreachcustomertype,eachofthetechnologieswasalsosizedtomeeteitherthecustomerloadorminimumtechnologyunitsize.Forboththe2016and2035cases,Black&Veatchalsotestedtwoutilityratesescalatingtwoways:attheCPIof2percent,andatCPIplus1percent(CPI+1).Additionally,fuelcellsandmicroturbinesweretestedunderbaseandlowgaspricescenarios.

4.1 MODEL ASSUMPTIONS Black&VeatchdevelopedtechnicalandfinancialassumptionstobeinputintotheSAMmodelforeachscenario,manyofwhichwerederivedfromthetechnicalcharacteristicsdiscussedinSection3.0.Theseinputsaresummarizedinthefollowingsection.

4.1.1 Technical and Cost Assumptions

Forthisanalysis,Black&VeatchusedasinputthetechnicalparametersandcostforecastsdevelopedinSection3forthevarioustechnologies.

Table4‐1andTable4‐2summarizethetechnicalandcostinputstothefinancialassessment.ForBESS,Black&Veatchoptedtomodellithiumiontechnologyonly,asthetechnologyhasbetterround‐tripefficiencythanflowbatteriesandaremorepracticalatasmallscale.

Table 4‐1 Technical and Financial Assumptions ‐ BESS (2014$)

TECHNOLOGYSIZE(KWH)

2016 2035

CAPITALCOST

($/KWH)

FIXEDO&M

($/KW‐YR)

ROUND‐TRIP

EFFICIENCY(%)

CAPITALCOST

($/KWH)

FIXEDO&M

($/KW‐YR)

ROUND‐TRIP

EFFICIENCY(%)

BESS 10 1500 20 87 400 20 87

Forthe2035case,theimprovementsinfixedcostforfuelcellsandBESSwereassumedasdiscussedinSection3.0.InthecaseofSOFC,aheatrateimprovementontheorderof20percenthigherthanthatofcurrentcommercialsystemswasassumed.ThisassumptionisbasedonthegapbetweenexistingcommercialsystemsandthetechnicallyachievableefficiencyforSOFC.Othercommercialfuelcelltechnologies(MCFC,PAFC)andmicroturbinescurrentlyperformneartheirtechnicalpotential;thus,noheatrateimprovementisapplied.Similarly,noimprovementisassumedforBESSround‐tripefficiencyinthe2035case.



Table 4‐2 Technical and Financial Assumptions ‐ Fuel Cells and Microturbines (2014$)

TECHNOLOGYSIZE(KW)

2016 2035

CAPITALCOST($/KW)

FIXEDO&M($/KW‐YR)

HEATRATE(BTU/KWH)

CAPITALCOST($/KW)

FIXEDO&M($/KW‐YR)

HEATRATE(BTU/KWH)

SOFC 210 8000 1000 7000 1500 150 5600

MCFC 300 4000 300 8000 1500 150 8000

PAFC 400 6000 150 9000 1500 150 9000

Microturbine 65 4000 170 13400 4000 170 13400

Table4‐3showsthegross‐to‐netlossassumptionsappliedtofuelcells,microturbines,andBESS.Inthecaseoffuelcells,ratherthanapplyapercentageyear‐to‐yeardegradation,anoverallsystemde‐ratewasappliedtobetterrepresentthestackreplacementundertheassumedO&Mpracticesforcommercialsystems.Black&VeatchhasassumedthatfuelcelltechnologieswillimprovethroughadvancesidentifiedinSection3.2,hencethisde‐rateisreducedforthe2035scenarios.

Table 4‐3 System Loss Summary for Fuel Cells and Microturbines

LOSSCATEGORY LOSS(%)

NameplateLosses 99

Availability 98

De‐rateforStackDegradation–2016(FuelCellOnly) 90

De‐rateforStackDegradation–2035(FuelCellOnly) 95

Fuelcellsandmicroturbinesaremodeledasfueledbynaturalgas.Bothtechnologiesarecapableofrunningonbiogas,butsuchaprojectwouldrequireauniquelocation,forexampleafoodprocessingplant,landfill,orwastewatertreatmentfacility.Black&Veatchhasassumedforthepurposesofthisanalysisthattheevaluatedcommercialcustomertypeswouldlikelynothavetheabilitytoutilizebiogasforthisreason.SuchoperationwouldalsoaddtothecapitalandO&Mcostsand,insomecases,reducelifespanofsomesystemcomponents.ThenaturalgaspricesusedarebasedoncurrentpublishedcommercialratesfromNWNatural,thegasutilityservingPortland,andescalatedatthegrowthratecalculatedfrombaseandlowwholesalepriceforecastsprovidedbyPGE,14asshownonFigure4‐1andinTable4‐4.

14 NW Natural Summary of Monthly Sales Service Billing Rates: https://www.nwnatural.com/uploadedFiles/Oregon_Billing_Rate_Summaries.pdf.



Figure 4‐1 Retail Natural Gas Forecast, Base and Low Cases (2014$)

3.00

4.00

5.00

6.00

7.00

8.00

9.00

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

2052

2054

2014$/MMBtu

Retail‐Base

Retail‐Low



Table 4‐4 Natural Gas Wholesale and Retail Commercial Forecast (2014$)

2014$/MMBTU

PGEFORECASTEDWHOLESALEPRICES ESTIMATEDRETAILPRICES

BASE LOW BASE LOW

2016 3.86 3.86 6.68 6.68

2017 3.80 3.67 6.57 6.34

2018 3.82 3.47 6.60 6.00

2019 3.83 3.28 6.62 5.66

2020 3.84 3.03 6.64 5.24

2021 3.67 2.87 6.34 4.95

2022 3.68 2.95 6.35 5.10

2023 3.89 3.00 6.72 5.19

2024 3.78 2.97 6.53 5.14

2025 4.01 3.09 6.93 5.34

2026 4.77 3.56 8.24 6.16

2027 4.53 3.52 7.83 6.08

2028 4.38 3.49 7.56 6.03

2029 4.50 3.65 7.78 6.31

2030 4.77 3.82 8.25 6.60

2031 4.97 3.95 8.59 6.82

2032 4.97 3.95 8.59 6.82

2033 4.96 3.94 8.58 6.81

2034 4.96 3.94 8.57 6.81

2035 4.96 3.94 8.57 6.80



4.1.2 Financial and Incentive Assumptions

Thefollowingareincentivesthatwerereviewedfortheanalysisandmatchedtoeligibletechnologies.Eachincentivewasappliedtotheeligibletechnologiesforthevarious2016modelingscenarios:

FederalITC:Ataxcreditequalto30percentofeligibleprojectcostsforfuelcellsand10percentofeligiblecostsformicroturbines.

FederalModifiedAcceleratedCostRecoverySystem(MACRS):Fiveyearsforfuelcells,microturbines,andenergystorage.

OregonStateRenewableEnergySystemsPropertyTaxExemption:Ofthetechnologiesconsideredinthisanalysis,onlyfuelcellsareexplicitlyincluded,althoughithasbeenassumedthattheexemptionisavailabletomicroturbinesandenergystorage.

EnergyTrustofOregon(ETO):50percentgrantsforanumberofrenewableenergytechnologiesincludingfuelcells;however,eligibilityislimitedtothoseprojectsusingarenewablefuel.TheBlack&Veatchassessmentconsidersonlynaturalgasasafuel,sofuelcellsarenoteligible.

ETOSolarIncentive:SimilartotheassumptionsforBlack&Veatch’sSolarMarketStudy,itwasassumedthatthesolarportionofthesolarPVandBESSsystemwouldbeeligible.Table4‐5summarizestheincentivesappliedinthefinancialassessment.

OregonStateNetEnergyMetering(NEM):PGEcustomersarecreditedattheirutilityratescheduleforexcessgeneration,rollingoverfrommonth‐to‐month.Anyexcessgenerationremainingattheendoftheyearisnotcreditedtothecustomer.ThiseffectivelycapsaprojectunderNEMatthecustomer’stotalannualconsumption.Fuelcellsrunningonnaturalgasareeligible,butmicroturbinesandBESSarenot.Black&VeatchhasassumedasolarPVplusBESSsystemwouldbeeligiblefornetmetering.

Table 4‐5 Available Financial Incentives in 2016 Cases

TECHNOLOGYFEDERALITC

FEDERALMACRS

PROPERTYTAXEXEMPTION ETO NETMETERING

SOFC 30% Eligible Eligible NotEligible Eligible

MCFC 30% Eligible Eligible NotEligible Eligible

PAFC 30% Eligible Eligible NotEligible Eligible

Microturbine 10% Eligible Eligible NotEligible NotEligible

BESS NotEligible Eligible Eligible NotEligible NotEligible

BESS+SolarPV SolarPortionOnly

Eligible Eligible SolarPortionOnly

Eligible



Forthe2035cases,incentivesareassumednottobeavailable,exceptforthe5‐yearMACRS.

Theanalysisperiodforallprojectshasbeensetto20years.AsdiscussedinSection3.0,theestimatedprojectlifespansforsometechnologiesmaybesignificantlylessthan20years,particularlyinthecaseoffuelcells.However,O&Mcostdatahavebeenestimatedbasedonfull‐servicewarrantiesandiscorrespondinglyhighforthosetechnologieswithshortlifespanstoaccountforfrequentfuelcell,turbine,orothercomponentreplacement.Inthecaseofenergystorage,asdiscussedinSubsection3.1.1,fulldailycyclingmayresultinalifespanofapproximately10years.Black&Veatchhasassumedthatthebatterysystemwillbecyclingdailybutnotnecessarilyatfulldischarge,soshouldbeabletooperateforthe20yeartestperiod.

Allprojectsareassumedtobecustomer‐ownedwithnodebtfinancing.Table4‐6summarizesthefinancialmodelingassumptions,thoughschoolsweremodeledastax‐exemptentities.Itisimportanttonotethatthepaybackcalculationreduces“energysavings”fortax‐payingentitiesbytheirtaxratesbecausetheywouldhaveotherwisehavebeenabletoexpensetheirelectricbillasatax‐deductibleitem.Theimpactofthiscalculationbetweentax‐payingandtax‐exemptcustomersissignificantonpaybackcalculations,eventhoughtax‐payingcommercialcustomersdobenefitfromMACRSandareabletodeducttheassetasacapitalexpense.

Table 4‐6 Financial Modeling Assumptions

FINANCIALASSUMPTIONS

AnalysisPeriod(Years) 20

FederalIncomeTax(%) 35.0

StateIncomeTax(%) 7.6

4.1.3 Customer Load

Itwasimportanttousedifferentcustomertypestounderstandhowdifferentloadshapesmaybenefitthroughelectricitybillreductionsforbothdemandandenergycharges,undereachoftheirrespectiverateclasses.Customerloadprofiles(hourlyelectricitydemand)wereobtainedfromDOEdatacompiledforallTypicalMeteorologicalYear3(TMY3)locationsintheUnitedStates,usingtheDOEcommercialreferencebuildingmodel15.ThedatasetcorrespondingtothePortlandInternationalAirportTMY3locationwasusedforthisanalysis.CommercialcustomertypesarepresentedinTable4‐7togetherwithsummarystatistics.PGErateschedulesusedintheanalysisaresummarizedinTable4‐8.

15 US DOE Commercial and Residential Hourly Load Profiles, openEI.org : http://en.openei.org/datasets/dataset/commercial‐and‐residential‐hourly‐load‐profiles‐for‐all‐tmy3‐locations‐in‐the‐united‐states.



Table 4‐7 Commercial Customer Type Load Summary

COMMERCIALCUSTOMERTYPE

ENERGYUSE

(MWH)

AVERAGEDEMAND(KW)

PEAKDEMAND(KW)

MINIMUMDEMAND(KW)

LOADFACTOR(%)

ASSIGNEDPGERATESCHEDULE


301 34 64 15 54 83

Hospital 8770 1001 1387 632 72 85

LargeHotel 2331 266 421 124 63 85

LargeOffice 5698 650 1718 211 38 85

MediumOffice 682 78 270 19 29 85

Outpatient 1228 140 307 36 46 85

PrimarySchool(1) 810 92 273 40 34 85


186 21 37 9 58 83

SecondarySchool(1) 2488 284 908 87 31 85

SmallHotel 549 63 126 32 50 83

SmallOffice 61 7 19 2 37 32

Stand‐AloneRetail 290 33 90 4 37 83

StripMall 270 31 84 3 37 83

Supermarket 1614 184 357 76 52 85

Warehouse 238 27 85 6 32 83

(1)Primaryandsecondaryschoolsaretax‐exemptcustomertypesandaremodeledassuch.



Table 4‐8 PGE Commercial Rate Schedule Summary (2014 Rates)

SCHEDULE

PEAKDEMAND(KW)

OFF‐PEAKRATE

($/KWH)PEAKRATE($/KWH)

DEMANDCHARGE($/KW)

32 0to30 0.0827 0.0827 0

83 31to200 0.0728 0.0831 5.6753

85 201to4000 0.0639 0.0742 5.0573

89 >4000 0.0594 0.0697 3.8522

Resultsforthevarioustechnologiesarepresentedinthefollowingsections.

4.2 ENERGY STORAGE Fortheenergystorageanalysis,Black&Veatchtestedtwoconfigurations:BESSaloneandBESSwithPV.Black&VeatchdevelopedamodifiedscriptingofSAMtomodelBESSinbothconfigurations.Energystorageismodeledtoreducepeakdemandandassociateddemandcharges,aswellasshiftingloadbetweenon‐peakandoff‐peakhours.Figure4‐2illustrateshowBESScanoperatewithaPVsystemwheretheBESSshiftsloadduringthepeakhourstooff‐peakhours.Itshouldbenotedthatthisexampleusesa400kWhBESSforillustrativepurposes;theactualmodelrunsutilizedamuchsmallersystemsize,asdiscussedbelow.

Figure 4‐2 Illustrative Example of a Large Hotel Using 400 kWh BESS and PV

150

200

250

300

350

400

450

2‐Jul

3‐Jul

4‐Jul

5‐Jul

6‐Jul

kW

BuildingLoad

BuildingLoadWithPV

BuildingLoadWithPV+ES



Forfinancialmodelingpurposes,wemodeledonlylithiumionbatterytechnology,duetotheavailabilityofsmallersystemsizesandsignificantlybetterround‐tripefficienciesthanflowbatteries.

4.2.1 System Size

FortheBESSplusPVsystems,thePVsystemsweresizedusingNRELcommercialcustomerprofiledataandestimatesofaverageavailablerooftopspace.Table4‐9showsthePVsystemsizesusedintheBESSplusPVcases.

Table 4‐9 Solar PV System Size by Customer Type

COMMERCIALCUSTOMERTYPEPVSYSTEMSIZE

(KW)

FullServiceRestaurant 36

Hospital 262

LargeHotel 113

LargeOffice 249

MediumOffice 116

Outpatient 55

PrimarySchool 481

QuickServiceRestaurant 16

SecondarySchool 686

SmallHotel 70

SmallOffice 36

Stand‐AloneRetail 162

StripMall 146

Supermarket 293

Warehouse 338



Todeterminethebatteryenergystoragesystemsize,Black&Veatchranthemodelusingstepsizesof5kWhandevaluatedtheresultsintermsofsystemsize(kWh)versuspaybackyears.Inallcases,withandwithoutPV,itcanbeseenthatthepaybackcontinuestoincreasewithadditionalstoragecapacity.Figure4‐3showsthepaybackperiodsversusincreasingsystemsizeforeachcustomer.Basedonthisresult,thebatterysystemshavebeensizedtotheminimumavailablesystemsizeof10kWh,aslargersystemshavediminishingbenefitstoloadreduction.Black&Veatchnotesthattheresultsforsmallcustomerloads,suchaswarehouse,smalloffice,quickservicerestaurant,areerraticbeyond10kWh,asthesystemsizeisclosetotheiraverageloadandsoarenotshowninthegraphonFigure4‐3.

Figure 4‐3 BESS Payback Curves, 2035 CPI+1

4.2.2 Results

Figure4‐4andFigure4‐5showthepaybackinyearsforallcustomertypesforthe2016and2035energystorageandenergystoragewithPVfortheCPI+1case.Itshouldbenotedthatforsomeofthesystemsthatshowpaybacksof25years,thepaybackperiodsareactuallywellinexcessof25years,and,therefore,notfinanciallyviable.Ascanbeseen,particularlyinthe2016BESS‐onlycases,thelongcustomerpaybacksindicatepoorfinancialfeasibility.BecauseofthesmallmarginbetweentheTOUrates,thereislittleopportunitytotakeadvantageofarbitragefromloadshifting.Sincetheon‐peakratesareonlyaround15percenthigherthantheoff‐peakrates,afterfactoringintheround‐tripcharge/dischargeefficiencyofthebatterysystem,thereisverylittlepositive(andinsomecasesslightlynegative)financialadvantagetochargingduringoff‐peakperiodsanddischargingduringon‐peakperiods.Giventhiscondition,theprimaryadvantageofenergystorageis,therefore,inreducingthepeakdemandcharges.Inmostcases,thesechargesarerelativelylow,

0

5

10

15

20

25

30

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Payback(yrs)

BESSCapacity(kWh)


Hospital

LargeHotel

LargeOffice

MediumOffice

Outpatient

PrimarySchool

SecondarySchool

SmallHotel

StandAloneRetail

StripMall

Supermarket

10kWhSystem Size



furtherdisadvantagingtheenergystoragefinancials.Thisisalsotrueforthe2035BESS‐onlycases,althoughdecreasedcapitalcostsshowcustomerswithsomereasonablepaybacks.

Ingeneral,in2035,customersunderthelargecommercialcustomerrate(Schedule85)withhigherdemandchargesappeartobenefitmostfromaBESSsystemwithlowerpaybacks,around5years.CustomersunderSchedule83appeartoachievepaybacksofabout10years.Thesmalloffice,underSchedule32,doesnotbenefitfromBESSatallsincethereisnodemandchargeassociatedwiththattariff.

Figure 4‐4 BESS Only Payback by Customer Type

0 5 10 15 20 25


Hospital

LargeHotel

LargeOffice

MediumOffice

Outpatient

PrimarySchool

SecondarySchool


SmallHotel

SmallOffice

StandAloneRetail

StripMall

Supermarket

Warehouse

ES2035

ES2016

20‐YearSystem Life



Table4‐10summarizesthepaybackforBESSOnlyunderboththeCPIandCPI+1cases.PaybackperiodsforCPIcasesaregreatlyincreaseddependingonthecustomertype.

Table 4‐10 BESS Only System Payback Summary by Customer Type

SYSTEMPAYBACK‐CPI SYSTEMPAYBACK‐CPI+1

ES2016 ES2035 ES2016 ES2035

FullServiceRestaurant 47.0 13.8 37.7 10.7

Hospital 28.6 8.2 24.8 6.5

LargeHotel 17.7 5.1 16.1 4.3

LargeOffice 17.9 5.2 16.2 4.4

MediumOffice 34.6 10.0 29.6 8.0

Outpatient 47.6 13.9 38.0 10.8

PrimarySchool 42.1 12.3 35.1 9.8

SecondarySchool 24.4 6.9 21.8 5.6

QuickServiceRestaurant >80 28.8 62.2 20.9

SmallHotel 30.1 8.7 26.0 6.8

SmallOffice >80 >80 59.2 19.3

StandAloneRetail 53.4 15.7 42.5 12.4

StripMall 49.5 14.5 39.9 11.4

Supermarket 26.2 7.5 23.0 6.0

Warehouse >80 32.0 67.2 24.5

WhencombinedwithaPVsystem,thetotalsystempaybackvariesbyeachcustomertype’suniquedemandprofileandPVsystemsize.However,thesepaybackcalculationsareworsethanPValone,soitdoesnotappeartobefinanciallypracticaltoinstallBESSwhenPVcurrentlyenjoysthebenefitsofnetmetering.



Figure 4‐5 BESS plus PV System Payback by Customer Type

0 5 10 15


Hospital

LargeHotel

LargeOffice

MediumOffice

Outpatient

PrimarySchool

SecondarySchool


SmallHotel

SmallOffice

StandAloneRetail

StripMall

Supermarket

Warehouse

PV+ES2035

PV+ES2016



4.3 FUEL CELLS FuelcellsweremodeledforeachtechnologydiscussedinSection3.2:SOFC,MCFC,andPAFC.Currently,highcapitalandO&Mcostslimitcommercialfuelcellusetoareaswithstrongfinancialincentives,primarilyunderCalifornia’sSGIPprogram.Furthermore,manycurrentapplicationstakeadvantageoftheCHPcapabilitiesofsomefuelcellsystems;whereas,Black&Veatchfocusedstrictlyonelectric‐onlyapplications,whichpresentsomewhatlimitedopportunity.Black&Veatchhasassumed,asshowninTable4‐2,thatfuelcellcostswilldecreasedramaticallyby2035,andinthecaseofSOFC,mayachievehigherefficienciesinthe2035cases.Thereishighuncertaintyassociatedwiththeseassumptions,buttheyareconsideredtobereasonableassumptionstotestforlong‐termfeasibility.

4.3.1 System Sizing

Fuelcellsaremodeledtorunasbaseloadpower(i.e.,fullnameplatecapacity)withminimalloadfollowingcapabilities.Asfuelcellsareeligiblefornetmetering,systemshavebeensizedforeachcustomertypeaccordingtotheaverageelectricitydemand,showninTable4‐7.SincecurrentcommercialSOFC,MCFC,andPAFCsystemsareavailablemodularlyatcapacitiesof210kW,400kW,and300kW,respectively,foreachtechnologytype(asidentifiedinSection3.0),customertypeswithaveragedemandthatisbelowthecapacityofonesingleunithavebeenexcluded,assumingitwouldnotbefinanciallyviabletooperateanoversizedsystemundernetmeteringrules.Table4‐11showstheremainingcustomertypesofsufficientsizetobeincludedinthefinancialassessmentforfuelcells,alongwiththeultimatesystemsizemodeledforeachfuelcelltechnology.

Table 4‐11 Fuel Cell Customer Type and System Size

CUSTOMERTYPE

SYSTEMSIZE(KW)

SOFC(210KWSYSTEM)

PAFC(400KWSYSTEM)

MCFC(300KWSYSTEM)

Hospital 840 800 900

LargeHotel 210 NA 300

LargeOffice 630 400 600

SecondarySchool 210 NA 300

Supermarket 210 NA 300



4.3.2 Results

Inboththe2016and2035case,thecombinationofcapital,O&M,andnaturalgasfuelcostsprohibitcostsavingsagainsttheutilityelectricityrates,evenwithavailableincentivesanda1percentrateescalation(theCPI+1case).Table4‐12showsthesystempaybackresultsfortheCPI+1case.

Table 4‐12 Fuel Cell System Payback by Customer Type, CPI + 1 Case, Base Fuel Cost

2016 2035

SOFC PAFC MCFC SOFC PAFC MCFC

Hospital >80 >80 >80 27.3 >80 >80

LargeHotel >80 >80 >80 27.3 >80 >80

LargeOffice >80 >80 >80 27.3 >80 >80

SecondarySchool >80 >80 >80 12.1 >80 27.3

SuperMarket >80 >80 >80 27.5 >80 >80

Forthe2035scenario,incentivesareassumedtobeunavailable,naturalgasfuelcostsareforecasttoincreasefasterthantheCPIrate,andevenwiththeassumeddramaticreductionincapitalandO&Mcosts,thevariousfuelcelltechnologiesstilldonotshowopportunityforpaybackwithintheprojectlife.Theonlycustomerwithapaybackbelowthe20yearprojectlifeisthesecondaryschoolSOFCcase,whosehighloadandtax‐exemptstatusprovideenoughbenefittoreduceitspaybackrelativetotheothercustomertypes.

Fuelcostsareclearlyasensitiveinputwithsignificantimpactontheresults,andaremoreuncertaininthe2035case.Black&Veatchalsomodeledallscenariosundera“low”fuelcostforecast.Usingthelowerfuelcosts,paybacksarereducedsomewhat;however,onlythesecondaryschool(atpaybacksof7.8yearsand17.5yearsforSOFCandMCFC,respectively)achievespaybacksbelowthe20yearprojectlife.

Table4‐13summarizestheLCOEforthedifferentfuelcellscenarios.Ingeneral,thereallevelizedcostofenergyishigherthanretailenergyratesforlargercommercialcustomers.

Table 4‐13 Fuel Cell Real Levelized Cost of Energy Estimates (2014$/kWh)

YEARNATURAL

GAS

SOFC MCFC PAFC

TAX‐EXEMPT

TAX‐PAYING

TAX‐EXEMPT

TAX‐PAYING

TAX‐EXEMPT

TAX‐PAYING

2016 Base $0.27 $0.24 $0.14 $0.13 $0.15 $0.13

Low $0.26 $0.23 $0.13 $0.12 $0.14 $0.12

2035 Base $0.08 $0.08 $0.10 $0.10 $0.11 $0.11

Low $0.07 $0.07 $0.09 $0.09 $0.09 $0.10



WhileBlack&Veatchhasnotpresentedresultsforthecustomertypesexcludedforbeingbelowtheminimumsystemsize,thosecustomersweremodeledandpaybackperiodsforallscenariossignificantlyexceededtheestimatedprojectlife.

Itshouldbenotedthatallfuelcellshavebeenmodeledforelectricitygenerationonly.Somefuelcellscenariosmayprovetobecost‐effectiveifusedasaCHPapplication,butthatwasnotevaluatedinthisstudy.

4.4 MICROTURBINES MicroturbinesaremodeledbasedontheCapstoneC65,asdiscussedinSection3.3.Ingeneral,microturbinesaretypicallydeployedinnicheapplications,andoftenundersignificantincentivessuchasCalifornia’sSGIPprogram,astheirlowerefficiencyandrelativelyhighcosttypicallyprecludefinancialfeasibility.Wehaveassumed,asshowninTable4‐2,thatmicroturbinecostandperformancewillnotimprovefrom2016to2035asitisawell‐establishedtechnology.

4.4.1 System Sizing

Microturbinesarealsomodeledtorunatbaseloadpower,becauseoftheadditionalwearandtearincurredforcyclingandreducedheatratesiftheyarerunatpartload.SincemicroturbinesarenoteligibletobenetmeteredinOregon,anditwasassumedthatitwouldnotbefinanciallyviabletoselltheenergybacktoPGEatavoidedcost,systemshavebeensizedforeachcustomertypebasedontheminimumdemand,asshowninTable4‐7.UsingtheCapstoneC65astheminimummicroturbinesystemsizeof65kW,customertypeswithminimumdemandthatisbelowthecapacityofonesinglemicroturbinewereexcluded.Table4‐14Table4‐14showsthecustomertypesofsufficientsizetobeincludedinthefinancialassessmentformicroturbines,togetherwiththeultimatesystemsize.

Table 4‐14 Microturbine Customer Type and System Size

CUSTOMERTYPESYSTEMSIZE

(KW)

Hospital 585

LargeHotel 65

LargeOffice 195

SecondarySchool 65

Supermarket 65



4.4.2 Results

Inallcases,forallcustomertypes(includingthosebelowtheminimumloadrequirement),andforboththebaseandlowfuelcostforecast,themodelresultsshowthathighcapitalandO&Mcosts,retailfuelprices,coupledwitharelativelylowefficiency,andlowerincentiveeligibilitymakethistechnologynotfeasibleforcommercialelectricity‐onlyapplicationsunderPGE’srateschedules.MicroturbinesmaybemorefinanciallyviableoperatinginCHPmodebutwillneedasuitablethermalloadtoaccommodatethemicroturbine.

Table4‐15summarizestheLCOEforthemicroturbinescenarios.

Table 4‐15 Microturbine Levelized Cost of Energy (2014$/kWh)

YEAR

MICROTURBINE

NATURALGAS TAX‐EXEMPT TAX‐PAYING

2016 Base 0.16 0.16

Low 0.14 0.14

2035 Base 0.17 0.18

Low 0.15 0.15


BLACK & VEATCH | Achievable Potential 5‐1

5.0 Achievable Potential DevelopingestimatesofachievablepotentialfortheDGtechnologiesexaminedinthisstudyischallenginginthatthesetechnologiesundercurrentfinancialconditionsarenotfinanciallyviableinthenear‐term,andlong‐termcostoutlookisquiteuncertainformanyofthesetechnologies.Anotheraddedcomplexityisthatappropriatelysizingofthesystems,matchedtoacustomer’sloadshape,reallydrivesthefinancials.Inorderforthetechnologiestobefinanciallyviable,technologycostswouldneedtodropsubstantially,additionalpoliciesandincentiveswouldneedtobeputinplace,andchangesinratestructureareneededtopromoteadoption.Absentthoseconditions,Black&Veatchforecastsminimaladoptionofthesetechnologiesoverthestudyperiod.Ifanyadoptionoccurs,itwouldbetowardthelatterdecade(2026to2035)oftheanalysisperiodwhenbetterclarityoncostsisavailable.TheonemajorcaveatinthisstudyisthatBlack&Veatchfocusedontheimpactofthesesystemsoncustomerelectricitybillsbutdidnotaccountforthevalueofreliabilityandpowerqualitytothecustomer.Thesefactorsaremuchmoredifficulttovalueandcouldvarywidelybycustomertype.PGEmaywanttoconsiderstudyingthesevaluestocustomersfurtherinfutureanalysis.

Fortheenergystorageoptionsinthenear‐term,BESScostsarenotfinanciallyviableforanyofthecustomertypes,giventhelackofavailablefederalandstateincentivesaswellasrelativelylowdemandchargesandlittlearbitrageopportunitywiththeTOUrates.AsnotedinSection4.2,onlylithiumionBESStechnologywasmodeled:flowbatterieshavesignificantlylowerround‐tripefficiencywhichwouldresultinpoorfinancials.Forthe2035CPI+1case,whendemandchargesincreasefasterthaninflation,mostcustomertypeswerefoundtoshowpaybackperiodsoflessthan20years,assumingaBESScostof$400perkWhin2014$.Whiletechnicallyfinanciallyviable,similartotheSolarGenerationMarketResearchStudythatBlack&VeatchdevelopedforPGE,thelikelihoodofadoptionforindividualcustomersisstilllimitedbytheperceivedpaybackperiod.Sincetheredoesnotappeartobeamaximummarketpenetrationcurveavailableforenergystorage,ifcommercialcustomerpreferencesforBESSareassumedtobesimilartosolarPV(Figure5‐1),commercialcustomertypesthatseepaybacksofaround5yearshaveabouta20percentchanceofadoption.Usingthesamecurve,customertypesthatseepaybackscloserto10yearswouldhavea5percentchanceofadoption.

Figure 5‐1 Solar PV Maximum Market Penetration Curve Relative to Payback Period

0%

20%

40%

60%

80%

100%

0 5 10 15 20 25 30

MakretPenetration

PaybackPeriod



Therefore,assumingthiscurveholdstrueforBESS,onlyabout5to20percentofcommercialcustomersarelikelytoadoptby2035.Sincecostsareonlyexpectedtodroptotheselowlevelsinthelatterhalfofthestudyperiod(2026to2035),minimaladoptionisanticipatedpriortothattimeperiod.Assumingthat5to10percentofPGE’scommercialcustomers(approximately104,000customers)wouldconsiderBESSinthe2026to2035timeframeandthatitismostpracticaltodeploysmallersystems(10kWh@2hourcapacity),theadoptionoverthose10yearscouldtotal52to104MWhor26to52MWofinstallations.Dividedevenlyacrossthe2026to2035timeframe,thatisequivalenttoapproximately2.6to5.1MWperyearofenergystorageinstallations.Adoptionmaybehigherifcertaincustomertypes,suchascriticalfacilities(hospitals,schools,etc.),placesomevalueonreliabilityandpowerqualityassociatedwithinstallingBESSand,thus,installlargersystemsand/orhavewideradoptiondespitepoorpaybacks.However,thismetricwasnotstudiedinthisanalysis.

Table 5‐1 Forecasted Annual BESS Adoption

BESSCAPACITY(MW/MWH)

2016TO2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

LowAdoption

0 2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

2.6/5.2

HighAdoption

0 5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

5.2/10.4

FortheBESSplussolarPVcases,theadditionofBESStoasolarinstallationdoesnotimprovethefinancialsofthecombinedsystem,and,infact,inthe2016cases,BESScausespaybacktoincrease.Therefore,inthenear‐term,giventhatsolarPVinstallationsareabletonetmeter,thereisnoincrementalbenefittodeployinganenergystoragesystemuntilnetmeteringisnolongeravailable.By2035,BESScostswillhavefallenenoughthatBESSinstallations,combinedwithsolarPV,willnotalterthepaybacksignificantlycomparedtosolarPValone.However,thisalsoimpliesthatacustomerwouldbeambivalenttoinstallingaBESSwithitssolarPVsystem,unlessnetmeteringwasnolongeravailable.Therefore,basedonthisanalysis,thedeploymentofBESSwithsolarPVsystemsisnotpracticaluntilnetmeteringisnolongeravailable.Ifnetmeteringisreplacedwithotherpolicies,thedeploymentofBESSaspartofasolarPVsystemmaybecomefinanciallyviable,butthiswilldependontherulesaroundthealternativeratestructures.

Theanalysisoffuelcellsandmicroturbinesinallcases,includinglownaturalgaspricecases,showedthatnoneofthesetechnologiesresultinfinancialpayback.Oneexceptionisthatthecaseforsecondaryschoolsin2035deployingSOFC,underalownaturalgaspricescenariowithratesthatincreaseatCPI+1,maymakesomefinancialsense.However,thisassumesthattheinstalledsystemandO&Mcostsdropsubstantiallyandefficiencygainsareachievedforthetechnology,whichishighlyuncertaingiventhetechnologystatustoday.AsidefromcapitalandO&Mcost,thefinancialsofthesetechnologiesrelativetoutility‐suppliedpowerarepenalizedintwoways:higherheatratescomparedtoPGE’ssystemheatrateandnaturalgaspricedatretailrates.Thesedrawbacksareunlikelytochangeunderanycondition.



Inthisstudy,fuelcellandmicroturbinetechnologiesweremodeledforelectricityproductiononlyandCHPmodeswerenotconsideredinthefinancialmodel.However,mostcommercialfuelcellsandmicroturbinescanbeconfiguredasCHPsystems.WhileCHPmayimprovethesetechnologies’financialsoverelectricity‐onlyoperation,CHPapplicationsarelimitedtospecificcustomersthatcanutilizeboththeenergyandheat.AdditionalstudiesexaminingspecificcustomerloadwouldbeneededtoassessthepotentialoffuelcellsandmicroturbinesforCHPapplications.

non-solar distributed generation market research

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