Grid Storage for Renewables Integration

Thank You Jessie my name is Barbie Shaw I am course ten class of 2002 now doing nothing really related to chemical engineering and steeped deeply in the world of energy efficiency welcome today I'm really glad to see such a sizable crowd this is a very timely topic especially for us Californians leading the way for the rest of America we have an exciting group of panelists with diverse perspectives across the industry from residential to commercial storage as well as the utility being represented I must divulge I do work for PG&E but I am I am NOT as informed as our expert panelists and I am also open ears to hear what they have to share with us one of my connections to this topic is really understanding how I am passionate about energy efficiency being first in the loading order doing everything we can to reduce consumption before we build new generation including storage and so what is the impact of increasing renewables on our grid cost dropping as well as cost of storage dropping and the the great greater ability for us to manage distributed energy resources and what is that going to do to energy efficiency that's one of my questions for tonight but there are many more questions and implications of robust storage capabilities which we'll let Jeff handle so Jeff Byron is our moderator tonight he has over 40 years of experience in the industry on the policy side as well as the technical technology side he is a Stanford alum but we still welcome him here amongst us and he's a former energy commissioner so Jeff I'm gonna turn it over to you thank you poor Robbi hold on one second I'm sure listen thank you so much for having me back about a year ago I'm odd rated up a presidential debate here with Park were there any of you that we're here for that well it's kind of you to say but I hope we don't do for energy storage what we did for presidential elections so I you know what I think I'll I think I'll talk from up here just because the notes come up and it's easier I'm gonna I'm gonna do a few introductory remarks and I apologize to my panelists I hope this will be helpful to you is this just as loud if I talk from here I have a yes and a no okay so so what I want to do is give some background on energy storage so everybody might have a good sense of what we're talking about here let me go back for a second so to help our panelist out let me just ask a few questions the audience and if you wouldn't mind help by a show of hands give them a sense of who you are and and and and I think it'll help them to direct their comments as well first of all Stanford got mentioned anybody here have an MIT affiliation no raise your hand please so not everybody not everybody that's always good how many of you work in or have a really good understanding of the utility industry a lot of hands a lot of hands oh and even even dr. Strauss froze his hand on that let's see who sees a new opportunity or a growing opportunity for energy storage going forward here Wow anybody here who would say they're uncertain about the energy storage market opportunity good good these are the folks these are the folks we need to talk to good well and it's good that you know the doubting Thomas or the folks that are here to learn as always a good thing I remember one of the questions I asked during the presidential debate amongst everybody there very well informed last year was who might change their vote as a result of what they hear tonight no hands went up okay so panelist Bray based upon my experience with this group and the pre questions that that I was given I think you could assume you've got a pretty well informed audience here and some key decision-makers so what we're gonna do is we'll do some introductory remarks from each of the panelists after I've given some background here we'll make sure we reserve plenty of time for discussion we'll go to Q&A from the audience and we'll finish promptly at 9:25 so that you can close I hate to see people walk out who needs to leave at 9:30 yeah okay so not we've got a helpful we got a couple all right well anyhow that's our plan so we'll do the best we can to stick to it so let me just give you a little bit of background here for those that don't know there are other ways to integrate renewables on the grid and I just wanted to take a moment to go through what we've done traditionally you know this think of this is the geography issue here regional coordination among the ISOs and the RTOS the independent system operators and the regional transmission operators is one of the ways that we can mix resources intermittent resources on the grid then we've got the diversity opportunity and we look at diversifying our resources in terms of geothermal you know wind solar because they're not now not all operating at the same time we can also integrate renewables on the grid by being a little flexible with the load and and and Todd might talk a little bit about this your utility your local utility oftentimes comes up with different programs that provide incentives for you to shift that load off of peak period times and then we also have flexible generation those are the kind of machines that can start quickly or ramp up quickly in order to meet demand when solar wind trail offers start quickly themselves and then of course the new emerging opportunity is all around energy storage and we'll talk a little bit about the two types of use for integrating renewables energy arbitrage and the ancillary services and of course what's driving this I think you all know the the PV and the solar PV and the wind installations are just they're just skyrocketing of course the total is still quite small but the growth is just phenomenal when I think of when I started on the Commission in 2005 or 6 it's now one to two orders of magnitude larger per year and it was only 12 years ago and the forecast for the energy storage development in the United States is also growing at a spectacular rate this study was done earlier this year I believe for the inner energy storage Association's annual conference in April and you can see that it there's a pretty good mix here between residential commercial and industrial and utility applications and in fact I'll show you something a little bit later about some projections that show that that stuff that's not utility may be growing the fastest and what does this mean it means a lot of money we're now talking about as much as over three billion dollar bark market in the year 2022 this is an incredible increase it's a tenfold increase from just last year but what's really driving this market growth I hope it's obvious to all of you but if it's not I have a feeling our panelists will talk to this a little bit costs are coming down considerably and I'll just throw some of these up these are just different headlines that I've pulled off the internet you know just in the last day or so since January first and there and and there's literally dozens of these that give you a sense that who the major players are in this space and and and again I wasn't trying to be partial or anything I just picked a variety of them the the international markets Europe is getting very interested in energy storage the military is interested in energy storage of course Tesla's name is probably going to come up once or twice tonight and and and you can also see that there are studies that indicate by 2030 we could hit as much as a hundred and 25 gigawatts of energy of energy stories this these numbers of you told them to me a couple of years ago I would have asked you what are you smoking okay so no no questions right now we're gonna continue what we're gonna continue please until we till we get through it hold your questions till later so there are two types of renewable at my OK'd here Doug thank you there are two types of renewable integration services that can be brought provided by energy service I'm just trying to give you a little background here because I think our panelists will talk to a lot of these things so let me just separate the two out most of you are all familiar with this one this is the long-duration services or what we call load shifting when renewables are generating when that when the power might be more valuable later on and I think you'll hear some of our panelists talk about short duration services or that they'll figure over in the right shows shimmy and and these are some of the things that are coming into play now on the on the utility side of the meter as well and hopefully Todd will speak to this and both of these services can be provided by a number of different types of storage I've listed a few here the lithium ion batteries flow flow batteries pumped hydro and maybe hydrogen there are of course others so here's another key factor that's driving this this was a recent study that was done by e3 I think this came out earlier this year and that is you may all know in California we've got a 50% renewable goal by 2020 30 so this is pretty significant and you can see what happens as you get between 30 to 50 percent you start by an air by their analysis having to curtail a lot of energy storage and the profit margins for these companies and these operations are tied up in those numbers we can't afford to curtail this stuff or it just doesn't just doesn't work so this is one of the other key factors I wanted to mention also there's two distinct markets for energy store there should be no surprise to you here one of them is behind the meter or customer-owned energy storage this is typically to offset the man charges but it could be for other reasons and I think some of our panelists were talking we'll talk to this in fact I was just listening to your podcast Barry earlier this week the way Barry characterizes this is think of behind the meter as saving money because that's what motivates customers to do this but then of course there's utility or third-party owned which adds to your rates but of course we expect our utilities like like PG&E to offset those and the only reason that they would do these projects is because it's avoiding other costs so Todd will speak to that and if I've created any any anything that bothers him all the better because he'll straighten us out this is just an indication of where some of these storage capabilities fit on on it on with two major characteristics duration and power and and you can see up all the way in the upper right hand corner pumped hydro this has been the one that we've used primarily in the past and you can see for good reason but it's very difficult to cite these at least in in the United States but that doesn't stop China I listened to a presentation just a couple of weeks ago by Xion Leo the executive vice president of the State Grid Corporation of China by 2020 they will build an additional 37 gigawatts of pump storage 37 gigawatts of pump storage so what is most of the energy storage that's being added at this time it's about 97 98 percent lithium-ion batteries so I think we're we want to know from our panel where is this going is that what it's going to be or is there something else that might emerge okay so let me just wrap this this little brief summary up the energy storage is really creating a disruptive change right now I think there's there's probably three things in my mind there are just really wonderful transitions that we're in the middle of but without going into the other two this is one of them continued growth of photovoltaics and wind is lowering costs and we're going to see continued dramatic growth of energy storage regulators and some of my panelists may not agree with this but I think regulators for the most part are adopting policies and beginning to recognize the value of energy storage and this is good news because it allows it allows providers of these projects more opportunities more revenue streams and the value proposition is more attractive it's really upsetting what we call the integrated resource planning process this is how utilities and the Public Utility Commission determine what generation resources are needed in the future we have we have developers that are putting projects online in less than 90 days I'll tell you we can't we can't even do the paperwork to site a power plant project in less than a couple of years so and and and Todd was telling me about an example earlier about interconnection difficulties so these this has really changed in the process on how we plan and utilities are looking much more closely at this but but energy storage also represents just a shift in terms of putting lowest cost opportunity on the grid versus what we've done in the past and that's adding more generation which costs more money so this is a pretty disruptive opportunity in fact I'd like to characterize it by showing my bias we now have the Holy Grail product offering and that is dispatchable renewables this is something I never thought we would see in my lifetime so I think I'll stop with that and just introduce briefly our panelists would you please pull up their resume we we did too many resumes I should say we did too many bios for them so we'll use the official bios but let me just say a little bit about each them as as I asked them to think about their introductory remarks I've known Barry for about 20 years no 12 years but actually I've heard I haven't told you this but I heard of you before I met you in Budapest Hungary well it seems I was on vacation I was traveling with someone who was quite upset about your uh your desire to install too many photovoltaics on the roof of your building in Los Gatos Barry has been a big advocate of renewable energy for a long time and the city attorney was none too pleased about your about your running put all that photovoltaic on the roof you know it's been slightly we've changed a little bit here yeah okay Kate McGinnis is the western director of marketing for AES energy storage and she's got a very strong background with an MBA and and also a she's a technologist who's really shown her dedication to this industry in recent years you're involved in local organizations and California's energy storage Association correct so I'm really eager to hear what you have to say dr. Strauss this is one of the brightest individuals I know I'll just we'll limit it to PG&E but but still very bright man so listen Todd don't do what you always used to do for me at the Energy Commission don't dumb it down tonight okay given both barrels you did to it given both barrels tell them about the benefits but also the challenges that this represents for you as an investor owned utility and Kelly Warner is the president of I want to say the full name because AMS always means something else to me advanced micro grid solutions a relatively new company and a high-flyer in this space and in fact Kelly's got a lot of executive experience in the energy business I think he's not quite as old as I am but he's been doing this for a long time Kelly you've joined a great company and I know founders very well Susan Kennedy and Jackie the late Jackie Pfannenstiel whom I worked with in the Schwarzenegger administration so Barry why don't you take a few minutes we'll go right down the line I know you may have some material you want to present these are just introductory remarks to kind of for you to get to know them then we'll get into the discussion and then Q&A please all right great thanks for that kind introduction Jeff I'm gonna give you just a little bit of background on what we do it's cinnamon energy systems and and forgive me because we've been called cinnamon solar for five or six years and then we're in the process of rebranding because so many of our customers are interested in storage solutions so basically what we do for our residential customers kind of below the line we're putting in a solar system that's going to reduce the kilowatt hour consumption and we're starting to put in batteries which theoretically could help them economically but I'll talk about that in a minute doesn't really save a lot of money on the residential side but it does provide backup power which is an emotional benefit that's really important to homeowners on the commercial side obviously we're able to do that peak demand reduction which is something that companies value very highly now as engineers where we kind of learn to solve problems that's the problems that's right you guys remember that from MIT but in business sometimes you're faced with a situation where somebody gives you a problem say gee what's what's the real problem there so I was kind of taking a step back and taking a look at what this this duck curve really means and what caused that duck curve and the the duck curve really started to stretch out when we started to hit our stride on the on the RPS portfolio we put in a lot of utility solar so much utility solar that we're getting to the point at which the costs of energy might be negative and the the developers are gonna have to pay the utility to take that power it's kind of crazy and Jeff he kind of mentioned something interesting maybe we're going to move towards a storage portfolio standard which is going to solve the problem of a to successful RPS we'll see how that works out but I kind of look at this duck curve as a problem from too much solar being delivered to the customers as opposed to customers developing that asset themselves second problem is an unreliable local grid and this is something that that anecdotally I've seen a lot of personally I've had five blackouts over the last 12 months in my house and I live in the suburbs so the fundamental problem is our local grid infrastructure wasn't designed for Evie's drawing as much power as perhaps was originally supplied to the house air conditionings new appliances and we're more dependent on electricity than ever my hot water heater has an electronic pilot light my gas stove has an electronic pilot light I can't keep my children happy without their electronics and the heat doesn't work in the house because there's fireplaces or illegal now there are electric gas fireplaces so that's changed and then also we're seeing situations in which the electric rates kind of keep going up now when I think about my 20 years doing solar OMA solar here in California my biggest competitor has not been other solar companies my biggest competitor is always been PG&E and I have to say that out of all the utility districts that I've worked with in the country without a doubt PG&E is the most cooperative the best utility to work with when it comes to solar I don't have national storage experience they've been great but their business interests are not aligned with what we who are providing behind the meter storage and solar assets are so I think it's good that we've got some competitors here and and I'm gonna be kind of waving the behind the meter flag so really quickly what the economics look like from for a rooftop solar it's become a fairly mature market utility own solar is going in at about four cents a kilowatt hour we're providing systems for homeowners and businesses in the six cents a kilowatt hour arranged but then when you look at the average price of electricity in California you can kind of come to this number pretty easily by dividing effect divided the utilities total revenue for from supplying energy into the number of kilowatt hours they provide it's about 20 or 21 cents so there's a big gap between what it costs to generate the power and what they're charging for and that's because there's a lot of infrastructure now when you look at energy storage systems this is kind of an interesting number for commercial customers or some good payback because you're able to reduce the demand charges and that's quite valuable we're seeing paybacks in that 3 to 6 year range and I'm focusing on small commercial we're not talking about humongous megawatt systems these are you know 100 kilowatt systems with maybe 2 or 300 kilowatt hours of batteries for residential customers the payback isn't really there for energy storage yet even on the the biggest where you're looking at a kind of a big gap and I'll get to that in a minute between peak and off-peak rates it's hard to justify using your battery to arbitrage energy based on the lifespan of the battery I'll talk about that in a minute but no doubt in my mind that storage behind the meter is going to be cheaper than utility storage that's because the batteries are gonna be on wheels many people drove here with batteries and as soon as that electric vehicle can exchange power back and forth you're gonna see a continued growth in the industry because you're going to be able to discharge your car into your home when you need that power alright well then I I would never consider doing a presentation in front of a technical MIT kind of audience without some kind of equation so if you're interested in the payback of a battery for a home or business it's very very simple but you can just when you get to the point at which the savings from the battery are greater than the cost of the battery then you're gonna have a market that's going to stop and start growing this is really easy to calculate you look at the total kilowatt hours at the battery hasn't it over its say ten-year lifetime times the gap between the peak and the off-peak time times the efficiency loss and that's got to be greater than the cost right now even under optimistic scenario is this 30 cents a kilowatt hour for a home is the gap between the evey nitrate and the evey peak day time rate you're still looking at a battery system that has to be less than six thousand dollars and they're just about that level may be still a little bit higher than that you can get batteries for a lot less but remember they have to be installed and they have to last now I'm going to come back to the duct curve but first if you're a vegetarian please close your eyes there's more than one way to skin a duck just had to flash that by quickly so in my view there are there are two different approaches we can be developing utility assets that are going to solve that curve with utility scale solar storage or we can start to deploy those assets in a more incentivized way for behind the meter storage and I kind of look at these three problems that we have with the duct curve in both cases we're going to need a lot of gas peaker plants but the honda meter storage is going to be very very cost effective once that starts to deploy in larger quantities and once the systems become standardized which they are not yet as far as the reliability of the local grid we either need a lot of local grid upgrades to handle much much more intensive power going back and forth between buildings and the grid or we're going to see situations in which there is gradual load defection because it is actually pretty cost effective to put in solar behind the meter and storage is gonna be the same way and finally you look at what's going to happen to electric rates if the utilities are buying those assets and putting those assets and they're going to recover those costs through higher rates and the the defection issue comes up when customers can say gee I can put in solar and storage myself and save more money that way so that's just my kind of introduction to kind of get things going and time for the next panelists Thank You Barry hey you want to you want to go up you want to sit oh yeah let's clap for Barry now just now you're stuck you have to clap for everyone it's okay oh yeah all right well I'll tell you a little bit about AES AES is a global power company we're in 17 countries in some places we are the utility here in the US we own Indianapolis Power and Light and Dayton Power & Light we have electro Paulo the utility that serves Sao Paulo and Brazil and a handful of others in other countries we're also an IPP we were pretty early to that market doing some of the earliest Power Purchase Agreements and then about 10 years ago we started our energy storage business my colleagues saw an opportunity I've only been with the company about three years saw an opportunity to put storage onto the grid they started out looking at electric vehicles and then said well maybe we don't need the car and test it out two megawatts in at Indianapolis Power and Light it was about two containers they were about 15 minutes of duration and then since then we've built a whole bunch of projects this is a sampling of kind of our current timeline and you know we've gone from doing small you know this small two megawatt projects we did a handful of those moved on to doing our first commercial project in the middle of the desert in Chile it's really about as remote as that picture makes it seem it's at a substation that's at a critical point in the Chilean grid and the system is basically providing spinning reserves it's a fifteen-minute system it gives enough time for other resources to ramp up and and come online and the northern Chilean grid is it's a pretty isolated system it's obviously not an actual island but it's practically an island in electrical terms from that point we moved into projects here in the US and so this is a project in norther in West Virginia it's co-located with a wind farm but it actually interacts independently with the grid and so it's providing frequency regulation services in the PJM system and so it's bidding these services daily hourly minute by minute actually and in its initial years it was saving about 20 million a year now there's tons of frequency regulation projects in PJM probably too many the prices have collapsed and that's what happens when a market is more successful then you know but it's good for the customers that is great for us more recently as the cost of storage has been declining we've been able to move to longer and longer duration systems this is a 30 megawatt project for our duration now think back I said the first project it was about a megawatt in a container for about 15 minutes this one one of these is 1.25 megawatts and it's a four hour duration so it's really managed to condense the footprint this 30 megawatt for our system is on about an acre and it sits in San Diego in Escondido in San Diego County next to an SD GE substation and so this was built in response to the Aliso Canyon challenges from last year and so it was contracted it was selected in about three weeks we had to do it we still did competitive bidding there were a handful of companies that were participating was selected within three weeks we contracted in another three weeks which was just crazy and I didn't sleep much and then built it in about six months the commission actually did its part they approved it in a month which is also kind of unheard of in California so the CPUC so you know there were a number of projects SCE did another three other I think three other projects in that same time frame so a lot of for our storage kind of came on to the system at the end and beginning and the blaster in the beginning of this year down the line we're working on building a project in Long Beach this is a hundred megawatt for our project it was contracted back in 2014 to meet local capacity needs in the LA basin that kind of arose from the retirement of San Onofre as well as the upcoming retirements of a lot of once-through cooling gas plants and so this project was selected in an all source solicitation it was competing against other gas plants other types of projects and Southern California Edison wound up procuring over 250 megawatts including some with Kelly's company as well so big milestone for the industry but on the timelines that often you know these things happen when they aren't emergencies this one won't be built until 2020 so we're also putting in projects to act as a distribution or transmission alternative this is a picture of a project that we built in Arizona for Arizona public service and it's two megawatts it's was put into a system in an area where they have a really high solar penetration and so it's helping to provide some services on the distribution feeder where it can help kind of stabilize the grid and provide some of these services we're also building another project that's a for our system at the end of a long radial line and so that's gonna help also for APS it's gonna help them avoid having to upgrade this 20 mile line to meet increasing capacity that they expect but you know you have to make if you're gonna make a really long investment in a transmission line you're you're predicting that growth before it actually happens so the storage is a great way to help either postpone doing something that you're not certain that you're gonna need and it can be put in incrementally this is another transmission alternative that we built in Indianapolis and then finally what you were one of the things that you were talking about we've contracted for a project in Hawaii where the five hours of storage will be paired with solar to provide a longer duration energy delivery that can meet the system needs at the end of the year I'll be with a different company we're forming a joint venture with Siemens so I will soon to be working for a company named fluence Thank You Kate dr. Strauss go ahead go right ahead and start talking she'll bring up your presentation perfect we don't need the energy right yeah so let's see course 18 class of 84 I took 1803 in ten 250 spent a fair amount of time knee 40 on the first floor and spent a fair amount of time in building 20 I can't remember whether it's wing D or E and I saw some pictures recently of a really nice renovation of building two particularly that new additional top floor all right to establish my MIT chops all right so let me now establish my PG&E chops raise your hand if you're a PG&E customer okay so I see a lot of customers here so really appreciate your business and we can talk more about some of the nuances about the services that you take from PGE that we provide you okay also to establish my PG chops is anyone here from the California Public Utilities Commission one per se okay are you a commissioner or your commissioners advisor are you a director or deputy director of any division in the PUC are you with Oro well you want to say who you're with that'll make it shorter right okay I think we're good but can you say who you're with Water Division y'all perfect so here's why because actually if there was a commissioner present or an advisor or a director or a deputy director there were reporting requirements I have to ensure that all communications are appropriate and transparent and publicly disclosed it's one of the elements of doing business as a public utility and I'm comfortable with that just want to make sure it you're all the way so I've established some PGH ops excellent we can talk more about that that's fine in this context I want to have your understanding of the message right now is basically the grid is the enabling platform we have energy storage for renewable integration lots of stuff about energy storage here tonight renewables let's focus on that last word integration the grid is the enabling platform for all the stuff to happen for all the stuff you want to do in your homes in your businesses and our cool Googleplex and all these facilities for two-way flows some batteries mobile sources whatever without the grid this doesn't happen now we're for the foreseeable future and there's a lot of value in the grid and our job is to deliver and turn that into value for you our customers and for all of California to meet California's climate ambitions and economic ambitions and all of our ambitions we have in California PG&E is the integrator what we do is basically use that grid that enabling platform to basically do the things from running bucket trucks emergency response services control centers procurement thinking about institutions and rules and regulations and safety to make sure that the energy you get electricity and also natural gas is delivered to you safely reliably affordably and in clean manner this is California so we add clean every utility across the country says safe reliable affordable more more they say clean I mean California has been the leader in that respect and PG embraces that vision and you know we're here you're glad I talked lots more about all the provocative things everyone's tossed out there already but I'll wait for the Q&A to do that job Thank You dr. Strauss Kelly would you like to make any introductory remarks stand move around a little bit so thank you all for the invitation as a Williams and Stanford alum I'm not sure how I got in here but I must say I've always had a bit of an inferiority complex around MIT grads and feel even just a little bit smarter standing here right now with you all so thank you so I'm president of advanced micro grid solutions where four-year-old company refer to ourselves as a distributed energy resource platform company and what we do is we develop aggregate optimize and manage fleets of distributed energy storage projects and other D ers most of our installations are behind the meters so we'll probably talk a little bit about the differences between front of the meter and behind the meter applications but our mo is mostly around aggregating behind the meter assets the company was founded by Jeff said susan kenedy and jackie Pfannenstiel two very prominent women in california sometimes referred to as the midwives of the duc curve they were very involved with the development of a lot of the renewable energy policies during the Schwarzenegger administration and other times and in California and when they founded AMS it was really around a thesis that their success was going to wreak havoc with Todd's company and other utilities in terms of the challenges of integrating all of you know this rooftop solar and other distributed energy resources I met Susan about four years ago I've been in the energy services industry my whole career so been dealing with the challenges of how do you finance and scale up you know these distributed projects starting off in energy efficiency and then renewables and now storage and when we were talking about how to you know structure this this new company around helping the utilities integrate all these de RS we really focused on the rapid advancements in energy storage and then how to make it scalable and bankable and that's been a big focus around what we're doing at advanced micro grid solutions our first projects are down in Southern California we're building right now we fact we just launched the first phase of it a 50 megawatt 200 megawatt our distributed virtual power plant using Tesla lithium-ion batteries and I can go into more details about this later on in the show but basically across 125 different commercial industrial sites all tied to certain substations in the grid in Southern California that are absolutely imploding due to a lack of local generation and and the duct curve issues of the rooftop solar and we'll be using our software platform to coordinate and orchestrate the charging and discharging of all these distributed systems to help the SCE and the California ISO manage voltages and loads down in this area so it's really exciting and one of the kind of the the proof in the pudding is that we were able to execute two hundred million dollar equity financing with Macquarie capital around building out this project and that was a at the time the largest energy storage financing to date and once again this is a so that the time was a three year old company with brand new technology kind of a crazy business model and being able to you know go to a very conservative investor and ultimately put together an equity financing like that is quite an accomplishment not only for us but for the industry and since then we've done a 10-year term financing with CIT which is any you in the financial world no that's the really the hardest thing to do is a layer in debt into these new kinds of projects so I think being a pioneer we get to experience a lot of the the early challenges of figuring out the market rules and things like this about how to ultimately set the table for this kind of a technology to be rapidly adopted by the industry so that you're going to see you know mass deployments and things like that so very excited about the future and would love to talk to you more about it tonight Thank You Kelly excellent so we've covered a lot of ground already and and I want to make sure we try and get to some subjects so the topics that I've got on my list or some of the barriers I'd like to see if we can talk about outside the United States a little bit possibly the technologies markets there's some interest in the financing aspect of that from some of the participants here maybe a little bit about the future and we don't have a whole lot of time so pithy short answers are appreciated and let's let's talk a little bit about the the technology and any challenges that are presented there I have a number of questions that I had list there let me just categorize them this way do you see any problems with the with the grid handling more and more renewables do you see any problem with integrating 3050 percent renewables there was a bill on the California's the legislative list this summer to try and go to a hundred percent so any problem I thought that was a hundred percent carbon free not a heartburn so I don't have some rule but it may have changed is an important distinction I'm sure it is but but the point is there have been countries in Europe that have hit the 100 percent mark actually hit the numbers not a hundred percent we need to get to 125 percent and make statewide why right because when is it the energy from these renewables generated one of the research and when do they need to be consumed and so if we're moving energy from one time period to another right we need to store it and it goes over line losses typically the 100% counts we're counting generation but against a retail load there's some wasallam so when you consider line losses and the time element of storage maybe 125 percent might be the number for 20 75 okay so write that down PG&E says we can get to 120 and so the question is what does it take to get there right and so they're questions about technical feasibility if the first cut actually it seems technically feasible there are really important questions about transients on the electrical system in the when you're counting cycles right and seconds little engineers here your power systems okay you know far more than I do I'm a math guy okay to me it's awesome you know complicated non-linear optimization but and so there are really important questions about feasibility there but in the large sense if I ignore lots of the complicated elements of the AC flow and the trans you know that's not the big issue the bigger issue is what is the cost and that is very much a matter of what's the slope of the trajectory to get there okay go on the cost side I mean one of the things I've been amazed about just from the four years I've been in the interview how rapidly costing the energy storage industry yes and in the energy storage industry and and I mean you look at all these projections you look what happened in solar you know the the market blew away any market projection so worse so we're we're all benefiting really from the electric vehicle industry in terms of you know battery manufacturing so but but I think this idea of Ken you know as are these renewables really going to create problems for utilities they are and they won't if it's done in a coordinated orchestrated fashion and so I think that this whole you know de ours can be a real benefit operators if they're done you know in coordination with the distribution system operators whereas if you have all of these de RS working in an uncoordinated fashion including energy storage of energy storages is out there trying to arbitrage utilities rate structures it's just going to add to the you know de the conflicts on the grid not not resolving what's here from the less follically challenged individual okay do you see any problems technically with the higher integration a higher percentage integration renewables well I think as you're seeing the grid change and the needs of the grid change as the mix of generation on the grid is changing and so you're seeing pricing dynamics shift and so while we may not have any technical problems keeping it together right now you're seeing the price go negative during certain seasons of the year in the middle of the day everybody understand what she means by price going negative the wholesale market price is going negative you know in the middle of the day especially it they like during the spring for example when you've got a sunny day you know full full sunny day fairly long days but no air conditioning run you know cuz it's pretty pretty temperate out during that time of year for example but the rest of that is the reason you continue to still generate is because of incentives like the production tax credit great there's a variety of reasons so wind would continue to generate mostly because of the production tax credit the utility scale solar may continue to generate depending on the structure of its contract rooftop solar the utility has no control over so it probably is continuing to generate and so there's you know a mix of pressures that are causing this and so while the the grid is going to continue to operate and be fine at this point it's it's providing a different pricing dynamic that starts to push you towards different other types of technology that can help fix it like energy storage so Barry do you want to add anything or can I ask you another question you can ask another question so so is it lithium-ion batteries at this point is that what you see going forward and if so are there gonna be any limitations as a result of all these batteries we're gonna make out a lithium it it's a from what I can see as far as established products definitely going to be a lithium-ion business the superior to let acid for you know all the reasons we know in terms of energy density and lifecycle cost and ability to generate power pull out a power under of it the biggest the biggest advantage one of the biggest advantages that lithium ion has right now is the auto industry we're just cranking those things out the limiting factor at least on the residential and small commercial side is the integration involved in putting a complete system together not they're not package systems Tesla did a great job coming out with kind of the first package system and now there's a bunch of other companies doing that so from on the residential side if anyways looking at putting in the system for backup power or energy arbitrage which eventually will make sense just kind of wait for those systems become a little bit less expensive and make sure the incentives are there for me so you're not worried about lithium becoming a limited commodity you know I was kind of thinking about the analogy between lithium and silicon and we may end up it might be were there's gonna be there what five-year period a few years from now where we may hit a shortage of lithium just like we hit a shortage of of silicon the the industry that the battery industry is obviously not coordinated neither was the solar industry and everybody's building factories like no tomorrow would demand for the product and then they find out that there's a upstream raw material that that's limited and that we may hit a wall on that in five years it's hard to tell so AES energy storage a am yes you both have agreements with a particular provider correct we work with the number of different Sonia not just yeah we also do we recognized X so we have multiple okay good so there is some competition in the marketplace other than just Tesla no yes oh good all right so so technically is that where we are do you see us lithium-ion for the foreseeable future well we're a start-up so I'd say three years is a foreseeable future million-dollar financing on your dude you're you're pretty far along you know I think we've built our platform to be agnostic so we do have a preference for kind of a cell based battery but we have the ability to shift if something superior and cost-effective and commercial and you know commercially viable comes along but for now you know out probably at least probably the next five six years which is sort of the horizon that we're kind of thinking of real projects in it's looking at my own very go ahead yeah and and just kind of setting the clock back about 15 years in the solar industry from it in the early part of 2004 there was about a dozen companies in the world making solar panels it rapidly increasing pace and the Chinese were coming online within a period of about six months they all hit the wall and the pricing for solar panels went up by about 30 or 40 percent so you know in spite of contracts that people may have I mean the same thing after the solar industry that's it's just gonna hit the wall and there's gonna be there could be a shortage it's interesting here three years and five to six years kind of the horizon because I'm looking at 2050 and working backwards okay I'm thinking about the 2030 goals that California's already set you know so long term means something or at least the horizon is something will different depending upon the context and I appreciate that as well it's interesting because you know you mentioned earlier Jeff in your slide you said okay what's driving all this growth in energy storage and your answer was low-cost and I was like hmm I thought the answer was policy there actually is a mandate in California for one thousand two hundred and eighty megawatts of storage actually for the investor owned utilities and actually other load serving entities other providers to actually acquire and put in place by 2024 so actually in California is by far the largest storage market in the United States and I believe still the world you guys would know better than I at that certainly when it came to solar California is probably number three Germany went first Spain went first in California kind of benefited a little bit you know and the way I see it California customers you have greatly benefited on the solar side from federal tax credits and Chinese subsidies and you know if we can get federal tax credits and Chinese subsidies for storage then our customers will benefit as well and so if the issue is the costs don't materialize in the same kind of way I think Jeff you identified some other ways to integrate renewables a larger geographic footprint demand response and other elements of the load side portfolio diversity of variety of other ons and so there's a variety of we need a portfolio of resources rather than focus on a particular technology or a particular project to do appropriate integration we think actually from the portfolio perspective yeah absolutely that's good look I'm not gonna take the bait though he's baiting an Energy Commissioner on IOU policies but but what I'd really like to do is drill down a little bit on this notion the first comment that he the first aspect of his comment this class yeah policy so do we need the mandate are you seeing energy projects elsewhere than California can this be done without the subsidies without the incentives let's call them so none of our projects until I guess you know the earlier California ones were benefiting from some kind of a mandate or subsidy so the those that project in northern Chile just based on how the market was set up and based on the needs of that particular location we were able to find an economic project and we've done three of them so there's about 52 megawatts in northern Chile providing that same sort of service the PJM market was also built up without subsidies there you know was a some rules in place that were reasonably favorable to storage and so we started doing our first project around them we worked with the with PJM to can adjust some of the rules to better credit storage for where it performed better than other resources so in some markets where you can kind of adjust the rules to fairly benefit the attributes of the different systems and what we're advocating for in a lot of places is not necessarily you know mandates are there great for us right but what I really want to see is that utilities are including storage as a resource in their integrated resources planning that they're getting up-to-date pricing on storage and they're not using four year old pricing when they kind of make up their mix and then when they actually go to procure resources I want them to identify what services they need and then run an all source type of competition where you know a storage can participate solar can compete the gas plant can compete maybe not here because I don't know that we're gonna build more here but um you know in locations that have you know we're looking at other types of resources I want to compete against that pker because if they really only need to run that pker four days a year for half an hour storage is a better option because you can do other things all year round with storage and it'll be a more valuable asset well in fact a very loose gift let's give Kelly a chance to respond to the same question I asked just a moment earlier can you do it without any incentives absolutely and we're not what we're looking for is access to markets because storage has a number of really unique attributes and when SoCal Edison went out for this all source procurement for to meet the needs of what they call the the LCR area is West LA basin they looked at gas peekers they looked at all different kinds of technologies they over acquired storage more than their mandate you know more than the mandate they had because the attributes of storage the ability to cite it you know in an urban area where you're not gonna be able to cite a gas plant and it's fast response and then companies like us that are figuring out how to monetize multiple benefit streams out of it so that ultimately the effective price to the rate payer for the value they're getting out of the storage asset is lower so it's not it's not really about incentives it's about access to market but then I would also say this is the utility industry I mean do you really think anything any dramatic change is going to happen without some kind of either a policy push or a regulatory push or or whatever I grew up in the energy efficiency industry which is one of the great success stories and in the whole utility industry you know no way it would have happened without what was referred to as market transformation programs that basically try to prime the pump to get new ideas into the mix because you know we're all humans we'd like to do what we know how to do and utility engineers especially like to do with a know how to do so you need some kind of a push to get things going Marathi referred to that earlier and heard in her opening remarks about energy efficiency in the loading order really was transformational well who started that California Barry Rosenberg yes which Barry would you like to the late art Rosenfeld so we talked about policies incentives mandates there's another policy called an electric rate and it's it's something that becomes very contentious at the PUC because you've got parties trying to argue at different things and I'm who the higher the electric rates are the more money the utilities are gonna make and and the more customers have to pay but if we design the electric rates properly to reflect what the cost of services and possibly to reflect the fact that we've got too much energy in the middle of the day I'm gonna put a battery in my house or my commercial building so that I can absorb some of that really really cheap energy in addition to what I'm generating from solar and then I can sell it back in the evening when the grenades it so there's another model here the part of the big challenges we have a business model in the utility industry that conflicts with allowing customers to acquire their energy at the lowest cost and that's a we're not gonna solve that problem but I think that ends up being at the heart of the issue as far as us finding a way to deliver energy cheap as well can I move on to another barrier that I'd like to bring up it's right in your wheelhouse sure I get my point in anyway that's all right it's the regulatory aspect of all of this and we're kind of talking around it a little bit let me ask you this question because I was at the energy storage Association conference in Denver earlier this year it was extraordinary I think there were 1,700 people there the first conference they had 26 years ago there were like 12 people so it's an inflection point as far as that industry that that association is concerned this year is a is just a watershed year and they talked about a FERC the Federal Energy Regulatory Regulatory Commission has a notice of proposed rulemaking that's been out for a while that would provide some standardization around the policies that all the different states are developing so my question is to those of you that are dealing in this area is that no per needed I mean we we finally have a I'm sorry that's the short acronym NOP our notice of proposed rulemaking we finally have a quorum at the FERC there finally could vote on something like this but they probably won't take it up with this sort of standardization at the federal level be helpful or you're going to have to continue to deal with this on a state-by-state basis and I'm not sure that's that's for that's Todd's but but Kate or that on a state-by-state basis but it is I mean it is it is it is helpful but I think it's more geared towards the the the iso's and the rules around what kinds of markets you can participate in with behind the metres assets and things like that but yeah that's I mean there's still you know state jurisdiction over a lot of the rules that govern what we do right Kate you want to add anything on that yeah I don't know if it'll make a lot of change here where we've got a lot of policies already in place and done a lot to to adjust the rules but I think there's a lot of other states that it could speed along yeah so so Todd just so I don't have to figure out what the question is I should ask you go right ahead I just wanted to interlude okay that's so I want to you know just correct and make sure folks understand first of all how does my company make money how do my shareholders make money is by selling more product more kilowatt hours no so let's be careful right is it when rates go up no I get a higher price does not mean actually I'd make any more money higher volume does that mean me not make any more money there is a standard way utilities make money and that my company makes money is by spending money in a particular way on capital equipment that counts as in a certain classification and then we actually say okay that investment dollar or billion dollars it came from the financial community from Bob from Bonta lenders and we need to pay the back in interest then shareholders get a rate of return on that that's how we make money not buy more volume not buy higher prices so prices go up because costs go up prices go down and costs go down in fact so that's kind of one important grounded the second is markets because actually while we are regulated monopoly and in our delivery system the grid it does seem like it's still a natural monopoly we could talk about which pieces storage you know goes that there's a wholesale market for energy the commodity and you refer to tell your negative prices so think about commodity prices that are negative getting it's very important location specific time specific so certain times price is actually if you're producing you have to pay why because electricity even with energy storage electricity is not instantly stored and so it goes over a network and it's that network effect that says you know what you're producing now pay-to-play for variety reasons and actually from economists and economists here right actually that's the marginal cost right it actually says you know what we want to encourage consumption at that time we want to charge our batteries and in fact if wholesale prices were completely flat every hour of every day would there be any opportunity for energy storage in that energy market no and so if basically there's no energy storage really benefits from volatility in space and time and prices in products across ancillary services and energy and one of the biggest challenges come up barriers to energy storage is that it's a wonderful technology with many attributes in fact its technology is a little unique and actually there's no one market to get enough money from to pay for the capital costs and the installation and make it profitable but if you can put together a variety of markets together it actually makes a lot of sense and so the question is how do we create institutionally these markets these structures to provide that opportunity for any technology and especially storage because it provides that and those markets don't exist today that's the biggest barrier and overcoming that multi use barrier that's what we need to do yeah totally agree I mean they are developing but you know we're sort of walking before we run so we're taking very simple approaches that we provide services to the host customer we make some money from them and then we provide services to the utility would make some money from them as the markets open up at the wholesale level then we can participate in other you know frequency regulation markets things like that but but getting to how the utilities make money so what an N AMS is actually agnostic as to ownership but I'll just pretend for a minute we're not so within SoCal Edison we're providing storage as a service as a third party and so and but many utilities want to own these assets and in some cases I think it's driving front of the meter storage project design because it just lends itself much more easily to a utility ownership model of the meter meaning on the utility utility substation or whatever versus you know assets that are on customers property and you have you know really part of the end of great innovation that we're doing at AMS is designing these contracts that all work together with a customer with a utility with the ISO and that it would be very hard for the utility to to do that to deal with you know all the customers and and things like that so we shouldn't let I think like ownership issues drive the technology decisions but we still need to recognize that you know the utility is really the central player and there's the orchestrator or whatever and you got to figure out how to make these models copasetic does anyone else want to respond to what Todd said a moment ago well I think you you have a natural advantage if you can kind of group all of the different value streams together so in my previous life I worked at an industrial company and I had found a facility that was basically an island did grid and it was the the generation so it had the fuel cost it was the the wires it had any you know had to deal with any kind of challenges in in the grid and any congestion anything like that and it was the end user so if there was an interruption in service it bore the cost of whatever wasn't produced at the time and so you know I could then stack up each of the different pieces of value and capture it all right internally because of this unusual structure you don't really get that in out in the world in the utility system maybe with an integrated fully integrated utility where you're doing all of the pieces you might capture most of it you still probably won't capture all of the customers side here in California because there is this market so certain certain functions are done through the the California Independent System Operator market certain functions are done at the the distribution level and you you can't always pile up the different pieces of value into capturing it but I you're you are definitely kind of pulling together more of those in to capture them which is great so utilities are not known for being labs of innovation and and and and they typically don't want to do something brand new for the first time they're very conservative they want things to work they're the ones that are responsible for that save save lives they want that mobilizing platform to be real and safe and environmental okay so given that you know our maybe we're are we getting a little more comfortable with the operation of energy storage are the and are the operators getting more comfortable and starting to allow providers such as yourselves to stack the word you used and is work used in the industry is stacking these various benefits or revenue streams is that becoming more commonplace so that these do become more economical do you see the connection I'm trying to make for instance an investor owned utility says you're gonna build that and it's just gonna do this that's all you're gonna get paid for because we want it they're a hundred percent of the time but if you become more comfortable with the operation of your equipment I think Kate referred to your company is getting realizing a multiple multiplicity of benefits from energy storage is that happening I think the utility procurements are I think you know what PG&E is doing with SoCal Edison doing what Con Ed is doing what is happening in Massachusetts I would love to fire up some slide to just show everyone so he what can we bring our can we bring our slide sample but because I think he might want to show us some example projects that he's done and might give us a sense of the stacking notion as well as other things go ahead go in you also just you know sort of this concept of a totally new idea versus what would be done in a normal utility distribution planning environment because it's they were they wouldn't come up with it it just wouldn't there wouldn't be a reason for them really to and so and and the go ahead and pull the plug on the side there so there's that we're not all more attention to them I agree completely I mean when I started out looking host out the transmission and last couple years booking distribution a distribution planning is like okay actually the horizon distribution plan is three to five years it's not 20 or 30 okay and they've got certain methodologies and approaches and it's very much decades old and it's provided safe reliable affordable right and so the key question and californians really pushing it with the distributional resource plan proceeding at the PUC in a variety of forums thinking about distribution planning needs to change based upon the proliferation of resource types and customer choice technologies absolutely in fact you know the group I'm in grid integration and innovation right one of our tasks is to change the process of distribution planning so distribution planners new distribution planning they will do the distribution plan in the future our job in the group actually is to change the process that they used to do that distribution planning to accommodate and take them count all these resources these choices and these opportunities absolutely thank you good okay who took them so Kelly go write it go right ahead take a few minutes and give us some examples of the kind projects that your company does quick here I won't go through all of this stuff because you've seen the duck curve wait a second we're a little bit off there so so SE e has this issue in Southern California where they decommission the San Onofre power plant they've got the duck curve issue then they had Aliso Canyon and they have you know hot spots on their electric grid specific circuits in in you know populated areas where they need local capacity and you know the electrical engineers here there's things like inertia on the system where if you don't have large spinning rotors as part of generators that's how power systems collapse and with batteries especially batteries that have four quadrant inverters on that you can basically simulate you know how a power plan would function to provide spinning reserves and harmonic and reactive power to so you can stabilize the grid that way you you so the way that we do this stacking of benefits as we've been calling it it's basically we just have an optimization algorithm that says when a battery will charge and discharge and we do that you know based on a variety of different objective functions that we have with what we're trying to accomplish so this is just a simple diagram of day in the life of a battery system so at the top is the load of a commercial industrial building the bars are actually this is the battery discharging or excuse me charging at night discharging during the day when when there's a price differential so that's really sort of an efficiency play during the morning we would be telling the batteries to discharge to reduce the customers peak demand and that's a big part of how their energy bill is calculated based on their peak so we can we can use the battery for the benefit of the host customer keeping in mind that we're going to do other things later in the day now our contract with the utility says between certain times of the day they have a contractual right to tell us to dispatch discharge the battery and we drop load dramatically and so in this case it'll be 50 megawatts across a hundred different projects and so it's our job to maintain enough juice in the battery to anticipate that probably from 2:00 to 6:00 in the afternoon when the duct curves ramping up the utility is going to tell us to drop load and then when we do that we basically just flat out you know discharge all the batteries then the batteries are dead and then at night when costs are low we we charge them so this is a very simple model of how we're stacking benefits and you using a battery to do multiple functions and not conflicting with with what we're doing and in this way well let me let me say so so we have this optimization going on at with one asset at a site in many cases we have multiple assets like like a backup generator maybe or like solar or whatever so we're trying to co-opt ax Meisner Bal de ARS and then we aggregate up all of those resources and optimize it the utility scale and that's how we're providing this 50 megawatt virtual power plant to the utility it's not something that a normal distribution planner would come up with they would basically say how do we cite a gas turbine how do we build a new substation and those are typically the kinds of deferrals that we're looking at with with these projects so this is these are actual projects that we have in the Southern California area tied to specific parts of the distribution grid and and then with our software we basically coordinate these dispatches so that when this is you know a group of sites and this is what they're aggregated load profile looks and when SCE gives us a 20-minute signal through a DP mp3 connection we drop load coordinating it across these different sites this is actually what the battery output looks like and you know sometimes we take more from one site less from another in terms of kind of what's what's going on so under a utility structure we we own these assets with our partner require capital you could do it as the utility owning these assets it's just a little more problematic but you know they're they're more comfortable with say building a large front of the meter storage project here that would have one you know be on one site one owner we would argue that it limits the number of things you can do with that battery but that's you know everyone's got their own point of view on that so anyway I just wanted to oh and then what these systems look like so our clients are like herb companies one of our big clients largest commercial property owner and in California we've got Kaiser hospital Walmart's a bunch of water districts I RWD ie way but anyway we build these systems so that they kind of blend into these urban environments they they look pretty cool they're clean they're quiet they don't you know so there's this is a totally emission las' power plant located in this area so Sir Kelly are all your assets on the customer side of the meter yes interesting Barry we do have it we do have a contract where the front of the meter where we haven't built that one yet so okay with with one of the California investor owned utilities yeah SD Jeanie with PG&E FDG San Diego sorry I missed a letter there so so Barry I know that you're interested in the customer side of the meter market did you want to add anything with regard to to where you see opportunity there when you're selling to utility customer even if it's on the not on the utility side of the meter you're - to a certain degree biased towards taking what they're gonna offer and buy from you so you really are a little bit co-opted I'm just a big fan of making sure that the price signals from rates are going to be consistent with what's gonna drive investment and so that's that's that's my passion is on the customer side is on the interview early customer own customer side of the meter so you want to add anything in particular what is that what's the rate fix this necessary dynamic pricing dynamic pricing would work out fine you know but but when you're looking at getting batteries to pay back right now you need about a 30 cent a watt 30 cent a kilowatt hour differential which you have on it's interesting if for residential customers to put in a system the standard solar rate this the standard time of you straight eto UA or et Orbi doesn't pay back with arbitrage it's interesting it's almost worth buying a used cheap electric vehicle so you can go on the eve you which has a 35 a big differential then then sticking with the standard solenoid that that's what that makes sense for solar really so is there a secret there that you're letting out of the bag on rates it's no secret is that basically the wholesale market they pointed to earlier there's a big disconnect between retail rates where Berry's is talking about and the wholesale market and they're you know connecting the two would be really interesting to provide a lot of signals for customers residential customers to participate and there's some institutional barriers and some political barriers there you know but it's possible you know we see more and more looking forward and our experience to date there's been a blending of wholesale and retail markets and to some extent the utility rate making process which is very heavily regulated it's not the utility sets race the Public Utility Commission sets rates in a very complicated way 25 years ago I made a diagram of it no one in California understood it then no now but it's very complicated for many good reasons because we were very ambitious and trying to achieve half a dozen policy objectives right the race not unlike the tax code go ahead Kate we need something to counter all of this I would say there's the the area where doing your project in Southern California is one of these it's a great example of where you know in partnership with the utility and the way they structured their procurement they were able to stack some of the different benefits some of these transmission and distribution benefits the you know the customer you know in your case the customer benefit but also the the capacity that was needed at that location you've got institutional barriers in some states so a Texas for example it's an energy only wholesale market and then the distribution companies are separate companies and then there are retail only companies and you can't like cross those different barriers it's really difficult and so there are opportunities in Texas where bet storage could help ease you know certain constraints on the demand on the distribution system but then they would be you know taking in and releasing energy and so that conflicts with the energy market and then you know the the folks who are only in the energy market are like that's gonna work the market yeah so it you find these sort of siloed pieces that there are reasons they exist but because storage can crossed all these different silos it's it these are the things that we need you know policy this for to cover the unintended consequences of conflicting regulatory policies yeah when Kelly was showing that the pictures of the grid in in LA area you mentioned that there was some hot spots and I didn't think about the hot spots you were referring to I was think about the hot spots that are hot right now I was thinking about what's what's going on with some of these tremendous fires we had the same situation up in Sonoma so you know we talked a lot about the pure economics of storage how we can get with all these great things have done but when you have grid reliability issues and you know there's gonna be tens of thousands of people who are no longer connected to the grid that they had before made the crits broken it has to be patched up but if if there is local commercial and residential battery stores installed first of all these people can benefit from contain have power because it could take weeks for them to restore but second there should be ways for those battery systems and solar systems that help provide power to a collapsed grid that may be functioning as a micro grid so it's really important to think about some of those other advantages because I don't know it just seems to be happening more and more often that we're having these problems and I think Barry the pointing to the issue of resiliency it's good now particularly as we feel the effects of climate change and we see what's happened not just in northern Southern California but in Texas and Florida and Puerto Rico and we see more frequent more extreme storm events being forecast in our service territory and so resilience is an important element and energy storage provides all a lot of that and so the question then becomes what are we willing to pay for that and how do we pay for that and to some extent what scent is that resilience of social good where is it you know basically those behind gated communities and really providing the the opportunity politically for all-around customers all of our society to benefit in that resilient way that's actually a real challenge the technology is there the question is how do we get there kind of politically and institutionally so let's do this poor Robbi let's let's go ahead and and start taking questions from the audience what we'll do at the end of that bat period to make sure the audience has an opportunity to ask you questions we may not have gotten to and there's a lot of things we didn't get to as well I'll come back to each of you for one last closing comment okay and then we'll and then we'll close the panel down you need my microphone all right I'll go up to the podium because I don't want to give up on my career I was reminded during our conversation is this one on yes okay I was reminded during our conversation there was one other thing we didn't go to that I think is transformative right now in the regulatory arena and you're probably all aware of this that my former Commission my Commission that I was formerly a member of made a rather unique decision about a month ago where they they basically preemptively denied the the permit for a new gas fired power plant because there are cheaper more reliable less polluting opportunities available and I although I don't think they said it there were they're pretty sure they're referring to these energy storage projects that are being built in spades so you must be pretty enamored with this idea correct and and I would think that the investor-owned utilities represented today here by dr. Strauss would also get pretty enamored because this is more stuff that you could rate based it's not a power plant believe me right when shareholder incentives are not along with customer acceptance that's not in the interest of shareholders and actually not looking to own stuff that's not economic it's good to hear you say what's really interesting is that it seems like and we'll see what how the integrated resource plan was sitting plays out the PUC it seems like the marginal resource for capacity may not be a gas-fired combined cycle plant or a peeker plant and maybe something else and maybe demand response right it may be energy storage and that's really interesting ok good so I'm sorry I took us down another path if you have a question please raise your hand and and and please stand and identify yourself I think that's always helpful and if you want to direct it to someone go ahead otherwise we'll just assume it's open is the microphone on please I think so good go ahead thank you very much for insightful discussion I'm Angela Chong from The Electric Power Research Institute and I have a question about retail rate reform as you know there's a lot of talk for storage to the values to be captured especially at the residential light level where the rates are relatively flat or inverted booked your rates that we need rate reform a better alignment with wholesale markets and the early resistance towards that as even with utilities are on the track of herbs reforming the rates has been the solar industry and we've seen that in states like Arizona for example however as solar industry becomes solar plus storage have we turned the corner when are we going to turn the corner where that industry is more accepted accepting towards rate reform and demand charges and so on I think questions for the solar industry and I see three battered well actually energy storage right so it's not solar and storage so maybe Barry I don't know I spent an enormous amount of time advocating for rates that are not penalizing solar and storage and the you know the the impediment usually is is we're we're arguing against our utility competitors on that I don't see that issue going away because it's really just a struggle of profits utilities want to keep the rates higher and then make sure alright how do we make money what it is is actually it's which of our customers pay more and which of our customers pay less so it's actually a one-of customer cost allocation among different customer types whether they have the solar or storage or it's multifamily and low-income it's not actually about utility profits this discussion I'm just gonna correct that a little bit the the the rates are set so that the utilities can make sure that they're gonna get that I think it's ten and a half percent fee genies case guaranteed rate of return so if for whatever reason they're not selling enough electricity because of solar then they're allowed to raise the rates so that they can continue to hit that rate of return on their net assets so it's it's a really I don't know what the solution is as far as your specific question about how to do this all I know is I've been advocating for 15 years for rates that would reflect the benefits that Solar is providing and to reflect the benefits of solar and storage are providing right now for business and consumers who basically can get power cheaper than what they're paying for from utility good we can go to another question unless you want to s PG&E so they have a critical peak period which was I think four o'clock in the afternoon and then you know based on their cost of power and everything they moved the critical peak period to six o'clock in the afternoon and the San Diego School District sued because they had made big investments in solar and just when their solar panels were going dark the rates would shoot up and so storage is a very effective arbitrage tool and if you had a storage system you would basically say oh that's fine you know because we can move load around and we can respond to these changes in in tariffs you know and that I mean that's just one function of storage but it it's certainly solar plus storage helps make a more I guess durable benefits dream you know given that tariffs are going to change and you're not quite sure where they're going to go well and so one of the things that's happening now with rates and I'm on these calls every week is the rates are not diverging they're getting they're getting closer they're getting flatter and it's but on the wholesale side third they're crazy they're negative and then they're very positive so there's a big differential between what the what the utilities are paying for power going out to the grid on the wholesale level and what customers are paying as those rates flatten we're getting more towards the situation where it's like hey it's fixed it doesn't matter when you're gonna use so Todd do I'd prefer that we move on shortened down but but the point to take away from this is this is just California this is just talking about certain rates which we have dozens of them this is just one state and in fact it's very complicated and you can see when you tweak one little aspect of it it can change a lot of a lot of things for customers so that's why maybe some standardization at the federal level might be very helpful with regard to not just energy storage but some of these policies in general let's let's go to this side of the room and take another question go please we'll try and be equitable move it around as much as we can and skin as few many and as we can go right ahead identify yourself please hi I'm Kevin Lang with Bank of America Merrill Lynch in the Renewable Energy Group I haven't heard anyone tonight mentioned community choice aggregators I'm curious if they're interested in storage procuring it if storage plays a role with how they were changing the market California I haven't really seen them procuring utility systems at least you know not kind of for the the timeframes in which you know I'd be looking to sell a system and I think I can help give you a brief answer on that subject I've been advocate in this area for the last two or three years the reality is CCA's or Community Choice Energy agencies have not really built a whole lot of solar yet so there are renewable so they're not going to have a great deal of demand but I can tell you having attended a number of different meetings organizing meetings and such there are energy storage and renewables companies that attend those meetings because they see opportunity it's not there yet so is it fair enough yeah okay I don't know I just think that's the short answer to that question so let's go ahead and pick another one please hey hi my Marcos Romano's I come from Europe actually will come with a startup from Spain so it's really interesting we have been actually speaking with many CCS we're really interested in the community scale in the optimization at that level and a matter that came up a lot we all agreed was integration we heard a lot of integration we heard a lot of opening markets and providing information and the main question is particularly to PG&E basically because it's a very surprising model that we have met here in California and the disintegration how much Papa how big part of this integration is digitalization and opening giving transparent information to other players who are like utility scales or to even consumers to know exactly where their energy comes from I think that's a big opportunity and I think that's something that you know California policy is interest in exploring and the question there becomes you know the one hesitation that's like I'm always sorry to want to pour cold water and everything that's like I've seen Wells Fargo I saw Equifax you know I don't think we've heard of a utility leak of millions of customer data information yet and you know that and we're paranoid about cybersecurity and so the question becomes you know this is your information right in our systems and so the question becomes how to make sure we provide that digital access in a way that maintains cybersecurity and that's really like a key challenge for restless Perry you want to ask a question hi Harry Devine in tech power services has anyone put together a comprehensive proposal for a tariff structure that would capture the different value components of storage I'm not asking whether it's in place I'm asking is anyone even put together what is recognized to be an acceptable structure for someone building an independent path storage project to sell into the grid that captured that under which through their revenue that they are paid they capture all the different aspects of the benefits of energy storage is that even then put together academically through a utility anywhere I think it's sort of going in in phases and I think ultimately you'd like to get to either tariffs or markets that have these kinds of pricing mechanisms of way of monetizing things I think right now the proxy is these these utility procurements and bilaterals are Power Purchase Agreements that are being done that allows a developer like us to monetize that these benefits yeah I think I think you can through the markets capture those those benefits that are captured within say the California Independent System Operator so you can you can get paid or pay to charge depending on the whether it's negative or positive pricing you can sell into the market hopefully at a higher price than you paid to charge and then you can also do various ancillary services like provides spinning reserve or provide frequency regulation and get paid for those services what that wouldn't capture and you'd have to find another way to get that benefit is if if the system is also in a location on the grid where there is some sort of you know deferral value or grid service that it's providing to help the you know the distribution grid so there it's not complete as of now in California anyway six or seven years ago I think it was a utility in Austin created what's called a value of solar tower the OST so it was done for solar and I'm sure that their academic there's probably a paper out there that has done something very similar for storage so you made up you may not be able to answer this but isn't this with the what the Federal Energy Regulatory Commission's proposed rule is attempting to do is provide some standardization around the value streams or the stacking for energy storage isn't that the same isn't that the answer I mean the challenges they're not always the same all the time difference difference difference go ahead please talk you asked is there a framework this exists the answer is yes and there are working groups and there are frameworks and PG has been a participant in them and so the interest you know when are they kind of ready for more wider public consumption in what forms so the answer is stay tuned in the coming weeks and months [Laughter] let's take another question on this side is there another question here Paul Kelleher I'm with Primus power we're a flow battery company excellent a flow battery company low battery current good and you know the storage plus solar are natural partners but I'd appreciate hearing the panel comment on the relationship between net metering and the benefits that are available to storage in the California market right now can you give us can you give them some more information I mean what are you looking for what do you want them to answer net metering is the ultimate battery and so if you're in the business of selling batteries any any net metering beneficiary which is just about every solar project less than a megawatt under nan one and under 3 megawatts under net metering - is already getting the benefits of the ultimate battery which is the utility grid so ah the ultimate battery there you go he said it not me and if you're trying to sell batteries we actually have to avoid the net metered marketplace because there is no battery opportunity there as battery this is the point here is like what do we think about arbitrage of customer demand charges net metering it favors solar but it disadvantages is storage and so you know this is I think Jeff you pointed earlier the unintended consequence of each kind of siloed well-intended regulation and that's kind of you know but that's the glory of California as we kind of make incremental progress right what's the alternative the New York approach top town you top-down large vision and the question is what happens on the ground and California is like we're gonna try lots of different things simultaneously see what works you know and that's how we get to the future and that's been the history California for 150 years yeah and you know in New York system is nowhere right now it's only talking exactly and so let's go so Santa so these things you know it's a game of whack-a-mole you know it's a game of the challenge of that way but it's like that's why you know it engages all of us as we try to attain that future for California for our society for the world in terms of climate change and you know California's been doing this for a hundred and fifty years you know and in the energy space it's been decades so you know what we can handle that thank you it's a good question so I apologize but we're gonna try and keep the Train on schedule just so that we're respectful of everyone's time I would let's go in reverse order if you would just take a minute and and just give me a sense of what something you you may not have gotten to that you want to make sure the audience hears or what you think might be the main takeaway that you want them to have just take a minute or so and make your final comment Kelly why don't you go first well the one thing we didn't talk a lot about is resiliency and reliability and so a lot of people when they think of storage that's the first thing they think of and it's actually the hardest thing to monetize yes and we're really struggling with this in terms of we basically all we need to do is put in a fast transfer switch on our projects to make it easier to island and provide backup power from the batteries and you start talking to customers about well you know will you pay this extra amount for it it's a fraction of the cost of the total system and large sophisticated fires do I think they just are looking for it for free but there is this concept from they will call the agile fractal grid or where you have these these DVRs in these storage systems and when you have like a major outage being able to use these assets to bring the grid back up online quicker you know in this sort of islanding approach versus you know one feeder at a time and you'll eventually get down to there and I think that's that's an area that has been really underutilize of how to unlock the value of resiliency and reliability from from batteries very good thank you dr. Strauss so I opened with the grid is the enabling platform and PG&E as integrator I want to leave you with PG&E as the innovator because yes all the accusations you've heard you know that's your grandfather's utility that's actually not the way the utility is today for example this morning in Oakland we announced an all source rfo to replace the aging peaker plant that I think was really high heat rate very thermodynamically inefficient using a really dirty fuel I think it was fuel oil or diesel or something jet it was a jet engine right replacing it with an RF oh okay all sources looking for distribute energy resources right we're not looking at the wire solution we're not looking to underground hundreds of million dollars little line and rip up the streets of downtown Oakland which one time say what's that portfolio of energy resources to meet that the needs for the customers and deliver that reliably and my team has spent a lot of time trying to analyze what are the parameters and characteristics for that portfolio of possible resources to meet those needs so PGE is not just the integrator or the innovator moving ahead from today into the future congratulations PGD there's no doubt about it Todd has one of the more difficult jobs than anybody in the room and I say that about a lot of PG&E positions please Kate sure so I mean ah I think moving forward we've been talking a little bit about you in front of the meter behind the meter I think the future has storage at lots of different points on the grid and the way we see the future we see a future where we Electrify everything and this is coming with electric vehicles you move a lot of your kind of home heating various other types of things ultimately to electricity you really accelerate the Renewable adoption and then you transform the grid with our favorite topic here energy storage and that's kind of where we see the future thank you Kate and Barry you have the last year so that's a lot of big responsibilities there well just just two things that are at the top of my mind pretty much every day when I'm working at providing systems for customers is one looking forward to rate design that's going to reflect their ability to monetize their investment just as the utility is able to monetize their investment when they're putting in the equipment and you know the second thing that just helps me wake up every morning is that I know with a hundred percent certainty that the cost for these systems will continue to come down at a breathtaking pace and we will be looking at a transformation of the way we all get our electricity I'm not sure if it's going to be it's it's definitely not going to be the utility of our grandfather I'm not smart enough to be able to foresee what it's going to be but I'm you know pretty sure it's gonna have a lot of self generation a lot of storage in it so thank you all very much listen before I turn this way just a moment this moment before I turn this back over to Paul Robby I want to thank you all such an attentive audience really good questions I am so sorry that we could get two more maybe we'll go to a three-hour panel sometimes now please thank our panelists

Channel: MIT Club of Northern California

Views: 27,700

Rating: 4.9422383 out of 5

Keywords: clean energy, power grid, grid, renewables, storage, pv, ev, electric, electricity, PG&E, solar, batteries, lithium, tesla, wind power, megawatt, energy, MIT, MITCNC

Id: nQL0vTcdTR4

Length: 108min 5sec (6485 seconds)

Published: Thu Dec 07 2017