Colleen Lueken EPIC 2018

Solar+Storage: The New MidMerit Generation Resource Dr. Colleen Lueken Director of Market Analytics, Fluence October 15, 2018

Summary • Introduction to Fluence • What do I mean by solar+storage?

Specifically, co-located, utility-scale energy storage and solar PV

• What is the value proposition for solar+storage and how is it changing?

Established that energy storage is a viable alternative to gas peakers Annual US energy storage deployments expected to reach 3.9 GW by 2023 (GTM Research) Solar prices coming down, but marginal unit of non-dispatchable solar energy is becoming less valuable to grid Now with abundant and cheap solar PV, solar+storage becoming a viable alternative to mid-merit generation

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Fluence is the global leader in energy storage

10+ Years

16 Countries 60+ Projects

500+ MW

30 MW of energy storage for San Diego Gas & Electric, California, United States

Largest energy storage project in North America • • •

30 MW / 120 MWh Contract to online in 6 months Sited on 1 acre, where a power plant could not be permitted

Storage/Solar+Storage established as peaker alternative Next stop: mid-merit generation such as NGCCs

Peaker

Energy

Solar Mid merit/load following generation

Baseload 24 hour generation dispatch 5

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Why add storage to solar? Firm Capacity.

As more solar comes online, every additional MW of solar capacity will be valued less • “Duck Curve” Forecast from 2012

Source: CAISO 6

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• Duck Curve Realization - 2017

Source: EIA

What is solar+storage? AC versus DC Coupling AC Coupled

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DC Coupled

How do you decide if DC coupling is the right choice?

DC coupled has several advantages though may place restrictions on commercial capabilities.

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What does a DC-coupled solar+storage plant look like?

Typical block size of ~3 MW

3 MW

500 kW each Up to 3 MW 3-6 MW 9

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(Solar only example)

Clipped energy capture: Maximizing Solar Energy to Grid with Storage

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Primary applications of DC-coupled solar+storage Renewable Firming and Flexible Peaking Capacity

Renewable Ramp Rate Smoothing

MW

Solar PV to Battery

Battery to Grid

Load

Solar PV to Grid

TIME OF DAY

Secondary Applications • Stacking of real power ancillary services applications, such as frequency regulation or contingency service.

• Stacking of reactive power ancillary services applications, such as the Dynamic VAR modes.

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Solar+Storage vs Gas Peaker Net cost of capacity methodology • Methodology compares storage or solar+storage capacity payment to traditional gas peaker • “Steps” account for the additional benefit accrued to the storage option compared to the gas peaker • For example, solar+storage provides $1/kW-mo in RECs value ($0 for gas) • Net Cost of Capacity = Cost net of benefits/Total MW Capacity

Net Cost of Capacity Increase

Decrease

Total

14

12

10

8

12

-1.5

-2.5

7 -1

6

4

2

0 12

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Ancillary services…

RECs value Capacity payment Reduced energy cost Net cost of capacity

An advantage of being always on and synchronized to the grid is being able to provide ancillary services more often than an NGCC • Solar+Storage 24 hr dispatch

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• Average 24 hour dispatch of NGCCs

Solar+Storage vs Gas Peaker Net cost of capacity methodology • Methodology compares storage or solar+storage capacity payment to traditional gas peaker • “Steps” account for the additional benefit accrued to the storage option compared to the gas peaker • For example, solar+storage provides $1/kW-mo in RECs value ($0 for gas) • Net Cost of Capacity = Cost net of benefits/Total MW Capacity

Net Cost of Capacity Increase

Decrease

Total

14

12

10

8

12

-1.5

-2.5

7 -1

6

4

2

0 14

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Ancillary services…

RECs value Capacity payment Reduced energy cost Net cost of capacity

The price for “fuel” is coming down while the price of gas is staying constant (and could always rise)

Source: U.S. Utility PV Market Tracker 15

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Solar+Storage vs Gas Peaker Net cost of capacity methodology • Methodology compares storage or solar+storage capacity payment to traditional gas peaker • “Steps” account for the additional benefit accrued to the storage option compared to the gas peaker • For example, solar+storage provides $1/kW-mo in RECs value ($0 for gas) • Net Cost of Capacity = Cost net of benefits/Total MW Capacity

(Values are for example only) Net Cost of Capacity Increase

Decrease

Total

14

12

10

8

12

-1.5

-2.5

7 -1

6

4

2

0 16

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Ancillary services…

RECs value Capacity payment Reduced energy cost Net cost of capacity

Solar+Storage vs. NGCC

(Values are for example only)

Net-LCOE Methodology • Compare solar+storage and combined cycle plants with similar total energy production and cycles (requires analyzing NGCC capacity factors and generation profiles and modeling a solar+storage plant that provides a like profile) • Consider any ancillary services or other values that either plant can provide as reductions in total capital cost • Net - LCOE is the average cost of each MWh of energy provided over the plant lifetime • Net LCOE = Net lifetime cost/Total MWh Delivered 17

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Net Cost of Energy Increase

Decrease

Total

120

100

80

60

100

15

-15

80

-20

40

20

0

t t … lue os os EX s c a P C v e ce al eO rvi tim me pit i m e t e i a f t s li fe C e et Lif s li ary l l N i C c RE An

Conclusion • Solar+Storage already competitive with mid-merit generation in some markets • Depends on the capacity factors of the NGCCs and the solar resource • Net LCOE is a metric that can be used to compare two generation resources with similar generation profiles but different capabilities

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Thank You Learn more: blog.fluenceenergy.com

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