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Dienstag, 28. März 2017

Q&A of the Week: World’s Largest Battery to Recover Cost 'Over 10 Years'



Q&A of the Week

World’s Largest Battery to Recover Cost 'Over 10 Years'

Using batteries to absorb excess solar energy generated in California’s day, and release it again during the peak evening hours, is “very important” and a big part of San Diego Gas & Electric Co.’s road map, Caroline Winn, chief operations officer at SDG&E, told
BNEF. “The sweet spot for energy storage” is providing power at peak times of the day, she said in a telephone interview.
The subsidiary of Sempra Energy, which supplies gas and electricity to millions of customers in southern California, owns and operates the world’s largest lithium-ion battery storage facility — a 30-megawatt project installed and maintained by AES Corp. The capital cost of the installation will be recovered through customers’ bills over ten years, which is the guaranteed lifetime of the battery without any degradation, said Winn.
The battery will help the utility deal with the increasing penetration of intermittent solar
power on its grid system. SDG&E currently sources 43 percent of the electricity it
delivers from renewable resources and also serves 100,000 customers that have
rooftop solar.
SDG&E is also testing the performance of a 2-megawatt vanadium redox flow battery
on its grid to see how it helps integrate renewables into the network, particularly
because the “beauty” of this battery is that it “has a longer lifespan than lithium-ion”, said Winn. The utility will weigh the benefits of technologies such as these as costs continue to fall, she said.
Gas-powered peaker plants will also be crucial, in order to sustain the grid during
intermittent solar output and provide reliability of supply, said Winn.
From next year, residential customers in California will transition onto time-of-use
electricity tariffs. This could change the 24-hour pattern of electricity consumption as
customers become savvy about saving on their energy bills, and use smart appliances
to adapt to different price points, Winn said.
Q: In February, SDG&E installed the world’s largest lithium-ion battery storage facility to date — a 30MW project built in Escondido, California, in partnership with AES. Can you talk about the profitability and how long it will take to repay initial investment?
A: The cost is confidential, but generally the cost of utility-owned energy storage
projects are recovered from customers. AES has guaranteed the energy and capacity for 10 years. They will maintain the installation and ensure there is no battery degradation over that time. We expect it to last even longer, as long as we understand the operations and the cycling of the battery. But in terms of recovery, [the costs will be recovered] over ten years, which is the book life of the asset.
Q: Where are the best revenue opportunities for lithium-ion batteries?
A: Today we have around 100MW of energy storage connected to the grid [and] it’s really around energy and capacity. It's providing that peak power at peak times — the role of the battery is to soak up renewable energy during the day and provide it for four hours in the evening as the system ramps up. That’s where we see the sweet spot for energy storage.
Q: To meet California’s policy mandate, SDG&E will install 330MW of energy storage by 2030. What is your planned rollout for this capacity?
A: We have over 100MW of energy storage connected to our grid today. Of the first 165MW that need to be brought online by 2020 to meet the PUC [California Public Utility Commission] mandate, we have procured 65MW to date. We do this through a competitive solicitation for least-cost, best-fit applications. Legislation was created last
year to give us the authorization to do even more energy storage [which brings the company to its 333MW by 2030 business target, which it will absolutely be able to meet. Energy storage] in California is very important given our renewable portfolio standards. Strategically we’re investigating different technologies, not just lithiumion. We just installed a redox flow battery on our system. Over the next decade or so, technologies will advance, price points will fall and, as the state continues to add more renewable energy, energy storage will continue to progress. In California, the ability to store excess solar energy in the middle of the day and use it in the peak hours, from 4pm to 9pm, is very important. So energy storage is a big part of our roadmap. 
Q: How long before batteries achieve organic growth beyond policy mandate in California?
A: Policy mandate helps us ensure we have a regulatory commission that will approve the expenditures to utilize this technology, so it is important they go hand in hand. But beyond that, we believe that with the amount of renewable energy, not just from the 43
percent we procure, but also our 100,000 customers that have installed rooftop solar, energy storage is a very important piece of the puzzle, as well as our natural gas peakers, which will provide more reliability for more hours of the day
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