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Energy Storage Has an Upstream
Swim in the Pacific Northwest

by Peter Maloney
Utility Dive, January 30, 2018

The dominance of low cost hydropower in the region, along with policies that favor
large power plant development over distributed energy resources, present challenges for the resource.

(Steven Lane photo) Powin Corporation Chief Technology Officer Virgil Beaston, left, shows the inside of a shipping container to Pacific Northwest National Laboratory employees Vish Viswanathan, center, and Chunlian Jin during a tour of a new battery storage unit at the BPA Ross Complex. States in the Pacific Northwest are moving forward with policies encouraging new energy storage projects, but the region already has a lot of old fashioned storage -- the type that sits behind a dam.

Hydropower provides the region with a cheap and abundant source of renewable energy that can also be used, in some instances, to store energy; and that presents a challenge for newer technologies, such as lithium ion batteries.

"Policy is pushing energy storage in the Pacific Northwest, but the economics of storage could have an uphill battle against the economics of hydropower," said Jay Paidipati, a director at Navigant Consulting.

In a new report, consulting firm Cadmus Group says energy storage development in the Pacific Northwest is stymied by the lack of a compelling business case, policies and pricing structures that favor large power plant development over distributed energy resources, sluggish movement towards grid resiliency planning, and potential concerns about storage technology lifetimes.

The Northwest does not have an organized capacity market, which means that storage cannot be traded with clear price signals. The region also lacks differential pricing that recognizes the locational and temporal flexibility of storage. That severely limits two possible revenue sources for a potential battery storage project: the sale of ancillary services and the opportunities that high electricity prices create for price arbitrage.

The Cadmus report, which takes a broad look at energy storage in the Northwest, also notes that there are many balancing authorities in the region, but there is no mechanism to easily aggregate and transfer storage resources across them. That engenders a need for complex bilateral agreements that make collaboration more difficult.

Hydro dominant

As much as 80% of the electricity generated annually in the Northwest is produced by hydropower, most of it owned and run by the federal Bonneville Power Administration.

Historically, pumped hydro projects have been the storage technology of choice in the Northwest, and they still lead the development pipeline. But pumped hydro projects have long lead times and are difficult to site.

Meanwhile, battery storage projects have begun to show up in the pipeline. There are only handful now, but Paidipati said those projects are poised to grow, propelled by policy changes in Oregon and Washington State, and they will have to find a niche to fit into the regional market.

No single application is going to be cost effective for every utility, said Paidipati, but the applications that are emerging in the region include using storage for capacity or resource adequacy, for the deferral of distribution upgrades, and for providing system reliability as the region's mix of renewable resources grows.

Since 2010, utilities in the region have been exploring new energy storage technologies; for example, Portland General Electric (PGE) with its 5 MW, 1.25 MWh Salem Smart Power Center in Oregon and Puget Sound Energy with its 2 MW, 4.4 MWh Glacier project in Washington.

Three more utilities have now stepped up with new pilot projects: the Snohomish Public Utility District is installing a 1 MW, 0.5 MWh lithium ion battery and a 2 MW, 8 MWh flow battery; Avista Energy is installing a 1 MW, 3.2 MWh storage project; and Kodiak Electric Association is installing a 3 MW battery storage project and a 2 MW flywheel project. Despite the challenges, the region's storage capacity is set to grow quickly, driven by recent policies.

State policy drivers

In 2015, Oregon passed HB 2913, which requires the state's two major utilities, Portland General Electric (PGE) and PacifiCorp, to have a minimum of 5 MWh of energy storage in service by Jan. 1, 2020. The state's Public Utility Commission released guidelines and timelines for the storage mandate last June.

In October, regulators in Washington State issued a policy statement directing the state's investor owned utilities to include energy storage in their integrated resource plans. Washington also provides grants to energy storage projects, such as Puget Sound Energy's Glacier project, through its Clean Energy Fund.

Avista Energy, which operates in parts of Idaho, Oregon and Washington, expects to include large quantities of storage in its 2019 integrated resource plan, according to the Cadmus report.

The biggest challenges energy storage faces in the region are in Idaho and Montana, Vincent Sprenkle, manager of energy storage at the Pacific Northwest National Laboratory, told Utility Dive. Both states lack any distinct law or mandate to drive energy storage.

In Montana, the state's renewable resource standard allows for energy storage, if it is paired with renewable sources.

Montana has also begun to look at energy storage to help smooth out the intermittency of wind power. The state has a tremendous wind regime, but it will need long duration energy storage to optimize that resource, Sprenkle said.

Ideally, those durations would be longer than six or eight hours, but the economics of long duration storage are still not favorable, Sprenkle said. He did note, however, that the cost of lithium ion storage projects continues to decline while the cost of pumped storage projects is flat or rising.

The seasonal need

The biggest need in the Northwest is for seasonal storage -- finding a way to capture an oversupply of winter wind and the runoff of the winter's melting snowfall, Sprenkle said. Those needs are enormous and would be best suited for large scale projects like pumped storage. "It is a proven technology, but it is difficult to permit," Sprenkle told Utility Dive.

For now, Sprenkle said the main applications for energy storage are resiliency, renewable integration, transmission and distribution deferral, particularly at remote, end of the line locations, and backup power for homes and businesses.

Those are among the applications being explored by PGE, which in November filed a proposal with Oregon's Public Utilities Commission (PUC) seeking approval of a plan to spend up to $100 million on nearly 39 MW of storage projects.

PGE's proposal is very close to the high end of the target set by the PUC of up to 1% of 2014 peak load, which in PGE's case would be 38.7 MW.

The utility's filing includes a variety of use-cases for its proposed storage projects, including a microgrid pilot project that will include batteries alongside existing solar power and biomass facilities, a battery at a substation that would provide energy and capacity and other ancillary services, up to 500 residential, behind-the-meter batteries that will be controlled by the utility, and a 4 MW to 6 MW transmission-connected storage facility that will be used to create a hybrid plant at PGE's 220 MW Westward 2 gas plant.

All the facilities are envisioned as pilot projects, PGE spokesman Steve Corson, told Utility Dive. "They are useful in and of themselves," but they also serve as a guide for future investment, he said. "As we plan down the line, we want to have more data so we can get more bang for the buck," Corson said.

This story has been updated to clarify that PNNL Energy Storage Manager Vincent Sprenkle said the biggest challenges energy storage faces in the Northwest are in Idaho and Montana.

Peter Maloney
Energy Storage Has an Upstream Swim in the Pacific Northwest
Utility Dive, January 30, 2018

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