Replacement Power for Indian Point – Energy Storage

In two earlier posts I addressed potential replacement of New York’s Indian Point nuclear station power using new projects that are licensed or under construction suggested by the Governor and the alternative use of renewables and energy efficiency as proposed by environmental organizations. The latest proposal, commissioned by the New York Battery and Energy Storage Technology Consortiums, claims that energy storage, along with a portfolio of other clean energy sources, can replace Indian Point. This post examines their proposal.

I have been following New York State (NYS) energy policy for a long time. Before retirement from a Non-Regulated Generating company, I was actively analyzing air quality regulations that could affect company operations and those regulations were often indirectly or directly tied to NYS energy policy. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone. I am motivated to write these posts on energy policy because the majority of what you hear in public is, in my opinion, overly optimistic about the viability of new technologies and rarely portrays costs realistically.

In January 2017 New York’s Governor Andrew Cuomo announced the premature closure of the Indian Point Energy Center located 25 miles north of New York City. Cuomo claims that Indian Point produces 2,000 megawatts of electrical power and that “more than enough replacement power to replace this capacity will be available by 2021”. Previously I showed that while the capacity can be replaced by projects that are either under construction or licensed, that insinuations elsewhere that the replacement will be air pollution free are not correct. Shortly after his announcement environmental organizations proposed using renewables and energy efficiency exclusively but I showed that was technically possible but the realistic costs of replacing all the capabilities of Indian Point with those resources would be too expensive to be a realistic option.

Indian Point Energy Storage Replacement Option

The New York Battery and Energy Storage Technology Consortium hired Strategen Consulting to evaluate the use of energy storage as a potential replacement for Indian Point. The study presentation is a slide show that includes some excellent graphics that show the mix of generation capacity in Downstate New York. In addition to the retirement of Indian Point the study explains that there are a couple of other issues that could exacerbate the capacity problem. They point out that attaining the new ozone ambient air quality standard has triggered a NYS process to address old peaking turbines in New York City and that the City of New York is requiring that all use of #6 fuel oil be phased out. As a result, they claim there could be a capacity shortfall of greater than 1,000 MW by 2023.

The primary goal of this post is to discuss the energy storage proposal but let me quickly address the peakers and #6 fuel oil phase-out problems. The process for determining what to do with the peaking turbines has just begun and while the NYS Department of Environmental Conservation has shown that those peakers contributed to ozone in 2011, there are indications that the relationship is weakening to the point where additional modeling is necessary to determine what is happening today as opposed to five years ago. The phaseout of #6 fuel oil is not a major technological problem so the only reason that capacity would be affected is if the costs for switch over are too high. I have seen no indications that any of the affected facilities will shut down due to this requirement. Both issues are valid problems but the evolving regulatory framework is too early in the process to claim that the 1,000 MW shortfall claimed is anything more than a low probability.

Battery Storage Replacement

Until this issue came up I had not paid much attention to battery storage other than recognizing that in order to make intermittent renewable power dispatchable you have to have storage. In my mind, that simply equated to building enough batteries to store the renewable energy for when it is needed. Not surprisingly, it turns out that it is more complicated than that. Late last year PG&E reported on the results of a battery storage demonstration project that described how the batteries were used on the grid and how they were paid to operate. The project participated in the day ahead energy market which is used to procure the majority of supply to meet that day’s predicted electric load. The California ISO also has a real-time energy market and the battery system provided services for short-term fluctuations from the day ahead forecast. In addition to the energy market batteries can be used for the ancillary services of frequency regulation and spinning reserves and the demonstration project participated in those markets.  Note that the energy storage association has a longer list of battery technology applications.

The rosy projection for the use of energy storage depicted in the Strategen report is at odds with the results of the PG&E 18-month trial of electricity storage on the grid encompassing 6 MW of storage at two sites. For example, the report notes that it takes more energy to charge the batteries than battery discharges. Note that there is a significant discrepancy between the installed costs of the trial and the proposed Indian Point replacement. The trial report states that the “fully installed cost of the 2 MW / 14 MWh Vaca BESS was approximately $11,000,000, which equates to $783/kWh or $5,500/kW”. The assumed installed cost by Strategen is $1600/kW or nearly three times less than the actual trial cost presuming that these numbers are apples to apples.

Todd Kiefer described the results of the CAISO battery storage trial on the T&D World blog.  Mr. Keifer summarizes the report as a cautionary tale. The report shows that batteries are not cost-effective:

“The report included two external studies that found that cost of battery storage must come down to about $800/kW to achieve economic break-even.  However that number has two false assumptions baked in: a 20-year service life and only 15-minutes of storage capacity.  To aggressively dispatch the batteries as was done in the trial to maximize revenue requires at least 30 minutes of storage capacity and would consume the 4,500-cycle service life within 10 years.  With these adjustments, the real break-even cost is approximately $200/kW.  Indeed, $197/kW is the estimate PG&E itself empirically found to be the break-even cost for a typical month in 2015.  This is a factor of 27 cheaper than the Vaca system cost of $5,500/kw.”

Even assuming that the Strategen cost estimate of $1600/kW is possible the breakeven costs are much lower.

The Strategen report indicates that energy storage could be used to replace the peaking turbines at risk because of the ozone attainment requirements. Mr. Keifer explains that shaving peaks through energy arbitrage is an obvious use of batteries but notes:

“This time-shifting of generation to match consumption peaks involves techniques such as peak shaving and load leveling; these are easy to envision and model and optimize when looking at yesterday’s load and price curves, but very difficult to do in real-time when the load and price are varying stochastically and neither the height nor timing of the actual load peak can be known or recognized till well after the fact.  In practice, energy arbitrage only generated enough revenue to barely cover operating expenses.”

The basis of the Strategen report is that energy storage can be used to replace traditional generating units such as Indian Point or the peaking turbines. The emphasis on that claim is capacity but that neglects all the other services those generating units provide to the grid. Mr. Kiefer notes that the most lucrative use of batteries is frequency regulation or the response to fluctuations in the mismatches between load and generation. In the current CAISO market Frequency Regulation is the highest-value product but the project was not cost-effective for that application. Importantly, if the battery owner wants to maximize revenue by optimizing the system for frequency regulation, that precludes using the system to shave the peak because the batteries are maintained close to 50% charge levels and stand ready to charge or discharge rapidly to damp out momentary dips and spikes in grid frequency that mark mismatches between generation and load.

Mr. Kiefer describes a surprising finding that is directly applicable to the Indian Point replacement situation.

“The wholesale electricity price varied so much by geographic location on the California grid that often it was not economical for the two battery arrays to store surplus power being generated by wind or solar farms.  California now has enough “renewable” energy capacity that it can produce negative locational marginal price (LMP) in the vicinity of the wind and solar farms.  However, these low prices do not necessarily propagate as far as the electricity storage sites.  This is often blamed on “grid congestion” as if to say it is a shortcoming of the pre-existing grid, but in reality this bottlenecking is a predictable consequence of adding large capacities of remote, diffuse, and uncontrollably intermittent generators at the fringes of the grid far from the load centers that consume their power.  If batteries are to be used for energy arbitrage, they would be optimally co-located at the fringes with the wind or solar farms.  However, if they are to be used for frequency regulation, they are better located near the loads in cities and industrial centers.  Since the revenue stream of the latter is much more attractive than the former, it is likely that the utilities would prefer downtown rather than desert locations for assets they own.  That leaves solar and wind developers to install storage at their sites.”

In New York State the majority of the renewable sites are far from New York City so this suggests that the batteries for replacing the ancillary services will have to be near the City but in order to use the batteries for peak shaving they will have to be located near the renewable facilities.

The Strategen report claims low costs but only “through long-term contracting arrangements (e.g. 10-20 years)”.  In his cost analysis of the report, Mr. Keifer notes that “To aggressively dispatch the batteries as was done in the trial to maximize revenue requires at least 30 minutes of storage capacity and would consume the 4,500-cycle service life within 10 years.” Obviously a long-term contract greater than the expected service life is not a good deal.

Conclusion

The experience of the California demonstration project suggests that costs are a major concern with respect to this proposal.  Moreover, because wind and solar are diffuse collecting that energy and delivering it where it is needed requires the use of the transmission grid so the role that Indian Point provides for grid support services should not be ignored. Batteries can provide many of those support services and in some cases better than a generating unit but in order to provide all those services with batteries you will need more than the number needed to simply replace the capacity. How many more batteries is unknown, how the batteries will work within the system best needs to be determined, and how long the battery systems will survive providing different services is another key element in a cost comparison. Integrating small amounts is not an issue but there is a point when the incompatible nature of those resources compared to traditional generating plants like Indian Point has to be resolved and that also increases costs significantly.  The failure of the Cuomo Administration to admit much less address the grid issues is disappointing.

Unintended Consequences

I was working on this post at the same time that Planning Engineer posted on Renewable resources and the importance of generation diversity at Climate Etc. There were a couple of related and relevant comments made that brought up some unintended consequences for the widespread use of batteries that I reproduce below.  These comments show that the perception that batteries are unencumbered by additional environmental impacts are incorrect.

Albert Hopfer works in the battery design and manufacture field and notes:

We in this business (the biggest of that business) are struggling with cell suppliers to get the cells and cell types needed for our products. Lithium does not grow on trees they exist and produced as either rock-ore or brine. Brine has become the (only) profitable choice. Brine requires 9-12 months to “sun dry” producing the necessary oxides for Lithium battery grade product.

That being said, you can imagine the scarcity Lithium would become and the change in cost/selling price. Gas auto sales in the US 2016 was at the 14 million level. Electric cars next to zero in comparison. Yet, today, EV’s and other large format battery needs (new) are exhausting supplies of Lithium. Lithium is also use in glass and other product production.

If the US grid and transport systems became dependent on storage using wind and solar the US would immediately be dependent on foreign Lithium since the US reserves are minor compared to places like South America etc. We do not want to go there.

M Anderson has been been “mapping, analyzing, and helping change complex global infrastructure networks, on the ground, in more than 40 nations for decades. (Autos, energy, water, food, mobile communications, waste, etc).” He explained that rooftop solar and local battery storage have several hidden “landmines” that can only be seen by looking at their total life-cycle from mining to recycling and waste.

The first landmine is that the “Lithium batteries in Teslas – and in emerging home batteries – contain 1200-2,000 pounds of traditional, recyclable, materials AND lithium that cannot be easily recycled. At current useful lives, these batteries will be coming into the waste-recycling streams at volume in about 7-12 years.”

The second landmine is the “17-25 year recycling periodicity of the massive “e-waste” in modern solar panels.”

He goes on to explain that one of the unique, negative, environmental effects of the widespread use of lithium batteries is that each new product made requires new mining of lithium and other materials and emphasizes the point that in the case of electric vehicles the difference in recycling potential with respect to existing vehicles means that “EVERY new EV made requires more new mining and material production than any of the existing 1.2 billion petrol-fired vehicles on Earth.”

As a result the environmental effects of mining Lithium will be exacerbated because so much more will be required.