Congressional Hearings
POWERING AMERICA: THE ROLE OF ENERGY STORAGE IN THE NATION'S ELECTRICITY SYSTEM
Congressional Hearings
SuDoc ClassNumber: Y 4.C 73/8
Congress: House of Representatives
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| AUTHORITYID | CHAMBER | TYPE | COMMITTEENAME |
|---|---|---|---|
| hsif00 | H | S | Committee on Energy and Commerce |
[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
POWERING AMERICA: THE ROLE OF ENERGY STORAGE IN THE NATION'S
ELECTRICITY SYSTEM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JULY 18, 2018
__________
Serial No. 115-152
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
35-498 WASHINGTON : 2019
COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
ROBERT E. LATTA, Ohio GENE GREEN, Texas
GREGG HARPER, Mississippi MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia KATHY CASTOR, Florida
ADAM KINZINGER, Illinois JOHN P. SARBANES, Maryland
H. MORGAN GRIFFITH, Virginia PETER WELCH, Vermont
BILL JOHNSON, Ohio PAUL TONKO, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina G.K. BUTTERFIELD, North Carolina
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
TIM WALBERG, Michigan officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
C O N T E N T S
----------
Page
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 3
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Jerry McNerney, a Representative in Congress from the State
of California, opening statement............................... 7
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, prepared statement........................ 95
Witnesses
Zachary Kuznar, Director, CHP, Microgrid, and Energy Storage
Development, Duke Energy....................................... 9
Prepared statement........................................... 12
Answers to submitted questions............................... 101
Mark Frigo, Vice President, Head of Energy Storage, North
America, E.ON.................................................. 16
Prepared statement........................................... 18
Answers to submitted questions............................... 105
Keith E. Casey, Ph.D., Vice President, Market and Infrastructure
Development, California Independent System Operator............ 29
Prepared statement........................................... 31
Answers to submitted questions............................... 111
Kushal Patel, Partner, Energy and Environmental Economics, Inc... 35
Prepared statement........................................... 37
Answers to submitted questions............................... 116
Kiran Kumaraswamy, Director, Market Applications, Fluence........ 51
Prepared statement........................................... 53
Answers to submitted questions............................... 122
Submitted Material
Statement of the National Rural Electric Cooperative Association. 98
Statement of the Edison Electric Institute....................... 100
POWERING AMERICA: THE ROLE OF ENERGY STORAGE IN THE NATION'S
ELECTRICITY SYSTEM
----------
WEDNESDAY, JULY 18, 2018
House of Representatives,
Subcommittee on Energy,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:03 a.m., in
room 2322, Rayburn House Office Building, Hon. Fred Upton
(chairman of the subcommittee) presiding.
Present: Representatives Upton, Olson, Barton, Latta,
Harper, McKinley, Kinzinger, Griffith, Johnson, Long, Bucshon,
Flores, Hudson, Walberg, Walden (ex officio), Rush, McNerney,
Peters, Green, Doyle, Castor, Welch, Tonko, Schrader, and
Kennedy.
Staff Present: Samantha Bopp, Staff Assistant; Kelly
Collins, Legislative Clerk, Energy/Environment; Wyatt
Ellertson, Professional Staff Member, Energy/Environment;
Margaret Tucker Fogarty, Staff Assistant; Mary Martin, Chief
Counsel, Energy/Environment; Sarah Matthews, Press Secretary,
Energy/Environment; Drew McDowell, Executive Assistant; Brandon
Mooney, Deputy Chief Counsel, Energy; Brannon Rains, Staff
Assistant; Annelise Rickert, Counsel, Energy; Peter Spencer,
Senior Professional Staff Member, Energy; Austin Stonebraker,
Press Assistant; Madeline Wey, Policy Coordinator, Digital
Commerce and Consumer Protection; Hamlin Wade, Special Advisor,
External Affairs; Rick Kessler, Minority Senior Advisor and
Staff Director, Energy/Environment; John Marshall, Minority
Policy Coordinator; Alexander Ratner, Minority Policy Analyst;
and Tuley Wright, Minority Policy Advisor, Energy/Environment.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Good morning, everybody.
So, on this day a year ago, the Energy Subcommittee
launched its ``Powering America'' hearing series focused on the
Nation's electricity system. And, over the past year, the
committee has explored important topics such as wholesale power
markets; electric generation; infrastructure, both transmission
and distribution; reliability; and technological innovation.
And this hearing is the 11th in the series and explores the
important topic of large-scale energy storage.
Electricity is indeed a fundamental and essential part of
our everyday lives and the interruption of which has far
reaching impacts on our livelihood, health, welfare, national
security, and everything else. That is why it is important to
utilize all forums of tools and technologies, including energy
storage, to help ensure our nation's electric grid is reliable
as well as resilient.
For example, one electric utility who serves Michigan
recognized the value of energy storage early on. In 2002, AEP,
American Electric Power, demonstrated the use of a sodium
sulfur battery for the first time in the U.S., and by 2008 they
had deployed three 2-megawatt batteries across the U.S.
Large-scale energy storage has benefits and unique
attributes that can improve the reliability and resiliency of
the Nation's electric grid. Energy storage can help manage peak
electricity load, provide essential reliability services such
as voltage and frequency controls, improve reserve capacity,
and provide black start capability.
The electricity industry is responsible for planning and
preparing for disruptions to the supply of electricity. And in
2017 the Atlantic hurricane season was unprecedented. Multiple
storms in close succession slammed into the Gulf Coast, Puerto
Rico, U.S. Virgin Islands. These storms left blind catastrophic
damage, which resulted in major disruptions of electricity to
millions of Americans across the country.
And when power outages occur, electricity providers can use
energy storage as a black start resource to restore electricity
quickly. Black start is when a power plant is turned back on
after an outage with the help of a transmission system. Because
energy storage resources have a reserve of electricity
available, they can provide the necessary power to bring other
power plants back online. This is important because in
emergency situations associated with electricity outages access
to electricity from the transmission system is often not
possible.
Demand for electricity varies depending upon a variety of
factors, including the time of day, season, and region. An
example of this is during the warmer summer months a greater
amount of electricity is consumed through air conditioning
compared to cooler spring or fall. During these times of peak
electricity consumption, more expensive generation units are
generally used to meet the increased demand. Energy storage
allows for electricity to be stored during off-peak times when
electricity is less expensive and then deployed during these
periods of high demand. The ability for energy storage to
energy time-shift can reduce costs for electricity providers,
which can lead to savings for consumers.
So today's panel of witnesses represents different aspects
of the electricity industry when it comes to storage.
Thanks for taking the time to join with us today.
And I was going to yield to Mr. Hudson, but he is not here,
so I will yield back my time and recognize the ranking member
of the subcommittee, Mr. Rush, for 5 minutes for an opening
statement.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
On this day, 1 year ago, the energy subcommittee launched
its ``Powering America'' hearing series focused on the Nation's
electricity system. Over the past year, the Committee has
explored important topics such as wholesale power markets,
electric generation, infrastructure--both transmission and
distribution, reliability, and technological innovation.
Today's hearing is the eleventh hearing in this series and
explores the important topic of large-scale energy storage.
Electricity is a fundamental and essential part of our
everyday lives, and the interruption of which has far-reaching
impacts on our livelihoods, health, welfare, and national
security. This is why it is important to utilize all forms of
tools and technologies, including energy storage, to help
ensure our nation's electric grid is reliable and resilient.
For example, one electric utility, who serves my home State
of Michigan, recognized the value of energy storage early on.
In 2002, AEP demonstrated the use of a sodium sulfur battery
for the first time in the U.S. By 2008, AEP had deployed three
2 megawatt batteries across the United States.
Large-scale energy storage has benefits and unique
attributes that can improve the reliability and resiliency of
the Nation's electric grid. Energy storage can help manage peak
electricity load; provide essential reliability services such
as--voltage and frequency control; improve reserve capacity;
and provide black start capability.
The electricity industry is responsible for planning and
preparing for disruptions to the supply of electricity. The
2017 Atlantic hurricane season was unprecedented--multiple
storms in close successions slammed into the Gulf Coast, Puerto
Rico, and the U.S. Virgin Islands. These storms left behind
catastrophic damage which resulted in major disruptions of
electricity to millions of Americans across the Nation.
When power outages occur, electricity providers can use
energy storage as a ``black start'' resource to restore
electricity quickly. Black start is when a power plant is
turned back on after an outage without the help of the
transmission system. Because energy storage resources have a
reserve of electricity available, they can provide the
necessary power to bring other power plants back online. This
is important because in emergency situations associated with
electricity outages, access to electricity from the
transmission system is often not possible.
Demand for electricity varies depending on a variety of
factors, including the time of day, season, and region of the
United States. An example of this is during warmer summer
months, a greater amount of electricity is consumed through air
conditioning compared to cooler spring or fall months.
During these times of peak electricity consumption, more
expensive generation units are generally used to meet the
increased demand. Energy storage allows for electricity to be
stored during offpeak times when electricity is less expensive,
and then deployed during these periods of high demand. The
ability for energy storage to ``energy time-shift'' can reduce
costs for electricity providers, which can lead to savings for
consumers.
Today's panel of witnesses represent different aspects of
the electricity industry when it comes to energy storage. Thank
you for taking the time to join us today and I look forward to
your perspectives on how energy storage improves the nNation's
electric grid.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. I want to thank you, Mr. Chairman, for holding
this critical and timely hearing.
Mr. Chairman, as we have discussed throughout this
``Powering America'' series of hearings, the domestic energy
landscape is changing drastically in fundamental ways. As we
move toward a more decentralized energy economy, storage offers
tremendous opportunities to integrate cleaner, renewable energy
resources in order to build a more efficient, resilient, and
effective electric grid.
With the evolution, Mr. Chairman, of various technology, in
addition to the increased production costs, energy storage
offers a uniquely flexible technology that can be utilized to
meet the changing demands of customers of utilities as well as
of the grid as a whole.
Energy storage, Mr. Chairman, is an incentive, in that it
provides consumers more control over when and how they use
energy while also helping them save money. With storage
technology, Mr. Chairman, utilities are able to defer or even
completely avoid making huge investments in other more costly
physical assets such as wires, poles, transformers, and
substations, while still meeting the needs of energy consumers.
Additionally, Mr. Chairman, energy storage can help make
the grid more resilient during severe weather events and
provide emergency power during times of disaster. Storage
technology can play a vital role in rebuilding electric
networks necessary for local communities and is a cost-
effective alternative to other traditional options.
This is true whether it be for establishing power for rural
or isolated communities or helping to quickly turn the lights
back on for residents of Puerto Rico and the Virgin Islands
after a disastrous hurricane like Maria. In fact, this
technology can be used to establish microgrids and minigrids,
or it can be utilized in fully distributed generation networks.
Mr. Chairman, even with all these tremendous benefits that
energy storage offers, there are still significant obstacles
impeding the emergence of this budding industry, including
economic, regulatory, and market barriers.
Mr. Chairman, there must be a strategic and calculated
effort by the Federal Government in order to fully develop this
technology and appreciate its enormous benefits. Specifically,
there must be more Federal funding to help offset the lack of
investment from the private sector in electricity storage
research, development, and demonstration.
Additionally, we must consider, Mr. Chairman, development
of a Federal energy storage roadmap, similar to those
established by some States, in order to increase coordination
among the various private initiatives, the national labs, and
other Federal agencies.
Finally, while FERC Order 841 was issued to ensure fair and
equal access for storage resources to compete in wholesale
power markets, we must go even further on the Federal level. In
each of their testimonies, almost all of the witnesses agree
that we must do more to remove barriers to grid and market
access, allow storage to compete in all planning and
procurement processing, and provide appropriate value and
compensation for the unique flexibility that storage
technologies provide.
Mr. Chairman, energy storage has the potential to
fundamentally transform the way we produce and use electricity
in a way that benefits the Nation as a whole, but we must be
willing to make the necessary commitments and the necessary
investment in this technology for it to do so.
With that, Mr. Chairman, I want to thank you, and I yield
back.
Mr. Upton. The gentleman yields back.
The chair would recognize the chairman of the full
committee, Mr. Walden.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Good morning, Mr. Chairman.
And to our members and our panelists, thank you for being
here.
Today we continue our series on ``Powering America,''
taking a closer look at what a lot of people think to be the
next big game-changer, and that is the Nation's, in the
electricity sector, large-scale battery storage.
For years, companies have been working to develop and
pioneer battery storage technology that is both cost-effective
and scalable. We are now at the point where that technology is
coming to fruition and being deployed on the grid in a
meaningful way.
The potential benefits of battery storage are substantial.
Batteries allow us to store energy when demand and prices are
low and release the energy when demand and prices are high.
This not only optimizes the way our electricity system works,
it also lowers electricity costs, meaning that American
families can keep more money in their pockets after paying
their monthly electricity bills.
So we have a lot of work to do here. My home State of
Oregon has been ahead of the curve when it comes to recognizing
the benefits of energy storage. Many of our electric utilities
are integrating energy storage projects.
The Pacific Northwest is home to the Department's Pacific
Northwest National Laboratory, where researchers work to
advance and develop energy storage technologies for grid-scale
deployment. PNNL has tens of thousands of square feet of
laboratory space dedicated to accelerating the development of
energy storage technologies.
In 2015, PNNL opened their Advanced Battery Facility, which
was built to bridge the gap between fundamental battery
research and commercial-scale battery development. I recently
toured that facility, I guess about a year ago now, with
Secretary Perry. It was really impressive.
Clearly, there is great potential in the role that large-
scale battery storage can play in the Nation's electricity
system, but, before that potential is fully realized, there are
a number of barriers and challenges that still need to be
tackled. These challenges range from technological limitations
and costs to wholesale market participation rules.
In order to address some of the challenges faced by energy
storage, FERC recently issued Order No. 841 directing the RTOs
and ISOs to amend their market rules in order to better
accommodate the participation of electric storage technologies.
As you know, right now, grid operators are in the process of
implementing the requirements and directives contained in Order
No. 841, which is something this committee will continue to pay
attention to as things move forward.
Last fall, as part of the Energy Subcommittee's ``Powering
America'' hearing series, we examined technology's role in the
electricity system. Energy storage was a main topic of
discussion at that hearing, and, during that hearing, we heard
from a witness who provided an example of how market rules can
create barriers to competition for energy storage in wholesale
electricity markets. That witness described an RTO/ISO rule
with a definition of a storage product that only accommodated
older storage technologies, such as storage that used a
flywheel. This outdated definition did not allow for newer,
more advanced energy storage technologies, such as lithium-ion
batteries, to participate and be fully compensated in the
wholesale electricity markets.
So today's hearing gives us an opportunity to better
understand the barriers such as this, and I look forward to
discussing further potential solutions. So I want to thank all
of you for coming today.
I will say in advance, we have another hearing with the
Federal Trade Commissioners going on downstairs that I will be
going back and forth with. But thank you for your testimony.
With that, I would yield the balance of my time to the
gentleman from North Carolina, Mr. Hudson.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Today we continue our ``Powering America'' hearing series
by taking a closer look at what a lot of people think will be
the next big game changer for our nation's electricity sector,
large-scale battery storage. For years, companies have been
working to develop and pioneer battery storage technology that
is both cost effective and scalable and we are now at the point
where that technology is coming to fruition and being deployed
on the grid in a meaningful way.
The potential benefits of battery storage are substantial.
Batteries allow us to store energy when demand and prices are
low and then release that energy when demand and prices are
high. This not only optimizes the way our electricity system
works, it also lowers electricity costs, meaning that American
families can keep more money in their pockets after paying
their monthly electricity bills.
Storage also allows for a more reliable and flexible
electricity system. By strategically placing large-scale energy
storage at various locations across the system, grid operators
have more tools available at their disposal to protect the grid
from power disruptions. Additionally, battery storage can help
lower congestion on the transmission system and can even serve
as an alternative to building out expen
My home State of Oregon has been ahead of the curve when it
comes to recognizing the benefits of energy storage and many of
our electric utilities are integrating energy storage projects.
The Pacific Northwest is home to the Department of Energy's
Pacific Northwest National Laboratory (PNNL), where researchers
work to advance and develop energy storage technologies for
grid-scale deployment. PNNL has tens of thousands of square
feet of laboratory space dedicated to accelerating the
development of energy storage technologies. In 2015, PNNL
opened their, ``Advanced Battery Facility'' which was built to
bridge the gap between fundamental battery research and
commercialscale battery development.
Clearly, there is great potential for the role that large-
scale battery storage can play in the Nation's electricity
system, but before that potential is fully realized there are a
number of barriers and challenges that are still being tackled.
These challenges range from technological limitations and
costs, to wholesale market participation rules.
In order to address some of the challenges faced by energy
storage, FERC recently issued Order No. 841 directing the RTOs
and ISOs to amend their market rules in order to better
accommodate the participation of electric storage technologies.
Right now, grid operators are in the process of implementing
the requirements and directives contained in Order No. 841,
which is something that this Committee will continue to pay
attention to as things move forward.
Last fall, as part of the Energy Subcommittee's ``Powering
America'' hearing series, we examined technology's role in the
electricity system--energy storage was a main topic of
discussion. During that hearing, we heard from a witness who
provided an example of how market rules can create barriers to
competition for energy storage in wholesale electricity
markets. This witness described an RTO/ISO rule with a
definition of a storage product that only accommodated older
storage technologies, such as storage that utilized a flywheel.
This outdated definition did not allow for newer, more advanced
energy storage technologies, such as lithium-ion batteries, to
participate and be fully compensated in wholesale electricity
markets. Today's hearing gives us an opportunity to better
understand barriers such as this, and I look forward to
discussing further potential policy solutions.
Joining us this morning is a panel of witnesses with
extensive and varied experience developing, operating, and
regulating large-scale energy storage. I would like to thank
them for being here and I look forward to hearing their
perspectives on how energy storage can strengthen the grid and
benefit consumers.
Mr. Hudson. Thank you, Mr. Chairman and Chairman Upton and
Ranking Member Rush.
I just want to take a moment to thank Duke Energy and Mr.
Zachary Kuznar for joining us at the hearing today to talk
about the important role energy storage can and will play in
increasing reliability for our constituents.
Duke Energy, based in Charlotte, North Carolina, is one of
the largest electric power holding companies in the United
States that are leading the way to modernize the energy grid
and generate cleaner energy.
As both a grid manager and operator, I look forward to
hearing about how utilities like Duke Energy can leverage
energy storage and other grid assets to deliver affordable and
reliable power for our customers.
And, with that, Mr. Chairman, I will yield back.
Mr. Upton. The gentleman yields back.
The chair recognizes Mr. McNerney for an opening statement,
5 minutes.
OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McNerney. I want to thank the chair.
And I appreciate the opportunity to talk about energy
storage. I spent my career developing wind energy technology
for about 20 years before coming here, and we have only dreamed
about being here today, when we were talking about a realistic
application of storage for renewable energy. So we see that
that is one of the possible beneficiaries of storage.
But the problem was that the capital costs kind of would
add to the capital costs of the equipment, so we have to find a
way to make sure the capital costs continue to go down. And we
know from manufacturing theory that when you double the
manufacturing the price goes down by 10 percent. So we need to
find incentives to make sure that the manufacturing curve
continues to increase and we can become more affordable over
time.
I am also the co-chair, with Mr. Latta, who is not here
this morning, of the Grid Innovation Caucus. And we see that
storage is going to be a big player in where we move forward
with our grids.
Now, we have a lot of challenges. There is demand-side
management, there are loads being shifted, there are cyber
threats and so on. So we know that storage is going to play a
very big role in these new developments and the new challenges
we find ahead of us.
So, again, I continue to look for ways, and I hope that you
can not only inform us on the technology but how can we best
incentivize the continuing technical development of solar
technology.
And so, again, I look forward to your testimony.
I am going to be yielding to the gentleman from
Pennsylvania, Mr. Doyle.
Mr. Doyle. Mr. Chairman, I want to thank you, first, for
calling this 9:00 a.m. hearing. We all appreciate that.
Mr. Upton. Were you at the game last night?
Mr. Doyle. No. No. I was somewhere else.
Mr. Upton. It was the winning dugout, I want you to know.
The American League had the winning Democratic dugout that they
had a couple weeks ago.
Mr. Doyle. Yes, that dugout has been pretty lucky these
last few weeks.
Mr. Upton. Yes.
Mr. Doyle. Anyway, thank you, Mr. Chairman, for this
hearing today. Energy storage presents an incredible
opportunity to increase efficiency, grow and reliably use
renewables, and provide resiliency to the grid.
I have introduced H.R. 4649, the Energy Storage Tax
Incentive and Deployment Act. This legislation would establish
an investment tax credit for energy storageinfrastructure for
utilities, businesses, and homes.
And I understand, while this legislation is under
consideration by the Ways and Means Committee, I think it is
important to address options for reducing barriers to
deployment and supporting the opportunities that energy storage
presents.
There is truly something for everyone with energy storage.
This technology supports the deployment of renewables like wind
and solar. It can be used as a standalone technology. It
increases grid resiliency when responding to extreme weather
events and times of peak energy demand. And it reduces
infrastructure costs.
It is important to fully realize this technology, and I
look forward to working with my colleagues to support the
expansion and the integration of energy storage throughout the
grid.
Mr. Chairman, I appreciate the time, and I will yield back
to Mr. McNerney.
Mr. McNerney. Well, I thank the gentleman for his remarks.
Storage also has a real opportunity in terms of small
businesses. I have seen small businesses in my community that
are basing new business models on energy storage. So we have a
lot to talk about here this morning.
I yield back, Mr. Chairman.
Mr. Upton. All time has expired on the opening statements.
We are joined by five witnesses today.
And thank you in advance for submitting your testimony for
the record. We had a chance to look at it, at least some of us
who didn't go to the ball game last night.
We are joined by Zachary Kuznar, the Director of CHP,
Microgrid, and Energy Storage Development for Duke Energy; Mark
Frigo, V.P. and Head of Energy Storage, North America, E.ON;
Keith Casey, Vice President of Market and Infrastructure
Development, California Independent System Operator; Kushal
Patel, Partner at Energy and Environmental Economics; and Kiran
Kumaraswamy--pretty good, no?
Mr. Kumaraswamy. Yes.
Mr. Upton. --director of market applications, Fluence.
So, welcome. Each of you will be recognized for 5 minutes
to summarize your testimony, at which point we will be asking
questions.
Dr. Kuznar, we will start with you. Thank you.
STATEMENTS OF ZACHARY KUZNAR, DIRECTOR, CHP, MICROGRID, AND
ENERGY STORAGE DEVELOPMENT, DUKE ENERGY; MARK FRIGO, VICE
PRESIDENT, HEAD OF ENERGY STORAGE, NORTH AMERICA, E.ON; KEITH
E. CASEY, PH.D., VICE PRESIDENT, MARKET AND INFRASTRUCTURE
DEVELOPMENT, CALIFORNIA INDEPENDENT SYSTEM OPERATOR; KUSHAL
PATEL, PARTNER, ENERGY AND ENVIRONMENTAL ECONOMICS, INC.; AND
KIRAN KUMARASWAMY, DIRECTOR, MARKET APPLICATIONS, FLUENCE
STATEMENT OF ZACHARY KUZNAR
Mr. Kuznar. Great. Thank you. Is this on? There we go.
Thank you, Chairman Upton, Ranking Member Rush, and members
of the subcommittee. Thank you for having me here today.
My name is Zachary Kuznar, and I currently serve as
Director of combined Heat and Power, Energy Storage, and
Microgrid Development at Duke Energy Corporation, which is
headquartered in Charlotte, North Carolina. My team leads all
energy storage development in our six regulated States in which
we operate, which are North Carolina, South Carolina, Florida,
Ohio, Indiana, and Kentucky.
Duke Energy believes storage will play a significant role
in how we operate, supply, and deliver energy for our 25
million customers now and well into the future. We see
tremendous value in energy storage investments and the benefits
they can provide across our generation, transmission, and
distribution systems.
Storage allows us to dispatch energy during times of peak
demand, enhance the reliability of our grid, provide energy
security and backup power for customers who provide critical
services for our communities, and enables increased flexibility
for helping manage the continued growth of renewable generation
on our electric system.
This will become increasingly important as more solar
connects to our system. North Carolina, for example, is number
two in the country for solar generation, only behind
California.
We plan to expand our investment and our regulated
footprint for our customers' benefit by building off our decade
of storage experience, which includes 8 pilot projects and 40
megawatts of commercially owned and operated assets. As the
technology continues to mature and the cost of batteries
continues to decline, we believe the time is right to increase
our investments in this area. Over the next 5 years, we plan to
deploy a minimum of 145 megawatts of storage across our
regulated business, representing approximately $300 million of
new investment, to continue to modernize our electric system.
In 2017, we received approval from the Florida Public
Service Commission to deploy 50 megawatts of battery storage
projects in our Florida service territory. We are targeting
applications to improve reliability, which will result in
better overall customer experience, along with utilizing these
storage assets to advance the flexibility of our system as
solar generation continues to increase in our Florida
footprint.
In North Carolina, we have incorporated a minimum of 75
megawatts of storage into our integrated resource planning
process. Our first two projects in our western North Carolina
service territory, totaling 13 megawatts, will be used to
provide valuable backup power to communities and give us the
ability to deliver grid services such as frequency regulation
that will help us to incorporate and manage the increased
growth of solar generation onto our system.
We also continue to evaluate and explore projects in South
Carolina as well.
We recently received approval from the Indiana Utility
Regulatory Commission to deploy 10 megawatts of battery
projects in Indiana. One of the projects is a partnership with
the Indiana National Guard at Camp Atterbury, where we will
deploy 3 megawatts of solar along with a 5-megawatt energy
storage asset at the base.
During normal grid operations, the solar generation will
send power to our electric grid to benefit all Indiana
customers, while the battery device will provide frequency
regulation to help stabilize the electric system. In the event
of a grid outage, the battery will provide backup power,
ensuring the base still has energy for critical infrastructure
and services. This is a perfect example of how technologies
like storage can provide both grid- and customer-sided
benefits.
We are also working with large customers such as the
Department of Defense, cities, hospitals, and other first
responders to evaluate similar partnerships.
In Ohio, we have filed for 10 megawatts of storage as part
of our electric security plan, and we are incorporating 2
megawatts year over year in our Kentucky service territory. We
believe these investments will grow well beyond the original
145 megawatts we have announced.
At Duke Energy, we serve as both the grid manager and
operator, with a clear line of sight and understanding of how
storage can be leveraged in conjunction with other grid assets
to bring to bear the greatest benefits for the grid and our
customers.
The utility is in an ideal position to investment in and
own and to capture these stacked benefit streams that storage
can provide. Storage can be a more cost-effective mechanism to
defer or forego a distribution upgrade, eliminate the need for
wires, and provide resource flexibility to ensure reliable
energy is delivered continuously.
As a seasoned utility, we have firsthand experience
managing these complex dynamics expertly in concert with the
broader electric system. More importantly, with over a century
of experience providing affordable, reliable electricity to our
customers, Duke Energy is positioned to deploy this exciting
new technology in a way that increases reliability and
maintains the security of our critical infrastructure.
I thank you again for the opportunity to discuss Duke
Energy's energy storage plans with you today, as we feel this
technology will provide essential benefits for our customers
and for our communities.
[The prepared statement of Mr. Kuznar follows:]
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Mr. Upton. Thank you.
Mr. Frigo?
STATEMENT OF MARK FRIGO
Mr. Frigo. Good morning, Chairman Upton, Ranking Member
Rush, and members of the subcommittee. Thank you for the
opportunity to appear before you today.
My name is Mark Frigo, and I am the Vice President and Head
of Energy storage for E.ON North America. In that role, I am
responsible for all aspects of our energy storage business. In
my testimony today, I will discuss E.ON's effort to deliver
this technology to customers across the United States.
Since 2007, E.ON has invested more than $14 billion in
renewable projects worldwide, with roughly half of that
investment made in local communities right here in the U.S. As
one of the U.S.'s largest owners of renewable power projects,
with more than 3600 megawatts under operation, we have also
taken a lead role in developing energy storage projects.
Traditionally, electricity could not be stored. Our
electric grid was developed as a just-in-time delivery system.
However, the energy world has changed. It is a world with
computers, smartphones, the cloud, rooftop solar on people's
homes and businesses, and the explosive growth of electric
vehicles. The grid as we know it, with large, centralized power
plants delivering power via transmission and distribution, will
be challenged to meet our nation's future energy needs.
This is where energy storage comes into play. Low-cost
energy storage has the ability to transform and meet the needs
of the new energy world. E.ON is helping to lead that change.
E.ON has 3 energy storage projects currently in operation,
totaling approximately 30 megawatts, each uniquely designed to
solve a specific problem.
Iron Horse, our first energy storage project in the U.S.,
is a combined energy storage and solar photovoltaic project
located in Tucson, Arizona. Working with Tucson Electric Power,
our team designed and built a 10-megawatt battery solution
paired with a 2-megawatt solar PV array to stabilize Tucson's
electric power grid.
We continue to own and operate the project for use within
Tucson Electric Power's system. It is our understanding that
this energy storage project, along with another one that TEP
has implemented, has significantly improved the situation
within the greater Tucson area.
Texas Waves, our other operational energy storage facility,
is actually comprised of two 9.9-megawatt battery projects in
West Texas, one co-located next to our Pyron Wind Farm and the
other co-located next to our Inadale Wind Farm. Texas Waves is
designed to provide ancillary services to the Electric
Reliability Council of Texas market and can respond to shifts
in power demand more quickly than traditional generating
technologies, thereby improving system reliability and
efficiency.
These two projects went online in January of this year and
have successfully responded during extreme weather and
unplanned generation outages. These projects were able to
respond to ERCOT's frequency regulation signal within
milliseconds, helping ERCOT manage minute-to-minute
fluctuations between load and generation on their grid and
ultimately helping the citizens of Texas keep the lights on.
Despite our successes in the market and its great potential
to enhance the grid's reliability and resilience, energy
storage remains an emerging technology. While that technology
continues to evolve and costs continue to fall, more steps from
both a policy and fiscal perspective are needed to unlock this
technology's full potential to support the grid and save
taxpayer money on their electricity bills.
Energy storage should be part of a grid modernization and
optimization effort to contribute to reliability and
resilience. FERC Order 841 was a significant step forward to
allow for energy storage participation on the grid in organized
markets. But FERC must now ensure that the RTOs and ISOs over
which it has jurisdiction faithfully and fully implement the
order to allow energy storage into their markets to the benefit
of customers.
It is also important that utility commissions in states not
included in organized markets ensure that the utilities they
regulate evaluate energy storage resources as a viable and
cost-effective tool in their utility planning process. Market
rules should not only ensure participation but should be
examined to ensure that interconnection processes do not
constitute barriers to entry.
Energy storage would also benefit from fiscal policy that
rewards investment in this emerging technology for a limited
period. For example, an investment tax credit for energy
storage would encourage greater investment and faster
deployment of energy storage solutions to help utilities,
generators, and, most importantly, customers to unlock the many
benefits of storage.
In closing, energy storage is an incredibly useful
technology that can meet the needs of the new energy world. It
is a uniquely flexible technology that can be designed to meet
the specific needs of customers and the grid. It increases grid
reliability while enabling all the technological and
sustainable advancements our country continues to enjoy. And,
best of all, it can do all these things while saving
ratepayers, your constituents, money.
I urge you to adopt forward-looking policies to help unlock
energy storage potential to keep the United States at the
forefront of the new energy world.
Thank you.
[The prepared statement of Mr. Frigo follows:]
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Mr. Upton. Thank you.
Dr. Casey?
STATEMENT OF KEITH E. CASEY, PH.D.
Mr. Casey. Good morning, Chairman Upton, Vice Chairman
Olson, Ranking Member Rush, and members of the committee. My
name is Keith Casey. I am Vice President of Market and
Infrastructure Development at the California Independent System
Operator. Thank you for the opportunity to appear before you
today to discuss the role of energy storage in organized
wholesale electricity markets in California.
California's clean energy policies are dramatically
transforming the resource portfolio that serves electric load.
California's ambitious renewable portfolio standard, greenhouse
gas emission reduction goals, policies concerning the use of
water for power plant cooling, as well as distributed energy
resource and rooftop solar goals, have all contributed to a
dramatic shift away from conventional power plants and to the
deployment of new technologies such as battery storage and
demand response.
Today, renewables comprise about 33 percent of the total
energy produced in our markets and are on track to meet 50
percent of 2030, if not sooner.
These high levels of renewables, which are predominantly
solar, do, however, present operational challenges such as
oversupply during the middle of the day when solar output is at
its greatest and ramping challenges during the late afternoon
and early evening when solar output declines but demand on the
system is increasing.
Today, these integration challenges are largely managed
with natural-gas-fired generation, but achieving California's
clean energy goals will require moving off of gas to cleaner
resources such as energy storage that can absorb surplus solar
output during the middle of the day and put it back on the grid
later when it is needed. Storage can also mitigate the reliance
on natural gas power plants for serving local electricity
demand in transmission-constrained areas of the grid.
Today, California operates with approximately 2,000
megawatts of energy storage on its system. Most of this is
legacy pumped hydroelectric generation, but, in recent years,
134 megawatts of battery storage has been added to the ISO
system.
Development of battery storage is being driven primarily by
State policy. The California Public Utilities Commission
requires investor-owned utilities to procure 700 megawatts of
transmission-level electricity storage, 425 megawatts of
distributed electricity storage, and 200 megawatts of customer
electric storage by 2020. And the utilities are making good
progress in achieving that goal.
Over the past several years, we have made numerous changes
to our wholesale energy markets to enable storage resources to
effectively participate. Most notably, we developed a specific
storage resource participation model so that our wholesale
market can optimally manage the state of charge of a storage
resource. We also developed special participation rules for
storage to provide other grid reliability functions and have
evolved our transmission planning process to consider storage
as an alternative to conventional wires and generation.
Earlier this year, through our transmission planning
process, we identified and approved two battery storage
projects for meeting grid reliability needs. These projects
will be treated as transmission assets, with their costs fully
recovered through transmission rates.
Currently, we allow storage resources, as well as other
types of resources, to participate in the wholesale energy
market even if they are connected to the distribution system.
While the development is at a very nascent stage, we believe
the future grid will be one where distribution and transmission
networks are highly integrated, providing for bidirectional
flow of energy versus the traditional grid, where power flows
one direction from large, centralized power plants to end-use
consumers.
The grid of tomorrow will have a much more diverse set of
smaller resources, with many located behind a customer's meter,
and will have the potential to provide services to the host
customer, the distribution network, and the transmission
network.
Getting there, however, will require overcoming a number of
challenges. Most notably, how do you enable resources behind
the meter to provide multiuse services to their host customer,
the distribution, and transmission grid in a coordinated and
verifiable way that ensures the services being paid for are
actually being provided, are not operating at cross-purposes,
and are not being double-counted? California is currently
grappling with this multiuse concept.
We are also examining how to allow storage resources that
are approved as transmission assets and, therefore, able to
fully recover their costs through transmission rates to also
participate in the wholesale energy market and earn market
revenues. FERC policy allows for this type of hybrid treatment,
but I do not believe any ISO or RTO has currently implemented
this hybrid model, so California may very well be the first.
Finally, the ISO appreciates and supports the proposed
reforms in FERC Order 841, which seeks to remove barriers to
electric storage resources participating in the organized
electricity markets. We are also working with our participating
utilities to develop better ways to coordinate transmission and
distribution system operation to enable energy transformation
in an efficient, reliable, safe manner.
This concludes my comments, and I will be happy to answer
any questions you may have.
[The prepared statement of Mr. Casey follows:]
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Mr. Upton. Thank you.
Mr. Patel?
STATEMENT OF KUSHAL PATEL
Mr. Patel. Thank you, Chairman Upton, Ranking Member Rush,
and members of the subcommittee, for inviting me to testify on
today's topic of energy storage and its role in the Nation's
electricity system.
My name is Kushal Patel, and I am a Partner at Energy and
Environmental Economics, or E3, which is a consulting firm
based in San Francisco that focuses exclusively on energy
issues. E3 advises a wide range of clients across the U.S.,
including public agencies, wholesale system operators,
utilities, project developers, technology companies, and
investors.
I lead E3's asset valuation practice, and, in that role, I
provide the energy storage developers and investors with
various kinds of analytical and strategic support for thousands
of megawatts of energy storage projects throughout the U.S.,
ranging from large pumped hydro projects to small customer-
sided lithium-ion batteries.
I also work with a number of other entities, like State
public agencies, to analyze and think through the role of
energy storage in our electricity system in the near and longer
term.
Energy storage has been called the Swiss Army knife of the
electricity system because of the many services it can perform.
E3 has rigorously analyzed energy storage for over 20 years,
beginning with technologies like pumped hydro that have been
part of our nation's electrical grid for decades, to current
technologies like advanced lithium ion and flow batteries that
are now just being deployed at scale, to emerging technologies
that are still in the R&D phase.
We have looked at energy storage providing services across
multiple applications or use cases. One such a use case is
participating directly in the wholesale markets, either as a
standalone resource or paired with generation. Another is
serving as a non-wires alternative that defers or avoids
building costly transmission or distribution assets, which
directly benefits utility ratepayers. And a third is as a tool
for individual customers to reduce their own electricity bills.
Significant barriers stand in the way of large-scale
deployment of mature and emerging storage technologies. These
barriers include high but declining technology costs and, more
importantly, the limited ability for storage to earn revenues
for the numerous services it can perform.
Today, clear routes to market exist for only a handful of
storage services, like frequency regulation. Other services
cannot be readily monetized, like grid resilience benefits. And
still others, such as those related to integrating larger
amounts of renewable energy, may not become valuable until the
future and then only in certain parts of the country. There may
even be market rules and operational rules that hinder and
prevent storage from providing multiple services and being
multiuse.
This means enabling policies and regulations are needed at
both the Federal and State levels to address these barriers to
ensure that storage is optimally utilized as well as
compensated fairly on a level playing field with other
technologies, which is challenging given the unique nature of
energy storage.
To this point, I recently collaborated with several New
York agencies in the development of the New York Energy Storage
Roadmap, which provides an excellent example of how
policymakers can proactively address the opportunities and
challenges energy storage represents.
The roadmap, just released last month, is a first-of-its-
kind, analytically driven set of policy, regulatory, and
programatic actions and recommendations meant to help New York
dramatically ramp up energy storage deployment beginning in
2019. It was developed specifically to identify the most
promising and cost-effective means of realizing New York's
target of installing 1,500 megawatts of advanced energy storage
by 2025.
The roadmap found that value stacking--i.e., being able to
perform and be compensated for multiple services, is essential
for the long-term commercial viability of energy storage.
This is especially relevant to the issue of dual-market
participation, where storage is providing both wholesale market
and distribution system services. For example, what should be
the operational rules and market structure that maximizes the
storage value by allowing it to provide both wholesale capacity
services in a constrained urban load pocket like New York City
as well as a distribution service like a non-wires alternative
to a utility investment like building a large substation.
So, to conclude, I believe the key to maximizing energy
storage benefits for our electricity system is twofold. First,
policies and rules must be established that allow storage
assets to provide multiple services at the wholesale,
distribution, and customer levels. Second, storage assets must
receive fair and equitable compensation on a level playing
field. These actions will both enable the optimal deployment of
storage assets onto our electricity grid and create a stable
environment for longer-term investing and financing.
Energy storage is a complex set of technologies that goes
far beyond batteries, and integrating them cost-effectively
into the grid while maintaining safety, reliability, and
affordability is no small task. I applaud this subcommittee's
leadership in addressing this topic and look forward to
providing my expertise wherever it might be helpful.
Thank you.
[The prepared statement of Mr. Patel follows:]
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Mr. Upton. Thank you.
Mr. Kumaraswamy?
STATEMENT OF KIRAN KUMARASWAMY
Mr. Kumaraswamy. Thank you, Chairman Upton, Ranking Member
Rush, and distinguished members of the subcommittee. My name is
Kiran Kumaraswamy, and I am a Market Applications Director at
Fluence, a Siemens and AES company. I am honored to testify in
front of you today on the topic of energy storage and its role
in the Nation's electricity system.
Fluence is an electricity energy storage technology and
services company jointly owned by Siemens and the AES
Corporation. Fluence combines the engineering, product
development, implementation, and service capabilities of AES
and Siemens' energy storage teams and is currently engaging in
an aggressive expansion of the business, backed by financial
support of the two parent organizations.
Energy storage allows us to meet the challenges related to
the changing energy landscape, transforming the way we power
the world by making better use of all the electricity
infrastructure assets we are putting on the grid and utilizing
the ones that we already have in place. With the introduction
of energy storage, we finally have the technical capability to
create unbreakable, resilient power networks that enable the
interaction of microgrids, minigrids, and distributed
generation.
Renewable energy generation is leading us toward a cleaner,
more sustainable future, but the variability of that generation
and the influx of low-cost clean energy is shifting the way
both generation assets and power markets operate. Energy
storage is needed to achieve the full potential of renewable
energy and to ensure all market participants are able to
benefit from this incredible transformation.
Energy storage is providing flexible peaking capacity today
in California and has been deployed as a T&D asset in Arizona.
Energy storage also has been proposed and selected in regional
transmission planning processes in organized markets across the
country.
The economics of advanced energy storage have reached the
point where storage is a more cost-effective alternative to
traditional single-use infrastructure, such as natural-gas-
fired peaking plants, and can provide critical grid services
more effectively at a lower cost.
Barriers to energy storage have taken numerous forms,
including market rules that inadvertently exclude energy
storage from revenue streams because the market rules were
written with other technologies in mind.
Fundamentally, policymakers can continue removing barriers
to storage by focusing on three main policy goals: first,
removing barriers to grid and market access; second, allowing
storage to compete in all planning and procurement that happens
across the country; and, third, appropriately valuing and
compensating storage for the flexibility that it provides for
our power network.
California has led the way in ensuring storage can
participate in markets by allowing energy storage to be owned
by both utilities and third parties, allowing it to participate
and earn multiple revenue streams, and ensuring that capacity
market rules don't unduly discriminate against the
characteristics of energy storage.
Some States have chosen to set a storage target to increase
adoption of technology and realization of potential benefits to
ratepayers. This has had the beneficial effect of clarifying
the benefits storage can provide to the State and providing
confidence to developers that the State is committed to energy
storage over the longer term.
These storage targets, whether binding or aspirational, can
be a key factor in encouraging utilities, regulators, and
stakeholders to modernize their planning and procurement
practices to take advantage of energy storage, as well as to
focus State regulators on identifying and addressing barriers
to storage deployment.
States are also removing barriers to storage by including
it in planning processes. A model in this regard is Washington
State, where the commission has ruled that energy storage must
be considered robustly in utilities' integrated resource plans
and that generation procurement needs to happen via technology-
neutral solicitations to maximize competition. By directing
utilities to consider storage along with other investment
options in generation, transmission, and distribution, State
regulators are ensuring appropriate competition of solutions
for electric grid reliability.
States are leading by making storage part of the generation
mix. Storage can save U.S. consumers tens of billions of
dollars, but this can happen only if the Federal Energy
Regulatory Commission makes energy storage part of traditional
transmission planning processes.
Federal policymakers have acted to remove barriers to
storage. We are pleased that FERC finalized Order 841 to ensure
fair and equal access for storage resources to compete in
wholesale power markets. In addition, we are pleased that FERC
finalized Order 845 to better enable storage to connect to the
electric grid when co-located at existing power plants. We
believe these are important policy initiatives at FERC that can
create lasting wholesale market changes.
Chairman Upton, thank you again for the opportunity to
testify today. I would like to invite you and other members of
the subcommittee to visit any of our storage facilities in the
United States.
Thank you.
[The prepared statement of Mr. Kumaraswamy follows:]
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Mr. Upton. Well, thank you all for your testimony.
You know, many of us here on this panel, I mean, we have
pursued the all-of-the-above energy strategy, and part of that,
obviously, is renewables. And we have seen great advancement in
wind and solar and other forms over the last number of years.
But, of course, the one knock on renewables has always been
what happens when the wind doesn't blow and the sun doesn't
shine, what is going to happen to that power, whether it is in
West Texas or Tucson or anyplace else.
And so it really is exciting to hear the advancements that
are made in energy storage, whether it is being an individual
that has got that solar rooftop application or whether it may
be in a big field outside of a nature center or a community
college or a university or a military base. It really is
exciting to see that, in fact, we can see those things happen.
And, of course, many of us here, a number of us here, went
down to Puerto Rico and the Virgin Islands, as well as those
Members from Texas who experienced firsthand the awful
hurricanes from a year ago and the real problems of getting
that power back up to speed, particularly in Puerto Rico and
the Virgin Islands.
And I know that, Mr. Kumaraswamy, you talked a little bit
in your testimony about how the hurricane season was certainly
unprecedented. And I think that you all actually put in some
electric infrastructure in the Gulf in advance. It wasn't in
the islands directly impacted by the hurricane, I don't think,
was it?
Mr. Kumaraswamy. One of the islands was Dominican Republic,
so----
Mr. Upton. So it was impacted.
Mr. Kumaraswamy. It was impacted.
Mr. Upton. So did it perform as expected? Tell us a little
bit about that.
Mr. Kumaraswamy. Sure.
So we did put two energy storage projects in the Dominican
Republic, and both of those energy storage projects provided
very critical frequency response to the local electricity
system during the Hurricane Irma and Maria conditions.
Conditions on the Dominican electric grid were very
volatile during both hurricanes, as generation, transmission,
and distribution networks were either damaged or shut down.
Both of these energy storage arrays that we deployed responded
as intended and helped to keep the grid operating through the
storm, even with nearly 40 to 45 percent of the Dominican
Republic's generation assets that were forced to shut down
during Hurricane Irma and Hurricane Maria.
Mr. Upton. In the Dominican Republic--so what we saw
firsthand when we were down in Puerto Rico were, the downed
power lines everywhere. There was a picture again, I think in
the USA Today or perhaps Wall Street Journal, earlier this week
about a bridge that we actually saw that was taken out.
The cost to the ratepayers, to the consumers, as we have
looked at additional storage capabilities, what is the actual
either reductions in power rates--how does it financially
benefit the consumers?
Mr. Kumaraswamy. That is a good question. One of the things
that I highlighted in my testimony also is that we find energy
storage to be a much more cost-effective option as opposed to a
single-use infrastructure asset like a natural-gas-fired
peaking plant that runs for a fraction of the year, right? So,
if you think about a natural-gas-fired peaking generation
plant, typically they run 40 to 60 hours of the year, so you
are really fractionally utilizing a capital asset, spending
several millions of dollars on this asset for the next 20 to 30
years and subjecting ratepayers for the cost recovery for all
of these assets.
We think that energy storage is a way more cost-effective
option, because it is able to provide the peaking capacity when
you actually need it for the electric grid, but it is also able
to provide a whole range of other services that the grid needs,
because energy storage assets are connected to the grid 24-by-
7, in comparison to a natural-gas-fired peaking plant, which
needs to be started up and shut down.
Mr. Upton. So one of the exciting things that has been
happening in Michigan--this was legislation that was adopted in
a bipartisan way a number of years ago--is that in Michigan we
now have a 15-percent renewable standard. And all the utilities
are able to meet that, and they have done a really good job.
The indications are that by 2040 or 2045, in fact, that 15
percent is going to move up to perhaps as much as 40 to 45
percent of the electricity consumed will be from renewables.
So, to get to that point, obviously we need the storage.
And I guess, though my time is expiring, I would like to know
if there is one thing that we could do legislatively to help
provide some incentives. How do we get all States to what we
hope will be attained in Michigan, as it relates to perhaps
legislation that might expedite the improvements of battery
storage?
Just real quickly, if you have any ideas, knowing that my
time is expiring. But I have the gavel, and it hasn't come down
yet.
Mr. Kumaraswamy. Maybe I will just go very quickly.
The easiest thing to do really is to ensure that energy
storage is considered in the traditional planning and
procurement processes, right? So, if it is related to
traditional generation options that are being procured or
transmission or distribution infrastructure that needs to be
put in place, to the extent that you can consider energy
storage as an option in that type of analysis, I think we have
seen that putting that as an option really goes a long way in
terms of enabling the utilities to better understand the
benefits that the technology provides.
Thanks.
Mr. Upton. Yes.
Any other quick comments?
Mr. Frigo. No, I would wholeheartedly agree with that. All
utilities need to put together an integrated resource plan. And
I have seen this with the States, that has been done on a State
level, which have pushed energy storage to basically mandate
their utilities to really look to use energy storage in their
system. So they have started to actively look at different ways
across our system. And that is really what has jump-started it.
So I think it is providing direction through a regulatory
way to have utilities look at it as a tool within their system
and to--also, the other big thing is through the
interconnection process that you have throughout the U.S.,
different in different markets, but to clear that path as well.
Mr. Upton. Thank you.
Mr. Rush?
Mr. Rush. I want to thank you, Mr. Chairman.
Mr. Kumaraswamy, you had indicated to the chairman that you
were very involved in the Dominican Republic during the
Hurricane Maria and you were able to stabilize the electricity
network there in the Dominican Republic.
Do you know anything about the Dominican Republic's next-
door neighbor? Can you compare what happened to them with what
happened in Haiti? Or do you have any insight into----
Mr. Kumaraswamy. That is a good question also. The impact
of the hurricanes was, to my knowledge, less than on the
Dominican Republic. And so I can't quite answer the question of
comparing how much it was impacted in the Dominican versus
Haiti or Puerto Rico.
But I think the real issue here is that energy storage is
able to add resiliency to the electric system. And that is
because it is able to provide frequency control for the
electric grid in a manner that is very superior to some of the
traditional resources that we have on the electric system that
perform the same job.
So, if you think about the traditional electric generators
that we have, they are usually pretty slow in responding to
changes in the system frequency. Because of the thermal inertia
that they have, it takes a while for them to actually stabilize
the grid frequency. In comparison, energy storage is extremely
quick to provide the response, which means that it is able to
arrest any frequency decline much faster, right?
And so that is the nature in which the energy storage
arrays that we deployed in Dominican actually acted. And so it
should provide the same type of response wherever it is
deployed.
Mr. Rush. Well, thank you.
Mr. Patel, you mentioned your work in helping to establish
the New York Energy Storage Roadmap. In your opinion, could
there also be a Federal energy storage roadmap? And, if so,
what would a plan look like? And what would it require from
Congress, FERC, the RTOs, ISOs, or some combination of each of
these stakeholders?
And the last part of the question is, what policies do you
think are needed to help monetize storage benefits?
Mr. Patel. Thank you, Ranking Member Rush. That is a great
question.
Like with any roadmap, there is a beginning, a road, and
the end. And I think, for New York, it is basically trying to
figure out exactly how to reach a fairly ambitious target set
by Governor Cuomo, and there are a lot of things that can be
done in the near term, in the long term.
And I think, one of the big things about energy storage is
that costs are coming down so fast, so the idea, then, is the
timing element of identifying what are the highest-value
applications now that can actually justify paying for itself
and then how to actually take advantage of all the cost
declines that are happening from technology providers and other
people that are working hard on that and then incorporating
that into the grid in a way that benefits all consumers and
ratepayers.
Knowing that the electricity grid and things like that have
been set for a very long time and in a very particular way, so
it takes time to, like Keith said, be able to make sure that
you are paying for the services you are getting and also
integrating it in a way that enhances resiliency and
reliability and not that makes it worse.
So, I think at the Federal level, I echo what we say here
in the panel, is that the planning process and procurement has
to change. Anyone who is in the energy industry is very excited
about storage, including the utilities and everyone else. But
the way that they do planning and procurement is very
prescribed. So allowing more flexibility, looking at more
assets, and things like that I think would be a very useful way
for the Federal Government to help States and other entities
that are regulated at the wholesale level to be able to think
through how to utilize the storage in the most beneficial way,
now in the next couple years but also in the long term,
especially as we add more renewables and other types of
resources.
Mr. Rush. Mr. Chairman, since you are a fair chairman and
since you took some extra time----
Mr. Upton. You go right ahead. The gavel hasn't come down
yet.
Mr. Rush. All right.
Mr. Upton. Are you yielding back?
Mr. Rush. No, I'm not. I want to ask Dr. Casey a question.
Dr. Casey, can you just assess the level of the working
relationship or the quality of the working relationship that
you have with the Department of Energy? Are they fully engaged
in partnership with this whole effort around storage?
Mr. Casey. The Department of Energy you are asking?
Mr. Rush. Yes.
Mr. Casey. Yes, I would say the Department of Energy is
actually a leader in developing microgrids, advanced energy
storage systems. They have a number of projects in California
that we have been collaborating with, as have the California
State agencies.
So I think from a defense standpoint they view it as very
imperative, from a resiliency standpoint, to maintain their
operations. So I think they have been doing a terrific job in
that regard.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Upton. Mr. Barton.
Mr. Barton. Thank you, Mr. Chairman.
I have been on this committee quite a while. I have been on
the subcommittee I think the whole time. Rarely do we have a
hearing or something like this where I know nothing about it,
but you have got me today. I know almost nothing about battery
storage capacity for the grid, so I am really glad to have this
hearing.
I have got one parochial question, and then I have got a
series of questions just on how you evaluate cost. The Brinkman
book says that California ISO and the PJM ISO up in the Midwest
have more capacity than Ercon, which hurts me as a Texan. I
assume that is because Texas has such unlimited production
energy capacity and coal-fired, natural gas fired, lignite--
wind power, even solar power and nuclear power. Is that right,
Mr. Frigo? Is that correct? Is that why Texas is lagging behind
California?
Mr. Frigo. Well, I think it is just a numbers game with
demand. PJM encompasses several States, from Illinois ranging
all the way to the east to New Jersey, and that is a very large
area with a very large industrial, commercial, and residential
base.
So as I mentioned before in my testimony, the power system
here in the U.S. is built on a just-in-time system. So you have
to have generation available to meet demand. So if you have an
area with a large demand, such as PJM, you are going to have a
lot of generation. California is--you know, if you just look at
its GDP by itself, it is a very large area. So that obviously
has a significant amount of load to--that is needed and,
therefore, you have a lot of generation as well.
Texas has quite a bit of generation, but most of the load
or demand, as you well know, is in the eastern part of the
State with the major cities out in the western part of the
State. It is more rural, and so you don't have as great a
demand, but you do have a lot of wind power in the western part
of the State.
Mr. Barton. My Texas pride doesn't need to be hurt by that,
is what you are telling me.
Now I want to ask some questions about cost. What is the
incremental added cost of storage versus standby generation?
Because it would seem to me--and I listened to what you said.
It seemed to me that it would be better to have a power plant,
maybe it is an old one, but it has already been discounted and
depreciated, that is there than the added cost of building a
big battery powered storage facility. Am I wrong on that?
Because, one of you said how much the costs are coming
down. Is it more cost-effective now to have storage capacity
that can't generate as opposed to an actual power plant that is
on standby?
IWhoever is smartest can answer that.
Mr. Casey. Well, I for sure won't go first then, at least
not on that criteria.
I think the question you are asking is, if you have an
existing power plant that is fully depreciated, would it make
sense to add storage in place of it. And I think that really
depends on the circumstance. But when you look at cost, I think
part of the cost needs to, at least in the case of California,
look at the environmental implications. California has a very
aggressive goal to decarbonize its grid, which means they are
looking for alternatives to relying on dirty, old convention
power plants that are providing peak shaving capacity.
Mr. Barton. Is it fair to say--and I am not against battery
storage. Don't misunderstand. Or water storage or whatever
storage is most cost-effective. But I am a little bit skeptical
if we are doing this simply because we don't like natural gas
power, we don't like coal power, we don't like nuclear power,
because that would be an added cost that somebody's got to
bear. Is that correct? It may be socially politically viable,
but it is not economically the best decision.
Mr. Casey. Yes. And, again, I would say--and, again, I
think this is very much a matter of State policy. But if you
have a State policy where you are focused on decarbonizing the
grid and incorporating the cost when it comes to planning of
the environmental cost of emissions, then when you look at it
from that scope, adding battery storage to replacing an
existing power plant can make sense from an economic
standpoint.
Mr. Barton. My time has expired. I will have a number of
questions, I hope for the record, that they can answer on on
how they value cost and the various algorithms, things like
that.
Thank you, Mr. Chairman.
Mr. Upton. Mr. McNerney.
Mr. McNerney. I thank the chairman. And I neglected to
welcome our two Californians here this morning. Mr. Casey and
Mr. Patel, welcome. Thank you for testifying. Thank you all.
Very interesting testimony this morning.
Mr. Casey, you mentioned that California is mostly
compliant with FERC Order 841. What are some of the lessons
learned from that implementation that could be brought to other
States?
Mr. Casey. Well, I think we are still learning. Battery
storage in California is relatively new. Operationally, we have
had just about 2 years of experience. I think the big thing is
to really, as ISO/RTOs, to really engage with the storage
resources that are participating, to understand what they are
seeing. We have made refinements to our market model for
battery storage based on feedback we have received from
developers. So I think that is important.
I also think, when it comes to the value proposition of
storage in organized markets, I think California can check the
box on every value category for storage. The challenge is how
do you stack those values and not look at them in silos. So if
you are looking at battery storage as a transmission
alternative, what are the other values it could provide to the
ISO? And I think that is kind of the next stage of market
sophistication with battery storage is stacking those multiuse
values.
Mr. McNerney. And that goes into my next question of behind
the meter storage. How do you value that? And is blockchains
one of the potential solutions? And if it is, what about the
energy implications of using blockchains?
Mr. Casey. Yes. Well, behind the meter storage can
actually, in the California ISO, participate in the wholesale
market. It can do it as a demand response, which is what we
typically see. So we never see the actual output of battery
storage, but what we do see is a reduction in demand at the
end-use consumer. So we have a number of applications where
behind the meter storage is providing demand response
capability.
In terms of facilitating procurement of those types of
resources, the California Public Utilities Commission does run
an auction process where people can bid to offer those services
and utilities buy them. I know they have talked about the
potential for blockchain technology to help facilitate that.
But I think it has all been very preliminary, so--I am not an
expert on blockchain technology. I don't think it has been
seriously considered in the context of behind the meter
storage. But that is something we could certainly follow up
with you on.
Mr. McKinley. Can anyone on the panel address the
blockchain energy question that we are using blockchains for
residential mere valuation drive a large energy cost?
No one on the panel?
OK. Thank you.
Mr. Kuznar, thank you for your testimony this morning. What
incentives will encourage you to reach the 145-megawatt goal
more quickly?
Mr. Kuznar. I think a couple of things. One, we have got a
lot of those projects kind of planned out. We actually want to
grow beyond that. One thing that was touched upon, which we are
really focused on and I would like to expound upon a bit which
is going to help us, is the planning process. And one thing we
have traditionally always done is looked at kind of a
generation planning to meet our load and looked at what is the
lowest cost generation. We have looked at transmission
distribution.
One of the projects that we are really rolling out and was
just going to help us, I think, exceed that is coupling those.
So when I look at battery storage, for example, I can put it
out at distribution circuit and defer an upgrade. That could
improve reliability. I could also use a fleet of those assets
to peak shave. I could use it for frequency regulation. So how
do we bundle those values together? And that has been one of
our big focuses. But our plan is to execute on those and then
exceed that number going forward.
Mr. McNerney. Thank you.
My next question is for Mr. Patel and Mr. Kumaraswamy. How
would you properly value storage? How would you do it? I mean,
you are telling us we need to figure out how to properly value
storage. What are your recommendations?
Mr. Patel. I can go first.
We have done a lot of economic analysis at E3 on this, and
it is challenging because storage is so flexible. So sometimes,
as others have said it, it uses kind of a Pico replacement. So,
instead of building a new combined cycle or combustion turbine,
we are using it to avoid that. So it is providing that service.
And other times I might be doing something for the distribution
utility. And behind the meter, I might be doing something for
the customer itself reducing their bills.
So the idea, then, is to figure out exactly how that all
works together and in a market participation model. So you are
making sure that it is doing the things it is supposed to be
doing, getting paid for it, but also making sure they can
actually perform and do that.
So I think that is--what values can actually be stacked
realistically with the technology we have today. And then also
going forward, you have those values change too. So it is, what
we can do today and what is value today. Then also the grid is
changing, so the values will change as well.
So, maybe for some years some values will be very high and
other years it will be very low. And then, how can you take
advantage of that? Very big challenge.
Mr. McNerney. In the interest of time, I am going to just
ask--I will propose this as a question for the record for both
of you, and anyone else that would like to answer that.
Thank you. I yield back.
Mr. Upton. Mr. McKinley.
Mr. McKinley. Thank you, Mr. Chairman.
I am maybe a little bit like Barton, just curious more
about how this all operates. I can understand when I see a
power plant, whether it is coal, nuclear, gas. But when we have
battery storage, are they onsite with these facilities,
tangential? Where are these lithium batteries? Because about 80
percent of our storage is in lithium. Where are these and how
secure are they?
Mr. Frigo. I could probably answer that first.
These lithium ion batteries actually can be used for--we
talk about multiple applications. They can be used for multiple
different things. They can be used for generation and they
could actually be used as a transmission or distribution type
of device. So depending on who you talk to, there is upwards
of, call it 15 to 20 different applications. And we talked a
little bit about them today.
But they can be located depending on--it is very dependent
upon the application. If it is a T&D, transmission and
distribution deferral type of application that was mentioned
earlier, you would locate it near the substation or the power
line where you have the problem on. If you are using it more--
--
Mr. McKinley. OK. Maybe we need to have a followup with
that.
I think, Dr. Casey, you comment a little bit about it, is
that you can't--I thought I heard you say you can't measure the
outflow. Someone may have implied that. But I am just--PJM and
California, between the two of them, 70 to 80 percent of all
battery storage in America. How often is it used? How often are
we drawing down on it? And when we do draw down on it, over an
annualized basis, what is the equivalent? Is it an equivalent
of a 1400-megawatt power station that could have been
available? I am trying to get to quantify the demand and how we
use our battery discharge.
Mr. Casey. Well, in the case of California----
Mr. McKinley. Go to the PJM.
Mr. Casey. Well, I can't really speak for PJM, I am afraid.
Mr. McKinley. OK. Well, try your California model.
Mr. Casey. OK. In the case of California, we use the
batteries we have in our market quite frequently. We are almost
daily dispatching them. We have a systemic issue where we tend
to have oversupply during the middle of the day with the solar
output.
Mr. McKinley. What I am driving toward, are we talking
about over a year's time in California? They are a little
different out there. But I am trying to figure out what is the
equivalent for a power station? How many power stations have we
avoided by using battery storage?
Mr. Casey. Well, we have roughly----
Mr. McKinley. What is the discharge? How much do we
discharge in a year's time in California?
Mr. Casey. We have roughly about 134 megawatts of batteries
on our system. We operate those daily. So I would suggest to
you that they operate at the equivalence of a power plant of
that same size.
Mr. McKinley. OK. So does the consumer save money by having
battery operations in their grid system?
Mr. Casey. Yes. They can in multiple ways. And I know some
of the panelists are eager to speak to that. But it gets to
this multiuse value, particularly if the battery is located
behind the customer's meter. So I will defer to some of my
colleagues.
Mr. Kumaraswamy. Yes. It absolutely saves money for rate
payers. I will give you one example. And I will also answer one
of the previous questions.
In 2014, the Southern California Edison, which is one of
the utilities in California, they had a shortage of capacity in
the Southern California region. And they had a solicitation
that was technology-neutral, and they went to the market to
actually get all types of resources. And in that process, they
actually selected 100 megawatts of grid scale energy storage
resource on an economic basis, which means that, to your
previous question, the 100 megawatts of four-hour energy
storage project is going to be operated like 100 megawatt
peaking plant.
Mr. McKinley. OK. Well, I know that we are using primarily
lithium-ion batteries, but we know they are much more expensive
than the nickel cadmium. Is there a reason that they just stay
charged longer? They don't have a loss? What is the rationale?
Because by far, people use lithium ion, but they are a more
expensive battery to use.
Mr. Kumaraswamy. I can probably take it also.
The platforms that we have at Fluence are technology
agnostic, but by far, most of the projects that we have
deployed have been lithium-ion. And that is for a range of
reasons, which include the lifetime cost of the overall project
and the fact that you have an established supply chain behind
this technology right now.
And so if you think about where we can add value for
utilities and for ratepayers, we think that lithium ion is the
leading technology right now. But, again, that is the situation
in present day today.
Mr. McKinley. My time has gone over. My point is, that if
lithium ion is 40 percent more expensive, if we went nickel
cadmium, wouldn't we be able to lower the rates for the utility
consumer?
Mr. Frigo. Lithium ion is--there is actually different
types of chemistries, and lithium ion is a general
classification of batteries. And there is different actual
chemistries, compositions, of which nickel manganese cobalt is
actually one type of lithium ion battery. So it is actually a
lithium ion battery.
Mr. Upton. Mr. Peters.
Mr. Peters. Thank you, Mr. Chairman. In response to Mr.
McKinley, my colleague, I just had this article that SDG&E
unveiled the largest lithium ion battery storage facility in
2017. Thirty megawatts of the 130, I think, is probably this
facility, equivalent of 20,000 customers for 4 hours.
And I am really excited to hear all this innovation that is
going on. I am excited to hear that batteries came back as part
of a competition that was technology-neutral. I think we are
heading for a lot of great opportunity here.
My questions have to do with what is the role of the
Federal Government as opposed to the State government.
Mr. Frigo. Is that right?
Mr. Frigo. Yes.
Mr. Peters. Just in your testimony, it says market rules
should, not only ensure participation, but should be examined
to ensure that interconnection processes do not constitute
barriers to entry.
Can you explain that to me?
Mr. Frigo. Sure.
Mr. Peters. Is there a Federal role in that or is that a
State role?
Mr. Frigo. That is actually a market role. So PJM,
California, ISO, they all have their different interconnection
processes. Yes. So for us as an independent power producer,
when we go to develop a new project, whether it be wind, solar,
natural gas, energy storage, we have to go through the
interconnection process which defines--the study the amount of
megawatts we propose to put on the system, see how it impacts
the system, and if there is any upgrades that are needed
associated with that.
And I will use an example. If you have 100-megawatt solar
project in California and you are proposing to put, say, a 20-
megawatt energy storage system or battery with that, it would
be studied as a 120-megawatt facility, but in reality, it would
not be operated as a 120-megawatt facility, because what you
would be doing is you are actually taking some of that peak
generation that is made during the high irradiation during the
middle of the day and shifting it toward some shoulder peer. So
you really need to study it more where for how it is going to
be operated.
So these are the rules from the interconnection process
that we need to make sure that it gets studied as it is
actually going to be operated.
Mr. Peters. Is there some government thing that is standing
in the way of that happening? That is what I want to
understand. What is the impediment to doing that, Dr. Casey?
Mr. Casey. Well, just to clarify, I am not familiar with
interconnection. Not that it is in other ISO/RTOs. But in the
case of California, Mr. Frigo's example, we would actually
study that project as 100 megawatts, provided the plant
facility operator agrees they will never go above that.
So the point is, if they add a 20-megawatt battery, they
have the potential to generate at 120. So long as they agree
they will manage their facility and never go above 100, we will
study it at 100. So that is an accommodation we made in our
interconnection process. Maybe that type of accommodation needs
to be done elsewhere.
But to get at your more general question about the role of
Federal versus----
Mr. Peters. So just in that instance, this is something
that the ISO takes care of?
Mr. Casey. Yes.
Mr. Peters. OK. Go ahead.
Mr. Casey. Yes. I think part of the challenge here is,
depending on the scale of the storage facility, if it is a
smaller project that is developed on the distribution system,
it can have state jurisdiction issues, particularly if it is
being connected behind a customer meter.
So when you talk about a Federal roadmap for storage, that
might make sense in the context of large scale transmission
connected. But I think more generally, these roadmaps, as New
York has one, California has an energy storage roadmap, it is
really recognizing that a lot of this is state policy. The
Federal policy has to align with it, but there is a lot of
state policy that has to align as well.
Mr. Peters. OK. And then, Mr. Patel, you have got in your
testimony storage assets must be fairly compensated. Again,
that seems like it is something that the States and the ISOs
handle. Is that right?
Mr. Patel. Yes, that is right. I think, to Dr. Casey's
point as well, and that seems the issue between the State and
the Federal Government. And that's really something that has to
be worked on. I think as a part of a Federal energy storage
roadmap, that would be something that I think would be top of
mind of exactly, how it participates in the wholesale market.
And if it was just participating in wholesale markets only, it
is fairly straightforward. If it is only doing distribution of
retail, it is also straightforward. But if it is doing all of
those things, then it starts getting very complicated. And I
think that is the role of the Federal Government, FERC, and
others to figure out exactly how to manage that.
Tthe easiest thing to do is say you can never do wholesale
if you are doing distribution retail, and vice versa. But that,
as we know, really diminishes the value of energy storage.
Mr. Peters. Are you comfortable with the Federal Government
prescribing through FERC some sort of national rule on that?
Mr. Patel. I think it would be part of a pretty ongoing--I
mean, it is already happening.
Mr. Peters. OK. It seems like people are figuring it out
without our help. But if you need our help, I want to know.
It has been my impression, before my time runs out too, by
the way, that basic research funding for energy is something
that the Federal Government can contribute to but that the
States are doing a pretty good job of figuring out ways to make
efficient markets. And we love the competition between
California and Texas. It got my California pride up right now.
Mr. Chairman, I yield back.
Mr. Upton. Thank you.
Mr. Long.
Mr. Long. Thank you, Chairman.
Dr. Kuznar and Mr. Frigo, I have a question for both of
you. What concerns me the most is when it comes to our
electrical infrastructure is grid reliability, which I think
that concerns most people, particularly ensuring customers in
rural areas get dependable electricity delivered to them.
How do energy storage technologies help your companies
ensure rural areas get the reliable electricity that they need?
Dr. Kuznar?
Mr. Kuznar. Great. And I thank you for that question.
Perfect example is, one of our projects that we just got
approval for in Indiana is actually a very rural community. It
is a radially fed line which was to really bring in an
additional distribution feeder there to improve the
reliability; was extremely difficult just due to the trees,
terrain.
So what we are actually doing is we are going to put a
battery storage device out there, which, during a grid outage,
will provide backup power to that community, give the crews
enough time to fix the major outage and get them back up. So
hopefully, they don't see there is any outage there.
And I think that is just a perfect example of one of the
tools that it provides. When we look at our makeup as a whole,
we don't look at storage as a replacement for base-load
generation. That is still extremely important for our business.
But it provides us these abilities to improve reliability for
rural communities, help us integrate solar and provide some
peaking needs as well. But I think it is a perfect tool, an
example, of how we can improve the reliability.
Mr. Long. OK. And, Mr. Frigo, how do energy storage
technologies help your companies ensure rural areas get the
reliable electricity they need?
Mr. Frigo. I think Dr. Kuznar answered that really well.
When you hear the term ``microgrid,'' effectively, rural
communities tend to be a microgrid because it is, as you
mentioned, at the end of a long radial line, which is a radial
line that is just a single line that goes off and ends. And
from an electrical perspective, that tends to be a very weak
part of the electric system as opposed to an area that weren't
very well connected.
So if you put energy storage toward the end of that radial
line, it helps stabilize the grid so when you have extreme
weather events, it improves the reliability so that it lowers
the probability of the grid actually collapsing in those areas.
Mr. Long. So energy storage technology can be used in
microgrids to provide affordable and secure energy for
communities?
Mr. Frigo. Absolutely.
Mr. Long. OK. I will stick with the two of you. I will let
you go first, Mr. Frigo, this time.
Can this technology ultimately lower rates for these
customers?
Mr. Frigo. Yes, they can lower rates. And I will give an
example of something we are doing up in New York that helps
lower the rates.
So we are working with a large utility up in that State
to--they have to build out their distribution system. The
reason why they have to build out their distribution system is
it is a bit of a weak system and it is in an area that is
growing from a residential and a commercial perspective, so
they see an increase in demand over the next 10 to 20 years.
So in the past, they would just say, OK, let's go build
some new transmission lines, new distribution lines, and
upgrade a substation. But that can be a very costly affair. And
so what they did is they looked at a non-wires alternative,
i.e., energy storage which actually solved the same problem at
a fraction of the cost of the alternative distribution.
So that is one example where the cost of an energy storage
system solved the same problem--or the cost of the energy
storage system was lower than the alternative, which was to
upgrade the distribution lines and the substation.
Mr. Long. OK. Dr. Kuznar, do you agree that the technology
ultimately can lower rates for customers?
Mr. Kuznar. It can. And, I think one of the pieces that we
really have to focus on that we are is just how we model that
and build those cases.
So a perfect example is the distribution upgrade, an
example I gave.You might have an instance where, let's say, the
distribution upgrade was $8 million. The battery might be--
let's say it is a little more. Let's say it is $10 million. But
if I am just building out that distribution upgrade, that is
all it is doing. If I have got a storage asset, I can then
utilize that for providing some regulation services. If I have
a fleet, they can provide peak capacity.
And then when you start adding those values together, you
have got an asset that could do a lot more than just the
traditional wire.
Mr. Long. OK. I have several more questions here, but I
think I will just submit them for the record, because--and
hopefully, you can get with my staff on your answers, because
in 8 seconds, I can't give you proper time to respond.
So, Mr. Chairman, I yield back.
Mr. Olson [presiding]. Thank you.
Mr. Doyle, 5 minutes, sir.
Mr. Doyle. Thank you, Mr. Chairman.
This is a question for all of the panelists. I want you to
talk a little bit about the effect you think an investment tax
credit would have on investment and deployment of storage
technology for your company or the industry in general. Maybe
just start with you, Doctor, and go down the line.
Mr. Kuznar. Right. And thank you for that question. I think
a general investment tax credit will obviously lower the cost
to the asset which could increase deployment. I think the only
thing we would be interested in there is the utility is to be
exempt from any tax normalization so we can kind of play on a
level playing field. But, I mean, I think lowering the cost,
you will see increased deployment.
Mr. Frigo. Thanks, Mr. Doyle, for your efforts with the
investment tax credit.
It would accelerate the implementation of energy storage,
no question about it. And how does that lower the cost to the
end consumer? I can give an example. Our Iron Horse project,
which actually is paired with a solar project, we were able to
take the ITC because it was an integral part of that solar
facility. The ITC that we were able to claim on that energy
storage project we passed back to Tucson Electric Power in the
form of a lower price, which they were able to provide in terms
of lower prices for their customers. So there is a real example
of it basically benefiting the end user.
Mr. Casey. Yes. No question, it would accelerate
development.
I would note, again, in the case of California, that we do
have State procurement mandates. So we have a mandate for the
utilities to procure 1300 megawatts of battery storage by 2020.
So that is the vehicle that is driving the storage development
you are seeing in California.
Mr. Patel. I also agree with the other panelists. In the
New York storage roadmap, we saw that the solar plus storage
applications were more cost-effective in the near term because
of the ITC when you pair it. So it is just lower costs and,
therefore, it becomes more cost-effective earlier, therefore
you get more deployment.
Mr. Kumaraswamy. Thank you, Congressman, for your work on
H.R. 4649.
For the record, I would just like to say that storage
actually adds value wherever you add it to the electric grid,
right? So whether it is paired with renewable resources or
whether you pair it with some other traditional energy
generation facilities or wireless options, storage is able to
add value to the electric system, right?
And so part of the problem that we have with section 48 of
the ITC right now is that it wrongly sends a market signal that
assumes that the value of storage has to be dependent on being
co-located with a renewable facility, which disparts the market
signal in terms of communicating the value that storage brings.
And so broadening the definition to include energy storage as a
standalone asset or as an asset that can be added to any type
of option, whether it is traditional generation, operational
wires would really provide the right market signal for
developers, for regulators, for utilities to make sure that you
are able to fully utilize the technology and deliver those
benefits to ratepayers.
Mr. Doyle. Great. Maybe just piggybacking on that, let me
ask you all to--you know, the cost is the main barrier, right,
to implementing the technology? So what other suggestions or
recommendations do you have on how we can bring down cost?
Mr. Kuznar. I mean, I think as you see increased
deployment, the costs will come down as manufacturing continues
to improve there. Again, I do think, though, when you look at
the cost, again, it is how--at least from a utility's
standpoint, how we traditionally modeled it. And I think if you
kind of start looking at the values it provides from generation
transmission or distribution, which is just a different process
for us to use, that you are going to see cost-effective storage
solutions in the very near term. We are already.
Mr. Frigo. I was going to say, I think it is very important
for the committee to look into electric vehicles, because
electric vehicles are what is really driving the cost down for
batteries that are being used in the grid. And, in fact, the
batteries that we are currently using for grid solutions are
actually being manufactured in the same facilities as electric
vehicles. So we are really riding the coattails of that. So as
electric vehicles go forward and expanded manufacturing
capacity is made for them, we will see lower costs on the
electric side as well.
Mr. Doyle. Interesting.
Anyone else?
Mr. Kumaraswamy. I would just add, I fully agree with Dr.
Kuznar's statement on increased deployment. And I think that is
a role that this committee can play. I mentioned it in my
testimony previously, through the Federal Energy Regulatory
Commission, if there is a way in which energy storage can be
considered as a mainstream transmission and distribution asset.
We have seen examples of utilities deploying energy storage as
a reliable T&D asset. How do we make this systematic change
where all the utilities across the country are doing the same
thing? Kind of evaluating these energy storage resources on the
same hand today, evaluate the wires options.
Because what we have seen is that when that process
happens, and when the process happened in the generation side,
there was a lot of learning that went through in terms of
understanding the technology and understanding the benefits
that the technology can provide to ratepayers, and that that
discovery process needs to happen on the transmission and
distribution side.
Mr. Doyle. Thank you, Mr. Chairman.
Mr. Olson. Thank you.
Mr. Walberg, 5 minutes for questions, sir.
Mr. Walberg. I thank the chairman.
I thank the panel for being here. Interesting. Interesting
discussion today.
In my home State of Michigan, there is the Ludington pump
storage facility. It has been described as one of the world's
largest electric batteries. And I believe when it was built, it
was also the largest pumped hydroelectric storage facility in
the world. There is roughly 1870 megawatts of electricity that
can seemly be dispatched at a moment's notice to help at peak
demand.
Pumped hydro facilities like Ludington seem to provide
valuable assets to the grid. And to ratepayers, they are very
unique, very specific.
Mr. Patel and Dr. Kuznar, I would like you to address these
questions, but anyone else that wants to jump in and add a
little bit more, I would appreciate it. Could you please
describe the unique assets that pumped hydro facilities bring
to the table?
Mr. Patel?
Mr. Patel. Sure. I worked with several developers looking
at pumped hydro, mostly on the West Coast. So, the biggest
challenges they have are that we haven't built a new pumped
hydro facility in this country in quite a long time. So the
idea, then, is to basically get the regulators and other folks,
you know, onboard with the values that it could provide. And,
again, as we have talked about, a lot times, some of these
values can be on the transmission side, some could be just from
the wholesale markets. And in some jurisdictions, there may be
no markets, so the utility has to basically buy in and monetize
those values itself.
So, the unique aspects are that it is a proven mature
technology that has been in use for decades and can have really
reliable performance and things of that nature. The downside of
those technologies is that they are large and they require
fairly big investment, so----
Mr. Walberg. Dr. Kuznar.
Mr. Kuznar. Great. Thank you. We also in North Carolina
have a couple thousand megawatts of pumped hydro. And if you
talk to our grid operators, they will tell you they can't live
without it, just the way it gives them the flexibility.
And I think what we are seeing with lithium technology is
kind of the ability to give the operators more storage to give
them more flexibility, but to do it in kind of smaller
increments at specific locations that are needed, but also do
it in a much quicker fashion.
So instead of our pumped hydro facilities, total, I believe
are a little over 2,000 megawatts. In this instance, we are
able to kind of deploy these a little quicker 5, 10, 15, 20
megawatt chunks on the best locations on the grid, which we
feel it is needed. But the pumped hydro is a critical part of
our infrastructure as well.
Mr. Casey. And if I might, as the sole grid operator on the
panel, we love pumped hydro. We have a little over 1,800
megawatts of it on our system.
I think in terms of what makes it somewhat unique relative
to batteries is the duration of--in the case of California, we
have a need to ramp up energy to manage the solar for spans of
10 hours a day. And having the ability to have a big resource
like a pumped hydro facility follow that profile, batteries
typically have shorter discharge periods.
But as was noted, new pumped hydro is very costly. It is a
long lead time investment. And the open issue really is, as
battery costs are declining, does it make sense to invest in
these huge infrastructure projects. It is something California
is grappling with right now.
Mr. Walberg. Are there any more being developed?
Mr. Patel. Yes, there are several. I personally worked on
at least two in Oregon and Washington that total about 1,600
megawatts. There is a couple proposed in California as well
that are a couple thousand and then throughout Arizona and
other places. So there are definitely ones that have gotten
actually FERC licenses already, at least two that I am aware
of, offhand. Nothing has been developed and no kind of
contracts have been signed for those sites yet.
Mr. Kumaraswamy. If I may, just want to add one comment
that was not reflected, which is the speed at which you can
actually deploy battery energy storage. One of the projects
that we delivered at the beginning of last year to San Diego
Gas and Electric, the speed at which the project was actually
delivered to San Diego Gas and Electric was about 6 to 8
months.
So when the utility actually desired to procure storage to
when the storage facility actually became operational was about
6 to 8 months. And so that is one of the key advantages of the
battery-based energy storage, is that you can really cut down
the lead time to where it is actually bringing these assets
onto the grid. So----
Mr. Walberg. So would you conclude that the strength of a
role for pumped storage facilities, hydro facilities, in the
future is pretty limited or is it moving forward?
Mr. Casey. I would say, in the case of California, it is an
open question that is being studied and evaluated. So it is
certainly on the table.
Mr. Walberg. OK. Thank you. And I yield back.
Mr. Olson. Thank you.
Mr. Schrader, 5 minutes for questions, sir.
Mr. Schrader. Thank you, Mr. Chairman.
I guess first question, Mr. Frigo, following up on some of
the discussion about what is the Federal Government's
appropriate role. Everyone wants to get a tax credit. That is
always wonderful. It lowers the cost, makes things wonderful.
How long and when should the Federal Government intervene
in some of these new technologies?
We are spending money like drunken sailors here nowadays.
Defense, nondefense mandatory, you name it. But at some point
in time, there may be a reckoning. We may want to get fiscally
responsible again.
And, I think there is a place for the Federal Government to
incentivize new technologies trying to get, you know, the cost
down, make it worthwhile for private enterprise, nonprofits to
engage.
What is the timeframe for a technology to prove itself,
perhaps? And when should the Federal Government start to back
out to avoid market distortion?
Mr. Frigo. That is a very good question. You need one for
2.3 years or something like that. I think, the key is you only
need it for the time for it to be competitive. And then at that
point where it is competitive, then you shouldn't need to be
able to have a tax credit anymore.
Energy storage, I think, as we talked about, the costs are
coming down significantly. My guess is that it would happen
much sooner than, for instance, the ITC or the PTC for wind and
solar.
Mr. Schrader. OK.
Mr. Frigo. So I think it is not that long, but I can't
really tell you an exact amount of time.
Mr. Schrader. Anyone else have a comment on that?
Mr. Patel--or----
Mr. Kumaraswamy. Yes. I actually have a comment. This was
the same thing that I said earlier. We already have the section
48 of the ITC that is being applied to energy storage. And the
IRS actually had a process of getting feedback from
stakeholders, and the process has stalled and is slowly
beginning back up again.
And so what we are talking about is an issue that is
already existing, right? And so storage that is paired with
renewable energy generation is able to get the investment tax
credit today, subject to certain rules that are slightly fuzzy
that are pending clarification by the IRS, right?
And so what we are essentially seeing is that the value of
storage to the grid is happening regardless of whether it is
paired with renewable energy generation or not, right? Because
when you have to fire up a natural gas fired peaking plant and
provide the peaking capacity, and storage is able to provide
that more cost-effectively, it is able to provide the same
level of service in that application, right? And it may do so
without being paired with a renewable energy generation
facility, right?
And so what we are really asking for is a much more
broader, all-encompassing definition of the eligible sort of
technologies that can qualify under the section 48. So----
Mr. Schrader. Good, good.
Mr. Patel. And I will add one last thing, if I may.
Mr. Schrader. Sure.
Mr. Patel. In New York, what we saw was that, there are a
couple of kind of high-value applications that are cost-
effective today. But, they are kind of unique because the costs
are so high for energy storage. So one of the things we looked
at there was, it doesn't make sense to accelerate the market by
utilizing a bridge incentive or some other incentive to
basically bring forward some of that development and then
reduce some of these costs, that are less hardware but more
what we call soft, which is permitting interconnection, getting
developers in the State, things like that.
So I think there is that push and pull of, you can just sit
there and wait for the market to evolve and then take advantage
of it in 5 to 10 years perhaps, or you can push it forward and
take advantage of it sooner and then transforming the market,
which we have seen in other technologies like solar and wind.
Mr. Schrader. All right. Second question. I have got some
utilities in my area of the world that are looking at hot water
heaters as a battery, potentially. They store a lot of water.
They cost a lot of money to keep them going 24/7. They are new
smart devices that could be implemented by different utilities.
You shut them off at different times.
Are you guys exploring this technology? Do you know any
entities that engage? Mr. Frigo, I guess.
Mr. Frigo. Yes. Those are called demand response type of
technologies. And that is what we call low-hanging fruit. That
is the elimination of waste and being able to use your energy
more effectively and efficiently. Absolutely, that is a tool
that should be pursued across the U.S. in the electric system
and by all utilities. And most of them are.
Mr. Schrader. Very cool.
Last quick question. One quick answer, and then I maybe get
more complete answers later.
With storage coming online here, it seems to me the
traditional utility model is being disrupted in a big way. And
what we pay folks for usually generation-type stuff, now we
have storage, we have distribution. Is the utility world going
through a renaissance about how they should be applying and
charging people? And are the Federal Government and State
governments keeping up with that change that is going on?
I think that is really important, because we are no longer
in the 20th century. We are in the 21st.
Mr. Kuznar, real quick.
I am sorry, Mr. Chairman.
Mr. Kuznar. Yes. No. Definitely. Just with distributed
generation in general. For years, it was just a one-way flow of
electrons from large central power plants to homes and
businesses. And now there is rooftop solar, there is storage,
there is all these different services. So I would definitely
say it is going through an interesting transformation.
Mr. Schrader. I will leave it at that. And I thank the
committee's indulgence. And I hope we address this issue. It
would be something that we should be looking at as a committee,
I think, going forward.
Thank you very much, Mr. Chairman.
Mr. Olson. I thank my friend. And misinformation about
sailors like me is noted.
Dr. Bucshon, 5 minutes.
Mr. Bucshon. Thank you, Mr. Chairman.
Earlier this year, I had the pleasure of touring
Indianapolis Power and Lighting Company's battery energy
storage system, which uses lithium ion batteries for frequency
control and has the capacity of 20 megawatts. It was impressive
to see in person, I have to admit. And I am happy to hear that
Duke Energy will be adding more energy storage to the Hoosier
State.
As you are all aware, FERC has recently begun the process
of addressing energy storage's role in the markets. But I would
like to hear from you all on what barriers still remain for
energy storage's access to the interconnection. And so I can
start at--whomever wants to start.
So the question is, are there still barriers that--to
integrating the energy storage's role into the grid,
essentially, and what are those barriers?
Mr. Frigo. Yes. Thanks for the question. I think we touched
on this a little bit earlier where we talked about that looking
at energy storage and the specific application for which it is
being used and then making sure that the relevant
interconnection process that we have to go through, depending
on where it is in the country, actually models that project for
how it is going to be used, that Dr. Casey mentioned about how
it is being used in California.
So I think more direction to not so much the markets,
because I think the markets are pretty on top of this. But also
in those States that are not governed by a market, like many of
the western states are off on their own, and any
interconnection process that you have to go through there to
make it easier for companies like us to be able to properly
study the energy storage project that is being proposed.
Mr. Kumaraswamy. Yes. I would probably just add two points
that are still barriers. One is that we would definitely like
to see FERC finalizing order 841, so they are still rehearing
requests that are happening on both order 841 and 845. And so
we have gone through a very extensive deliberation process to
get to this point where we have an order. And so it is
important for us to close that and get to the implementation
stage of implementing the spirit of what FERC Order 841 really
requires market operators to do.
And then the second thing that I have said earlier is to
have FERC require energy storage being considered in
traditional transmission planning processes, right? And so FERC
has direct jurisdiction over transmission. And how planning is
conducted nationally. And so I think that would be an area of
keen interest to make sure that storage is equally considered
with traditional wires options in planning processes.
Mr. Bucshon. Whomever.
Mr. Casey. OK. If I might, the issue of considering storage
in transmission planning has come up a lot. I can tell you, in
the case of California ISO, we do. As I mentioned in my
testimony, we approved two storage projects just this spring as
alternatives to traditional wires. So there is an ability for
ISO/RTOs to consider storage in its transmission planning
process. Whether they all do or not, I don't know.
We have also modified our interconnection process to
accommodate energy storage. Storage is unique. It both
generates and consumes. So trying to treat it like a
conventional generator creates some issues, and we have made
changes to our interconnection process to accommodate it. So I
think in large part, we have done quite bit to accommodate
storage, at least in our footprint.
Mr. Kuznar. And I would just add to that, Congressman. In
Indiana, for example, we got approval for those first 10
megawatts. I think a big part of it is just education and
getting--because we are regulated, so we have to get approval
from the regulatory commission for us to invest in those assets
to show that we are doing something that is cost-effective.
And it is the education piece with the consumer counselors
in the commission of we are using this. It is a little
different. It got generation value, transmission value,
distribution value, and it should be a tool that we could use
if it is cost-effective. And we went to the BIC with a number
of folks in Indiana and educated people there just on what is
storage, what is the value. It is a little different. It is not
just the generator. It has this T&D value as well. And I think
that was just incredibly important to get their backing that
this is good for people in Indiana.
Mr. Bucshon. Yes. IWell, thank you. And I had another
subcommittee hearing at the same time, so I apologize if you
had to repeat some of that. But I think it is worth repeating
this type of information, if there was some repetition.
But because I think especially if--when people across the
country are looking more and more at renewables, reliability of
the energy supply and stuff becomes an issue, right? And I
firmly believe that without some sort of energy storage, it is
going to become a problem if we continue on the current pathway
of where we are going with that, how we generate base load for
energy. So thank you for your responses.
I yield back.
Mr. Olson. Thank you.
Mr. Welch, 5 minutes for questions.
Mr. Welch. Thank you. I thank the panel and thank the
chairman and thank my colleagues.
This is such a great issue--we can do something useful for
once. And the energy storage industry is a big deal in Vermont.
I just want to talk a little bit about that, then ask a few
questions.
In Vermont, we are starting to see what it could look like
when--our largest utility, Green Mountain Power, is all in on
this, they have an energy storage resource, including Stafford
Hill Solar Storage Facility in Rutland. It is one of the first
microgrids powered solely by solar and battery backup. And it
was the first in the region to use battery storage to reduce
peak power usage, saving $200,000 in 1 hour. In Vermont, that
is like real money. The battery storage can also be used to
power an emergency shelter at the Rutland High School.
In 2015, GMP launched its first of a kind program to offer
500 Tesla Powerwall batteries for $37.50 per month, a deal that
included customers getting backup power for letting the
utilities tap the batteries to manage systemwide or local peak
conditions. That is so terrific, because we don't have to have
these big backup generators. And we had a firsthand look at
what happened. We had a big heat wave in July. And by
leveraging these batteries and demand response resources, GMP
was able to take the equivalent of 5,000 homes off the grid,
saving customers about $500,000. We have got a couple of
others. Dynapower in Waterbury.
I am interested to learn more about what we can do to build
off this type of work. And I want to talk about FERC Order 841
that came out earlier this year. And as you know, that moves
towards opening the U.S. wholesale energy markets to putting
storage on an equal footing with generators and other grid
resources.
So I want to ask Mr. Frigo, does FERC Order 841 solve all
your industries' problems, or what other barriers are there?
And do current market designs adequately value and compensate
storage for the flexibility it provides to the grid? And what,
in your view, needs to be done?
Mr. Frigo. Right. FERC Order 841 is a great, great start.
But as my colleagues have mentioned, I think the big push now
is to finalize that. I know there has been a number of
stakeholders that have asked FERC for a rehearing on that. I
think it is important to deny that rehearing and basically
implement the order full on. If you are just delaying the
order, you are delaying the implementation.
Mr. Welch. Thank you.
Mr. Frigo. So then you also have FERC Order 845, which is
dealing with the interconnection. Push that forward as well.
And I think, actually, another thing is there has been a
number of States--this gets backs to the Federal-State
relationship. There has been a number of States that have
really pushed storage forward that I think the Federal
Government can learn from. California is one. New York is one.
And we have seen it recently with Massachusetts, and just
recently New Jersey as well. There are things that these States
are doing that could be adopted to the rest of the country.
Mr. Welch. Thank you.
And, Mr. Kuznar, what do you view as the main limitations
of battery technology at this point? And can you update the
committee on any new promising storage technologies that may
address some of these limitations?
Mr. Kuznar. Right. I think where storage technology is
today is in a very good place. We started doing R&D projects
almost 10 years ago. Where it has come from there to now from a
control system standpoint to a reliability standpoint, it has
improved dramatically.
I think going forward, you look at most technologies that
are commercially available. Lithium ion, they are finite in
their duration. So I think, one thing as a utility we are
always looking for is kind of longer duration batteries, one
that can meet more of our peak. And that is something we are
really keeping an eye on going forward.
Mr. Welch. OK. One last question. I introduced a bill that
would extend the electric vehicle credit. We are bumped up
against the 200,000.
And, Mr. Frigo, can you elaborate on how EV expansion can
benefit storage?
Mr. Frigo. Sure. So these batteries that we use for grid
purposes, whether generation or transmission and distribution,
are being manufactured in the same facilities as batteries for
electric vehicles. And electric vehicles is the bulk of that
manufacturing capacity right now. And so as you provide
incentives for more electric vehicles to be bought, put on the
road, to be implemented obviously increases the demand for the
manufacturing capacity, which makes those battery providers
expand that capacity, driving cost down, because you get
economies of scale. And then the grid applications for the use
of batteries just follows as a natural result.
Mr. Welch. Thank you very much. I thank the panel.
Mr. Chairman, I yield back.
Mr. Olson. Thank you.
Mr. Griffith, 5 minutes for questions, sir.
Thank you very much. I appreciate it, Mr. Chairman.
And I appreciate the panel being here today.
Mr. Patel, I was glad to hear in your comments that you
mentioned pump storage, and other people have asked about it.
And while we have pump storage near my district--not yet in the
district, although it is being looked at--one of the
interesting concepts that has been talked about is taking
abandoned coal mines and using those for pump storage
facilities. Because, as you mentioned, one of the problems is
it takes a lot of money. You got to land there where you are
going down. You have electricity already running in there,
oftentimes rail; if not rail, good roads. And it has already
been secured, because nobody wants folks getting in there and
getting lost in the mines or coming into some kind of a
problem.
So I would just point out that there is some potential
there. Would you agree with that, Mr. Patel?
Mr. Patel. Yes, absolutely. I think one of the projects I
looked at is an old aluminum smelter. That is, obviously,
existing. It has water rights. So, it is potentially a lower
cost than something that is somewhere else.
Absolutely, site value and those things really drives
costs, and if they are lower and they can provide that same
value at that lower cost, then it makes sense.
Mr. Griffith. And we have a lot of opportunities in rural
America to do that. And we have talked about microgrids. I am
going to ask some questions about that too.
Mr. Kumaraswamy, in your testimony, you referenced the
interaction of microgrids as one of the benefits of energy
storage being introduced to the grid.
And you also talked about that, Dr. Kuznar.
During previous hearings, we have discussed how microgrids
could be a solution to quickly restore electricity after
natural disasters like hurricanes. I am also interested in how
microgrid technology could be used to provide power to rural,
mountainous areas across the country. And can you expand on the
benefits that you think microgrids provide to the grid? Also,
what current limitations do you see associated with that
microgrid technology?
And then I will come to you, Dr. Kuznar.
Mr. Kumaraswamy. So one of the solutions that we deployed
for a utility in the southwest U.S., Arizona Public Service, we
actually delivered a 2-megawatt energy storage project to them
earlier this year. And it is in a city called the city of
Punkin, which is on the outskirts of Phoenix metropolitan. And
this was a city that was growing very moderately in terms of
load growth, and they had figured out that it was actually way
more cost-effective for them to add a battery storage project
at the end of the radial feeder to serve the city and part of
that town that was moderately growing than upgrading a long
section of the transmission line, right?
And so I think, as it relates to how we rebuild the network
and how we think about modernizing the grid, energy storage has
a very critical role to play in that.
On the microgrid topic, we think that storage that is
combined with solar or any other renewable sources has
incredible potential in terms of increasing the resiliency in
the way we actually power our network itself. So there is
incredible potential. What we would like to, again, see is the
open mindedness from utilities and transmission planning
entities to actually include this as a resource to make this a
mainstream asset while you are conducting this process.
Mr. Griffith. And one of the things I would like to hear
you all comment on, because I represent a mountainous district
with lots of trees and mountainous areas, and I noticed when we
were visiting Puerto Rico--and you have heard several others
mention that in one of the places we visited, they used to have
a hydropower facility, but they abandoned it, and now, of
course, everything is wheeled into that particular rural,
mountainous area of Puerto Rico. And I couldn't help but wonder
what if they had kept that just for keeping the lights on in
the hospitals and the school, using the school as a shelter in
time of a disaster.
Dr. Kuznar, do you have anything that you can add to that?
And then talk about Duke.
Mr. Kuznar. Yes. I mean, one of the main applications that
we are looking at with storage is reliability for radially fed
areas. You know, we are doing just--as you know, we are doing a
project in Indiana, a radially fed town, poor reliability, 5
megawatts, backup power. We are doing a number of projects in
western North Carolina in the Asheville area, same exact
instance. A lot of trees, mountains, bring down distribution
lines. Provide----
Mr. Griffith. It is the same mountains. Mine are just a
little further north.
Mr. Kuznar. A little further north, right. Backup power
there. But, also, the unique part about storage, we are also
going to use them, in conjunction with backup, to provide
regulation services to help incorporate solar into our grid.
So it is the stacked values we are looking at. But
distribution reliability is a major use case we are evaluating.
Mr. Griffith. So you think for areas like mine and your
western part of North Carolina, this is a real opportunity to
make sure that we have, particularly in times of ice, snow, et
cetera, usually for us, or heavy rains resulting from a
hurricane coming up the spine of the mountains, that microgrids
is a really good way for us to go.
Mr. Kuznar. Without question.
Mr. Griffith. And, Mr. Frigo, 6 seconds. Did you want to
add something?
Mr. Frigo. Yes. Pump storage--and this is important to
note, that we have been talking about batteries a lot here.
Energy storage, I think most of us would agree, we are really
technology-agnostic. There are multiple forms of energy storage
that are all very useful.
Mr. Griffith. And I see pump storage as just a big wet
battery. Would you agree with that?
Mr. Frigo. I would agree with that.
Mr. Griffith. Thanks. I appreciate it.
I yield back, Mr. Chairman.
Mr. Olson. Thank you.
Ms. Castor, 5 minutes for questions, ma'am.
Ms. Castor. Thank you, Mr. Chairman.
And thank you to the witnesses. It has been a very
interesting hearing. You have given me hope that America can
stay in the lead on battery storage and energy storage.
And I think energy storage has so much potential to change,
to modernize the way we produce energy, the way it is
transmitted to our homes and businesses, I think at great
benefit to our neighbors and businesses back home, first
incorporating these clean, renewable energy sources, helping us
to reduce carbon pollution, help to modernize the grid that is
so outdated in so many places across the country. I think I see
great potential for jobs, increasing competition, and the
opportunity to build the more resilient grid. And you have
heard a number of members talk about that in their trip to
Puerto Rico.
I think there has been an awakening after the last
hurricane season on the importance of a more resilient grid and
what microgrids and energy storage can provide, but we run
into--as you have provided a long to-do list for policymakers,
I think another one we have to face is that FEMA is totally
hamstrung by the Stafford Act so that, when a community is
demolished, a grid is annihilated by an extreme weather event,
they can only build back what was in place before. Now, the
Congress did give Puerto Rico a little more flexibility.
But what are you seeing? Are you hearing this discussion
among the industry about changes in that area, as well, Mr.
Kumaraswamy?
Mr. Kumaraswamy. Yes, no, that is a good question, and it
is an important thing to acknowledge, about how the Stafford
Act restricts what we can actually rebuild in Puerto Rico.
One of our parent companies, the AES Corporation, actually
provided a vision for rebuilding the Puerto Rico grid itself.
We filed those comments with the Puerto Rico Energy Commission.
And part of the plan actually envisions creating smaller
minigrids and several minigrids and connecting them through a
series of transmission lines, which we think would
substantially reduce the cost for ratepayers there and also
significantly increase the resiliency in terms of being able to
serve power for people after disaster conditions like
hurricanes.
And I think that we need to really think about using the
technological advancements like energy storage, which happen to
be more modular, right, so that, like Dr. Kuznar was saying
before, you can actually deploy them closer to load centers,
unlike traditional assets which need to be sited much farther
away because of water issues, because of emissions issues and
stuff like that. And so energy storage does not have any of
those attributes, right? So there is no fuel, no emissions, no
water, no noise. It doesn't have any of these attributes that
typically limit the infrastructure that we put on the electric
grid.
And they are also available in modular sizes, so that if
you have--say you are closer to San Juan, you can actually put
energy storage closer to the load centers and power those
communities locally there, as opposed to producing electricity
farther away and transmitting them.
So I think we do need to carefully consider some of these
advances.
Ms. Castor. So the technology exists.
Mr. Kumaraswamy. Absolutely.
Ms. Castor. It is a matter of deployment and the high cost
of doing that right now. But, otherwise, if we don't do it,
taxpayers are going to be on the hook. If we build back what
was there before and another storm comes through, taxpayers
have to step up again to do this. So it would be smart policy
to go ahead and do it right the first time.
Mr. Kumaraswamy. Absolutely.
Ms. Castor. Dr. Kuznar, Floridians are hungry for cleaner
energy. And it was great to hear that North Carolina is leading
the pack in solar energy, but, really, the State of Florida,
the Sunshine State, has great potential, and we are not meeting
that potential right now.
I was very pleased to hear you are doing--that the public
service commission has now authorized Duke and, I guess, FP&L
for 50--not kilowatt-hours----
Mr. Kuznar. Megawatts.
Ms. Castor [continuing]. Megawatts, excuse me. But they are
still calling it a pilot project. It doesn't seem like we have
a commitment there.
Tell me, are you committed, is Duke Energy committed, and
the other utilities? What is standing in the way to do more,
and how can you be encouraged to do more?
Mr. Kuznar. Thank you for that question. We have been
through this process--what we got approval for in December was
700 megawatts of solar and 50 megawatts of storage, but our
plan is to go well beyond that. That was just the first ask
there.
As part of this process, we have identified what we think
are much more than 50 megawatts of storage on the grid. We
worked with our transmission distribution planners to identify
sites of poor reliability, where do we couple with solar, how
do we help the integration of solar.
So I would just say this is a first step in what we plan on
doing in Florida. Because, as you said, the partnerships that
we can have with critical infrastructure to provide grid
services and backup power during an outage, we think, is going
to be very important going forward.
Ms. Castor. It absolutely will be. Thank you so much.
I yield back.
Mr. Olson. Thank you.
Mr. Johnson, 5 minutes, sir.
Mr. Johnson. Thank you, Mr. Chairman.
Thank you, panelists, for being here with us today, by the
way.
Several members have talked about the challenges of rural
America a little bit. I want to expound on that just a little
bit more and maybe dig a little deeper.
I represent rural eastern and southeastern Ohio. The
terrain is hilly. Communities are often far apart from one
another. And my district is home to very intensive energy
development industries--coal, oil and gas. And as that
production continues, particularly in the Utica and Marcellus
Shale, the need for reliable power only increases as
petrochemical operations come to this region of the country.
But, thankfully, my district is also home to reliable sources
of power, like coal-fired power plants.
Some of you have pointed out that energy storage can be
used for other applications as well, such as when a
transmission line suddenly stops working.
So, Mr. Kumaraswamy, your testimony touches on energy
storage being used in this way. Can you further elaborate, how
it can be helpful in rural settings?
Mr. Kumaraswamy. Absolutely.
So, when we size some of our transmission and distribution
systems, we go through the same process that we go through for
generation sizing, right? So we build them for peak conditions
of the electric system, so we have to meet the summer peak
demand for the utility, which typically happens in July and
August in the Northeast. And so what we are actually doing is
building a solution that you actually need only for 30 or 40
hours of the year, right?
And so we think that it is not the most efficient way of
allocating capital, in terms of investing large capital into an
asset that you would fractionally utilize. It just seems like,
in every other commodity market, we are moving toward increased
utilization and more efficient capital spending.
And we think that energy storage, through its capability to
be a modular solution, where you can actually add the right
size capacity to the network when you need it, and then if the
load continues to grow, you can augment the system with an
additional set of battery modules, which is incredibly more
helpful than a more lumpy capital asset like the traditional
wire solutions.
And so we are beginning to see this happen. And like Dr.
Casey mentioned, CAL ISO has been leading the charge on this.
We have seen energy storage being selected as a transmission
asset through the regional market transmission planning
process. And so what we would like to see is more of that
happening, where the traditional T&D planning folks can
actually use this technology that is available in the toolkit
and regularly look at this as an option in which you can solve
the reliability needs.
Mr. Johnson. OK. All right.
Dr. Kuznar, you mentioned that Duke recently filed for 10
megawatts of energy storage as a part of its electric security
plan in Ohio. Can you elaborate on the project and explain why
Duke decided that energy storage was the best option for this
particular situation?
Mr. Kuznar. Right. So that is where we are currently going
through that rate case and hearing right now. But what we have
done is, in Ohio, it is interesting because, unlike our other
States, we have no generation. So we are just a wireless
utility in Ohio with transmission and distribution, where in
Kentucky, Indiana, the Carolinas, and Florida, we have
generation transmission and distribution.
So what we are looking at for these projects in Ohio is
similar, basically looking at areas--and we want to expand
beyond this; it was kind of our first ask, but--with poor
reliability. So we have some very rural, radially fed lines in
Ohio, which to maybe potentially run a second feeder out there
to improve the reliability is just not cost-effective, where
now storage can give us this tool we can use to put down at
these radially fed areas and increase the reliability for our
customers.
So that is really what the gist of the project is in Ohio.
Mr. Johnson. OK.
Well, thank you very much, gentlemen.
I don't have time to ask my next question. It is too long.
I yield back.
Mr. Olson. Thank you.
Mr. Tonko, 5 minutes for questions, sir.
Mr. Tonko. Thank you, Mr. Chair.
And thank you to our witnesses for offering great advice.
A modernized grid will need to be smarter, more
distributed, and certainly more flexible. Storage technologies
will be essential to achieve that vision.
In my home State of New York, NYISO, NYSERDA, and the
Public Service Commission are all working together to integrate
storage resources and remove barriers to the wholesale
electricity market. As was noted by Mr. Patel in his testimony,
earlier this year New York established a 1,500-megawatt storage
goal by 2025 and made a commitment to financial support for
project developers from the State's Green Bank.
So, Mr. Patel, I know you helped develop the New York
Energy Storage Roadmap. In your view, what are the most
significant policy recommendations included in that report?
Mr. Patel. Yes. Thank you for the question.
There were a whole host of recommendations; it is a long
report. But I think the biggest ones were, what I touched on
earlier, and I think the other panelists as well, is the value
stacking, had how to actually do that in practice.
And, also, there are other initiatives going on at FERC,
things like that, and how to accelerate that. So are there ways
to, basically--it may be imperfect, until you can actually get
full participation in the market and the New York ISO and
others. Are there ways to allow the utilities or others to
basically get those values sooner, maybe through--in New York,
in particular, can you modify load on the utility side versus
directly participating in the wholesale market. So that might
be a bridge you can do in the next year versus waiting 3 or 4
years until the wholesale markets are in the right place to
allow for bigger participation.
And I think the last big recommendation, of course, is the
financial support that will be coming from the Green Bank and
the Clean Energy Fund of New York. And those have proposed
several hundred million dollars, which will obviously
accelerate deployment.
Mr. Tonko. Thank you.
And, also, Mr. Patel, why is it important for States or
grid operators to signal their commitment to storage through
targets or incentives or policy? Why is that critical?
Mr. Patel. Yes, no, another good question. I think the
market is evolving, and, obviously, developers and other folks
need a whole infrastructure supply chain, people on the ground
to actually go out and figure out how to actually do this.
So the States that are moving forward have committed to
being the first of those there. California, New York, they have
put some real money and effort into becoming the leaders in
this space. So, obviously, that yields folks opening up offices
and having more interest and actually getting out there and
doing it first.
Mr. Tonko. Thank you.
Dr. Casey, I believe that California and New York have
pretty much shared a similar approach. What lessons or advice
would you have to other regions on how they might remove
barriers within their markets?
Mr. Casey. Well, I think the big lesson is recognizing the
uniqueness of storage compared to conventional generation. I
think, even in our case, there is a tendency to try to take the
standard approaches we take with generation, like, through
interconnecting the resource, as well as participating in the
market. Well, they don't work for storage. Storage has unique
operating capabilities, as FERC is recognizing.
So being flexible in recognizing that they do have special
needs and finding ways to accommodate that, I think that is the
biggest lesson learned.
Mr. Tonko. And, as Mr. Patel indicated, there are some
opportunities that FERC can offer. Which would you prioritize,
in terms of what FERC can do to move the process along?
Mr. Casey. Well, I guess I have a slightly different view,
in that I think FERC has done a lot. I know FERC allows storage
to be treated as a transmission asset, to be considered in
planning processes. Order 841 is, I think, a huge step forward
in enabling wholesale market participation.
So I am not sure how much more there is for FERC to do. I
think it is incumbent on the industry and the ISOs and RTOs out
there, the organized markets, to really look at, how do we act
on the opportunities we have and getting them in place.
Mr. Tonko. Great.
And many State policies and mandates will drive growth
moving forward. Is storage being sufficiently considered in
State and utility resource planning efforts, such as resource
adequacy and transmission and distribution planning?
Mr. Casey. Yes, in the case of California, it definitely
is. There is a whole focused effort, led by the State Public
Utilities Commission, on, more generally, distributed energy
resource planning, but storage is a big component of that.
Mr. Tonko. Thank you.
Mr. Kumaraswamy, I had a question for you, but you have
already tackled it.
But thank you all for being here.
I yield back, Mr. Chairman.
Mr. Olson. Thank you.
And you all have made it. I will be the last member asking
questions. But, like Chairman Emeritus Barton before the
current vice chairman of the full committee, my Texas pride
makes me respond to some comments that were made in this
hearing earlier.
The witty banter between Chairman Upton and Mr. Doyle about
the All-Star Game last night in D.C., they failed to mention
the MVP. His name is Alex Bregman. He plays third base for the
World Series champion Houston Astros. He and another 'stro, as
we call them, George Springer, hit back-to-back home runs in
the 10th inning to win the game for the American League. Let
the record show: Astros, Astros, Astros, MVP.
Now let's get to business.
My first question is for you, Mr. Frigo. As you know, sir,
every air conditioner in Texas is cranking right now, hard. We
are having 100-degree days all over the State. Had those for a
couple weeks. There is no end in sight. Our ERCOT power grid is
under severe stress. Our reserve margins are lower, and we have
had some big retirements. Three days ago, we set a record for
July power: 70 gigs of power. This week, we may break that
record. ERCOT says we might hit 74 or 75 gigs. That is huge.
Reliability can be a hypothetical at times, but right now
at home it is as real as it gets. If the power goes out, that
affects people on the extremes: the extremely young, the
extremely old, and the extremely sick. It is life-threatening
to them if the power goes out.
I would like you to talk about what your storage projects
in places like the Permian Basin can do for reliability. How
can they protect the grid? What scale do you need to see more
of an impact? Any thoughts about that, sir?
Mr. Frigo. Yes. You are correct; today is a very hot day in
Texas, and the grid is under tremendous stress. In fact, I was
looking at our power curves just before this meeting started,
and we have our two projects on standby right now. And they are
probably being called upon as we speak to meet the frequency
regulation, which is basically making sure the grid stays at 60
hertz. Because if it goes above or below, you potentially could
have a grid outage.
And so that is where our storage is actually coming into
play as we speak, by getting the frequency regulation back on
track.
Mr. Olson. How about the scale? What to increase the scale?
How can we do that?
Mr. Frigo. Well, unfortunately, we have ERCOT that is not
under the jurisdiction of FERC. So they are on their own in
terms of implementing their own planning process and looking
for the future. Obviously, they do, I think, look--they are
smart. They look at what the rest of the country is doing and
take what works and implement it back.
I think a lot of the things are on Texas's shoulders and on
ERCOT's shoulders to basically implement many of the things
that are being done throughout the country at ERCOT itself. The
frequency regulation market is actually constrained now in
terms of the amount of megawatts that could be put on. And so
there have been efforts proposed to put in a fast frequency
regulation market that is bigger that would allow for greater
energy storage, but it hasn't passed thus far.
Mr. Olson. Well, thank you.
Mr. Kumaraswamy--is that close?
Mr. Kumaraswamy. That is spot-on.
Mr. Olson. Oh, boy. Spot-on for a thick Texas tongue, I
will take that as a great compliment.
One of the trends we are seeing in Texas, as you know, is
an incredible boom in wind power. My home State is number one
in America for wind power production. Wind power is great, but,
as mentioned earlier, it has two problems. It blows hard at
night where power is not needed, and the biggest wind is in
extreme west Texas. As was mentioned earlier, we have to have
that power in Houston, Dallas-Fort Worth, Austin, San Antonio,
the big cities.
Could you talk about how storage on batteries will mesh
with natural gas power? And does that make other forms of
energy work better, or does it replace them? And, finally, can
battery storage with wind power or solar power actually become
sort of baseload power, a quasi-baseload power? Is that
possible?
Mr. Kumaraswamy. That is a good question, and the answer is
yes. There are actually enough examples that are happening
across the country and internationally that showcase the value
that storage can bring. At, like, 3 or 4 hours of duration, if
you pad them with wind or solar, you can operate these
renewable facilities as partially baseloaded facilities. And so
there is incredible potential for you to do that.
I actually want to second the view that Mr. Frigo said
previously. In the Texas market, there are two things that I
see, particularly. One is that there have been past attempts to
reform the ancillary service market there, what is called the
FAST, the Future Ancillary Service Team, the FAST acronym, and
it didn't see light at the end of the day, and so it was
stalled completely. We think those initiatives are extremely
important, because you have to go to your place where you start
integrating the speed at which storage can actually provide the
service and not create artificial barriers in that market.
And so, because it is nonjurisdictional, I think it is
really ERCOT and the PUCT that have to resolve that issue. That
is number one.
Number two is that there have also been cases where energy
storage was actually a more cost-effective option than proposed
transmission projects and so utilities there have gone ahead
with that, but because of several reasons they have not been
approved to date.
We think that, for the same reason that you indicated,
which is the wind is in west Texas and the load is down south,
it also creates transmission constraints while you are trying
to move all of that power. And so storage can actually provide
great value as a transmission asset. And I think it is upon the
State to make sure that you are creating, then, the policy
environment for that to actually happen.
Mr. Olson. Well, thank you.
Seeing no more members----
Mr. Rush. Mr. Chairman?
Mr. Olson [continuing]. Looking to ask questions--Mr. Rush.
Mr. Rush. I have a question. And maybe any of the panelists
could answer this, if I might.
I am interested in how energy storage batteries, microgrids
and minigrids, their application to undeveloped countries, in
undeveloped countries. It seems to me that we are always
looking for a marketplace, for a different, wider market.
And so my question is, in the future of batteries, energy,
do you see a wide application in the future for batteries and
for, say, underdeveloped countries that are trying to develop a
middle class, middle-class lifestyle? Is there any significant
potential for the application of mini-grids in some of those
countries? And, also, if you can touch on, is there any future
for exporting energy based on stored energy?
Mr. Frigo. That is a good question, Mr. Rush. E.ON is a
big, global country. We have operations throughout the world.
And, in fact, we have part of our company that is actually
looking at this and working in some underdeveloped countries.
What you see is a lot of the grids in those countries are
very small, are not well-interconnected. Maybe there are one or
two power plants in the entire country and limited
transmissions distribution, so you have a number of smaller
communities on the peripheries that are just not electrified.
So one of the things that you see being used in
underdeveloped countries and these rural communities is the
formation of microgrids, what we talked about earlier. And in
these microgrids, they will typically have maybe a wind turbine
or two or maybe some solar. And this is where energy storage
can also play part.
We are working in Tanzania right now where we are looking
at solar, pairing it with energy storage to meet the needs of
some small communities that are not connected to the
centralized grid. So that is definitely one example.
In terms of your other question in terms of export power,
it really depends on where you would site that storage. Storage
is really used to solve a particular problem in a particular
location. So you really wouldn't put it with the intention of
exporting power farther away.
Mr. Rush. Thank you, Mr. Chairman. I yield back.
Mr. Olson. Thank you, my friend.
One comment on your question is to remember the country
called India. I was there this past March and talked with the
leaders there. Their motto for energy is: Natural gas is the
present, renewables are the future. That means batteries are
the future.
Great ally, great market--1.3 billion people who have been
held back by energy since probably the last half-century, but
now, with America opening up our exports of natural gas and
oil, they are looking for a source of energy from us. They have
air problems too.
So thank you for bringing that up.
OK. Seeing there are no further members wishing to ask
questions----
Mr. Rush. Mr. Chairman, I ask for unanimous consent to
enter into the record the opening statement from Ranking Member
Pallone.
Mr. Olson. Without objection.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Electricity storage is one of the most exciting topics in
energy today and I'm glad the Subcommittee is exploring it.
Under the leadership of Governor Phil Murphy, my home state of
New Jersey recently set an aggressive target to add 2,000
megawatts by 2030, including 600 MW in the next three years.
Energy storage provides flexibility and key reliability
services to the electricity grid. It can also be an essential
compliment to renewable generation resources like solar and
wind by storing excess power generated on a sunny or windy day.
That stored power can then be quickly dispatched to the grid as
needed when the sun isn't shining or the wind stops blowing.
Grid-level energy storage comes in many different forms,
from various types of batteries to molten salt storage. Our
committee and the House of Representatives took an important
step to promote another type of energy storage late last year
when we overwhelmingly passed legislation to expedite
closedloop pumped storage hydroelectric project licensing.
Recently, the Federal Energy Regulatory Commission (FERC)
issued an order that attempts to remove barriers to storage in
U.S. wholesale energy markets. I applaud FERC for moving to
place storage on an equal footing with generators and other
grid resources. While FERC's Order 841 is not perfect, it is an
important first step, and it could help promote deployment of
an additional seven gigawatts of storage across the country.
I already mentioned New Jersey's energy storage efforts,
but the fact is that states and utilities around the country
are moving to incorporate storage into the grid. There are many
reasons that new storage projects are being planned or coming
on line. In addition to providing reserve capacity, a number of
these projects will also provide frequency regulation and
voltage support that will make the grid more dependable.
One of the main reasons we're seeing more of these storage
projects pop up is the rapidly falling price for incorporating
storage into the grid. Storage has become increasingly
competitive with generation technologies for managing peak
load. In fact, Pacific Gas and Electric just requested approval
to replace three natural gas peaking plants with battery
storage. Meanwhile, a Tucson, Arizona utility reportedly
contracted for 100 megawatts of solar electricity coupled with
30 megawatts of storage for less than $45 per megawatt hour--a
price that's fully competitive with a new natural gas plant.
So, what we are beginning to see is the potential for a
truly transformative technology to take hold, one that can work
with all types of generation. Combined with renewable energy,
storage could help us meet our climate goals while also
creating new American jobs. Storage is already employing
thousands of people in the United States and has the potential
to employ many more, while adding billions to our economy and
saving money for millions of electric consumers across the
country. That should be something both sides of the aisle can
easily agree on.
Mr. Olson. And it looks like my colleague from Texas, Mr.
Green, has slipped in here.
We have talked all about the Astros, Gene. Do you want to
add some comments about battery power?
Mr. Green. And don't forget Altuve getting a hit last
night, and Springer helped scoring the run. Although I was
worried when our pitcher, Morton, let a home run get away from
him. But thank you, Mr. Chairman.
And I thank our colleagues who are here. I know you all
didn't want to have--although between Pete and I, we are both
Astros fans because, if you couldn't tell it, we are both from
Texas.
I want to thank the chair for this, because when it comes
to renewables, while were a still great success in the last
decade, the sun doesn't always shine and the wind doesn't
always blow. But advances in energy storage have the potential
to lead to a grid with a expanded renewable portfolio. And I am
glad our witnesses are coming here today.
For those of you on the panel who operate or construct
storage facilities, what was the regulatory process to build
these facilities, and what improvements would you like to see?
Mr. Kuznar. I can start. So----
Mr. Green. Was it a problem with FERC or----
Mr. Kuznar. Right. So, we operate in a number of different
markets. It is a new technology. And so the way we have modeled
it in our traditional planning processes that at least our
commissions are used to seeing. If you look, we operate in
Ohio, Indiana, Kentucky, North Carolina, South Carolina, and
Florida. And so, at Duke, we have a lot of different
commissions overseeing those States. And we are regulated, so
they must approve those projects.
So I think, one of our just initial goals that we needed to
tackle was just how do we model storage, how do we show that it
is an economic investment for us, and how do we educate and get
approval from our commissions.
Mr. Green. OK.
Do you feel, Mr. Kumaraswamy--pardon. Having a name like
``Green,'' it is easy. But, in your testimony, you talk about
investment tax credit. And I know what we--do you feel the
single-year tax credit extension framework that is currently
used on a year-to-year basis works for the development of
storage projects that require lots of permitting and
environmental reviews?
Mr. Kumaraswamy. Yes, no, that is a good question. I think
we talked about this previously, but one of the things that I
wanted to highlight is that section 48 of the investment tax
credit currently applies for energy storage when it is paired
with renewable energy generation.
There has been some ambiguity about that process, and the
IRS has actually invited comments on that procedure. And they
have not provided formal guidance on the topic. But one thing
that we see is that energy storage provides value wherever it
is put on a grid, right? Whether it is co-located with
renewables or whether it is paired with traditional generation
facilities or when it is used as a wires option, right, so
while it is replacing traditional T&D infrastructure asset.
So it is able to add value wherever it is added to the
grid. And so thinking about energy storage as a class by itself
and extending the current section 48 rules to apply for that
would be what we would like to see.
Mr. Green. OK.
I represent an area that is in ERCOT. And the expansion of
wind power has been overwhelming. Not as much solar, but I
think the State is going to get into that. And I don't think we
would have built most of that without the investment tax
credit.
And the same with storage. When I look at information that
ERCOT has much less storage capacity than some of the other
areas, does anybody know why that would be? Because compared to
California or compared to even PJM, the storage capacity is
much smaller.
Mr. Frigo. I can answer that, Mr. Green.
Mr. Green. OK.
Mr. Frigo. ERCOT, which is not under the jurisdiction of
FERC, has, effectively, a pilot frequency regulation market
that energy storage is well-positioned to participate in.
Currently, it is maxed out at 65 megawatts for regulation up
and then 35 megawatts for regulation down. And, basically, that
is markets already saturated with the existing storage there.
Mr. Green. OK.
Mr. Frigo. So what ERCOT needs to do--and this is one of
the things that has been proposed to ERCOT--is to expand that
market so that more energy storage could come onto the grid.
And that is something that initially got rejected and will
probably be revisited, I guess, in the future.
Mr. Green. OK. Because last year--I know Congressman Olson,
it is not his district now--we didn't have a lot of wind
damage, but when you get 55 inches of rain, it has an impact on
pipelines, on everything else. And we didn't lose power like
Puerto Rico or other States that were hit with high winds, but
it would be great to have that storage capacity that maybe some
of the plants--and the nuclear power plant continued. Our coal
plants could not because all the coal was underwater,
literally, in the storage area.
Mr. Chairman, I know I am out of time, but I appreciate the
time.
Mr. Olson. Well, thank you.
And one more time, seeing there are no further members
wishing to ask questions and no one wanting to brag about the
Houston Astros, I would like to thank all the witnesses for
joining us today.
Before we conclude, I would like to ask unanimous consent
that we submit the following documents for the record: Number
one is a letter from the National Rural Electric Cooperative
Association, and the second, a letter from the Edison
Electrical Institute.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Olson. And pursuant to committee rules, I remind
members that they have 10 business days to submit additional
questions for the record.
And I ask the witnesses submit their responses within 10
business days upon receipt of the questions.
Without objection, this subcommittee is adjourned.
[Whereupon, at 11:30 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
| MEMBERNAME | BIOGUIDEID | GPOID | CHAMBER | PARTY | ROLE | STATE | CONGRESS | AUTHORITYID |
|---|---|---|---|---|---|---|---|---|
| Rush, Bobby L. | R000515 | 7921 | H | D | COMMMEMBER | IL | 115 | 1003 |
| Upton, Fred | U000031 | 7991 | H | R | COMMMEMBER | MI | 115 | 1177 |
| DeGette, Diana | D000197 | 7859 | H | D | COMMMEMBER | CO | 115 | 1479 |
| Shimkus, John | S000364 | 7939 | H | R | COMMMEMBER | IL | 115 | 1527 |
| Schakowsky, Janice D. | S001145 | 7929 | H | D | COMMMEMBER | IL | 115 | 1588 |
| Walden, Greg | W000791 | 8115 | H | R | COMMMEMBER | OR | 115 | 1596 |
| Blackburn, Marsha | B001243 | 8154 | H | R | COMMMEMBER | TN | 115 | 1748 |
| Burgess, Michael C. | B001248 | 8182 | H | R | COMMMEMBER | TX | 115 | 1751 |
| McMorris Rodgers, Cathy | M001159 | 8209 | H | R | COMMMEMBER | WA | 115 | 1809 |
| Matsui, Doris O. | M001163 | 7810 | H | D | COMMMEMBER | CA | 115 | 1814 |
| McNerney, Jerry | M001166 | 7816 | H | D | COMMMEMBER | CA | 115 | 1832 |
| Bilirakis, Gus M. | B001257 | 7881 | H | R | COMMMEMBER | FL | 115 | 1838 |
| Castor, Kathy | C001066 | 7883 | H | D | COMMMEMBER | FL | 115 | 1839 |
| Loebsack, David | L000565 | 7915 | H | D | COMMMEMBER | IA | 115 | 1846 |
| Sarbanes, John P. | S001168 | 7978 | H | D | COMMMEMBER | MD | 115 | 1854 |
| Walberg, Tim | W000798 | 7992 | H | R | COMMMEMBER | MI | 115 | 1855 |
| Clarke, Yvette D. | C001067 | 8072 | H | D | COMMMEMBER | NY | 115 | 1864 |
| Welch, Peter | W000800 | 8204 | H | D | COMMMEMBER | VT | 115 | 1879 |
| Latta, Robert E. | L000566 | 8095 | H | R | COMMMEMBER | OH | 115 | 1885 |
| Scalise, Steve | S001176 | 7959 | H | R | COMMMEMBER | LA | 115 | 1892 |
| Guthrie, Brett | G000558 | 7954 | H | R | COMMMEMBER | KY | 115 | 1922 |
| Harper, Gregg | H001045 | 8021 | H | R | COMMMEMBER | MS | 115 | 1933 |
| Lance, Leonard | L000567 | 8049 | H | R | COMMMEMBER | NJ | 115 | 1936 |
| Lujan, Ben Ray | L000570 | 8058 | H | D | COMMMEMBER | NM | 115 | 1939 |
| Tonko, Paul | T000469 | 8082 | H | D | COMMMEMBER | NY | 115 | 1942 |
| Schrader, Kurt | S001180 | 8118 | H | D | COMMMEMBER | OR | 115 | 1950 |
| Olson, Pete | O000168 | 8178 | H | R | COMMMEMBER | TX | 115 | 1955 |
| Kinzinger, Adam | K000378 | 7931 | H | R | COMMMEMBER | IL | 115 | 2014 |
| Bucshon, Larry | B001275 | 7947 | H | R | COMMMEMBER | IN | 115 | 2018 |
| Long, Billy | L000576 | 8015 | H | R | COMMMEMBER | MO | 115 | 2033 |
| Johnson, Bill | J000292 | 8096 | H | R | COMMMEMBER | OH | 115 | 2046 |
| Duncan, Jeff | D000615 | 8143 | H | R | COMMMEMBER | SC | 115 | 2057 |
| Flores, Bill | F000461 | 8173 | H | R | COMMMEMBER | TX | 115 | 2065 |
| McKinley, David B. | M001180 | 8222 | H | R | COMMMEMBER | WV | 115 | 2074 |
| Cardenas, Tony | C001097 | H | D | COMMMEMBER | CA | 115 | 2107 | |
| Ruiz, Raul | R000599 | H | D | COMMMEMBER | CA | 115 | 2109 | |
| Peters, Scott H. | P000608 | H | D | COMMMEMBER | CA | 115 | 2113 | |
| Brooks, Susan W. | B001284 | H | R | COMMMEMBER | IN | 115 | 2129 | |
| Hudson, Richard | H001067 | H | R | COMMMEMBER | NC | 115 | 2140 | |
| Cramer, Kevin | C001096 | H | R | COMMMEMBER | ND | 115 | 2144 | |
| Collins, Chris | C001092 | H | R | COMMMEMBER | NY | 115 | 2151 | |
| Mullin, Markwayne | M001190 | H | R | COMMMEMBER | OK | 115 | 2156 | |
| Walters, Mimi | W000820 | H | R | COMMMEMBER | CA | 115 | 2232 | |
| Dingell, Debbie | D000624 | H | D | COMMMEMBER | MI | 115 | 2251 | |
| Costello, Ryan A. | C001106 | H | R | COMMMEMBER | PA | 115 | 2266 | |
| Doyle, Michael F. | D000482 | 8132 | H | D | COMMMEMBER | PA | 115 | 316 |
| Engel, Eliot L. | E000179 | 8078 | H | D | COMMMEMBER | NY | 115 | 344 |
| Eshoo, Anna G. | E000215 | 7819 | H | D | COMMMEMBER | CA | 115 | 355 |
| Green, Gene | G000410 | 8185 | H | D | COMMMEMBER | TX | 115 | 462 |
| Barton, Joe | B000213 | 8162 | H | R | COMMMEMBER | TX | 115 | 62 |
| Pallone, Frank, Jr. | P000034 | 8048 | H | D | COMMMEMBER | NJ | 115 | 887 |
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