DOCKET

09-IEP-1G
NGK INSULATORS, LTD.
DATE April 02 2009

RECD. April 02 2009

NGK’s Sodium Sulfur (NAS) Battery

The Vendor
Vendor’s
s Perspective on
Barriers & Issues Encountered in U.S. Deployment
Presented to the
California Energy Commission

Staff Workshop on Energy Storage Technologies and

Policies Needed to Support California's Renewable
Portfolio Standard (RPS) Goals of 2020

April 2, 2009 TECHNOLOGY

INSIGHTS

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Abstract

• NGK Insulators’ Sodium Sulfur (NAS) Battery has

been deployed at over 200 locations world-wide,
world wide
totaling over ~300 MW, 2000 MWh
• 9 MW are currently operating at three U.S. utilities
• An additional 10 MW have been delayed from 6 to 12
months due to U.S. regulatory issues.
• These circumstances present barriers to deployment
of NAS – and similar storage technologies – in
support of
¾ California RPS goals
¾ “SmartGrid“deployment
• The vendor perspective on select experiences are
summarized in this presentation
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Part 1:

NGK Insulators, Ltd.

NAS Battery Technology, Status & Applications

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NGK Insulators, Ltd.

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The “Na”+“S” Î “NAS” Battery

Unit Rating: 1 MW, 6 MWh/cycle, 300 cycles/yr, 15 years

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NAS Battery Development Highlights

• Joint Development by NGK and

T k Electric
Tokyo El t i PPower C Company (TEPCO)
• Initial Target: Utility-Scale (Multi-MW, Multi-Hour)
Distributed Energy Storage (DES)
¾ 1984 ～ Technology – Beta Alumina Ceramic Electrolyte
¾ 1989 ～ Cell and Battery Module Development
¾ 1997 ～ Field
Fi ld Tests
T t att Substations
S b t ti (6 MW
MW, Tsunashima,
T hi JPN)
¾ 2000 ～ Field Tests at Customer Sites
¾ 2002 ～ Commercialization in Japan
¾ 2006 ～ First US Utility-Scale Installation at AEP (1 MW)
¾ 2008 ～ Largest to Date: 34 MW, Wind Stabilization, JPN

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NAS Battery Manufacturing

• 2003 – Commercial-scale manufacturing plant

commissioned

• 2005 – 48 MW/yr production (960 modules)

• 2008 – 90 MW/yr (1800 modules)

• 2010 – 150 MW/yr (expansion in-progress)

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NAS Deployment History

* IIncludes
l d 160 MW NAS Distributed
Di t ib t d Energy
E Storage
St within
ithi TTokyo
k
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NAS Battery Applications

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Part 2

Barriers & Issues Encountered in

US Deployment

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The Regulatory
g y “Ownership”
p Issue

Ownership regulations have obstructed NAS owners from

accruing the combined benefits of both
MARKET SERVICES and GRID SERVICES

Organized (ISO) Markets Grid Infrastructure

(competitive, unregulated) (rate-based, regulated)

• Market Services • Grid Services

¾ Energy
gy Trading,
g, ¾ Reliabilityy Enhancement
e.g., time-shift wind ¾ Upgrade deferral
¾ Ancillary Services, e.g.,
frequency regulation

• This issue –
¾ Creates owner uncertainty on investment recovery
¾ Applies to all DES technologies like NAS (multi-MW
(multi MW, Hrs)
¾ Presents a barrier to DES contribution to CA RPS goals TECHNOLOGY
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Cases

• Case 1: 6 MW DES (NAS) Project delayed ~ 1 year

¾ Owned by a California Investor Owned Utility
Utility, Transmission
Company (abbreviated, CA-IOU(T))

• Case 2: 4 MW DES Project

j approval
pp delayed
y ~ 6 months
¾ Customer is a Texas Investor Owned Utility, Transmission and
Distribution Company (abbreviated, TX-IOU(T&D))

• Case 3
C 3: MMulti-MW
lti MW DES P
Proposall tto CA
CA-IOU
IOU – combined
bi d
benefits were NOT considered
¾ Proposed by a California Independent Storage Developer
(abbreviated, CA
CA-ISD)
ISD)

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Case 1:
CA--IOU(T)
CA IOU(T)* 6 MW DES Project Delay

• In Feb 08, CA-IOU(T) purchased 6 MW DES to provide:

¾ Reliabilityy enhancement [[a grid
g service]]
¾ Renewables generation support (time-shift wind) [a CAISO market service]
¾ Ancillary services - regulation control, VAR support [CAISO market services]
• In May 08, the vendor was advised that
¾ “CA-IOU(T)
( ) is facing
g the challenge
g of establishing
g the p
precedent for Battery
y
Energy Storage Systems (BESS) as a Transmission Asset recoverable in the
Transmission Access Charge (TAC).”
• The vendor’s understanding is that
¾ The CA-IOU(T)’s challenge to qualifying BESS as a Transmission asset is due
t a FERC ruling
to li on th
the rigid
i id separation
ti off G
Generation
ti anddTTransmission.
i i
– . . .“[asset] may not be operated and/or managed by the California Independent System
Operator Corporation or functionalized as transmission for rate recovery purposes,”
¾ The CA-IOU(T) considered the ruling to place the cost recovery of energy
storage assets at risk
¾ No FERC or CPUC rulings have been obtained

* California Investor Owned Utility, Transmission Company

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Case 2:
TX--IOU(T&D)
TX IOU(T&D)* 4 MW DES Project Delay

• In July 08, TX-IOU(T&D) received ERCOT approval of 4 MW DES

for reliability enhancement
¾ No ISO market services (energy trading, ancillary services) planned
• In Aug 08, two Market Participants (TX-MPs) filed objections
¾ ““. . . it is
i nott clear
l [t
[to TX-MP]
TX MP] that
th t the
th storage
t device
d i should
h ld b be owned d
and operated by the TX-IOU(T&D), causing the TX-IOU(T&D) to
effectively take ownership of the energy while it is stored in the battery. “
“. . . TX-MP believes that the intent of the Legislature
g was to distinctlyy
separate generation, transmission and retail functions.”
• ERCOT tabled the issue
¾ “.. . . until the PUCT issues a decision in the proceeding relating to the
ownership issue (PUCT Docket No. 35994).”
• In Feb 09, PUCT expressed approval for TX-IOU(T&D) to proceed
*Texas Investor Owned Utility, Transmission and Distribution Company
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Case 3:
CA--ISD
CA ISD* Multi
Multi--MW DES Proposal to CA
CA--IOU

• During 2008, CA-ISD submitted a proposal based on networked

multiple DES systems in response to CA CA-IOU
IOU RFO
RFO.
• CA-ISD projected value based on combining both
¾ CAISO market services (e.g., frequency regulation, energy) and
¾ Grid services (e.g., upgrade deferral, feeder reliability)
• The vendor’s understanding is that
¾ CA
CA-IOU
IOU proposal evaluators were not equipped to consider the
combined benefits of market and grid services, i.e.,
– DES only credited for MARKET SERVICES
((as though
g DES were a ggenerator))
– DES benefits for GRID SERVICES ignored.

*California Independent Storage Developer, (Storage counterpart to IPP)

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Case Summaries

• Case 1: CA-IOU(T) Owner - 6 MW DES Project Delay

¾ FERC ruling appears to deny BOTH market and grid services

• Case 2: TX
TX--IOU(T&D) Owner - 4 MW DES Project Delay
¾ Market
M k participants
i i (TX
(TX-MP)
MP) objected
bj d to storage ffor grid
id services
i
– PUCT has recently approved project
¾ The use of storage for market services was not addressed

• Case 3: CA
CA--ISD Owner - Multi
Multi--MW DES Proposal to CA-
CA-IOU
¾ Storage valued by CA-IOU for ONLY market services
¾ Value of proposed grid benefits denied

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NGK INSULATORS, LTD. Vendor Perspective of
US Market Structure
Shaded denote candidate energy storage owners
owners, ii.e.,
e MARKET CHANNELS

Utility
Private
Holding
Companies
Company

CASE 1 CASE 3
APP(s)
( ) IPP(s)
“T” Utility
Utilit ISD(s)
(Unregulated) (Unregulated)
(FERC) (Unregulated)

CASE 2 “Merchant Suppliers”

“D” Utility competing in ISO markets
(PUC) Both “natural
monopolies” Utility – side –
of – the - meter

Customer – side
– of – the - meter
Customers
(RELIABILITY DG,
(RELIABILITY, DG Demand
SmartGrid, Response)
Renewable Delivery, TECHNOLOGY
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Market Channels???”
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Alternative Rules for Owners of
Distributed Energy
gy Storage
g (DES)
( )

• DES technologies are “new tools” in “new markets”

¾ Existing
g rules appear
pp to stem from “deregulation”
g of g
generation assets,,
and strict separation generation and T&D functions

¾ “Storage” is being treated “generation”

• Alternative rules for DES ownership should allow owners to

accrue benefits from COMBINED market and grid services.
Options include:
¾ Interim Rule
Rule-Making/Flexibility
Making/Flexibility – while experience is gained with DES
technologies, e.g.,
– Allow “T&D” utilities to place storage in rate-base for grid services and return
market revenues to rate payers

¾ New Rule-Making – to recognize “energy storage” as a regulatory

category separate from generation and T&D

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Networked DES
Located Near Load in SmartGrid

DES

LOCATION BENEFITS
¾Renewable time-shift
¾T&D upgrade deferral
¾Feeder Reliability
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(Figure from NETL ModernGrid) INSIGHTS

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Networked DES
in SmartGrid Deployment
p y

Roles for Storage

in Next Few Years

Utility or

TECHNOLOGY
(Figure from Energy Pulse) INSIGHTS

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Contact Information

• For additional information, please contact –

Harold Gotschall
Principal
Technology Insights
6540 Lusk Blvd, Suite C-102
San Diego, CA 92121-2767
Phone: 858-455-9500
858 455 9500
E-mail: gotschall@ti-sd.com

• Or –
M T
Mr. Takayuki
k ki E
Eguchi
hi
Regional Manager of NGK-Locke's Western Region
NGK-Locke, Inc.
21250 Hawthorne Blvd., Suite 500
Torrance, CA 90503
Ph: (310) 316-3323
Email: eguchit@ngkus.com

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