Over the next decade and a half, Duke Energy plans to spend $500 million or more on energy storage across the Carolinas. After looking extensively at pricing and tech trends, the utility realized energy storage would play an extremely important role on the grid.
How important? "To do effective planning, you have to mix it into your planning at large scale," said Melisa Johns, Duke Energy's vice president of distributed energy resource business and product development.
We spoke with Melisa Johns about Duke Energy’s plans to step up investment in storage technologies ahead of her participation in the upcoming Energy Storage Summit in San Francisco on December 11-12.
GTM: Duke Energy will likely invest $500 million in energy storage over the next 15 years. What key benefits will these upgrades bring to customers?
Melisa Johns: Energy storage brings a lot of different value streams. It can be used to integrate renewables or defer traditional upgrades that we would make to our system, such as a distribution or transmission line. Storage can also be used to help with our existing portfolio of assets to respond quicker for stability or frequency regulation.
As a utility, we think we are in the best position to plan, operate and manage energy storage. As the grid operator, we understand how its different capabilities can be applied. And we think we are in the best spot to do that because we already have a 100-year history in building a large portfolio of generation and T&D assets, and managing those in an efficient, optimal manner. Duke Energy has owned pumped storage hydro and we have operated that for the last 45 years. So we understand the value that storage brings to our grid.
As we look at where we could add new storage instead of traditional line or substation upgrades, we are looking at cost-benefit ratios. In a lot of cases, storage provides a more cost-effective solution, particularly when you consider the other value streams that it brings with it, like microgrids. We have been working on a couple of microgrids that are around emergency response centers. We have the occasional two or three hurricanes every hurricane season, and if an area experiences an outage, we can use energy storage to keep that emergency response center operating if our lines are down.
GTM: How can storage enable flexibility and reliability during weather events such as Hurricane Michael?
Melisa Johns: We have a demonstration project here in Charlotte where we put solar and storage at a substation that is located next door to a fire station. We utilized that microgrid several times in the event of an outage to keep the fire station running. We also have an approved project in Indiana called Camp Atterbury, and that is one where we are putting solar-plus-storage at a National Guard facility to serve them in the event of an outage.
There is also another solar-plus-storage backup project in Anderson, South Carolina. The Anderson Civic Center provides emergency service and shelters for key South Carolina departments, like the Department of Health, the school district and the American Red Cross.
GTM: What are the key challenges Duke Energy is facing in expanding energy storage across its operations?
Melisa Johns: My team works a lot with our T&D and generation planners. Our challenge right now is identifying where we put storage, where it can bring the most value to the grid and our customers. We are doing these projects now individually. But we really want storage to be a tool that planners integrate in their planning — whether it is for generation or T&D.
I think the challenge there is getting the modeling to a granular perspective and quantifying the benefit that storage is bringing.
One of the biggest challenges is how you incorporate it into your everyday planning and how...you represent all the value that energy storage is bringing. Right now, that granular modeling is very, very difficult to do, particularly all the way down to the distribution level.
Right now, we’re working with specific projects on small sections of the grid, and we’re demonstrating its value on a case-by-case basis. But, really, to do effective planning, you have to mix it into your planning at large scale.
GTM: What are your thoughts on the pathway from today's small demonstration projects to large-scale batteries playing a role in peak capacity?
Melisa Johns: We need to be able to show storage is most cost-effective based on the other options we have in front of us. So it gets back to quantifying the value streams of storage. As we get more experienced with battery storage, this will help us not only quantify, but also better explain and demonstrate what type of face value we can get from it.
On top of that, we also need to learn how to integrate storage with what we already have. So you can write generation plans a little bit differently. In North Carolina, we are second in the country for solar energy, we already have a lot of pumped storage hydro, which has been working very well to help us integrate solar. Storage in that portfolio may look a little bit different and have other value streams than in other jurisdictions that are not as renewables-heavy. Figuring that out will probably take five to 10 years.
Right now, our plans are predominantly focused on the distribution grid level, although we are working with our gas operators to figure out how to utilize storage there. For most of our jurisdictions, we have to put these projects in the interconnection queue, and that takes time.
GTM: What key opportunities do you see in tapping new revenue streams for energy storage assets across the grid?
Melisa Johns: As you incorporate more and more storage, energy storage prices continue to drop, and you can quantify value better, and there are more applications on the customer side. We also see revenue from grid services as a potential avenue for storage.
There is a lot of talk about the intermittency of solar, so obviously I think that is a key value storage can provide. Right now, there is a lot of over-paneling, and there is energy that does not get delivered, so with storage you can capture some of that energy and deliver it at another point in time. We see a lot of capability for storage to help us integrate more renewables into the system.
GTM: What are some of the most innovative battery technologies you are monitoring?
Melisa Johns: There is this zinc air technology that is really interesting, primarily because it is rechargeable technology, but also because of how cost-effective it is. We are working with a zinc air battery provider called NantEnergy, and they have been able to lower the cost of energy storage to $100 per kilowatt-hour.
GTM: What role can a utility like Duke Energy play in owning solar-storage assets versus procuring them as services?
Melisa Johns: That is exactly what we’re looking at, owning solar-plus-storage in addition to standalone storage. We have both in our plan [and] in our portfolio. Often with solar-plus-storage, we’re looking at systems that can be a microgrid in the event of an outage for a customer like the National Guard or the Anderson Civic Center.
We’re also looking at large-scale and utility-scale solar and the value streams for storage there. There are different plays in solar-plus-storage, so it really depends on what types of use cases you’re looking at. I definitely think it makes sense for us to own it and to actively look for those investment opportunities.
Come to San Francisco on December 11-12 for Energy Storage Summit 2018 and join Duke Energy and other leading companies in storage development, including PG&E, Exelon, SCE, Con Edison, Southern Company, San Diego Gas & Electric, CAISO, NYISO, Constellation, Shell New Energies, E.ON and many more.
