Dispatches from San Diego

This is part one in a four-part series on CNESA's trip to San Diego for the Energy Storage North America conference and expo. See parts two, three, and four.

We're happy to be here in San Diego. We're at the center of an energy revolution, and top industry leaders, academics and policymakers are here to show us what they've learned so far.

On the Ground in California’s Energy Revolution

Energy Storage North America 2015 began with site visits to San Diego’s most innovative energy storage projects. Byron Washom, director of strategic energy initiatives at UC San Diego, showed us how his university is leading the way in microgrids and  energy storage.

Byron Washom at the UCSD Microgrid.

UC San Diego is operating a campus microgrid containing a diverse array of technologies, including solar PV-powered EV charging stations, fuel cell storage, thermal storage for cooling, diesel backup generators, and a number of interesting experimental projects that reflect the university’s commitment to exploring the next wave of energy storage technologies.

The first thing that strikes you about UC San Diego is its size. Washom commented that serving the electrical needs of the campus is akin to serving a city of 90,000 people. This has provided both challenges and opportunities for the school.

Maxwell's 30kW solar-smoothing system 

Washom has pioneered what he terms a “Motel 6” model for testing new energy storage systems. By laying the groundwork for a container-sized system in various locations on campus, he can carry out testing on whatever systems come his way. We saw a 30kW, 5-minute ultracapacitor installation by Maxwell, being used to smooth out fluctuations due to clouds in a solar PV array built on top of a university theatre. This system will be tested in conjunction with the university's solar forecasting system -- among the most advanced in the world.

BYD has also partnered with UC San Diego to provide a 2.5 MW / 5 MWh energy storage system located on campus. This is a big investment for a campus as large as a small city.

The school's microgrid not only serves the university, but has also helped the community of San Diego through a demand response partnership with the city’s utility, San Diego Gas & Electric. In a recent load event, the university activated its automation systems to adjust thermostats and other non-critical loads to transform the microgrid from an electricity importer into a 3 MW exporter. This 3 MW, Washom said, happened to be just enough to keep the grid up, clearly demonstrating how the right combination of technologies and practices are revolutionizing how utilities and consumers interact.

Keynote Addresses

In the evening, conference attendees met to listen to opening remarks from Janice Lin, conference organizer and founder of Strategen Consulting. She introduced James Avery, chief development officer of San Diego Gas & Electric, who argued that energy storage is the next big opportunity for cleantech players.

Taking a question from the audience about whether utilities had a role to play in the new world of distributed energy, Avery responded by pointing out that for California to reach its carbon emissions targets, the state will need to decarbonize – and thereby electrify – the entire transportation sector. With millions of electric vehicles needing to charge up, there will be a huge demand for electricity – both on a distributed and utility scale.

John Zaruhancik, the president of AES Energy Storage, spoke next. He announced a 20 MW storage project to be built in Dallas, in partnership with Oncor, a Texas utility.

He also talked about the broader meaning and importance of energy as a matter of human livelihood. AES Corporation, which operates the world’s largest fleet of grid-connected batteries, is active in countries which face energy insecurity and instability, such as the Philippines and the Dominican Republic. In his perspective, energy storage is another tool to make people’s lives better, by providing light to read, refrigeration for medicine, and the foundation for a modern economy.

“Clean, unbreakable power,” Zaruhancik said. “That’s what we really want.”

Our trip blog continues in part two for the first full day of presentations and coverage from the expo floor. 

CNESA 2015 White Paper

Credit: Crew of ISS Expedition 23

CNESA has released its 2015 White Paper, an overview of the energy storage industry in China and abroad. The report explores trends from 2014 and looks at the newest technologies, concepts and markets shaping energy storage today. 

Key topics include:

• The Future of Solar+Storage 
• Chinese Energy Storage Policies
• Opportunities in the EV Industry
• China and the Energy Internet
• Outlooks for the Chinese Energy Storage Market
• The State of Energy Storage Technologies

We're happy to release this white paper for free. Our Chinese-language version, with greater detail and in-depth analysis, is available for purchase.

If you want to learn more about the Chinese energy storage market, contact us.

CNESA Demand Response Pilot Goes Online

Summer heat in Beijing. Credit: timquijano

On August 12th, 2015, the Beijing Demand Response Pilot program went online for the first time, as peak load in Beijing reached 18,430 megawatts – a new record. The round of demand response reduced load by about 70 megawatts, helping to ease pressure on the grid.

High summer temperatures led to another record-breaking load on the following day, reaching 18,560 gigawatts. To relieve grid stress, the Beijing Development and Reform Commission (BDRC) and the Beijing Energy Conservation and Environmental Protection Center (BEEC) issued an order to mobilize load integrators to begin reducing load. In the end, load was reduced by about 66 megawatts.

CNESA was the first organization to be recognized as a load integrator in Beijing, so when the dispatch order was given, we helped users engage in demand response. This instance of demand response came through the city’s Demand-Side Comprehensive Management Service Platform, which announced the response action in advance. Our load integration platform received the order and confirmed receipt. This instance demonstrated the capability of CNESA’s demand response platform to seamlessly receive top-down orders, and then divide responsibility and delegate to users. The system also successfully collected data and conducted analysis on user performance.

CNESA is working with the BDRC and BEEC to further improve this pilot program and make the most of our platform. We will learn from the experience of other integrators and improve the platform’s functionality to provide a convenient experience for a growing number of users. We’re also actively exploring how to establish long-term demand response mechanisms so that we can do our part in improving demand response in Beijing.

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User demand curve shown on CNESA demand response platform interface

Beijing Demand Response Pilot Program

CNESA is helping the government achieve lower peak loads. Here's how.

Photo: robert anders

Since the promulgation of the Beijing Demand-side Management Pilot Program Financial Incentive Fund Management Guidelines in 2013, demand response programs have been subsidized by the Beijing Ministry of Finance. By the end of 2015, these programs are expected to bring about a total demand reduction of 150 MW from peak loads. The government has chosen to play a leading role in forming supporting pilot institutions that include both energy services companies and consumers.

Our Role

The Beijing development commission has entrusted CNESA to implement a demand response pilot program. As the first organization authorized to manage load integration, CNESA is responsible for developing a demand-side management platform and encouraging qualified consumers to participate. The Commission will provide subsidies to participating organizations.

CNESA has made progress towards achieving improved demand response by:

1. Exploring the peak shifting potential among electricity consumers
2. Guiding consumers on how to reduce consumption through behavioral changes
3. Establishing a demand response platform

CNESA is currently in the process of attracting qualified consumers to join this DSM platform and creating a DSM data infrastructure to manage peak loads.

The demand response platform is critical to achieving demand-side management in the Chinese electricity market. It will help promote demand response across the grid and help establish DSM implementation mechanisms throughout the country. The platform will also demonstrate how consumers can benefit from the market by changing their usage behavior.

CNESA has partnered with ENERBOS, an energy software service provider, to design the platform’s back-end database and develop web applications to link with existing platforms (grid platforms, the CNESA network, and energy consumer platforms), and test functionality.

How it Works

The platform aggregates demand reduction goals from the grid dispatcher and publishes a reduction plan for consumers – including key information such as reduction amount, date and time, relevant areas, subsidy payments, etc. – so that consumers can decide how to reduce demand based on their capabilities and needs. The platform will then confirm which electricity providers and consumers will participate. The platform will monitor the load curve during implementation to evaluate participant performance and calculate subsidies. Lastly, the platform will use this data to guide and improve future actions.

CNESA has also developed a series of automated demand reduction packages to meet the needs of different consumers. This framework uses a distributed network to integrate different sub-systems into a single computerized and centralized structure, through which managers can quickly and conveniently monitor and control the network via a comprehensive graphical user interface. This platform improves grid stability and performance, all while bringing profit to participants. 

Energy Storage China 2015 Held in Beijing

Over 700 participants joined CNESA for our 4th annual conference and expo.

On June 3, 2015, CNESA and Messe Dusseldorf held their 4th annual summit — Energy Storage China 2015 — in Beijing, with the support of the National Energy Administration. The event took place over four days, with the theme of “Driving Energy Storage Commercialization: Policy, Technology, and Financial Innovation.” The summit featured discussions on many energy storage applications, proposed future directions for industry development, and broadened commercial possibilities for energy storage.

Global energy storage market steadily advances

As the global new energy industry has developed, renewable energy is gradually moving from a supplementary role towards large-scale substitution of  tradition energy. Energy storage technology's role in integrating renewable energy into the grid has gradually emerged, and industry insiders expect the global ES market to exhibit explosive growth.

According to CNESA's database, at the end of 2014 the global grid-connected installed capacity of energy storage was 845.3 MW (not including pumped hydro, CAES or thermal storage). 111.6 MW was installed in 2014, an increase of 15% from the year before. The annual growth rate is also 2% higher in comparison to 2013. China has 84.4 MW of installed capacity, about 10% of the global total.

The US has the largest number of projects and installed capacity. By year's end 2014, the US had commissioned 95 energy storage projects, with installed capacity exceeding 357 MW. Japan is second in installed capacity with 310 MW, and China second in number of projects with 63. In 2014, the US installed the most new capacity, 34.4 MW, with China and Europe following with 31 MW and 27.7 MW respectively.

In terms of technology, sodium sulfur batteries make up the largest share with 40%, followed by lithium ion and lead-acid batteries with 33% and 11% respectively. But, for new capacity in 2014, lithium ion batteries made up 71%, followed by flywheels with 20%.

In application, most energy storage is installed on the grid side for connection of renewables, ancillary services, transmission and distribution, and distributed microgrids. Grid connection of renewables makes up 45%, or 379 MW. In 2014, user-side applications made up 43% of new installations, with ancillary services and T&D following at 28% and 19%.

In investment news, 12 major companies raised over US$400M in energy storage finance in 2014 to fund technology R&D, project installations, market expansion, and deployments. In particular, investors seemed to favor enterprises with more innovative technologies and business models, such as Stem and Aquion Energy.

Rapid development in China’s energy storage industry

While the global ES market is developing at a steady pace, China's storage industry is seeing rapid changes. In March 2015, the CCP Central Committee and the State Council issued long-awaited electricity system reforms, which are already showing positive effects on the clean energy and advanced energy storage industries. This is good news for industry-watchers, who have been awaiting policies introducing market mechanisms into China’s heavily regulated electricity system.

At ESC 2015, CNESA Secretary Tina Jing Zhang announced that, according to CNESA’s database, China had 84.4 MW of ES installed capacity on the grid by the end of 2014 (not including pumped hydro, CAES or thermal storage). This is an increase of 31 MW in a single year—a growth rate of 58%. This is a substantial jump in deployment compared to years past, where 2013 saw only 14% annual growth.

Lithium ion batteries make up 74% of China's installed ES capacity, followed by lead acid batteries and sodium sulfur batteries at 14% and 10%. These three technologies make up about 98% of China's market.

In terms of application, user-side applications account for most of China's market, about 50%, which includes islands, remote areas, industrial parks, and low-carbon city installations. Renewable energy grid integration and electric vehicles make up the second and third largest applications, at 27% and 13%, with most of the former being in wind farm energy storage, and most of the latter being in solar+storage EV charging stations, V2G (vehicle to grid) applications, demand response charging, and second-life EV battery usage.

World-Class Experts Convene at ESC 2015

This year’s conference received support from the German Energy Storage Alliance (BVES), the California Energy Storage Alliance (CESA), the India Energy Storage Alliance (IESA), and the Global Energy Storage Alliance (GESA). Through their support, we were able to host experts from across the world to share their views on the development of the industry.

In the opening ceremony, we were joined by top representatives from government and industry, including: Mr. Shi Dinghuan, chairman of the China Renewable Energy Society and member of the China Energy Storage Expert Committee; Mr. Xu Dingming, advisor to the State Council; Ms. Zhang Yulei, director of the Zhongguancun Industry Office; and Mr. Johnson Yu, chairman of CNESA.

In the following speeches, Ms. Lu Hong of the Energy Foundation China’s Renewable Energy Project shared the findings of a new report, the “China 2050 High Renewable Energy Penetration Study.” Dr. Eicke R. Weber, founding president of BVES and director of the Fraunhofer Institute for Solar Energy Systems, described the rise of Industry 4.0 in Germany, as well as the challenges and opportunities in the energy storage industry today. Darren Gladman, policy manager at the Australia-based Clean Energy Council, presented on industry trends and opportunities in the Australian market. Our speakers also included Rebecca Feuerlicht, project manager for the Center for Sustainable Energy, who shared her insights on California’s Self-Generation Incentive Program (SGIP).

To examine different applications of energy storage technology in depth, participants engaged in smaller seminars on the following topics:

• “China’s Electricity Reforms and Energy Storage Opportunities” – Prof. Zeng Ming, director of the Energy and Electricity Economics Center at the North China Electric Power University, explained the details of China’s new electricity reforms. Mr. QIN Yi, director of the Shenzhen Micro-grid Management System Engineering Laboratory, also shared his insights into the pilot pricing reforms for the transmission grid.
• “Developments in the International Energy Storage Market” – Speakers from around the globe presented on energy storage trends in Australia, Germany, Canada, the EU, India, Japan, and China, then followed up with questions on energy storage business models.
• “Electric Vehicles and Storage” – Mr. Wang Zizhong, director of the dynamics lab at the China North Vehicle Research Institute, proposed suggestions on the future direction of EV batteries. Meanwhile, industry leaders and academics shared their experiences with EV charging and operation models.
• “Advanced Energy Storage” – Experts presented on traditional technologies such as physical, electrochemical, and phase change storage methods as well as emerging technologies like aqueous sodium ion and solid-state lithium batteries.
• “Solar PV plus Storage” – Mr. Wang Sicheng of the National Development and Reform Commission’s Energy Research Institute explained the importance of energy storage as a part of solar deployment. Representatives from the US, Australia, Japan, and China, shared case studies on distributed storage and analyzed financing methods and business models.

Additionally, CNESA released the industry’s top annual report, its 2015 Energy Storage Industry White Paper. The report examines international projects and policies, especially focusing on solar-powered EV charging models and the state of new energy finance. The paper looks at “solar-plus-storage” as a potential model for microgrids, as well as the opportunities that EV battery development is bringing to the industry as a whole. The report also takes a close look at the concept of the “internet of energy.”  CNESA hopes that the results of our white paper – along with the hard work of industry members and better business models – will help spur continued development in the Chinese energy storage industry.

This year’s conference drew over 700 participants and 80 speakers from 10 countries. The event was a great chance for sponsors, exhibitors, and other participants to connect with policymakers, grid representatives, integrators, and foreign utilities. Participants learned about the newest global trends, policies, technologies, and business models. By making these connections, participants met new customers and positioned themselves for another successful year.

China's New Electric System Reforms

Credit: Steffen Ramsaler / Flickr

Beginning in March 2015, following years of silence in electric system reforms, China has introduced new policies and documents reforming its electricity generation, retail, usage, and many other sectors.

The leading policy document, Several Opinions of the CPC Central Committee and the State Council on Further Deepening the Reform of the Electric Power System – also known as Policy No. 9 – have established a new framework which officials are referring to as “pipeline in the middle, open at both ends.” China is putting forth a series of reforms in electricity pricing, distribution and retail segments, electricity trading, distributed generation, and other aspects. Combined with the set of policies that followed, we expect that this round of electric system reforms will have a profound impact on China's electricity markets and industries.

(1) Changes to T&D pricing and grid operation models

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New electric system reform policies. Source: CNESA

Policy No. 9 separates T&D and retail, establishes a principle of “approved costs plus reasonable profit,” and differentiates T&D prices based on voltage level . The policy also breaks up China's long‐standing model that integrates transmission, distribution, and retail in a single entity. It also puts a stop to practices where grid operators can profit from differences between generation and retail prices. The role of the grid will shift from that of an electricity trading body towards an electricity transmission provider, in which the grid will earn profits through a “toll” in exchange for services.

Before the issuance of Policy No. 9, Shenzhen and Inner Mongolia were T&D reform pilot regions. Another policy document emerging in the wake of Policy No. 9,  Notice on Hastening Implementation of Policy No. 9-related Transmission and Distribution Reforms, will expand the pilot program to include Anhui, Hubei, Ningxia, and Yunnan, bringing the number of pilots up to six. We expect that this number will continue to grow.

Following the beginning of Shenzhen's T&D pricing pilot, electricity prices have dropped. From 2015 to 2017, Shenzhen's T&D prices will drop year-by-year: ¥0.1435, ¥0.1433 and ¥0.1428 per kWh, respectively. This is more than ¥0.01 less than 2014 levels. Electricity customers are already realizing the benefits of reform.

The changing role of the grid operator and a clarified T&D price will:

1. Create flexible electricity trading models

2. Introduce competitive pricing on the generation and retail sides

3. Promote the entrance of diverse participants into the electricity market

4. Improve utilization and efficiency of the entire electricity system

(2) Reforms to price-setting, and the formation of market trading mechanisms

Policy No. 9 clarifies that outside of T&D pricing and public welfare electric pricing, generation and retail prices will be determined by the market. Generators can determine prices through agreements with large users or retailers, or through market competition. In addition, during the process of reform, differences in electricity subsidies among different users will gradually undergo reform.

3) Generation and retail side competition, and a diversity of retail entities

In addition to prices being set by the market, Policy No. 9 shows that following the elimination of public welfare generation and use planning, generation-side generation planning and retail-side electricity usage planning will also be determined more and more by the market. Generation-side and retail-side competition will become much more intense. As private funding of retailers liberalizes, there will be more pathways to breed market entities.

In the new system, high-tech industrial parks and economic zones, privately-funded retailers, utilities such as water, gas, and heat providers, energy service companies, qualified generation companies, microgrid operators/owners, and others can all take part and fight it out in the future retail market.

Before Policy No. 9, Shenzhen's T&D price reform, the first of such reform pilots, had already been active in this respect. On March 24, 2015, Shenzhen's first privately operated retail electric company, Shenzhen Electric Power Retail Co. Ltd. (Shenzhen Dianneng Shoudian Co. Ltd.), officially received its industry and commerce permit. It is also China's first privately-owned retail electric company. Whether more of these companies will appear is a matter that will be watched closely.

(4) New ancillary services market

China's ancillary services have long been provided by grid‐connected power plants, without any ancillary service market. This will change with Policy No. 9.

Policy No. 9 establishes a new “shared responsibility” mechanism for ancillary services. This improves the compensation mechanism for ancillary services provided by grid‐connected power plants. It will use a “those who undertake are those who benefit” principle. It also establishes "shared responsibility, shared gains" mechanisms for user participation in ancillary services. Users, in accordance with their contracts with either generator companies or the grid, can be responsible for a required ancillary service fee, or some other type of economic compensation.

Another new policy document, Guiding Opinions on Improving Electric Operation and Regulation to Promote Greater and Fuller Use of Clean Energy (hereafter referred to as Opinions on Clean Energy), was drafted to promote renewable energy consumption. It also reemphasized the importance of ancillary services, and stressed the establishment and improvement of related mechanisms. These include peak shifting compensation mechanisms, incentivizing the direct purchase of clean energy ancillary services, and advancing the development of electric ancillary services.

(5) Demand side management and new electric service companies

One of the highlights of this electric reform is the simultaneous reform of electricity production and consumption. Policy No. 9 emphasizes demand side management in balancing the grid. The Notice on Perfecting Electric Emergency Mechanisms to Conduct City Pilot Demand Side Management emphasized the need to establish time-of-use pricing, incent the participation of private electricity service companies, and establish online electricity usage monitoring platforms to promote demand side management efforts.

Opinions on Clean Energy, from the angle of renewable energy consumption, also emphasized the importance of demand side management, increased time-of-use price spreads, comprehensive operation and usage subsidy policies, incentives for user participation in peak shifting and frequency regulation, and the establishment of demand side management platforms.

User usage behavior has a large impact on the overall efficiency of the electric system. Through demand side management and demand response, user load can become a dispatchable resource with a certain degree of flexibility. This can lower peak loads and play an important role in providing the grid with peak shifting and ancillary services.

(6) Gradual transition from fossil fuels to renewables, and the creation of distributed energy markets

Opinions on Clean Energy further promotes the usage and consumption of renewable energy after the release of Policy No. 9. Key methods included in the document for advancing renewable energy consumption include comprehensive overall planning for annual electric balancing, strengthening of daily operation regulations, sufficient ancillary services and other benefit compensation mechanisms, and strengthening of demand side management.

Of particular importance, Policy No. 9 emphasizes the establishment of new distributed energy development mechanisms, as well as the complete opening of user-side distributed energy markets. In reality, since the 2013 issuance of the NDRC Notice on Implementing Price Leveraging to Promote the Healthy Development of the Solar PV Industry, which established a ¥0.42/kWh subsidy for power provided by distributed solar PV, many localities launched their own local subsidy plans. However, distributed PV development has not completely been taken up. In 2014, only about 2.52 GW of distributed PV was installed, well short of the 6 GW target.

In the other reforms under Policy No. 9, distributed energy can now become a resource for regional retail companies via usage by specialized ESCOs, in addition to existing models such self‐consumption, grid feed-in, or grid dispatch.

Moreover, distributed energy, especially distributed PV, can work with energy storage and other devices to participate in demand side management, broadening the value of distributed energy. The distributed energy market can likely bring great development opportunities.

Energy storage is a flexible power resource, and has already proven many applications at all levels of the grid from generation down to the user. However, a great many bottlenecks continue to hamper widespread application. Outside of technological performance and cost factors, in China, the lack of appropriate mechanisms for market participation has been a major reason for the slow development of energy storage.

The new reforms will open up Chinese electricity markets such as demand response, ancillary services, and distributed energy, within all of which energy storage can play a major role.