A July report from Energy Storage Canada finds that the introduction of at least 1,000 MW of energy storage over the next decade could provide $2.7 billion in total savings for Ontario’s electricity customers, and that the savings could reach upwards of $4 billion (see Figure 1).
From a net savings perspective, based on an installed cost of $200,000 per MW per year, the report says energy storage can provide $774 million to $2 billion in savings under a base case and a high estimate case, respectively.
Potential savings fall into three service types:
• Wholesale Market, including energy arbitrage, reduced prevalence of surplus baseload generation, reduced need for flexibility and cost-guarantee procurement mechanisms, lower ancillary service costs, and increased participation in Capacity Auctions. In total, energy storage can provide $1.1 billion to $3.1 billion in gross savings in the wholesale market.
• Maximize Transmission and Distribution Investment – storage investments made at specific locations on the grid to better utilize existing transmission and distribution assets. Based on current power system planning outlooks and historical investment trends, energy storage can provide $457 million to $840 million in gross savings over the next decade.
• Direct-to-Customer Savings, helping electricity customers manage individual costs by shifting peak consumption, resulting in lower Time-of-Use rates and reduced demand charges. Energy storage can also help shift renewable energy output – largely from solar generators – from low-value to high-value hours.
Other benefits, not quantified, include reduced greenhouse gas emissions, lower transmission congestion, increased electricity exports and import values and improved power quality.
Recommendations include:
• The Independent Electricity System Operator should contract for the full suite of services energy storage can deliver, and should enable the co-optimized operation of these storage resources.
• The IESO, the regulators and utilities should establish enduring, cost-effective and competitive methods to integrate energy storage:
» rely on current proposals for Capacity Auctions and ensuring energy storage’s future participation;
» determine how to optimize existing assets by, for example, co-locating energy storage with operating renewable generation and other baseload generation facilities;
» ensure that the Ontario Energy Board and the IESO coordinate efforts to fully extract all value from non-wires solutions and wholesale market participation; and
» establish an OEB-IESO committee with a clear and reasonable timeline and set of objectives for the full integration of energy storage.
The report was prepared for ESC by Power Advisory LLC.