Regulatory Considerations for Your Storage Portfolio

Electric Energy Storage

Phoenix, Arizona

January 12, 2011

Bob LaneDirector: FERC, CAISO and Compliance

Director: Regulatory Strategy

2

SDG&E Service Territory

• San Diego Gas & Electric

has customers in San

Diego and Southern

Orange counties in a

service area that spans

4,100 square miles from

Southern Orange County

to the Mexican border.

• SDG&E has 1.4 million

electric customers.

• SDG&E's customer mix is

89% residential and 11%

commercial & industrial.

Regulatory Strategy

• View Storage as part of a larger Smart Grid Strategy

• Storage is one part of a larger integrated strategy to modernize the grid.

• Outline key drivers of the investments in storage

• What changes in the marketplace are leading to the need for storage

• Determine jurisdictional nature of investment

• Need to know which regulators and what regulatory framework is applicable

• Make a business case for the storage applications

• Articulate the value storage provide

• The costs are clear and are quantified, benefits should be quantified

Case Study: SDG&E General Rate

Case YTY2012 - Filed Dec. 2010

• Proposed Energy Storage in 2012 General Rate Case

Distribution Level• To address increasing penetration of PV on distribution system

• Voltage regulation, frequency regulation, power intermittency, voltage flicker, deferment of capacity upgrades

• Located on distribution circuits with high PV penetration

• Planned installations of deployment over multiple years

Substation Level• To address centralized renewable variable generating sources

• Voltage and Frequency regulation

• Some off peak energy storage capability

• Requested 2012 Ratebase addition = $54.9 million

Case Study: SDG&E General Rate

Case YTY2012 - Filed Dec. 2010

Project will install electric energy storage in two forms:

• Distributed Community Energy Storage devices.

• 50 Kw batteries installed in those circuits where the penetration of PV is 20%

• 11 Circuits in 2011 and 14 Circuits in 2012

• Substation Energy Storage

• Utility scale, size anticipated to be 1 MW or greater,

• Installed to mitigate the effects of utility scale (up to 2 MW) PV projects that will be installed in various locations.

• 4 MW to be installed in 2011 and another 4 MW to be installed in2012

View Storage as Part of a

Larger Smart Grid Strategy

SDG&E Smart Grid Program Request• Renewable Growth

• Energy Storage (ES)

• Dynamic Line Ratings

• Phasor Measurement Units

• Capacitor SCADA

• SCADA Expansion

• Electric Vehicle Growth

• Plug-in Electric Vehicles

• Smart Transformers

• Public Access Charging Facilities

• Reliability

• Wireless Faulted Circuit Indicators

• Phase Identification

• Condition Based Maintenance (CBM) Expansion

• Smart Grid Development

• Integrated Test Facility

Storage is placed in

context as one of

several Smart Grid

technologies being

deployed to

facilitate renewable

energy growth and

the integration of

these renewable

resources onto the

Grid

Outline Key Drivers Of The

Investments In Storage

• Renewable Energy Growth

• Renewable Energy Portfolio Change

• Variable Wind and Solar Generation

• Ramp Rates

• Growth of Distributed PV

Drivers: Renewable Portfolio Change

Drivers

Variable Solar and Wind Production

CA Centralized Renewable

Production May 1 – May 5, 2010

Source: CAISO Renewables Watch Reports, May 2010

CA Centralized Renewable Production May 1 – May 5, 2010

-500

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

0:0

0

0:3

7

1:1

4

1:5

1

2:2

8

3:0

5

3:4

2

4:1

9

4:5

6

5:3

3

6:1

0

6:4

7

7:2

4

8:0

1

8:3

8

9:1

5

9:5

2

10:2

9

11:0

6

11:4

3

12:2

0

12:5

7

13:3

4

14:1

1

14:4

8

15:2

5

16:0

2

16:3

9

17:1

6

17:5

3

18:3

0

19:0

7

19:4

4

20:2

1

20:5

8

21:3

5

22:1

2

22:4

9

23:2

6

Me

ga

wa

tts

2013 - Wind + Solar4000 MW Solar and 6000 MW WIND Nameplate Capacity

WIND

SOLAR

WIND + SOLAR

Source: CAISO

Drivers

Ramp Rates

Drivers

Distributed PV

SDG&E instrumented a circuit with a high PV nameplate capacity at a time These Graphs show the impact of a 1 MW PV system on SDG&E’s primary voltage for one day recorded with this instrumentation

Shows the impact of fog burning off on the output of the PV system and the commensurate changes in primary voltage during the day.

Magnified view, 10 minutes of one particular change in the PV system output data.

Operational issues noted from include: high primary voltage coincident with PV system output and an approximately 15% swing in primary voltage coincident with PV system output change.

Drivers

Distributed PV

Drivers

PV Growth

Drivers

Roll-out Schedule for PEVs

Saturn VUE

Ford Escape

Hyundai

2009 2012 2011 2010

BYD in Europe

Fisker Karma

Subaru Stella

Chrysler

Smart for Two

ZENN City

BYD EV in China

Tesla Roadster

Mitsubishi iMiEV

Chevrolet Volt (5.3kW charge)

Kia LPG/Electric

EPRI, Eaton, Ford Trouble

Truck

Nissan LEAF

BMW Mini E (7.7kW charge)

Toyota Prius

Aptera BYD F3DM

BEVPHEV

Determine Jurisdictional Nature

Of Investment

• Investment is on the distribution system

• State Regulated – California Public Utilities Commission

• Determined best procedural vehicle would be to include in the

2012 Test Year General Rate Case

Make A Business Case For The

Storage Applications

Value Opportunities

• Grid operation to islanded system operation

• Smoothing electrical transition

• Power quality

• Power leveling / regulation on grids with connected variable, renewal energy

sources, such as Wind, PV, etc.

• Peak load shifting / shaving

• As needed

• Daily

• Energy storage for off-peak / on-peak energy arbitrage

• Energy regulation / ancillary services related to CAISO operations

• T&D capacity deferral

Questions?

• Bob Lane

• rlane@semprautilities.com