Powering the Grid with Distributed Energy Resources

William F Tyndall

Duke Energy Commercial Strategic Initiatives

1

Energy Challenges

United States

Aging power plants and distribution infrastructure

Climate change

Changing customer expectations

Globally

1 billion live without access to electricity

Energy reliability is challenge in many countries

Climate goals require substantial decarbonization of electricity supply

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3

Working definition of distributed energy landscape

Demand management Energy efficiency

Decentralized generation

De

ce

ntr

alized

en

erg

y r

es

ou

rce

s

En

erg

y E

xtr

ac

tors

Services and solutions

to optimize total energy

consumption for the

same level of services

Distributed storage

Storing energy/electricity,

'behind the meter' and on-

site – typically paired

with DG

Lowering or shifting

electric usage of

end-use customers

at peak or times of

dispatch

Generating electricity

'behind the meter' and

on-site where energy is

used

Ability to design,

engineer, develop,

install and manage

all the energy needs

of a customer

(includes micro-grid)

Integrated

offering

4

Distributed energy: ~$15B market in 2012, to grow to ~$35B by 2020

4

102

9

5

8

4

2

3

0

10

20

30

40

Revenue $B

Solar PV - Commercial

Solar PV - Residential

Energy Efficiency

Demand Management

Distributed Storage

Integration

2020(E)

35

1

2012

14

0 1

+144%

Decentralized Energy Market1 (Base case), 2012 – 2020(E)

Key assumptions

• Continued smart grid

expansion and penetration of

advanced metering

• Net metering in place in key

PV markets through 2020

• Growth in dynamic pricing

models

• No explicit changes in regional

DR expansions

• ITC at 30% through 2016, 10%

to 2020

• Energy prices broadly aligned

with Duke forecast

• Moderate econ growth

Potential upside

of $10-15B

above base

case

1. Considering only a subset of decentralized energy markets Sources: EV Power. LBNL, NERC. EIA AEO. Navigant, BCG Analysis

5

Distributed energy: 35% capacity growth over last 3 years

2009-2012 US cumulative capacity growth

0

50

100

150141

21%

38%

28%

3%

Total EE DR

GW

Decentralized

Generation

11%

Traditional

Generation

(gross adds)

Utility Scale

Renewables

35% of

capacity growth

Declining Solar Prices Still Beating Analyst Expectations

6

7

0.00

0.05

0.10

0.15

0.20

0.25

1200 1400 1600 1800 2000 2200 2400 2600

UT

TX

WV

CA

AZ

AR

AL

AK

OH

NY

NV

TN

SD

SC

RI

PA

OR

OK NM

NJ

NH

NE

ND

NC

MT

MS

MO

MN

MI

ME

MD

Average electricity price for commercial in 2012

in $/kWh

LA

KY

KS IN

IL ID

IA

FL

MA

DC

CO

Solar irradiation on optimally

inclined plane in kWh/m2/year

WY

WI

WA

VT

VA

DE

In many states, commercial PV expected to reach retail parity by 2017

Generation capacity in GW (2010) Commercial grid parity by 2017

at current electricity prices

Iso-LCOE

curves at a

PV system

price1 of

2.80 $/Wp (2012 w/ 30% ITC)

1.8 $/Wp (2017)

1.62 $/Wp (2017 w/ 10% ITC)

4.0 $/Wp (2012)

1. For roof-mounted system 100 kWp; year end prices; does not account for accelerated depreciation benefit Note: Assumptions: Performance ratio of PV system 85%; lifetime 20 years; discount rate 7%; annual OPEX as percentage of initial CAPEX 1%; assumed electric prices grow at inflation Source: Solar Electricity Handbook (online); IEA Electricity Information 2011; LBNL; NREL database; BCG analysis

HI

Note: actual electricity price by

customer has large range based on

consumption level, TOU, etc.

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0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600

Slovakia Hungary

Czech

Poland

Bulgaria

Romania Turkey South Africa

Average electricity price for households in 2012

in $/kWh (excluding VAT)

Hawaii

India

California

Spain

Texas

Australia

Greece

Japan

China

Italy

France New York

South Korea

Germany

Netherlands

UK

Finland

Sweden

Norway

Belgium

Solar irradiation on optimally

inclined plane in kWh/m2/year

Global PV market growing as more countries reach retail parity

1. For a 10kW roof-mounted system; mature PV market; price excl. VAT Assumptions: Performance ratio of PV system 85%; lifetime 20 years; discount rate 8%; annual OPEX as percentage of initial CAPEX 1%; exchange rate €1.00 = $1.30 Source: Joint Research Centre of the European Commission, NREL; PVGIS; BCG analysis

Size of electricity

market in TWh (2012)

Residential grid parity by 2013

at current electricity prices

Iso-LCOE

curves at a

PV system

price1 of

2.9 $/Wp

1.9 $/Wp

1.6 $/Wp

Note: actual economics depends

on price for PV generated energy

(e.g. FiT, net metering)

Storage Value to Commercial Customers

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:

• Demand management hardware

• Energy intelligence software

• Grid services

• Contracts with utilities to aggregate Stem asset fleet

• Provide capacity, stability, and reliability

Swarm Logic Method Automated DR Event

SWARM LOGIC: AN ELEGANT, SIMPLE SOLUTION

200KW

Traditional Method

Barclays Bank downgrades utility sector bonds due to DG plus storage From: “The Solar Vortex: Credit Implications of Electric Grid Defection” (May 2014)

Over the next few years… we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo. Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii. Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after.

In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power. We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade.

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Two projects showing the promise

Argentina40,091,359 Area: 2,780 • Population ,400 km2 • Density: 15 p/km2

Neuquén • Population 550,334 • Area: 94,078 km2 • Density: 5.89 p/km2 • 1.83% of total GDP

South America

Coyuco-Cochico

S 36°28´54” W 70°13´17” Location

Chorriaca

S 37°55´57” W 70°06´14”

164 Population 500

Creoles Natives Mapuche

Barrancas Nearest City Chos Malal

66 km of cliff-side dirt road

Distance to

nearest city and

access

71 km of paved road

Goat and sheep farming

Communitarian horticulture Main activities

Goat and sheep farming

Communitarian horticulture

Elementary school

Health care center Services

Elementary school

Health care center

Police detachment

Civil registry

Communication radio

Rural development committe Community

Organization Rural development committe

Diesel engine providing

6 hrs/day Electric service

Diesel engines providing

18 hrs/day

Bottled gas and wood

Other fuels

used for

heating and

cooking

Bottled gas and wood

32° to 0° F

0° to -18° C

Winter

temperatures

41° to 22° F

6° to -5.2° C

Coyuco-Cochico

Chorriaca

Chorriaca Hybrid Wind-Diesel System • 100 kW of new wind

generation

• Hybrid system with existing 120kW diesel generation

• One to three turbines, depending on economics of final contractor proposals

• Annual fuel savings: 58,386 liters

Mini hydro at Coyuco-Cochico

Diversion weir

Settling basin

Penstock

Power house

Road

Bridge

Transmission line

Diversion weir Gabion weir, height=2m

Intake Side intake type with a sluice gate

Settling basin and head tank

Open type, length=9.8m, width=5m, with spillway for excess water

Penstock and spillway

Reinforced PVC pipe k6, diameter= 500mm, length=160 m. Underground

Power house 30m2 pre-assembled concrete. Located 1620 masl, 2 m above average water level.

Turbine and Generator

Cross-flow turbine (Mitchell-Banki). Impeller diameter 400 mm. Synchronous generator 400 VCA brushless with AVR

Transmission line 13.2 kVA Lenght=3.7 km and 2 transformers 04/13.2 kV – 200 kVA

Intake Height (m) 24.1

Flow (l/s) 600

Penstock net diam.(mm)

470

Hydraulic loss (m) 2.44

Net Height (m) 21.6

Generator efficiency 90%

Turbine efficiency 75%

Power output (kW) 86

Annual generation (MWh)

753

Annual fuel saved (lts) 23,796

Transmission line Mini-hydro

Distributed Energy Benefits – United States

Lower carbon emissions

Solar and energy efficiency = zero CO2 emissions

One study: Major California city could decrease carbon emissions by 70% by growing DER by 2% per year

System benefits

Reduced transmission losses

Grid Support

Greater resiliency

Reduced Consumer Costs

Customer Choice

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