Offshore wind and battery storage are about to come into the Northeastern power mix in a big way.

With more states requiring offshore wind targets, almost 18 GW are mandated to come online by 2035 in states across New England. But how that intermittent capacity will fit into an increasingly clean energy mix, how it will impact system reliability and whether the region's utilities are ready for more change, remains in question.

The answer, stakeholders told Utility Dive: It depends.

"In the beginning, the objective was to produce low-cost renewable energy credits, regardless of production profile, location or intermittency, but penetrations are becoming too high for that," Navigant Director Lon Huber told Utility Dive. "Now, we need a diversity of resources and price signals to developers to shape their offerings to handle each region's specific idiosyncrasies."

"It is not about home runs. Each part of the portfolio has to get on base. That's how we win the game." Paul Napoli VP, Power Markets, PSEG-LI

As the Northeast power system evolves toward reliance on large scale renewables, storage, distributed energy resources (DER) and other load balancing strategies will be essential, say stakeholders. And offshore wind and storage may be a better answer for the reliability challenges of the Northeast's dark winters than solar-storage hybrid projects, but a diversity of resources will be essential.

"These technologies are not competitive, they are complementary, and will be part of a portfolio with demand response, load reduction programs and transmission for wind," Public Service Electric and Gas-Long Island (PSEG-LI) VP for Power Markets Paul Napoli told Utility Dive. "It is not about home runs. Each part of the portfolio has to get on base. That's how we win the game."

Reliability benefits of OSW + storage

There is a need for a portfolio of zero emission resources that maintains high reliability, Huber said. Initially, over-procurement of renewables to protect against variability, with economic curtailment when necessary, may be the least cost solution. Hydropower and existing pumped storage can fill gaps, and "solar and newly added storage will be supplements," he said.

OSW "seems an obvious choice if there is transmission to deliver it into load pockets because, in the right offshore locations, it can help cover peak demand," he added. In the near term, if U.S. offshore wind proves to be low in cost and aligns with peak demand, "economic curtailment may be cheaper than storage."

The right price signals will "mature" technologies for directly addressing peak demand and atypical extreme weather events, he added. An example is Massachusetts' Clean Peak Standard (CPS), a concept Huber created, that would compensate technologies for peak demand reductions and load shaping.

Reliability "is not about choosing between resources, it is about choosing between conditions and constraints." Jason Burwen Policy VP, Energy Storage Association

Through 2030, solar plus storage on land and OSW, with some complimentary storage to align supply and demand, will dominate the Northeast's renewables, with existing fossil fuels continuing to have a role in the power mix, Huber said.

To reach 2050 emissions goals, fossil generation will need to phase out "without compromising reliability, even during extreme events like a polar vortex," he said. "By 2030, system operators will have learned how renewables and other technologies perform and can begin to shrink fossil fuels' role."

Reliability "is not about choosing between resources, it is about choosing between conditions and constraints," Energy Storage Association Policy VP Jason Burwen agreed.

A transmission constraint that prevents getting generation from the bulk system to a local area "requires either new transmission or locally available resources," Burwen said. "Storage can serve local reliability if there is local generation to charge it."

Where there is no constraint, OSW, onshore wind or utility-scale solar can be used, Burwen said. And pairing them with storage can transform the resources from variable to dispatchable resources.

New York "is probably the most difficult place in the northeast to add utility infrastructure, which makes it a good place for both storage and offshore wind." Doug Copeland Manager, Atlantic Shores Offshore Wind Development

Recent research shows OSW's reliability along the Northeastern coast is significantly better than onshore wind because its production profile better aligns with higher loads, Lawrence Berkeley National Laboratory (LBNL) Research Scientist Andrew Mills told Utility Dive.

A soon-to-be published LBNL study on the reliability of solar, storage and solar plus storage revealed the importance of longer duration storage for reliability, Mills said. But the solar-storage reliability contribution to winter-peaking systems like those in New England is lower, while OSW has a 60% to 75% coincidence with winter peak demand periods, giving it a particularly high winter reliability value.

These and other studies also suggest that increasing storage flattens and lengthens the peak demand period, Mills said. "With 20% of load met by storage, it may take 10 hours of storage duration instead of 6 hours to get significant reliability value."

New York "is probably the most difficult place in the northeast to add utility infrastructure, which makes it a good place for both storage and offshore wind," Atlantic Shores Offshore Wind Development Manager Doug Copeland told Utility Dive.

Off the Northeastern coast, OSW and transmission are foundational to any portfolio of resources, while the value of storage "is very location specific," he said. "As more offshore wind comes online in New Jersey, storage can mitigate its system impacts. In New York City, the system is very congested and stressed and the need for storage will come much sooner."

Fortunately, note stakeholders, policies are already in place to spur that deployment and bring the market for both OSW and storage to scale.

The rise of OSW and storage

Currently, OSW's midpoint unsubsidized levelized cost of energy (LCOE) is $92/MWh and its capital cost is $3,025/kW, according to the 2018 Lazard report. By comparison, natural gas ranges $41/MWh to $74/MWh.

But advances in Europe and China have brought prices to as low as $61.56/MWh and $51.48/MWh in 2018, according to the Global Wind Energy Council (GWEC) April 2019 market report.

With scale, U.S. prices can match those in Europe, National Renewable Energy Laboratory (NREL) Research Scientist, Walt Musial told Utility Dive last year.

That is why states like New York, New Jersey and Massachusetts have set targets for both storage and offshore wind, and Maryland requires a portion of its renewable portfolio standard come from offshore wind and has a 30% investment tax credit for storage. Connecticut has a 2 GW offshore wind mandate and Maine and Delaware currently have policy in place encouraging offshore wind buildout as well.

Following state mandates, utilities and developers are also getting in the game.

Consolidated Edison (ConEd) has a competitive solicitation out for 300 MW of storage by December 2022, as a result of state mandates in order "to get the market moving," the utility's Resource Planning Manager Aydemir Nehrozoglu told Utility Dive.

Scale is coming fast. Currently, only one 30 MW U.S. project is operational, but eight projects representing 1,958 MW are in development, a June 2019 industry white paper reported.

The unsubsidized levelized cost of a utility-scale solar plus storage project with 4-hour lithium ion batteries is $108/MWh to $140/MWh, and its capital cost is $1,559/kW to $2,162/kW, Lazard reported in November 2018.

More important are Lazard's forecasted drops in storage costs, Huber said. By 2022, the cost of lithium ion storage is expected to drop 28% and longer-duration flow battery chemistries are forecasted to fall 38% to 45%.

Those price drops will become important as the penetrations of large scale renewables rise, and developers and utilities seek a balanced portfolio of resources.

Building the right portfolio

Mandated OSW targets will also help to drive transmission upgrades, regardless of what happens in the storage market, said Nehrozoglu.

Transmission is inadequate to deliver OSW in certain parts of its territory, he said. Additionally, new transmission and natural gas pipelines face permitting challenges and a 660 MW potential deficit that could be caused by aging peaker retirements is too large to be served by battery storage alone.

The need is "15 or 20 times" bigger than non-wires solutions like ConEd's pioneering portfolio of demand side management resources in the Brooklyn-Queens Demand Management project, ConEd Utility of the Future Group Manager Michael Harrington added.

"The solution will be a mix of new technology resources and traditional resources, some owned and operated by the utility and some by third parties," Harrington said. "The hard question is exactly what that portfolio is."

To address that question, Eversource has initiated a partnership with offshore wind developer Orsted, Charlotte​ Ancel, the utility's director of clean energy, told Utility Dive.

An Eversource 25 MW, 38 MWh battery installation is expected to reduce outages by 50% for Provincetown and two other Cape Cod communities, Ancel said. Another 5 MW, 20 MWh hour installation on Martha's Vineyard will allow the retirement of five diesel generators that serve peak demand.

To meet policy goals, "all the resources have to work together, but we don't expect home runs, we just want singles, because winning this game will be a team effort." Paul Napoli VP, Power Markets, PSEG-LI

Eventually, "this battery storage will be paired directly with offshore wind, large scale hydro, or utility-scale solar," she said. "It will also provide significant value as a distribution system asset, as Eversource's distribution system evolves into a platform to accommodate small-scale, flexible resources like electric vehicles and smart thermostats."

U.S. OSW developer Deepwater Wind is working on the 130 MW Southfork project that "will feed its production directly into our Long Island territory's east coast," PSEG-LI's Napoli said. In anticipation, the utility is considering new transmission, has interconnected distributed solar, built two 5 MW batteries and added load management programs.

The portfolio led to a competitive solicitation in 2015 and has been expanding in the Southfork load pocket since 2016-2017, he said.

This new way of serving load is built around "many circumstances and probabilities" and "a portfolio of traditional and new technologies," Napoli said. To meet policy goals, "all the resources have to work together, but we don't expect home runs, we just want singles, because winning this game will be a team effort."