Pumped Storage Hydropower Valuation Guidebook

1 Pumped Storage Hydropower Valuation Guidebook A Cost-Benefit and Decision Analysis Valuation Framework March 2021. ANL-21/10. Foreword This project was funded by the United States Department of Energy's (DOE's) Water Power Technologies Office (WPTO) under its HydroWIRES initiative and carried out by a collaborative consisting of five DOE national laboratories led by Argonne National Laboratory (Argonne). In addition to Argonne, the Project Team members included Idaho National Laboratory (INL), National Renewable Energy Laboratory (NREL), Oak Ridge National Laboratory (ORNL), and Pacific Northwest National Laboratory (PNNL). The project team collaborated with Absaroka Energy and Rye Development, whose proposed Pumped Storage Hydropower (PSH) projects (Banner Mountain by Absaroka Energy and Goldendale by Rye Development and Copenhagen Infrastructure Partners) were selected by DOE WPTO through the Notice of Opportunity for Technical Assistance (NOTA) process.

2 For these two projects, the project team conducted various techno-economic studies to assess the value of their potential services and contributions to the grid. A Technical Advisory Group (TAG) was established to provide advice and recommendations to the project team. The TAG included experts from grid operating organizations, utility companies that own and operate PSH plants, PSH developers, equipment manufacturers, consulting companies, industry research organizations, regulatory agencies, and other stakeholders. The following experts participated in the project as members of the TAG: Denis Bergeron (Maine Public Utilities Commission). Norman Bishop (Knight Piesold). Brent Buffington (Southern California Edison). Wei Dang (Puget Sound Energy).

3 Peter Donalek (Stantec). Christine Ericson (Illinois Commerce Commission). Donald Erpenbeck (Stantec). Robert Fick (Los Angeles Department of Water and Power). Scott Flake (Scott Flake Consulting). Levi Gilbert (Pacific Gas & Electric). Edward Hansen (Pacific Gas & Electric). Elaine Hart (Portland General Electric). Udi Helman (Helman Analytics). Michael Manwaring (McMillen Jacobs Associates). Jay Mearns (Pacific Gas & Electric). Denis Obiang (Los Angeles Department of Water and Power). Aidan Tuohy (Electric Power Research Institute). Bruno Trouille (Mott McDonald). Robert Williams (Puget Sound Energy). In addition to the TAG, the Project Team actively engaged with the Hydropower industry and held workshops and seminars at key industry events, such as the National Hydropower Association's (NHA's) Water Power Week and at the HydroVision International conference.

4 The main purpose of these events was to disseminate information on the development of a Valuation framework for PSH projects and obtain feedback from the industry. A key objective for the PSH. Valuation framework developed during this project was to make it publicly available for use by the Hydropower industry and stakeholders. In engaging the Hydropower industry and stakeholders, the project team closely collaborated with the National Association of Regulatory Utility Commissioners (NARUC). NARUC also provided technical support and assisted the project team in organizing industry outreach events, workshops, and webinars, as well as in coordinating and facilitating interactions with the TAG. Acknowledgments This work was authored by Argonne National Laboratory, operated by UChicago Argonne, LLC, for the Department of Energy under Contract No.

5 DE-AC02-06CH11357; Idaho National Laboratory, operated by Batelle Energy Alliance, LLC, under DOE Contract No. DE-AC07- 05ID14517; National Renewable Energy Laboratory, operated by Alliance for Sustainable Energy, LLC, under Contract No. DE-AC36-08GO28308; Oak Ridge National Laboratory, operated by UT-Battelle, LLC, under DOE Contract No. DE-AC05-00OR22725; and Pacific Northwest National Laboratory, operated by Battelle under DOE Contract No. DE-AC05- 76RL01830; and supported by the HydroWIRES Initiative of DOE's Water Power Technologies Office. The project team would like to express sincere gratitude to the Department of Energy's Water Power Technologies Office (WPTO) for recognizing the need for this type of research and for funding this effort.

6 Alejandro Moreno, Timothy Welch, Samuel Bockenhauer, Marisol Bonnet, and others at WPTO have been instrumental in guiding and supporting the project team and coordinating interactions with the Hydropower industry throughout the project. Special thanks go to Samuel Bockenhauer for his extraordinary management and coordination of the project within the HydroWIRES initiative. The project team closely collaborated with the Absaroka Energy, LLC, the developer of the Banner Mountain PSH project, and with Rye Development and Copenhagen Infrastructure Partners, developers of the Goldendale Energy Storage Project. The collaboration with these industry partners and their consultants was outstanding throughout the project. We would like to express our gratitude to all members of the Banner Mountain and Goldendale teams, especially to Eli Bailey, Rhett Hurless, Daniel Lloyd, Matt Pevarnik, and Antoine St-Hilaire on the Banner Mountain team, and to Nathan Sandvig, Erik Steimle, Ushakar Jha, Rick Miller, Carl Mannheim, and others on the Goldendale team.

7 The project team would also like to thank the members of the Technical Advisory Group 19. industry and regulatory experts for their time and effort in reviewing the project materials and reports, as well as for providing extremely useful guidance and advice for the development of the PSH Valuation framework. Their experience and expertise was invaluable for this project and for the development of the PSH Valuation Guidebook . During the course of the project, the project team was also supported by staff and consultants from the National Association of Regulatory Utility Commissioners (NARUC). Special thanks go to Kerry Worthington, Danielle Sass Byrnett, and Christopher Villarreal, for their kind collaboration throughout the project. The project team would also like to thank Stephanie Lenhart (Senior Research Associate, Boise State University) and Dakota Roberson (Assistant Professor, University of Idaho) for their contributions to Section on valuing power system stability.

8 HydroWIRES. In April 2019, WPTO launched the HydroWIRES Initiative 1 to understand, enable, and improve Hydropower and Pumped Storage Hydropower 's (PSH's) contributions to reliability, resilience, and integration in the rapidly evolving electricity system. The unique characteristics of Hydropower , including PSH, make it well suited to providing a range of Storage , generation flexibility, and other grid services to support the cost-effective integration of variable renewable resources. The electricity system is rapidly evolving, bringing both opportunities and challenges for the Hydropower sector. While increasing deployment of variable renewables such as wind and solar have enabled low-cost, clean energy in many regions, it has also created a need for resources that can store energy or quickly change their operations to ensure a reliable and resilient grid.

9 Hydropower (including PSH) is not only a supplier of bulk, low-cost, renewable energy but also a source of large-scale flexibility and a force multiplier for other renewable power generation sources. Realizing this potential requires innovation in several areas: understanding value drivers for Hydropower under evolving system conditions, describing flexible capabilities and associated trade-offs associated with Hydropower meeting system needs, optimizing Hydropower operations and planning, and developing innovative technologies that enable Hydropower to operate more flexibly. HydroWIRES is distinguished by its close engagement with the DOE national laboratories. Five national laboratories Argonne National Laboratory, Idaho National Laboratory, National Renewable Energy Laboratory, Oak Ridge National Laboratory, and Pacific Northwest National Laboratory work as a team to provide strategic insight and develop connections across the HydroWIRES portfolio as well as broader DOE and national laboratory efforts such as the Grid Modernization Initiative.

10 Research efforts under the HydroWIRES Initiative are designed to benefit Hydropower owners and operators, independent system operators, regional transmission organizations, regulators, original equipment manufacturers, and environmental organizations by developing data, analysis, models, and technology research and development that can improve their capabilities and inform their decisions. More information about HydroWIRES is available at 1. Hydropower and Water Innovation for a Resilient Electricity System ( HydroWIRES ). Pumped Storage Hydropower Valuation Guidebook A Cost-Benefit and Decision Analysis Valuation Framework Vladimir Koritarov1 Patrick Balducci1. Todd Levin1 Mark Christian1. Jongwhan Kwon1 Catharina Milostan1. Quentin Ploussard1 Malhar Padhee1.