Kyle Chen shares how a summer as a Shultz Fellow at the California Department of Water Resources gave him a unique perspective on renewable energy storage planning within the public sector
This summer, I had the privilege of working as a Shultz Fellow at the California Department of Water Resources (DWR), specifically focusing on the Pine Flat Dam project. My task was to investigate the potential of implementing a front-of-meter Battery Energy Storage System (BESS) to enhance the dam's profitability in California's rapidly evolving energy market. This experience provided me with invaluable insights into renewable energy planning and the complexities of integrating new technologies within the public sector.
Pine Flat Dam, due to its run-of-river nature, has traditionally faced challenges in generating electricity flexibly, especially as California's energy landscape shifts increasingly towards solar power. With the growing penetration of solar energy, electricity prices during midday have been decreasing, sometimes even dipping into negative territory. This trend poses a significant challenge for the dam's operations, as generating electricity during these periods could lead to financial losses. Building upon a 2020 study by a previous Shultz Fellow Wenxi Zhao, which found that adding a battery system was not profitable at the time, my project re-examined this approach in light of new developments. These include federal tax incentives provided by the Inflation Reduction Act, increasing price volatility, and the potential for multi-market participation.
My primary focus was on analyzing various BESS configurations and modeling their potential economic benefits under the current market conditions. By leveraging updated electricity price forecasts and incorporating the new 30% investment tax credit for battery storage systems, I developed a comprehensive cost-benefit analysis for implementing a BESS at Pine Flat Dam. The results were promising. The inclusion of federal incentives significantly reduced the Levelized Cost of Capacity (LCOC), making the BESS option more financially viable. Additionally, the analysis highlighted the potential for increased revenue through participation in not just the day-ahead market, but also real-time and ancillary services markets. This multi-market approach could provide the necessary flexibility to store electricity generated when prices are low and sell it when prices peak. Moreover, connecting to the grid instead of the Pine Flat Dam could further optimize revenue.
Working closely with my mentors and previous Shultz Fellows, I gained a deeper understanding of the technical and economic challenges involved in renewable energy storage. The project allowed me to apply my analytical skills in a real-world setting, providing a sense of achievement as I contributed to a potential solution for one of California's pressing energy challenges. While my time at DWR was only 10 weeks, the experience has left a lasting impact on my perspective on renewable energy. It underscored the importance of adaptive strategies and innovative technologies in achieving a sustainable energy future. I'm grateful for the opportunity to contribute to this meaningful project and look forward to continuing my journey in the field of renewable energy.
This summer has truly been a transformative experience, offering me a rare inside look at the intersection of technology, policy, and market dynamics within the public sector. The knowledge and skills I gained will undoubtedly shape my future career in renewable energy planning and development.
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