Assessment methodology for the benefits of electricity storage projects for the PCI process

1. Assessment methodology for the benefits of electricity storage projects for the PCI process TEN-E RG meetings 5-6 March 2019 Progress update

2. RecapEC initiative to launch this study Objective • Advice on approaches for a comprehensive analysis of benefits of electricity storage in PCI context Scope • List of common benefits, incl. indicator definition, quantification options and data needs • Not technology specific • Special attention to sub-hour domain • All in line with Reg. (EU) 347/2013 and ENTSO-E CBA methodology Engagement • Stakeholder consultation on best practices of assessment / data • Reporting in TEN-E RG meetings Outcome • Approach demonstrated for candidates of 4th PCI list • Contribution to CBA methodology and implementation guidance for future TYNDP/PCI processes

3. RecapStudy approach Task 3 Data mapping to CBA indicators Task 1 Mapping of CBA approaches Task 2 Stakeholder engagement Review Approach Data Shortlist of societal value drivers Mapping of storage value propositions Industry associations, promoters Data mapping State of the art quantification approaches Map to CBA2.0 indicators and approach Gap analysis TSOs ENTSO-E, national Application PCI candidates Robustness & consistency Model/data needs Authorities EC, ACER Consultation (tbc) Conclusion April 2019 Kick-off early January 2019

4. Task 1 Mapping of CBA approaches Task 2 Stakeholder engagement Task 3 Data mapping to CBA indicators STORAGE BENEFITS INVENTORY IDENTIFICATION • Societal benefit • Storage project benefit (capturing part of societal benefit) • Description / interpretation • Risk for benefits overlap • Potential negative system benefit (i.e. cost) PCI HANDLING • Relevance in PCI process (based on relative magnitude) • Mapped to TEN-E objective (Market / Sust. / SoS) • Mapped to ENTSO-E CBA indicator • Captured in CBAs available in 4th PCI process FUTURE GUIDANCE • Approach for assessing societal benefit • Option to monetize • Data/model required to assess benefit

5. Task 1 Mapping of CBA approaches Task 2 Stakeholder engagement Task 3 Data mapping to CBA indicators • Longlist of >100 variations of storage benefits narrowed down to 22 • Focus on ones relevant for PCI process, i.e. with clear societal perspective and relevant for PCI-eligible projects (large-scale) • Reasonably complete, but not fully exclusive. Attention needed in NPV assessment to avoid double-counting. • Complemented with cost perspectives (capex, opex, environmental, negative benefits) • Mostly already captured in ENTSO-E’s CBA and guideline on missing benefits. Main issue is common understanding of terminology, assessment approach and depth of analysis.

6. Task 1 Mapping of CBA approaches Task 2 Stakeholder engagement Task 3 Data mapping to CBA indicators • Covers the three TEN-E objectives • Pragmatic approach needed to address non-TEN-E objectives • A.o. innovation, employment, other economic activities • Option is to allocate part of the TOTEX to the PCI CBA • Issue how to validate this in the process • Industry experience indicates the value differs substantially. This could give a prioritization for future PCI assessments. • Various benefit streams that are potentially relevant for PCI assessments are not portrayed at all in present TYNDP2018. Mostly due to complex modelling and lack of information.

7. Task 1 Mapping of CBA approaches Task 2 Stakeholder engagement Task 3 Data mapping to CBA indicators • Outreach to all PCI applicants (more than half already interviewed) • Continuing engagement with ENTSO-E, EASE, ACER • Main feedback collected • Generally confirmation that all available relevant CBA information is presented in TYNDP2018. • Discussion is crucial to understand robustness/approach of ‘missing benefits’ provided in the TYNDP2018 • Main issue remains lack of clarity and transparency of TYNDP/PCI process • Different background/expertise compared to TSOs. Limited storage assessment expertise at ENTSO-E or ACER. • Risk of assessments being non-comparable and process being non-equitable

8. Non TEN-E related benefits • Industry benchmarks • Declared and checked missing benefits ENTSO-E CBA Task 1 Mapping of CBA approaches Task 2 Stakeholder engagement Task 3 Data mapping to CBA indicators Working assumption (for discussion) is to have a 4-layer NPV approach • ENTSO-E CBA indicators: basic value streams, consistent • ‘Missing benefits’: checked for robustness and relevance • Industry benchmarks: in case of no information available on highly relevant indicators • Non TEN-E related benefits: pragmatic approach Robustness and consistency decreases from i. to iv. and needs to be acknowledged in process. Only focus on monetized costs/benefits. Outcome is an overview of candidate NPVs and their main sensitivities and robustness. Approach to be presented in April RG meeting.

9. Further engagement • Outreach to PCI storage applicants ongoing • For other questions and suggestions, please contact • EC: sebastian.gras@ec.europa.eu • Project team: edwin.haesen@navigant.com • Suggestedapproachfor PCI assessmentofelectricitystorage in April TEN-E RG meeting

10. Annex (February meeting)

11. Task 1 – Mapping of CBA approaches • Consolidation of integrated benefit itemization and assessment frameworks • Storage and other smart/flexible solutions • Review of various types of quantification methods (simple and complex) • Mapped to TEN-E objectives and applicable CBA methodology, leading to a gap analysis • Suggestion for how to handle presently missing or unclear benefits Task description Mapping of storage value propositions State of the art quantification approaches Map to CBA2.0 indicators and approach Gap analysis Model/data needs Output • Overview of typical (large-scale) electricity storage propositions with • relevant assessment methodologies (including data needs) • mapping with the CBA2.0 approach • draft proposal for how to close possible gaps in the CBA2.0 based assessments in a pragmatic but robust way with available public data.

12. Task 2 – Stakeholder engagement • Base information from TYNDP assessments, PCI application process, and earlier stakeholder/ENTSO-E/ACER statements • Request for interviews with all electricity storage PCI applicants, preferable early February • Engagement with other relevant organizations incl. EASE, EC/JRC, ENTSO-E • Consulting on suggestions for relevant assessment approach and reference data (complementing Task 1) • Views from RG members are appreciated Task description Review Approach Data Industry associations, promoters TSOs ENTSO-E, national Authorities EC, ACER Output • Report with agreed meeting notes of all stakeholder interactions including • mapping of the various stakeholder views vis-à-vis the identified value drivers and CBA2.0 gaps • their suggestions for methodology improvements and data delivery.

13. Task 3 – Mapping of data to CBA indicators • Based on Task 1 & 2, develop set of indicators in line with TEN-E regulation and CBA method, as complete as possible and reasonable • No new studies/modelling foreseen • Aim to have a workable approach to test positive net benefit of applicants and allow for possible prioritization • For EC and RGs to consider in 4th PCI ranking process, based on available CBAs and public robust data • Progress discussion with RG in March • Final proposal for RG in April Task description Shortlist of societal value drivers Data mapping Application PCI candidates Robustness & consistency Consultation (tbc) Output • Assessment of electricity storage projects PCI candidates. This is based on available TYNDP assessments and additional values drivers which are quantified based on public information. This is consulted with stakeholders and experts. The outcome is fit for purpose for the EC to use in its PCI process. • Recommendations are given for a CBA methodology update for electricity storage projects in line with the present TEN-E guideline.

14. Project Planning Methodology progress Kick-off announcement Final proposal

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