Is Solar+Storage Worth it in Hawaii? Yes, and in California and Pennsylvania and Virginia…

Author: Seth Mullendore, Clean Energy Group | Project: Resilient Power Project

blogphoto-bigstock-Solar-Panels-On-Tropical-House-480x330The Interstate Renewable Energy Council (IREC) recently enlisted Clean Power Research (CPR) to create a methodology for valuing customer-sited behind-the-meter solar+storage systems in the state of Hawaii. The report detailing CPR’s findings, Valuation of Solar + Storage in Hawaii: Methodology, came out this month.

Verdict: Yes, by their methodology, combining storage with solar adds value to a solar-only system in Hawaii.

Limitations: The method only takes into account one aspect of solar+storage value – that of avoided utility capacity costs, which only represents part of the value of storage to a utility. The methodology does nothing to account for the many other benefits available to the utility customer who actually owns the system.

That storage adds value to a solar system will come as no surprise to solar+storage advocates, and many doubters may dismiss the verdict as only applying to Hawaii, where solar penetration is high and electricity rates are by far the highest in the U.S. However, the truly interesting thing about the report is that it lays out a clear methodology for valuing behind-the-meter storage anywhere – one that has nothing to do with either solar penetration or the cost of electricity.

The methodology gets a bit technical but goes something like this:

  • Solar-only system do not reduce peak demand in Hawaii because the peak occurs during the evening when the sun isn’t shining. This is true in most areas. Things tend to peak over a two-hour period in the evening when people are returning home from work, whereas peak solar generation tends to happen earlier in the day, when the sun is high in the sky.
  • Batteries can specifically target this peak period by lowering demand using stored energy generated by the solar panels throughout the day.
  • Batteries can potentially be used to offset peaker plants (power plants built specifically to meet periods of higher than normal demand), so the value of storage can be assessed based on the avoided cost of not building a new peaker plant.

A lot of assumptions then get plugged into the methodology. CPR used some assumptions favorable to storage and some not, but they tended to lean towards conservative estimates. The end result is that adding storage to a solar system in Hawaii costs about $0.08 per kilowatt-hour and offsets peaker plant generation that would cost the utility a little over $0.10 per kilowatt-hour, for a net savings of around $0.02 per kilowatt-hour.

That may not sound like much, but it’s a net benefit that adds up over time, and it represents only one of many value streams open to owners of solar+storage systems.

The report goes on to list a bunch of other benefits not considered in CPR’s valuation. The following chart from the report summarizes how a more comprehensive valuation could be structured:

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The CPR methodology includes the first two benefits, Avoided Fuel Cost and Avoided Generation Capacity Cost. As you can see, there is only one additional cost, Solar Integration, and a whole list of generalized additional benefits.

The nice thing about CPR’s methodology is that it can be fairly easily applied anywhere. The downside, which they fully acknowledge in the report, is that it is severely lacking in its ability to capture all the benefits of energy storage when combined with solar. The resiliency benefit of adding storage to a solar system isn’t even included in their chart. To learn more about that overlooked benefit, take a look at a new report produced by Clean Energy Group, What States Should Do: A Guide to Resilient Power Programs and Policy.

Here are a couple of real-world examples of where behind-the-meter storage systems are already paying off for customers:

  • In California, the technology integrator Stem has estimated project payback periods of less than three years for its behind-the-meter systems. The company plans to aggregate systems located at customer sites across southern California to participate in demand response programs. Demand response is basically the utility name for the methodology that CPR put forward.
  • In the PJM Interconnection territory, which covers much of the Mid-Atlantic and some Midwestern states, behind-the-meter systems are earning revenue through another benefit to the power system, frequency regulation – the fourth benefit listed in CPR’s chart. Frequency regulation is used to smooth out constant fluctuations in power supply and demand. S&C Electric Company, which owns storage at a demonstration center in Chicago, has reported that its system of six aggregated 25 kilowatt batteries could pay for itself in as little as two or three years by supplying frequency regulation services.

The takeaway is that storage can be an added benefit to solar systems in Hawaii, and has proven to be an economic benefit in a lot of other locations as well.

CPR’s methodology presents a reasonably simple method for partially valuing behind-the-meter storage. Utilities should like it because it lays out the economics in their terms. Storage advocates should be quick to note that it’s missing a lot – notably, all the other benefits available to the customer that actually owns the system.

The methodology does not include any of the ways that a customer could potentially use storage to lower their utility bills, such as demand charge management for commercial and industrial customers and electricity use time-shifting for customers on time-of-use rate structures. Nor does it include any valuation of power resiliency, which can mean a lot to a family or business when the grid goes down.

Like so many other recent energy storage announcements, IREC’s report is at least another step in the right direction.

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This article was also featured on Renewable Energy World.

Shining a Light on Emerging Resilient Power Movement

Author: Samantha Donalds, Clean Energy Group | Project: Resilient Power Project

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A new, first-of-its-kind report from Clean Energy Group tells the story of the early years of the resilient power movement – and as the movement spreads beyond the Northeast, states in other regions should be taking notice

In October 2012, Superstorm Sandy devastated the Northeast United States, disrupting electric service to more than eight million people in 17 states. As traditional diesel-powered backup generators failed, critical facilities such as hospitals, first responders and public shelters, as well as vulnerable populations – the elderly, disabled and those in low-income neighborhoods – were severely impacted by the extended and widespread power outages.  In some communities, the blackouts lasted for weeks.

In a rare example of a positive outcome from a natural disaster, several of the states hardest hit by Superstorm Sandy took action, using new policies and initiatives to promote the deployment of resilient power technologies.  Resilient power uses clean energy systems, like solar PV combined with energy storage, to provide uninterrupted electricity to critical facilities during grid outages.  As a bonus, resilient power systems can be configured to reduce electricity costs and provide valuable grid services year-round.

At this writing, most active state resilient power programs are concentrated in the Northeast. Massachusetts, New Jersey, Connecticut, New York, Maryland, Vermont, and a few other states have collectively committed more than $400 million to create resilient power programs, incentives and funding institutions. These programs have largely been funded by system benefit charges, alternative compliance payments from utilities, and supportive federal solicitations and disaster relief funds.

Because of these state programs, 40 municipalities in the Northeast now have resilient power projects underway, which will support more than 90 critical facilities, at a likely capital cost of several hundred million dollars. In other words, larger resiliency goals have now been translated into real, on-the-ground community projects protecting communities with local, reliable, clean electric power that won’t fail when the next storm knocks out the electric grid.

The resilient power movement represents a promising new path for clean energy deployment across the country. These early state efforts demonstrate that, when installed in combination and properly designed, renewables and energy storage technologies offer not only environmental and economic benefits, but can also save lives and protect vulnerable populations.

The new report by Clean Energy Group, What States Should Do: A Guide to Resilient Power Programs and Policy, profiles these leading state resilient power programs, and provides recommendations for efforts in other parts of the country. The report is intended to help states establish new policies and support new markets to advance clean resilient power nationwide. You can read the full report here. An executive summary for policymakers is available here. Clean Energy Group will be hosting a webinar on this report in July.

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Photo: Sausalito Fire Station. Photo courtesy of Cupertino Electric, Inc. featuring Hawkeye Photography; used by permission.

Clean Energy Group hosted a webinar on this report in July 2015. A recording of that webinar is available here.

This article was also featured on Renewable Energy World.

The Solar+Storage Innovation You Didn’t Hear About

Author: Todd Olinsky-Paul, Clean Energy Group | Project: Resilient Power Project

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There’s so much going on in the world of resilient power right now, it’s hard to keep up: new state programs from Alaska to Massachusetts, record-breaking amounts of energy storage being installed, the Supreme Court poised to rule on FERC’s jurisdiction over regional energy markets, new product announcements from cutting-edge technology companies like Tesla.

But sometimes amid all the noise, important stories get overlooked. Here’s one you might not have seen, from a little-known startup called Tumalow.

The company doesn’t make or install batteries, nor does it make or install solar panels. What it does make is software to control the PV and batteries. Tumalow’s software uses historical electricity usage data from buildings to predict when the peak demand times will occur. By discharging the battery at the precise time to reduce peak demand, the company can save a facility half a million dollars each year in demand charges (a portion of a commercial or industrial customer’s monthly electric bill that is based on the fifteen minutes of highest demand in the month). Tumalow provides the battery free and splits the profits with the facility, so there’s no up-front cost to the customer, and immediate monthly savings.

But using the battery for fifteen minutes each month leaves a lot of down-time, during which the battery can be used for other purposes – and this hints at the rest of Tumalow’s business plan. A TakePart interview with founder Will Gathright yielded the following quote: “’It seems that a ton of smart people are making really amazing battery systems, but much less work is going into how to use the batteries after you make them,’ said Gathright. ‘If you’re clever on how you set it up, you have an amazing system, because you can control many distributed batteries as if they were one virtual power plant. We’re reducing demand charges for buildings, but it’s also a way to use the battery system to help the grid at large.’”

Translation: Tumalow’s share of the energy cost savings from individual facilities is just the beginning. The company plans to aggregate multiple installations to provide lucrative grid services, such as frequency regulation and demand response.

The best part? The company is targeting schools as its primary customer base, and its systems are configured to provide resilient power in case of grid outages.

Schools, of course, make excellent public emergency shelters, which is why there are more than 115 schools, designated as hurricane shelters, equipped with resilient solar+storage systems in Florida. Public schools serve all communities, not just the wealthy who might be able to afford residential backup systems, and thousands of schools across the nation are already equipped with solar panels. Supplying them with batteries at no cost, wiring them to provide resiliency benefits, and aggregating them to sell grid services is a no-brainer. And in an era of tight budgets and increasing property taxes, the cost savings should appeal to school boards.

The point here isn’t to promote a single company – Tumalow isn’t the only company targeting solar+storage in schools – but to focus attention on a crucial but under appreciated part of resilient power systems, which is the system controller. Gathright makes a good point: we have lots of companies making lots of cool batteries, PV panels and inverters, but to make money and provide a good service, the systems need smart controls that will make most efficient use of the battery’s capacity behind the meter, while allowing remote aggregation for the provision of valuable and needed services on the grid.

Tumalow recently received a US DOE Sunshot Catalyst award. To see the company’s short Sunshot application video, which explains their concept clearly and concisely, click here.

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This article was also featured on Renewable Energy World.

Offshore Wind Targets: the Missing Carrot?

Author: Valerie Stori, Clean Energy Group | Project: Offshore Wind Accelerator Project

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Offshore wind advocates and industry were dealt a discouraging setback when news of Cape Wind’s terminated utility contracts hit the press. What was widely considered to be the nation’s first and iconic offshore wind project is now, once again, facing legal hurdles and an uncertain future. While Massachusetts is a leader in offshore wind power policy and infrastructure, there is still more the state can do to attract developers and the investors they need to be successful.

An offtake mechanism that provides long-term market certainty would be especially useful. Representative Patricia Haddad has introduced legislation, which, in addition to calling for increased hydro, requires utilities to jointly solicit proposals from offshore wind developers and enter into contracts for 8,500,000 MWh per year in the aggregate by 2030. The contracts are to be “commercially reasonable” and be in effect for 15-25 years. Similarly, in efforts to promote the development of local wind, Representative Timothy Madden has introduced legislation that would allow local government entities to enter into long-term power purchase contracts. In his vision, a community such as Martha’s Vineyard could direct its municipal utility to purchase offshore wind power (or any renewable energy of the community’s choice).

Haddad’s bill, which identifies an offshore wind target of 2000MW, is the carrot that has been missing from other offshore wind bills and legislation. Maryland, another leader in the US offshore wind game, has set a target and mechanism for developing 500MW of offshore wind capacity. Together, the two targets approach what we have heard is the minimum amount it would take for a manufacturer to invest in infrastructure in the United States—3000MW.

Acting as a region—either in setting regional targets or in procuring energy (or both)—would help lure developers, attract investors, grow a domestic supply chain, and lower costs. Collaboration would help all states, including smaller ones, spread the costs of a capital-intensive industry among more ratepayers, thereby lowering costs. Strong individual state policies are the backbone to developing the offshore wind industry; regional policies could be a key link to the industry’s long-term success on the Atlantic coast.

Oregon is Poised to Fund Energy Storage

Author: Todd Olinsky-Paul, Clean Energy Group | Projects: Clean Energy States Alliance, Resilient Power Project

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In May, the Oregon Department of Energy announced its upcoming solicitation for an energy storage demonstration project.  The $295,000 solicitation, which should be released this month, combines state funds with support from the U.S. DOE Office of Electricity, and will also draw on technical assistance from Sandia National Laboratories.  CESA helped to coordinate the federal-state partnership and will continue to participate as the program goes forward.

Energy storage wears a different complexion on the west coast as opposed to the Northeast, where state energy storage and resilient power efforts were kick-started by the devastation of Hurricane Sandy, and are now being buoyed by emerging FERC-regulated electric services markets, such as frequency response in PJM and demand response in NY-ISO, and by their potential to reduce high demand charges in New York City.  Oregon’s electricity prices are low, thanks to abundant hydroelectric power; its markets are not FERC-regulated, and demand charges are do not comprise a large portion of the typical commercial electric bill.  And although storms may sometimes cause outages, the region was not traumatized by a recent Sandy or Irene.

But the west coast faces its own natural disaster threats, not the least of which is earthquakes.  The region is long overdue for a major quake of 8.4 magnitude or greater, seismologists say; for reference, that’s comparable to the 2011 Tohoku quake that destroyed the Fukushima Daiichi Nuclear Power Plant in Japan.

Compounding the threat, many of the region’s coastal communities rely for their electricity on just one or two transmission lines traversing the mountains from inland generators.  Oregon’s Resilience Plan predicts that after a major earthquake, it could take up to six months to restore electric service to some coastal communities.  But distributed resilient power systems could provide electricity to critical services, such as first responders, medical facilities, communications and shelters, when it is needed the most.

There are, of course, other use cases for energy storage in Oregon.  These include transmission and distribution investment deferral, and peak load management; improvement of service reliability; improvement of power quality; grid regulation; and improved integration of renewables, including energy firming, ramp control, and energy shift. Ideally, the Oregon RFP will result in a system or systems that serve multiple uses.

Oregon DOE plans to release its first energy storage solicitation in June, and hopes to announce an award later this year.  In doing so it will join its neighbors in the Pacific Corridor: California, which has adopted a game-changing 1.3 Gigawatt energy storage mandate; Washington State, which funded 6 MW of energy storage in 2014; and Alaska, which has a number of energy storage installations, including an island (Kodiak) that relies exclusively on renewable generation and energy storage.

For more information on the Oregon energy storage solicitation, click here.

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This article was also posted on Renewable Energy World.