It’s Time to Recognize the Value of Resilience

Author: Seth Mullendore, Clean Energy Group | Projects: Resilient Power Project , Solar+Storage Optimization

NOAA: US 2017 Billion-Dollar Weather and Climate Disasters It’s official, 2017 was the costliest year for weather-related losses in U.S. history. Hurricanes Maria, Irma, and Harvey each accounted for billions of dollars in damages, significantly adding to the total cost figure of $1.5 trillion dollars from more than 200 events throughout the year. Hurricane Maria, in particular, set a new record for the longest power outage, plunging Puerto Rico into a humanitarian crisis with about half the island still powerless.

Despite these astronomical numbers and a heightened awareness of the need for greater resiliency, it remains the case that building managers and business owners do not typically attribute any monetary value to power outage-related economic losses that clean, resilient power systems could partially or completely avoid.

Because of this, the value placed on installations of solar PV paired with battery storage (solar+storage) systems to avoid power outage losses is zero; that is, the resiliency benefits of these systems have no economic value in project financing considerations and are essentially ignored when making technology investment decisions.

This is a problem. Extreme weather and related power outages clearly come with a price tag ($18 billion to $33 billion annually, according to a 2013 report by the U.S. Department of Energy), but these potential costs are not typically accounted for when considering the potential benefits of a resilient power system. The result is that fewer solar+storage systems pencil-out to make economic sense than would be the case if the power resilience they provide was accurately valued. Because of this oversight, more businesses and communities will fail to make needed investments in resilient power systems and will continue to remain vulnerable to the power outages during the next disaster.

A paper released by the National Renewable Energy Laboratory (NREL) and Clean Energy Group (CEG), Valuing the Resilience Provided by Solar and Battery Energy Storage Systems, confirms that placing a value on the benefits provided by solar+storage technologies during power outages can significantly boost the economics of these projects.

The researchers found that valuing resilience tends to result in larger optimal solar+storage system designs, which can make solar+storage economically viable in cases where it might not be otherwise.

For example, the study found that valuing resilience in an economic analysis for a solar+storage project at a school in California would increase the optimal size of the solar PV system by 20 percent and increases the battery storage capacity by more than 13 times. By avoiding losses and increasing cost reductions, the resulting system doubled the lifetime benefit of the project.

Without assigning a value to avoided outage costs, a hotel in California would not readily opt to install a solar or storage system; but, when the value of avoided losses is incorporated into the decision, a 363-kilowatt solar PV system paired with 60 kilowatt-hours of battery storage would become a fiscally sound investment.

While these results are for hypothetical scenarios, the value of avoided losses and the impacts from outage costs that were modeled represent real-world data from utilities and their customers. The expense of power outage-related losses can be devastating to businesses.

In the case of Puerto Rico, the secretary of the island’s Department of Economic Development, Manuel A. Laboy Rivera, estimated that the economic loss to Puerto Rico’s businesses from Hurricane Maria is at least $20 billion; others have put the estimate as high as $40 billion. According to Mr. Laboy Rivera, “the lack of power is the root of everything.”

The cost of outages can be even more severe when you consider the impact on lifesaving services, such as first responders, emergency shelters, water treatment facilities, and medical clinics. Power outages are a nuisance for everyone, but, for those dependent on devices like respirators or medications requiring refrigeration, access to electricity can become a matter of life and death.

Backup generators, the go-to solution for resilience, have proven unreliable. A paper published after Hurricane Katrina noted that many diesel generators in the New Orleans area failed immediately due to flooding. Others soon ran out of fuel due to supply issues or failed due to lack of maintenance. Flooding was again a problem for generators at a Texas chemical plant during Hurricane Harvey. The ongoing situation in Puerto Rico was described by a New York Times reporter as “an epidemic of broken generators.”

Unlike generators, which tend to sit idle 99 percent of the time, solar+storage systems can operate and deliver electric bill saving throughout the year. In some areas, solar+storage can generate additional revenue by providing grid services, like frequency regulation, or participating in utility programs such as demand response. The resilience benefit of solar+storage is also not limited by fuel supplies. As long as there is adequate solar to charge the batteries, a solar+storage system could potentially deliver power to critical loads indefinitely during an extended outage.

The resilience benefits of solar+storage and the high costs of power outages are not just theoretical. A recent 11-hour power outage at Atlanta’s international airport, which occurred when a fire disabled both the main and backup power systems serving the airport, may cost Delta Airlines up to $50 million—that’s about a $4.5 million per hour loss while the power was out.

During Hurricane Irma, 29 Florida schools equipped with solar+storage were called upon to act as community emergency shelters. Solar+storage also powered individual homes as 7 million customers across the Southeast were left in the dark, and kept traffic lights running in the town of Coral Springs, Florida. Solar+storage has proven its worth in non-disaster situations as well, powering the 2,800 residents of Borrego Springs, California during an outage due to planned grid maintenance by San Diego Gas and Electric.

CEG and NREL’s analysis shows that the value of resilience can and should be incorporated into any investment decision involving resilient power technologies. The key takeaway from the paper and recent disaster events is that energy resilience and technologies that can help boost resilience have value. Investing in technologies that can avoid outage-related losses can make a lot of economic sense, and not accounting for that benefit could ultimately cost people money, or worse. By valuing resilience now, solar+storage could be installed before the next storm hits, instead of as an afterthought, as in the case of Puerto Rico.

If you’re interested in learning more about the paper, Valuing the Resilience Provided by Solar and Battery Energy Storage Systems, CEG will host a webinar with NREL on Wednesday, March 14 to discuss the findings. For more information on this free webinar and to register, visit www.cleanegroup.org/webinar/valuing-resilience-solar-battery-energy-storage.

 

This article was also posted in The Energy Collective.

Will 2018 Be Another Good Year for U.S. Offshore Wind?

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

Block Island Wind Farm. Photo by Val Stori, Clean Energy Group. 2017 was a banner year for offshore wind in the U.S. Boosted by the start of commercial operations at the Block Island Wind Farm in December 2016, the offshore wind sector gathered momentum and made significant progress over the year.

Exciting announcements came from across the East Coast at both the federal and state level. Maryland announced the Public Service Commission’s first offshore wind renewable energy credit (OREC) awards to two commercial wind projects—Deepwater Wind’s 120 MW Skipjack project and US Wind’s 248 MW project. This is the nation’s first OREC award, despite both Maryland and New Jersey having OREC legislation since 2010. Meanwhile, in Massachusetts, utilities jointly released the nation’s first competitive solicitation for commercial-scale offshore wind. In Mid-December, three developers submitted proposals with 400 MW and 800 MW options; all the proposals contained an element of energy storage. A decision is expected in late April. Also in Massachusetts, Deepwater Wind submitted a bid proposal for Revolution Wind, a 144 MW project, under Section 83D of an Act to Promote Energy Diversity; a decision is expected in late January. Racing to join the procurement line-up, New York Governor Cuomo issued an exciting announcement on January 2nd indicating that New York will issue two solicitations in 2018/19 to develop at least 800 MW of offshore wind.

In addition to these procurements, the federal Bureau of Ocean Energy Management (BOEM) is expected to issue a proposed sale notice for Massachusetts’ unleased areas (OCS-A-502 and 503); these are areas for which both Statoil and PNE Wind individually submitted unsolicited lease requests. BOEM is also expected to release a Call for Information and Nominations in New York in response to an unsolicited lease request and to New York’s ‘Area for Consideration’ submission, which included a request that BOEM identify at least four wind energy areas within the Area of Consideration best suited for offshore wind development and each capable of supporting at least 800 MW. The ‘Call’ is the start of the leasing process and identifies the area from which Wind Energy Areas will be identified. The public will have 45 days to comment.

Connecticut may be dipping its toes into offshore waters as well—in December, the Connecticut Department of Energy and Environmental Protection (CT DEEP) issued a draft Request for Proposals to solicit offers from offshore wind, fuels cells, and/or anaerobic digestion. The draft proposal includes offshore wind projects with a nameplate capacity of greater than or equal to 2 MW (with an 825,000 MWh maximum), which may be paired or co-located with energy storage. Developers must describe the role of Connecticut ports in project development and operation. CT DEEP plans to issue the final RFP at the end of January, with bid proposals due in April, and a final decision rendered in June.

2018 could change the tides for offshore wind in New Jersey. Governor-elect Phil Murphy campaigned on a platform to add 3.5 GW of installed offshore wind by 2030—the most ambitious offshore wind target in the U.S. Governor-elect Murphy can use the Offshore Wind Development Act, a law enacted in 2010, to financially support offshore wind development through ORECs and tax credits.

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This blog post was also reprinted in Renewable Energy World and in Windpower Engineering.

Powerless in Atlanta

Author: Lewis Milford, Clean Energy Group | Project: Resilient Power Project

Atlanta airport signs. Photo Credit: Iofoto/ Bigstock.com.

Any investigation into the massive power outage at Atlanta’s international airport last month should not only look back to see what went wrong. Rather, it should look forward to how the airport could use new technologies like solar and battery storage to prevent such disasters from happening again.

Because diesel backup generators failed to function during the 11-hour outage, there was a complete breakdown in power supply at the airport. The consequences of the power outage impacted hundreds of thousands of people, and left security at the airport in the dark.

According to the previous Secretary of Transportation, Anthony Foxx, who was stuck in another airport due to the outage, “there is no excuse for lack of workable redundant power source.” He said the electric design in place was a “total and abject failure.”

The investigation into this calamity might find flaws with the design of the electrical system, or maybe its maintenance, or other factors. But to be successful, it should consider new ways to deliver more resilient power with technologies like solar and storage in the future. Doing more of the same, investing only in more diesel generators and utility power upgrades, is not the answer.

Unlike standby generators, solar+storage systems operate 365 days a year, providing clean power, reducing utility costs, and generating new revenue streams for the system owners. The combination of solar and storage is the 21st century solution to provide power when the grid goes down.

Resilient power systems are now being installed in critical facilities all over the country—in schools, shelters, fire and police stations, and hospitals.

These systems are also now under consideration at airports to prevent the sort of disaster that occurred in Atlanta. Indeed, city officials in Burlington, Vermont are now looking to solar and battery technologies for use at the Burlington International Airport to ensure that power outages don’t cripple that airport’s operations.

A few months ago, the Burlington Electric Department and the Burlington Airport issued a request for proposal to install a battery storage and solar microgrid with “the ability to power the Airport in an outage.” This system, which is expected to be in operation by the end of 2018, is designed to “isolate the airport circuit from the [utility power] distribution supply when the source is lost.” By islanding the system from the grid, the “solar array at the Airport [would] be able to resume operation during an outage”—by powering the batteries with solar to keep the power on.

In the RFP, the electric department also asked for bidders to design the system to reduce the airport’s electric bills: “In addition to providing a back-up power supply to the Airport in the event there is a loss of source, the energy storage system will be used for peak load shaving, energy arbitrage, and other wholesale market actions as economical.”

So, apart from dealing with outages, solar and storage can save airports money on their electric bills. According to a recent study by Clean Energy Group and the National Energy Research Lab, Georgia has some of the highest commercial demand charges in the country, meaning commercial facilities in Georgia – like the airport – can save significant amounts of money by using energy storage to reduce demand charges.

These monthly charges are collected by the utility from its commercial customers, based on the customer’s peak demand for electricity each month. They could represent almost half of a big electricity user’s electric bill.

Tens of thousands of commercial customers in Georgia may pay high enough demand charges to warrant a close look at energy storage. Batteries could reduce these peaks and save customers thousands of dollars off their electric bills.

Our study did not look at individual customers, but the Atlanta airport, like other large commercial utility customers, is likely paying high demand charges to Georgia Power. That’s a cost that the city should consider in its evaluation of new solar and storage systems. It might be possible to get “resiliency for free,” with the savings in demand charges applied to investments in solar and storage.

The bottom line is that Atlanta should learn from this tragedy and adopt new solar and storage systems in any new retrofit of the airport’s power system. Solar and storage can provide power resiliency, bill savings, and environmental benefits.

Installing more of the same old energy technologies that failed, and have failed when most needed in disasters all over the country, is not a sensible path for airport officials. If they proceed with new technologies like solar+storage going forward, they could significantly reduce the risk of another major power outage at Hartsfield-Jackson in the future.

 

This blog post was also published in Renewable Energy World.