What is resilient power?
Resilient power is the ability not only to provide critical power to essential facilities and services during a power outage, but also to provide economic benefits throughout the year, by reducing power bills and generating revenue through providing services to utilities and grid operators.
First and foremost, resilient power is the ability to provide a facility with continuous, reliable power even when the electric grid goes down. Additionally, truly resilient power should be clean, renewable, and have the ability to provide benefits throughout the year, not just during natural disasters and other power emergencies.
The traditional solution to dealing with power outages has come in the form of fossil-fueled generators, most often diesel generators. But these systems are designed to run only during emergencies, and are therefore prone to failure when called upon. Furthermore, once on-site fuel supplies are exhausted, diesel generators are dependent on fuel deliveries that may be difficult or impossible during a disaster. Even generators running on natural gas can have their supply lines strained or completely disrupted in an emergency. And, because traditional generators sit idle most of the time, they represent sunk costs with no associated value streams.
A better solution can be found in resilient power solutions provided by clean distributed energy, such as solar PV combined with battery storage. In addition to powering critical loads during an outage with a renewable source of energy, these systems can provide on-going benefits through electricity bill savings and generating revenue by providing valuable grid services. Because these systems operate each and every day, facility owners and residents can rest assured that power will be there when disaster strikes.
For more information on the resilient power movement, see the Clean Energy Group report, Resilient Power: Evolution of a New Clean Energy Strategy to Meet Severe Weather Threats.
How does resilient solar+storage work?
When the grid is up and running, a resilient solar+storage system functions similarly to a normal solar system: meeting local electricity demand, sending excess electricity to the grid, and drawing electricity from the grid if needed. Unlike most stand-alone solar installations, when there is a power outage, additional equipment, like an automatic transfer switch and battery bank, allows a resilient solar+storage system to isolate itself from the grid and power critical loads in the event of a power outage, until utility power is restored.
While renewable power technologies like solar PV have the ability to generate electricity independent of the central utility grid, many solar PV system owners are surprised to find their building is without power when the grid goes down, even if the sun is shining. This is because the majority of PV systems currently installed are grid-tied systems. Due to safety concerns, these systems must automatically shut down during a grid outage leaving owners and residents without electricity when they could benefit from PV power the most.
Figure 1. Grid-tied PV System Schematic
Resilient solar+storage systems, as illustrated in Figure 2, differ from typical PV installations in two important ways. First, they include equipment to isolate the system when the grid goes down, a process called islanding. This usually consists of an automatic transfer, which is sometimes incorporated as part of the inverter. Second, they include an energy storage system, usually batteries, to store a reserve of electricity to be used when grid goes down or meet other needs while the grid is functioning properly.
Figure 2. Grid-tied Solar+Storage System Schematic
When the grid is up and running, a resilient solar+storage system functions similarly to a standard solar PV system: meeting local electricity demand, sending excess electricity to the grid, and drawing electricity from the grid when needed. If the grid becomes unavailable, due to severe weather or other unexpected failure, the resilient solar+storage system will island from the grid and continue to power critical loads of the building. The only significant difference is that instead of exporting and importing power to and from the grid, the islanded system will send solar power to and pull power from the system’s on-site storage system. With a properly sized system and careful consideration of critical loads, the solar+storage system has the potential to continue providing power indefinitely.
Additionally, unlike traditional backup generators, a resilient solar+storage system can provide benefits to the system owner year round. The most obvious benefit comes from offsetting the electricity purchased from a utility with self-generated solar power to lower the building’s utility bills. Less familiar are the benefits that a storage system can provide including demand management, load shifting, and frequency regulation.
For more information about how resilient solar+storage systems works, see the Clean Energy Group report Solar+Storage 101: An Introductory Guide to Resilient Power Systems.
What is the value of installing a resilient solar+storage system?
Pairing solar PV with battery storage results in multiple benefits, both economic and social. In addition to the benefit of providing electricity during a grid outage, solar+storage systems also can provide clean, reliable power continuously, boost the economic resiliency of communities by reducing or stabilizing utility bills, and in some cases generate revenue by providing valuable grid services.
The primary benefit of a resilient power system is the ability to provide power to essential loads continuously, even when the utility grid is down. However, because solar+storage systems can operate year-round, not just during an outage, they offer a number of additional economic benefits that traditional sources of emergency backup power cannot, such as utility bill savings and the possibility of generating revenue.
Most people are familiar with the market case for solar PV. Electricity generated from solar panels can lower utility bills by offsetting electricity purchased from the grid. In some markets, the solar renewable energy certificates (SRECs) associated with electricity production can also be sold to provide additional revenue. While these value streams can be realized with solar alone, the addition of battery storage can unlock a vast array of other benefits.
From renewable generation smoothing to demand charge reduction, energy storage technologies have the capacity to benefit each segment of the power system. Energy storage can deliver value not just to utilities and grid operators, but to commercial and residential consumers alike.
By enabling system owners to store energy for later use, energy storage gives customers the flexibility to decide how and when to use the energy generated by their solar panels. Solar owners with storage have the ability to directly consume more of the renewable power they generate, which is particularly important for customers not able to receive full retail compensation for energy exported to the grid. Storage also lets system owners decide when to import electricity from the grid and when to export it, allowing customers on time-of-use rates to purchase electricity when prices are low and self-consume when prices are higher. For customers facing utility demand charges, predominately commercial customers, additional savings can be achieved using battery storage for demand charge management.
Energy storage can also be paid for providing services to utilities and grid operators. Unfortunately, the full potential value of energy storage cannot be realized under current market conditions. However, markets are beginning to emerge that provide viable revenue streams for battery storage. Two of the most widely adopted and integral electricity market products for energy storage today are ancillary services and demand response.
Ancillary services encompass a suite of products that support power system reliability. They vary depending on the grid operator, but typically include frequency regulation, spinning reserve, non-spinning reserve, voltage control, and black start. Energy storage has the capability to provide all of these services, though it currently only plays a significant role in some frequency regulation markets.
Demand response programs help utilities and grid operators avoid power interruptions at times when electricity demand threatens to exceed available generation supply or the capacity limits of transmission and distribution lines. Battery storage has the ability to quickly respond to demand response calls by discharging stored energy to meet the electricity demands of local loads, thereby reducing overall demand on the central power system.
These are just a few examples of the types of value energy storage can provide. New value streams are currently being explored through pilot programs and demonstration projects and additional opportunities are anticipated to emerge as utilities and grid operators become more familiar with energy storage technologies and the multitude of services they can provide.
For more information on energy storage value streams, see the Clean Energy Group report Energy Storage and Electricity Markets and the Rocky Mountain Institute report The Economics of Battery Energy Storage.
How can the Resilient Power Project help me develop a project?
The Resilient Power Project provides technical assistance to project developers. We also provide grants to pay for third-party technical service providers experienced in clean energy storage projects. In this way, a project developer and financing entity can have the information they need to assess the technical and financial feasibility of developing a specific resilient power project.
Clean Energy Group has created the Technical Assistance Fund (TAF) under its Resilient Power Project with funding from national foundations. The purpose of the TAF is to support the development of grid-connected, reliable, clean energy projects that provide power assurance (resilient power) at the community level. The principal focus of TAF is to support projects benefiting low-income communities, including projects that ensure uninterrupted access to critical services for low-income and vulnerable populations. The key purpose of the TAF is to support technical and financial analysis of potential projects, as well as predevelopment costs associated with project installations.
The Resilient Power Project works with building owners, developers and city officials who are considering the implementation of resilient power in affordable housing, community facilities and public buildings. These projects could involve solar with battery storage, fuel cells, combined heat and power (CHP) and related cleaner and more resilient energy technologies. Microgrids that include these projects could be eligible for TAF support. In general, projects will involve clean distributed generation that serves building-related electric loads and is capable of providing emergency power independent of the utility grid by islanding in the event of a power outage.
The size of a typical grant from the TAF is in the $5,000 to $15,000 range. These grants can be used to (1) pay for third-party technical service providers experienced in clean energy storage projects, (2) provide support for predevelopment costs associated with resilient power projects, and (3) help city officials develop one or more resilient power projects.
How can resilient power projects be financed?
Community resilient power projects can be financed with third-party power purchase agreements and leases, development loans, tax-exempt and taxable bonds and commercial PACE financing – supported by federal, state and utility incentives, and the revenues and cost savings available with energy storage in many local markets.
As with solar PV, resilient power systems can be third party-owned and financed with power purchase agreements (PPAs) or leases. The battery storage PPA can either be wrapped into the solar PV PPA or separate PPAs can be created. The PPA sets the financial terms under which the host purchases power and services generated by the system from the third party. This allows the host facility to obtain a resilient power system at little or no up-front cost, generally at an energy cost savings for the duration of the PPA.
States that have clean energy finance and incentive programs, as well as state and national development finance entities, are potential sources of loans and other funding for building owners and project developers.
Municipalities, public housing authorities, hospitals, universities and schools can also use a range of bond financing programs to fund resilient power projects, ranging from general obligation bonds (for critical public facilities) to 501(c)(3) bonds (for nonprofit-owned hospitals, schools and other facilities), housing bonds (for low income and elderly housing), school construction bonds (for emergency shelters) and disaster recovery bonds (to ensure resilient power is provided to vulnerable populations impacted by prior extreme weather disasters).
Property Assessed Clean Energy (PACE) programs allow multifamily housing and commercial building owners to finance clean energy improvements, which are then repaid through an assessment added to the building owner’s property taxes. In addition to commercial and industrial facilities, municipal and nonprofit-owned buildings have qualified for PACE financing in states that permit non-tax property assessments and payments.
New battery storage companies are rapidly taking advantage of the favorable project economics of solar+storage today. As these projects are aggregated into pipelines of financeable projects, the transaction and financing costs of resilient power projects will continue to fall.
What are states doing to promote resilient power?
A number of states have embarked on new and ambitious resilient power programs aimed at protecting critical facilities and vulnerable populations from the impacts of grid outages caused by natural disasters. More than $400 million in new state funds – plus millions more in private investments – have been dedicated to resilient power projects in the Northeast alone, with additional resources being committed in other states including California, Oregon, Florida, and Minnesota.
In a rare example of a positive outcome from a natural disaster, a number of states have embarked on new and ambitious resilient power programs since Hurricane Sandy devastated the Northeast in 2012. These programs are aimed at protecting critical facilities and vulnerable populations from the worst impacts of future disasters. In the first two years following the storm, more than $400 million in new state funds have been dedicated to resilient power deployment efforts in the Northeast alone, and this money has leveraged many more millions in private funds. The resulting installations show that, when designed properly, renewables and energy storage offer not only environmental and economic benefits, but can also save lives and protect vulnerable populations.
The resilient power movement is now expanding beyond the Northeast, and new state efforts have arisen in all areas of the country. Clean Energy Group has offered support to states, municipalities, developers and others engaged in this important work. Support is in the form of direct policy and program design, stakeholder outreach and knowledge sharing, and a technical assistance fund to help support project deployment in low-income neighborhoods.
The following states have active resilient power programs. Their activities are on-going; but the current status of each state’s program is summarized here:
- In 2014, the California Energy Commission (CEC) issued a $26.5 million microgrids solicitation resulting in a recommendation of more than $31 million in funding for 8 microgrids, four of which are designated to support critical infrastructure that will provide resilient power to 3 fire stations, a wastewater treatment plant, a Native American reservation that includes community emergency services, and a hospital.
- California has adopted an energy storage portfolio standard that applies to three of the state’s largest utilities, with a total goal of 1.325 GW of energy storage by 2020.
- The California Independent System Operator (ISO), the California Public Utilities Commission (CPUC), and CEC have developed an energy storage roadmap that identifies policy, technology and process changes to address challenges faced by the storage sector.
- CEC has procured a State Energy Assurance Plan and has engaged in California Local Energy Assurance Planning (CaLEAP).
- The Connecticut Department of Energy and Environmental Protection has funded 13 resilient power microgrids in the first two rounds of its $48 million Microgrid Grant and Loan Program; a third round of funding has been made available through a rolling application process.
- University of Southern Florida’s Solar Energy Center, with the Florida Office of Energy and Florida’s SunSmart E-Shelter Program, has equipped 115 schools with small PV systems and batteries, which are sufficient to keep lights and electrical outlets operating during a grid-disrupting natural disaster.
- The Game Changer Competitive Grant Program has supported several innovative projects, notably the Konterra Solar+Storage microgrid.
- Massachusetts Department of Energy Resources (DOER), through its $40 million Community Clean Energy Resiliency Initiative, made 27 technical assistance grants at a total of $224,194. A second round of implementation funding awarded $26 million to 18 implementation projects, 11 of which included solar+storage, to support a total of 31 critical facilities (some projects included multiple buildings). A third round of funding is upcoming.
- DOER and Massachusetts Clean Energy Center (MassCEC) have commissioned a 2-part study to make recommendations for the future role of energy storage in the state.
- MassCEC is collaborating with DOER to produce a state energy storage roadmap.
- DOER has committed $10 million to energy storage deployment.
- MassCEC has committed $650,000 to fund microgrid feasibility studies.
- Minnesota Department of Commerce has produced a report on microgrids as a path to energy assurance.
- The New Jersey Board of Public Utilities formed the nation’s first Energy Resilience Bank (ERB) capitalized with $200 million in federal disaster relief funds and has dedicated $65 million to resilient power projects at water and wastewater treatment plants. Future solicitations will focus on hospitals, multi-family housing, emergency shelters, and other critical facilities.
- NJBPU has expended $3 million in resilient energy storage grant awards through a competitive process to 13 solar+storage projects at critical facilities. Four resilient power projects are now moving forward. NJBPU has committed $6 million to a second round of funding, half of which will be expended through a prescriptive rebate program, and half through competitive solicitation.
- New York Energy Research and Development Authority (NYSERDA) is administering the $40 million NY Prize to support construction of 4-5 microgrids; to date the program has funded 83 feasibility studies.
- NYSERDA has supported the installation of over 140 resilient CHP systems.
- Oregon Department of Energy, in collaboration with US DOE, Sandia National Laboratories and CEG/CESA, has announced a $295,000 joint federal/state grant to Eugene Water & Electric Board to build a resilient energy storage demonstration project.
- Oregon has produced a State Energy Assurance Plan.
- Oregon has adopted an energy storage mandate that will require major utilities to procure 5MW of storage by 2020.
- Vermont, in collaboration with US DOE, Sandia National Laboratories, and CEG/CESA, issued a $290,000 joint federal/state grant to Green Mountain Power, the state’s largest utility, to build the nation’s first microgrid on a utility distribution system that is powered exclusively by solar PV and battery storage. The systems includes 2.5MW of solar PV and 4MW of battery storage, and provides resilient power to a public school that serves as an emergency shelter.
More details on state resilient power programs and activities can be found in the Clean Energy Group report, What States Should Do: A Guide to Resilient Power Programs and Policy. In addition to an update on state activities, the report outlines program design, policy tools, and financial drivers for resilient solar+storage power systems, such as Renewable Portfolio Standards and rebates, green and energy resilience banks, and third-party service providers that rely on electricity services markets.
What policies/initiatives have been implemented to support resilient power deployment?
The U.S. Department of Energy (DOE) has acknowledged the costly increase in natural disaster-related grid outages and the importance of resilient power systems. But there is little federal policy to directly support deployment of resilient systems. The federal Investment Tax Credit applies to energy storage systems installed with solar PV (with some limitations) and U.S. DOE Office of Electricity has supported some energy storage demonstration systems that have resilient power benefits through CESA’s ESTAP program. On the state level, a number of states have policy and programs in place to support resilient power deployment; Clean Energy Group has aided in the development of these state programs with research and information sharing, direct policy and program support and technical assistance.
The US Department of Energy (DOE) has acknowledged the costly increase in natural disaster-related grid outages and the importance of resilient power systems, most recently in the October, 2015 publication Climate Change and the U.S. Energy Sector: Regional Vulnerabilities and Resilience Solutions. But there is little federal policy to directly support deployment of resilient systems. Some states have taken a more direct approach with various programs directly supporting resilient power deployment, but there is much more that could be done to support resilient power deployment at all levels of government – federal, state and municipal.
There are few federal incentives supporting resilient power deployment, and those that exist are indirect, that is, not specifically targeted toward resilient power. An example of this is the federal Investment Tax Credit, which can, under certain conditions, be applied to energy storage systems installed with solar PV, but which does not distinguish between resilient (islandable) systems and those that are unable to operate when the grid is down (non-islandable). Similarly, US DOE Office of Electricity has provided funding support for some energy storage demonstration systems that have resilient power benefits through CESA’s ESTAP program, but again, the goal of the program is to promote storage, not necessarily resiliency.
State programs are more varied, but again, many support resilient power without specifically targeting it. A good example is California’s Self-Generation Incentive Program, which offers rebates for qualifying distributed energy systems installed on the customer’s side of the utility meter. Advanced energy storage is eligible for the incentive, but so are many other technologies, and there is no requirement that systems provide a resilient power benefit. Similarly, many states offer financing programs, such as PACE (Property Assessed Clean Energy) loans that can be used for resilient systems but are more broadly targeted toward clean energy improvements of all kinds, with no special incentives for resiliency.
Below are a number of more targeted resilient power policies and programs by type. Each includes a brief description and examples of how it has been implemented by states. More details on these programs and policies can be found in the CEG publication What States Should Do: A Guide to Resilient Power Programs and Policy.
- Solicitations/Request for Proposals (RFPs): Typically a competitive program that solicits qualifying proposals and awards grants, solicitations and RFPs may be targeted to a specific audience such as municipalities, utilities, or private developers.
- Massachusetts Community Clean Energy Resiliency Initiative
- New Jersey Renewable Electric Storage Incentive
- Connecticut Microgrid Grant and Loan Pilot Program
- California Demonstration of Low-Carbon Microgrids for Critical Facilities
- Renewable portfolio standards and stand-alone mandates: Renewable Portfolio Standards (RPS) have been adopted by many states. They require that utilities procure a defined amount of qualifying energy resources by a set date. Resilient power systems can be included in larger RPSs as qualifying resources, or they may be required as a stand-alone mandate separate from a larger RPS (if one exists).
- Adders, multipliers and carve-outs: Adders, multipliers, and carve-outs may be applied as part of an incentive program or mandate to provide an extra boost to a particular kind of technology or application. Adders and multipliers boost an existing incentive (or credit under a mandate) for the desired technology; carve-outs, sometimes called set-asides, make a portion of the existing incentive or mandate applicable only to the desired technology.
- Prescriptive rebates: This is typically a longer-term, non-competitive incentive program that provides a set rebate for the installation of qualifying technology. The rebate can be set on a per-system basis, or more commonly on a capacity basis, for example as a dollar-per-kilowatt or dollar-per-kilowatt-hour rebate.
- New Jersey’s Renewable Electric Storage Incentive will offer a $300/kWh prescriptive rebate in its second round of funding
- Financing institutions: A number of states have “green banks” that could provide financing for resilient power deployment; only one state thus far has established a dedicated “resilience bank.” This type of dedicated financing institution can offer loans, grants, credit enhancement and other financial supports for eligible technologies.
- New Jersey Energy Resilience Bank
- Demonstration projects: This is a typical early strategy used by states to demonstrate and gain experience with new technologies and/or applications. Demonstration projects are most beneficial when they not only demonstrate that a new technology works, but that it offers value and can achieve a reasonable payback. A few examples of state demonstration projects are listed below.
- Integrating resilient power into longer-term state policy: This strategy, while it usually does not result in immediate deployment, is useful in laying the groundwork for a longer-term commitment to resilient power. Generally, resilient power policy would be integrated into state disaster planning documents, state energy plans, or both. States have also issued more targeted policy documents such as energy assurance plans, roadmaps, and task force reports.
- State of California Energy Assurance Plan
- Oregon State Energy Assurance Plan
- Minnesota Microgrids – Barriers, Opportunities and Pathways Toward Energy Assurance
- Oklahoma Energy Assurance Plan
- Texas Energy Assurance Plan
- Maryland Resiliency Through Microgrids Task Force Report
- For an example of state planning processes and methodology, see the California Local Energy Assurance Planning (CaLEAP) website.