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Energy Storage

Finding Balance — and Value — in Energy Storage

An ultimate promise of energy storage is that it helps to solve many of the reliability and quality concerns presented by an increasingly distributed, variable electric grid. While the technology and cost for energy storage systems that can truly meet this promise is not yet attainable, utilities are increasingly seeing the value of deploying existing solutions.

Benefits from energy storage include everything from better balancing the disconnect between areas of high demand, low generation and high generation, low demand; or offsetting transmission congestion costs; bringing down peak demand; and better understanding how to manage a future with a high concentration of distributed energy resources.

However, to ensure the greatest value in these assets, utilities need to carefully plan and consider how energy storage will work on their systems, which uses will deliver the highest value/return for the system, and what technology is right.

The Public Power Energy Storage Guidebook includes five case studies from public power utilities that have implemented energy storage projects. Here are some highlights from the examples and recommendations for how other utilities can refine the purpose, value, and benefits of energy storage for their projects.

Battery Learning Curve

Although a variety of storage technologies exist, the overwhelming majority of current applications center on lithium-ion battery energy storage systems, or BESS.  

While BESS have become more common over the past decade, the array of regulatory considerations continue to evolve. Despite having state and local governments that are generally supportive of battery storage systems, utilities face a challenge of needing to educate those involved in the permitting process about the relative safety and environmental concerns of the systems, often while learning about these details themselves. Some public power utilities reported that this added education and coordination led to project delays.

Engaging with partners and subcontractors who have verified technical and safety expertise in installing BESS is critical, especially for utilities that do not have in-house experience or specialties in these areas.

The New York Power Authority is able to issue permits for its projects, which allowed for a relatively streamlined process for its North Country Energy Storage Demonstration Project, a 20-megawatt installation in the northern part of the state. However, New York State changed its building codes during the project implementation, which required staff to add in a review of the changes and any potential effects on the project.  

The relative newness of BESS also makes for challenges in accurately planning for the long-term use of the systems. As noted in the case study from Lansing Board of Water and Light in Michigan, depending on how the system will be used, there may be limited history to allow for certainty in predicting battery lifetime and performance, which can prevent these assets from being properly valued or included within planning studies or integrated resource plans.

Several of the case studies noted that timelines for projects implemented within the past few years had to be extended due to longer-than-anticipated lead times for key materials and equipment. Utilities stressed the need for flexibility in projects as long as supply chain constraints continue, as well as being aware of the potential for added costs from tariffs on imported materials. Such flexibility could be supported through developing a risk mitigation plan as part of the project design.

Bringing it Back to Rates

A clear objective across public power projects is to ensure that the implementation of energy storage can be done without needing to raise electric rates.

For Manitowoc Public Utilities in Wisconsin, which deployed two residential-scale systems, the rates question is not just about how the utility can reduce costs associated with peak demand, but what will drive customers to see battery storage solutions as an economical choice. MPU has a goal to have all its customer programs be self-funded, such as it does with a community solar program. The utility noted that more customers would need to switch to a time-of-use structure to be incentivized to invest in residential storage systems.

For Braintree Electric Light Department in Massachusetts, which implemented a 2 MW, 4 megawatt-hour system in 2018, the focus was on reducing transmission costs. The current system has so far been able to catch about 90% of transmission peaks, saving the municipal utility tens of thousands of dollars per month in transmission costs. While the savings benefits have been substantial, BELD noted plans to upgrade the system to one that can be discharged throughout the entirety of peak demand periods.

Also in Massachusetts, Wakefield Municipal Gas and Light saw how its 3 MW, 5 MWh BESS could reduce costs associated with peak demand. Since becoming operational, the system has been effective in reducing 95% of the utility’s monthly peak demand charges. Despite these savings, WMGLD and other utilities reported a reliance on grants and other external funding sources to make the projects economical.

10 Steps to Consider

Public power utilities can take the following steps when implementing their own energy storage projects to avoid common challenges.

  1. Assess current energy storage maturity level: The Public Power Energy Storage Maturity Model allows public power utilities to assess their preparedness for effectively planning, deploying, operating, and maintaining energy storage assets.    
  2. Conduct a feasibility study: Begin by assessing the specific needs, goals, and constraints of the utility, such as peak load management, renewable integration, grid stability, or cost reduction. A thorough feasibility study evaluates the technical, economic, and regulatory aspects of energy storage deployment in the given context.
  3. Define project objectives: Clearly define the objectives and desired benefits of the energy storage project, such as peak shaving, grid resilience, emission reduction, or cost savings. Align these objectives with the utility's overall strategic goals and ensure they are in line with regulatory requirements and environmental targets.
  4. Identify suitable technologies: Explore different energy storage technologies (e.g., lithium-ion batteries, flow batteries, or thermal storage) and select the most suitable technology based on the project requirements, including factors such as capacity, duration, scalability, efficiency, and lifespan. Consider partnering with experienced vendors or consultants to evaluate and select the right technology for the project.
  5. Assess financing options: Evaluate various financing options, including grants, incentives, public-private partnerships, or third-party models. Seek opportunities to access funding or expertise in energy storage implementation in collaboration with federal agencies, industry associations, and research organizations.
  6. Engage stakeholders and build partnerships: Involve key stakeholders — such as local communities, customers, regulatory agencies, and technology providers — in the planning and implementation process. Collaborate with industry partners, research institutions, and peer utilities to share knowledge, best practices, and lessons from similar projects.
  7. Develop a comprehensive project plan: Create a detailed project plan that includes design, procurement, construction, integration with existing infrastructure, testing, and commissioning. Ensure compliance with relevant regulations, safety standards, and environmental requirements throughout the project lifecycle.
  8. Monitor and evaluate performance: Implement a robust monitoring and evaluation system to assess the performance, effectiveness, and impact of the energy storage project. Continuously analyze data and gather insights to optimize the system's operation, improve grid management, and maximize the benefits derived from energy storage.
  9. Promote public awareness and education: Engage in public outreach and education initiatives to raise awareness about the benefits of energy storage, promote energy efficiency, and encourage participation in demand response programs. Provide information and resources to customers and the community to enhance understanding and support for energy storage projects.
  10. Continuously innovate and adapt: Stay informed about the latest advancements in energy storage technologies, regulatory developments, and industry trends. Foster a culture of innovation and flexibility to adapt to evolving energy landscapes and seize new opportunities that arise in the energy storage sector.
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