In an effort that will involve Tesla as a partner, a Consolidated Edison utility is planning a battery storage demonstration project that aims to show how storage can provide multiple benefits.
Under the $5.6 million proposal that is part of New York's utility sector reform effort called Reforming the Energy Vision, Orange & Rockland will team up with Tesla, an electric vehicle maker and energy storage system provider, to test the idea that battery storage can provide a range of services with costs and benefits shared by multiple stakeholders, according to a Feb. 6 filing made by O&R with the New York Public Service Commission.
Tesla, which will own and develop the battery systems, will work with the utility to develop multi-use operations strategies to balance dispatch among stakeholder groups that include participating customers, the distribution system and Tesla.
“These strategies will be guided by algorithms and protocols, designed by Tesla, to deliver optimal dispatch for the aggregated portfolio, maximizing the portfolio value among customers, the distribution grid, and Tesla,” O&R said. “Under this demonstration, the flexible operating characteristics of distributed energy storage will be employed to obtain the highest value use of the resource at any point in time.”
Currently, a lack of regulatory and market mechanisms prevents storage projects from spreading costs and delivering benefits to multiple stakeholders, which limits its potential deployment, according to O&R.
“When energy storage is deployed for multiple value streams, the amount of value and revenue generated on a per unit basis increases to capture previously idle storage capacity for productive use,” O&R said. “This additional revenue means that multi-use applications of energy storage can be economically viable in locations where single-use applications are not.”
The proposal includes two 2 MW/4 MWh portfolios. One would include up to eight commercial and industrial customer sites and the other would be placed at one or two solar projects. The batteries at the solar projects would be able to capture federal investment tax credits.
O&R expects that the batteries will allow its customers to reduce their demand charges, which can make up to 70 percent of their electric bill.
The utility intends to roll out its project in overlapping phases, starting with a roughly year-long effort to line up interested customers and select sites. The second phase will focus on the technical performance of the battery systems, followed by a final phase that includes market participation and an effort to “stack” the systems’ value streams.
O&R expects the battery systems will garner up to $788,000 a year by participating in the New York Independent System Operator’s energy, capacity and ancillary services markets.
Ninety percent of the wholesale market revenue will go to O&R to offset the project’s cost. Tesla will get the rest of the wholesale market revenue.
O&R expects to use the lessons it learns on future battery projects to defer transmission and distribution investments. The project will also help reduce uncertainty and risk around battery storage, according to the utility.
O&R has about 300,000 electric customers in southeastern New York, northern New Jersey and eastern Pennsylvania and 130,000 natural gas customers in southeastern New York and eastern Pennsylvania.
Last summer, O&R’s sister utility, Con Ed of New York, started two storage demonstration projects.
In one project, Con Ed is working with NRG Energy to use transportable batteries to better manage capacity constraints on the investor-owned utility's distribution system. The second project uses front-of-the-meter batteries at locations that can reduce strains on the distribution system.
The utility is partnering with GI Energy to place batteries at four sites on land leased from customers.
Both projects are in the early implementation phases, according to reports filed last month at the PSC.