The Sacramento Municipal Utility District, a California public power utility, has developed a unique program that allows the public power utility to partner with customers to install battery systems where they are most needed on the grid.
The program, unveiled in January, aims to align the benefit commercial customers would see by installing on-site storage with the locational needs of the grid, according to James Frasher, a member of SMUD’s distributed energy storage group.
Instead of installing behind-the-meter storage that would lower a customer’s demand charge, but not particularly benefit SMUD’s distribution system, the customer can buy a “share” of a battery system installed in a location with a distribution feeder system that is maxed out and is in line to be upgraded, Frasher said.
Electrify America, the first Energy StorageShares program, will invest $1.3 million buying “shares” in a 4-megawatt battery storage project SMUD is developing instead of installing storage facilities to support its 12 electric vehicle charging stations powered by the public power utility.
In exchange for buying the shares, which equal 1 kilowatt in demand charge reduction, Electrify America will receive bill credits to reflect the reduced demand charge the company would have had if it installed on-site storage, according to Frasher.
“This first-of-a-kind program will help address peak energy demands, minimize impacts to the grid and support the expansion of EV charging in our community,” SMUD CEO and General Manager Arlen Orchard said. “A program like this also continues to move us toward a carbon free economy by enabling higher levels of renewable generation to be integrated with the grid.”
The program saves customers money, but allows SMUD to site energy storage facilities where it can provide the most value, partly by avoiding or delaying investments on feeder circuits that are at their capacity, according to Frasher.
A customer, for example, may want to mainly reduce their demand charges and could operate a battery system solely to meet that goal, Frasher said.
SMUD, however, would seek to maximize the benefits of an energy storage system, possibly by participating in the California Independent System Operator’s markets, according to Frasher.
“The program allows us to access a deeper value stack than we could have with a behind-the-meter system,” he said.
The program also allows SMUD to take advantage of economies of scale by buying larger storage facilities than individual customers might want on their sites, Frasher said.
The program’s first battery will be tied to a request for proposal process that started late last year and is still underway, according to Frasher. The 4-MW battery will have 4,000 available shares.
Besides Electrify America, SMUD has been talking to several customers who are interested in the program, he said.
The Energy StorageShares program is part of SMUD’s overall goal of having 9 MW of energy storage by the end of this year and 75 MW by the end of 2026, according to Frasher, who noted that the public power utility’s most recent integrated resource plan indicates it may need 500 MW of storage by 2040.