Grid Modernization

When and How to Plan for New Technology

By Keith Dennis, president, Beneficial Electrification League, and Carole Plowfield, clean energy strategy manager, American Public Power Association

Public power utilities face diverse and often contradictory economic, political, and social pressures. With some regional variations, public power utilities are expected to maintain moderate rates while upgrading grid resiliency; reduce emissions of greenhouse gases while managing the growth of electrical end uses, such as electric vehicle charging; develop more centralized renewable power while integrating more distributed resources, such as rooftop solar and behind-the-meter battery storage; and help customers improve their energy efficiency while mitigating peak demand with dynamic pricing and demand response programs.

That is a tall order, and public power utilities are finding new ways to meet the test.

Careful, strategic technology planning is essential to managing this bewildering array of challenges. When public power utilities integrate new technology into their investment decisions as it becomes cost-effective, it will help lower the overall cost of a transition to clean energy. When utilities have the right technology in place, it will promote adaptation to future scenarios where, for example, systemwide electric generation will be more variable, cost signals stronger, and customers have new electric load shapes and demands. This is why technology planning is one of six “lanes” identified in the Energy Transition Roadmap, a resource based on input from some American Public Power Association member utilities.

Technology planning involves a wide range of decisions, from how to plan for, finance and choose vendors for advanced metering infrastructure to the most critical resource planning decisions, such as whether to build utility-owned generation and energy storage. No matter which technologies a utility chooses to deploy, careful review of the business case, opportunities and costs, and requirements to make the operation a long-run success will be important. Taking steps to mitigate risks in contracts upfront and communicating with customers that may benefit from the chosen upgrades are also essential.

One technology public power utilities are exploring as the cost has come down is battery energy storage systems. The U.S. Energy Information Administration estimates that by the end of 2023, 10,000 megawatts of battery storage systems will be energizing U.S. electric grids — 10 times the cumulative capacity installed in 2019. Battery storage can be deployed in centralized, utility-scale applications and in small-scale, decentralized configurations, usually customer-owned and behind-the-meter. Large utility-scale systems are the most straightforward pathway for public power to increase storage capacity as they seek to mitigate the variability of renewable energy and achieve other benefits, such as peak shaving. These large-scale battery storage facilities are often co-located with new solar- or wind-generation facilities or at substations. They can be utility owned or vendor owned.

Public power utilities generally start with pilot projects to develop expertise in operating and utilizing large-scale battery storage. For example, Salt River Project in Arizona began its battery storage initiatives with two pilot projects — a 10-MW standalone system and a 20-MW system that is integrated with a solar energy plant. SRP has since begun developing a 25-MW battery storage facility at a substation adjacent to its Agua Fria Generating Station and contracted for output from 100 MW of battery storage capacity from NextEra Energy’s solar and battery storage projects in Arizona.

As an emerging technology, large utility-scale battery storage projects require greater due diligence than more traditional capital expenditures and procurement contracts. One California public power utility reported that the capabilities, performance, and efficiency of a large-scale battery storage system did not meet expectations. The utility’s representative attributed the issues to personnel changes and overly optimistic projections from the vendor’s sales team. They recommend involving as many utility personnel as possible from the beginning when contracting for battery storage to lessen the chance that critical in-house expertise will be lost with future personnel changes.

As public power utilities engage in technology planning and integrated resource planning, they might face scrutiny from community members who lack understanding of the limits of these technologies and dismiss the need for existing or additional thermal generation resources. Involving relevant community stakeholders and leaders, such as city councils and town energy committees, in discussions about changing the generation mix as early as possible can help garner buy-in for projects.

The Public Power Energy Transition Roadmap, published in December 2022, explores the challenges public power utilities face, and solutions they can deploy, as the electric grid uses more clean energy. This article is adapted from the roadmap and is based on work supported by the Department of Energy Office of Electricity under Award Number DE-OE0000928.