You purchased that spiffy new rooftop solar array and waited patiently in the queue to get interconnected to the grid. Now that you’re generating kilowatt-hours, you’ve decided to invest in a residential energy storage system to maximize your ability to avoid paying for peak-priced power. There’s one hiccup, though: What do your state’s interconnection rules mean for connecting your new battery to the grid? 

We’ve now arrived at a cutting-edge topic in interconnection, one that several states have recently addressed or are working on addressing, and which many more will need to address soon.

As the Interstate Renewable Energy Council discussed in our recent report, Charging Ahead: An Energy Storage Guide for State Policymakers, energy storage promises to play a critical role at all levels of the electric system, from traditional utility-scale generation down to residential customer applications. It is also vitally important in accelerating integration of all types of distributed energy resources, or DERs. Energy storage offers a broad suite of electricity services, including deferral of expensive transmission and distribution line upgrades, the regulation of voltage and frequency, and expanding consumers’ ability to control their energy use and costs.

But while energy storage is affected by many of the same interconnection issues we’ve discussed in previous posts, it also raises new issues because of the technology’s unique characteristics — specifically, its ability to act as both energy “generation” (by injecting stored electricity onto the grid) and load (during its charging state), as well as its ability to be controlled so that it operates only when intended.

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Legislation proposed in Florida could see solar and energy storage become part of the go-to solution for providing energy resiliency against natural disasters and helping restore power in their aftermath.

Holly Raschein, a Republican member of the House of Representatives for the US’ so-called ‘sunshine state’, introduced HB 1133 ‘Energy security and disaster resilience program’ on 2 January. The bill calls for the establishment of a pilot programme within Florida’s Department of Agriculture and Consumer Services to investigate and correctly value the use of solar-plus-storage systems in preventing or coming back from energy supply and delivery problems stemming from natural disasters and other causes.

Creation of the pilot would “encourage and demonstrate the effectiveness of distributed energy generation and energy storage technologies to provide for the energy needs of critical disaster resilience facilities located in areas of critical state concern during a natural disaster or declared state of emergency,” the bill’s text reads.

Through the pilot the benefits and costs of such solutions would be assessed and valued, with key facilities such as community centres, airports, public buildings, hospitals and disaster and emergency assembly zones under particular consideration for deployment of systems.

It defines the systems to be used as solar PV systems with integrated energy storage that could offset all or the majority of a facility’s energy demand in the event of a grid outage. Systems would have to have ‘islanding’ capabilities i.e. to be able to work independently of grid, with another technical specification proposed being that the batteries on any given site are capable of powering the facility for 24 hours of backup power for critical, ‘must-run’ functions, or for five hours of the facility’s “average daily usage”. Grants would be provided towards the cost of leasing or purchasing systems that are placed to serve critical disaster resilience facilities.

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Energy storage has been called a “swiss army knife” because it’s highly versatile, adaptable and can provide many different benefits to the grid. This flexibility can be financially rewarding. For example, when storage is deployed in behind-the-meter applications, it can be programmed to target different value streams like peak-demand shaving, time-of-use arbitrage or self-consumption. These value streams are effectively different ways for an energy storage system (ESS) to make money by reducing a customer’s utility bill.

Smart energy storage developers highlight the versatile nature of an ESS when selling systems today. It’s a powerful selling point to show that storage can make money in different ways. It’s also a compelling value proposition to show that storage can adapt to future policy changes. For example, when an ESS is paired with solar PV, it can hedge against future changes to utility rate design or net metering (NEM) rules that erode the economics of solar. Storage effectively acts like an insurance policy to preserve future savings. In some cases, storage may not make financial sense from a pure return-on-investment perspective. But if a customer is convinced that storage can future-proof his or her solar savings, this may be reason enough for them to pair an ESS with a PV system.

Solar economics are eroding

Electric utilities all over the country are proposing changes to their utility rate designs and net metering frameworks. In Q3 2017 alone, 41 states took action on distributed energy solar policy and/or rate design, according to the most recent 50 States of Solar Report, published by the NC Clean Energy Technology Center. The types of changes being proposed and implemented are all different, depending on the state and utility territory. The one commonality they share is that the changes almost always erode the value of solar. Meaning that the “avoided cost” that solar can achieve, gets diminished because of the policy change.

A great example of this is the new time-of-use rates (TOU) that went into effect in the San Diego Gas & Electric (SDG&E) territory in December 2017. The new TOU rates, which solar customers are now being defaulted onto, dramatically shift the summer season on-peak period (the highest priced energy) from 11 a.m. to 6 p.m., all the way out until 4 p.m. to 9 p.m. in the evening. This radical shift erodes the value of solar, as afternoon solar production now gets valued at a lower priced mid-peak rate, instead of the premium on-peak rate, as illustrated in the chart below for the DR-SES schedule.

In California, both Pacific Gas & Electric and Southern California Edison have proposed similar TOU window shifts in their most recent general rate case filings, which are likely to be adopted in 2018.

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U.S. energy storage increases 46% in 3rd Quarter. Hawaii, California, Massachusetts aim to be powered by 100% renewable energy by 2045.

The article “US Energy Storage Increases 46% in 3rd Quarter” by Joshua Hill, published on December 7, 2017, revealed the latest U.S. Energy Storage Monitor report by Greentech Media (“GTM”) Research showed a total of 41.8 MW (megawatts) worth of new energy storage capacity was deployed in the third quarter of 2017, representing an increase of 46% year over year and 10% quarter over quarter.

Texas led the way in the utility-scale segment with its 30 MW project, followed by Massachusetts, California, and Hawaii. GTM Research also highlighted the increasing role that energy storage is having in utilities’ integrated resource planning (IRP), with utilities across 14 states including nearly 2 GW (gigawatts) worth of storage into their IRP thinking.

Another article by Joshua Hill – “California To Meet 2030 Renewable Energy Targets By 2020”, dated November 21, 2017 – indicates California state’s major utilities have already met and should soon exceed the state’s 2020 renewable energy target of 33%. The article also says they will likely meet the 2030 target of 50% by 2020.

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Most of the focus on energy storage safety has been on mobile applications, given the spate of exploding laptop and phone batteries.

Lithium-ion batteries used in those applications are under tighter restrictions for size and density that can lead to higher risks. 

Stationary storage applications are often safer than mobile uses because there are not the same space constraints. But in some markets, space can also be an issue for stationary storage, especially with projects that use lithium-ion batteries.

Such systems could get a higher profile this year with the expected release of new safety protocols.

New York standards

New York City is a prime example. The Fire Department of New York (FDNY) is working on drawing up standards to ensure the safe installation of battery storage projects, but population density and bureaucratic overlap still make New York one of the most restrictive markets for energy storage projects.

FDNY is collaborating with the New York State Energy Research and Development Authority (NYSERDA), the National Fire Protection Association, insurance companies and Consolidated Edison. Together they are working to come up with procedures and protocols for battery safety.

NYSERDA also is working with Con Ed on a joint battery energy storage safety initiative that aims to answer critical safety questions confronting FDNY and other agencies that are responsible for reviewing applications for energy storage installations. The initiative was undertaken in support of Gov. Andrew Cuomo’s Reforming the Energy Vision, which, among other things, looks to reduce peak demand by using battery storage.

The city saw its first behind-the-meter installation last May — a 300 kW, 1.2 MWh lithium-ion battery project in Brooklyn. But that project is sited outside, where fire safety concerns are muted.

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On January 3rd, New York governor Andrew Cuomo delivered a state energy storage target of 1500MW via the private market by 2025 and has put up $260 million in state money to help drive the investment.

In the annual “State of the State” address, varying proposals  – from combating MS-13, to cleaning up the Hudson River, to expanding clean energy jobs – were delivered to start the new year. The energy storage target delivered seems to be an extension or culmination of prior state legislation requiring targets be set.

The 20th proposal of New York’s State of the State address was specifically directed at “clean energy jobs and climate agenda.” Here are the key sub-components of the legislation:

• Expanding the Regional Greenhouse Gas Initiative (RGGI) and reducing emissions from the highest-polluting, high demand “Peaker” power plants
• Issuing solicitations in 2018 and 2019 to develop 800MW of offshore wind while developing the job ecosystem surrounding the industry
• A 1500MW energy storage target, a $200 million fund at the state Green Bank to help drive pricing down for energy storage through strategic deployment
• A “Zero Cost Solar for All” program for 10,000 Low-Income New Yorkers
• NYSERDA being directed to invest at least $60 million in storage pilots plus other activities that reduce barriers and costs when deploying energy storage – such as developing smarter permitting, customer acquisition, interconnection, and financing processes

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The project to build one of the world’s largest lithium-ion battery storage systems started out as a bet—on Twitter. Last March, Tesla CEO Elon Musk tweeted to Australian billionaire Mike Cannon-Brookes, CEO of software company Atlassian, that Tesla could get a massive 100-MW/129-MWh energy storage system installed and working in 100 days, and he did.

The proposal was to help mitigate a chronic power shortage South Australia faced after the state shut down its last coal-fired power plant in 2016. The aging Northern power station in Port Augusta had been rendered uneconomical by an oversupply of generation, owing partly to a surge in renewables that was encouraged by the state. Though reeled by a series of blackouts—including during the summer of 2017—the state stuck doggedly to an energy plan introduced in March that sought to cut its reliance on an electricity interconnector with eastern Australia feeding it coal power, stressing it wanted to produce its own power from wind, solar, and natural gas (for more on South Australia’s energy plan, see “After Blackout, South Australia Wrests Control of Its Power Security” in POWER’s May 2017 issue).

A major facet of that energy plan entailed the construction of the country’s largest grid-connected battery. For Musk, who is known for his ambitious entrepreneurial style, the challenge was seemingly irresistible. In March, Cannon-Brookes asked Musk via Twitter how serious he was about the bet. Musk responded, “Tesla will get the system installed and working 100 days from contract signature or it is free. That serious enough for you?” Cannon-Brookes replied, “legend! You’re on mate. Give me 7 days to try sort out politics & funding. [Direct message] me a quote for approx 100MW cost—mates rates!”

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While acknowledging that the economics “vary significantly” by region and application, Navigant Research has forecast that energy storage for integration of renewables and co-located with solar or wind could be worth more than US$20 billion by 2026.

‘Energy storage for renewables integration’, a new report from the Colorado-headquartered research and analysis group, looks at the point at which the falling costs of new solar and wind generation will meet with the falling costs of lithium and other advanced batteries to converge on a ‘sweet spot’ for adding storage to generation assets.

To date, the higher value applications of batteries have been found not in their combination with solar or wind – where they could maximise self-consumption of PV or minimise the grid curtailment of wind – but in areas such as providing ancillary services to the grid like frequency response. While the huge drop in the cost of renewables has provided a driver for the addition of energy storage, the cost of the storage systems themselves still remains the biggest obstacle, authors Adam Wilson and Alex Eller said. The challenge presented in adding ever-higher shares of renewables to grids around the world means it is increasingly likely energy storage will be used as a facilitating agent.

Many factors influence the cost and suitability of energy storage for this use, including the condition, state and size of the local grid, the amount of renewable generation being added to it, local electricity rates, policies and the available options for financing. Meanwhile the industry, still in its early stages, lacks standardisation and a dearth of the aforementioned financing options, Navigant found. Complicating the picture further still is the fact that solar PV prices have dropped in some regions to the point where it would be simply uneconomical at this point to add the more expensive energy storage component.

Navigant said that while some regions have stripped back policy support for solar PV, phasing out or removing feed-in tariffs (FiTs), leading to a corresponding drop in demand from customers behind-the-meter, even some of these regions, where electricity prices are still rising, the economic competitiveness of solar and energy storage grows. The research firm also pinpointed Australia, California, New York and Germany as solid examples of regions where policy support and rising electricity retail rates have converged to see “strong deployment” of energy storage for renewables integration (ESRI).

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Most of the focus on energy storage safety has been on mobile applications, given the spate of exploding laptop and phone batteries.

Lithium-ion batteries used in those applications are under tighter restrictions for size and density that can lead to higher risks. 

Stationary storage applications are often safer than mobile uses because there are not the same space constraints. But in some markets, space can also be an issue for stationary storage, especially with projects that use lithium-ion batteries.

Such systems could get a higher profile this year with the expected release of new safety protocols.

New York standards

New York City is a prime example. The Fire Department of New York (FDNY) is working on drawing up standards to ensure the safe installation of battery storage projects, but population density and bureaucratic overlap still make New York one of the most restrictive markets for energy storage projects.

FDNY is collaborating with the New York State Energy Research and Development Authority (NYSERDA), the National Fire Protection Association, insurance companies and Consolidated Edison. Together they are working to come up with procedures and protocols for battery safety.

NYSERDA also is working with Con Ed on a joint battery energy storage safety initiative that aims to answer critical safety questions confronting FDNY and other agencies that are responsible for reviewing applications for energy storage installations. The initiative was undertaken in support of Gov. Andrew Cuomo’s Reforming the Energy Vision, which, among other things, looks to reduce peak demand by using battery storage.

The city saw its first behind-the-meter installation last May — a 300 kW, 1.2 MWh lithium-ion battery project in Brooklyn. But that project is sited outside, where fire safety concerns are muted.

Click Here to Read Full Article