Utility Dive, 15 Feb 2018
As Hurricane Irma receded last September, thousands of Floridians sheltered in 115 well-lit schools, drinking hot coffee and communicating with the world through cell phones charged by solar-plus-storage systems.
Funded by a $9.8 million 2009 Recovery Act grant, the solar-plus-storage systems powered the schools despite the overcast weather, while 6.7 million utility customers had no electricity. Like last year’s hurricanes in Houston, Puerto Rico and the U.S. Virgin Islands, Irma made vivid the value of shelter from the storm.
“With the cost of storage coming down, the economics of solar-plus-storage are compelling,” Dyson said. “Once you start considering what resilience might be worth, they just get better.”
As it becomes unavoidably clear that an extreme weather-driven emergency can hit anywhere, the pace of adoption of solar-plus-storage will accelerate, he added. Recognizing this, utilities from Vermont to Hawaii are looking into the technology and economics of grid-scale and customer-owned storage.
The rise of solar-plus-storage
Green Mountain Power is a utility-leader in the rise of solar-plus-storage. The utility has several initiatives to deploy solar and battery energy storagethroughout its territory. President and CEO Mary Powell said the company’s strategy could be described as “resiliency as a service” because “customer interest in resilience is a big part of the transformative products and services we’re offering.”
Almost a third of the leases in Green Mountain Power’s just-launched Tesla battery offering are already subscribed and it expects to fill out the program by the end of 2018, Powell told Utility Dive. “A big majority of customers say they are participating for resilience.”
This way of looking at solar-plus-storage systems could be a game changer in the marketplace, according to a new paper from the National Renewable Energy Laboratory (NREL) and Clean Energy Group. “Valuing resilience can make PV and energy storage systems economical in cases when they would not be otherwise,” it reports. Where adding storage is already cost-effective, “valuing resiliency can increase the size of the cost-optimal PV and storage system.”
The resilience value of solar-plus-storage is important to utilities because it “could lead to an acceleration of load defection,” Dyson said. “Customers may add storage for backup power but discover that it allows them to reduce their purchase of the utility’s electricity at times when it is most expensive, leading to lower utility revenues.”
But smart utilities like Green Mountain Power could take advantage of customer investments in storage and other emerging smart products and services, Dyson added. Forthcoming RMI research shows these customer-owned technologies could help utilities reduce their peak demand burden as much as 25%.
Adding battery energy storage to a residential solar system typically costs an estimated $450/kWh to $800/kWh, plus an installation cost, according to Nick Liberati, spokesperson for online solar market manager EnergySage. Costs for commercial systems may vary, depending on size and need.
The exact value of resilience is elusive because there is no exact cost for an “anticipated” outage, the NREL/Clean Energy Group paper says.
As a result, the “resilience benefit” of solar-plus-storage is typically not accounted for when investigating cost-effectiveness, according to “Valuing the Resilience Provided by Solar and Battery Energy Storage Systems.”
For power systems to be resilient, they “must be capable of islanding and operating independently from the grid during outages,” the paper says. They must have “transfer switches, critical load panels, and appropriate controls” that allow them to “act as self-sufficient microgrids, generating energy and powering critical loads until utility services are restored.”
Diesel generators have long been used for backup power, but fuel supplies can be uncertain in emergencies, the paper adds. Buildings are likely to increasingly be designed with solar-plus-storage resilience capabilities “as outages occur more frequently.”
NREL Senior Energy Advisor and paper co-author Joyce McClaren said there are few technical challenges and mostly manageable regulatory challenges to getting more resilient power systems in place. “The biggest challenge is that resiliency hasn’t been quantified and there is no agreed-on metric,” she told Utility Dive.
Estimated utility bill savings from a solar-plus-storage system can be incorporated into a payback calculation, the paper says. But the resilience value only becomes clear in “allowing businesses to stay open or residents to shelter in place” and “powering critical facilities such as hospitals and emergency shelters” during an outage or emergency.
Even when building owners see this value, there is no dollar amount they can use in a payback calculation, McClaren told Utility Dive.
NREL and the Clean Energy Group used the avoided cost of an outage as “a proxy for the value of resilience,” McClaren said. It is based on data in a 2015 utility customer survey by the Lawrence Berkeley National Laboratory that derived Customer Average Interruption Duration Index values.
It is a conservative estimate because it was limited to quantifiable losses like productivity and revenue, she said.
The researchers calculated the net present value (NPV) of resilient power supplied by solar-plus-storage systems for three types of precisely standardized buildings. They are a “typical but hypothetical” elementary school, large hotel and large office building, McClaren said.
NPV is “the net difference between the benefits and the costs of the project.” If the NPV is negative, the cost to install and maintain the system is greater than the bill savings. NPV is positive if the cost of building and operating the system is less than operating without it.