Storing The Sun’s Energy Just Got A Whole Lot Cheaper
With prices dropping rapidly for both renewables and battery storage, the economics of decarbonizing the grid are changing faster than most policymakers, journalists, and others realize. So, as part of my ongoing series, “Almost Everything You Know About Climate Change Solutions Is Outdated,” I will highlight individual case studies of this real-time revolution.
My Monday post discussed the Federal Energy Regulatory Commission’s (FERC) report that in the first quarter, the U.S. grid added 18 megawatts of new natural gas generating capacity, but 1,291 MW of new renewables. But one of FERC’s “Electric Generation Highlights” for March deserves special attention as a leading indicator of the revolutionary new economics of solar plus storage:
Half Moon Ventures LLC’s 4.2 MW Minster Solar Project in Auglaise County, OH is online. This project includes an energy storage capacity.
The Minster “solar + storage system is the largest U.S. facility of its kind connected through a municipal utility,” according to S&C Electric Company, which built and integrated the storage system. It combines a 4.3-MW photovoltaic systems and a 7-MW/3-MWh storage management system that provides power conversion with lithium ion batteries.
How does a storage system based on lithium-ion batteries make economic sense? The answer is: in a few different ways, with a system called “revenue stacking.” It’s worth taking a slightly wonky look at how such a system can stack or combine multiple revenue sources, since this is a defining feature of the game-changing new economics of solar energy plus storage.
To get the scoop on the system, I spoke to S&C’s Director of Grid Solutions, Troy Miller, who described this as “one of the first, if not the first” energy storage system to allow so many different revenues sources. The company has also posted online the full case study.
Capturing the Multi-Faceted Value of Energy Storage
First, this system lets Half Moon Venture sell into PJM’s market for frequency regulation. PJM is the regional transmission organization that coordinates wholesale electricity movement and maintains grid reliability for over 60 million customers in 13 Eastern and Midwestern states and the District of Columbia. Frequency regulation is “the injection and withdrawal of power on a second-by-second basis to maintain grid frequency at 60 Hz.”
To make this happen, “the battery system was sized for frequent charging and discharging cycles.” The control platform for the system was designed “to interface with PJM market interfacing software to enable the system to follow a signal from PJM.” The system analyzes both grid conditions and market pricing to determine how to optimize revenues by either dispatching to or absorbing electricity from the grid.
Second, the Village of Minster had a major power quality problem — “occasional low power factor,” which wastes energy and requires expensive equipment to fix. Minster had been planning to install $350,000 worth of capacitor banks dedicated to dealing with this issue. But S&C was able to design the storage system to “provide power-factor correction concurrent with frequency regulation services.” That saved Minster $350,000.
Third, the system will allow Minster to reduce peak mid-day demand charges. Utilities typically charge customers a fee whose size depends on the maximum power consumed during a day since, they argue, they have to maintain enough capacity to deal with the very biggest peak demand they might see — typically during a hot summer day.