Inside the first municipal solar-plus-storage project in the US
Stacking revenue streams to finance the project was a success, Village of Minster officials said
There are some things that just seem to go together. Like Superman and Lex Luthor, Kim and Kanye, and love and marriage, solar and storage are an obvious pairing, right?
So obvious, in fact, that one utility executive said she felt surprisingly unsurprised by the proposed Tesla takeover of SolarCity. “Solar and storage are always paired in microgrids,” said Lisa Cagnolatti, vice president of Southern California Edison’s customer division at the Grid Edge World Forum 2016 session. “We have been waiting for those markets to come together.”
But the marriage between solar and storage started before Tesla proposed to acquire SolarCity. Last year, the Rocky Mountain Institute published a report saying distributed energy resources paired with storage could pave the way for massive “load defection.” But for utilities, combining solar and storage is another option to boost grid resiliency while integrating more renewables into the power mix.
Take the Village of Minster in Ohio. Leaders of the public power utility in that town had long been solar advocates when they were approached by CEO Michael Hastings of Half Moon Ventures, a development and financing company. The company proposed what is now the United States’ first municipal utility-owned solar-plus-storage project.
“I had put the concept together before and was looking for the right project,” Hastings told Utility Dive. “Minster had the qualities I was looking for, beginning with quality partners who wanted to get the project built.”
Backed by Half Moon Ventures, the Minster utility’s power purchase agreement (PPA) anchored a 3 MWac solar array and 7 MW/3 MWh lithium-ion energy storage system installation.
Investor details are confidential “but we are doing fine financially,” Hastings said. “The best answer I can give you to whether we are satisfied with the return on our investment is that I want to do more solar plus storage projects.”
Breaking it down
Like many small Midwestern electric cooperatives and municipal utilities, Minster officials wanted solar to diversify its portfolio and hedge against fuel price volatility, said Donald Harrod, Village of Minster administer. A project with solar developer American Renewable Energy was in the works.
But the deal fell apart when Ohio lawmakers failed to enact a law to put in place solar renewable energy credits (SRECs). The SREC revenue stream would have made financing possible. “Without SRECs, we could not make the project work on our own budget and Ohio regulation limits our debt,” Harrod said. “Then Half Moon Ventures approached us.”
But Hastings wanted to add storage and, initially, the utility was reluctant. Half Moon Ventures brought in S&C Electric, a 105-year-old, international electric services provider. The utility’s system had long relied on S&C switches, Harrod said. “We saw them as proven providers who would use technologies that would do what they promised.”
Confident S&C would deliver, the muni exercised the unique ability of small independent utilities to act quickly. “When we see an advantage for the community’s citizens, we don’t have to worry about what is best for shareholders,” Harrod said.
The PPA with Half Moon sets the utility’s price for solar energy-generated electricity at $0.07/kWh, Harrod told Utility Dive. The resulting all-in $0.095/kWh cost for power matches the muni’s average retail electricity rate, allowing the Village to basically break even on the power transaction.
Other benefits in the project’s deal are providing Minster with significant savings. “On a budget of $7 million per year, we are saving about $1 million per month, which allows us to avoid raising rates on our customers, who are also the citizens of our village,” Harrod said.
Many see energy storage as a technology that is five years off, said David Chiesa, senior director of S&C Global Business Development, who worked with Harrod during development. “But S&C has 20 utility-scale storage systems and over 175 MWh of capacity in five countries with 12 battery suppliers and five different chemistries,” Chiesa said. “It is a technology that is viable today and the Minster utility leaders saw that.”
The success of the Half Moon project has now prompted Harrod and other town leaders to think about the potential of a microgrid.
Additionally, the public-private partnership is an indication that utilities are beginning to understand how “the use of and expectations for the grid are going to fundamentally change,” said Michael Edmonds, president of S&C U.S. Business Division.
Inside the deal
Despite the Village of Minster’s relative conservative reputation as a community, they saw the benefits of the deal, Harrod said.
After Minster accepted the idea of storage, Half Moon acquired the proposed project from American Renewable Energy and made the solar developer the engineering, procurement, and construction contractor (EPC), while bringing S&C as the energy storage system EPC.