08 Mar [S&C Electric Q&A] Part 2: Energy Storage Opportunities
By Jon Arnold, ETS16 Community Advocate
This is the second thought leadership interview I have conducted with S&C’s David Chiesa, and as Senior Director of Global Business Development, he is well-versed about what utilities really need for modernization. One of the most pressing needs—and most promising opportunities—is energy storage, and as this interview explains, S&C is at the forefront of helping utilities develop microgrid capabilities via projects that have a quick payback. To illustrate, David cites the HMV project done with the Village of Minster, Ohio, and it’s a great preview for what you’ll hear from him at ETS16.
Energy storage has long been a missing piece of the smart grid puzzle, and S&C has developed proven expertise here. Tell us a bit first about why utilities need better energy storage solutions and why it’s been such a challenge so far.
Energy storage has been called the “holy grail” of grid solutions. But energy storage just hasn’t really taken off the way the industry expected it to…yet. The tipping point for energy storage is coming. The installed price of energy storage continues to fall, the creation of more markets for energy storage and the technological understanding of the industry continues to rise. Very soon, this industry will see the day where energy storage becomes a common application on the grid.
Consider the “Product Adoption Curve.” If you were to look at energy storage on this curve, you would see that we passed the “innovators” stage sometime before 2012 when S&C installed its 100th MW/hr of energy storage. We are solidly into the “early adopters” stage and we are making a move to the “early majority” stage. The activity in energy storage in 2015 was incredible and we are seeing more focused action across a wider geography in 2016. We are so close to the market tipping point, where pricing renders energy storage economical for widespread adoption, that we’re seeing companies getting scared they won’t be ready for it.
S&C is ready. We started down this road in 2006. We’ve done our pilot projects and they’ve been running for years. We’ve had our lessons learned meetings and incorporated that knowledge. We know what it takes to be a successful PCS manufacturer and energy storage integrator. In fact, we are the only integrators in the world to have installed all 16 recognized energy storage use cases in the latest GTM market study.
Let’s talk specifically about the HMV project for the Village of Minster. Briefly describe it along with S&C’s role and what makes it special as a grid modernization initiative.
The Village of Minster, Ohio, had a desire to increase their renewables portfolio as a percentage of their overall generation procurement. The Village of Minster is a municipal energy authority that operates within PJM territory. They had been pushed by some of their largest customers to “go green.” As such, they sought out PV developers to design, build and construct a 4.4MW photovoltaic plant within their service territory.
Half Moon Ventures (HMV), a project developer specializing in renewable energy based in Chicago, purchased the rights to develop the PV plant from the originating party. While designing the PV plant, HMV had the idea to expand the scope of the project to include energy storage. They turned to S&C, their power engineering design/build consultant (also based in Chicago), to help conceptualize that energy storage system.
After months of careful consideration and multiple meetings with all of the stakeholders, the energy storage system selected was a 7MW/3MWH system using lithium ion batteries from LG Chem. This system size was selected to allow the benefits of the energy storage system to flow to multiple stakeholders in the system. This size also maximized the payback from the project.
What was the driver for this project, both for Minster, as well as PJM in terms of the wholesaling side of things?
In order to get the fastest payback, the project took advantage of the flexibility of an energy storage system to allow for three primary revenue streams/cost avoidance:
- Participation in the PJM fast frequency response market
- Avoidance of the PLC (peak load contribution charges) on 8-10 days annually
- Defer the procurement of power factor correction Cap Banks
Many of your readers will be familiar with the PJM frequency marketplace—this will be the primary revenue driver for the project. HMV plans to participate in the RegD market ~350 days annually. They will exit the market on peak load days and for annual maintenance. On those peak load days, they will get a notification 24 hours in advance from PJM and the energy storage system will provide 1.5MW for the required two hours to reduce the PLC that Minster pays.
Finally, the PureWave®SMS 7MW system, which is rated at 8.75MVA and provides industry-leading technology, will be able to provide 5.25MVAR (Capacitive or Inductive) simultaneously with a 7MW charge or discharge.
What have been the lessons learned so far, what opportunities do you see this presenting for other municipal utilities?
First, let us say HMV is writing a blueprint for municipal utilities. There are over 3,000 Customer Owned Utilities (COUs) in the U.S. Every one of them should be watching this project right now. They should be talking to Don Harrod of the Village of Minster about how they landed this project and inquiring about the performance of the project. When this project is successful, we expect to see a large number of COUs looking to bring similar benefits to their customers.
Lesson Learned #1 | Have the conversation. No one really saw this coming, but by continuing to talk about the possibilities, this became a reality.
Lesson Learned #2 | Be creative. The HMV team never stopped looking for ways to make this project work. We don’t pretend to understand what they did on the financial side, but they found a way.
Aside from operational benefits for municipalities, energy storage will open up possibilities for microgrids and renewables that end customers will benefit from. In your view, are utilities thinking enough along these lines, and if not, how can you help change that?
Utilities are really coming around. For a long time, investor owned utilities (IOUs) have had reputations as monoliths—huge, unchanging institutions unwilling to change. I’m here to tell you that is changing and changing quickly. IOUs have had a change of heart. They are hungry for change and looking for ways to innovate that you don’t expect to see from companies with these kinds of reputations. We’ve had an incredible number of inquiries from IOUs about innovation on their grids. These range from community solar and energy storage to microgrids. It’s an exciting time to be in this industry.
Installing energy storage really sets the stage for innovation on your grid. Energy storage is so flexible and can provide so many benefits that it’s a great place to start innovating. One of its best benefits is that it allows for quick migration to microgrids because you have a grid-forming technology readily available at the edge of the grid. I don’t think utilities thought much about the ability to form a grid in past, but they are now because their customers are asking for it.
Do you see how it all comes back to the customers of our customers? They really drive the market, and S&C is just trying to find innovative ways to help our customers help their customers. When we do, it helps everyone.