Date: Nov 28, 2017
From transmission deferral to hybrid generation, 2017 has seen a number of notable projects done by or for regulated utilities.
2017 could go down as the year regulated utilities took the lead in energy storage.
Several of the most notable energy storage projects this year were done by or for regulated utilities. And that momentum will likely carry into 2018 as well, Tim Gretjak, an analyst at Lux Research, told Utility Dive.
In some cases, it is easier for a regulated utility to make the economic case for energy storage, Gretjak said. It is hard for developers of energy storage projects to compete in energy markets where the rules do not value the flexibility that storage can provide, he added.
The trend could be bolstered by the fact that utilities across the country are beginning to include energy storage in their resource planning processes. In Oregon, for instance, Portland General Electric’s integrated resource plan proposes five storage projects. In New Mexico, the Public Regulation Commission amended the state’s 2017 IRP rules to include energy storage.
The most talked about
High on the list of notable projects of the year is Tucson Electric Power’s (TEP) solar plus storage facility. The project is being built by NextEra Energy and features a 100 MW solar array and a 30 MW, 120 MWh energy storage system. It’s most notable feature, however, is its power purchase agreement.
TEP reported that the all-in cost for the solar-plus-storage project was “significantly less than $0.045/kWh over 20 years.” TEP said the solar portion of the project, at under 3¢/kWh, was “the lowest price recorded in the U.S.” That puts the remaining storage portion of the project at about 1.5¢/kWh.
The project marked the lowest price announced for a solar-plus-storage project to date, far outstripping the nearest contender, a 11¢/kWh PPA between Kauai Island Electric Cooperative and AES Corp. for a 28 MW solar array with a 20 MW, 100 MWh battery system on Kauai, Hawaii.
The TEP project drew the scrutiny of industry analysts who examined the outlines of the project — the contract details are confidential — in an effort to understand how the utility and the developer could make the project viable at such a low price.
Carmine Tilghman, TEP’s energy supply director, provided some hints. “Storage provides the ability to simulate ‘load’ by allowing us to charge during the day and minimize the ‘duck curve’ issues, but [batteries] still have significant limitations to both peak shaving,” he said.
In a subsequent article, Jesse Jenkins, a PhD candidate at the Institute for Data, Systems and Society at the MIT Energy Initiative, said that if the value of available subsidies is backed out, the pricing on the project is closer to 9¢/kWh, but that “is still impressive.”
