WHAT YOU SHOULD KNOW
Top Reasons Why Shrewsbury Should Reduce Peak Demand with a Storage Peaker Plant instead of a Natural Gas Peaker Plant
A new Fracked Natural Gas Peaker Plant is not as cost-effective nor as environmentally friendly as it is marketed to be, poses serious health and environmental concerns, and is NOT the preferred solution to meet our future energy needs. From financial, maintenance, health, environmental, and safety perspectives alike, investing in energy efficiency and local renewable energy projects is a far better choice. Therefore, Sustainable Shrewsbury is advocating for the safer and lower-cost alternative of new investment in Renewable Energy (e.g. Solar Farm) and Utility-level Energy Storage (e.g. Commercial Scale Battery Storage).
Financing solutions are available for storage projects. A financed storage system collocated with a Solar Farm would provide additional cost savings.
- Shared Savings Model with No Up-Front Cost – The contract may be based on a shared savings model where the system is paid for by the cost savings it delivers to SELCO. That would mean there would be no capital expenditure (aka no up-front cost) from SELCO, but the overall savings would be reduced.
- 30% Total Project Cost Tax Credit – While municipal utilities themselves are not able to capture the 30% tax credit, the developer may be able to capture the tax credit on the storage system if and when coupled with a Solar project, therefore lowering the cost of the system and increasing viability of financing.
Connecticut Municipal Electric Energy Cooperative (CMEEC) provides electric services
to several Connecticut municipal utilities, which in turn provide electricity to roughly 70,000 residential, commercial and small business customers throughout the state.
The batteries are utilized to store solar energy produced during off-peak hours and later discharge this energy at times when CMEEC’s load is peaking, or coincident with the ISO-NE peak load. Tesla and SolarCity will implement and maintain a controls system that allows CMEEC to dispatch the battery’s energy in its preferred manner. By strategically discharging the battery in this manner, CMEEC will reduce the load they serve, and thus will pay lower capacity charges to ISO-NE for that peak event.
Benefits of a Peaker Plant:
Working with MMWEC engineers, SELCO estimates $11.4 million in net income over 30 years. Another way to look at this is avoided cost.
Approximately 40% of SELCO’s costs are determined by an extremely small number of
hours each year.
Nearly 19% of SELCO’s costs on a yearly basis are determined by one hour each month which is called the “transmission peak”. At the end of every month, the hour that had the highest amount of electric generation in New England is determined. We are billed for our transmission costs based on our contribution in that one hour. This transmission peak hour is typically between 5 and 8 p.m., but as more solar enters the New England market, we expect there to be months when this peak hour is pushed later towards 9 p.m. During the summer, air conditioning load can cause the peak hour to be earlier in the afternoon. As early as 2 p.m. on cloudy humid days when air conditioning is running and solar generation is being thwarted by Mother Nature.
The “capacity peak” hour occurs once a year and accounts for approximately
20.5% of SELCO’s costs this year. This all time peak for the year usually occurs on
the third day of a heat wave where there is minimal cooling the night before.
The capacity peak hour is typically the same hour as the transmission peak hour
Details on the Peaker Plant options:
Proposed Natural Gas Peaker Plant
- Total Project Cost estimated at $2.5 to $2.7 Million (based on bids received by other municipal utilities)
- M. Hale recommended that the Commission vote to authorize the General Manager to sign MMWEC’s Pooled Loan documents for the 2.5MW gas peaker generator. The project is estimated to cose $2.8M and is being funded by a combination of available cash and the issuance of debt, in the amount of $2.2M, through MMWEC’s pooled financing program.
Examples of other MLPs installing Natural Gas Peaker Plants:
- Mansfield Municipal Electric Department
- Middleborough Gas & Electric Department
- Reading Municipal Light Department
- Taunton Municipal Lighting Plant
Proposed Energy Storage Peaker Plant
The following figures are just for EXAMPLE PURPOSES ONLY and don’t reflect actual pricing. These may reflect pricing options that may be somewhat in the range of what it may cost. This is why we need to collaborate with industry leaders in battery storage in order to get the most up to date pricing available.
- Using the most conservative figure of $500 / kWh, and Shrewsbury needs a 10 MWh system
- A 10 MWh system is $500,000 / MWh * 10 MWh = $5,000,000
- If paired with Solar provides 30% tax credit, $5,000,000 * 70% = $3,500,000
- Using the $38,000 first year fuel cost over 15 years equates to $570,000 of savings related to using battery storage which doesn’t require any fuel
Examples of other MLPs installing Storage Peaker Plants:
- 2 megawatts of batteries for energy storage will be installed at the substation
- The 3.9 megawatt-hour energy storage system will support critical emergency response functions by providing up to 12 days of backup power to the Sterling police station and dispatch center during grid outages
- The battery storage system will support the utility’s distribution system on a daily basis, which will provide economic returns to the utility and ratepayers Projected Financial Benefit
- Projected revenues from utilizing the batteries for grid services are expected to result in a payback of installed costs in less than seven years.
- Planned system will be the largest utility-scale energy storage system in Massachusetts
- 3 MW / 6 MWh energy storage system
- Allows the utility to meet peaks in demand without buying power from the grid
- The project will stabilize rates for HG&E customers over the next 20 years and improve reliability and stability across the system
- Governor Charlie Baker said “The demonstration projects funded through these grants will strengthen our innovation economy and provide the Commonwealth with a roadmap for reducing our most expensive energy loads and securing our energy future.”
More info on Solar + Storage:
SHREWSBURY ENERGY STORAGE VIDEOS
RECOMMENDED ENERGY STORAGE VIDEOS
SHREWSBURY ENERGY STORAGE IN THE NEWS
10/12/17 – SELCO Commission Minutes – Oct 12th, 2017
7. Review and Consider Approval of Gas Peaker Unit
Bryan Moss, a Shrewsbury resident, requested an opportunity to address the Commission. Although he stated that he is in full support of the concept of peak shaving, he would like the Commission to discuss other energy options.
Included in Mr. Moss’s presentation was a time line of climate change, the financial impact of climate change. catastrophic climate change, climate mitigation adaption, financial risks, fossil fuel risks, carbon free renewables i.e. solar energy, battery storage, and a 30% tax credit. He invited the Commission to ask questions.
Mr. Moss reported that UMass has recently divested themselves of all fossil fuels – oil,
natural gas, and coal quoting a UMass representative as saying “these investments are not viable for the future.”
In closing, Mr. Moss requested that the Commission delay their vote authorizing the
installation of a gas peaker plant until all discovery information can be righted on; economic viability of energy storage or vote to proceed with the gas peaker plant solution agnostic so the RFP is open to both natural gas and energy storage companies to bid allowing more competition. He quoted the Sterling Electric General Manager, “Battery storage, in the next ten to fifteen years, is going to be an almost mandatory thing to have; it’s an absolute no brainer to put this type of system in place now to protect yourself from the rising cost of capacity.”
Mr. Moss thanked the Commission for the opportunity to present his views.
M. Hale recommended that the Commission vote to authorize the expenditure of funds for the purpose of installing a 2.5 MW natural gas fired generator for the purpose of improving reliability and reducing transmission and capacity payments.
He said that SELCO has been investigating different energy alternatives to control capacity including solar, battery storage, and natural gas peaker units since 2012. Most customers, residential and commercial, are not interested in voluntary load shedding/peak shaving programs. Sterling received a substantial subsidy for their battery storage project which has worked very well.
The Commission reviewed a financial analysis that was prepared comparing battery storage and natural gas peaker of which the economic results clearly pointed to investing in the natural gas peaker.
M. Hale stated that, at this time, he recommends proceeding with a 2.5MW gas peaker and delay the second 2.5MW investment for a few years. He added that the proposed natural gas peaker unit is expected to run an average of twenty hours per month.
Following further discussion,
Accept the recommendations of tile General Manager to provide for a gas peaking plant on terms set forth.
Motion made by M. Refolo and seconded by A. Trippi.
Following a brief discussion, the motion was approved unanimously.
R. Holland requested that it be noted in the minutes that SELCO will continue to also
actively pursue battery storage options.
The Commission thanked Mr. Moss for his presentation.
SHREWSBURY – After less debate than expected, town meeting members overwhelminghly approved the extension of gas service lines to residents near Centech Boulevard.
Bryan R. Moss, Precinct 8 town meeting member, who is opposed to fossil fuels, acknowledged that SELCO’s efforts would save the town money. But he said he opposed the article because the town needs to look more toward renewable fuels.
“We need to do something different than business as usual,” he said.
Benjamin Tartaglia, a town meeting member from Precinct 6, said the measure, which he referred to as “the Shrewsbury pipeline,” encourages the use of more gas. He said the gas extension might aid the controversial $3.2 billion Access Northeast natural gas pipeline that would have gone through Shrewsbury and several surrounding Central Massachusetts communties. The proposal has been put on hold because of a lack of funding.
“I’m concerned in the future it will be used as another reason to put the large gas pipelinie through town,” he said. “Is there any way this smaller pipeline would impact our other gas uses in town that would encourage us to have to vote for a larger pipeline through town?”
Mr. Hale said it would not. He said the extension is not a pipeline.
ENERGY STORAGE IN THE NEWS
10/25/18 – Braintree adds electricity storage
3 MW/6 MWh energy storage system to be installed at Mt. Tom Solar, adjacent to former coal plant; benefits include lower utility capacity costs/demand charges, reduced stress on electric grid, and optimization of solar energy
HOLYOKE, Mass.–(BUSINESS WIRE)–ENGIE North America and Holyoke Gas & Electric (HG&E) today announced plans for the largest utility-scale energy storage installation in Massachusetts. Green Charge, an ENGIE NA subsidiary, will operate the three-megawatt energy storage system at Mt. Tom Solar, which began operation in January of this year adjacent to the former Mt. Tom Power Station. The system will be used to optimize intermittent solar energy and reduce utility capacity costs for HG&E, the system’s customer, while reducing stress on the HG&E distribution system. This project will contribute to rate stabilization for HG&E customers over the next 20 years. In addition, customers will benefit from improved power quality and reliability. Green Charge expects to complete installation by April 2018, in time for the peak summer months when capacity costs are highest.
The California Public Utilities Commission rejected a refurbishment of the Southern California Edison’s Ellwood Peaker Plant, paving the way for a solar+storage solution instead.
Critics of Southern California Edison’s (SCE) Ellwood Peaker Plant are hailing the California Public Utilities Commission’s (CPUC) decision to reject unanimously a taxpayer-funded refurbishment of the plant, saying it affords the utility an opportunity to put more solar+storage into operation.
The CPUC also indicated that they would like to re-evaluate its approval of another gas peaker plant that has yet to be built.
“At this time, absent very compelling circumstances, we should be directing all of our investments in infrastructure and energy to clean energy resources,” said Clifford Rechtschaffen, one of the commissioners. “The proposed refurbishment is not a good use of ratepayer dollars.”
The little town of Sterling, MA is getting a lot of attention these days. Not only has the Sterling Municipal Light Department (SMLD) won awards for its new solar+storage microgrid, the town is getting visitors from Germany, Japan, Norway and many other countries. The visitors come to see an innocuous-looking metal box at the utility’s electrical substation; the box houses 2 megawatts of lithium-ion batteries, capable of nearly four hours of continuous maximum discharge. The batteries, along with a 3 MW solar array, can be islanded in case of a power outage and will support the town’s police station and emergency dispatch center for at least two weeks – more with solar recharging – meaning Sterling’s first responders will be able to help people in need if a natural disaster knocks out the regional grid. But these resilient power benefits, however important, are not the reason for all the attention.
Sterling is in the spotlight because its municipal utility can use the new battery system to control rising power costs. This benefits the town’s ratepayers, but it also benefits the entire New England region; and it means the $2.7 million battery system will pay itself off in about two years, with grant funding from Massachusetts Department of Energy Resources (DOER) and U.S. Department of Energy Office of Electricity (DOE-OE). But even without the grants, the system would still achieve a payback period of fewer than 7 years… pretty good considering that the batteries come with a 10-year performance warranty and are expected to continue to function significantly longer than that.
According to an upcoming paper by Sandia National Laboratory, which provided technical assistance to the Sterling energy storage project, the biggest energy cost savings potential from the batteries comes from reducing Sterling’s electricity demand during a single annual peak demand hour for the New England region. This regional peak demand hour generally occurs in July or August, and each utility in New England is assessed an annual fee for capacity services based on its individual demand during that one hour. Green Mountain Power (GMP), using a similar battery and solar microgrid in Rutland, Vermont, demonstrated the value of capacity charge savings during the 2016 regional peak, on August 12. In one hour that day, GMP saved $200,000 by discharging its batteries to offset electricity purchases from the New England grid operator. Sterling Municipal Light Department will attempt to do the same in 2017 and each year thereafter.
A second source of significant cost savings for SMLD can be achieved by using the batteries to reduce utility transmission charges. These charges are assessed based on a single peak demand hour each month. As with the annual peak, if a utility reduces its demand during the monthly regional peak, it reduces its share of transmission costs for that month. In December 2016, SMLD successfully discharged its batteries during the monthly peak, saving its ratepayers $17,000 for one hour. That’s a significant savings for a municipal utility with an annual budget of $8.2 million. SMLD repeated this performance in March and, with the batteries now fully operational, SMLD hopes to continue to hit monthly peaks on a regular basis.
In addition to these savings, SMLD will use its batteries to engage in arbitrage—that is, discharging the batteries for self-consumption when grid power is priced the highest; and for frequency regulation—a grid-balancing service that batteries can provide, and be paid for.
With all these cost savings and revenues, SMLD conservatively estimates the economic benefits from the batteries are worth $400,000/year to utility’s ratepayers. Of course, that doesn’t include some of the most significant unpaid benefits of the system, such as integrating the large amount of solar PV on Sterling’s system, reducing emissions from fossil fueled power plants, and providing backup power in case of a natural disaster that knocks out the regional grid. It’s no wonder Sterling’s success is being closely watched by many other municipal utilities and electric coops in New England, several of which are actively working to build their own battery systems.
So, what does all this mean for the regional grid? For 100 years, the electric grids have been based on big, centrally-located fossil fueled and nuclear generating plants, sending one-way flows of electricity down transmission lines to distribution utilities, who in turn supplied power to their customers. In New England and many other regions, the whole system is regulated by the Independent System Operator (ISO), which makes sure that electricity supply exactly meets demand in real time. That means that every day, the ISO is signaling expensive and highly polluting gas ‘peaker’ plants to ramp their generation up and down, following a fluctuating load.
That’s all about to change. If a small municipal utility like Sterling can save big money by relying on its own batteries rather than expensive peaker plants, other utilities can do the same. And when enough utilities install batteries, it will change the face of the grid. It will mean more renewables can be deployed, without the intermittency that can cause demand spikes; more grid services can be provided by distributed resources, increasing competition and opening markets; and more municipalities can take control of their energy purchases and costs. It will also mean more energy resiliency in local communities, where solar+storage can provide critical backup power during emergencies. That’s a new electricity business model that lowers costs, is good for the environment, and potentially saves lives.
Commits up to $10 Million of Additional Funding and to Examining Inclusion of Additional Energy Storage Technologies in Commonwealth’s Portfolio Standard
–Lieutenant Governor Karyn Polito
–Secretary of Energy and Environmental Affairs Matthew Beaton
determined that it is prudent for the Commonwealth to set targets for electric distribution companies (EDCs) to procure energy storage systems, pursuant to An Act Relative to Energy Diversity, Chapter 188 of the Acts of 2016 (The Act) signed into law by Governor Baker August 8, 2016. Section 15(b) of the Act fmiher states that, “the department shall adopt the procurement targets, if determined to be appropriate under subsection (a), by July 1, 2017”.
–Lieutenant Governor Karyn Polito
–Secretary of Energy and Environmental Affairs Matthew Beaton