Home Battery Storage Programs Provide Grid Flexibility and Save Customers Money | Article

Today’s U.S. electric system looks much different than it has in the past. Electricity generation from natural gas and renewable energy has steadily increased over the last decade, while generation from coal has dramatically fallen. Meanwhile, as communities work towards grid decarbonization, utilities and grid managers have been researching how to lower peak energy demand and maximize the benefits of renewable energy. Advancements in battery storage technology promise to provide the needed grid flexibility that will reduce stress on the grid, save customers money, and allow renewable energy generation to continue to grow.

Over the past decade, grid-scale battery storage power capacity has grown rapidly, more than quadrupling since 2014, with expectations it will double again by 2022. According to the National Renewable Energy Laboratory’s (NREL) Greening the Grid factsheet, grid-scale battery storage systems can help utilities manage energy loads, lower costs, and better integrate their renewable energy resources. More recently, interest has grown in distributed battery storage systems that can similarly provide valuable services for homeowners and building owners. Customers can reduce their energy costs by storing electricity from the grid or their rooftop solar systems for use during peaking events when electricity prices are higher. Home batteries also turn intermittent rooftop solar systems into more reliable energy sources, with customers able to run on energy from solar power at any point in the day or night. In addition, distributed battery storage systems can serve as emergency reserves of power during blackouts or severe storm events when customers may otherwise be without power.

Green Mountain Power (GMP), a power company in Vermont, has pioneered some of the largest and most successful home battery storage programs in the country. Uniquely, they provide services to both the grid and residential customers. GMP began its first pilot home battery storage program five years ago, initially partnering with Tesla and using the company’s Powerwall home batteries. In 2018, GMP expanded home battery storage options for hundreds of its customers by adding a separate “Bring Your Own Device” (BYOD ) pilot program in which customers could partner with local installers and use other battery models.

Green Mountain Power and participating homes share access to the installed battery storage systems, which can store energy from the grid or customers’ rooftop solar systems. Customers can only use the energy on their batteries during power outages because the batteries are primarily purposed with serving the grid. When the region's grid faces peak demand, these battery storage systems serve as extra reserves of energy for GMP. With access to this stored energy, the power company can reduce what it pays to the grid operator and then pass those savings along to its customers. GMP recently announced that its current battery network saved customers over $3 million in 2020, and the batteries provided 16,000 hours of backup power to customers’ homes during power outages.

In May, Vermont regulators officially gave tariff approval for the power company’s new Tesla Powerwall and BYOD programs, each modeled after their respective pilot program. GMP already has over 2,500 utility-controlled Tesla Powerwall batteries installed throughout its service area, and now that both programs have the state’s official approval, they will continue to grow rapidly. Up to 500 customers can enroll in each program every year, increasing Green Mountain Power’s energy storage up to 10 MW annually. Customers also have access to upfront incentives as high as $10,500 to join the BYOD program depending on how much of their battery storage capacity is enrolled. For the Tesla Powerwall program, customers can receive two heavily discounted home batteries from GMP by entering into a 10-year lease and paying either $55 per month or $5,500 upfront.

Other utilities across the nation have recognized that battery storage systems create mutual benefits for them and their customers, and they are beginning their own programs. In September, the Arizona Corporation Commission (ACC), the state’s utility regulatory body, approved a new residential battery storage pilot program for the state’s largest utility, Arizona Public Service (APS). Arizona’s peak energy demand occurs in the evening when solar generation decreases, so a robust distributed energy storage network could potentially serve as a collective power plant that could be called upon to flatten energy demand. With the state’s rich solar energy resources and a strong solar industry, battery storage systems can also maximize the value of customer’s rooftop solar energy systems by storing excess energy for use in the evening or during power outages.

According to ACC Commissioner Lea Márquez Peterson, the pilot program will offer incentives of $500 per kW (up to $2,500) to encourage customers to purchase and install home battery storage systems. Through the pilot program, APS will study the grid impact and evaluate best practices. While it remains to be determined if and how APS will have access to these batteries, the ACC hopes the offered incentives will encourage battery storage purchases and create benefits for the local energy grid. Other program specifics, such as the budget, will be ironed out in 2021.

In Oregon, Portland General Electric (PGE), the state’s largest utility company, recently announced that it had received approval from state regulators to launch a five-year pilot home battery storage program. The pilot program serves as an opportunity for PGE to study how a distributed battery storage system can add flexibility to the energy grid and support the growth of renewable energy, particularly rooftop solar. PGE will have control of the 525 batteries installed in customers’ homes and will operate them to maximize their benefit to the grid. However, while the batteries won’t necessarily be used to minimize customer’s bills, PGE will provide incentives to encourage customers to purchase battery storage systems and participate in the program.

Homes that already have a battery can receive a $40 monthly bill credit if the battery is solely charged from the grid or $20 per month if it is charged with a rooftop solar system. Customers within PGE’s Smart Grid Test Beds, neighborhoods used for testing new grid tools, can receive the monthly bill credit and a one-time rebate up to $3,000. Customers that qualify for Oregon’s Solar Within Reach program, an income-qualified program, can receive a $5,000 rebate and the monthly bill credit.

Like Portland General Electric and Arizona Public Service, Holy Cross Energy (HCE), a Colorado electric cooperative, recently launched its own home battery storage pilot program. Unlike the other two programs, which provide only rebates and bill credits, HCE removes economic barriers through on-bill tariff financing. HCE covers the high upfront costs of the battery storage systems and provides them to participating customers. Customers then pay back the utility $800 annually over 10 years through a line item on their utility bills. By supplying customers with affordable financing options for battery storage systems, HCE hopes to eventually expand its battery fleet and deploy up to 5 MW of distributed storage. Distributed battery storage will help the local grid via load shifting and peak shaving, and customers will have access to emergency backup power during wildfire events.

As utilities look to transition away from fossil fuels and add to their renewable energy portfolios, they also need solutions that will help manage rising energy loads and reduce stress to the grid. The new battery programs in Arizona, Colorado, and Oregon, as well as those in other states, will provide more information for utilities curious about how distributed battery storage systems can benefit the grid and their customers. If these programs can achieve Green Mountain Power’s current success, more utilities will surely follow suit.

Author: Hamilton Steimer