Tag Archives: Solar energy

Dominion Fulfills 400-Megawatt Solar Commitment

Dominion solar farm

Dominion solar farm. Photo credit: Dominion.

Dominion is investing more than $800 million in solar projects in Virginia totaling 398 megawatts of generation either completed or under development. The projects bring the company within an eyelash of fulfilling a 2015 promise to bring 400 megawatts of large-scale solar generation facilities into service by 2020.

Furthermore, said Dominion in a press release issued today, 80% of that capacity is being covered by large business and government customers ranging from Amazon Web Services to the Commonwealth of Virginia and the University of Virginia. Most of the development and construction cost of the projects will be borne by customers under contract, not passed on to rate payers.

Legislation enacted in 2015 declared that development in Virginia of up to 50 megawatts of solar projects in the state was “in the public interest.”

“We are well ahead of schedule on the solar expansion and what we have added so far will have a very minimal impact on the price of electricity for the 2.5 million regulated customers we serve in Virginia,” said Paul Koonce, CEO of Power Generation at Dominion Energy. “Our goal is to have a balanced generating portfolio that is highly reliable, cost effective and environmentally responsible. The cost of energy powered by the sun is coming down and we are working hard to develop projects in new and economical ways for our customers.”

Bacon’s bottom line: Most of this information has appeared in previous announcements, which raises the question of why Dominion issued this press release at this particular time. The backdrop is the increasing pushback the utility is experiencing by gubernatorial candidates and lawmakers on a variety of fronts. Most significantly, the 2015 deal that froze the base rates of Dominion and Appalachian Power for six years has been re-opened for scrutiny.

With this press release, Dominion is reminding the public that there was more to that 2015 legislative compromise, crafted in response to the Obama administration’s Clean Power Plan, than the rate freeze. The company also committed $57 million over five years to energy assistance to low-income customers and made the 400-megawatt commitment to solar. Reading between the lines, the press release says, “Hey, guys, we made good on the solar promise.”

Bacon’s other bottom line: It’s also apparent — again, reading between the lines — that Dominion management is not persuaded that solar makes economic sense… yet. In other words, its commitment to solar at this point in time is driven by political considerations.

Why do I say that? Because Koonce stresses that the company’s solar investment to date “will have a very minimal impact on the price of electricity.” The implication is that solar would increase the price were it not for the fact that Dominion is building its utility-scale projects by means of long-term contracts with entities willing to pay a premium price for green energy.

The crux of the matter is that solar power is not “dispatchable” — Dominion does not control when it generates solar electricity. It produces electricity only when the sun shines, which does not coincide with periods of peak consumption, and, further, is subject to weather-related interruptions, meaning that electric companies must maintain expensive back-up capacity to fill in.

The vast majority of Dominion’s investment has been in large, utility-scale projects, which are easier to integrate into the high-voltage transmission grid. PJM Interconnection, the regional transmission organization of which Virginia is a part, has said that the region grid could accommodate up to 30% intermittent wind and solar power by redirecting energy flows across a 13-state region.

The dynamics of on-again, off-again production play out differently on the local distribution grid, which lacks the flexibility of the interstate transmission grid. That’s why Dominion has installed 10 experimental, rooftop and other small-scale solar sites around the state: to learn more about how local electric circuits respond to fluctuations in energy output.

Dominion is under tremendous political pressure to accommodate more “distributed generation.” But the economics are very different from utility-scale generation that ties into the transmission grid. Published reports say that the cost of solar could fall to as little as 4 cents per kilowatt hour by 2040. That compares to roughly 11 cents charged by Dominion Virginia Power today. But that still leaves the intermittency issue. While battery storage has been touted as a remedy, battery manufacturers like Tesla are hoping to get the cost down to $100 per kilowatt hour by 2022. There’s still a long way to go before large-scale rooftop deployment is feasible.

Yet in the press release Koonce acknowledged that “the cost of energy powered by the sun is coming down.” So, who knows what the future might bring?

McAuliffe Reverses, Now Opposes Electric Rate Freeze

Governor Terry McAuliffe

Governor Terry McAuliffe said yesterday that he supports legislation that would cancel the freeze in base electric rates on Dominion Virginia Power and Appalachian Power if President Trump kills the Clean Power Plan. The endorsement came a little late for state Sen. J. Chapman Petersen, D-Fairfax City, whose bill to roll back the freeze was killed in a Senate committee in January in a 12 to 2 vote.

Taxpayers “are entitled to the lowest, most efficient rate that we can deliver to them,” McAuliffe said on the John Fredericks Show, which broadcasts in Hampton Roads, Richmond, Lynchburg, Danville and Franklin. “If Chap Petersen can get me a bill on my desk, I’d sign it. Let me be clear.”

“There’s a better chance of me starting for the Redskins as quarterback,” said Petersen, as quoted by the Richmond Times-Dispatch. “Governor, you’re going to need to send down the legislation.”

In 2015 The General Assembly passed a bill freezing base electric rates, which McAuliffe signed, after the Obama administration had rolled out the Clean Power Plan requiring Virginia’s electric utilities to significantly reduce CO2 emissions. The State Corporation Commission staff had estimated that the legislation could push electric rates 20% higher. With a stated goal of providing rate stability in uncertain times, the legislation locked base rates in place for six years.

Environmentalists were critical of the bill from the beginning, arguing that the Clean Power would increase rates only marginally. Then industrial customers contended that Dominion had been overcharging customers before the law went into effect, and the law locked in rates at excessively high levels. Moreover, they charged, the electric companies weren’t even taking on a major risk: If the Clean Power Plan had forced them to retire coal plants and build new generating facilities, they would have been able to pass on the cost through a Rate Adjustment Clause, which wasn’t affected.

Dominion has argued that the law also provided for annual, instead of biennial, review of power companies’ Integrated Resource Plans, making the planning process more transparent. As part of the legislative compromise, the company also upped its financial commitment to its Energy Share energy-efficiency plan for low-income homeowners.

Furthermore, Bill Murray, Dominion’s managing director of public policy, said last week, the company has taken $296 million in write-offs for the past two years for expenses relating to the closure of its coal ash ponds. The freeze prevents the company from recovering those costs. “Those are costs we are absorbing.”

Bacon’s bottom line: McAuliffe’s support for reversing the freeze is a day late and a dollar short. As a practical matter, Petersen’s bill cannot be resurrected. Reversing the freeze without understanding the emerging regulatory context may not make sense anyway. The Trump administration has made clear its intention to kill the Clean Power Plan. We Virginians need a clearer idea of what kind of energy policy we want going forward. Simply rolling back the freeze doesn’t inform that debate.

Solar power is the potential game changer. The cost of generating solar energy continues to decline, and so does the cost of battery storage, which will help offset the intermittent nature of solar generation. No one disagrees with those propositions, but many questions remain open. How rapidly are solar prices declining? When will solar become economically competitive with natural gas in Virginia? That depends in large measure what happens to natural gas prices. Will they rise from currently low levels, and, if so, by how much?

Another big question is how much solar can Dominion, Appalachian Power and Virgina’s electric co-ops absorb without undermining the reliability of the electric grid. A related set of questions revolves around how much retail competition regulators should allow, how to guarantee the integrity of the grid if electric utilities lose market to independent solar operators, and how rate payers will be impacted if utilities experience a decrease in consumption.

One more pressing matter: What’s the role of nuclear in a post-Clean Power Plan world? While it still may make economic sense to renew the licenses for Dominion’s existing nuclear power plants, building a third unit at North Anna guesstimated to be $18 billion probably does not. Dominion wanted to maintain that option as an insurance policy, at a cost of hundreds of millions of dollars in engineering and permitting expenses, to protect against the most onerous of the Clean Power Plan regulatory scenarios. In a Trump presidency, that scenario looks highly unlikely. Should Dominion scrap North Anna 3?

If Virginians want to unfreeze the freeze, we need to recognize that no regulatory action takes place in a vacuum. Rather than dealing with each of these issues piece-meal we should settle them in a comprehensive way.

Converting Coal Mines into Pumped Storage

Is it practicable to convert old coal mines into pumped storage facilities? We may find out.

Is it practicable to convert old coal mines into pumped storage facilities? We may find out.

Perhaps the most intriguing idea in the renewable-energy package promoted by General Assembly Republicans (see previous post) is the idea of converting abandoned coal mines into pumped storage generating units.

Dominion Virginia Power operates a pumped storage facility in Bath County. The facility has two reservoirs. During periods of high demand when the price of electricity is high, Dominion releases water from the upper reservoir into the lower; during periods of low demand when the price is low, the company pumps water back into the upper reservoir.

The idea is to replicate this process on a smaller scale inside old coal mines. Frankly, I’m having a hard time visualizing how this would work — the underground coal mines I’ve visited follow are as level as the coal seams they follow — but I’ll assume that proponents of the idea know much more about the subject than I do.

One advantage of using coal mines for pumped storage is that they use water already in the mines, and there is no need to dam a river or creek. Further, Terry Kilgore, R-Gate City, who sponsored the bill, envisions using wind or solar power to pump the water. You can’t get any greener than that.

Here’s the topper: Use the abundance of green power to sell big corporations on locating their data centers in Southwest Virginia. One of the Commonwealth of Virginia’s two data centers is located in Lebanon, Va., on the edge of the coalfields, and the Virginia Tobacco Region Revitalization Commission has invested heavily in equipping the region with the broadband access that any data center requires. High bandwidth and clean energy make a winning combination, the thinking goes.

Dominion, which already has a coal plant in Wise County, doesn’t have a specific project in mind, but says it is keenly interested in what Kilgore’s bill would allow, reports the Roanoke Times.

“This is a BIG deal longer-term in the coalfields,” Jack Kennedy, Wise County’s clerk of circuit court and regional technology advocate, told the Times. “It could lead to hundreds of millions in investment, maybe over $1 billion.”

Hope always springs eternal in Virginia’s suffering coalfield region. The idea of converting underground coal mines into pumped storage facilities sounds extremely conceptual, and the economics are far from proven. But you never know. If the idea does work, and if the region could attract a handful of data centers — stranger things have happened, Microsoft located a data center in Mecklenburg County —  it could be a game-changer.

Pro-Solar Tweaks Advance in General Assembly

If big corporate customers start generating their own electricity, who will pay to build and maintain the electric transmission-distribution grid?

If big corporate customers start generating their own electricity, who will pay to build and maintain the electric transmission-distribution grid?

As the General Assembly reaches the mid-point of its session, solar-energy legislation sponsored by Republicans has a very good chance of passing, reports Robert Zullo with the Richmond Times-Dispatch

The proposals emerged from lengthy discussions in a working group of Virginia’s electric utilities, electric cooperatives, and solar industry proponents. While the package is “a mixed bag,” said Will Cleaveland with the Southern Environmental Law Center, he conceded that it “leans slightly to the positive.”

According to Zullo, the package includes bills that:

  • Allows farmers to sell more renewable energy generated on their property to utilities;
  • Establishes a pilot community solar program for subscribing utility customers;
  • Allows streamlined permitting for small-scale renewable energy projects; and
  • Allows utilities to ask the State Corporation Commission for recovery of costs for pumped hydroelectric generation and storage facilities in Virginia’s coalfields. As envisioned, this pump-storage would be coupled with solar energy.

Bacon’s bottom line: Anything that injects more entrepreneurs and competition into the equation is a good thing. However, these bills leave unanswered perhaps the most important issue facing solar energy in the state: legal clarity for power-purchase agreements, specifically for arrangements involving third-party financing. A consortium of Fortune 500 corporations had requested clarification of laws that would make it easier for them to execute deals with third parties in order to generate their own solar energy. Power-purchase agreements are complex legal and financial instruments set up to extract maximum value from federal tax credits.

Many corporations have made a commitment to clean power and would like to derive a bigger percentage of their electricity from renewable energy sources, which in in most parts of Virginia means solar. From their perspective, the ideal law would allow them to generate their own solar electricity and sell surplus power back into the grid at the full retail rate. However, power companies argue that independent solar generators should recoup a lower wholesale rate for the electricity. Electric utilities oppose laws that allow competitors to capture retail market share without compensating the utilities (and their rate payers) for the cost of maintaining the transmission-distribution grid that everyone relies upon when the sun isn’t shining.

Until the General Assembly grapples with the fundamental issue of how to generate solar electricity without undermining the transmission-distribution grid, all the rest is window dressing.

Clean Energy Stakeholders Agree on Solar Legislation

Utilities, other stakeholders hammer out solar legislation for Virginia

Solar legislation proposed for 2017 General Assembly

A working group that includes Dominion Virginia Power, Appalachian Power and an assortment of clean energy advocates has achieved consensus on pro-solar legislation to submit to the General Assembly. According to Jim Pierobon, writing for Southeast Energy News, the group worked through the summer and early fall guided by Mark Rubin, a mediator with the Virginia Center for Consensus Building.

According to a summary provided by Rubin, the four initiatives would:

  • Streamline the regulatory oversight utilities are subject to on large-scale solar projects, boosting the size limit from 100 megawatts to 150 megawatts for systems seeking a one-time permit earmarked for a specific project.
  • Increase the profit that investor-owned utilities (Dominion and Apco) can make on projects originated by third-party developers and power purchased under Power Purchase Agreements.
  • Provide for a community solar pilot program administered by utilities.
  • Allow wineries and farmers to build sizable solar systems and earn credits for power they push into the local distribution grid, in effect expanding Virginia’s “net metering” law.

Not everyone is wild about the package. “It’s very much a utility-centric proposal,” said Tony Smith, CEO of Secure Futures, an independent provider of solar solutions.

Ivy Main, the renewable energy chair for the Virginia Chapter of the Sierra Club, says the proposed legislation would not promote true community solar. In her Power to the People blog, she wrote:

For real community solar, we will have to look to legislation developed by the Virginia Distributed Solar Collaborative. This broad-based group of solar stakeholders includes consumers, local government employees and environmentalists as well as solar industry representatives (but not utilities). The Collaborative developed its own model bill this summer based on legislation from other states. The model bill gives much greater freedom to customers to cooperate in the development and ownership of renewable energy facilities for their own benefit.

Environmentalists Oppose Apco’s Green Tariff

solar_panelsAppalachian Power Company’s proposal to offer a special green-power tariff (which I covered here) has run into heavy resistance from environmentalists on the grounds that (1) it would be expensive and (2) it would prohibit competition in Apco’s service territory. Jim Pieroban explores the controversy in Southeast Energy News.

The proposed tariff, Apco spokesman John Shepelwich told Pierobon, “responds to consumer and industrial demand/requests for 100% renewable energy generation. The goal … is “to provide customers with easy access to cost-effective renewable energy with low transaction costs and a fixed energy component that provides price certainty and avoids fuel price volatility, without impacting other ratepayers.”

Critics say that Apco is overpricing the renewable energy, which will be supplied mainly by wind farms in Illinois, Indiana and West Virginia. The average cost of wind nationally is about $20.75 per megawatt hour, and Apco likely could purchase it for less than that. But Apco’s tariff would average $72 per megawatt hour because it would include projects brought online between 2001 and 201o when the cost was much higher.

As Pierobon notes, third-party sales of electricity are generating increasing interest in Virginia and throughout the Southeast. The regional chapter of the Solar Energy Industries Association (SEIA) contends that Apco’s proposed tariff would effectively remove solar supplied by third parties as an option for ratepayers. Said Dana Sleeper with the Maryland-DC-Virginia chapter: “Ironically, [approval]  could result in fewer options for customers to purchase renewable energy and support renewable energy development in Virginia.”

Renewable Energy Outlook in Virginia Still Sunny

Sunny days ahead for renewable energy in Virginia.

Despite political developments in Washington, D.C., it looks like sunny days ahead for renewable energy in Virginia.

Progress toward an electric grid powered by renewable energy has been frustratingly slow to many Virginians. There have been two main obstacles to ramping up production of wind and solar power in the Old Dominion: cost and reliability.

Wind still has high hurdles in Virginia. There is a limited number of on-shore locations suitable for wind turbines, usually atop scenic mountain ridges, and projects run into stiff opposition from local residents. Meanwhile, the massive expense and risk associated with jump-starting an East Coast offshore wind industry looks insurmountable.

But solar is a different story. The cost per kilowatt continues to decline, making solar increasingly competitive with natural gas. Meanwhile, entrepreneurs are devising an array of strategies for coping with solar’s biggest drawback: the fact that utilities can’t turn it on and off in response to changes in electricity demand.

With the goal of advancing wind and solar, many states have embraced Renewable Portfolio Standards that mandate targets and timetables. Virginia’s goal of achieving 15% renewable production by 2025 is voluntary, however. Therefore clean power advocates have counted on the Obama administration’s Clean Power Plan to promote clean energy indirectly by compelling power companies to reduce CO2 emissions.

Politically, that approach didn’t work out well. The election of climate-warming skeptic Donald Trump as president and his appointment of Scott Pruitt, a Clean Power Plan foe, as the head of the Environmental Protection Agency, suggests that the Clean Power Plan will be drastically weakened, if not killed outright.

But that doesn’t mean renewables are dead in Virginia. Market forces are shifting dramatically in favor of clean energy. Instead of pushing government-driven mandates, clean power advocates need to back entrepreneurial, market-driven solutions. Here are some examples of energy innovation here in the Old Dominion that make solar an increasingly attractive proposition.

AES Energy Storage. Arlington-based AES Energy Storage is building a global enterprise selling industrial-scale batteries to make the electric grid cleaner and more reliable. The low-hanging fruit is using batteries for “frequency regulation,” fine-tuning the frequency on the electric grid, but AES also is using batteries to offset the intermittent output of solar panels.

Dominion Voltage Inc. Richmond-based Dominion Voltage Inc., a non-regulated subsidiary of Dominion Resources, has developed a Conservation Voltage Reduction product that works in conjunction with smart meters to reduce voltage and conserve energy — up to 4% may be achievable — and provide the flexibility required to integrate solar into local distribution circuits serving homes and businesses. The company claims that it can boost the capacity to accommodate solar on distribution systems from 20% to 80%.

Opower. Arlington-based Opower, purchased earlier this year by software giant Oracle for $532 million, sells data services that track energy-usage trends over tens of millions of homes. More recently, the company has developed services that help utilities engage with electricity consumers — notifying them by text, for instance, if their energy usage is spiking — in order to better manage the electric load.

Tesla Motors. The Department of Motor Vehicles ruling that allows Tesla to set up a retail operation in Richmond represents more than a victory for competition in the automobile retailing sector — it will bring Tesla’s broader strategy to transform the electric grid to Virginia. Batteries in electric vehicles represent a potentially massive source of energy storage that can be turned on and off at will (at least when the cars aren’t driving). Tesla CEO Elon Musk’s grand plan is to EVs with solar panels to make rooftop solar a more economically viable proposition than it is today. Continue reading

New Solar Farm in the Works

SunPower Corp., a California-based solar energy company, plans to request a special use permit from James City County for a solar farm up to 35 megawatts in Norge near Williamsburg, reports the Williamsburg-Yorktown Daily. The project, which would be built on a 223-acre site, is in the early permitting stage. SunPower is in active discussions with potential buyers of the power.

The (Battery) Acid Test

Dominion coupled solar rooftops at Randoph-Macon College with experimental battery storage.

Dominion coupled solar rooftop at Randolph Macon College with experimental battery storage.

Dominion Virginia Power is running experiments to see how well battery storage works with solar electricity. The verdict so far: mixed. 

Last year Austin-based ViZn Energy Systems had developed a zinc-iron redox battery system, the product of eight years of work, which it touted as safe, efficient, durable and flexible. The battery, the company stated, could absorb excess electricity when the sun was at its peak, inject power into the grid when production faded, and smooth over short, spiky fluctuations in voltage as output varied with cloud cover.

When Dominion Virginia Power opened a 50 KW roof-top solar installation at Randolph-Macon University in Hanover County in April 2015, it installed one of ViZn’s 48 kW “flow” batteries along with a smaller, 7 kW “wet cell” battery to test in real-world conditions.

“We wanted to evaluate and demonstrate some different battery technologies, explains Brett Crable, director of new technology and energy conservation. A big question was how the batteries would stand up to continual charging and re-charging.

As it turned out, the flow battery did not meet expectations from a reliability standpoint, says Crable. When the lease on the battery system expired, Dominion chose not to renew it.

As Dominion prepares to integrate increasing volumes of intermittent solar and wind power into its distribution system, it is looking at battery storage as one tool for dealing with the inevitable fluctuations of voltage and power. PJM Interconnection, the regional transmission organization of which Dominion is a part, says the high-voltage transmission system can handle up to 30% wind and solar without making it vulnerable to blackouts. But Dominion wants more hands-on experience with its lower-voltage distribution lines (which connect substations to homes and businesses) before committing to battery storage on a large scale.

Unlike the batteries people buy for home use, one size does not fit all in an industrial application. Batteries have varying characteristics depending upon the chemical composition and internal structure. Some batteries are designed for power (releasing electricity faster) and others for energy (total electricity stored). Some hold up better than others from charging and re-charging. Some are toxic, others non-toxic.

“As technology evolves, you look at power, energy, durability and safety,” says Crable. “Depending upon the application,  you’re looking for different characteristics.”

In addition to its small-scale deployment at Randolph-Macon, Dominion is testing a lithium-ion battery at an experimental solar facility in Kitty Hawk, N.C.

Among the dozens of battery deployments around the country, the Randolph-Macon project is one of only two facilities in Virginia using battery storage at the moment, according to the  U.S. Department of Energy Global Energy Storage Database. The other is a 25 kW zinc bromine flow battery at a Visa data center in Loudoun County.

Electro-chemical energy storage projects in northeastern quadrant of U.S.

Electro-chemical energy storage projects in northeastern quadrant of U.S.

While Crable sees battery storage as useful for narrow applications, he doesn’t regard it as practical for residential and small business customers who fantasize about going off the grid.

Say you’re an individual homeowner with a house of average size and energy consumption, he says. You’ll need about 5 kW capacity of solar to meet your needs during normal weather conditions. To keep the juice flowing on nights and cloudy days, you’ll need to augment the solar panels with a battery. If you want enough power to keep on the lights for four days — enough to sustain you through a long winter storm — that would be a very large battery. Then you’d need enough solar panels to fully recharge that battery while also meeting your household needs….which would require even more solar panels You probably don’t have enough rooftop to hold them all.

“Battery storage is complementary,” Crable says. “But as a replacement for the power grid, it is not economic or cost-competitive.”

The grid is evolving and modernizing, he says. “Solar will be part of that, and battery storage will continue to evolve and play an important role.” But it’s too early to say whether Dominion will deploy battery storage on a large scale in the future. “We always seek to learn.”

Banking on Batteries

AES Energy Storage maintains racks of batteries similar in appearance to a server farm.

Arlington-based AES Energy Storage operates the largest battery-storage enterprise in the world. The company does not manufacture batteries. Rather, its Advancion energy-storage platform integrates batteries with inverters and controllers, and tells the batteries when to recharge and when to sell into the grid. The batteries, as seen above, are stacked in racks not unlike servers in data centers.

AES Energy Storage is building a global enterprise using industrial-scale batteries to make the electric grid cleaner and more reliable. 

Richmond-based Dominion Resources may be the most visible energy company in Virginia — its Dominion Virginia Power subsidiary is the dominant electric utility in the state — but it is not the biggest. That distinction belongs to Arlington-based AES Corp., which operates power plants in 17 countries. Where Dominion generated $11.7 billion in revenue in 2015, AES racked up $15 billion.

While coal dominates its electric-generation portfolio, AES is moving aggressively into renewable energy. In the U.S. alone, AES Distributed Energy operates solar plants in seven states, wind in three, and energy storage in four. The company claims to have “the most comprehensive and accomplished fleet of battery-based energy storage in the world.”

Battery storage is still a niche product in the $388 billion electricity industry, but it is strategically important. Batteries can smooth minute-to-minute fluctuations in electricity frequency, shave peaks in demand, and facilitate the integration of large volumes of variable solar and wind production into the grid. Indeed, it is hard to imagine a green energy future without a big contribution from battery storage.

“We find energy storage to be one of the elements we need to create a clean, unbreakable grid,” Kiran Kumaraswamy, market development director for AES Energy Storage, tells Bacon’s Rebellion.

The grid faces what Kumaraswamy calls a “trilemma” — tradeoffs between cost, reliability and sustainability. Zero-carbon wind and solar energy sources are environmentally sustainable and their costs are plunging. But they have a big drawback: variable electricity output. Fluctuations must be balanced very quickly.

PJM Interconnection, which oversees the 14-state regional electric transmission grid of which Virginia is a part, says it can accommodate up to 30% renewable power by juggling conventional power sources. But variability becomes an issue above that level, as it can be in utilities’ lower-voltage distribution systems not overseen by PJM. Battery storage can offset that variability by supplying electricity instantaneously as needed.

As the world turns to solar and wind, says Kumaraswamy, “the grid will need more flexibility. Energy storage enables you to achieve that flexibility.”

AES, which helped jump-start the battery-storage industry eight years ago, now has 156 megawatts of battery storage installed around the globe and 276 megawatts under construction or late-stage development. Broadly speaking, AES has identified four applications where battery storage can provide economical solutions:

Frequency regulation. The best-developed application for energy storage is known in industry jargon as “frequency regulation.” The U.S. electric grid operates on a frequency of 60 hertz — a standard that generators, power lines, machines, HVAC systems and household appliances all have been designed around. Maintaining frequency requires a perfect balance between electricity being added to and withdrawn from the system. If there’s too much electricity, the frequency rises; if there’s too little, the frequency falls. In either case, system reliability can be impacted.

PJM has devised an elaborate system for regulating frequency. It has set up day-ahead auctions to match the lowest-price supplies of electricity with anticipated demand, and also real-time auctions to refine supply and demand for five-minute increments. As good as PJM’s models are, however, they cannot forecast with exactitude every blip in generation when clouds pass over a solar farm or  an industrial customer throws the switch on a big machine.

Batteries can deliver precise and accurate power to the PJM system for short durations. PJM’s need for regulation resources is a tiny percentage of its total load, which can peak around 100,000 megawatts on a typical day, says Andrew Levitt, PJM’s senior market strategist, but the batteries and other resources supplying regulation are critical for keeping the frequency within a narrow range. PJM sends a signal every two seconds to fine-tune the draw.

As an example of how the battery storage industry is taking shape, consider one of AES’s battery arrays in Laurel Mountain, W.Va. That 32-megawatt facility sells electricity into PJM’s frequency-regulation market. The size of the payment varies in direct proportion to the timeliness and accuracy with which AES can deliver micro-bursts of power. Profitability hinges on how well AES follows the PJM control signals for regulation. Continue reading