SOLAR ENERGY, BATTERY SYSTEMS AND GRID INVESTMENTS

During the past 10 years, solar systems, large and small, have been installed in many areas of the world, especially in southern Germany and southern California. With many small solar systems connected to a distribution system, the passing of clouds causes their output to become highly irregular. When there were few solar systems this was not a problem, but not so with many systems.

 

Increasingly, battery systems are added to such distribution grids for regulation, i.e., keeping voltage and frequency with prescribed ranges, and, if such battery systems have sufficient storage capacity, for shifting solar energy from midday hours to late afternoon/early evening hours to reduce a utility’s peak demand.

 

Solar/Battery Systems Combos: If a large capacity solar system, multi-megawatt, is directly connected, via a substation, to a high voltage grid, a multi-megawatt battery system is often required for regulation, before being allowed to connect to the grid.

 

If the battery system has sufficient storage capacity, solar energy can be charged around midday, at lower electric rates, and discharged during peak evening hours, at higher rates. However, the payback of that is very poor, unless the rate differential is very high.

 

In addition regulation and energy shifting, the battery system has other economic advantages, such as reducing a utility’s monthly and annual peak demands, and for participating in the real-time markets and forward capacity and reserve markets, as discussed in an ISO-NE report How Energy Storage Can Participate in New England’s Wholesale Electricity Markets and in Parts 1 and 2 of this article.

 

Solar Systems Do Not Reduce High Voltage Grid Investments: The design of the capacity of a high voltage grid system is similar to the design of a highway system. The peak electric loads (equivalent to traffic during peak hours) are projected, for say 10 or 20 years, and the need for high voltage wires, poles and substations is determined and capital costs are estimated.

 

Historic electricity demand growth was 2 to 3 percent per year, but that growth has been near zero since about 2005, largely due to energy efficiency improvements, a.k.a., cost cutting. That means actual annual HV grid investments became significantly less than long-term projections.

 

Some RE proponents claim the reduction in HV grid investments was due to build outs of distributed solar and wind systems, but that is invalid, as shown under Part 3 of this article.

 

As battery systems are required to “tame” solar energy on distribution grids, i.e., a necessary part of the distribution grid, the overall cost of grid investment most likely increased due to solar build-outs. In addition, larger field-mounted solar systems often require build-outs and reinforcements of nearby grids. Utilities, such as GMP, are required to keep detailed records of such grid work.

 

Part 1. Solar/Battery System Combos

 

If a grid has many small capacity solar systems, or a multi-megawatt solar system, the minute-to-minute variations of their outputs, such as during variable cloudy conditions, would destabilize the grid, and quick-responding battery systems to perform regulation, a.k.a., firming, would be required. 

 

- Battery systems draw variable AC energy from the grid, convert it to DC, absorb it, discharge steady DC energy, convert it to steady AC energy, and feed that back into the grid.

- With enough storage capacity, MWh, battery systems can store midday solar energy and discharge it during peak evening hours, about 5 to 9 pm.

- Battery system losses: 7%, charging + 7%, discharging + 3%, DC to AC conversion + 1%, balance of plant* = 18%.

* Electricity for lighting, HVAC, electronics, etc., drawn from a nearby distribution grid.

 

Throughout the world, many utilities have installed multi-megawatt battery systems, especially in southern Germany and southern California, and solar/battery system combos, during the past 10 years.

 

KAUAI, HAWAII, SOLAR/BATTERY SYSTEM COMBO

 

In Kauai, Hawaii, there is a 52 MWh battery system, combined with a 13 MW field-mounted PV solar system, tied, via a substation, to the HV electric grid. The battery system is used for regulation and energy shifting. The system is designed to supply stored energy from 5 to 10 pm, which reduces the use of peaker plants. Tesla and its subsidiary, Solar City, own the entire installation.

 

PUBLIC SERVICE COMPANY OF NEW MEXICO, SOLAR/BATTERY SYSTEM COMBO

 

The Smart Grid Demonstration Project of the Public Service Company of New Mexico consists of a solar system plus battery system for simultaneous voltage smoothing and peak demand reduction. Please read the very complete report of the New Mexico combo. See URL for Report.

https://www.smartgrid.gov/files/FTR_FINAL_PNM_27May14.pdf

 

STERLING, MASSACHUSETTS, SOLAR/BATTERY SYSTEM COMBO

In Sterling, Massachusetts, NEC ES provided a turnkey GSS® energy storage system which includes a single 53' container housing 3.9 MWh of lithium ion batteries, a 2 MW power conversion system, and proprietary NEC ES AEROS® controls software suite. NEC ES will provide service and maintenance. The battery system has a turnkey cost of $2.7 million, or $692/kWh. The battery system is combined with an existing 2.4 MW PV solar system.

With a $1.4 million grant from the Massachusetts Department of Energy Resources (DOER) and financial grants from the U.S. Department of Energy Office of Electricity (DOE-OE), and other grants, it pays for itself in about 2 years, without grants in about 7 years. The battery systems have a 10-year performance warranty, but are expected to function longer than that.

http://www.renewableenergyworld.com/ugc/articles/2017/04/14/sterlin...

 

Reducing Forward Capacity Market, FCM, and Regional Network Services, RNS, Charges: The Sandia National Laboratories performed a detailed study of the battery system at Sterling, MA, and determined:

 

- The ISO-NE FCM charge reduction due to 2 MW would be as shown in table 1

- The ISO-NE RNS charge reduction due to 2 MW would be as shown in table 2  

http://www.sandia.gov/ess/docs/journals/SterlingMA_2017PES_SAND2017...

 

FCM: ISO-NE has a 2015-16 capacity liability of 32,968 MW x 3.129 $/kW-month x 1000 kW/MW x 12 months = $1,237,888,464

 

The Sterling Municipal Light Department share, no storage, would be (9.631, Sterling MW)/(24039, ISO-NE peak MW hour) x $1,237,888,464 = $495,946

 

The SMLD share, with 2 MW feed-in from storage for a maximum of 1.95 hours, would be {(9.631 - 2)/24039} x $1,237,888,464 = $392,956/y, for a reduction of 495,946 - 392,956 =  $102,990, which is close to the Sandia value in the below table 1.

 

Table 1; ISO-NE FCM Charge Reduction, per Sandia study

 

Year	Price ($/kW-month)	Annual savings ($)
		Power	Power	Power	Power
		1 MW	2 MW	3 MW	4 MW
2015-16	$3.129	$51,477	$102,958	$154,443	$205,932
2016-17	$3.150	$51,822	$103,649	$155,479	$207,315
2017-18	$7.025	$115,572	$213,153	$346,744	$462,344
2018-19	$9.551	$157,128	$314,269	$471,424	$628,591

 

RNS: The ISO-NE RNS charge is from June 1 to May 31, thus for 2 MW, the ISO-NE charge reduction would be (5 months x $7.27889/kW-month + 7 months x 8.22512/kW-month) x 2 MW = $187,941; Sandia used a slightly greater amount. See below Table 2.

 

Table 2; ISO-NE RNS Charge Reduction, per Sandia study

 

Power (MW)	Annual Savings ($)
1	$98,707
2	$197,403
3	$296,104
4	$394,806

 

STAFFORD HILL, VERMONT, SOLAR/BATTERY SYSTEM COMBO

 

Green Mountain Power, a utility in Vermont with 77% of the electricity market, owns the Stafford Hill, 2.5 MW solar plant, 7722 panels, on about 20 acres. GMP added 2 MW (storage 2.4 MWh) of advanced lead acid batteries, 2 MW (storage 1 MWh), of lithium-ion batteries, total storage of 3.4 MWh, and (4) 500-kW inverters. This means 2 MW can be delivered for 1.7 hours, or 1 MW for 3.4 hours. The expected life of the batteries is about 10 - 15 years.

 

Capital Cost: The turnkey cost was about 7.155, solar system + 5.345, battery system = $12.5 million. The GMP battery system cost of $5,345,000/3400 kWh = $1,572/kWh, is about 2.27 times the $692/kWh cost of the Sterling, MA, battery system.

 

Subsidies:

 

- $235,000 was a cash donation from the US-DOE

- $50,000 was a cash donation from the VT-DPS, via the Clean Energy Development Fund.

- The federal investment tax credit, ITC, can be used to offset state and federal taxes due on other GMP operations.

- The state ITC is about 25% of the federal ITC.

- GMP sells Renewable Energy Credits, RECs, to out of state entities to reduce the cost/kWh of solar electricity.

- The whole project can be written off in about 5 years, which reduces state and federal taxes.

- GMP claims, with subsidies, the project pays for itself in about 5 to 6 years; without subsidies, the payback period likely would be at least 10 years.

NOTE: GMP prefers not utilizing the 200 MW reserved for Vermont of the recently approved 1000 MW, HVDC line, because, that does nothing the increase GMP’s asset base on which GMP earns about 9+%/y. Instead, GMP prefers to own/lease to ratepayers heat pumps (made in Japan), solar systems (PV panels made in China with dirty coal plants) and Tesla Powerwall 2.0 batteries (made in Nevada), because that adds to GMP’s asset base on which it earns 9+%/y, and helps GMP collect federal and state ITC cash grants, federal and state tax savings due to 5-y write-offs, and other subsidies, to minimize paying federal and state taxes (no wonder Vermont’s governmnet is not collecting enough taxes year after year), and increase its net profit. Buying electricity from other producers, such as H-Q, does none of that. It has to do about the bottom line and nothing with saving the world. That is just window dressing.

NOTE: The levelized cost of utility-scale, field-mounted, solar is at least 13.5 c/kWh (heavily subsidized) in New England. GMP may be hoping, with enough PR about islanding, and micro-grids, and batteries “being the future”, people would not notice the project’s poor economics.

http://www.windtaskforce.org/profiles/blogs/the-true-cost-of-solar-...

 

Solar Energy Shifting: The wholesale prices during peak hours, usually 5 - 8 pm, would have to be extremely high (which happens on rare occasions) compared with the much lower, wholesale prices during midday hours (when solar is highest) to make energy shifting pay in New England. However, in southern California, such large price differences exist due to time-of-day pricing.

 

Operation During Summer Months: The DC output of the solar system varies from about 2 MW around noontime to about 0.5 MW when a cloud passes over the panels, for a ramp rate of 1.5 MW in 10 seconds, or 9 MW per minute, which can be dealt with by the quick-responding battery system, as it occurs. The variable solar DC energy is charged into the batteries at a levelized cost of, say 13.5 c/kWh (subsidized), 20 c/kWh (unsubsidized). If not enough solar, the batteries are topped of with grid energy at midday wholesale prices of, say 6 c/kWh, which is converted from AC to DC (conversion and charging losses about 10%).

 

The battery system has (4) 500 kW inverters to convert the DC energy discharged from the batteries to AC. The battery system can discharge AC energy at a steady level of up to 2 MW. However, according to GMP, typically, the discharge is maintained at a steady level of about 1 MW, spread over up to 3.4 hours, during peak hours, about 5 to 8 pm, to ensure catching the peak demand for that period. The steady output from the inverters, a.k.a., firm output, is required by ISO-NE, i.e., no firm output, no feeding in.

 

Operation During Winter Months: In NE, the ratio of the monthly output of maximum summer/minimum winter is about 4; in Germany, it is about 6. There are days with minimal output, when panels are covered with snow and ice. Less solar would be charged into the batteries during midday and more is taken from the grid to top off the batteries.

 

NOTE: The battery discharge of 3.4 MWh implies the batteries would be completely drained. If done on a daily basis, the batteries likely would not last beyond 10 years.

 

Part 2.

 

The ISO-NE grid operator performs the accounting of the grid capacity costs and distribution costs. GMP pays the grid operator for its share of capacity costs (the money paid to power plant owners to make sure they their plants available during peak load periods. GMP’s share of the capacity cost is based on its demand during one annual peak hour. GMP’s share of the transmission cost is based on its demand during 12 monthly peak hours.

ISO-NE charges imposed on GMP: 
- FCM charges are about $35 million/y 
- RNS charges are about $55 million/y 
- Total charges are about $90 million/y

ISO-NE FCM Charges: Capacity Payment = (Capacity Load Obligation) x (Net Regional Clearing Price)

 

- The CLO is based on the peak contribution value, e.g., the load on the peak day/hour each year identified by ISO-NE.

- The NRCP = (Total Capacity Payments to Resources)/(Total Capacity Supply Obligation, MW - Self Supply, MW - Excess Real-Time Energy Generation, MW).

 

GMP Traditional Demand Reduction: GMP's peak demand is about 770 MW. GMP reduces its peak demand (as seen by ISO-NE), and thus its ISO-NE FCM and RNS charges, by using:

 

- 100 MW of diesel-generators and gas turbine-generators, all, or some of which, are often used a few hours a day to reduce GMP’s peak demand.

- 100 MW of hydro plants for which GMP gets a 43 MW capacity credit from ISO-NE.

 

GMP Battery Demand Reduction: GMP used its Stafford solar/battery system combo to reduce its peak demand by about 2 MW from 3 to 4 pm, on August 12, 2016; the ISO-NE peak demand of 25,466 MW. GMP claims it reduced its annual demand charges by about $200,000. GMP did not provide any calculations of this very important number. See graphs on page 4 and 13 of URLs

 

http://legislature.vermont.gov/assets/Documents/2018/WorkGroups/Hou...

https://www.iso-ne.com/static-assets/documents/2016/09/iso_ne_post_...

Reducing ISO-NE RNS Charges: Regional Network Service (RNS) charge = (Pool RNS Rate) x (Monthly Network Load).

 

In a similar manner, described above, GMP can reduce its transmission charges during the 12 monthly peak hours. No monthly savings are yet available for Stafford Hill, but they are expected to be similar to those of Sterling, MA, about $17000/month, or about 204,000/y, if a 2 MW load reduction, for one peak hour, in each of 12 months. See Table 2 and See URL

http://www.renewableenergyworld.com/ugc/articles/2017/04/14/sterlin...

Total reduction about $200,000/y, FCM + $200,000/y, RNS = $400,000/y 

Economics of GMP’s Stafford Hill “Mirogrid/Islanding” Project: The project has a net gain of $241,116/y, on a capital cost of $12.5 million. By any definition that is a very poor return. Various grants, subsidies, federal and state ITCs, 5-y depreciation write offs create the appearance of a payback of 5 - 6 years (as claimed by GMP), whereas, in fact, the payback is at least 2 to 3 times that long, well beyond the 10 - 15 year life of the batteries.

 

NOTE: All annual costs related to the battery system amortization are ignored.  

 

Sterling, Mass, 2 MW/3.9 MWh battery system; turnkey cost $2.7 million; $692/kWh

 

GMP, Stafford, Vermont

Battery system: 4 MW/3.4 MWh battery system; turnkey cost $5.345 million; $1572/kWh

Solar system: $7.155 million

Total = $12.5 million

 

GMP revenue gain from ISO-NE charge reduction:

 

Forward Capacity Charge reduction; $200,000/y

Forward Transmission Charge reduction; $200.000/y

Total; $400,000/y

 

GMP solar loss:

 

Generation: 2.5 MW x 8766 x 0.145 = 3,177,675 kWh/y

Generating cost: 13.5 c/kWh x 3,177,675 = $428,986/y; heavily subsidized

 

Battery charging/discharging loss: 0.15 x 3,177,675 = 476,651 kWh/y

Battery charging/discharging loss: 0.15 x $428,986 = $64,350/y

 

REC sales: $0.03 /kWh x (3,177,675 - 476,651) = $81,030/y

 

Sell to grid at wholesale: $0.07/kWh x (3,177,675 - 476,651) = $189,072/y

 

Solar loss: ($428,986/y) - ($189,072/y + $81,030/y) = $158,884/y

 

Overall gain; $400,000/y - $158,884/y = $241,116/y

Cost Reduction by Energy Shifting (arbitrage), Normal Peak Demand Day: The shifting operation reduces GMPs electricity purchases during peak hours, when summer wholesale prices are higher, typically about 8 to 10 c/kWh, and even higher on some days.

 

GMP produces solar electricity at 13.5 c/kWh (heavily subsidized). GMP can buy electricity at wholesale prices for 6 c/kWh during midday hours, and 7 - 8 c/kWh during peak hours, around 5 - 8 pm. GMP reduces the cost of solar electricity by 3 c/kWh by selling RECs to out-of-state entities*. See URL.

http://www.windtaskforce.org/profiles/blogs/vermont-speed-renewable...

 

* That means that electricity cannot be counted to any Vermont “90% RE of all Primary Energy by 2050” goals. Vermont’s meadows and open land would be used as energy production plantations for Connecticut entities. Vermont an energy colony!

 

On a NORMAL peak demand day, the cost reduction due to solar energy shifting would be (3400 kWh - 10% discharge and conversion loss) x (8, peak wholesale - 13.5, levelized solar + 3, REC) = - $76.50, a loss.

 

Cost Reduction by Energy Shifting (arbitrage), Very High Peak Demand Day: Cost reductions by energy shifting are greatly increased on very hot summer days, when wholesale prices likely would be very high, as happened at 4 pm, on August 12, 2016, according to the ISO-NE, Hourly Wholesale Load Report. These are very rare occurrences.

 

The feeding from the solar system and from the battery system to the grid has to be apportioned and timed to maximize revenues when prices are highest. Prices were 7.7 c/kWh at 10 am, reached a maximum of 36.8 c/kWh at 4 pm, and were 7 c/kWh at 10 pm.

 

On THAT very high peak demand day, the cost reduction from energy shifting would be (3400 kWh - 340 kWh, 10% discharge and conversion loss) x (36.8, peak wholesale - 13.5, levelized solar + 3, REC) = $798.66, a gain.

 

Revenues from Selling Solar Electricity: GMP receives revenues from selling electricity of its solar system, less about 20% due to running it through the batteries.

 

Revenues from Real-Time and Forward Markets: The steady output of the solar/battery system combo enables GMP to participate in the Day-Ahead Energy Market, which lets market participants commit to buy or sell wholesale electricity, including wind and solar, one day before the operating day, to help avoid price volatility. Accurate wind and solar predictions are required to make firm commitments. Failure to perform involves penalties.

Another Revenue Option for GMP: GMP has other options to gain revenues by leasing or selling wall-mounted, Tesla, Powerwall 2.0, battery units. GMP sells turnkey units for $8000, or charges a ratepayer (with a solar system or not) $15/month for leasing a unit for a 10-year period.

 

GMP automatically drains a percentage of the energy from those batteries in late afternoon to reduce its peak demand charges.

 

It would take 1000 batteries (turnkey cost $8 million) x 13.2 kWh to provide 13.2 MWh, or 3.88 MW spread over up to 3.4 hours, which is a drop in the bucket to reduce GMP's peak demand of about 770 MW.

 

CONCLUSIONS:

 

- Enhanced demand management and enhanced energy efficiency would significantly reduce peak demands at significantly less cost per MW, than solar/battery system combos. However, that likely would add very little, or nothing, to GMP's asset base.

 

- From the above it is clear, large solar plants must have battery systems, or other means of firming, such as a diesel-generator set, for safely connecting to the grid.

 

- The peak demand, MW, is in the late afternoon, when solar energy output has become much less than at noon, worse in winter.

 

- It would be much less costly for GMP and ratepayers to turn on a quick-starting diesel-generator set for that period, as GMP has been doing for decades. A standard 1 MW, D-G set has a turnkey cost of less than $1.0 million.

 

- Even better would be a Siemens, quick-starting, about 40% efficient, OCGT, such as model SGT-A45TR, 44 MW, turnkey capital cost about $40 million. That would be less than the about $50 million for four GMP solar/battery combos.

 

The OCGT would reduce peak demand by 44 MW, which is much more than the 8 MW of the four solar/battery combos.

 

The OCGT would last at least 35 years, whereas the solar systems would last about 25 years, and the battery systems about 10 to 15 years.

 

GMP fiddling with heavily subsidized "microgrids and islanding" will prove to be very expensive for ratepayers, because a lot of costs are not mentioned. See URL.

http://www.windtaskforce.org/profiles/blogs/solar-energy-does-not-r...

 

Part 3.

 

Solar Systems Do Not Reduce High Voltage Grid Investments: Below it is shown solar systems do not reduce investments in high voltage systems, because peak demands occur when solar output is minimal, about 5 to 6 pm.

 

Below is a table with the hourly NE demand on 13 July 2016 from the real-time ISO-NE grid status website. The NE peak demand was 22173 MW at 5 pm. The Vermont demand values were obtained by pro-rating, based on an assumed 1000 MW peak demand. See page 6 of URL.

 

The NREL pvwatts program was used to obtain the hourly output in July for a 5 kW system in Woodstock, VT, using Concord, NH, weather data. That output was prorated upwards, based on an assumed Vermont installed solar system capacity of 125 MW.

 

If Vermont’s maximum solar output is assumed to occur on 13 July 2016, the output of the 125 MW would have been 15.8 MW during hour 17 (5 pm), for a demand reduction of 1.58%. If Vermont’s solar system capacity were doubled, that demand reduction percentage would also double.

 

Conclusions:

- The NE grid capacity is designed to accommodate at least the maximum demand that could occur in the foreseeable future. 

- The small demand reduction percent due to solar output would have minimal impact on grid capacity design and investments.

- Solar output (and wind output) cannot be counted on to reduce grid design capacity, because in New England:

 

During winter, solar output could be near zero, if panels were covered with snow and ice when peak demand occurs.

Solar output is near zero, or zero, about 75% of the hours of the year.

Wind output is near zero, or zero, about 40% of the hours of the year.

Total solar + wind output is near zero during many hours of the year, including peak demand hours, per the real-time, ISO-NE grid status website.

 

Hour	N.E.	VT	VT	VT	Reduced	Demand
	13-Jul-16	13-Jul-16	5 kW	125 MW	Demand	Reduction
		Prorated	July max	July max	July max
	MW	MW	kW	MW	MW	%
6	12987	586	0.890	22.3	563	3.80
7	14785	667	1.809	45.2	622	6.78
8	16259	733	2.602	65.1	668	8.87
9	17269	779	3.205	80.1	699	10.29
10	18300	825	3.635	90.9	734	11.01
11	19248	868	3.830	95.8	772	11.03
12	20053	904	3.816	95.4	809	10.55
13	20864	941	3.537	88.4	853	9.40
14	21332	962	3.030	75.8	886	7.87
15	21661	977	2.345	58.6	918	6.00
16	21981	991	1.490	37.3	954	3.76
17	22173	1000	0.630	15.8	984	1.58
18	22028	993	0.102	2.6	991	0.26

 

Part 4.

 

Hydro-Quebec A Much Better Alternative Than Standard Offer: Hydro-Quebec has about 5600 MW of spare hydro plant capacity, and has under construction and in planning stages an additional 5000 MW of hydro plant capacity. Here a list of the benefits of hydro energy:

 

- Clean (no particulates, no SOX, no NOx)

- Low-cost (5 - 7 c/kWh, plus 1 c/kWh for transmission), much less than wind and solar

https://vtdigger.org/2015/01/28/utilities-want-flexibility-renewabl...

- Very low CO2/kWh emissions, much lower than wind and solar

- Steady, 24/7/365 energy, i.e., NOT variable and NOT intermittent, unlike wind and solar, which are weather dependent, variable cloudiness dependent, night and day dependent, and season dependent

- NO federal and state subsidies and investment tax credits

- NO capital outlays by Vermont’s government

- NO enriching of multi-millionaires and their lucrative, risk-free, tax shelters

- NO additional environmental impact in Vermont

- Private entities would own the transmission lines from Quebec to New England

- RECs would not be sold to out-of-state entities so they would be wearing the green halo, instead of Vermonters.

- Much less social discord than controversial wind on pristine ridgelines and solar in fertile meadows

 

Here are some URLs about increased hydro energy from Hydro Quebec.

 

http://www.windtaskforce.org/profiles/blogs/increased-canadian-hydr...

http://www.windtaskforce.org/profiles/blogs/more-energy-from-hydro-...

http://www.windtaskforce.org/profiles/blogs/gmp-refusing-to-buy-add...