Consolidated Edison has relatively little energy storage on its system right now, but that will likely change over the next few years. Driven by New York's 50% renewables goal and the state's strategic push to modernize its grid, the utility is working on a series of projects that will showcase the viability of residential aggregation, commercial and industrial applications, and solar plus storage installations.
And now, the utility has begun to study the underlying business and market models that will enable those resources. In a request for proposals issued last month, Con Edison posed a simple challenge: Show us how to make money with storage.
“Energy storage is a huge part of our future,” said Jamie Brennan, project manager for Consolidated Edison's RFI. “What we wanted to do in 2016 was establish a process for driving innovation at the grid edge through demonstration projects, and to find ways to increase the products and services we offer customers.”
ConEdison calls its request an "experiment," and encouraged respondents “to provide creative approaches, potentially ones we have not imagined."
With a cap of $25 million in funding, the utility is asking project developers for proposals that will reduce operating expenses and reduce peak demand, while integrating, optimizing, or scheduling distributed resources. Solutions could also target value-added services to customers, including power reliability or quality, or enabling wholesale market participation.
"Any proposed demonstration project should offer the companies the opportunity to derive significant [market-based earnings],” the utility said in the request. Submissions are due March 25.
A new phase of research
There has been research into the value of storage and market optimization, but Brennan said Consolidated Edison's project would likely be a first-of-its-kind experiment. “Actually dispatching batteries in a way that informs some of those questions with real world results is new, certainly in our service territory,” he said.”The value of the demonstration project is to start answering questions with real world applications.”
Last year, Rocky Mountain Institute issued a report identifying 13 services batteries could deliver to the grid, from frequency modulation to peak shaving to backup power. Many batteries are being under-utilized, the report concluded, used for only one purpose or participating in just a single market.
"Currently, most systems are deployed for one of three single applications: demand charge reduction, backup power, or increasing solar self-consumption," the report found. "Dispatching batteries for a primary application and then re-dispatching them to provide multiple, stacked services creates additional value for all electricity system stakeholders."
But the key is in developing systems which can determine how storage should participate.
Brennan notes that on some days it may make sense to align a battery's operations with shaving the customer's peak usage, in order to help that customer manage their bill. On another day there could be a spike in prices, and the battery is best utilized to minimize the energy consumed in a building. And then there are demand response events, when the same battery could get paid for performing in another program or market.
Ultimately, Brennan said, the goal is an energy storage system that is "participating in the right market at the right time, and modeling the potential in all of those. And then building in the intelligence to maximize the return on the battery."
Con Edison has already proposed three demonstration projects as part of the Public Service Commission's Reforming the Energy Vision strategy, and Brennan said the utility backs that process fully.
“We're very supportive of the PSC framework, in terms of identifying the problem and letting the market develop solutions,” Brennan said. “The goal of the RFI was to structure a framework that defined the problem, put some boundary conditions around a potential solution, and then said to market participants: 'What is the appropriate business model to extract value from the storage?'"
Con Edison kicked off the RFI with a Q&A period, and last week published the answers to all queries. Brennan said questions came from dozens of companies, and others asked to receive the answers but did not pose questions. “From what I've heard through the grapevine, there seems to be quite a bit of interest in the RFI,” he said.
Some questions focused on the size of potential systems, and whether or not aggregated residential storage would be considered. But Consolidated Edison already has a virtual power plant demo that will focus on residential applications, and is using the most recent RFI to focus on commercial and industrial solutions.
Focus on larger-scale storage
The RFI for now is centered on the industrial and commerical sector.
“We're really intending the RFI to be focused on the industrial and commercial sector, and understanding the appropriate business models to drive adoption of storage in that customer class,” Brennan said. It will also test whether the proper rules are in place, in the New York ISO market and at the PSC. “Do the rates and tariffs align properly? Do they compete?”
The utility's virtual power plant demonstration project is moving ahead, and in the upcoming marketing phase the key will be to appropriately size and price storage options based upon what services customers most want.
“There will be a series of learnings we'll get from that project that we can scale up,” Brennan said. But “so as not to duplicate efforts we're really focused on larger scale” in the new RFI. And the utility is agnostic about where the project is located on the grid, or on which side of the meter, with substation and office park projects both fair game.
“We will learn not only technically what is best way to deploy batteries and how do you integrate them operationally …. but also figure out what is the appropriate business model to grow storage, what is the right way to set up markets and rates that optimize the benefit the batteries bring to the distribution system,” Brennan said.
“If you're going to aggregate a series of battery systems at the commercial level, what is the best way to allocate that virtual resource at scale and how do you parse it out?"