The increasing deployment of distributed energy storage has led utilities to focus on lowering peak demand across the United States. Throughout the Northeast, utilities are considering "bring your own device" (BYOD) programs as battery storage, clean energy and utility advocates fight for ownership and swift technology deployment.
Instead of leaving battery storage deployment up to the private sector, Liberty Utilities is developing the second regulator-approved storage program for utility-owned behind-the-meter (BTM) in its New Hampshire territory.
The state Public Utilities Commission (PUC) developed the proposal with Liberty Utilities and other stakeholders. The finalized program, accepted by PUC in January, offers an opportunity for customer-sited energy storage to lower system-wide costs, while welcoming private sector vendors and utility-owned systems.
Liberty's program would use distributed storage resources to reduce peak demand charges across its entire system, similar to Vermont's investor-owned utility, Green Mountain Power, which announced a behind-the-meter utility-owned pilot in 2017.
In order to incentivize battery owners with clear price signals, Liberty plans the roll-out of a time-of-use (TOU) rate. To maximize customer benefits, the utility and participating stakeholders create a rate based "off the system need," Lon Huber, energy director at Navigant Consulting, who represented the New Hampshire Office of Consumer Advocate during the PUC proceeding.
PUC staff originally recommended regulators deny the project, finding the proposal too costly and not technically workable. Private sector providers of distributed energy resources (DER) also opposed the proposal for initially including only Tesla's Powerwall batteries, which would be owned by Liberty.
In November, the stakeholders reached a compromise under which Liberty must demonstrate the effectiveness of peak system demand cuts to its customers by offering 100 Tesla Powerwall 2 batteries to 100 participants in the first part of the pilot, allowing the participation of battery system aggregators that can dispatch during peak demand.
"The benefits from the program were laid out initially, but needed fine-tuning and clarity. Once we were able to do so, stakeholders supported the proposal," Heather Tebbetts, Liberty Utility's rates and regulatory affairs manager, wrote Utility Dive via email.
Vermont's main investor-owned utility, Green Mountain Power, also partnered with Tesla to roll out a residential battery storage program including 2,000 customers. The batteries were used to lower costs by shifting peak demand during the 2018 summer heat wave, saving customers $500,000, according to the utility. The program is expected to save customers up to $3 million across its lifetime.
"We have gotten a lot of interest in this program. We have 200 customers on a waiting list," John Shore, senior communications manager for the Liberty Utilities East Region, told Utility Dive via email.
The first phase will serve 100 customers, and the utility will vet each customer for their interest and the program's requirements, such as space for the batteries and reliable cell phone and WiFi service, according to Shore.
As northeastern states set clean energy goals, pairing distributed solar and storage resources in residential homes increases resilience, especially during outages caused by energy use during extreme weather.
Storage is being increasingly seen as "electricity insurance," Marco Mangelsdorf, ProVision Solar's president told Utility Dive earlier this year. "If the grid goes down, solar-plus-storage is an insurance policy against being in the dark."
Having granted the program PUC approval, regulators need to approve Liberty's customer contract and plans for cybersecurity and communications, Shore said.
Liberty Utilities designed three rate tiers "specifically for our battery storage program," Shore said — critical peak, peak and off peak pricing. Participants in the first part of the program will be required to sign up for the TOU rates.
The off-peak pricing is meant to encourage beneficial electrification like electric vehicle charging, according to Huber. The critical peak time is focused on the top hours of the ISO-NE system. Weekends will only have peak and off peak pricing.
"A lot of times when TOU rates are developed, stakeholders just eyeball it, and they put a lot of art into it," Huber said. Liberty's TOU was modeled differently to be a "cost-based rate."
Liberty's distributed storage rate was developed by "assigning cost to three hours of the year" representing the highest use, creating the time period of the system need and modeling it to specify the price for each time period, he added.
The time-of-use rate is "not ultra sophisticated, where they have to think about their exports and everything like that," Huber said, comparing it to New York's energy storage value stack.
The order creating the storage program from the New York Public Service Commission (PSC) involved creating a value stack of multiple revenue streams to compound the benefits for project developments. The value stack included the ability to sell services from distributed storage facilities into the wholesale power market of the New York ISO.
Liberty Utility will be using ISO-NE data a lot, to "make sure that the [TOU] rate is inline with the bulk system needs," Huber said.
Residential support and regulated markets
Liberty Utility's program is innovative from a variety of angles, according to Huber, although "some of the lessons are a little bit contained because of the structure of the market there."
Tethering behind-the-meter storage deployment with a time-of-use rate is relatively easier in a restructured market, like ISO-NE, he said.
"I think PJM would probably be the next one. And New York's sort of already has this in play through the value stack," Huber said. "The utilities aren't really the ones operating the storage in New York. So they're allowing developers and customers, and they're hoping they have the sophistication to respond to the value stack."
For a vertically integrated market to apply this, he said the market would have to have a need for increased capacity, to meet peak energy needs.
Liberty operates in multiple service territories, but they may have different regulatory structures as well as stakeholders, Tebbetts said when asked about particular lessons from the New Hampshire PUC process.
"We are in the process of ramping up so once we’ve done so we will review lessons learned," Tebbetts said.
Another aspect unique to the behind-the-meter offering is the strong local support the proposal received. Lebanon, New Hampshire specifically supported the battery project, participating as an intervenor in Liberty Utilities' docket with the PUC.
"They are very active in sustainability planning," Shore said.
Lebanon helped with the rate modeling, according to Huber. The city is in a growing part of Liberty's service territory, he added.
Competition and Bring-Your-Own-Device offerings
Developers are not choosing to participate in the first phase of the pilot, where they would have to establish deployment of the storage capacity during peak times without Liberty's signal. Due to the initial uncertainty, many are waiting for the second phase, once Liberty's identification of peak time usage is proven.
The pilot, which Shore said will begin after regulators sign off on Liberty's customer contract, cybersecurity and communications plans, will involve the utility-owned Powerwall devices initially.
"Really there's a series of benefits with the utility jumping in, especially first, which is they can work out a lot of kinks," Huber said. "They can understand the technology, which will help down the road with interconnection. They have all the incentive in the world to beef up their forecasting and get the algorithms right."
Not all stakeholders supported allowing the utility to be the first mover.
"We advocated launching the bring your own device program at the same time as the utility-owned battery storage program, and I continue to believe that would have brought more innovation and savings to the state more quickly," Melissa Birchard, senior attorney with the Conservation Law Foundation, wrote Utility Dive via email.
"The bring your own device pilot isn’t barred from launching earlier if there are aggregators able to predict the peak, but the likely outcome is that the bring your own device pilot will launch after Liberty demonstrates its own predicting capabilities," she said.
The structure of the BYOD component is not yet determined, but the interconnection process won't change between the various phases of the program.
"It is the same regardless of the technology or whether Liberty owns it," Tebbetts said, referring to the existing behind-the-meter customer interconnection process for batteries, solar and wind energy.
"As part of the Settlement Agreement, the NH PUC will have a working group to provide the opportunity for a BYOD program in phase 1," Tebbetts said. "If an aggregator chooses to participate in phase 1, both programs will run concurrently."
The compensation of participants and aggregators in the BYOD program will be determined through the working group.
"Ultimately, New Hampshire will benefit from cost-savings, improved services, and reduced emissions, which is a great outcome – though it will take a little longer," Birchard said.