NEC Energy Solutions is building momentum with its grid battery offerings for municipal utilities in New England.
Two years after a pathbreaking storage project with the Sterling Municipal Light Department in Massachusetts, NEC has added five more contracts in that state and one in Maine. The projects will add up to 20 megawatts of power capacity and more than 40 megawatt-hours of energy storage.
The battery systems will help the municipal utilities reduce the consumption peaks that drive monthly transmission costs and an annual capacity charge. By predicting peaks and discharging at the right time, the storage plants save money for utility customers.
The 2 megawatt/4 megawatt-hour system built in Sterling, Massachusetts for a municipal utility with fewer than 4,000 customers has already saved local ratepayers more than $1 million since December 2016, NEC said.
With that project as a model, the storage manufacturer and integrator has succeeded in expanding its footprint in the growing New England storage market, where supportive state policies combine with access to wholesale market revenue to make project economics viable.
“This activity is added proof of an inflection point in the adoption of energy storage in the market as municipal entities are now moving forward with projects without subsidies,” sales director Doug Alderton said via email Monday.
The Sterling project helped stimulate subsequent deals by showing how batteries could save money for customers, he added. Massachusetts moved things along after that with its competitive Advancing Commonwealth Energy Storage grants, which supported three of the newly announced projects, in Ashburnham, Taunton and Wakefield.
More recently, projects are advancing based on the economics of lower storage prices and increasing transmission costs, Alderton said.
NEC Energy Solutions, the storage unit of Japan's NEC Corp., claims to have more than 750 megawatts of storage in place around the world.
Fast-moving munis
Municipal utilities procure power on behalf of the communities they serve. They pay fees for monthly transmission usage and annual consumption during the system peak, a situation that a fast-reacting battery system can mitigate. Vermont utility Green Mountain Power has tackled these peaks with a distributed fleet of several hundred home battery systems.
City-run municipal utilities operate with a flatter hierarchy than a traditional investor-owned utility, and their shareholders are their customers (and neighbors). This localized structure can help munis move quickly on clean energy projects that might provoke years of study in other territories.
“Municipal entities control their own approval and interconnection process, enabling faster decision processes and approvals to project execution,” Alderton said. “When there is a clear economic advantage to their ratepayers, they can move swiftly to take advantage of technical innovation and cost declines.”
Sterling offered an early example of that, moving decisively at a juncture when only a handful of larger utilities had adopted batteries for peak power delivery.
Municipal utilities continue to break new ground, like the one in the Southern California city of Glendale, which executed a sweeping transition from fossil fuels to distributed, clean energy in the course of a single year. The locally controlled Western Farmers Electric Cooperative in Oklahoma recently contracted with NextEra for the nation’s largest wind, solar and battery plant.
Some of the newly announced projects will be owned by the municipal utilities, but a few will be owned by third parties under contract with the muni; NEC declined to specify which ones fall into which camp.
One third-party owner is pairing the battery with co-located solar and claiming the federal Investment Tax Credit. Another developer will bid into the New England ISO wholesale markets when the battery is not on call for peak-shaving.
The variety of use cases points to why New England has become such a hot spot for energy storage development. States like Massachusetts and New York have dedicated funds to early storage adoption, and the ISO New England wholesale markets are more amenable to participation by newfangled storage plants than markets elsewhere. Those revenue streams combine with specific customer needs, like peak-shaving.
