SOLAR+STORAGE APPLICATIONS FOR LOCAL GOVERNMENTS

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1 SOLAR+STORAGE APPLICATIONS FOR LOCAL GOVERNMENTS Overview Solar with battery back-up or solar+storage is growing in popularity in the United States. These systems have the ability to provide unique benefits to municipal facilities. The recent increased interest in solar+storage is partially due to popular media attention after Tesla s energy storage announcement, the falling costs of system components and extreme weather events such as Hurricane Sandy. PV module prices for non-residential systems have declined 10% year over year since 1998, 1 and are expected to continue falling in Concurrently, the prices for lithium-ion batteries have also begun to decline in the commercial sector. Deutsche Bank estimates that lithium ion battery costs will likely drop 20-30% per year for the foreseeable future, and recorded installed costs of $500/kWh at the end of While the battery market is not as mature as solar, these price declines are significant and have driven interest in solar+storage installations in a few states (i.e. California, Hawaii, and New York). According to GTM Research, commercial systems installed in these key markets achieved an average 20% IRR in These falling costs are making solar+storage more accessible for use on municipal facilities, and for the public at large. Benefits of these systems for municipalities include, but are not limited to: Table 1- Summary of Benefits to Local Governments Utility Bill Reductions Commercial accounts are subject to energy and demand charges. Energy charges are based on the volume of energy consumed from the grid. Solar PV helps reduce these charges by providing facilities with electricity during periods of sunlight. Demand charges are based on peak energy demand in a 30- or 15- minute interval per month. These charges can add up to 20-30% of utility bills. Since solar relies on the sun and can be intermittent, it cannot reliably 1 Galen Barbose and Naïm Darghouth, Tracking the Sun VIII: The Installed Price of Residential and Non-Residential Photovoltaic Systems in the United States (Lawrence Berkeley National Laboratory, 2015) < 2 Sophie Vorrath, Energy Storage Could Reach Cost Holy Grail Within 5 Years, Clean Technica 2015 < 3 Jeff St John, Here s How the US Solar-Storage Market Reaches $1B in 3 Years : Greentech Media, 2015 < [accessed 24 August 2015]. P a g e 1

2 provide demand charge reduction support. Batteries can help smooth this intermittency and reduce peak load during periods of lower solar production. Solar+storage can thus provide enhanced utility bill savings. 4 Critical Load Support Grid Support Greenhouse Gas Reductions Batteries can store energy produced by solar panels and discharge during times of emergency. During grid outages or other crises, batteries can provide power to serve mission critical functions in buildings. This can help emergency shelters or control centers continue to operate in the event of extreme weather or other critical circumstances. Solar PV is an intermittent resource, which can pose grid integration challenges at high penetrations. Batteries can ease this intermittency by continuing to provide power to a host facility even during increment weather. In contrast to a traditional back-up generator, solar+storage is an emissions-free source of back-up power. If paired with an existing diesel generator, solar+storage can also extend the life of fuel supplies during emergencies, since the diesel generator would not be the sole emergency power source. 4 Please note that most residential accounts are not subject to demand charges thus the financial implications of solar+storage are substantially different. P a g e 2

3 New Jersey Resilience Bank Financing Solar Retrofits and New Solar+storage Installations The New Jersey Economic Development Authority launched the New Jersey Energy Resilience Bank using Community Development Block Grant Disaster Relief funding. The program is designed to enhance the resilience of small public, non-profit, and for-profit entities which were impacted by Hurricane Sandy. The Energy Resilience Bank provides a mixture of loans and grant support for retrofits of existing distributed energy systems, such as solar, or new projects which are capable of operating independently from the grid. New Jersey Economic Development Authority, Energy Resilience Bank, 2015 < System Components Solar+storage systems can be designed in a variety of configurations, and can be integrated to coordinate with existing back-up generators or on-site generation. There are several key components, which must be included in a solar+storage system for it to provide resilient back-up power, and/or provide demand charge savings. These include: Solar panels Solar PV panels/modules generate electricity from the sun. These panels are scalable to a variety of residential, commercial, and industrial applications by adding additional solar arrays (or collections of panels). Battery back-up Battery storage is used to store energy produced by the solar panels, and can also scale in size, akin to solar PV. Several different battery technologies tend to be used for energy storage, including advanced lead acid, lithium ion, and flow batteries for larger scale applications. Each of these technologies has particular benefits and tradeoffs. 5 Smart Inverters Solar panels and batteries produce DC power, while public and private facilities run on AC power. An inverter is needed to convert the energy produced by the system into a useable form by the host facility. An inverter for a solar+storage system must also be able to operate independently from the grid if the system is being designed for resilience support. An inverter must also be able to switch between charging the battery and 5 Grid Market, Technology Matrix, 2015 < and Battery University, Advantages and Limitations of the Different Types of Batteries, 2010 < P a g e 3

4 supplying power to the host facility. Inverters which can perform multiple functions have been termed "smart inverters." Depending on the system design and configuration, the solar+storage system may require one inverter for the battery or multiple inverters for both the solar system and the battery. For additional specifics on inverters, and different system design options including AC vs. DC-coupling, please reference this recently published resource. 6 System management software For solar+storage systems that provide demand charge management support, or multiple different services, system management software is necessary to optimize the use of the battery. Many of the active developers in the U.S. package solar+storage installations with their proprietary software. Critical load panel (Optional) Solar+storage systems are capable of providing critical load support. In the event of a grid outage, the solar+storage system can power essential loads in a facility, which are located on a separate sub-panel. It is not yet economical to provide full load support for facilities. While these descriptions assume a grid-tied installation, solar+storage can also be used in offgrid or microgrid applications. For further detail on the technology requirements, there are complimentary resources available on the Solar Outreach Partnership website, which have been collected by the Solar Outreach project team. 7 The Massachusetts Community Clean Energy Resilience Program- Grant Support for Local Governments The Massachusetts Department of Energy Resources launched the Community Clean Energy Resilience Program in The $40 million dollar program was used to fund feasibility studies and provide implementation support for resilient energy solutions in Massachusetts cities and towns. Among the grantfunded projects were several solar+storage projects on community shelters and public buildings, which will be able to operate independently from the grid. These projects are beginning to be implemented throughout the state, including projects on a series of community shelters in Boston and a fire station in Northampton. Massachusetts Department of Energy Resources, Resiliency Initiative, Massachusetts Department of Energy Resources, 2015 < 6 Seth Mullendore and Lewis Milford, Solar+Storage 101: An Introductory Guide to Resilient Power Systems (Clean Energy Group, 2015) < 7 NARC, Solar for Safety, Security and Resilience Toolkit (Solar Outreach Partnership, 2015) < P a g e 4

5 Opportunities for Local Governments Solar+storage offers an opportunity for savings and increased resilience for communities. Even outside of emergencies, systems can provide reliable utility bill savings. No money down, third-party ownership models for solar+storage are beginning to become available in some states and utility territories (i.e. California, Hawaii, and the Pennsylvania-New Jersey-Maryland (PJM) ISO territory) where high demand charges or market support have created strong economics. 8 This is increasing the accessibility of solar+storage. Florida: Integrating Resilient Solar into Emergency Planning The SunSmart E-Shelter program in Florida installed solar+storage systems on schools, which doubled as shelters in areas vulnerable to hurricanes. The program installed 10 kw PV installations throughout the state. These shelters are able to provide emergency support to their respective communities in the event of an outage. The program was funded by a mix of American Recovery and Reinvestment Act Funds, public and private utilities. Florida Solar Energy Center, SunSmart E-Shelters Program, 2014 < Systems will become more economical with continued cost reductions. Additionally, alternative financing models may emerge as electricity markets change their rules. The Federal Energy Regulatory Commission (FERC) Orders 755 and 784 mandated that fast-responding resources, such as batteries be compensated for providing support to the grid. 9 This Order is in different stages of implementation across the country; however, in the interim, lending products are available for solar PV, and grant programs are becoming available in states for resiliency or microgrid development. While these rules are being developed, local governments should look to solar+storage in the near-term as opportunity to generate savings, increase resilience, and reduce greenhouse gas emissions in their communities. 8 Rocky Mountain Institute, The Economics of Load Defection, Rocky Mountain Institute, 2015 < 9 FERC, Third-Party Provision of Ancillary Services, Accounting and Financial Reporting for New Electric Storage Technologies (FERC, 2013) < P a g e 5