BATTERIES AS VIRTUAL POWER PLANTS – New York pilots solar-plus-storage VPP
The REV initiative — the ‘reforming energy vision’ of New York State — has a pilot that may serve as the first steps in creating a template for the future.
Sunverge is another end-to-end energy storage provider that has invested in a platform for networking and aggregating its energy storage systems together. The company has partnered with several utilities on pilots in the US as well as in New Zealand and Australia.
As part of New York’s Reforming Energy Vision (REV), this June New York utility Con Edison, US solar module maker and installer Sunpower and Sunverge announced a $15 million pilot, the largest to deploy residential solar-plus-storage systems.
In this, 300 homes in Brooklyn and Queens will have solar panels leased from Sunpower and energy storage systems from Sunverge installed and connected. These will be aggregated together to operate as a virtual power plant to test various applications, including peak shaving, capacity markets and transmission and distribution deferral.
Con Edison will own the energy storage systems.
One of REV’s goals is for New York to reach a target of 50% renewable energy by 2030. To do so, Con Edison has been trying to understand how it can incentivize adoption of rooftop solar by customers and how the utility itself can deploy the technology for distribution grid expansion deferral.
In New York State, Con Edison is second after National Grid in terms of installed solar PV capacity. Nearly 10,000 of Con Edison’s customers have had rooftop solar installed, totalling 115MW, and the utility receives about 4,000 applications a year.
It’s not much compared with a typical Californian investor-owned utility, which might have more than 100,000 solar customers amounting to several hundred megawatts of installed capacity, and which could be dealing with thousands of applications every month.
“Solar-plus-storage in load pockets that can be reliably dispatched could eliminate or offset the need for additional T&D equipment, which results in bill savings for all customers,” says Griffin Reilly, an engineer leading the project at Con Edison. “Eventually, if many solar-plus-storage systems are dispatched when needed, they could offset the need to run a more carbon costly peaking unit that’s on the bulk transmission system.”
All participants in the pilot will be new solar customers and single family households.
The implementation plan for the pilot is happening in three phases. The deadline is to have all 300 systems installed and operational by the end of 2017. As soon as the first solar-plus-storage system is installed and connected, Con Edison will begin testing the system’s capability as a dispatch tool, using Sunverge’s platform.
The first phase began on July 18 with Sunpower, which has the role of an energy services provider in the pilot, promoting offers to customers for integrated solar-plus-storage systems through the value proposition of resiliency services.
Though outage rates have been declining as a result of Con Edison’s storm hardening investments, there are still customers that want the extra peace of mind that they will have power in the event the grid does go down. Usually these customers buy a back-up generator.
Reilly says: “Solar-plus-storage will be cheaper than most backup generators, in this programme, and will provide power automatically with no interruption and without the need to refill a gas tank. This is an attractive offering for customers.
“The goal is for this programme to become the new normal, by allowing the battery systems to be used and partially paid for by the grid, which lowers the cost for resiliency for the individual homeowners.”
Sunpower is doing the marketing, customer acquisition, permitting, installation and O&M for all systems in the virtual power plant pilot, which is to run through to the end of 2018.
Phase one will test customers’ willingness to pay for resiliency and the knowledge created during the phase will inform Sunpower on how to finance, or offset, the cost of energy storage deployment.
In addition to understanding what revenues can be made from resiliency payments the pilot will also enable Sunpower to understand what it can earn from dispatch payments using a virtual power plant based on solar-plus-storage units.
Sunpower will retain all resiliency payments during the pilot and in exchange for that right it is lowering the total cost of the project that Con Edison is paying from the start. This way it shares the risk of what the total payments might be and a range of prices are being tested.
The second phase will demonstrate system control.
Sunverge’s virtual power plant software will not run in Con Edison’s control centres. The utility is creating a communication bridge that will allow its own control software to speak with Sunverge, which operates the energy storage systems, either independently or in aggregate, and will evaluate their performance under a variety of different scenarios.
Work is under way to create a connection between Con Edison’s control environment and Sunverge’s. The operator screens are being built in-house by Con Edison’s supervisory control and data acquisition (SCADA) engineers.
“Ultimately the goal is to be able to send commands and receive data from our one control platform to multiple third party platforms. This is the first of such connections,” says Reilly.
Connecting to Sunverge’s hub means creating a standard in terms of how Con Edison talks to that hub.
“We send out the instructions, such as we want 150 units deployed in the day ahead market, and the hub takes the instruction and acts accordingly, communicating it to the units in the virtual power plant. Our SCADA is not controlling individual units but Sunverge’s system will execute the commands,” says Reilly.
Standardizing that communication and way of connecting with third parties will be important since Con Edison wants it to be a flexible platform, potentially connecting with demand response loads as well.
“We have systems that give automatic notices to our demand response participants but the project with Sunpower and Sunverge will be a first for creating this bridge communication. However, we are several years away from a single platform that controls all distributed and demand response loads and energy resources,” Reilly says.
The third phase of the pilot is to test market participation and rate design.
Con Edison will investigate and test methods for optimizing dispatch, since no process exists to do so. This requires dispatching the solar-plus-storage systems on the grid, without actually participating in the market.
As more of the 300 units come online, the utility will have a greater understanding of how they work as a virtual power plant asset. If the systems are deployed in the capacity market and have to provide 4MW of capacity over four hours, it will allow Con Edison to see how to value firm capacity of 100 units as an example and see how many units will be needed to meet the minimum output threshold.
Testing for size
Con Edison will also evaluate the various existing market opportunities to monetize the wholesale market benefits of the virtual power plant for services other than capacity, such as for frequency regulation and reserves, in a similar manner, by seeing how many units will be required.
Under REV, extensive regulatory reforms are reshaping the state’s electricity industry and the business practices of utilities. This is to enable entities such as Con Edison to engage the services of third party service providers.
The third and final phase of the pilot with Sunpower and Sunverge will identify future opportunities to capture value that evolves over time through REV’s Track Two process.
REV is split into three tracks. “The first is about defining a distributed system platform provider, the role that Con Edison is taking on. Track Two is about how these entities will be regulated and incentivized and the third track is about large-scale renewables and meeting the ‘50 by 30’ clean energy standard goals, so the regulatory framework of Track Two may yield distribution markets that do not exist today,” says Reilly.
In addition, alternative residential rate design use cases, as well as dispatch options, will be explored in the final phase of the pilot to examine optimal use of the solar-plus-storage systems for each use case.
“Two use cases considered in our filing are residential demand charges and time of use rates. If we dispatch the units for time of use, they will use as little energy from the grid as possible during the highest cost hours. We can show how the units performed, and what the energy cost savings would be through shadow billing. This could be enough to incentivize solar-plus-storage directly through customer bill savings, rather than through market participation,” he says.
Time of use would also offset peak demand, leading to transmission and distribution (T&D) savings for all. “We’re looking at all the ways a residential battery could potentially recover the stacked value within to bring them to this technology faster,” says Reilly.
Ultimately Con Edison does not want to be involved in owning solar-plus-storage units, even though it owns the storage assets for the purposes of the pilot.
Ken Munson, chief executive of Sunverge, says: “Regardless of ownership, we believe all stakeholders derive the greatest value when the units are controlled by the utility.”
Traditional tariff-based systems only address one value stream, like peak load reduction as an example, and are often discounted by the utility in integrated resource planning because the utilities have limited visibility into system availability and performance.
“With the Sunverge control platform, utilities can use the battery energy storage system to its full extent and it can be counted on as an integral part of the distribution system. That is what Con Edison is focused on achieving,” says Munson.
Testing best cases
The pilot will allow Con Edison to develop and test a wide range of use cases that informs it on how best to work with third party owners while maintaining direct control over the systems.
“This is similar to the methods the New York Independent Service Operator (NYISO) uses to control large generating plants,” Munson says.
“In future, we would pay for the third party to control distributed energy resources in a way we designate, and that designation would come through an automatic control system we would have to set up, similar to what we are doing with the SCADA bridge to Sunverge. That’s why we are doing that, to test and learn for future connections,” says Reilly.
Looking ahead, Munson says: “We see the market taking shape through our services being offered directly to utilities and through third-party market participants such as large solar distributors.
“Sunpower provides valuable expertise in customer acquisition, solar finance, post-sales support and O&M for utility clients.
“In the future, we’ll likely partner with enterprise software providers such as energy trading and risk management, advanced distribution management systems, energy management systems, and distributed energy resource management systems vendors, as well as downstream hardware integrators that bring battery and inverter systems to market.