Theworld's largest battery manufacturing plant is under construction in Nevada,but the state's dominant utility company sees no value in incorporating batteryenergy storage into its system and the Public Utilities Commission staff isadvising against any regulatory changes to require it.
Energystorage and solar industry groups urged the PUC to require or at leastencourage use of battery technologies for electric services in comments filedfor the commission's recently opened investigation on battery storagetechnology (16-01013).
isconstructing its Tesla Gigafactory outside Sparks, Nev., to become the one ofthe world's largest producers of lithium ion batteries for electric vehicles,homes and other uses. Tesla askedthe commission to direct utilities to fully consider energy storage as analternative to other grid resources in planning and procurement and direct themto deploy commercial energy storage systems.
However,NV Energy Inc. inFebruary issued a 400 MW to 700 MW open resource request for proposals forlong-term capacity without considering energy storage in specifications for thesolicitation, Tesla said.
"Teslaencourages the commission to utilize its battery storage investigation toposition Nevada as a leader in deployment of new grid technologies like energystorage, which will provide the state with a modern, clean and resilientelectric grid," the company said, expressing hope that the PUC had notopened the battery storage investigatory docket merely as an academic exercise.
Butthe PUC's staff argued against any regulatory action to make use of thetechnology. The staff commented batteries can be used for multiple services andprovide multiple benefits, but there appears to be disagreement about whatmethodology should be used to evaluate the costs and benefits that energystorage projects may provide.
"Currentlythere is no regulatory or legislative mandate for Nevada electric utilities toincorporate storage into their resource planning process, and at this timestaff does not believe the commission should alter its regulations to mandateNevada electric utilities incorporate storage," PUC Assistant StaffCounsel Meredith Barnett wrote.
Instead,the current resource planning process provides an adequate forum for storage tobe considered for utilities to provide reliable service, the staff concluded.
NVEnergy said itsNevada Power Co. andSierra Pacific Power Co.subsidiaries have investigated pumped storage, compressed air storage,flywheels and other methods in addition to batteries. Nevada Power purchasespower from SolarReserve LLC'sand Grupo Cobra'sCrescent Dunessolar facility, which has molten salt energy storage.
NVEnergy said it participated in a federal grant project with 10 batteries in aresidential development starting in 2009. The company noted the commissionrejected its proposal to include deployment of batteries in conjunction withother demand technologies at 100 homes in its 2015 Integrated Resource Planfiling.
However,NV Energy said in most cases proposed storage projects of any type have notbeen deployed for reasons of cost, siting and other issues the companyillustrated by way of several examples.
"Thebalance of system components and the software for configuring batteries andcommunicating with them is undoubtedly immature," the utility companyconcluded.
NVEnergy submitted confidential reports to the PUC and withheld them from publicinspection on costs and applications, but said current battery technology isfour to 10 times more costly than other alternatives for operating reserves,peaking capacity, arbitrage, transmission and distribution support andreliability.
Without change, Nevada willmiss out, storage advocates say
Respondingto 10 questions the PUC posed to interested parties, Tesla said it is playing akey role in technology and production improvements in battery storage, but itsarray of existing products are already cost-effective for many applications,including almost any grid service required other than producing electrons.
Teslasaid battery storage prices continue to drop significantly and the industryshould see costs in the next five years lower than $400/kW. The Energy StorageAssociation reported a year-end 2015 median estimate for the installed cost ofutility-scale lithium-ion battery storage at $900/kW and a projection of a 50%decline by 2019.
Thoughit is an "apples to oranges" comparison, the Energy InformationAdministration priced gas turbines in the range of $639/kW to $942/kW, in itslatest annual energy outlook.
TheEnergy Storage Association saidPJM Interconnection LLChas deployed more than 270 MW of energy storage for frequency regulation andCalifornia is requiring utilities to procure 1.3 GW of storage by 2020.
"Consideringthe anticipated continued decline in battery storage installed costs, coupledwith increasing levels of economically-procured storage in other jurisdictions,the continuing exclusion of energy storage from utility resource planning maydeprive Nevada ratepayers of least-cost solutions to system demands," theassociation said.
Teslasaid its products can be deployed as utility-connected "in front-of-themeter" assets or as customer-connected "behind-the-meter" assetsand that a single storage device can provide multiple grid services.
"Storagecan act like generation, providing fast-responding ancillary services, shiftingenergy production from off-peak times to on-peak times, reducing the need fornew peaking generation capacity, and providing black start capabilities,"Tesla said and listed many more applications. "Giventhe rapidly changing landscape of energy storage products … now is the righttime to update utility processes to uncover these cost-effective applicationsfor Nevada."
Rooftopsolar business SolarCity Corp.,which pulled out of Nevada after the PUC eliminated net energy metering due toNV Energy's cost-shifting concerns, saidpolicymakers could open opportunities for storage systems by adopting new ormodifying existing statutes and regulations.
Thecompany, which shares a close relationship with Tesla through Elon Musk, saidit "strongly believes that the Nevada utilities should be required toinclude energy storage as part of their resource planning efforts." Muskis chairman of SolarCity and chairman and CEO of Tesla.
WesternResource Advocates saidNevada's utilities should be required to include storage in resource planningand submit proposals for demonstration projects to gain experience operatingbattery storage. The PUC should make rules to assure customer-sited batteriescan be interconnected with the distribution grid, WRA said.
Severalother companies with energy storage services provided comments includingStem Inc.'sfiling, 's Enel Green Power's comments, RenewableEnergy Systems Americas Inc.'s remarks and SolarReserve's .