February 3, 2020
What Minnesota could do to expand its use of energy storage
While lithium-ion batteries get much of the attention when it comes to talk about energy storage, a recent forum by Clean Energy Economy MN on the topic, shed light on other alternatives. The event hosted about 50 people at Larkin Hoffman and helped explain some of the barriers, and the opportunities to greater adoption of energy storage in Minnesota. In this piece we touch on some of the different reasons why energy storage can be a smart solution for building owners, and why policy plays a big part in the conversation.
Demand management is a technical term for changing how you use electricity based on a change in the price of power. Demand charges are fees applied to the electric bills of commercial and industrial customers based upon the highest amount of power drawn during any (typically 15-minute) interval during the billing period. Ultimately, it’s a fancy way of saying trying to save money on your utility bills.
Businesses or even churches could employ energy storage to reduce the monthly demand charge from their utility. Most lithium battery storage is being deployed in this way. According to Energy Storage Engineer Andrew Larson with Werner Electric, demand management is the most common use of energy storage currently. He also shared that pumped hydro currently accounts for 90 percent of the world’s energy storage.
Managing the grid
When you hear “managing the grid,” does ice come to mind? Well according to Mike Patterson with Trane, there is a lot of genius behind cooling batteries. It can be a fairly simple technology; small ice storage tanks are filled with coiled tubing full of ice cold water that acts as an affordable way to manage how much electricity you’re drawing from the electrical grid.
He explained that cooling batteries offer resilience, they can act as an emergency backup if power goes out, and longevity -- in fact cooling batteries last up to four times longer than chemical batteries (like lithium-ion).
Mike also shared a case study that perfectly illustrates the power of chillers. A gigantic furniture mart was being built in Texas in an area that was already suffering from frequent rolling brown-outs. The facility manager of course wanted to keep utility costs down, but also wanted to be a good neighbor and not exacerbate the existing power problem. Trane engineered a solution: they installed three high efficiency 1,000 ton chillers along with 79 ice storage tanks. The combination helped the furniture mart eliminate 1.6 MW of power usage from the afternoon grid and lowered their overall energy costs.
According to Mike, schools represent the most common buildings in Minnesota currently using energy storage for cooling, followed by office buildings and places of worship.
Why policy matters
Battery storage price declines have been so steep, they’re helping shift the national conversation around energy storage. That’s the story Virginia Rutter with Nokomis Partners shared with the crowd.
She also cited Lazard’s recent study on Levelized Cost of Storage, which found that in most parts of the country, the economics of most energy storage projects still depend on incentives.
The two states in the nation leading in residential energy storage are California and Hawaii. But Massachusetts is the leading state in front-of-the-meter installations of energy storage, currently deploying 58 MW. Here’s a great guide to the differences between front-of-the-meter and behind-the-meter.
In California and Hawaii specifically, Virginia explained that those states’ have much higher electricity rates than Minnesota, making energy storage more financially viable.
In all of the states that are leading the country in energy storage deployment, incentives have been put in place. Here are some options state legislators and regulators could consider:
- Setting a deployment target.
- Example in New York: 1,500 MW by 2025, 3,000 MW by 2030
- Rebate or cost incentive
- Example in California: Self generation incentive program. This program incentivizes not only energy storage systems, but waste heat to power technologies, wind turbines, fuel cells and more.
- Performance based incentive
- Example in Massachusetts: Solar Massachusetts Renewable Target Program
Our takeaway from the day: energy storage is a necessary piece to getting Minnesota to a de-carbonized grid. Let’s find a way to implement greater energy storage into both small-scale and utility-scale projects.
Next Steps in Minnesota
In 2019, CEEM joined a coalition to begin to incorporate energy storage in Minnesota. CEEM supported a bill that requires utilities to consider energy storage in their system plans, known as integrated resource plans. The bill also allows for utilities to propose energy storage pilot programs, if and where appropriate.
The bill also supported a study of energy storage in Minnesota. The report, called the “Minnesota Energy Storage Cost-Benefit Analysis” was issued in December (LINK). CEEM provided input as the study was developed, and we see the report as a starting point for policymakers to consider options that will support energy storage going forward. We expect the report will be presented to the legislature during the 2020 session.
For more information on energy storage policy and how your business can get involved, contact Benjamin at firstname.lastname@example.org.