How to Eliminate Regulatory Barriers to Battery Storage

by James A. Bacon

Virginia’s move to an energy future dominated by solar and wind power will necessarily be accompanied by battery storage. Vast arrays of batteries will be needed to store and release electricity to offset the intermittent generation of solar and wind farms. Battery storage is exceedingly expensive now, but the price is expected to decline significantly in the decade ahead. While the speed with which batteries become economical to deploy on a large scale is highly uncertain, there can be little doubt that batteries eventually will become an integral part of Virginia’s electric grid.

A recent state-commissioned report, “Commonwealth of Virginia Energy Storage Study,” suggests that the near-term potential for energy storage in Virginia (over and above the Bath and Smith Mountain Lake pumped-storage facilities) could reach 24 to 113 megawatts of capacity, while the potential grows to between 239 and 1,123 megawatts over the next decade. The study, written by the Strategen consulting firm, recommends establishing a goal of 1,000 megawatts by 2030. (That would be two-thirds as much capacity of the state-of-the-art, natural gas-powered Greensville County Power Station.)

A number of things must happen to achieve this potential. The Commonwealth of Virginia has no control over the pace of technology advance, the global supply of critical raw materials (particularly cobalt and manganese), or the evolution of wholesale electric markets. But it can do a few things. Foremost is to address safety, permitting and environmental issues before they create bottlenecks to large-scale battery deployment.

The problem with lithium-ion batteries is that they have the potential to catch fire or explode. That’s bad enough when we’re talking about a cell-phone or laptop battery, but the concern multiplies exponentially when batteries are erected on a scale capable of storing enough electricity to power a modern economy for hours at a time. The risk can be managed…. but that will require action by state and local governments.

The energy-storage study identifies four primary safety-related areas: (1) adopting safety codes, (2) adopting interconnection standards, (3) educating and training stakeholders, (4) facilitating uniform permitting processes; and (5) creating battery disposal standards.

States the study:

Building code development and adoption is a notoriously long process, typically requiring three years for development and then multiple years for states and municipalities to amend and adopt. The length of this process can be a barrier to the deployment of emerging energy technologies such as advanced battery storage. …

Adopting the most recent building and fire codes, or at least those sections that relate to energy storage, is the foundational step that States and municipalities can take to minimize the safety risks that ESSs [Energy Storage Systems] pose to commercial and residential customers.

Fortunately, Virginia administers building codes and standards at the state level, so standards can be implemented without the necessity of going locality by locality. Another issue that warrants attention is interconnection standards. Again, I’ll let the study explain:

Advanced energy storage systems are frequently used in grid-interactive scenarios that require advanced inverters to operate in conjunction with the utility service. … Whereas building and fire codes seek to protect the ESS host customer and their neighbors, interconnection standards seek to protect the grid from safety and reliability issues….

Overly burdensome interconnection requirements can pose a significant hurdle to customer-sited, distributed energy resources, including energy storage resources. Therefore, regulators in many states have taken proactive roles in addressing interconnection issues by establishing fair and transparent regulations and standards.

There is an interconnection rulemaking underway at the State Corporation Commissions, the study says. The SCC staff has been holding stakeholder workgroups and accepting comments to inform the drafting of standards.

Virginia needs to establish an “appropriate (but not unreasonably onerous” permitting process,” the study suggests. Project developers must build permitting costs and timelines into their financial and project-development models. An uncertain permitting process results in uncertainty and risk, which increases the cost of the project. By streamlining the permitting process, the Commonwealth can reduce risk and project costs.

To move these regulatory and permitting matters forward, the state may want to undertake “an extensive education campaign” to win over local authorities, fire officials, and utilities regarding the safety and grid-reliability of these technologies. “The inherently risk-averse nature of AHJs, first responders, and utility stakeholders often necessitates additional education,” Strategen says.

Finally, the Commonwealth must establish standards for end-of-life disposal. Batteries contain hazardous chemicals that must be disposed of or recycled at the end of their useful lives, about seven to ten years. To date, no one has experience in large-scale battery disposal, so best practices are still evolving. Moreover, in Virginia, states Strategen, “there is a lack of clarity over whether the siting of battery storage projects would require explicity approval from either the SCC, or the Department of Environmental Quality (DEQ), or both.

I don’t see any insurmountable barriers here. Strategen has identified the legislative/regulatory checklist, and Virginia’s political leadership needs to tick it off item by item. Given the strong support for renewables in the Northam administration and soon-to-be Democratic-controlled General Assembly, the political will surely exists to deal with these nuts-and-bolts issues. Leadership just needs to avoid neglecting them in the pursuit of sexier objectives.

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17 responses to “How to Eliminate Regulatory Barriers to Battery Storage

  1. This is a great issue to highlight. Often, the needed infrastructure gets overlooked in the enthusiasm for the shiny new technology. The state needs to be proactive in this area so it can be in a position to take advantage of the new technology. However, there probably is a need for some caution or, at least, a willingness to build some flexibility into the process. As with all new technologies, battery design and capability will likely develop and change rapidly. The state needs to be careful that it does not enact standards and regulations that are too rigid and cannot be adapted easily with changing technology.

    There is one aspect of the area of battery development in which the state could exercise some control. It could encourage the development of battery research in one or more of its university engineering programs. By doing this, as Va Tech has done with drone research and development, Virginia could be in the forefront of this developing technology.

  2. Blue Sky stuff.
    The assumption here is new technology will come someday and Virginia will be guilty of not being aggressive enough to use it.

    Americans by nature want to be early adopters of new technology. We do not want to caught dead using old technology, when newer technology is out there. But often times we are convinced by proverbial snake-oil salesman, who understands our unqiue human nature.

    OMG I wish I had a nickel for every time a Virginia democrat said we must move immediately on renewable power such as Offshore Wind, otherwise we lose the race with China or some other boogeyman. But what’s even more disconcerting, everyone sucks that up as a truth.

    When I was in the private working world, we always deferred, procrastinated because sometimes regs changed, or sometimes it became cheaper and clearer direction later. Not saying delay forever, just saying management tried to not get hepped on the obvious urge (from us engineers) to move quickly to build new things.

    • This does not really relate to this post, but your comment made me smile in remembrance of a saying we analysts had in DPB: Do it early, do it over. That fit in perfectly with my procrastinator mentality.

  3. I don’t know. My layman’s view is that batteries don’t get much cheaper with scale. So why build industrial grade battery storage along with all the concomitant infrastructure? Tesla has a Solar Roof product and a Power Wall product designed at the house scale. The total for both (installed) the last time I looked was $48,000. Add in smart home technology that automatically reduces electricity use and you get closer to a solution. Add in a neighborhood scale natural gas powered generator (think about the generators in data centers) and maybe we can kiss Dominion goodbye.

    • First …the thing about pumped storage is that it uses as much energy as it produces … not sure where that stands with VA’s versions, but it does require a lot of energy which it draws when demand is low. There are lots of better ways to do good things for SW than build that hydro facility and wreck havoc to the mountainside.

      I would like to agree with and amplify DJ’s comment … storage combined with solar on a distributed level is ready right now and could do a lot. NREL says that in VA we could generate 25% of demand with rooftop solar. Add the solar and that would do alot to Dominion’s demand profile … all of which they would not like under current regs.

      Here is one residential s/s example … Thanks to an array of programs batteries powered more than 1,000 Vermont Homes through Halloween Outage. A pilot program at Green Mountain Power, the residential battery systems delivered an average of nine hours of back power to homes, with one household powering devices for a full 82 hours.

      Called the Grid Transformation Pilot, homeowners pay a monthly fee to host a utility-owned and controlled Tesla Powerwall battery. The house can use it for backup in an outage, and the utility could dispatch the capacity otherwise to manage peak demand. These pilot programs allow GMP is able to tap into the small residential systems to reduce system-wide expenses, saving nearly $900,000 by deploying the systems during a single hour of regional peak demand this July.

      It is also true that developing systems at the distributed level minimizes risk level should projected demand levels not materialize. Distributed resources also save money on transmission and substation development as seen in the Brooklyn microgrid project I wrote about earlier.

      So … in addition to the good ‘plan ahead’ issues Jim brought up … when, oh when, is someone in VA going to get serious about fixing the “only mor central power means profit” incentives in our regulatory system?

  4. Batteries are roughly cost-competitive with new fossil-fueled peaking units now and provide many more benefits. California is way out ahead of other states in putting them to use.

    Conventional peaking units do have the advantage of being able to run whenever needed, but they are expensive, polluting and vulnerable to rising fuel prices.

    There is sufficient capacity available in PJM and enough time to dispatch it (with good weather forecasting tools) to cover the variability in renewable resources and demand without sacrificing reliability. Until the amount of renewables exceeds the 30% penetration level identified by PJM, a dramatic build-out of fossil-fired peaking units appears to be an attempt to lock in lock-term profits by putting new units in the ratebase, as opposed to good energy planning.

    Batteries installed by utilities and third-party providers offer many services besides just energy to cover peak demands. Studies of current battery installations show that they are constantly charging and discharging throughout the day to level the variations that always occur in supply and demand. Frequency and voltage levels can be kept constant using batteries in ways that cannot be accomplished with pumped storage. This saves money and wear and tear on motors and electronic devices.

    Batteries are more efficient and have a more rapid response than pumped storage facilities. We should avoid building the new pumped storage facility in southwest Virginia and instead invest in a widely distributed network of battery storage. This would improve reliability, provide blackstart capability, reduce the costs of transmission and distribution system congestion, as well as provide storage of energy to be used during peak periods and for demand response services.

    Batteries installed behind the meter in commercial and industrial establishments can greatly reduce their monthly bills, while saving all Virginia utility customers money by reducing the peak.

    This could slightly reduce the money earned by generators, however, since they are paid the most when expensive and inefficient peaking units are dispatched.

    The main obstacle to widespread deployment of batteries in Virginia is the uncertainty as to how they will be paid in the PJM markets. PJM proposed rules that must receive FERC approval before implementation. Some battery providers have objected to some of the rules, saying they were developed to favor old technologies (pumped storage) at the expense of new technologies that continue to decrease in cost and provide more benefits.

    Lithium ion and various types of flow batteries are the primary technologies being considered for battery installations today. Although, several technologies with lower costs, higher energy densities and no heat issues seem to be just a year or two away from commercial application.

    There is a wide variety of Lithium ion chemistries. Most have heat issues, which is why all Li-ion batteries used in EVs have cooling systems (as do the commercial size batteries). A new Li-ion chemistry has reduced the heat issue and the high dependence on cobalt that makes some nervous about the future of Li-ion as sources of cobalt get stretched.

    It is important to push forward with the PJM/FERC process which will set the rules for battery deployment. It is also important for Virginia to set an appropriate state-wide safety protocol. Legislators should be wary of efforts to limit the use of industrial size batteries to just the utility space. That would be another blow to customer choice in Virginia and increase our energy prices.

    Batteries will have a very useful role to play on our future energy system. Virginia should encourage exploration in this area and the participation of many innovative companies, including our utilities.

  5. Yep, I do not think the current battery storage is ever going to scale economically.

    It’s going to take a breakthrough in some other way.

    Pump-storage was originally designed to work in tandem with Nuclear plants. The concept was to release water during the day when there was peak demand then pump it back up at night with Nuclear power when the demand was low.

    So we’re changing the way it would be used – like the original way is no longer needed or obsolete because now we’re talking about pumping water up during the day and generating power at night.

    Further – do we have anywhere enough pump-storage capacity to power the grid at night? Originally, it was not designed to be the major generator of power to the grid – on to addressed the peak demand over and above the baseload demand.

    Pump storage sites are geographically rare in Virginia and even the ones that do exist -we’d have to use eminent domain to obtain the land at some expense.

    I’d almost think it more likely that we’d use solar to pump water upstream on rivers during the day and then let that water flow down the river and through turbines at night…. lots of rivers… in Virginia to do that.

    • “It’s going to take a breakthrough in some other way.”

      I think this is spot on. Someday, hopefully soon, someone is going to find a way to build a very small battery that holds a boatload of stored electricity. If I had a billion dollars, I’d invest a lot of it in battery research.

  6. Certainly battery designs can be improved upon. Widespread usage will increase with new designs and further cost reductions. But it should be recognized that batteries have cost effective applications right now. Especially in states that have removed the barriers to their use, such as California.

    Virginia, will stick its toe in. However, we should be concerned about the headlong rush to add billions in energy costs (and utility profits) for the new pumped storage plant that is yesterday’s answer to tomorrow’s energy challenges. It is not a good fit for our modern energy system, and certainly not cost-effective.

    Phasing out the nukes in the 2030s will avoid billions in added costs for uneconomic generating units. If we do this in a planned way to maintain reliability and reasonable costs, we will free up most of the capacity of the Bath facility (3000 MW) for use in a new way, without additional investment.

  7. The ONLY WAY we could get rid of Nukes is:

    1. – we have enough solar to produce what the Nukes do during the day
    2. – we have “something” that will generate electricity at night

    because … “storage” of the scope and scale to power the grid at night – is a long, long way off – and in my view, until we have, in hand, a truly cost-effective storage solution – we’re just not going to do that. They’ll keep those Nukes going as long as they can or unless some other technology like Fusion comes along – which if it ever does – will render obsolete all fossil fuels and probably all renewables… Fusion reactors
    would be the fundamental source of electricity at that point.

    On pump-storage – how much pump-storage electricity do we have right now in Virginia and how much -theoretically would we need to power the state at night if we could power the state with solar during the day?

  8. From what I can tell – two things:

    1. – Virginia does not generate all the electricity it uses – it’s a net importer of electricity [37%]. Reference: Electricity consumption is greater than electricity generation in Virginia, and the state receives additional power from the regional grid managed by the PJM Interconnection.74

    EIA Profile Analysis: https://www.eia.gov/state/analysis.php?sid=VA

    2. – the Bath pump storage facility generates about 3% of the total and currently solar generates around 1%.

    What does that mean in terms of pumped-storage being a viable “battery” for solar-generated power in Virginia?

    Well, you’d need 10 or more facilities the size of the Bath County facility just to get to around 50%.

    Look at any topographical map of Virginia and see how many potential sites exist. It’s not impossible. The total surface area of the upper and lower reservoirs are about 800 acres – however it’s how much “head” (height difference between upper and local that is rare – over 1000 feet.

    There may well be many more viable sites in mountainous West Va, though.

    And it cost 3.8 Billion dollars (in 2019 dollars).

    So you’d need 10 of these just to get to 1/2 the storage capacity needed for solar.

    Dominion and ApCo probably do not have the financial capacity to build this much stuff. The Atlantic Coast Pipeline is about $1.5 billion for comparison and neither of them would likely transfer to corporate business model that reduced their market value and investors without significant intervention by the State.

    So – we’re likely decades away from anything close to this – even if we started right now today to fund and acquire the land and start building more reservoirs.

    Bottom Line – there are two types of us – there are the optimistic dreamers and their are the pragmatic party poopers….

    My heart is with the former – my mind is with the latter.

    So I want to see us go to a world where we stop using fossil fuels and use as much solar and renewables as we can including replacing the nukes if possible but I just don’t see that happening anytime in most of our lifetimes.

    We need a solution that is not yet apparent such as a breakthrough in fusion technology or some other cost-effective approach.

    I’m not optimistic that the costs of conventional batteries will drop – but I’d have to admit that it too could well be in that range of technologies not yet realized.

    I just don’t think it is the ONLY one and that’s what we hang our hats on for what we want to do. We don’t rule it out – but we certainly should not focus on it as the sole answer – because realistically – it’s just not.

  9. Absent sufficient battery storage capacity, customers, from the biggest to the smallest, will be dependent on the power company for electricity during the times when the sun isn’t shining or wind isn’t blowing. Yet the power company retains all of its fixed costs. Either each customer connected to the grid and receiving conventional power when non-fossil fuel power is not available (or customer that could receive such power) must pay a substantial, monthly, flat-rate charge to recover those costs and/or a much higher kwh charge that recovers both fixed and variable costs. And figure in the strong likelihood that many customers, generally small ones, will not have access to renewable power, such that their monthly bills will skyrocket.

    And any new regulatory model still needs to address these fixed costs. It’s not unlike the situation where the FCC transitioned from a monopoly in telephone handsets and business equipment to competition. In the monopoly market, the costs of installing and removing home and in-business wiring were capitalized to keep local service rates down. In a competitive market, installation and removal of wiring had to be expensed as there was no certain way to recover capitalized costs. And further, the unamortized base of capitalized inside wiring costs. As I recall, in 1981 – the changeover date, the unamortized amounts were in the billions of dollars. Consumers paid back every dime of this capitalized expenses. Dominion, et al., have the right to recover their embedded capital investments plus carrying charges.

    And to add insult to injury, government is not likely to restrict development or redevelopment in areas that flood or are expected to flood. So we will most likely see a major transfer of wealth from the bottom and much of the middle to higher income people, say for example, former President Obama because of his new island estate. Look at both coasts and the Gulf; President Obama is hardly alone.

    Bu, instead of discussing all the issues, we see society focusing on the wisdom of ultra-wealthy actors who use private jets, morons who write for the Post and the Times and a 13-year-old girl. Does anyone truly believe any of these people could answer a single question posed herein?

    • TMT … Yes … regulatory reform needs ton make sure the distribution grid costs are not loaded only on those who do not, or cannot, provide onsite generating facility for themselves. That means not just changing the rate-based incentives, but also re-imagining the utility business itself.

      The first change is to break the link between the amount of energy delivered to customers and the revenues it collects, or to ‘decouple’. That would also mean finding ways to reward utilities for coordinating third party services and resources on the grid including adoption of micro-grids and the software to manage them. It would also mean rewarding utilities for providing enhanced services like EV charging which will grow electricity use when demand is either flat or declining. (RMI, Navigating Utility Business Model Reform)

      Green Mountain Power and Ft. Collins are highlighted for changes made. Regulatory redesign in NY and HI include performance-based incentives that include shared savings mechanisms for both the utility and its customers when demand is reduced.

  10. The matter of Solar Cell Facilities for generation of electrical power, whether you support or not, requires more than reflected by this blog’s commentary concerning batteries. In September of this year (2019) Governor Northam signed an Executive Order (#43) calling for “one hundred percent of Virginia’s electricity from carbon-free sources by 2050.” The Order refers to both Solar and Wind. If all of it were to derived from solar then approximately 771 thousand acres of land would be required, which is an area approximately 1.25 times that of Augusta County. (If you choose to have only half coming from solar then an area approximately 62 percent of that of Augusta County would be required. This amount of acreage would be for the solar cell arrays alone. Storage aspects such as battery backup, pump storage, etc. are not included. (Someone has mentioned using rivers. That would be okay if not for periods of drought when rivers severely drop in flow volume.)

    The Commonwealth of Virginia’s 2018 Energy Plan includes anticipation of a significant increase in the use of electric vehicles. The number of miles driven in Virginia each day is approximately 234 million. Using the 20-miles-per-5kWhr energy requirement of a Tesla S then the additional solar facility acreage required if we went to electric vehicles would be approximately 16 % of the area of Augusta County. (This assumes a total conversion to electric vehicles, all of which would use the energy consumption of the particular Tesla vehicle.)

    Thus, if Virginia were to be entirely carbon-free then an area 1.41 times that of Augusta County, 876,230 acres, would be used by solar facilities. This amount of acreage for solar facilities is not trivial. Just the amount of acreage introduces contest for other uses and conflicts with adjacent uses such as residential, business, and industry. There are other aspects, such as how level the ground must be, removal of trees (hence a CO2 issue), setback due to the shade of trees on adjacent properties, etc.

    None of the preceding is meant to argue for or against solar-generated power. Solar facilities have been, are, and will be constructed. At some point there will be enough experience/data to decide if solar is a good thing, a bad thing, or simply a thing. The point of the preceding is to put into perspective the extent of land use required if indeed Virginia were to be carbon-free. If Virginia grows in population, business, industry, and otherwise the land requirement will be more extensive than cited here. It is up to an informed public to decide how much of anything is to occur in the Commonwealth.

    One additional thought, and this is in regards to off-shore wind generation. During WWII 175 cargo ships were sunk of the east coast of the U.S., primarily by German submarines. Has anyone considered the vulnerability of off-shore wind-power towers during an armed conflict?

    • ERLong …
      Your numbers could be totally correct but your assumptions about becoming carbon free are not. First, central demand will be reduced substantially when buildings, which use 70% of electricity, are retrofitted and onsite/community-based generation is allowed. Second, neither solar nor wind is completely land based. VA has a very substantial offshore wind resource which can provide 3 times the total energy VA uses. Development of the industry in bringing pricing down significantly.

      NREL saw rooftop solar meeting 25% of Virginia’s needs with another 20% met by urban utility scale PV. They did see a lot of available land space for rural utility scale solar, but RMI‘s ‘Clean Energy Portfolios’ should be considered here. These ‘portfolios’ include not just wind and solar but energy efficiency, demand response, both distributed and utility scale storage, and both distributed and utility scale renewable generation. The portfolios are drawn to be region specific, including calculation for solar output that range from Alaska at .105 to Nevada at .263, and Virginia at .200.

      Nationally RMI believes 50% of US thermal power will retire by 2030. To directly replace those old technologies will cost $520 Billion if replaced with gas-fired power and will commit an additional $480 Billion in future cost for the fuel required to run those plants. In their comparative cost analysis, RMI saw natural gas in the Mid Atlantic costing 60% more than Clean Energy Portfolios. (RMI – The Economics of Clean Energy Portfolios.)

      Here in VA we should not confine our thinking to only centralized utility generation.

  11. @TMT – Don’t you think that ANY source of electricity has these costs?

    Why would you treat solar any different than say gas or nukes?

    And WHY focus on personalities and their lifestyles either?

    If someone – a celebrity expresses concern about plastics or CSOs or other facets of our world – that makes them a hypocrite if they don’t stop using it?

    Is that really legitimate?

    If where you live has CSO or Stormwater runoff problems and you cite them – that makes you a hypocrite because you are, at the same time, a user and part of the problem?

    This is the problem we have these days with Conservatives whether it’s about climate change, abortions, immigration – they demonize people.

    If you express an opinion that, for instance, we should not waste electricity, does that make you a hypocrite because you have not installed the most efficient furnace available?

    When someone does that – what is their real motivation? Is it to really address things that we need to do or is it to just blame people who do speak up but they themselves are not perfect ?

    What does that achieve?

    So anyone in Arlington/Alexandria that uses the toilet but expresses concern about their CSO problem – is a hypocrite if they don’t stop pooping or convert to a compost toilet or whatever?

    geeze.

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