Utility pilot projects aren’t famous for being standout financial successes. Usually, the goal is to verify a technology in the field before attempting broader deployment. Sometimes nothing follows the pilot.

Vermont utility Green Mountain Power not only verified the efficacy of residential batteries for meeting grid needs, but it also saved its customers millions of dollars with them. Now, that program has been ratified by the state’s Public Utility Commission as a permanent residential storage tariff, which means battery installations — and utility savings — will continue to rise.

At a time when forward-thinking companies are excited to erect networks of distributed batteries at some point in the next few years, Green Mountain Power represents something of an anomaly. It already has not several hundred, but 2,567 utility-controlled Powerwall batteries sitting in customer homes, adding up to around 13 megawatts.

“These things are functioning exactly as or better than we hoped,” said Josh Castonguay, GMP vice president and chief innovation officer. “You’ve got an asset that’s improving reliability for the customer, paying for itself and providing a financial benefit for all of our customers.”

By discharging those batteries during hours when ISO New England grid faces monthly and annual peak demand, GMP reduces the payments it owes to the grid operator. Those savings — $3 million in the first three quarters of 2020 — pass on to the utility customer base. Households that host the batteries also benefit from backup power when the grid goes down. The network supplied 16,000 hours of backup power this year.

Two routes for homeowners to get batteries

All pilots come to an end, but the battery tariff approved in May ensures this program will continue to grow.

The tariff offers two routes to batteries. A customer can pay the utility $55 per month to lease two Tesla Powerwalls; that covers installation costs and lasts for 10 years. After that, the customer can keep using the battery as long as it functions, and GMP will collect and recycle the equipment when its useful life ends.

For people who want to see what the market has to offer, there’s a “bring your own device” option, in which GMP pays an upfront sum to the customer for buying and connecting a battery. The amount depends on how much capacity the utility is allowed to control, but it goes up to $10,500 (to keep the money, the customer’s battery has to actually show up as promised). Software startup Virtual Peaker manages those batteries on GMP's behalf.

Each program is capped at 5 MW per year, or about 500 customers, a small fraction of the utility’s 266,000 customers (although that total includes businesses, which aren’t part of the program).

In the long term, the program could scale up to reach every home in the area, Castonguay said. Even renters can benefit from it, as long as their landlord agrees.

“My hope is we continue to ramp this up and we’re able to find other value streams to make it cheaper and cheaper,” Castonguay said.

One value GMP is testing is using the batteries as digital meters for homes, in place of the traditional utility meter. In field testing, 80 percent of the batteries matched utility-grade meter performance, and GMP is investigating and clearing up the causes of the remaining discrepancies, Castonguay said. Typically a small wiring quirk makes the difference, and that can be addressed once identified.

Deploying while others test

The clear success of GMP’s distributed battery efforts raises the question of why so few others have been able to replicate the model.

A few elements are special to Vermont. The state’s close-knit community makes it possible to work with stakeholders and regulators to figure out new programs and move quickly when they work, Castonguay said.

GMP is also allowed to own and rate-base the batteries on customer property, something that other states do not allow their utilities to do. There is a market-design tension involved in letting utilities supply a product that competitive installers can also provide.

Utility ownership allowed GMP to structure the monthly payment, which relieved customers of having to pay upfront, and it also meant the utility, not the customer, was on the hook for product performance. But it’s possible to offer that setup without the utility providing it — companies like Sunrun and Swell sell backup power for a monthly fee.

More mysteriously, Tesla has made only limited attempts to set up similar networks elsewhere. It built an automated software platform for GMP that dispatches the Powerwalls for peaks while keeping batteries as full as possible for when they’re needed for backup. With sufficient staffing and resources, Tesla should be able to duplicate the network in many other similarly organized markets, or elsewhere in the territory of ISO New England itself.

Tesla does advertise Powerwall participation in ConnectedSolutions, a bring-your-own-device program that utilities National Grid and Eversource offer in Massachusetts, Connecticut and Rhode Island. And Tesla has installed home batteries in South Australia, which it aggregates and bids into grid services markets. That virtual power plant included roughly 900 sites, according to a July report from the market operator.

In contrast, leading U.S. rooftop solar installer Sunrun has made networks of home batteries a companywide strategic priority. It is building out 20 MW in New England to fulfill a capacity market contract in 2022 and working with power providers in California on several localized battery networks.

Oregon utility Portland General Electric is building a program that more closely resembles GMP’s: It will control batteries in 525 homes, using them for a broader range of grid services while attempting to preserve backup power for the customer. But that program aims to study performance for five years before finalizing a long-term investment and operations strategy.

GMP, meanwhile, will see how much further its annual tally of dollars saved by home batteries can rise.