Last week, Vermont utility Green Mountain Power officially started selling -- and leasing -- Tesla’s Powerwall batteries to its customers. This first-of-its-kind offering from a U.S. utility comes with some interesting dollar figures on just what distributed, centrally controllable behind-the-meter energy storage is worth to a utility that can put it to use.
Specifically, GMP is offering its customers three options to get their hands on one of the 500 Powerwalls the utility has ordered from Tesla. They can buy it outright for $6,500, and use it for emergency backup power during the state’s weather-related, multi-hour power outages. Or they can get much less expensive installment or bill credit deals, if they agree to “share access” to the battery with the utility.
The first of these options involves the customer buying the $6,500 Powerwall, and then getting monthly bill credits of $31.76 -- a figure that would take 17 years to pay back the battery’s cost. The other, and seemingly more attractive, option is to get the battery free of charge, and then pay a monthly fee of $37.50 -- what amounts to an interest-free 14-year Powerwall installment plan.
This is less than half the costs of $86 per month that Green Mountain Power has calculated for the 7-kilowatt-hour systems it’s deploying in its “Energy City of the Future” project in Rutland, by the way. But according to its filing with the Vermont Public Service Board, the utility is also expecting to achieve a net present value (NPV) of about $50 per month over 10 years from each system, based on the grid services they can provide.
Subtract that from its $86 in costs, and you’re left with the $37.50 monthly fee the utility’s asking its customers to pay -- a fairly transparent sharing of costs. As for what it intends to do with these batteries to earn $50 per month, here’s the plan:
During normal (i.e., non-outage) conditions, GMP will have the ability to control the charging and discharging cycles of the batteries. For customers who agree, this will enable GMP to discharge batteries during (1) times of high market prices to help lower its energy costs and (2) times of peak load to help reduce significant capacity and transmission expenses. Those savings will directly benefit customers."
The biggest and most predictable benefits will come from reducing capacity and transmission expenses from grid operator New England ISO, which can add up to 20 percent to 30 percent of the cost of energy for utilities in the region. The first is the forward capacity market (FCM), which sets the price of future grid capacity for the region’s utilities, based on their share of peak power consumption on the days when the ISO reaches its own system peaks. The second is the regional network service (RNS) charge, meant to cover a utility’s share of transmission infrastructure costs and based on monthly peaks.
Green Mountain Power intends to use its Tesla batteries to meet 100 percent of the FCM peaks, and 75 percent of the RNS peaks, for customers who’ve chosen the $37.50-per-month installment plan. For customers who decide to receive a $31.76-per-month credit instead, the utility assumes the batteries will hit 75 percent of the FCM peaks, and half of the RNS peaks.
Energy arbitrage is a third value stream, with an eye toward storing energy to ride through cold snaps, when regional energy prices can spike, Josh Castonguay, GMP’s director of generation and renewable innovation, said in Friday’s interview. All together, these values can be calculated down to the individual customer, using the real-time broadband or cellular-connected SolarEdge inverters it’s installing with eachsolar-battery project, he said.
“For every kilowatt we can knock off that peak, there’s a dollar-figure savings for our customers,” Castonguay said. This assumes, of course, that the utility doesn’t tap the batteries when they’re going to be needed for emergency backup. GMP CEO Mary Powell noted that the typical winter outage in Vermont lasts about 2.5 hours, which could require most of a Powerwall’s capacity -- or a lot less, if people minimize their electricity use through the downtime.
That’s a key focus of the Rutland project, which is combining Powerwalls with rooftop solar, smart thermostats, energy-efficiency improvements, and real-time connectivity to its distribution grid and customer data systems, according to Castonguay. But it will also apply to the direct-to-customer batteries it’s selling, under the state’s relaxed regulatory regime that allows vertically integrated utilities to move novel projects, like behind-the-meter battery financing, into action far more quickly than usual.
“Our whole goal is to take the dispatch of the battery out of the customers’ hands, and use our microgrid controls,” Castonguay said. “There are times we can say, we’d like to have every Powerwall we have out there to hit our peak.” But when the weather starts to turn, or storms approach, “we can leave those alone, to provide customers that emergency backup.”
For now, backup power remains the primary reason for a homeowner or small business to install a Powerwall, Powell said -- essentially, a cleaner, if more expensive, alternative to the backup generators available today. But solar integration brings further benefits, including the potential for long-range energy balancing, and “as we deploy these, I’d like to work in more sophisticated ways with solar customers,” she said.