Massachusetts Envisions Huge Growth in Energy Storage

Mount Tom site to serve as a model for future projects

By Ed Burke, Dennis K. Burke Inc.

Can Massachusetts meet its goal of 200 megawatt-hours of energy storage by 2020? Many are looking at the Mount Tom project in Holyoke, and say it just might.

Holyoke Gas & Electric (HG&E) will soon have the capacity to store green electricity generated at a solar farm on the grounds of a former coal plant, allowing the utility to meet peaks in demand without buying power from the grid.

In October, HG&E announced the construction of a 3-megawatt, 6-megawatt-hour energy storage system at the Mount Tom site in Holyoke. The system is expected to be up and running in April. Green Charge, a subsidiary of ENGIE North America, will operate the system.

Electricity produced from the 5.76-megawatt solar farm will be stored in the energy storage system. HG&E can then call on that power during local and regional peak load periods without going to the grid and paying peak-time power prices.

The project is expected to stabilize rates for HG&E customers over the next 20 years and improve reliability and stability across the system.

 

Mount Tom’s Transformation

The Mount Tom site is a striking snapshot of the past and the future. The 128-acre site along the Connecticut River was home to a coal-fired power station for decades. Facing the cheaper alternative of natural gas, the facility was closed in late December of 2014.

In 2016, Holyoke decided to build a solar farm on the site. Construction on the Mount Tom Solar Farm began in October 2016, and it started producing power in January 2017. The $10 million, 17,000-panel solar farm occupies 22 acres in the shadow of the smokestack of the former coal facility. The solar farm produces enough energy to power
1,000 homes.

The energy storage system, which is essentially a system of batteries, will be built in a series of weatherproof shipping containers standing six feet off the ground at the solar farm.

 

Holyoke’s Financing Model

Although the Holyoke project is the largest utility-scale energy storage project to date in Massachusetts, it’s the project’s financing model that’s getting a lot of consideration.

In the Holyoke arrangement, the bank owns the battery system. PNC Bank will own the asset and lease it back to Green Charge to operate on behalf of the municipal utility customer. This arrangement lowers the cost of capital for the storage system.

The leaseback setup means the bank owns the assets and provides money to Green Charge upfront to develop the project. Green Charge will make monthly payments back to the bank, with revenue it generates from operating the storage.

With a few restrictions, the bank also gets the Solar Investment Tax Credit for the remainder of its availability.

The storage contract with Holyoke is for 20 years, the same time span as the solar contract.

 

Managing Peak Demand

In July 2017, Massachusetts announced its goal of 200 megawatt-hours of energy storage by 2020. The state has a number of municipal utilities that could make similar storage deals to better manage their peak charges.

The Holyoke project was awarded a $475,000 grant from the Massachusetts Department of Energy Resources as part of the state’s Peak Demand Management Program. The grant money is not contributing to the economics of the system; it will fund research by the University of Massachusetts Amherst to measure and analyze the storage system. The grant’s goal is to provide research and recommendations on the future value of battery storage throughout the state.

In a prepared statement, Governor Charlie Baker said, “The demonstration projects funded through these grants will strengthen our innovation economy and provide the Commonwealth with a roadmap for reducing our most expensive energy loads and securing our energy future.”

 

Changes in the Wind

Of the approximately 25-gigawatts of new utility-scale electric generating capacity added to the power grid in 2017, nearly half was generated by wind or solar. Renewable energy sources like wind and solar provide energy intermittently, and don’t always match up with demand. Energy storage resolves that issue.

As battery prices continue to fall, local utilities are increasingly looking at storage as an alternative to traditional peaking generation.

Driving down the price per kilowatt-hour, the industry believes solar-plus-storage systems could compete with some natural gas peaking power plants today or in the near future.

California’s Energy Storage Decision requires investor-owned utilities to procure 1,325-megawatts of storage by 2020. In January, California approved replacing two gas peaking power plants and one larger facility with energy storage. The three plants are no longer considered economical, but were identified as necessary for reliability.

Natural gas now accounts for about a third of the country’s electricity, but renewables like solar and wind are expanding faster, doubling their market share over the past decade to a projected 17 percent last year.

Folks working in renewable energy have been saying for years, “Just wait until battery storage gets here.” Turns out, they weren’t wrong.

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