Pa. power storage: Who’d foot the bill for batteries?
Late last year, months before the country got a dramatic lesson in what is otherwise the wonky workings of the Texas electric grid, Pennsylvania regulators began a discussion about batteries and how they might help utilities avoid the types of disasters that befell the Lone Star State and bring other benefits to local grids.
Comments — hundreds of pages in all from utilities, industry groups, consumer advocates and environmentalists — poured in just as the scope of the grid failure in Texas was coming into full view. The deadline for the Pennsylvania filings was the same day that the operator of the Texas transmission grid announced it was “seconds and minutes” from catastrophe. More than 4 million residents were without power last week in freezing temperatures. Those who were fortunate enough to keep their lights on are now facing extraordinary electric bills.
While the questions that the PUC posed dealt with batteries on local utility grids, such as those operated by Duquesne Light and West Penn Power in southwestern Pennsylvania, and not a transmission grid like the one that nearly collapsed in Texas, the Lone Star State’s experience nevertheless served as a real-life demonstration of what could go wrong and what could potentially be mitigated with strategically placed batteries.
“Energy storage can change the utility industry by adding a buffer to what is currently a justin-time production and delivery system,” Allentown, Pa.-based utility PPL wrote in its embrace of the technology.
Batteries won’t eliminate the root cause of outages, such as equipment failures at power plants (as happened at gas, coal and nuclear facilities in Texas), or downed wires from bad weather ( same), but they can serve as backup during those outages, said Akron, Ohio- based FirstEnergy Corp., which owns West Penn Power, to keep the lights on until traditional sources of power are restored.
The Natural Resources Defense Council noted that batteries can store intermittent solar and wind energy and feed it into the grid during peak times. (A number of wind turbines were frozen during the storm in Texas and couldn’t produce power, although they were not the main cause of the blackouts.)
They can also help Pennsylvania meet its goal of decreasing carbon emissions by filling in during
heavy use times, supplanting fossil fuel generation when air quality is compromised, environmental advocates noted.
“During unprecedented heat waves in California, hundreds of energy storage facilities at businesses and institutions across the state were called to operate collectively as a ‘virtual power plant,’ reducing demand on an over-taxed grid,” wrote the Advanced Energy Management Alliance, a Washington, D.C.-based industry group.
Batteries can help utilities regulate the quality of the power they supply — making sure that voltage flickers don’t damage expensive customer equipment, utilities said.
They can be placed in remote areas where building wires and substations can be costly and difficult, and in socially disadvantaged areas to ensure that hospitals and shelters can continue to function during a grid outage, a group of environmental advocates wrote.
As the push to electrify cars puts more pressure on the grid, batteries can come to the rescue, FirstEnergy noted.
Everyone involved agreed that batteries should be part of a modern utility’s toolkit.
But the agreement ended there.
When the PUC asked how batteries should be defined within the boundaries of our electric regulations — whether they are power makers, power takers or power movers (generation, load, transmission or distribution) — there was no consensus.
The argument isn’t a semantic one and could determine if consumers will be
asked to foot the bill for a utility’s foray into energy storage.
Pennsylvania law, which deregulated the electricity market more than two decades ago, prohibits utilities from owning generation assets.
So if the PUC treats batteries
as a generation source, akin to a power plant and similar to how they function on the nation’s largest transmission grid, which includes Pennsylvania, utilities won’t be able to claim them as part of their distribution systems.
All the utilities that submitted comments argued they should be allowed to own batteries. They also argued that, as with any other part of their distribution infrastructure, the cost to deploy them should be recovered through customer rates, which gives the utility a guaranteed return on its investment.
Duquesne Light, the Downtown-based electric utility for much of Allegheny and Beaver counties, urged the PUC not to put batteries in a restricted box and suggested they might warrant the creation of a separate category with its own rules.
Several commenters including a battery developer suggested that if utilities want to rely on batteries, they should outsource their development to third parties and simply sign long-term agreements for their services.
“Energy storage development is not a natural extension of the traditional role of utilities to justify a utility using its distribution monopoly status to recover costs through rate base,” wrote the Retail Energy Supply Association, which represents electric generation suppliers. “Nor does the utility have any type of ‘monopoly’ on energy storage development.”
But Duquesne Light countered that while it has a statutory obligation to ensure safety and reliability, “thirdparty battery operators, on the other hand, may be subject to different incentives and have less operational visibility into [a utility’s] distribution system.”
The PUC has not proposed any new regulations for battery storage but initiated the comment period to begin the debate.