Renewable energy in Minnesota is about to take a potentially
big step forward.
Connexus Energy is building two electricity “storage”
systems — solar-panel arrays connected to big batteries. Each battery can store
up to two hours of power, allowing Connexus to inject renewable energy into the
grid on command.
“It’s a big endeavor, especially since it is new and first
of its kind,” said Greg Ridderbusch, CEO of Ramsey-based Connexus, the state’s
largest cooperatively owned electricity provider. “It’s not research and
development. This is a commercial project.”
The $31 million undertaking marks the first commercial-battery
deployment in Minnesota, and the largest by an electric co-op in the country.
Falling battery prices have made “solar-plus-storage” a viable alternative for
Connexus.
The improving economics of storage, combined with regulatory
mandates in some states, have prompted a surge in battery projects nationwide.
Minneapolis-based Xcel Energy has plans for one of the country’s largest
energy-storage initiatives in Colorado.
Xcel’s battery efforts in Minnesota have been limited,
though it may unveil bigger plans next year.
Batteries can smooth out the variability of renewable
energy. The sun shines only during the day, and clouds can obscure it when it
does. Prime time for wind gusts is often at night, when power demand is low.
With a battery, renewable energy can be captured and pushed onto the grid when
it’s most needed.
“The holy grail for renewable energy is to have storage you
can dispatch at any time,” said Ellen Anderson, executive director of the
University of Minnesota’s Energy Transmission Lab.
Ramsey-based Connexus — which serves 130,000 customers in
portions of seven counties, particularly Anoka and Sherburne — began looking at
energy storage in 2016. At first, batteries didn’t pencil out.
But Connexus devised a plan that would work, saving the
co-op around $4 million in annual power-supply costs.
“This is a cost-efficient project for them,” Anderson said.
“They will save customers money because they will reduce peak demand.”
Power is at its most expensive when demand is at its peak —
late afternoon to early evening for Connexus, said Brian Burandt, the co-op’s
vice president for power supply. Yet solar-energy production is strongest at
midday.
The Connexus project consists of two solar gardens, one each
in Ramsey and Isanti County’s Athens Township. Together, they have 10 megawatts
of production capacity. Each solar garden will have its own battery system with
a combined 15 megawatts of storage. When stored energy is released into
Connexus’ system, it effectively replaces high-cost, peak power for about 7,000
homes.
“It’s the first modern and significant deployment of energy
storage in the state,” said Matt Prorok, senior policy manager at the Great
Plains Institute, a nonprofit energy research group in Minneapolis. And by
battery standards, it’s a fair-sized project.
Battery use in installation grows
Even bigger is a 30-megawatt battery paired with a
100-megawatt solar array being built in Arizona and a 100-megawatt storage
system under construction in Southern California. San Francisco-based Pacific
Gas & Electric recently announced four major storage projects, including
one with a 300-megawatt battery.
California has been the locus of large-scale battery
projects in the U.S., driven by the state’s energy policy. Illinois, Indiana
and Ohio have several battery installations, though they are for the most part
aimed at frequency regulation on the power grid, meaning they help smooth out
the flow of energy instead of capturing renewable energy.
Despite those buildouts, batteries are in a nascent stage.
“Things are pretty small now compared to wind and solar,”
said Brent Bergland, general manager of energy storage at Golden Valley-based
Mortenson, which builds wind and solar farms. The company in 2015 created an
energy-storage unit, which has since landed seven battery projects.
The battery market “should ramp up pretty quickly over the
next few years,” Bergland said.
GTM Research, which tracks clean power, expects the
energy-storage market to climb from 215 megawatts deployed in 2017 to 557
megawatts by the end of 2018 and approach 1 gigawatt in 2019.
The next few years should represent an inflection point,
with the storage market expanding 17-fold by 2023, according to GTM. A good
deal of that capacity will go beyond grid projects done by power companies,
extending into batteries in individual residences.
“The decline in battery prices is the biggest factor”
pushing the trend, said Mitalee Gupta, GTM’s energy-storage analyst. At the
same time, the energy density of batteries — their storage capacity — is
improving.
Wholesale battery prices have already dropped from about
$800 per kilowatt hour of storage in 2012 to $241 in 2017, she said. Another 10
percent decline is expected this year, and wholesale prices by 2022 should be
40 percent of the 2017 level.
Xcel sees opportunity in batteries
The improving cost outlook is evident in Xcel Energy’s
“Colorado Energy Plan,” the company’s proposal to close two coal-fired
generators in that state and build a raft of renewable-energy projects and a
gas-fired plant.
The plan is expected to have a large battery component: 275
megawatts spread across several renewable energy-plus projects. Last winter,
Xcel received bids from energy-storage developers that were the lowest yet
nationally for such projects.
“We are at a point where we have a really great opportunity
to maximize batteries on our system,” said Chris Clark, president of Xcel’s
Upper Midwest operations. “We are seeing good pricing in pairing batteries and
solar.”
In Minnesota, Xcel has run one battery-research project, and
had another rejected by the Minnesota Public Utilities Commission (PUC). The
company installed a 1-megawatt battery in 2008 next to a wind farm in Luverne,
which continues to operate.
In 2016, Xcel proposed another battery project, this one in
conjunction with a solar-panel array in Belle Plaine. The PUC rejected the $12
million plan after both the Department of Commerce and the attorney general’s
office opposed it, saying Xcel didn’t prove its benefits were worth the cost.
Clark said Xcel will have more to say about energy-storage
plans for Minnesota in its next long-term resource plan, which is expected to
be filed with the PUC next winter.
Connexus project watched closely
Solar panels are being installed now at Connexus’ two sites,
while lithium-ion batteries should arrive by October. The system is expected to
go online by year’s end.
“We know solar works and we know batteries work,” said
Connexus CEO Ridderbusch. “The challenge is to integrate the two and make them
work with the grid.
The Connexus solar garden is being developed by Engie, a
French energy firm, while Florida-based NextEra Energy is taking care of the
storage system. Connexus has a 25-year power-purchase agreement with Engie, a
common arrangement in the renewable-energy industry. It also has a 25-year
storage agreement with NextEra, which is unique, Burandt said.
Since energy produced by the solar panels will be captured
by the battery, the Connexus project will receive a 30 percent federal tax
credit for solar.
Connexus, like most retail electric co-ops, buys its power
from a wholesale co-op, in this case Maple Grove-based Great River Energy. But
Great River’s contracts allow its customers to generate up to 5 percent of
their own power, making room for Connexus’ renewable-storage project.
The project will be watched closely by the power industry in
Minnesota and beyond, as batteries are viewed as increasingly important to the
electric grid of the future.
They could help reduce the use of fossil-fuel generation,
particularly so-called “peaker” plants, which operate only at times of maximum
demand. Power stored in batteries can be dispatched onto the grid quickly. And
batteries can facilitate more solar and wind power.
“We expect that battery storage will allow higher volumes of
renewable energy to be integrated on the grid,” Ridderbusch said.
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