27 percent of utilities are expecting to invest in behind the meter storage, according to the recently released Utility Dive “State of the Electric Utility” survey. 24 percent of utilities are already deploying behind the meter storage in pilot projects. 4 percent have already brought it into their core utility operations.
Yet despite the optimistic trend—which mirrors the projections of the industry analyst community—and the well-known value streams associated with behind-the-meter storage, there are still relatively few third-party studies that demonstrate, using data from systems installed in the field, how the value of distributed storage can be shared between the customer who hosts the storage on her premise, the distribution grid, and the wholesale market.
A new feasibility study released by Alectra Utilities and the Independent Electricity System Operator (IESO) in Ontario provides a powerful illustration to utilities and regulators of what distributed solar and storage can contribute to the electricity value chain when aggregated in concert as a virtual power plant across an entire service territory.
The feasibility study is based on research conducted by a group of stakeholders that included Alectra Utilities—the second largest municipal utility in North America—the IESO, Navigant, Sunverge Energy and others in conjunction with the Power.House pilot, a 20-home solar and storage deployment that launched in early 2016. The study defines the technical and market potential of residential solar and storage in the York region—a geographic area in southern Ontario that encompasses one million customers and nine municipalities. The study evaluated different elements associated with the widespread adoption of the Power.House offering, including the market potential for adoption, the associated value streams, the opportunity for non-wires alternatives, barriers and catalysts to adoption, costs and scalability considerations, and the value associated with services that the technology can offer. The study concludes that the deployment of solar and storage to 30,000 homes in the York region can create significant net economic benefits to the electricity system over a 20-year time horizon.
Alectra and the IESO quantified the economic benefits of an expanded Power.House program under two scenarios: a base case, reflecting current trends in system costs and electricity demand, and a deep-de-carbonization case, reflecting “higher levels of electricity demand sparked by aggressive policy and market driven electrification.” The 30,000 home figure is taken from the base case, which projects CAN$180 million in cumulative net benefits for Ontario over the lifetime of the program. The study defines cumulative net benefit as “the economic impact and resulting value to Ontario electricity customers as a whole reflecting both total costs and benefits, independent of who pays or who benefits from the deployment. This approach is consistent with the perspective used in supporting the [Ontario] Long-Term Energy Plan analyses.” Under the deep decarbonization scenario, Alectra and the IESO found that an expanded rollout of Power.House could create a cumulative net benefit of CAN$2.7 billion.
Power.House launched as a solar+storage offering that 20 single-family residential customers in Powerstream service territory subscribed to early last year (Powerstream went on to merge with Horizon and Enersource to become Alectra Utilities). For an upfront cost of CAN$3,500, plus a $20 payment per month over a 5-year period, customers received a 5 kW solar array with a 6.8 kW/11.4kWh Sunverge One system. Alectra promised customers that bill savings over the first five years would pay off the upfront cost of the system—if they don’t, Alectra will make up the difference. Alectra placed these customers on a TOU/NEM tariff, and Sunverge’s software—which runs both on premise and in the cloud—managed stored solar energy on the customers’ behalf to maximize their economic outcome. The initial deployment was successful: the pilot was oversubscribed, thanks to Alectra’s marketing efforts, and average customer bill savings between May-July 2016 totaled $142/month.
The feasibility study began once the Power.House pilot was off the ground. One of the first steps was to analyze the technical and market potential of similar solar and storage offerings. The study considered technical eligibility factors for solar, such as roof space and shading, as well as customer eligibility factors, such as internet connectivity, residential load profiles, and whether homes are rented or owned. They also conducted power flow modeling on their distribution network to estimate what penetrations of DER could be sustained while maintaining reliability. Finally, they developed two different solar+storage offerings: one for large homes (5 KW solar / 11.6 kWh storage), and one for small homes (3 kW of solar / 7.7 kWh storage). Although the large home offering had a higher upfront cost, the study found that it yielded a faster payback.
Alectra also evaluated whether the virtual power plant could serve as a meaningful alternative to transmission and distribution infrastructure. They evaluated two substations, and found that it makes economic sense to defer upgrades on one substation in the York region for two years, generating an estimated savings of $12 million (2016).
To analyze the value that solar and storage could contribute to system reliability, the IESO, Navigant, and Sunverge collaborated to develop an optimal dispatch profile for the aggregated solar and storage resources. According to the study, “the team used a combination of historical and simulated market data to develop an optimized hourly system dispatch profile for a given reference year. This dispatch profile was seen as the reference profile to maximize the value generated by the system both from a customer and market revenue perspective.” This calculus also encompassed the customer value stream, in which the Sunverge software manages the home load, solar, and storage in real time in order to maximize the economic benefit for homeowners on the TOU/NEM tariff. The testing of these dispatch profiles was conducted on a subset of the fleet deployed in the Power.House pilot. The image below shows the responses of individual units within a VPP operating against a plan of prioritized use cases, including regulation (8-10 hours per day), demand response, operating reserves, peak reduction for deferral, and end of day PV ramping.
The study underscores Sunverge’s original mission: Distributed energy storage and solar, when aggregated into a large–scale, software-managed virtual power plant, serve as a meaningful alternative to traditional forms of generation and infrastructure.