With all the hoopla over utility commission rulings regarding how rooftop solar gets treated in California and Nevada, we almost forgot to bring up Hawaii, which has enacted some quirky rules of its own. The state, consisting of several islands, has the highest retail electric rates in the country.
At 40 cents a kilowatt hour — compared to a national average of 12.5 cents in 2014 — Hawaii’s businesses are motivated to install solar. The penetration rate is 15 percent, which means that when the sun is beaming, it can overload the grid and brownouts can occur. Just how have state regulators there handled all this?
One way is by casting a net to find energy storage vendors that can provide the vehicles to make those electrical networks more efficient. That means that power generators don’t have to burn fossil fuels to cover those peak energy needs. The problem is that until the price of battery storage drops, Hawaii has a conundrum.
One of the steps that the Hawaii Public Utilities Commission has taken — starting last October — is to end its existing “net metering” program. That’s the method by which solar rooftop users are compensated when they send power back to the utilities through their wires. Instead of getting the full retail rate, which is quite high, the solar folks will get a fixed rate of around 15 cents a kilowatt hour. Fair?
“It’s not unreasonable for Hawaii to consider alternatives to net metering,” says Sean Gallahger, vice president of state affairs for the Solar Energy Industries Association, in an interview. “It drives a sustainable solar market.” Instead of customers getting a two-year payback, he adds, it will take a little longer.
The main utility there, Hawaii Electric, says that it needs storage devices that have 60 megawatts to 200 megawatts of storage capacity — enough to harness the electrons to provide 30 minutes of electricity. That would ease congestion on the grids when the demand skyrockets or provide a steady stream of power when the sun is hiding.
At least 40 different storage technologies now exist, which have the goal of either maintaining voltage levels on the grid, keeping wholesale electricity from gyrating or encouraging the use of more green energy. Any of today’s storage devices can inject about 15-45 minutes of power into the grid. Ultimate batteries may go for three to five hours, and run at 90 percent efficiency whereby little energy is lost during the production process.
“Because of Hawaii’s high retail prices, it is ground zero in this battle,” says Mark Bonsall, chief executive of the Salt River Project, at a recent forum in Phoenix. “It can redefine the business model of the electric utility. We know how to do utility-scale storage right, but we are still struggling with rooftop solar.”
According to GTM Research, the energy storage market was $249 million in 2012 and it could be as much as $682 million next year. An obstacle to getting there? Clean tech funding is falling, says PriceWaterHouseCoopers, in a Wall Street Journal story.
So what about cost? Generally speaking, just about everyone agrees that energy storage is a good idea that could add tremendous value in electricity markets. But the disagreement comes over who will pay for it. If a project is going to cost as much as $1 billion, utility executives are going to want to see an awful lot of data – and they are going to want to know how this price tag will be shared.
When utilities build power generation, they are looking out at least 20 years. They wan to see a return on investment in 10 years, says Jay Whitacre, engineering professor for Carnegie Mellon University in Pittsburgh. For energy storage to be competitive, it needs to be about 10 cents a kilowatt hour over the lifetime of the system, he adds.
The California Public Utility Commission has anticipated the problem and already requires the state’s three incumbent utilities – PG&E Corp, San Diego Gas & Electric, and Southern California Edison – to collectively buy 1,325 megawatts of energy storage by 2020. Hawaii’s initiatives will move those efforts further along. But is this enough?
“There are many different ideas that are getting R&D capital right now,” says Whitacre, who spoke previously with this reporter. “The best of these R&D projects will mature, and we will see demonstrations in between 2 and 6 years. Most technologies, however, are years away from being used by utilities-at-large.”
Until then, the batteries will continue to get better because of the intellectual heft going into them. However, the benefits, for now, will flow to facility managers, who need to prevent the lights from flickering out even for a moment — not to those homeowners who think they can replace their utilities.