San Diego Gas & Electric (SDG&E) is proposing a novel way of integrating more battery storage on the grid to help manage electric loads more effectively: invite utility customers to install their own batteries and make it worth their while with a new rate.
According to a post at Greentech Media, SDG&E has made the proposal for a pilot program part of its distribution resource plan that it and two other investor-owned utilities in California were required to submit to regulators earlier this month.
All the details are not spelled out. But the basic idea is that customers who supplied their own batteries and allowed the utility to control them at certain times would earn a “new residential energy storage rate.”
The pitch comes as utilities look for ways to integrate an increasing number of photovoltaic (PV) systems on the grid, what are called distributed energy resources, or DERs. Batteries, whether they are jumbo utility-sized installations or simpler residential-sized units, can help even out the peaks and valleys of grid demand by storing energy at times of overproduction and sending some of that power back to the grid at times of very high demand.
By shaving peak loads, batteries can help utilities avoid expensive grid upgrades, such as new transmission lines and transformers.
A new business model
A variety of utility pilot projects around the country are designed to see how batteries can be brought into the mix and ease the sharp ups and downs in supply and demand. But, Greentech Media reports, the plan from SDG&E is unusual in that the utility would not own the batteries.
SDG&E calls this a “new business and revenue model for third-party ownership of distribution infrastructure,” Greentech Media said, which would help the utility replace lost earnings it would normally see from grid infrastructure projects.
James Fine, senior economist with the Environmental Defense Fund, called the plan “a little ray of light through the darkness of the traditional utility business model.” He told Jeff St. John of Greentech Media, “It’s a new way to sustain and support the utility operations, to get away from the incentive to put more steel in the ground.”
It’s also complex. The customers who supply the batteries, for example, must have access to information allowing them to share their stored energy while keeping enough for their own needs. How to include third-party providers, such as SolarCity and Tesla, also will be difficult to resolve.
St. John writes that while the distribution resource plans submitted by California utilities have a lot of new information about what distributed energy can do for the grid, they don’t spell out how much money customers and other third-party providers could earn.
What SDG&E’s plan does say, however, is this: “Customers taking advantage of the incentive will 1) accept a new dynamic rate that more acutely aligns charging and discharging with specific grid needs and 2) allow SDG&E to directly control the storage system’s charge and discharge functions during a limited number of high-load hours annually.”
The more control a customer is willing to cede to the utility, the more the customer would benefit.