Energy Storage Drives Smart Grid Innovation

The emerging demand for well-managed grid energy storage will drive Smart Grid innovation with new business models for utilities, energy industry stakeholders, and importantly there will be new business opportunities for utility customers. This need to manage grid energy storage will require a smarter grid, with new utility regulations and new grid markets with corresponding improvements in smart metering, smart grid energy storage, and smart management of electrical loads.

We will start with this story of a small municipal utility, Princeton Municipal Light Department, PMLD, to illustrate the emerging need for managing grid storage and why business models need to change for many stakeholders as we shift to renewable power. The author has been a light commissioner at PMLD for 5 years and it should be noted that small light departments are a microcosm of the larger electric grid. PMLD has some 1500 mostly residential customers with very few commercial and zero industrial customers and we own and operate two 1.5MW wind turbines since 2009 that can provide roughly 20% of the town’s power needs. PMLD buys most of its power from NextEra and pays transmission and capacity charges to National Grid via regulations enforced by New England Independent System Operator ISO-NE based on 1-hour peak load usage. We recently analyzed how we might support increasing amounts of PV generation in town. In a hypothetical thought experiment, we imagined how we might support net metering options as each customer installed a PV system equal to their own yearly consumption until all customers had PV sourced power. Utilities everywhere struggle with this problem. While we anticipated the so-called utility death spiral with net-metering at the full retail rate, it is very interesting to observe the business model impacts of the various stakeholders as PV generation increased.

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Early on with the wind turbines, we realized we needed to move this wind power from behind the meter (servicing our own town load) to in front of the meter where they are an ISO-NE registered asset that can sell power outside of our own town. Physically, they are in town but financially they are on the New England grid. It turns out that about 9% of the year the wind machines generate more power than the town of Princeton needs so, had we kept them behind the meter we would need to curtail their power or face fines for pushing power onto the New England grid from a non-registered generating asset without an ISO-NE administered sales contract.