Lessons from a Battery Sharing Program in Hawaii – It’s Not Easy Being Green

Hawaii is struggling to shut down its oil and coal-fired power plants. Everyone agrees it’s the right thing to do. After all, Hawaii, like most islands, is particularly vulnerable to sea level rise. are among the highest in the country.

Consider that Hawaii enjoys abundant sunshine and strong breezes year-round, and the case for renewable energy is even more compelling. This does not mean, however, that the transition to renewable energy is easy. In particular, the production of solar farms tends to decline at the end of the day when the demand for electricity increases. Energy storage is the key.

Hawaii Drum Bonus Program

Companies like ESS and Form Energy promise affordable long-term storage, but these technologies are still in their infancy. Hawaii needs battery storage immediately, if not sooner. And so last March, HECO, the state’s main utility company, launched a grand experiment to pay households for sharing electricity in their residential storage batteries during peak demand hours. Six months later, nearly 1,800 families have joined the Battery Bonus program.

Once they have all installed and checked their batteries, this will represent 10 MWh of committed capacity helping the grid each night. The goal of the program is to supply 50 MWh by summer 2023.

The program is easy as pie. No smart grid control, no sophisticated grid stabilization services. The batteries are simply programmed to send energy back to the grid every day between 6:00 p.m. and 8:30 p.m. The battery’s stored energy is first harnessed to meet household needs. After that, the battery sends its remaining power to the grid to be used by others.

Participants receive an initial bonus of $850 per kilowatt ($4,250) when they commit to the program for 10 years. They also earn a monthly bill credit of $5 per kilowatt for the duration of their participation. That’s another $3,000 in monthly credits over a decade. In addition, HECO pays the retail tariff for electricity re-exported to the grid.

In other words, if a typical 5 kWh household battery costs $10,000, the Battery Benefits program will pay the customer a total of $7,250 over the next ten years. This means that a large part of the cost of a battery is paid by HECO. Additionally, homeowners are now eligible for a 30% federal tax credit whether or not they have a solar system. (Before the new IRA law, only systems that combined solar power with a battery were eligible.)

The devil is in the details

If it’s such a good deal, why isn’t everyone committing to it? That’s an excellent question. According Canary Islands Media, with large-scale solar and battery projects on hold due to supply chain issues, HECO needed any additional clean energy it could harness to keep the grid running smoothly after the planned plant shutdown coal. Driven by necessity, regulators, solar installers, and the utility banded together to quickly design and approve a workable plan to engage individual consumers in supplying the power grid.

But the plan only guarantees reimbursement for electricity sent back to the grid at retail rates for three years. After that it could continue retail or it could be less. No one knows at this point, and as any professional salesperson knows, people with questions often put off buying decisions until their questions are answered.

“Battery Bonus is a demonstration of how [distributed energy resources] can be used as a grid service to retire fossil fuel power plants and decarbonize your grid and your economy,” said Rocky Mould, executive director of the Hawaii Solar Energy Association. Canary Islands Media. This concept of engaging distributed energy resources is being discussed across the country, but “sometimes you have to learn by doing. You won’t know until you do it.” He suggests that Other states could learn from Hawaii’s experience when designing their own programs to harness households (or electric car batteries) for clean energy.

Now that it’s increasingly affordable for households and businesses to generate and store their own clean electricity, people across the country are finding ways to make it profitable. Efforts underway in California, Utah and Vermont, for example, reward customers for using their energy devices in a way that helps the broader power grid. This requires outreach to ensure people are aware of the opportunity. But customers also need to feel like it’s a good deal to justify the legwork required to sign up.

But finding the right balance of incentives required several revisions to the program. HECO launched an early version in the summer of 2021 to avoid a potential power shortage in the post-coal era, but the incentives weren’t high enough to convince many customers to sign up. After several months, the utility partnered with the home solar industry to find more attractive compensation.

“When we launched it, we knew it probably wasn’t going to be perfect and we had to adjust later,” said Kaiulani Shinsato, director of customer energy resource programs at HECO. “The hard part is that we can’t change things too often because…[customers] need some degree of security.

Applications increased after incentives were increased earlier this year, Shinsato said. But HECO doesn’t want to overpay because that would unfairly shift costs to customers who don’t have batteries. This logic is familiar to anyone who follows the net metering debates for solar energy. Utilities routinely cite equity as justification for paying less than the full retail rate for solar customers generated on their rooftops.

The net metering conundrum

The only formal point of disagreement between Hawaiian Electric and the solar industry was the utility’s resistance to setting a long-term export rate for the program. If customers receive the full retail rate, there is no economic penalty for their participation. If they’re getting less than the full retail rate, it might make more sense for them to keep their electricity in their battery and use it for their own needs rather than sharing it with the grid.

“An export that does not sell at retail [rate compensation] is an economic loss at the margin,” says Mold. “And what happens is it builds up over time. It eats away at the initial payment you receive.”

If Hawaiian Electric ended up reducing this compensation, customers would be locked out. If they withdraw from the battery bonus before the end of the 10-year period, HECO may recoup a prorated portion of the initial bonus payment, which could amount to thousands of dollars.

The result has been that most Battery Bonus participants are people who installed rooftop solar systems before 2015, as they are grandfathered under the old net metering rules that pay the full retail rate for all exports to the network. Hawaii ended its net solar metering program in 2015 for new rooftop installations over concerns that too much solar power would rush onto the grid on sunny afternoons and potentially destabilize it.

“The way we’ve positioned Battery Bonus is that it’s a tremendous opportunity for our customers with existing net metering systems,” said David Gorman, president of Oahu-based solar installer RevoluSun.

The island of Oahu, where the battery bonus program is offered, has 48,310 net-metered solar customers with a total of 328 megawatts of PV capacity, Mold says, so there’s still a large number of participants. first-order potential. Now that the early friction with permissions and validation has eased, the pace of signups may increase. “When people start getting these checks and telling the water cooler about it, it has an exponential effect on demand — it’s not linear,” Gorman said.

But the program would fall short of its visionary potential if the only households financially incentivized to participate are those who signed up for solar on a tariff the utility eliminated during the Obama presidency. And it’s not clear that paying the retail rate for customer battery exports is actually a bad deal for utility customers as a whole. The alternative is to burn more oil, which is so expensive right now that HECO has raised its rates several times throughout the year, much to the public’s dismay.

Shinsato acknowledged that the uncertainty after third grade is a challenge for adoption. “Longer term, we want the devices to be more operationally flexible so that we can call them when the network needs them, even outside of that peak two-hour window. This is absolutely critical, especially on this island. We are going to need our customers to help us” in order to achieve 100% renewable.

HECO is working with Siemens and Kitu Systems on software to manage a variety of energy devices in its territory. But national standards for how all of these distributed-energy devices must communicate won’t be finalized by the time Hawaii has to implement them. “We are breaking into new territory on many of these issues,” Shinsato says.

Households may soon take on more roles traditionally performed by centralized power plants. This would mean that the collective population of Oahu would not need to fund the construction and operation of larger-scale network infrastructure, as they would make better use of the small-scale equipment that is already there.

It’s the billion-dollar price tag that could make a huge difference in places like California, which has thousands of untapped home battery systems — and a chronic problem finding enough power to run air conditioners. during a heat wave. Hawaii sprang into action to deal with an emergency and is now fine-tuning its approach for the long term. What HECO is learning could provide important lessons for utility companies in other states to emulate as they design their own shared energy systems.

[Author’s note: I actually know the correct spelling for America’s 50th state is Hawai’i and that native Hawaiians get offended when clueless mainlanders don’t know this. However, Google insists I spell it without the apostrophe in order to perfect the search optimization protocol that is essential to online resources such as CleanTechnica. If you are annoyed by this, please make your displeasure known to Google, not me. Thanks for understanding.]


 

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Ryan H. Bowman