For Immediate Release
May 13, 2021
Media Contact
Kristin Kelly, (802) 318-0872
COLCHESTER, Vt. — Green Mountain Power (GMP) announced a new program is benefitting customers and the grid, and marks the first time stored energy in a network of residential batteries is being used to help keep the regional grid balanced. GMP’s pioneering new Frequency Regulation Pilot program allows customers to share stored energy with regional grid operator ISO-New England (ISO-NE) to keep a steady, regulated flow of energy on the grid at all times, a critical function for regional system safety and reliability for customers.
ISO-NE is continually calling on qualified regional energy producers to increase or decrease output to help maintain that important balanced flow of power on the grid at all times. Typically, this cycling on and off of energy is done by ISO-NE with fossil fuel generators through the Regulation Market, a wholesale energy market that also pays participants for their consistent, quick, and accurate responses to grid needs, which can shift minute-to-minute. Using their network of Powerwall batteries and Tesla Autobidder software, GMP is the first utility to perform this essential grid service in the wholesale power market with clean stored energy distributed from customers’ homes. In addition to cutting carbon, this pioneering project is also benefitting all GMP customers through reduced power supply costs. It creates a new value stream for all GMP customers in addition to the ongoing benefits of GMP’s earlier home energy storage programs.
Tesla’s Powerwall battery provides up to 12 hours of backup power for the whole house.
“This project would not be possible without the great partnerships we have with our customers in the Powerwall program,” said Mari McClure, president and CEO of GMP. “This pilot is unique and important because it builds off our existing innovation and collaboration to deliver meaningful change to essential grid functions by reducing carbon emissions, increasing performance and lowering costs.”
GMP successfully entered the Regulation Market with this network of residential power sources after three months of testing with ISO-NE, and partnerships with ISO-NE, Tesla and Customized Energy Solutions (CES), a software solutions company. Tesla coordinates the distributed batteries to respond to signals from ISO-NE and aggregates critical data about the response. CES provides the key integrations between Tesla and ISO-NE.
“GMP is on the leading edge of innovation, and CES is proud to be part of this innovative project, helping to enable the aggregating of multiple residential batteries into the Regulation Market,” said Craig Tropea, vice president of wholesale services at CES. “This success marks a critical point of progress and shows how a new energy future is happening right now in Vermont, leading the way for others to follow.”
200 GMP customers are enrolled in the program now, and a prerequisite is that they already have two Powerwall batteries through a GMP program. Jimmy Karlan of Guilford, Vt., is in GMP’s Powerwall program and was excited about this opportunity to share stored energy from his two Powerwalls in a new way.
“GMP is fighting the good fight to reduce carbon emissions and achieve 100 percent clean energy. I was overjoyed with the opportunity to help,” Karlan said. “The batteries provide seamless backup power at home when there are outages due to storms, as well as backup power to the grid when in need. It feels good to be part of this invisible network of Vermonters who share in their desire to help our state achieve 100 percent clean energy.”
GMP plans to expand this pilot program in the future. Customers sharing energy through the program are paid $13.50 per month on their energy statements. This includes a share for their program participation and for the increased use of their batteries, which can charge and discharge rapidly for periods of time each month. GMP takes steps to ensure that customers have backup power available if weather is predicted to cause outages. All GMP customers also benefit from the Frequency Regulation Pilot program because additional payments from ISO-NE flow to customers to lower costs.
In 2017, GMP was the first utility to partner with Tesla, and launched the first Powerwall pilot program. Now, through a series of groundbreaking programs, GMP is the first utility with tariffed home energy storage programs for customers. These programs provide participating customers with clean, seamless backup power in residential batteries in exchange for sharing some of that stored energy to reduce peak demand on the grid. There are about 3,000 Powerwalls installed in customers’ homes, and GMP’s network of stored energy, including Powerwalls, car chargers, and utility-scale batteries, helped reduce costs for customers by more than $3 million in 2020 through peak reduction, which will continue.
About Green Mountain Power
Green Mountain Power (GMP) serves approximately 266,000 residential and business customers in Vermont and is partnering with them to improve lives and transform communities. GMP is focused on a new way of doing business to meet the needs of customers with integrated energy services that help people use less energy and save money, while continuing to generate clean, cost-effective and reliable power in Vermont. GMP is the first utility in the world to get a B Corp certification, meeting rigorous social, environmental, accountability and transparency standards and committing to use business as a force for good. GMP earned a spot on Fast Company’s Most Innovative Companies in the World list four years in a row (2017, 2018, 2019, 2020). In 2021, the Smart Electric Power Alliance (SEPA) honored GMP as a nationwide leader in energy transformation, and in 2019 GMP earned the Deane C. Davis Outstanding Vermont Business of the Year Award from the Vermont Chamber of Commerce and Vermont Business Magazine.
“There are about 3,000 Powerwalls installed in customers’ homes, and GMP’s network of stored energy, including Powerwalls, car chargers, and utility-scale batteries, helped reduce costs for customers by more than $3 million in 2020 through peak reduction, which will continue.”
3,000 Powerwalls x 10,000 each, turnkey = $30 million; 10-y life
Utility-scale batteries about $10 million, 15-y life
Investments of at least $40+ million reduce ISO-NE imposed FCM and RNS charges by $3 million in 2020?
GMP should show its calculations, instead of making statements that cannot be verified!!!
The batteries come with subsidies:
1) Grants from various sources, such as the VT Clean Energy Development Fund
2) 26% federal investment tax credits, plus state FITs. Tax credits reduce, dollar-for-dollar, the taxes GMP paid on profits
3) 100% depreciation over 5 years; the normal for utilities is 20 to 25 years. Write-offs reduce GMP taxable income
4) Deductions of interest on borrowed money. Interest deductions reduce GMP taxable income. See URL
https://solarplusllc.com/macrs-and-bonus-depreciation/
The cash value of the subsidies, about 45% of the turnkey cost of the GMP investments, i.e., about $18 million, is recovered by GMP in the first 5 years, i.e., skimming the fat off the milk for GMP, and increased costs for ratepayers and taxpayers.
Addition
The “Game of Picking Peaks” amounts to cost shifting from clever, early-adopter utilities, onto other utilities.
The ISO-NE costs of running the grid do not decrease. They continue to be spread among utilities.
The Game will end after more utilities learn to play the game.
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
Economics of Battery Project
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
If a bank makes a $3.0 million loan at 9%/y for 15 years, it would require annual mortgage payments of $365,136, to recover the loan, plus interest.
If GMP makes a $3.0 million investment in a battery system at 9%/y for 15 years, it would require annual payments of $365,136, to recover the investment, plus a 9%/y return on invested capital.
Cost of financing would be 5,477,040, total payments – 3,000,000, turnkey cost = $2,477,040, paid over 15 years.
It is assumed GMP finances the battery from its own resources, i.e., the $5,477,040 would be paid to GMP
It is assumed the value of the battery system is about zero at end of Year 15.
Revenues are $179,880/y, RNS and FCM reduction + $7,653/y, arbitrage = $187,533/y. See table 6
Revenue shortfall is 365,137, paid to GMP – 187,533, revenues = $177,604/y
Subsidies are 177,604, revenue shortfall + 102,468, bulge control loss + 27,302, battery loss = $307,374/y, which would be charged to ratepayers and taxpayers and added to government debt. See Notes and table 6
Battery throughput is 2920 kWh/d x 365 d/y = 1,065,800 kWh/y. See table 6
Battery rated capacity is 4000 kWh/d as AC
Battery annual CF = 2920/4000 = 73%. See table 6
Battery operating range is from (4000 – 2920)/2 = 540 kWh (16.5% charged) to 3460 kWh (86.5% charged)
Operating below 16.5% and above 83.5% would significantly shorten the battery life, and would be less efficient
Cost of paying GMP = (365,136) / (1,065,800, maximum throughput) = 34.26 c/kWh.
Cost of subsidies is 307,374 / 1,065,800 = 28.84 c/kWh
Total cost of battery use is 34.26 + 28.84 = 63.1 c/kWh. See Note
NOTE: This report shows values of battery owning and operating costs of 46 – 65 c/kWh, which are similar to the 63.1 c/kWh of this article.
Ignored Costs of Solar and Battery Systems
1) O&M, which includes on-site use of electricity, labor and materials
2) Miscellaneous costs, such as insurance, etc.
3) Decommissioning and disposal of battery plant
4) Build new battery plant to serve for 10 years, i.e., 25y, life of solar plant – 15y, life of battery plant
NOTE: A minor revenue could be obtained by using the battery for frequency regulation, i.e., rapidly absorbing and discharging very small quantities of electricity to maintain the grid frequency and voltage within the prescribed ranges.
NOTE:
– The GMP battery project is similar to a person buying a big house, without having enough income to make the monthly mortgage payments. Luckily, that person has parents, who voluntarily make up the shortage each month!!
– The GMP battery project does not have enough revenues. Luckily for GMP, ratepayers and taxpayers are coerced to make up the shortage each month!!
– GMP wants to spread many heavily subsidized combos all over Vermont, as part of its expensive “micro-grid, climate fighting” strategy, which will be good for GMP financial results, but not good for ratepayers and taxpayers and the Vermont economy.
Production of Panton Solar System
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
Production data and capacity factors are shown in this URL
Production was 1.272 MWh at a capacity factor of 34.891% on May 1, 2020
The annual average CF is about 0.20, which is greater than normal (0.145), because, instead of panels at a fixed angle, the panel angle is automatically varied during the day, to better face the sun.
Midday Solar Bulge
The bulge would be a maximum of about 4.9 x 0.8 = 3.92 MW, during a very sunny, summer day
The battery system would absorb electricity to reduce the bulge by about 1 MW.
GMP likely knows how much that 1 MW reduction benefits the stability of the distribution grid
During the late-afternoon/early-evening, the battery would discharge “the bulge”, at 1 MW, and thereby reduce the GMP peak demand.
GMP likely knows how much that 1 MW reduction would benefit GMP and ratepayers.
Economics of Solar Project
If a bank makes a $14.7 million loan at 9%/y for 25 years, it would require annual mortgage payments of $1,480,342 to recover the loan, plus interest.
If GMP makes a $14.7 investment in a solar system at 9%/y for 25 years, it would require annual revenues of $1,480,342, to recover its investment, plus have a 9%/y return on invested capital.
It is assumed the value of the solar system is about zero at end of Year 25.
Solar production is about 4900 kW x 0.200, CF x 8766 h/y = 8,590,680 kWh/y
However, the operation of the battery system reduces solar sales by 248,200 kWh/y, or $27,302/y
Solar revenue would be (8,590,680 – 248,200) x 11 c/kWh = $917,673/y
The revenue shortfall of 1,480,342, paid to GMP – 917,673, revenue = $562,669/y has to be provided by various subsidies from ratepayers and taxpayers
Cost of solar is $1,480,342/y / (8,590,680 – 248,200) kWh/y = 17.74 c/kWh
GMP sells at 11 c/kWh, as part of the VT “Standard Offer” program
GMP receives from subsidies the equivalent of 6.74 c/kWh
Total paid to GMP = 11 + 6.74 = 17.74 c/kWh. See table 2
Each year, a solar project has other costs, which also are transferred to ratepayers and taxpayers and government debt (certainly not to the owner), which would increase the cost of electricity from 17.74 c/kWh to at least 19.84 c/kWh. See tables 2 and 6
GMP-OWNED SOLAR/BATTERY COMBO IN PANTON, VERMONT
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
GMP has built a solar/battery combo, on 35 acres of farmland, in Panton, Vermont, a rural area. The $17.7 million solar/battery combo, would provide power, for a few hours, during rare power outages; at first to about 50 users, such as Town Hall, police, fire, EMS, etc., later to additional users.
– The battery system, 10 Tesla Powerpack units, would deliver 1,000 kW for 4 hours, or 500 kW for 8 hours, etc.
– It would be connected to many users with its own distribution system.
– If the normal distribution system is down, the emergency distribution system would take over.
– The extent and turnkey capital cost of the emergency distribution system likely would be known to GMP
Turnkey capital cost of the 4.9 MW solar system, was about 4.9 MW x $3.0 million/MW = $14.7 million
Turnkey capital cost of the 1 MW/4 MWh battery system was about 4000 kWh x $750kWh = $3.0 million. See URL
https://www.vpr.org/post/green-mountain-power-eyes-panton-states-second-commercial-energy-storage-battery
GMP has built a solar/battery combo, on 35 acres of farmland, in Panton, Vermont, a rural area. The $17.7 million solar/battery combo, would provide power, for a few hours, during rare power outages; at first to about 50 users, such as Town Hall, police, fire, EMS, etc., later to additional users.
– The battery system, 10 Tesla Powerpack units, would deliver 1,000 kW for 4 hours, or 500 kW for 8 hours, etc.
– It would be connected to many users with its own distribution system.
– If the normal distribution system is down, the emergency distribution system would take over.
– The extent and turnkey capital cost of the emergency distribution system likely would be known to GMP
Turnkey capital cost of the 4.9 MW solar system, was about 4.9 MW x $3.0 million/MW = $14.7 million
Turnkey capital cost of the 1 MW/4 MWh battery system was about 4000 kWh x $750kWh = $3.0 million. See URL
Warren Buffett Riding the Subsidy Gravy Train
Quote: “I will do anything that is basically covered by the law to reduce Berkshire’s tax rate, for example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”
https://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/even-warren-buffet-admits-wind-energy-is-a-bad-investment
Green Mountain Power, GMP, Riding the Subsidy Gravy Train
Vermont utilities buy about 1.4 million MWh/y of hydro power, at 5.7 c/kWh, under a 20-y contract, from Hydro Quebec. The HQ electricity is not variable, not intermittent and does not cause midday solar bulges
GMP, a Canadian company, refuses to buy more hydro electricity from HQ, because that electricity would just be a “pass-through”, on which GMP would make minimal profit. HQ has plenty of electricity and is eager to sell it. This approach requires no subsidies!!
Instead, GMP wants to own heavily subsidized utility-scale solar/battery system combos, and spread them all over Vermont, as part of its very expensive “micro-grid” strategy. The combos are much more profitable for GMP, than buying more electricity from HQ. However, combos would lead to significantly increasing electricity costs for Vermonters.
Solar/battery combos come with:
1) Grants from various sources, such as the VT Clean Energy Development Fund
2) 26% federal investment tax credits, plus state FITs. Tax credits reduce, dollar-for-dollar, the taxes GMP paid on profits
3) 100% depreciation over 5 years; the normal for utilities is 20 to 25 years. Write-offs reduce GMP taxable income
4) Deductions of interest on borrowed money. Interest deductions reduce GMP taxable income
https://solarplusllc.com/macrs-and-bonus-depreciation/
so does this mean we can stop paying the Energy Efficiency Fee?
John,
Efficiency Vermont claims it reduces energy consumption in Vermont, based on its own method of calculating.
EV has a budget of about $60 million PER YEAR
About 40% is used for the all-in costs of payroll and benefits, including salaries, vacations, healthcare, pension, social security, etc., much better than the rest of Vermonters
The rest filters down to pay incentives to pre-selected, EV-approved contractors
Just a small amount goes to folks with low incomes, who have been brainwashed to buy heat pumps, which would give them minimal savings, if they were to live in a well-insulated, well-sealed house.
If amortizing costs of the heat pumps and service calls, parts and labor, are added in, these poor Vermonters will have an annual loss.
They will just have to console themselves with that loss, while GMP makes millions each year due to:
1) federal and state investment tax credits, which offset, dollar-for-dollar any GMP taxes paid on profits
2) 5-y write off of wind, solar and battery assets, which reduce GMP taxable incomes
3) loan interest deductions, which reduce GMP taxable incomes
4) grants from Clean Energy Development “SLUSH” Fund, which is bonus gift to GMP