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Does Tri-State's energy policy deter co-ops from battery investment?

Source: 
The Durango Herald

WASHINGTON – A sweeping package of sustainable energy legislation moved closer to passage in the U.S. Senate this week, when a bipartisan group of senators jostled for support from the U.S. Department of Energy.

Much of the legislation focuses on boosting funding and research for grid-scale energy storage technology. Today's lithium-ion batteries can store energy for only about four hours. Innovation in long-term, seasonal energy storage will be required to take full advantage of solar and wind energy, Senate energy committee members said.

But the Expanding Access to Sustainable Energy Act, introduced by Sen. Amy Klobuchar, D-Minn., and co-sponsored by Sen. Cory Gardner, R-Colo., focuses on extending energy storage advancements to rural electric cooperatives.

"It empowers rural communities and electric co-ops to develop their own energy storage and grid improvement projects by providing technical assistance and grant support," Klobuchar told the Senate energy committee.

Under the proposed law, the Department of Energy would establish a grant program targeting rural co-ops.

In a statement, Department of Energy Assistant Secretary Bruce Walker said the department would work with the Congress on the bill, but he refrained from supporting it.

"I hope (the Department of Energy) will see the benefit of supporting rural electric cooperatives to explore electrical energy storage opportunities in rural America," Gardner said at Tuesday's legislative hearing.

La Plata Electric Association, which serves tens of thousands of customers in La Plata and Archuleta counties, could benefit from the proposed grants, depending on how they are implemented, said Ron Meier, manager of engineering and member services for LPEA.

Federal tax breaks for solar and wind power, as well as energy storage, do not generally benefit electric co-ops like LPEA, Meier said. They would have to enter a purchase power agreement with their electric supplier, Tri-State Generation and Transmission Association.

Tri-State has 43 member co-ops and electric companies across Colorado, Nebraska, New Mexico and Wyoming. They invested in coal decades ago but generate a third of their electricity from renewable sources today, according to Tri-State's website. Under the contract, LPEA is obligated to purchase 95% of its energy from Tri-State until 2050.

"That's where the rub can come between LPEA and Tri-State because anytime we enter a purchase power agreement, that's where the 95% rule starts showing up and starts becoming an inhibitor on projects," Meier said.

LPEA and an engineering consulting firm are in the middle of a feasibility study to look at implementing batteries to store excess rooftop solar energy. Depending on the results of the study, the co-op could start a couple of pilot projects as a part of its 2020 budget.

But, Meier said, Tri-State may view stored energy as part of the 5% of energy LPEA is contractually allowed to generate.

"There's a question when it comes to energy storage: Is that a generator or is it not a generator (of electricity)?" Meier said. "There's also a question to what energy storage offsets from our power bill."

Tri-State did not respond to requests for comment for this article. It issued a request for proposals in June to increase solar and wind energy resources.

United Power, a Tri-State member co-op based in Brighton, is in the process of negotiating with Tri-State to get those questions answered. How they resolve the dispute may have implications for the whole U.S. electricity industry, United Power's business director Jerry Marizza said.

In 2017, United Power installed Colorado's largest grid-scale battery system: a 4-megawatt Tesla battery and a 0.5-megawatt one. These batteries store energy to be used at high-demand hours, a practice called peak shaving, which can reduce the amount co-ops pay to their electric suppliers, Marizza said.

Tri-State did not have a policy on batteries regarding peak shaving or the 95%-5% rule in 2017. United Power purposely charged its batteries with electricity it bought from Tri-State, as opposed to its solar panels, in an effort to show it was not storing power it generated.

When Tri-State was considering establishing a battery policy in February 2018, Marizza asked the energy supplier to hold off; United Power was happy to freely store energy to use for peak energy-use hours.

"What I asked them was to do nothing," Marizza said. "(The battery) doesn't make energy, it stores energy."

Instead, Tri-State classified batteries as energy generators and therefore they apply to Tri-State's 95%-5% rule. United Power's battery project itself is not currently under contract, which is the subject of its current negotiations.

Marizza hopes to reach a compromise with Tri-State, as well as batteries' role in peak shaving, by September. LPEA and other member co-ops are closely watching the negotiations, Marizza said.

In November 2018, United Power Board Chairman James Vigesaa wrote a letter to LPEA and raised concerns about Tri-State's high energy costs and its commitment to renewable energy.

"United Power also feels that Tri-State's reluctance to embrace additional sources of renewable energy generation due to constraints of its largely fossil fuel generating fleet, creates growing problems with our environmentally conscious residential, commercial and industrial members," Vigesaa wrote.

LPEA board members voted last week to request an estimate from Tri-State of how much it will cost to buy out the co-op's contract. Board members have expressed concern with Tri-State's reliance on coal.

Instead of leaving Tri-State completely, United Power wants to store and generate more of its own renewable energy.

Sen. Martin Heinrich, D-N.M., who has worked closely with Gardner on grid-scale energy storage legislation, said Tri-State's contracts are unfair to member co-ops and consumers who prefer solar and wind to coal.

"They are really holding back a host of local co-ops from providing the kind of electricity that their constituents, in many cases, are asking for," Heinrich said. "They need to have a 21st-century attitude and that is something they lack."

The sustainable energy package could get a vote in the Senate energy committee as early as next month, said committee Chair Sen. Lisa Murkowski, R-Alaska.

James Marshall is a student at American University in Washington, D.C., and an intern for The Durango Herald.

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