By John Downey
The N.C. Utilities Commission has approved — with some conditions — Duke Energy Progress’ proposed solar-and-storage microgrid designed to improve power reliability and avoid long outages in the isolated town of Hot Springs, North Carolina.
The restrictions include a cost cap, confidential for now, above which Duke would have to prove additional costs are justified before it could add them into its rate base. The commission is also requiring Duke to outline what it hopes to learn about microgrid performance from the project and provide annual reports on how often the storage battery is used, whether it is recharged from the solar panels or from power on the grid and how often outages are avoided or mitigated, in addition to other operational details.
Duke already agreed to all those conditions in a settlement reached with the Public Staff of the N.C. Utilities Commission, charged with protecting utility customer interest in the state. So the conditions will cause no delay in construction of the project.
Duke spokesman Randy Wheeless says construction should start by mid-summer and be completed in the first half of 2020. The microgrid will have a a 2-megawatt solar farm paired with a 4-megawatt lithium battery that will improve the power quality in the remote community northwest of Asheville, near the Tennessee border.
“The microgrid concept will be an important tool for Duke Energy to strengthen the energy grid and help overall reliability to customers,” he says.
The Hot Springs project will be Duke’s first utility-scale microgrid that will serve residential and commercial customers. The town is served by a single, 10-mile-long, high-voltage transmission line connecting it to Duke’s larger power grid and, ultimately, its power plants. Because of the single line, the area is subject to frequent power outages that can often last a long time. The microgrid, with its solar and battery sources, can keep electric service available to customers while the line is repaired.
The costs of the project and the cap the commission has placed on it are redacted in the order issued in late Friday. When Duke first announced it would put a storage battery in Hot Springs, it was paired with a proposed 9-megawatt battery in Asheville, and Duke said the two projects would cost about $30 million. But it did not break them out separately and did not say whether any of the the solar costs were included in those estimates.
According to current estimates of project construction costs calculated by the U.S. Energy Information Administration, the solar piece of the microgrid is likely to cost $2 million to $3 million. The storage piece is likely to cost about $8 million, according to EIA estimates. There are likely to be additional costs for connecting the microgrid to the larger Duke system. But that gives a rough idea of the project’s price tag.
The final costs will be known after construction, once Duke seeks to put them in its rate base. They are only confidential now to ensure that Duke is able to negotiate a fair price with contractors.
In the order, the commission says it “supports the cost-effective development of solar and battery storage by (Duke Progress) … and encourages DEP to continue to pursue such projects on behalf of its customers.”
But the commission notes some caveats.
“Though it is undisputed that the Hot Springs microgrid should improve reliability in the Hot Springs area, based on the testimony of the Public Staff, it is not clear that it is the most cost-effective way of doing so,” the order says.
The order goes on to note that there are other benefits from battery storage — including frequency and voltage regulation and the ability to ramp up and down during rising and falling demand — that are hard to quantify without significant amounts of data. “Operation of the Hot Springs Micro-grid will provide valuable operational experience as battery storage and solar technologies continue to develop and evolve,” the order says, and will help resolve some of those questions.
Wheeless says Duke Energy Corp. (NYSE: DUK) is considering other microgrids on its Duke Progress and Duke Energy Carolinas systems, though it is not ready to announce any at this time. Some might be similar to the Hot Springs project — serving a remote community with single-line service that can lead to extended power outages. But there are other possible uses. He says a micorgrid could also be useful for large, critical-service customers — like hospitals, emergency services and military bases.
“We are looking at microgrids as another tool in the box, he says. “They are not just for one scenario, but for any situation where such a system would make sense.”