Energy storage is the new black, these days. Customer-sited “behind-the-meter” energy storage systems (located on the distribution grid) are on the rise as costs continue to fall. Yet, in most states and across most utilities, regulations and standards that touch energy storage still lag behind in addressing this unique energy resource. Last week, the Silver State set itself apart from the pack with a landmark regulatory decision on interconnection rules for energy storage.
Specifically, the Nevada Public Utilities Commission approved changes to Nevada Power Company’s and Sierra Pacific Power Company’s (collectively “NV Energy”) interconnection rules (“Rule 15”) to explicitly allow distributed energy storage systems to connect to the grid, and clarify the process that such projects would undergo as they seek interconnection.
Clarifying the “rules of the road for energy storage” ensures more efficient processes for customers, project developers and the utilities, while also maintaining grid safety and reliability. As more Nevada consumers adopt energy storage, such rules will be key to avoid costly, onerous and/or time-intensive regulatory processes.
As the Interstate Renewable Energy Council (IREC) played a leading role in advancing these reforms and negotiating the settlement among involved parties — NV Energy, Tesla, Western Resource Advocates (WRA), and the Nevada Bureau of Consumer Protection — we report out the details of these interconnection improvements with some additional insight.
In addition to some important procedural and technical updates to accommodate energy storage, the final settlement took some steps forward to ensure that behind-the-meter energy storage systems (especially those paired with distributed generation, e.g., solar PV) operate in compliance with the state’s recently restored net metering policy (NEM). Most behind-the-meter energy storage projects paired with solar PV are configured to primarily serve customer load, but at times may export excess solar PV energy onto the grid, and thus would be eligible to receive customer bill credits via NEM. During the interconnection reform discussions, the concern was raised as to how the utility would be able to guarantee that the excess generation provided to the grid was indeed generated from the NEM-eligible renewable energy. The key question under debate was how the utility could track the energy used to charge the energy storage systems, and similarly, track the discharge of that energy onto the grid.
Although IREC, Tesla and WRA argued that customer economic motivations and built-in system controls would inherently avoid NEM policy violations, NV Energy argued that it needed more data and/or verification to assure NEM integrity was not compromised.
The settlement among the parties resulted in a pilot that will run through October 2019, during which time NV Energy will install revenue quality interval meters on behind-the-meter energy storage systems to track energy charged/discharged to ensure NEM integrity. In addition to the meters, energy storage customers will have the option of using built-in system controls to limit the function of their systems to one or both of these settings:
- Non-export, i.e., the system will not export any excess energy onto the grid, beyond inadvertent export.
- NEM-only, i.e., the system will be configured only to charge with NEM-eligible electricity.
After the pilot, a Phase II regulatory proceeding will seek to determine the appropriateness/usefulness of the meter data collected, the appropriate allocation of costs for the meters (should they continue to be required), and whether or not the proposed system controls alternative and/or inverter energy data could be used in lieu of the meters.
Another key win came when NV Energy retracted its original proposal to increase interconnection application fees for NEM systems above 25 kW. NV Energy proposed larger systems be charged an $800 application fee, plus a potential $600 supplemental review fee. This request was deemed out of scope to the energy storage interconnection issues, and was thankfully put to rest.
Although they may seem extremely esoteric, the details surrounding fees, meters vs. controls, and collecting customer charging and discharging data to ensure NEM integrity can have a big impact on how quickly clean energy resources can scale and become cost-effective.
As a party to this effort over the past two years, IREC commends the Nevada commission and the parties involved in the settlement for working collaboratively and productively to achieve a compromise that will move the ball forward for energy storage in the state. The long-term benefit will be more customers investing in energy storage, unburdened with redundant costs or complicated requirements when installing their systems. That, in turn, will help scale energy storage to optimize benefits and reduce costs for all consumers and the grid.
To the Silver State goes a gold star!
Highlighted Improvements to NVE’s Interconnection Rules for Energy Storage:
- Expressly defines an energy storage device — defining storage in the rules is fundamental to allowing these systems to connect to the grid.
- Approves a bi-directional interval meter, paid for by NVE, for the temporary purpose of reporting customer usage of storage to ensure “NEM integrity” during the pilot phase — the data collected and the metering approach will be evaluated in phase II.
- Allows for “inadvertent export”, which is a nominal amount of unplanned and uncompensated electrical export from the storage device, for a limited duration — this ensures that energy storage systems designed to primarily serve on-site customer load will not be subject to inappropriate or overly onerous interconnection review.
- Clarifies that the size of storage-coupled system for the purposes of interconnection review is based on the net system generating capacity, as limited by the use of an inverter-based or other control system (“net nameplate rating”) — this ensures energy storage systems are evaluated based on their design and actual operation on the grid, as opposed to their worst-case scenario.
- Clarifies that a separate application to interconnect new load will not be required for storage devices interconnecting under Rule 15 — this is important since energy storage can sometimes act as “load” and adding an additional interconnection review would add cost and time to the process to connect to the grid.
- Sets a 10-day timeframe for the utility to notify the energy storage customer of any distribution system improvements that might be required to accommodate the new generating facility — this will help projects move through the interconnection queue more quickly (or drop out if the project can’t bear the burden of upgrades, which will help mitigate queue backlog).
- Removes the need for an additional study fee charged for modifications made to the project, in the event changes are made during the interconnection review process — this helps save costs for customers.