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Danville Utilities in Virginia has plans for a 10.6-MW battery storage system

December 18, 2020

by Peter Maloney
APPA News
December 18, 2020

Public power utility Danville Utilities in Virginia is moving forward with a battery energy storage project designed to shave its peak charges and save the utility and its customers money.

The Danville Utility Commission at its Nov. 30 meeting voted unanimously in favor of the 10.6-megawatt (MW), 23.3 megawatt hour (MWh) project.

The proposal is scheduled to be discussed at a work session of the Danville city council on Jan. 5. If it moves forward, the proposed project will be on the agenda for a vote on final approval at the council’s Jan. 19 meeting.

If approved, Danville Utilities is targeting Dec. 1, 2021 for operation of the battery system. It would be the public power utility’s first energy storage system.

“We are looking to take advantage of the battery storage system to reduce our exposure during generation and transmission peaks,” Jason Grey, director of Danville Utilities, said.

Not being an all-requirements utility, Danville gets is electrical power and transmission services from a variety of sources, including the PJM Interconnection. Danville, which is on the Virginia-North Carolina border, is just a couple of miles within the limits of PJM’s territory.

Danville Utilities has been looking at a battery system for well over a year but didn’t pursue one. “We kept an eye on battery prices and revisited the idea when prices came down,” Grey said.

If the project is approved, Danville Utilities would enter into a 20-year capacity agreement with Delorean Power, the Arlington, Va., company that would build, own and operate the storage system. The project is sited on an unused plot of land, about 100 feet by 70 feet, outside a utility warehouse in Danville.

Under the agreement, Danville Utilities would pay $4.25 per kilowatt per month, or about $541,000 in the first year with the costs declining slightly thereafter to reflect the 1.5% annual decline in battery capacity.

The utility would charge the batteries during off-peak hours when energy prices are lower and discharge the batteries during on-peak hours to offset or avoid transmission and energy capacity costs.

By the utility’s estimates, Danville would save $1.2 million in transmission and capacity costs in the first year of the agreement. And, over the 20-year life of the agreement, the utility would spend about $9.6 million in capacity payments to Delorean but save about $48.3 million in generation and transmission capacity charges.

Because so many transmission owners are implementing upgrades, transmission charges have been rising about 15% every year, Grey said.

By using the batteries to shave the peaks off its capacity charges, Danville Utilities expects to also be able to reduce its power cost adjustment, the sum that the utility charges customers to cover the over- or under- payment customers make through their monthly base rate. “When we can lower our power cost adjustment, it helps ratepayers,” Grey said.

The proposed battery storage project is kind of a trial, Grey said. “We hope to learn about the technology” and decide if it is a viable solution. “If it performs as anticipated, we could do another project in two or three years.”

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