TVA’s flexibility program enables local utilities to embrace distributed energy

by Peter Maloney
APPA News
August 19, 2020

In June, the Tennessee Valley Authority began allowing local power companies the flexibility to generate up to 5% of their average electric needs from distributed resources.

That equates to about 800 megawatts of new distributed generation, or 2,000 MW if all the generation is solar power, TVA said.

The program, approved by TVA’s board in February, allows any of the 141 local power companies that have entered into 20-year Long-Term Partnership Agreements with TVA to reduce the amount of energy they buy, potentially cutting their overall energy costs. TVA serves 154 local power companies.

TVA anticipates that much of the generation that will be built under the program will be solar power because the cost of the technology has fallen rapidly in recent years.

Since the June 22, 2020, launch, 47 local power companies have signed on to the program, citing a desire to provide customers with more renewable energy, a chance to lower costs for customers, and the economic development benefits of being able to offer renewable energy.

The flexible partnership agreement, which launched August 2019, committed to developing a flexibility solution by October 2021, but that schedule was moved forward by about 15 months to accommodate the immediate needs of customers of some of TVA’s local power companies.

It is “impressive to watch the diverse and creative solutions that are now beginning to sprout up all around the Tennessee Valley,” Dan Pratt, TVA’s vice president for customer delivery, said in a statement.

“We found ourselves in a non-competitive state when we were faced with some of the options being offered to us when school systems, universities, industries would come to us asking for renewable power and asked, ‘Can you do this for us?’” Jeff Dykes, president and CEO of BrightRidge, which provides electric and broadband services to Johnson City, Tenn., said during a Webex meeting to discuss the flexibility program. “It was always disheartening to tell them, ‘No. We agree that this is an option we should look at, but our current contract does not allow that.’”

So, the flexibility program is an opportunity to help meet customers’ needs in terms of solar power, as well as electric vehicle charging stations, Dykes said. “I think all 150-plus utilities in the valley will be able to use flexibility to their advantage,” as an economic development advantage, he added.

Dykes said BrightRidge already has “a lot of things in the hopper.” The goal is to get a large-scale solar plant in place in 2021 and some smaller solar projects that could be brought on at a quicker pace, Dykes said.

Greg Williams, executive vice president and general manager of Appalachian Electric Cooperative, also welcomed the flexibility program. “It will allow us to bring a solution to the table for a university customer” that otherwise the co-op could not do, he said during the meeting.

Appalachian Electric Cooperative has been exploring options for a number of months that will likely include solar power in combination with energy storage, as well as demand response options that would “help us lower our overall costs” by reducing demand charges, Williams said. The cooperative is in the process of preparing to issue a preliminary solicitation and is looking at potential providers, Williams said.

“We are certainly excited about the possibility [of the flexibility program] and what this truly means for public power,” said David Wade, president and CEO of EPB, the public power utility serving the Chattanooga, Tenn. area, during the online meeting. “It is really about ‘how do we serve our community in the best possible fashion?’”

One of the uses Wade sees for the program would be as a means of increasing reliability in outlying neighborhoods where adding generation would provide the redundancy to re-route power around damage when it occurs. Wade said the utility has $10 million in generation and storage projects in its budget this year.

“We do not have anything in the hopper right now, but we are certainly open to it,” Chris Davis, the general manager of Cumberland Electric Membership Corp. said during the meeting. “We see this as a marketing tool going forward.”

The new flexibility program could have a “huge impact” in the community and throughout the Tennessee Valley, Dykes at BrightRidge said.

The utility executives at the meeting said they are happy to have the reliability afforded them by a long-term supply agreement with TVA. “Right now, we need the baseload generation and support for increased renewables,” Wade at EPB said. “As the world changes, we’ll continue to change.”

Agreeing with Wade about the need for baseload power, Dykes added that the 5% mark is “just a start. It could become 20% at some point.”