Colorado Utility Launches Innovative Financing Tool for Battery Storage

December 10, 2020

How EESI Helped Holy Cross Energy

The BESS on-bill tariff pilot program is in part the result of the assistance that EESI provided through its Access Clean Energy Savings program. EESI has been working with Holy Cross Energy since 2017, and helped it successfully secure $11 million in federal capital for the pilot program.

On September 1, Holy Cross Energy (HCE), a rural electric cooperative (co-op) serving 58,000 members in western Colorado, launched an on-bill tariff pilot program aimed at financing battery energy storage systems for its members. The program, known as Power+, involves six homes, which will each receive two or three of stationary and rechargeable Tesla Powerwall lithium ion battery packs. Participants will repay Holy Cross Energy over 10 years through a line item on their utility bills, to cover the costs of the Tesla batteries.

To participate in the program, members must agree to allow the co-op to remotely control the battery devices as a way to manage energy on the grid. HCE can regulate the power flowing in and out of the battery system on an hourly or daily basis, depending on the co-op’s power needs. In exchange for that control, Holy Cross Energy will pay homeowners an energy credit on their bills. HCE expects participants will receive approximately $600 in energy credits annually per battery pack, depending on how often the participant overrides HCE's usage of their battery systems. On average, participants will see a $30 to $60 surcharge on their monthly bills, including the energy credit, after installing the storage devices. The pilot will look to demonstrate the system’s effectiveness before the program fully launches in mid-2021.

Holy Cross Energy’s objectives for the BESS pilot program are to study and refine the installation process, software integration, and battery storage systems’ remote access. During the pilot program, HCE will work with local contractors to make sure they understand the battery technology and how to adequately install it. HCE is also testing the on-bill repayment mechanism to ensure that the two monthly bill line-items (the repayment charge and battery utilization credit) are properly managed through the co-op’s billing system software.

Because the Battery Energy Storage System (BESS) pilot program is capitalized by a no-interest federal loan program, HCE is financing the systems at zero-interest rates. This lowers repayment charges for participants, making them more affordable. Ultimately, HCE plans to deploy five megawatts of distributed storage in its service territory via 1,000 battery devices, at a price tag of $9 million.

Installing distributed energy resources increases wildfire and grid resilience for homes and businesses by allowing them to island themselves from the grid in case of wildfires or other extreme weather events. Power outages due to wildfires have become more common in western Colorado, which is disrupting people’s lives. Wildfires disproportionally impact communities of color, and with Latinos making up 30 percent of the population living in the three counties served by HCE, the BESS program can help Latino families that could not otherwise afford battery storage keep energy flowing while the power grid is out.

Distributed battery storage systems are also a way to help HCE reach its goal of 100 percent renewable energy by 2030. Because of HCE’s generous solar panel rebates, more than 15 megawatts of net-metered solar energy have been installed by members on homes and businesses. When paired with solar energy, BESS participants can use the energy in their storage devices to island themselves for longer durations. In the full program, HCE expects co-op members with existing rooftop solar to drive battery storage installations.

The Power+ pilot program is an innovative on-bill financing program as it focuses on distributed battery storage systems, setting it apart from other on-bill financing programs that are focused on energy efficiency. It also involves a series of innovative technological elements, such as remote controlling devices through cloud-based components and interconnection processes. The Power+ program is the first on-bill tariff program operated by a U.S. co-op to finance stand-alone battery storage systems (Green Mountain Power operates an on-bill financing program for in-home battery storage devices in Vermont, but it is not a co-op). Whereas the Green Mountain Power program functions as a lease, the BESS program is considered part of the utility bill, so there is no debt associated with the investment. The BESS program is also unique in that participants will own the storage system and it is transferable to the next home occupant. While participants own the system, they can still release control of it to the co-op so as to receive the energy credits that make the system more affordable.

“This program is a great example of a win-win situation for HCE and our members,” said Sam Whelan, Power Supply Supervisor at Holy Cross Energy. “On one hand, HCE is able to operate behind-the-meter storage assets in order to save on power supply costs and optimize our portfolio. On the other, our members receive the value of resilience from residential storage at a fraction of the cost due to HCE’s low-cost capital, rebates, and bill credits for allowing us to optimize the operation of their battery.”

Retaining control of the participant’s energy storage system allows HCE to use it for ancillary services, providing energy and cost savings for HCE. In return, participants receive a credit for the co-op's energy storage usage on their monthly utility bill. This credit is a portion of the co-op's savings through load shifting and peak shaving. Peak shaving is achieved by extracting energy from the Powerwalls during peak demand hours, instead of purchasing or generating expensive electricity. Load shifting means moving excess renewable energy—that would otherwise be wasted—into the battery storage systems. As a result, HCE saves energy through reduced demand charges, avoided outage costs, and by reducing the need to build expensive natural gas-powered peaker plants to supply power during peak demand hours.

HCE will finance these storage systems through an $11 million loan from the Rural Energy Savings Program (RESP). RESP is a relatively new federal zero-interest loan program administered by the Rural Utilities Service, housed within the U.S. Department of Agriculture. Co-ops can apply for RESP funds to finance clean energy projects for homes and businesses, including solar panels and battery storage systems, as well as energy efficiency measures and beneficial electrification projects.

Author: Miguel Yanez