Today, energy storage company sonnen, Inc. (a subsidiary of Shell), real estate developer Wasatch Group, and utility Rocky Mountain Power (a subsidiary of Pacificorp) announced a unique and ground-breaking virtual power plant (VPP) in Herriman, Utah, just outside of Salt Lake City. The project, Soleil Lofts, is an apartment community that will feature solar arrays as well as 600 sonnen lithium iron phosphate ecoLinx batteries, totaling 5 megawatts (MW) of capacity and 12.6 megawatt-hours (MWh) of energy. Residents will begin moving into the apartments in September 2019 and the final building will be complete by December of 2020. Sonnen Inc’s CEO Blake Richetta recently characterized Soleil Lofts as “the world’s first all-electric, carbon neutral residential apartment community VPP, managed by the local utility, Rocky Mountain Power.”
A path-breaking project
What makes this particular project unique? First, the storage units will be located inside the residences (check out the picture – these are meant to be handsome appliances, like a gleaming refrigerator or trophy cooking range). None of this hide-the-battery-in-the-garage stuff for sonnen. But what about fire (after all, didn’t we see a battery fire at Arizona Public Service earlier this year, as well as a garage with its roof blown off by a Hyundai EV in Montreal just last month)? sonnen’s stable lithium iron phosphate chemistry is chosen for its proven safety, (its thermal run-away temperature rating is far higher than most competing lithium technologies. Note: To compare various battery characteristics, including safety, Battery University’s site is a good place to start).
Can you find the battery? Hint, it’s not the fridge.
Credit: Wasatch Group
Second, and with potentially significant implications for other U.S. utilities, is the fact that Rocky Mountain Power committed funding in exchange for the right to manage the batteries through a newly developed utility platform integrated with sonnen. This arrangement allows them to provide emergency back-up power, manage daily peak demand, improve overall grid efficiencies, and learn how to provide battery solutions for other customers in the future.
There are some similar types of arrangements out there in the market today. In the commercial space, behind-the-meter storage aggregations have been deployed for years by companies such as Stemand Advanced Microgrid Solutions. Meanwhile, in the residential space, solar and storage company SunRun recently won a bid to offer 20 MW of capacity to the New England Grid operators by 2022. To do so, it will manage a fleet of an estimated 5,000 customers tied to its BrightBox residential solar and storage systems. SunRun recently announced another project in East Oakland, CA to offer an integrated half megawatt of capacity to East Bay Community Energy by 2022.
Doesn’t look like a power plant, does it?
Credit: Wasatch Group
At the same time, some utilities have also stepped into the game of coordinating on-site storage assets to optimize their operations. For example, Vermont’s Green Mountain Power began offering on-site residential storage to up to 2,000 customers in mid-2017 for $1500 down or $15 per month, providing back-ups against outages while maintaining the right to aggregate the batteries for its own purposes and reduce the utility’s exposure to wholesale costs. It is now following on with a second ‘Resilient Home’ offering to an additional 250 customers. For its part, New Hampshire’s Liberty Utilities received approval this year to commence its own ten-year home battery pilot project, combining storage with time-of-use rates, with a monthly cost of $50. Batteries will be charged during overnight lower rates, or by solar installations where they exist. The first phase envisions 200 batteries, with a follow-up phase including another 300 units.
So there are already some initial examples of utilities paying for and getting access to behind-the meter storage. However, all of these projects have been implemented in high-cost energy markets on the East and West coasts. They were all designed by actors playing directly in the energy arena, and generally retrofitting storage into existing properties. And none of them was conceptualized as an integrated utility-customer storage play in a new real estate project right from start.
The new math: “1+1+1 = 5”
In a conversation with the CEOs of sonnen and Wasatch Group, and a Managing Director from Rocky Mountain Power, the three parties emphasized that what makes the Soleil Lofts project so unique is the way it came together, as well as its location in a low-cost power market.
Wasatch Group’s Founder and CEO Dell Loy Hansen started the project with the environment in mind. Having been raised watching his father’s work in soil conservation, and having founded his own companies, including utility management company Conservice to monitor and reduce water use in apartments by 30%, Hansen has long been concerned about the growing air quality problem in the Utah area along the Wasatch Front. To address that issue, he conceived the idea of a master-planned zero-emissions, all electric apartment complex, commenting in a recent conversation that, “I don’t want to build another apartment unless I can change the trajectory of the world…you can talk about it or do something.” So he set out to build projects that are 100% carbon neutral with the goal of setting a standard for others to follow.
The initial concept was to build a development powered by solar and batteries, and entirely separate from the grid. However, Hansen soon found there were “reliability issues related to weather, snow and climate that made that very impractical. The miracle came when we met with Rocky Mountain Power.” He and Rocky Mountain Power evaluated the concept and eventually determined they could develop an undertaking that would benefit residents, the Wasatch Group, and the utility.
The next step was to find the storage system they wanted. After evaluating multiple vendors and battery technologies, including a visit to a large manufacturer in Nevada, Hansen and Rocky Mountain Power eventually determined that sonnen was the right technology partner for developing the Soleil Lofts battery fleet and VPP. Wasatch then created the overall cost estimates, and Rocky Mountain Power agreed to contribute funding in exchange for contractual rights to manage the battery fleet for the greater good of the utility grid. Hansen painted the project as having multiple winners, saying, “We’ve come up with a beautiful concept, where 1+1+1=5.”
Hansen noted the Soleil Loft project also includes approximately 150 EV charging stations and one year of free charging so that residents can save money and reduce emissions with e-mobility, “You won’t create pollution that will create a Beijing-like atmosphere in the Wasatch.” He was also keen to emphasize that the entire project (which admittedly does take advantage of existing federal and state tax credits) is profitable.
Rocky Mountain Power jumped in early
Bill Comeau, Rocky Mountain Power’s Managing Director of Customer Innovations, commented that Hansen approached the utility looking to address the air quality issue along the Wasatch Front by building all-electric, while trying to integrate renewables into the picture. One challenge was the fact that their customers enjoy low electricity costs (EIA data shows Utah’s average residential cost of power at 10.5 cents/kWh, compared with an average price of 18.9 cents in California 21.6 cents in New England). This low-priced environment provides unique challenges for making innovative utility projects pay off. As a result, he said, the best way to make this endeavor work was to “make sure we would have a solution where we could manage the batteries for frequency response and demand response.” Rocky Maintain Power was able to extract value from those services that then allowed the partnership to come to fruition.
Comeau noted that his utility is also going through a transitional period in integrating renewables into its system and this solution could help it expand offerings based on customer needs. A key part of that future includes the ability to manage distributed assets that can help add more customer value and efficiency to the grid. He also praised the state regulatory commission, which has “been supportive of us being able to innovate and create a foundation for us to be able to have these solutions for our customers.” They were, he says, “willing to be so flexible and clearly understand the infrastructure needs for the future and the challenges that we have,” especially relating to the integration of renewables in a way that enhances infrastructure for the benefit of all customers.
If you can make it there…
sonnen’s Richetta pointed out that Utah is not the first place one would normally think of as a suitable location to create a virtual power plant. “There are so many places in the country where VPPs are talked about every day, but this is a state with a very stable grid, low prices and minimal power outages.” However, with Rocky Mountain Powers’ focus on modeling the potential benefits to the system and “willingness to develop an argument for the value of the battery and the platform, it makes sense.”
This project, he observed, “is extremely important for the industry and for sonnen. It’s the first master planned apartment community in the world that is a virtual power plant with solar and storage, and it’s controlled by the local utility.”
Hansen emphasized, “This is not a liberal dream. This is a pragmatic business…that is a great win and we cannot wait to show the world this because we want people to copy us. This is a model project that creates sustainable power and it is profitable.”
As he wrapped up our conversation to move onto his next call, Hansen added, “We don’t have to use fossil anymore. It doesn’t have to be that way. It’s a choice.”
