Homer Electric to install new battery

By Ben Boettger

February 18 - In fall 2021, Homer Electric Association (HEA) plans to power up a series of Tesla Megapack batteries that will free it of the need to burn additional fuel for reliability when disconnected from the rest of the Railbelt. HEA's battery energy storage system (or BESS) could also allow its grid to add more renewable power from variable sources such as wind and solar.

HEA's Board of Directors voted at their July meeting to start negotiating a contract with Tesla, the California-based maker of electric vehicles and battery systems, which had been one of three bidders to submit a proposal for the BESS. As this meeting took place, the Swan Lake wildfire was burning through the central Kenai Peninsula. The fire would soon provide an object lesson in the benefits of energy storage. 

2019: A strange year for the Railbelt

In August high winds drove the Swan Lake fire toward the Sterling Highway and the powerline alongside it, which connects HEA's Soldotna substation to Chugach Electric Association's Quartz Creek substation. The "SQ line" is the single connection between HEA and the rest of the Railbelt. Five days after the HEA directors voted to authorize the Tesla contact at their August 13 meeting, the approaching fire forced them to shut the line off. As firefighters kept back the flames and teams of linemen inspected the damaged poles and wires, HEA would remain "islanded" from the rest of the Railbelt until mid-December.

When connected to the Railbelt, HEA can buy power from other utilities if the demand on its grid exceeds the generation capacity it has running at the time. When islanded — if not by fire, then perhaps by fallen trees, avalanches, equipment failure, or routine maintenance — HEA can't count on other utilities for back-up if one of its own generators or lines go down. Under these conditions, utilities run an extra generator to make up the lost redundancy.

The Swan Lake fire was not HEA's first time being islanded in 2019. Early in the year, the Kenai Peninsula's grid was cut off from the Railbelt when Chugach Electric rebuilt its transmission line from Quartz Creek into Anchorage. This incident shows how expensive redundancy can be when it comes from an extra gas-fired turbine.

Under usual circumstances, HEA relies on its two most efficient sources of power to meet most of its demand: the Bradley Lake dam on the south side of Kachemak Bay, which produces much cheaper electricity than the gas turbines, and the Nikiski Combined Cycle plant, a 72-megawatt gas turbine that can produce an extra 18 megawatts without burning additional gas by cycling waste heat through a secondary steam turbine. When Chugach Electric started rebuilding its powerline in February, HEA had to fire up a second turbine — the 47 megawatt Soldotna Combustion Turbine plant — to keep the redundancy required to stay reliable when islanded.

Although running two turbines instead of one saves the utility from potential blackouts should one fail, it also means that to keep the same total amount of generation, each turbine has to run at a lower output. Because of the physics of turbine operation (specifically, because of the heat-rate curve), this also lowers their efficiencies. A turbine running at less than optimal output burns more gas to produce one kilowatt -- making each kilowatt of power more carbon-intensive and more expensive. The second turbine costs HEA an extra $20,000 per day in fuel costs, HEA manager Brad Janorschke told the board of directors in March. HEA Director David Thomas wrote that over a year, extra fuel cost "can range from a million to many millions of dollars annually."

When the Swan Lake fire shut down the SQ line in summer 2019 and began HEA's second long island period of the year, the high water level in Bradley Lake became a complicating factor. When HEA was islanded in mid-August, the water behind the Bradley Lake dam was almost full, approaching a point when it would either have to be drained for power generation, or spilled and wasted.

HEA is normally allowed 12 percent of the state-owned hydro plant's cheap renewable power, with the rest transmitted to other utilities. But since transmitting this power is impossible when the Kenai Peninsula is islanded, HEA gets it all. This is obviously a bad deal for the other utilities — Elwood Brehmer of the Alaska Journal of Commerce reported that making up for Bradley's loss cost other Railbelt utilities a rough total of $11.8 million— but it also has a hidden downside for HEA. Redundancy still requires running two turbines, and with Bradley power filling a greater share of demand, each of those turbines must run even farther below capacity -- that is, with even less efficiency. In August, HEA was running two turbines near their minimum loads while at the same time increasing the power it took from Bradley Lake from a 7 megawatts to 40-50 megawatts, according to the manager's report to the board in September.

Being islanded with plenty of water in Bradley Lake may have added up to a net savings for HEA -- according to the December manager's report, its monthly gas purchases were 28 percent less than what it had budgeted. In any case, having a charged battery waiting to pick up the load, should one gas turbine fail, would have been simpler and cheaper than running a second turbine for months just in case. Thomas wrote that it takes about 15 minutes to cold-start a gas turbine, and the battery HEA has on order would be able to carry a lost turbine's load for this time while another fires up.

"It is inconvenient for members to lose power for 20 minutes, it is annoying when if it persists for hours," Thomas wrote. "...The BESS won’t help with the small-scale outages when a motor-vehicle accident happens or a tree falls on the line in your neighborhood, but it will help us respond to any of our generation units tripping off line, trees falling onto or burning our transmission lines, and to generation and transmission faults arising anywhere from Seward to Fairbanks."

Following load

Battery storage can also let HEA run more efficiently under normal conditions.

For a utility without storage, electrical generation has to meet electrical demand in real time, and demand fluctuates unpredictably. Lights are turned on and off, phone chargers are plugged and unplugged, levers are pushed down and spring up on toasters. To follow the ebb and flow of demand, HEA throttles their gas turbines up and down. 

"That need for regulation limits how we operate our turbines, and moving their output up and down increases gas consumption and maintenance - much as surging your car back and forth from 50 mph to 60 mph isn't as fuel-efficient as a steady 55 mph," Director Thomas wrote. The turbine can run at a steadier pace if battery power is used to follow fluctuations instead.

Discharging, the battery will be able to supply 93 megawatt-hours to the grid, at a rate of 46.5 megawatts per hour.

"During our lowest demand periods, it could potentially power our entire load - all the members from Seldovia to Sterling, Ninilchik to Nikiski - for a while," Thomas wrote.

Reliability was the primary reason for the battery, but Thomas said it's the beginning rather than the end of the device's potential.

"A modern, computer-controlled, high-capacity BESS is a bit of Swiss-army knife," he wrote. "You buy it to solve particular problems and then find additional uses for it."

Are more windmills and solar panels among the tools that might pop out of this swiss army knife? Incorporating these forms of renewable energy into a large-scale grid is complicated by the fact that no one can predict when wind and sunshine will be available to supply power, or when their absence will have to be made up for by other generation -- mainly, by those gas turbines that are expensive and inefficient to adjust on short notice. Large-scale solar in particular is plagued by the "duck curve" problem of daily sunlight being slightly misaligned with peak electric demand, requiring other generators to "ramp up" their output very quickly to compensate as the sun sets and artificial lights come on. Having a battery that can ramp up instead without the fuel costs and inefficiencies can let more solar be built into HEA's grid.

A battery might also be better than gas turbines for supporting electric vehicles, which Thomas wrote could also create jagged peaks and valleys of electric demand that a battery system "can handle more flexibly than combustion units and which non-firm renewables can't address at all." 

Other batteries in the Railbelt

HEA's battery system will be the third in the Railbelt. Fairbanks' Golden Valley Electric installed a 46-megawatt battery system in 2003, which at the time was the world's largest. In 2015, Chugach Electric installed two linked energy storage devices -- a 1-megawatt flywheel and a 2-megawatt array of Samsung lithium-ion batteries -- which allowed it to accept more variable renewable power from the Fire Island wind farm. Each storage device added to the Railbelt increases the entire system's resilience.

"There have been events in which Golden Valley's BESS has saved the entire Railbelt from having a larger blackout than it did," Thomas wrote.

HEA board vote

Had the battery system been installed during 2019, Thomas wrote, HEA would have saved several times the battery's annual cost. Wildfire and drought made 2019 an unusual year, however, and under other circumstances -- a scenario in which HEA was rarely islanded, sold little battery power to other utilities, and had little variable generation to support -- operating and maintaining the battery could be an annual cost.

The decision was made by the HEA directors on behalf of HEA's infrastructure-owning subsidiary, the Alaska Electrical and Energy Cooperative (AEEC). In August, directors Roy Champagne, Dan Furlong, and Ed Oberts voted against installing the battery. Thomas voted for it, along with directors Erin McKittrick, Dave Carey, Dan Chay, and Jim Levine. Director Kelly Bookey was absent, but in July had voted against negotiating the contract with Tesla, alongside Champagne and Oberts. 

Thomas, the AEEC board's president, wrote on behalf of all the members to summarize the debate over the battery. He wrote that weighing the capital and financing costs against the potential savings -- and the potential of other capital projects such as HEA's prospective Grant Lake hydroelectric installation -- were central to the board's discussion, along with the possibility that grid-scale batteries would be cheaper in the future. 

"Directors who didn't want to proceed at this time placed more emphasis on guaranteed savings and/or thought BESS prices would be sufficiently lower in the future to advise waiting," he wrote. "Those in favor focused more on the potential additional savings, new opportunities, and the reduction of carbon emissions."

HEA would not release information about the cost of the battery. Some aspects of the battery project are covered by a non-disclosure agreement between HEA and Tesla. While HEA has secured the megapacks, its contractors are still designing the structures and equipment that will surround them, so the exact construction cost is still unknown, HEA Manager Janorschke said in his December board report. However, Janorschke said HEA has been approved for a $38 million line of credit for battery system construction from the National Rural Utilities Cooperative Finance Corporation.

Editor’s note: This story has been changed to remove an incorrect comparison between the cost of Bradley Lake power and gas-fired generation.