20200806ICL Comments.pdf

IPC-E-20-02 1 August 6, 2020
Benjamin J. Otto (ISB No. 8292)
710 N 6th Street Boise, ID 83701 Ph: [phone] x 112 [e-mail]

Attorney for the Idaho Conservation League BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER COMPANY’S PETITION TO ESTABLISH AVOIDED COST RATES APPLICABLE TO PURPA ENERGY STORAGE FACILITIES.
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CASE NO. IPC-E-20-02
IDAHO CONSERVATION LEAGUE COMMENTS

The Idaho Conservation League (ICL) submits the following public comments in
response to the Staff Comments and Request for Public Input filed July 16, 2020 and
Commission Order No. 34699. ICL discovered this request and Order on July 22 when we
happened to open the case page on the PUC website out of curiosity. Since then, ICL worked to
encourage the storage development community to provide input, since it appeared no other
promotion or targeted outreach occurred to solicit input. Below, ICL provides some high level
input in areas we have some knowledge of, but much of the requested information is specific to
the storage developer community. ICL recommends the Commission issue a more formal and
robust request for input from experts in this field before making any decision in this case.

General Comments
Battery storage technologies are a rapidly developing resource option that addresses
customer’s need for reliable, affordable, and clean energy services. As Idaho Power explains in
the Company’s 2019 Amended IRP: “As increasing amounts of intermittent renewable resources
like wind and solar continue to be built within the region, the value of an energy storage project
increases.”1 As Idaho Power explains in the Application in this docket: “The potential benefits
and possible promise of economically viable, utility-scale energy storage facilities is in the
unique operational characteristics to, for example: provide ancillary grid services such as reserve

1 Idaho Power 2019 Amended IRP at 53.
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2020 August 6, PM 4:52
IDAHO PUBLIC
UTILITIES COMMISSION
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capacity, surge capacity, load-balancing, or voltage support; firming of variable generation; or
time-shifting generation to match load.”2 As Idaho Power continues to add variable resources,
such as the Jackpot Solar project, customers stand to benefit from the suite of services storage
can provide to the grid.
ICL recognizes that the specifics of any power purchase agreement influence whether
customers realize the promise of economically viable, utility-scale energy storage facilities.
Because storage technologies can provide firm, dispatchable energy and capacity, along with a
suite of ancillary services, ICL encourages the Commission to think anew about how to craft an
implementation of PURPA that does not hobble the development of independent storage
providers in Idaho.
Enabling an independent storage development sector, distinct from utility ownership,
benefits customers by providing resources at a lower cost that utilities can. Independent
developers can monetize tax credits and accelerated depreciation that allow them to reduce
upfront capital costs in ways utilities cannot due to the federal laws. Independent developers can
also finance projects using higher debt to equity ratios that minimize financing costs while utility
customers are exposed to the 50/50 debt to equity ratios built into utility rates.3 Both of these
financing tools allow independent developers to reduce the costs of projects, which can be
passed onto customers through appropriate pricing and contract terms. The Commission should
adopt avoided cost rates and contract terms that enable customers to realize the benefits of lower
cost projects that utilities simply cannot provide due to federal laws and state regulatory
decisions. Adopting methods that do not capture the full value of storage projects, and contract
terms that discourage independent power, will result in higher costs to customers.
Idaho Power’s IRP method for setting avoided costs is not currently capable of capturing
the unique operation characteristics that Idaho Power describes, specifically ancillary services.
ICL supports using avoided costs to establish PURPA contract rates. To appropriately do so for
storage projects the IRP methodology must include intra-hour modeling, and a wider array of
avoidable utility costs, to capture the ability for storage to provide the ancillary services the

2 Idaho Power Application at 9.
3 See Avista Response to Staff IRP Audit Request 17 in AVU-E-19-01.
IPC-E-20-02 3 August 6, 2020
Company describes. ICL recommends the Commission direct Idaho Power to work with
stakeholders to improve the IRP methodology to achieve this common goal.
Response to Staff’s Specific Requests for Public Inputs
Below ICL address only the questions where we could find meaningful information in
this short timeframe.

• The all-in costs to develop and build a battery QF.
The all-in costs depend upon the size of the project, the interconnection needs, the land
costs and permit requirements. However, recent data shows that storage projects can deliver at
prices well below fossil-fueled resources. According to a S& P Global Market Intelligence report
on recent solar combined with storage agreements: “Levelized energy prices have dipped into the
range of $30/MWh to $40/MWh, in nominal dollars, for many projects scheduled to come online
in the next few years. Adjusted for inflation over the estimated 30-year lives of the projects,
those contracts are in the $20/MWh to $30/MWh range, according to a recent report
from Lawrence Berkeley National Laboratory, or LBNL.”4 ICL notes these prices are below the
costs of fossil fueled resources shown in utility resource plans, so any decision that hobbles the
development of independent storage development in Idaho is likely to subject Idahoans to higher
cost resources.

• The expected life of different battery technologies.
The same S&P Global report documents that most Power Purchase Agreements currently
being signed by utilities in the west extend for 20 years or more. Since the independent storage
projects typically holds the performance risk and must secure insurance policies, it is safe to
assume storage technologies have a long expected life. However, ICL understands through
conversations with developers that the pace and frequency of the storage charge and discharge
impacts battery life. So any pricing methodology and contract terms should be flexible enough to
allow the utility and developer to find an optimal solution to address the specific attributes of the
project and the utility’s need for grid services.

4 https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/falling-us-solar-plus-storage-prices-start-to-level-as-batteries-supersize-56971432
IPC-E-20-02 4 August 6, 2020

• How ancillary services provided by battery QFs could be valued and what impact this
would have on the payback period. The two graphics below represent the services storage can provide and the location on the
grid these services are useful.5 Because storage is uniquely suited to provide a broad array of
services that impact customers costs, ICL recommends the Commission develop avoided cost
methods and contract terms than enable a broad array of storage projects.

5 International Renewable Energy Agency, Electricity Storage Valuation Framework: Assessing System Value and
Ensuring Project Viability, at pages 22 and 23 (March 2020). Available here: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Mar/IRENA_Storage_valuation_2020.pdf
IPC-E-20-02 5 August 6, 2020
• The contract term necessary in order for a battery storage QF to have a reasonable
opportunity to obtain financing.
ICL observes that since the Commission reduced the PURPA contract term to two years
no project has been able to negotiate a reasonable PURPA contract. In frequent conversations
with developers the two-year contract term is always raised as an absolute bar to development in
Idaho, so much so that most developers do not even consider Idaho a meaningful place to
participate in utility planning or regulatory processes. Because storage projects can provide
unique values compared to solar or wind projects, ICL does not know the correct contract term,
but in preparing these comments the input we received is that 2 years is a non-starter and 5 years
is the minimum to be considered a state that supports an independent development sector.

• Best practices in surrounding states and analysis on the development of QFs in those
states. ICL did not have the opportunity to conduct this analysis in the current timeframe. We
agree that assessing the best practices in other areas is a good step in developing contracting
rules for Idaho. We encourage the Staff to look beyond just surrounding states and consider any
state that has a robust storage development environment. We also encourage staff to look beyond
projects pursuing PURPA contracts and consider all forms of independent developers entering
into power purchase agreements with utilities.

Conclusion
We appreciate and strongly support the PUC Staff’s exploration of the developing market
for independent storage projects. Because independent developers can provide resources at lower
costs than utilities, and due to the constrained timeline and process to request input in this
docket, we encourage the Commission to engage in further exploration of these issues before
making any decisions in this case.
Respectfully submitted this 6th day of August 2020,
Respectfully submitted,
___/s/ Benjamin Otto______ Benjamin J. Otto
Idaho Conservation League
IPC-E-20-02 6 August 6, 2020
CERTIFICATE OF SERVICE
I hereby certify that on this 6th day of August, 2020, I delivered true and correct copies of the foregoing COMMENTS to the following persons via the method of service noted:
Electronic Mail Only (See Order 34602):

Jan Noriyuki Commission Secretary [e-mail]
Commission Staff
Edward Jewell Deputy Attorney General [e-mail]
Idaho Power
Donovan Walker Lead Counsel [e-mail] [e-mail]

___/s/ Benjamin Otto______ Benjamin J. Otto Idaho Conservation League