20200807Clenera Comments.pdf

OctEnera"800 w Main St, Suite 900
Boise,lD 83702
208-639-3232
Date: August6,2020
Re: Case No. IPC-E-20-02
Requests for Public Input - responses from Clener4 LLC
Question l: The time, costs, and resources required to develop a forecasted generation profile.
Response to Question I : A forecasted generation profile for an eslablished project locolion and size can
be generated in approximately 2-3 da1ts.
Question 2: Whether there are additional benefits to the utility's system that are achieved by battery
storage projects at specific thresholds.
Response to Question 2: Establishing an eligibility tbeshold ofjust l00kW would cause increased costs
for sntall Battery Storage QF projects due lo infficiency of integrating lechnologlt components (i.e.
power plant controller, metering, rela1,s, inverters, elc). At l0 to 20MW threshold projects can achieve
nteaningful cosl savings and cosl effectiveness through integration of components. Establishing an
eligibility threshold of'less than l0 to 20 MW would elJbctively discourage development of cost effective
Energt Storage QFs.
Question 3: Whether there are limitations on the ability of battery storage QFs to disaggregate
Response to Questiott 3; lt is nol clear what Staff's queslion means, please elaborate on whal the specific
concern is or provide an example. However it should be noted that some battery slorage systems may
have /lexibility in their ability to be sitedfor marimtrm utility benefit.
Question 4: Whether Staffs understanding of the prevailing state of battery technology and inverter size
is correct.
Response to Question 4: Li-ion batteries are lhe predominanl technolog,t currenlly used in the energy
stordge industry, and lhe range of inverters thal Staffcited is accurate.
Question 5: The all-in costs to develop and build a battery QF
Response to Question 5: The final cosl .for a Battery Storage QF is highly variable depending on lhe exact
design and integration of components. A tl,pical 20M14 Battery Storage QF proiect, the all-in cosl to
develop and build may range fi'om approxintately $30 million up to $40 million. That said, it is unclear
why the C'ommission has any interesl in the cost to the QF of developing its project in light of the fact that
avoided cosl rates are to be based on the ulility's incremental cost of resource acquisitions and not based
on the QF's cost or "payback" periods.
Question 6: The expected life of different battery technologies.
Response to Question 6: The expeclecl usable li.fe.for mosl Li-ion bqtteries is 20 to 25 years, although the
bullen, storqge system clegrades over llrc lifetime at non-linear rate. For exantple. over tltefirst 3 yetn's
the system degrades by approximalely l0% in tolal (or 3.3% annually), and then.from yeor 4 onward,
depending ort the baltery chemistry the degratlation rate is approxintalely I -2% annually.
Question 7: How ancillary services provided by battery QFs could be valued and what impact this would
have on the payback period.
Response to Queslion 7: Batlerv Slorage QFs must be charged.fi'om q renewctble resoru"ce. Therefore,
some o/ llrc capabilities o/-the ballery storage lechnology (i.e. charging./iom the transmission grid) are
lintited in ttperalions conlrqctualll' ftut not technically). For example,.frequency regulation could only be
achieved in one direction (again, due to controclual limitations to Eulifi, as a QF, nol necessarily
lechnical limiltrlions). All otlter ancillary services could be supporled. Belou, is qn illustt'ation oJ'
ancillary sertices llrul can be supported by a Battery Slorage QF.
Salid llcfp Srnl.g
&lesSnarmr
lliO/EIOS.rrEr Utliv3c'rri(.r Pllrf $npur iiaplE
. Ancillary Services for additional fGG
. Primary frequency regulation
. Frequency droop response
. Spinning reserve
. Synthetic inertia
. Raffip control
. Black Start
Question 8: The contract term necessary in order for a battery storage QF to have a reasonable
opportunity to obtain financing.
Response lo Question 8: A general guideline /bt'contract terms lhal are necessdrv to obtqin.financing is
I 5-20 l,eau'5, based on industry standards. However, i/'contracted rales are sfficiently ltigh enough to
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obtain a recoyery of capital in a shorter qmounl of time, lhen a shorler term would sffice to mitigate
risks for /inancial parlners. It is wortlty of note thot, according to the Staff's review of surrounding states'
contract lengths, lhat lhe ldaho Commission is an extreme outlier by only permitting two year contracgt
terms for aryt wlrdrto,o, project larger than 100 kll/ and ary other project larger lhan l0 aMllt. The
radical nature ofthe ldaho rules on conlracl lengthwhen compared to all surrounding states suggests
thal lhey are nol reasonable.
Question 9: Using multiple successive contracts with shorter length terms to maintain accuracy of avoided
cost pricing over the life of a PURPA project and the QFs ability to obtain financing.
Response to Question 9: IPUC Staff observed thal reducing conlracl terms from 20 to 2 years was
effective at endingfuture development of Wind and Solar QFs, based on inability to obtainfinancing.
This is a logical outcome given tlmt reducing contracl lengths to just 2 years introduces significant
uncertainty into any proposedfinancing or investors expectations ofgetting a return ofcapital let alone a
return on investment..
Question l0: Best practices in surrounding states and analysis on the development of QFs in those states.
Response to Question l0: In a December 2019 ruling, the Arizona Corporation Commission recently
established l8-year minimum contracl lengths in order to encourage development of QFs, see dockel E-
01345A-16-0272. The ruling also established additional guidelines to help ensure that QF PPAs are
financeable. While lltere are a lol of states that aclually encourage the developmenl of QFs, Idaho is no
longer one of them. If the Commission is serious$'interested in exploring this question it will need to
dramatically expand the scope of tltis dockel which it has specifically lintited to "determine the
appropriate project eligibility cap and contract term for energ) storage qualifuingfacilities." [Order No.
34699 at poge l.J But to reiterate our comments above as they relate the specific issues in this dockel,
establishing an eligibility threshold of less than l0 to 20 MlV would effectively discourage development of
cost effective Energy Storage QFs and a general guideline for contract terms lhal are necessary to obtain
financing is I 5-20 years,