Climate clash brewing in Minnesota over energy storage

Source: Jeffrey Tomich, E&E News reporter • Posted: Tuesday, February 26, 2019

The Midwest’s largest battery storage project came online last month when electric cooperative Connexus Energy flipped the switch on a solar-plus-storage project outside the Twin Cities.

Clean energy advocates and utilities agree that more such projects are coming in Minnesota and the Midwest, as batteries are widely seen as a necessity to accommodate increasing levels of wind and solar energy on the state’s power grid.

But debate at the Minnesota state Capitol last week exposed a divide over the Legislature’s role in facilitating energy storage. It’s being informed by broader national changes, including the Federal Energy Regulatory Commission’s landmark Order 841, which requires regional grid managers like the Midcontinent Independent System Operator (MISO) to change tariffs that enable storage to provide capacity, energy and ancillary services.

At issue is whether Minnesota lawmakers should adopt a bill agreed to last spring that would enable utilities to seek cost recovery of energy storage projects from the Public Utilities Commission or if the Legislature should try to accelerate the state’s clean energy transition by requiring utilities to propose storage projects.

Freshman Rep. Anne Claflin (D), a climate scientist for the state’s Pollution Control Agency, proposed the latter in legislation that came up for debate last week before the House Energy and Climate Finance and Policy Division.

Among other things, H.F. 1165 would require utilities to propose at least one energy storage project by January 2021. The bill would also provide $1 million in grants for demonstration projects to assess the effectiveness of energy storage systems at hospitals.

Claflin said deploying more energy storage would benefit the state in a variety of ways, including reducing rates and peak energy use and making the state’s power grid more resilient.

The proposal rankled some Republican members of the committee, who noted that utilities, advocacy groups and lawmakers had worked hard last year to negotiate energy storage legislation. Ultimately, that storage provision was included in an omnibus budget bill last spring that was vetoed by then-Gov. Mark Dayton (D).

The same legislation was refiled last month and unanimously approved by the Senate last week.

S.F. 100 specifies that utilities can seek cost recovery for storage projects and must weigh storage as an alternative to other energy resources in the long-range plans submitted to regulators. It further requires the state Department of Commerce to conduct a cost-benefit study on storage.

The Energy Storage Association applauded the passage of S.F. 100, saying it represents “the first of many opportunities for bipartisan action in the state geared for breaking down barriers to cost-effective energy storage deployment.”

But members of the House climate and energy committee sparred over whether to adopt the bill language negotiated last year or push something more aggressive.

“Much has happened in the past year, and we’re moving forward,” said Rep. Jean Wagenius (D), chairwoman of the committee. “We’re not stagnant.”

Among the changes since last year are the FERC order and completion of the Connexus project, a 10-megawatt solar farm coupled with 40 megawatt-hours of battery storage.

Also, the Democratic-Farmer-Labor Party took back control of the Minnesota House. Within weeks of the November election, the party made clear that addressing climate change would be a priority by establishing an energy and climate committee.

The committee spent its first several meetings with informational hearings on climate change; impacts already being felt in Minnesota; greenhouse gas emissions by sector; and an overview of the state’s energy infrastructure, policies and regulations.

The committee also held an informational hearing on energy storage that set the stage for Thursday’s debate.

Clean energy advocates and the utility industry have been working together closely for the past two years on how to add energy storage to the state’s power grid, and it’s widely agreed that batteries and other forms of energy storage can help the state integrate more wind and solar.

A study last year suggested that the decarbonization of Minnesota’s economy by 2050 will require significant electrification and significant penetration of wind and solar energy. And under most scenarios, that will require 2,000 to 3,000 MW of energy storage (Energywire, Aug. 6, 2018).

A separate report from the Energy Transition Lab at the University of Minnesota in 2017 laid out a series of recommendations to help advance energy storage. Some of those recommendations became a basis for the legislation initially proposed last year.

The policy push centers on clarifying the regulatory treatment of energy storage, which technically does not qualify as electric generation, transmission or demand reduction, but can function as all three. There’s a divide, however, on how to do it.

Peder Mewis, a regional policy manager for the Clean Grid Alliance, an advocacy group that works throughout the Midwest, noted that both bills pending in the Legislature contain the key provision requiring energy storage to be evaluated by utilities in their integrated resource plans. So-called IRPs are 20-year plans filed with state regulators that outline how they plan to meet energy demand.

“We find value in codifying this stuff in the resource planning process; that’s the most important thing,” Mewis said.

Meanwhile, Xcel Energy Inc., the state’s largest utility, said provisions agreed to by legislators in S.F. 100 are “terrific” and “move the ball forward” in advancing energy storage in Minnesota.

Rick Evans, regional government affairs director for the Minneapolis-based utility, said energy storage will play a “significant role” in helping achieve the company’s goal of 100 percent carbon-free energy by 2050.

The company was still evaluating H.F. 1165, however, and had not taken a position on the bill at the time of last week’s hearing.