Small batteries but high stakes for New Hampshire home energy storage pilot

The results of Liberty Utilities’ residential battery program could help determine how the state deploys the technology.

A New Hampshire utility has begun installing batteries in customers’ homes as part of a pilot program that could help determine how the costs and benefits of residential energy storage are spread in the state.

Liberty Utilities, an Ontario-based company with about 43,000 electric customers in New Hampshire, plans to put batteries in 100 customers’ homes by the end of summer. Over the next two years it hopes to get a better understanding of the value they offer both customers and the grid.

Participating customers will pay $50 a month for 10 years or about $5,000 upfront for installation of two Tesla Powerwall batteries, which retail for around $6,500 each not counting hardware and installation. They will also be enrolled for new time-of-use rates, which vary based on the time of day. The utility will own the batteries and be able to draw from them to help meet demand during peak hours.  

In-home batteries have become increasingly popular in recent years. The Energy Storage Association last month reported a 10% increase in residential storage deployments from the final quarter of 2019 to the first quarter of 2020. The earliest adopters were largely interested in backup power, but there’s growing interest in the potential of home batteries as a tool to manage solar panels, electric vehicle charging and demand response.

When paired with the right rate structures, residential batteries — often referred to as “behind the meter” storage — have potential to significantly reduce utility bills. Customers can charge batteries overnight when electricity prices are low, then use that power during peak hours when prices are higher. Or they might store power generated from solar panels during the day for use in the evening.

The batteries also bring opportunities for utilities, which can use them — as Liberty plans to do — as a source of power at peak hours when the grid is congested. That could lower the need to run expensive peaker plants or upgrade transmission and distribution lines, especially if utilities invest in complementary large-scale projects.

Similar to debates around rooftop solar panels and electric vehicle charging, big questions remain about who should own and benefit most from the use of residential batteries. Utilities still need to better understand the value to the entire grid before deciding whether or how to spread costs across all customers.

If utilities own the batteries, some advocates say it could prevent competition and customers could end up paying more than they should. A potential middle ground exists in which utilities and customers each contribute to the cost of the batteries, with one or the other owning it depending on the program.

“I think the utility ownership issue needs to be carefully proven out for a large-scale deployment,” said Amy Boyd, director of policy at Acadia Center. “A small pilot is one thing, but there could be significant equity concerns by rate-basing batteries in certain people’s homes by charging everyone for them.”

Utilities and regulators are moving forward with small pilot programs to try to get a better grasp on those economics. In Vermont, Green Mountain Power has been testing in-home batteries since spring 2019. Customers in that program can lease Tesla Powerwalls owned by GMP or partner with third-party vendors to purchase their own battery with financial assistance from the utility.

Liberty Utilities’ New Hampshire customers are just across the border from Vermont. Its pilot program was approved by the New Hampshire Public Utilities Commission early last year, but the first customers are only now getting their batteries. Liberty originally proposed a much bigger pilot, but the commission approved a scaled-down version to avoid high costs for customers.

The pilot has had ample customer interest and a waiting list, but the first phase was delayed several times. Initial delays were largely due to concerns over cybersecurity and worries that hackers could tamper with the batteries. After utility officials proved the program is safe, the pandemic delayed it again.

Liberty now has through the end of next month to install the phase one batteries. Because of the delay, this phase will last through August of 2022. That way, officials will be able to collect peak load data from two summer seasons before moving on to the second phase.

At that point, Liberty will install up to 300 additional batteries. Under the commission’s order, the second phase will allow for a bring-your-own-device option. In that situation, customers could buy their own utility-approved batteries and participate.

“Phase one has already been delayed multiple times, so we’re disappointed that we’re still waiting,” said Madeleine Mineau, executive director of Clean Energy New Hampshire. Still, she said, the high level of customer interest is an early sign of success, and pilots in other states have shown the cost savings potential.

Liberty’s pilot is unique, though, because of the time-of-use rate. “That is the aspect of this that I think is really awesomely cool,” said D. Maurice Kreis, the state’s consumer advocate. He added that “this gives consumers who are inclined an even greater opportunity to use the grid when power is cheap.”

While Kreis said he could see an advantage in utility ownership — utilities are experts in this technology, he said — Mineau said there’s value in opening the program to outside vendors. That could lead to more customer incentives or utility partnerships with vendors, she said. 

Boyd, of the Acadia Center, is also supportive of the bring-your-own-device model, which she said allows for more competition. Having more manufacturers’ technology be eligible, she said, “pushes toward a common software, a common interface, which I think we need to have anyway.”

The results of Liberty’s test run could help determine how residential batteries are deployed across the state: A recently introduced bill in the state legislature would forbid utilities from owning behind-the-meter batteries unless the commission determines — based on this pilot — that utility ownership is in the public interest.