Valuation of Behind-the-Meter Energy Storage in Hybrid Energy Systems

Many remote communities are subject to poor electric service, which low power quality and reliability being common concerns. To compensate, many isolated communities employ diesel generation units to bolster utility inputs or to fully support key loads in the event of an outage. While this is effective, it can be a very expensive mode of operation requiring oversized units to ensure reliable power. Declining prices of both renewable generation and energy storage systems have the potential to improve this situation, though careful planning is needed to make these hybrid energy systems financially attractive. This paper presents analytical methods to enable informed decision making with respect to future planning incorporating renewables and energy storage systems to enhance system reliability and reduce operating costs. These methods are demonstrated in a case study for the San Carlos Apache Tribe, which is located in a sparsely populated region next to Coolidge, Arizona that has limited power generation and transmission resources. Currently, the energy tariffs are high and the system suffers from frequent power interruptions, adding up to an average of around 100 power interruptions per year. To reduce electricity costs and improve power quality, the tribe is currently installing solar photovoltaic arrays in several sites inside of the reservation. We have analyzed the potential benefits and optimal of energy storage systems associated with solar power generation to reduce the tribe’s costs with electricity and contribute to improve reliability of critical loads. Results show that energy storage has the potential to reduce electricity costs significantly and provide backup power for critical loads during several hours.