A small town in Ohio creates industry buzz with solar plus storage

By K Kaufmann

Ask any of the residents of the Village of Minster, Ohio what they like best about life in the town of 2,850 people, located about an hour’s drive north of Dayton, and the answers are pretty much the same.

Minster, they say, is a safe, immaculate and close-knit community where people work hard and care about each other.

“They’re conservative, but when there’s a need, people step up,” said Les Prenger, 76, who’s lived in the town most of his life. “We get jobs done.”

Lining up for the ribbon cutting at the Village of Minster storage project are (left to right) Michael Edmonds of S&C Electric, Minster Mayor Dennis Kitzmiller, Village Administrator Don Harrod, Michael Hastings of Half Moon Ventures and Yu Weizhou, CEO of Concord New Energy, a project investor. (Photo by K Kaufmann)

Prenger was speaking at a recent village “open house” at Minster’s newest municipal utility project, a solar-plus-storage installation that reflects the community’s cautious but can-do approach to change. With 4.2 megawatts (MW) of solar and 7 MW of storage, the project is already being seen as a model, not only for its technology but for the multiple financial benefits it’s providing to Minster and its project partners

According to Village Administrator Don Harrod, the storage system — with 3 megawatt-hours of backup power — will improve power quality for the town’s industrial customers, which include the largest Dannon yogurt factory in the United States. It will also save the village money on distribution system upgrades and cut summer peak demand and demand charges for the power it buys from its main supplier, American Municipal Power.

Meanwhile, Half Moon Ventures, the Chicago-based renewable energy developer that owns the storage system, is also tapping the batteries to sell frequency regulation capacity to PJM Interconnection, the regional grid operator for 13 states in the Northeast and Midwest.

Frequency regulation in the PJM service territory is “a very lucrative market,” said Michael Hastings, CEO of Half Moon Ventures. While he would not provide details on the cost and pricing of the storage system, Hastings estimated that the project will pay for itself in about three years.

“Our full intention, our full strategy going forward is doing projects just like Minster again and again, with as many towns around the country as we can,” he said.

Check out video on construction of Minster storage system here.

“This is unique in that there are four different revenue streams,” said Garrett Fitzgerald, a senior associate at Rocky Mountain Institute in Boulder, Colorado, a nonprofit research group, which published a recent report in support of such “revenue-stacking” storage projects. “Many of the (projects) that are providing multiple services are providing two or three.

“In many markets, these batteries can technically and physically provide these values but it’s difficult for owners or developers to get compensated for it,” he said.

Mike Hyland, senior vice president of engineering services at the American Public Power Association (APPA), sees Minster as part of a trend toward small utilities — municipals and electric cooperatives — exploring storage, including batteries, compressed air and even water heaters.

“We like win-win-win solutions, and Minster is at the cusp of this,” he said. “There are a lot of utilities that are going to learn from what Minster has done. We believe we need to do more.”

A very cool back story

Although Minster’s storage system only went live at the end of April, the project has already put the village in the national spotlight. The solar side of the project went online in December, earning Minster the No. 1 spot for adding the most new solar watts per customer in the Smart Electric Power Alliance (SEPA) 2015 utility solar market survey.

Green Energy Ohio, a group promoting renewable energy in the state, also named Minster its Clean Energy Community of the Year.

But, as impressive as all this is, what’s most important about the Minster project are the obstacles it had to overcome.

Minster’s 4.2-MW solar installation. (Photo by K Kaufmann)

About two years ago, the village had signed a power purchase agreement for the 4.2-MW solar project — without storage — when the state legislature put Ohio’s renewable portfolio standard on hold for two years. The freeze also effectively killed the value of the solar renewable energy certificates that were critical to finance the project, recalled David Dwyer, owner of of American Renewable Energy, the project developer.

“The freeze took about $2.5 million out of the project,” Dwyer said. “I was talking to a half dozen investors. They all said, ‘I’m not sure we can do this.’”

At this point, Dwyer and town officials started rethinking the project and researching other options — including storage. They revised their original solar power purchase agreement, incorporating the 7-MW battery system, which eventually led to a new search for investors and the connection with Half Moon Ventures. Dwyer said he and Hastings had their first face-to-face meeting and decided to work together at Solar Power International in 2014 in Las Vegas.

Up until then, most of Half Moon’s projects had been either wind or solar. But the company was looking to get into storage, and Hastings said, the Minster project penciled out.

“We’re able to offer solar to them cheaper than (power from) coal, and we’re still making money on the deal,” he said.

Read SEPA report on key factors for developing high-value, cost-competitive utility solar projects here.

Harrod confirmed that the power purchase agreement the village has on the solar project is set at 7 cents per kilowatt hour, which is slightly less than the average price it pays for wholesale power. Any savings will be passed directly to customers through a power adjustment factor that is included in monthly electric bills.

If the village pays less than a set rate for its wholesale power, bills are adjusted down; if it pays more, they are adjusted up, Harrod said.

He also estimated the storage could help cut the village’s peak demand by almost a third. More direct savings, he said, include the $350,000 that the village would have had to spend on equipment upgrades to ensure power quality and stability for Dannon and other customers in its surprisingly varied and substantial industrial sector.

Businesses in town range from Nidec Minster, which manufactures machine presses used, for example, to make pop-tops on soda cans, to Striker Bows, a small local business that has a national reputation for making custom sporting and hunting bows.

“People coming in from the coast assume industrial decay (in the region), but that’s really not the case,” said Hastings. “There’s a healthy economy, and (solar plus storage) is a pretty simple and elegant solution to a lot of municipal needs.”

RPS vs. market: What will best drive innovation?

For Hastings and other project partners, the Minster installation is also highly replicable — making it possible for more utilities to go straight to solar plus storage, as opposed to standalone solar projects that add storage later. Dwyer said he is now working with several other communities in Ohio who are interested in the Minster model, and Harrod said he’s already hosted officials from three different communities in western Ohio.

Similarly, Michael Edmonds, president for U.S. business at S&C Electric, which developed the battery system, said his company is now using it as a model for other projects.

Still, Fitzgerald of Rocky Mountain Institute expects the near-term market to include both standalone solar and solar plus storage, depending on project economics.

“If someone wanted to install solar in a place with no demand charges, no transmission upgrades, you’re not going to be able to capture additional value,” he said. “You’re only going to see solar plus storage in applications where they are able to provide multiple services.”

The likely impact of the Minster project also raises a thorny question about state support for solar and other distributed energy technologies, such as storage. With the two-year hold on Ohio’s renewable portfolio standard (RPS) set to expire at the end of 2016, state lawmakers are now debating whether to unfreeze the original green energy target — 12.5 percent by 2027 — extend the hold for a few more years or make it permanent.

The most recent figures from the U.S. Energy Information Administration — from 2012 — put Ohio 45th in renewable power generation in the country.

One of the original arguments for the freeze was that the market should determine renewable energy development in the state, and in a way, Minster’s solar-plus-storage project seems to support that view. As a municipal, Minster was not subject to the RPS, Harrod said, but its development of the project was triggered by its search for a market-based alternative to its original plans for a standalone solar project.

“I’m always for the free market,” he said. “But Ohio is so far behind other states that have imposed renewable standards and have helped with state incentives, I think it’s necessary for the state to step in and at least let us catch up.”

Noting that municipal utility compliance with renewable energy standards varies from state to state, Hyland said that municipals tend to be more community- and market-based by nature.

“They’re small,” he said. “They know what jobs mean to the community; they know what the tax base is. They’re going to do innovative things.”

K Kaufmann is SEPA’s communications manager. She can be reached at [email protected].