‘Renewable energy may save NMI $11.3M yearly’

A study commissioned by the Commonwealth Utilities Corp. shows that using renewable energy will bring substantial savings to the agency and its customers ranging from 10 percent all the way to 69 percent, equivalent to $11.3 million.

CUC executive director Alan Fletcher said yesterday that the “Renewable Energy Integration Study,” which has just been completed, is designed to answer important questions concerning how much renewable energy (solar, wind) can be reliably integrated into the Saipan electrical grid, and how much money renewable energy can save the CNMI ratepayers.

The study was performed by DNV KEMA Energy & Sustainability, a major international firm with extensive experience in the integration of renewable energy resources.

The results of the study indicate that renewable power of up to about 25 percent of Saipan’s peak power demand—about 8 megawatts—can be integrated without causing grid instability.

The report, however, cautions that even this level of renewable penetration can only be achieved if the renewable energy generation sources are dispersed in different parts of the island, rather than a single installation at one location. This is necessary in order to avoid triggering grid instability in cases of sudden drops in output.

“The study has generated new policy questions for CUC in how renewable energy development, net metering, and general interconnection requirements are handled. By example, to achieve higher levels of renewable energy into the system, CUC might insist on the installation of ramp-rate control (energy storage) paid by customers and developers when first installed. Otherwise, CUC would have to shoulder the cost of storage later on, thereby creating a liability for ratepayers,” according to Fletcher.

Based on the 52-page document, results reveal that the potential savings from different renewable energy penetration levels is from 10 percent to 69 percent—or savings ranging from $1.6 million to $11.352 million per year. Savings occur primarily from fuel that is burned, as well as from additional savings from taking diesel generating units offline, at higher renewable penetration percentages.

Fletcher said that CUC computed the average savings to consumers on the basis of the predicted cost reductions, and on the basis of purchasing solar PV (photovoltaic) power at the lowest proposed cost received so far of $0.185 per kWh, and determined that the per-kilowatt hour (kWh) cost of electricity would drop by about seven-tenths of a penny, or $0.007 per kWh, for a total 8 MW of solar PV, which is equal to the maximum 25 percent that can be installed. Part of the reason for the small savings, Fletcher said, is that the 25 percent of peak power capacity represents less than 5 percent of annual energy use, due to the part-time nature of solar and wind energy.

CUC, however, cautions that even this level of savings will only occur for renewable power, which is purchased through a power-purchase agreement.

“Customer installed renewable energy, such as net metering installations, will not result in any savings for most CUC customers. Net metering installations only save money for the customer who has installed them. Thus, savings to the CNMI as a whole will not happen unless the remaining 5 MW is sold as a power purchase agreement, or if future net metering customers are instead treated as independent power producers and power is purchased from them at a rate low enough to result in a net savings to the utility’s customers. It is possible that further increases in net metering customers may, in fact, result in rate increases due to the way CNMI’s net metering policy is structured,” he said.

CUC will be reporting to the Commonwealth Public Utilities Commission this spring on the Net Metering Interconnection Requirement Standards and plans to address the policy questions and its overall renewable plans at that time.

At present, there is about 1 MW of renewable energy already installed and feeding into the Saipan electrical grid, and CUC has approved applications for about an additional 2 MW. This means that it may be possible to install an additional 5 MW of renewable energy, without causing the grid to become unstable.

“Integration of renewable energy beyond 25 percent is possible, but would require energy storage to provide the needed ramp-rate control. Again, this is needed to prevent the sharp drops and spikes in power that tend to cause grid instability. Ramp rate control requires the installation of batteries and control electronics that are not ordinarily a part of a traditional solar PV or wind system, and consequently increases costs. Beyond 75 percent renewables, what is known as diurnal storage becomes necessary,” said Fletcher.

This means this will require significant energy storage capable of providing a steady output of power over a longer period of time. In the CNMI, this translates to battery storage, which at the current time would likely result in high electricity costs in excess of current diesel generation costs. Future conditions may change this, such as if fuel prices rise substantially, and/or if the cost of renewables and energy storage drop.