Plans to invest $200 million in a lithium-ion storage facility in the US hang in the balance in a row over ‘price protectionism’ and the use of renewable energy to charge the batteries.
Franklin Energy Storage Projects has said the proposed Idaho facility— which would include four 25MW battery storage units— qualifies for a 20-year contract under a federal law promoting alternative energy.
However, the regulator, Idaho Public Utilities Commission (PUC), has twice rejected the application. The PUC has sided with the state-regulated Idaho Power utility, which said the project is allowed only a two-year contract because the batteries would be charged with solar— making that facility a “solar generator”.
Now Franklin has called on the Federal Energy Regulatory Commission (FERC) to overrule the PUC— saying it is in violation of the law intended to promote renewables.
The company said the limited contract fails to provide the stability needed to make the project financially viable.
And an attorney representing Franklin told BBB the case could have a negative impact on future such projects across the country— and hit investment in emerging battery-storage technologies as a whole.
The row centres on the Public Utilities Regulatory Policies Act (PURPA), which dates back to 1978 and was intended to promote alternative resources. The law requires power companies to buy electricity at a state commission-approved rate from qualifying small power-production facilities.
Industry observers say battery storage on a commercial scale is so new that the 1978 PURPA law does not address the issue.
In 2012, the Idaho PUC limited wind and solar projects that can qualify for PURPA 20-year contracts to not more than 100 kilowatts after utilities complained they were being forced to buy power they did not need at high rates. According to the PUC, Franklin is building a solar project exceeding 100 kilowatts, making it ineligible for the 20-year contract.
But Franklin has argued the PUC is not abiding by that law— and rather than protecting electricity consumers from Idaho Power role as a state-regulated monopoly, the commission is protecting the utility to the disadvantage of consumers.
Franklin attorney Peter Richardson said: “There’s a fundamental difference between what a battery project can do and what a stand-alone wind project or solar project can do.”
Unlike wind, solar or hydro— which generates energy that must be used as it is produced— batteries can store energy until needed, Richardson said. Advances in technology “have brought renewable-energy battery storage to the edge of being financially competitive on a commercial scale”, which means similar projects “could start popping up in other states”.
“Battery storage is going to open a whole new chapter in the utility industry,” Richardson said.
Idaho Power could not be contacted for comment by BBB. However, the utility reportedly contends it can buy energy on the open market cheaper than from PURPA projects and pass on savings to customers.
The Associated Press quoted a utility spokesperson as saying it supported the PUC’s decision that protects “customers from Franklin Energy’s attempt to circumvent established rules for setting contract price and terms for PURPA energy sales agreements”.
An FERC ruling on the case is expected early this year.
Earlier this month, the FERC rejected proposals by the Trump administration to “subsidise” struggling coal-fired and nuclear plants over support for developing battery storage technologies.