- Colorado
- Residential Storage
- Energy Technologies
- Energy Technologies
- Energy Storage
Can Colorado Become the Next Big Energy Storage Market?
Having covered the energy storage industry for several years it’s exciting to see my home state, Colorado, making headlines. Aside from a handful of older pumped hydro plants, the storage industry is nascent in Colorado due to a combination of cheap electricity, relatively low demand charges, and little regulatory support. The state has emerged as an attractive market for both wind and solar generation projects, and energy storage has entered the state’s energy planning in a big way. State-level policies and new storage projects are shaking up the market at all levels.
Policies Supporting Growth
Colorado’s first energy storage-specific legislation likely will go into effect this year thanks to Governor John Hickenlooper signing SB 18-009 into law. The bill concludes that customers have a right to interconnect and use batteries without restrictions. The uptake of residential energy storage has been slow in Colorado, partially due to the relatively high permitting and interconnections costs charged by utilities. The bill aims to reduce these barriers and allow customers to benefit from the resiliency and cost savings that can be provided by residential storage.
New Projects and Procurements Highlight Colorado's Potential
While the prospects for residential storage are improving in the state, recently announced projects have shown that utility-scale energy storage is already viable. In late 2017, northern Colorado utility cooperative United Power announced it will build and own a 4 MW/16 MWh battery energy storage system. What’s unique about this project is the utility’s plan to share the benefits with its customers through an innovative community energy storage program. Commercial and industrial customers can buy into the project for a certain number of kilowatts, and have their peak demand and associated charges be reduced by that amount. For the utility, the real value lies in reducing its overall peak demand, and the charges it pays to the regional wholesale supplier. United Power estimates that its investment can be fully repaid in 7-8 years with a 10% return.
The most noteworthy and well-publicized development in Colorado’s storage market was the announcement from the state's largest power provider, Xcel Energy, that it received record-breaking low bids for new solar, wind, and storage capacity. Through its all-source solicitation, Xcel received bids for projects offering some of the lowest prices ever seen for wind, wind plus storage, solar, solar plus storage, and all three resources combined in a single project. The following table shows the total bids and median prices received.
Xcel Energy 2017 All-Source Solicitation Bid Summary, Renewables and Energy Storage
(Source: Xcel Energy)
These record low prices highlight the growing maturity of combined renewables plus storage projects, and the relatively low cost to add storage to wind or solar projects as system integration expertise has improved. Although the specific proposed projects and the companies bidding have been kept confidential, the details provided by Xcel list standalone battery storage projects up to 150 MW capacity with a duration of 10 hours. These projects included a rumored bid by Tesla for a 75 MW/300 MWh battery plant—which would be its largest. This wave of recent action on policies and new projects has put Colorado on the map as one of the most attractive states for new storage developments.