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MorganCasellaDynamicOrganics,LLC104EastPutneyFallsRd.Putney,VT05346AnthonyCallendrelloBayCorpHoldings,Ltd.953IslingtonStreet,Suite22Portsmouth,NH03801

August18,2017

JudithWhitney,ClerkVermontPublicServiceBoard112StateStreet,4thfloorMontpelier,VT05620-2701Re:Act53PublicServiceDepartmentEnergyStorageReportProposedOutlineDearMs.Whitney,DynamicOrganics,LLC(“DO”)andBayCorpHoldings,Ltd.(“BayCorp”)arepleasedtoprovidethefollowingcommentstotheVermontPublicServiceDepartment(“PSD”,or“theDepartment”)inreferencetothePSD’spreliminaryproposedAct53energystoragereportoutline.1.Whatismissingorshouldbeotherwisemodifiedintheproposedreportoutline?ThermalStorageThe Department developed a substantial preliminary outline for this energy storage report.However,energystorageseemstobetreatedsolelyaselectrochemicalbatterystorage.Thereare numerous components of “energy storage” such as thermal storage (i.e. grid interactivewaterheatersandbuildingmassintertials),andflexibledemandresourcesthatcanrespondtochanging grid conditions – using renewable energywhen abundant and storing forwhen it’sscarce(orloadshifting).These typesof storage areoftenmore cost-effective thanpure electrochemical storage, andshouldbeconsideredasstorageassetswithspecificgridvaluesinthereport.Althoughthermalstorage systems such as ice storage cannot provide backup power like a conventionalelectrochemicalbattery, theabilitytoshiftheating,ventilation,andair-conditioning(“HVAC”)loadsoutofcoincidentpeakperiodsprovidesthegridthesamecapacityreductionsasabattery.Thisthermalstoragecanbeusedasaloadreducerifappliedduringpeakperiodstodecreasethecapacity requirementsof thedistributionutility (“DU”).Air-conditioning (“AC”) isprovided towithoutanylossofcomfortviaasimplecirculatorpumprunningthroughthestorediceenergy(inlieuofthenormalcompressorloadrequirements).

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As the Department has outlined electric vehicles (“EV’s”) under the ownership options anddeliverypathwaysforpromotingstoragesection,werecommendthatthermalstoragebeaddedtothissamesection.EVchargingdoesnotyetprovidepowerbacktothegrid (thoughthis isbeingpilotedaroundtheUS,butwillrequirelargechangestoEVwarranteesifadoptedatanyscale),andthereforetheEVinclusioninthestoragereportoutlineisbasedontheideaofload-shiftingthechargingofthesevehiclestooff-peakorover-generationhours.ThissameloadshiftingcanbeaccomplishedbyHVACappliances,andcancreateevenmorevalueforthegridthanEV’sifproperlyincented.Thisisbecausethecoincidentpeakdemandsofthegrid normally occur on thewarmest and coldest days of the year –whenHVAC devices arerunningatfullcapacity.LoadshiftingofHVACthereforereducesthecoincidentdemandsonthegrid,ratherthanjustoffsettingthesedemandswithelectrochemicalstoragedischargedtothegridduringthesetimes.Thedefinitionofabattery in this context shouldbechanged tocapacitance,asbatteriesareactingasasurgedeviceorcapacitorforthegrid.Flexibleloads,suchasHVACthermalstorage,canalsoactasachoketoslowtheratesofchangeinload/demand.AsVermonttransitionsfromfossil-fuel heating, the uncontrolled loads of heat pumpswill increase peak demands unlessbetter control and dispatch of these technologies is adopted. To sequence the dispatch andcontrolofelectrochemicalbatteries,thermalstorage,andflexibledemandresponseinthefuturesmartgrid,dynamicratesandsecuretelemetrywillberequired inanopenenvironmentthatencouragestheadvancementoftherenewablegrid.SmartGridArchitectureMissing from theDepartment’s outline is any discussion of the open smart grid architecturerequiredacrossVermontthatenablesboththestoragedeploymentandtheinnovationneededtocreatealowercarbongrid.Thisarchitectureisrelevanttoallsectionsofthestoragereportoutline,andexamplesofexistingarchitecturessuchastheOpenAutomatedDemandResponse(“OpenADR”) protocols should be reviewed and included in the report for discussion.OpenspecificationsandflexibledatamodelssuchasOpenADR2.0bareusedtofacilitatecommoninformationexchangebetweenelectricityserviceproviders,3rdpartyaggregators,andcustomers–capableofevendynamicvariableratestructuresatincreasinggranularintervals.IncludedintheDepartment’sreportshouldbeamorefundamentalbackgroundonotherstatesandcountriespreviousworkdevelopingsolutionstohowaninteroperable,open,reliable,andsecuresmartgridarchitectureismanagedanddeployed.Extensiveworkhasbeenundertakenby parties such as the Smart Grid Interoperability Panel (“SGIP”), Electric Power ResearchInstitute (“EPRI”), Open ADR Alliance and others which can be adopted and built upon byVermonttoproduceanopenarchitecturesmartgridthatcanbedeployedacrossthestate.Thisarchitectureprovidesasecureandreliableplatformtocommunicateforecastandreal-timegriddemandsandpricing,providingtheeconomicdriverthatwillencouragebehavioralchangeanddeploymentofenablingtechnologies.

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2.WhatarethemostcompellingreasonsfordeployingenergystorageinVermont?Energystorage isrequiredtobuildamorerenewablegrid.Vermont isuniquelypositionedtoworkcollaborativelywithstakeholderstodevelopstoragedeploymentandsmartgridsolutionsduetoouralternativeregulationplansandtheVermontlegislature’shistoryinproperlyvaluingrenewables.ThevaluepropositionsthesesolutionsprovideneedtobedemonstratedtootherstatesnotasprogressiveasVermontsothatacleanergridcanbeadoptedacrosstheUS.Independent service operators (“ISO’s”) and DU’s presented with increasing distributedrenewablegeneration(“DRG”)facesteeprampingratesforconventionalthermalgenerationasshown in Figure1below for ISONewEngland (“ISO-NE”) and theVermontElectricCompany(“VELCO”).NotethatVermonthasahighper-capitaDRGinstallationcomparedwithotherNewEnglandstates,andacorresponding23%peakoffsetfrommaximummorningloadtominimumafternoonloadfromsolarvs.the11%ISO-NEaverage.

Figure1.VELCOvs.ISO-NE“DuckCurve”Comparisonfrom4/15/20161

Inadditionto increasingDRG,electricvehiclecharging loadsandlargeincreases intheuseofhigh-efficiencyelectricalheatingtechnologiessuchasheatpumps(“HP’s”)furtherchallengegridstability. Even in a cold climate such as Vermont, VELCO estimates that HP technology willaccountforthreetimesmoreloadthantheEVmarketby2035.Becauseoutdoorairtemperature(“OAT”)istheprimarydriverofcoincidentelectricgridpeakingdemandsalready,primarilyduetoair-conditioning(“AC”),theexponentialgrowthofHP’swillhavesignificant impactsonthegrid. This is evidenced below in Figure 2 with the VELCO forecast growth estimates of PVproductionandtheoncomingdemandofelectrifyingtransportationandheating.Vermont’sAct56andtheComprehensiveEnergyPlanlayoutwithspecificitythatDU’sneedtoencouragethisfossil-fueltransitionwhilemanagingthecoincidentpeakingofgriddemands.1Takenfromthe“StateofVermont’sTransmissionGrid”–2016REVConferencePresentationbyHantzPresume,VELCO

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Figure 3. VELCO Summer Monthly Peak Time of Day 2010-2016

Figure2.VELCOforecastsofVermontPV,DemandResponse,HP,andEVGrowth2PenetrationofDRGandthegrowthofHP’sandEV’swillcreateproblemsforthecurrentgridwithoutsignificantchangestohowwedetermineelectricityrates.StorageisneededinVermonttoloadshiftDRGproduction,helpingtomaintainthevalueofrenewableenergy,specificallyPV,and continue to incent its adoption. Present rate structures for renewables don’t reflect thehighlyvariablevalueofenergyatdifferenttimes,andweoftenvalueeachkilowatt(“kW”)thesameaseveryotherkW.Whennet-meteringwasconceived40yearsago,anysolarthatcouldbeproducedandexportedtothegridwasoccurringduringnormaldailypeakloadhours,andcoincident with the warmest sunny days inmid-summer. As DRG penetration has increasedrapidlyinVermontoverthelast6years,theFCMpeakhasbeenpushedbacklaterandlaterintotheeveningfollowingthesignificantrampingratesafterPVgenerationdropsoffeachday.

Figure3.VermontSummerMonthlyPeakTimes2010-20163

2,3Takenfromthe“StateofVermont’sTransmissionGrid”–2016REVConferencePresentationbyHantzPresume,VELCO

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AstheFCMpeakmoveslaterintotheevening,thevaluethatsolarprovidesincounteringthispeakloadisdecreased.TheoveralltrendshowninFigure3illustrateshowpushingdownontheduck’sbackyearbyyearwithDRG,thecoincidentpeakdemandsontheVELCOgridsystemispushedlaterintotheeveningasthePVgenerationfades.Untilwefigureoutstorageandflexiblecapacity,eachmarginalkWofDRGwillbelessvaluable.3.WhatarethebiggestbarrierstodeployingstorageinVermont? Tocreatearenewablypoweredgridandretirethecurrentfossilfuelgenerationfleet,Vermonthastoevolveitscurrentregulatorymarkets,ratedesignpolicies,andredefinetherolesofboththeDU’sandEfficiencyVermont (“EVT”), so thatall stakeholdersarealigned to facilitate theactivebalancingofDRGandcontinuousdemandmanagementofloads;orthesmartgrid.Simpleefficiencymeasures,aseffectiveastheyhavebeeninreducingtotal-energyconsumption,mayalsoburdenutilitiesifnotbettermanaged.TheheatpumpprogramfromGMPandEVTprovidesanexampleofthis,wherethoughthereisanet-efficiencygainforthehousehold,GMPisstillsubjecttothecoincidentpeakingoftheseuncontrolledloads.Balancing intermittentDRG resourceswill require changing the current grid structure fromasupply-side management framework where generation is dispatched to follow loads, to ademand-sidemanagementframeworkwhereloadandstoragearedispatchedtofollowandfirmintermittentDRGproduction.DU’sonceperformedthismoreactivedispatchofgeneration,butduetoderegulationandthedecouplingofgenerationinthemajorityoftheUS,theyoftenjustmanagebillingandwires.ThisisnotthecaseinVermont,andourutilitiesarebeingforcedoutof necessity to take on this dispatch role once again. Green Mountain Power (“GMP”), forexample,citesthattheyhavegonefromoperating10powersourcestooperating8,300powersourcesin10years(thisincludesnet-meteredsolarprojects).The smart grid will require magnitudes more DER deployed over the distribution grid, andbecausetheseresourcesareallbelowtheISOlevel,theycanbebetterdispatchedandmanagedbelowthesubstationsbyDU’s.ThisbalancingcanbeaccomplishedthroughpricesignalsderivedfromexistingforecastingtoolsalreadydevelopedandcontinuouslyimproveduponbyVELCO’sDeepThundermachine-learningforecastingtool,andcombinedwiththereal-timevoltagesatsubstationfeeders.LoadsmanagedbytheDU’s,EVT,3rdpartyaggregators,andcustomersacrossVermont can use these locational economic signals to respond continuously, providing theaggregatedemand-sidemanagementtoolneededtobalancearenewablegrid.Withareliable,secure,openarchitecturesmartgridframeworkcapableofsendingthesepricesignalsandreliablyaccountingforflexibledemandresponseandstorageperformance,Vermontcanunlocksmartgridinnovationacrossthestate.Thisisneededtoevolvethecurrentsupply-sidesystemwhereutility-scaleDERisdispatchedmainlybytransmissionauthoritiestoonewheredispatchsignalsaregeneratedforthedistributiongrid-belowthesubstation-allowingelectronstoberenewablygeneratedandusedlocally.

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Distributionallocationalmarginalpricing(“DLMP”)signalsmaynotbesomethingthatVermontwants to tackle immediately,andcanbedifficult tocost-justify incomparisontocurrentgridcontractingandcapacityobligations.However,thisshouldbeviewedasthepenultimategoalforVermont,andthisreportshouldoutlinestepsthathelptoachievethisresult.PilotsthatcanhelptoprovethevaluepropositionofDLMPsignalsanddemand-sideresponseshouldbeencouragedacrossVermonttohelpdefineandadoptdynamicratedesignsandpolicies.Current renewable incentivizes in Vermont including utility rate structures for net-metering,feed-intariffsundertheStandardOfferProgram,andeventheRenewablePortfolioStandard(“RPS”)legislation,donotincentpeakloadreduction,buttotalenergyreduction.Becausethesecurrent tariffsand incentivesdonotdifferentiate renewablepowerbasedon the time itwasproduced,andisthereforeagnostictothemarginalgenerationunitatthetimeofproduction,Vermontrunstheriskofcatalyzingunequalgrid-relatedandfuel-relatedbenefitswithoutamoregranularapproachtoratedesign.This is furtherdetailed in thereport,“Evolving theRPS:ACleanPeakStandard foraSmarterRenewable Future,” developed by Strategen Consulting on behalf of the Arizona ResidentialUtilityConsumerOffice,isrecommendedforDepartmentreviewforbackgroundandinclusioninthisstoragereport.4MostVermonthouseholdsarechargedforelectricityunderanaveragefixedresidentialrate.Thisvolumetric$/kWhpricingblendsthetransmissionanddistribution(“T&D”)withthegenerationportionoftheutilitycosts.Fixed,averaged-costelectricratesincentefficiency,ortotalenergysavings, but not peak grid demand and capacity reductions (a significant portion of averageelectriccosts).Thishasenabledustodevelopmechanismslike“net-zero”homesthatgenerate2-3Xhouseholdloadwithphotovoltaics(“PV”),pushingthispowerontothegridduringtheday,andusingthermallygeneratedelectricityduringevening,nighttime,andcloudyperiods.Thishasasignificantbenefitforthecustomer,whousesthegridasamassivebatterywithnoround-trip inefficiencies, but has left utilities incenting only the reduction in total energyconsumptionof buildings –without reducingoverall capacity andpeakdemandsof the grid.Althoughthehomemayhavea“net-zero”kWhuse,theKWdemandandcapacityrequirementsofthebuildingmaynotchangeatallfromthegridsperspective.Afterthesungoesdown,thesameexistingthermalgenerationcapacityisrequiredbythe“net-zero”homeintheeveningasthenon-DRGconnectedhome,contributingtotheever-steeperrampingratesrequiredasmoreDRG is put on the grid. This has created incentives thatworkedwith smaller levels of DRG-penetration,buthaslessbenefitsforthegridascapacitypeaksarepushedlaterintothenon-solarevenings.Additionally,DRGpenetrationand the increasingheatpumpdemandsexpectedeven in coldclimatestateslikeVermontarechangingthecharacteristicsofsupplyandload.Ratesneedtoevolvethatdistinctlyaddressbothenergyandcapacityonthewholesaleandretaillevels.Thisis4https://www.strategen.com/new-blog/2016/12/1/evolving-the-rps-a-clean-peak-standard-for-a-smarter-renewable-future

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alreadyoccurring inpilot format throughout thecountry,with someutilitiesadoptingcriticalpeak pricing (“CPP”) and even piloting real-time rates. These kinds of dynamic rates will berequiredtoincentandbalancetheseincreasingDRGresourcesbehindthemeter,providinganeconomicincentiveforbehavioralchangeandtechnologyadoptionthatwillcreatethesmart,flexible, renewable grid we need. These same pilots need to be built upon with similarinvestigations across Vermont in order to define this value to the grid. DO and BayCorprecommend the Department review reports developed by the Rocky Mountain Instituteregardingtheeconomicsofstorageandflexibledemands,specificallythefollowing:TheEconomicsofBatteryEnergyStorage,20155TheEconomicsofDemandFlexibility,20166VirtualAllocationofDemandthroughtheGMPCurtailableLoadRiderRatestructuresandtariffs that incentpeakdemandreductionandasmartergridneedtobedeveloped,butVermontalreadyhasexistingtariffs(namelytheCPPandCurtailableLoadRider(“CLR”)3 that can be amended to unlock storage value and create deployment opportunitiesresultinginsavingsforallsystemcustomers.FewcustomerscurrentlyparticipateintheCPPorCLRtariffrateandrider.DOandBayCorpreferencethemhereasevidenceofratestructuresthatarealreadyavailabletoGMPcustomersandwhichencouragepeakdemandreductions.DO and BayCorp provide the following example of our current development work as anillustrativeexampleandanswertobothoftheDepartment’squestions4and5:BackgroundDOhasbeenworkingwithalargehospitalinGMPserviceterritorythatistransitioningtotheN63/65C&ITimeofUse(“TOU”)rateandlookingtousepowermoreefficiently.Currently,theTOU rate is a simple on-peak (6am-10pm) and off-peak (10pm-6am) differential kWh ratestructurewithT&Dbrokenoutseparately.Thehospitalhasasummerpeakof650KWandawinter peak of 350 KW (when the central biofuel boilers have replaced AC loads). There iscurrentlya3MWhicestoragebankonthecampusthatchargesovernightinthesummerattheoff-peakrateandthenreduceson-peakACkWhanddemandduringthedayforthecampus.Thehospitalneedstohaveuninterruptiblepowersupply–currentlyprovidedwithin9secondsofinterruptionbytheonsitebackupdiesel-generators.Locatingagrid-scaleflowbatteryonthehospitalcampuscanprovideuninterruptablepowersupply(“UPS”)within200millisecondsofinterruption–andwithoutanyfossil fuelbackupgeneration.Thiscanbeusedastheprimarybackupsystem,andthe4MWhofcapacityoftheflowbattery(iffullycharged)couldprovidepowertothehospitalfor6-7hoursinthesummerandalmost14hoursinthewinter(assuminganaverage600KWsummerpeakand300KWwinterpeakdemand).5www.rmi.org/insights/reports/economics-battery-energy-storage/6https://www.rmi.org/insights/reports/economics-demand-flexibility/3http://www.greenmountainpower.com/wp-content/uploads/2016/09/Curtailable-Load-Rider-4.1.16-1.pdf

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CreatingaVirtualCurtailableLoadIfsizedsolelytoaccommodatethehospital’sload,thecapacityofthebatterywouldbelessthan1 MW. The only revenues that would be received by the battery owner would be thecompensationunderthecurtailableloadprogram.If,however,thebatterycouldbesizedat1MWor larger, thebattery couldparticipate in the ISO-NE frequency regulationmarket. Therevenuesfromfrequencyregulationwouldimprovetheeconomicsofthebatteryinstallationandincreasethelikelihoodoftheeconomicviabilityoftheenergystorageproject.DOandBayCorparediscussingaconceptdevelopmentforautility-scalestorageassetlocatedonthehospitalcampusthatcanachievetheeconomicbenefitofparticipatinginthefrequencyregulationmarketbyinstallinga1MWbatteryandcreatinga100kW“virtual”curtailableloadusingaportionofthebattery’scapacity.TheflowbatterywouldbeavailableundercontractwithGMPtobedispatchedattheirdiscretionduringpeakperiodsforpeakshaving.GMPdeterminestheseevents,similartoaCPP,throughforecastgriddemandsandotherinputs.Usingthissameforecasting,GMPoffersaCurtailableLoadRider(“CLR”)tarifftoC&Icustomerswhocanactivelyreduceloadduringthe4to6hourcurtailable periods, and offers a revenue-neutral TOU/CPP rate schedule for residentialcustomersthathas10,8-hourCPPperiods(80hoursperyear)4.Whendispatched,GMPwouldrealize the capacity, capacity-related (such as ancillary services), and other savings from thereductioninannualandmonthlypeakloadsresultinginsavingsforallcustomersonthesystem.GMPwouldinturnreimbursethehostfacilityforaportionofthedemandreductionthatthefacilityhasbeenallocatedandpaidfor.Inthiscase,theallocationtothehospitalwouldbe100kWandtheywouldreceivecurtailableloadpaymentforthatamountwhentheenergystoragefacilityisdischarged.Importantly,theenergystoragefacilitycannowparticipateinthefrequencyregulationmarket and use those revenues to support the construction and operation of thefacility.Thereisnoreasonwhythis“virtual”curtailableloadarrangementneedbelimitedtoasingleC&Icustomer.Theallocationofthecurtailableloadriderpaymentispurelyadministrativemuchlikethe allocation of net metering credits that the Vermont utilities account for and credit tocustomeraccounts.Multipleaccountscouldparticipateinowningalloraportionofthebattery’scapacityandthehostutilityderivesbenefitshouldanyportionofthebattery’scapacitynotbeallocated.Inthecaseofthehospitalpresentedbelow,allocatingaportionofthestorageoutputtotheCLRcancreatetheincentiveneededforinvestmentinotherenablingtechnologies(activedemandmanagementandstorage)thatcreateamoreflexiblecampusloadprofile.TheCLRstatesthattheC&Icustomermustbeable to reduce loads25% fromaveragemonthlypeaksduring thecurtailableevent.Forthehospital,thismeansreducingsummerloadsbyapproximately160kWandwinterloadsby90kW.TheoutlinebelowshowshowtheflowbatterycapacitywouldbeallocatedduringtheCLR.4http://www.greenmountainpower.com/wp-content/uploads/2016/09/Rate-9-Critical-Peak-Pricing-10.1.16-1.pdf

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C&I Hospital in GMP Territory - Virtual Demand Allocation ExampleHospital Hourly Max KW Demands from April 1, 2016 - April 1, 2017

650 KW Summer Peak Demand

350 KW Winter Peak Demand

Hospital(C&I)

HospitalPrimary Meter

FlowBattery

Inverter

HospitalTransformers

Flow BatteryTransformers

GMP Grid12.7 kV

Flow BatteryMeter

UPSAuto Transfer

Switch

GMPSubstation

Reduce 25% of Peak with Ice Storage,HVAC Demand Response, 100 KW Flow

Reduce 25% of Peak with 100 KW Flow

Example One-Liner of Flow Battery “Partition” at Hospital

Virtual Metering of Hospital Demand Reduction during Curtailable Load Hours

Hospital100 KW

GMP900 KW

During GMP Curtailable Hours

During GMP Non-Curtailable Hours

ISO-NE1 MW

Flow Battery Capacity Allocation

Flow Battery Participates in ISO-NE FrequencyRegulation Market the Majority of Time

of the storage asset to be stacked between GMP and C&I customers. During non-curtailable hours the full

During this same time the hospital will use 100 KW for demand reduction to help 25% load rider reduction.

Figure4.ExampleVirtualDemandAllocationofBatteryCapacitywithGMP’sCLRTariff

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StackingFunctionandValue,IncentivizingPeakDemandReductionandaSmarterGridBeyondthebenefitsoftheflowbatteryprovidingUPSpowerandallowingfor100kWofdemandreductionpermonthfromthevirtualdemandallocation,participationintheCLRtariffprovidesthehospitalwithaneconomicincentivetodemandmanageandreducepeakloadsacrossthecampus.Theexisting3MWh ice storageasset is currently chargedovernightduringoff-peakperiodsandthenimmediatelybeginsdischargingat6amaton-peakrates.Thedifferentialrateof on/off peak charging garners some savings for the hospital, but the binary TOU pricingscheduleisn’talignedwiththeneedsofthegrid.The ice storage is far more valuable to GMP if it can be charged overnight and thenmadeavailable during the afternoon peak periods, especially during the steep ramp required ofconventionalthermalgenerationasdailysolarproductionfades.Asthehospitalalreadyownsthisicestorageloadshiftingasset,theadditionaldemandreductionbenefitsattainedthroughparticipationintheCLRtariffcomesatminimalcoststothecampus.DOiscurrentlymodelingthecapacityandperformancecharacteristicsoftheflowbattery,andworkingwithEVTengineerson an efficiency optimization program algorithm for the standard TOU charging cycle of thebattery. The DO controller developed for the projectwill discharge the ice using a differentresponseprogramforCLRdayswhencalleduponbyGMP.Figure4illustrateshowtheicestorageassetcouldprovidetheadditionalkWdemandreductionsrequiredforthehospitalduringthesummerAC-seasontoreduceaveragemonthlypeaksby25%.Thissupplantsthe100kWofdemandthatcouldbevirtuallyallocatedthroughthemeter,andalignstheloadshiftingicestoragetechnologywiththeneedsofthegridthroughtheeconomicincentiveofreduceddemandchargesprovidedbytheCLR.Additionally,theCLRtariffencouragesdeeperadoptionofenablingstoragetechnologyandflexibledemandmanagement,aseverykWthatthehospitalcanreduceduringtheCLRperiodisworth~$15(approx.average$/kW-monthdemandchargeofhospitalduringN63/65transitionfromformerCVPSRate04).ConclusionStorageisneededacrosstheVermontgrid.VirtualallocationofstorageusingtheCLRtariffisoneexampleofhowgranularratestructurescanhelpto incenttheadoptionoftechnologiesthatenable a smarter, flexible grid. The hospital example above illustrates how the coordinateddispatchoftheflowbattery,thermalstorage,andbuildingdemandresponsecombinetoreducetheamountofoverallstoragecapacitythatwouldotherwisehavebeenneededonthecampusto offset these loads. This is the same 1+1=3 concept that DO and BayCorp suggest theDepartment consider in this storage report, namely, that a smarter grid with flexible loadsaggregatedwithdemand-sidemanagementtoolscanreducetheamountofstorageneededtobalancethefuturerenewablegrid.Theredoesn’tneedtobea1:1storagetoDRGratioifwecandevelopanopensmartgridarchitecturethatprovidesthesecurecommunicationsandvariablepricingsignalsneededtodriveinvestmentandinnovationinthesmartgrid.EnergyStorageReportOutlineStructureInreferencetotheproposedoutline,DOandBayCorprecommendthattheDepartmentconsiderthefollowingrevisionsandadditionstotheAct53EnergyStorageReport:

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1.Introduction2.State,regional,andnationalactionsorinitiativesaffectingdeploymentofenergystorage a.Storagedescriptionanddefinition b.Storagetechnologies Electrochemical ThermalStorage(PermanentLoadShifting,FlexibleDemands) HydroReserve/Storage c.Storageapplications HVAC EV GridSupport(DemandFlexibility) d.Nationalstoragelandscape e.Regionalstoragelandscape f.Vermontstoragelandscape3.Federalandstatejurisdictionalissuesregardingdeploymentofenergystorage a.Wholesale/retail b.FERCorders c.ISO-NEstorageactivities d.VELCOorDUDefinedAncillaryServiceSignals4.BenefitsandCostsofStorageSystemsinVermont a.UsesCases b.Benefits c.Costs5.OwnershipOptionsandDeliveryPathwaysforPromotingStorage a.UtilityOwnership b.Third-PartyProvidersandAggregators c.ElectricVehicles d.OpenSmartGridArchitecture e.VirtualDemandAllocation(“CommunityStorage”)6.PotentialProgramsandPoliciestoEncourageSoundStorageCapabilitiesinVermont a.Utilityplanningexercises b.Ratedesign DistributionLocationalMarginalPricing EndUseRatesforNewTechnologies c.Energyassuranceefforts d.Sitingcriteria/thresholdfor248review e.Interconnectionstandards f.EEUactivities g.RPSmultipliers CleanPeakPortfolioStandards h.Procurementtargets i.Modificationofexisting(netmetering,SO)ordevelopmentofnewincentive CLRTariff,VirtualDemandAllocation j.Demonstrationprojects k.R&D7.Recommendations

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TheEnergyStoragereportshouldfocusonhowtheuseofdemand-managementtechniquesandthedevelopmentofanopensmartgridarchitecturecanreducetheamountofelectrochemicalstorageneeded tobuild the renewablegrid.AdoptionofOpenADRorotheropenstandardsalreadycreatedcanhelpVermontevolvepastademand response frameworkanddevelopaflexible demand-side management system – with active, continuous balancing of DRG intobuildings,vehicles,andstoragetomostcost-effectivelydeploycapacityacrossthegrid.Vermont should encourage and incent customers to change behavior and warrant theinvestment in enabling technologies that actively support the grid and encourage deeperpenetrations of renewable energy. The Department should encourage the Public UtilityCommissiontodevelopascalable,interoperablearchitecturethatenablesthepartnershipswith3rdpartyaggregatorsandtechnologyinnovatorsthatwillbecrucialtotheultimatedevelopmentofthesmartgrid.UltimatelyitwilltakeamassivecollaborativeefforttobuildtherenewablegridenvisionedbyVermont.ExistingratestructuresthatincentpeakdemandreductionssuchastheCPPorCLRtariffsandrates should be adopted and encouraged immediately,with pilots that help prove the valuepropositionofevenmore flexible loadsencouragedacross thestate.TheDepartment shouldrecommendsimilar interconnectionoptions forvirtualdemandallocationofbatterycapacity.JustascommunityPVsystemswereenabledthroughvirtualgroupnetmetering,batteriescanbesimilarlydevelopedas“communitystorage”projectswithmultipleofftakers.UndertheCLRexampleprovidedabove,itwouldbesimpletohavemultiplevirtualC&Icustomerofftakersusingtheutility-scalebatterycapacity.ThebatteryenablesthehospitalinourexampletoparticipateintheCLRtariff,astheicestoragealonewouldnotbeadequatetoreducepeakdemands,andunavailableforthermalstorageinthe winter. The 100 kW supplies the 25% winter demand reduction, and warrants theoptimizationoftheicestoragecontroltoattainthe160kWreductionneededforsummerpeakreductions.Thehospitalisalsoinvestigatingtheflexibledemandcapabilitiesthatalreadyexistandmightbeabletobecontrolledbythecampusbuildingmanagementsystem.Thebatteryhasthereforeprovidedacarrottotheadministrationandfacilitiesmanagementteamtoinvestigatedemandreductionandflexiblecapacitiesofthecampus.If this storage capacity can be virtually allocated tomultiple campuses, the same economicdriversforcurtailingpeakloadscanbemadeavailabletomultipleC&Icustomersoffthesamebattery.Thisallowstheeconomiesofscaleof largergridstorageassetsandunlocksavailablebenefitstocustomersunderexistingratestructures.Thiscanallowfornomoneydowndemandsavingsagreements,followingonthepowerproductionagreementsthatunlockedPVgrowth.DOandBayCorpareexcitedtoworkwithregulatorsandstakeholderstodevelopasmarterandcleanergridforVermont,andthankyoufortheconsiderationofthesecomments.Sincerely,MorganCasella AnthonyM.Callendrello