State regulators have given Appalachian Power the OK to build its first battery energy storage system to serve some of the most outage-prone customers in Southwest Virginia.
A battery energy storage system draws electricity from the grid and stores it to be used as needed, such as during outages or high-demand times. This system would serve around 2,790 customers on Appalachian’s Glade-Whitetop circuit, which spans about 260 miles of mountainous terrain and is difficult to reach for repairs.
The $57.3 million project would create two battery energy storage sites, one each in Grayson and Smyth counties, totaling 7.5 megawatts of capacity and 30 megawatt-hours of energy. Capacity refers to how much electricity the system can deliver at one time, while energy refers to how much power it can distribute before it must be recharged.
Appalachian applied in January for approval to build the system. The State Corporation Commission, which regulates utilities in Virginia, issued its final order on Monday, giving the green light. It’s unclear when construction will begin or when the project is anticipated to be complete.
Utility says project will improve reliability, lower costs
Appalachian has said that the customers on the Glade-Whitetop circuit represent 0.5 percent of its 540,000 Virginia customers but account for 1.3 percent of system outages each year. In 2022, the circuit saw more than 4.2 million minutes of customer interruptions, “making it one of the worst performing distribution circuits in the Company’s system from a reliability perspective,” the utility has said.
Appalachian has said the system could also provide cost savings by storing electricity produced more cheaply during lower-demand periods and deploying it during higher-demand periods when power would be more expensive.
“Thus, the Project will both improve reliability for Appalachian’s customers and reduce the Company’s cost of service — both of which advance the public interest,” the utility said in its application.
An Appalachian Power spokesperson said in February that recovering the capital cost of the project would directly add about 60 cents to each customer’s monthly bill, but customers likely wouldn’t see that expense for two years. The utility said it plans to file to recover the project costs at a later date.
The battery energy storage system would also help the commonwealth’s second-largest electric utility meet the requirements of the Virginia Clean Economy Act of 2020. The act mandates that by the end of 2035, Appalachian must have filed for permission to construct or own 400 megawatts of battery storage.
Appalachian Power announced in May that it is looking to add up to 1,100 megawatts of wind, solar and battery energy storage capacity to its electricity portfolio to help meet its VCEA requirements.
The act also has an interim target of 25 megawatts of battery storage by the end of 2025, and the Glade-Whitetop project is “the first application, a long journey towards that, meeting that mandate,” Noelle Coates, an attorney for Appalachian, said at the SCC’s June hearing in the case, according to a transcript.
SCC staff recommended substation over battery project
In May, SCC staff recommended Appalachian Power build a new electric substation rather than move forward with the battery energy storage system.
Although the substation would cost about $5 million more, SCC staff said it would benefit more customers and would last 30 years compared to the 20-year expected lifespan of the battery energy storage system. Staff also said a substation would provide continuous power rather than the limited amount available in the batteries, which could be depleted during long outages before service was restored.
In June, U.S. Rep. Morgan Griffith, R-Salem, wrote a letter to the SCC questioning whether a battery energy storage system would be the best solution to the area’s frequent power outages. He said it was his understanding that the system would provide power only for a few hours but that outages there can last days.
“The ratepayers should not have to pay for a solution that would likely only put a band-aid on the problem,” Griffith wrote.
In July, an SCC hearing examiner recommended the commission approve the battery energy storage system, calling it a “reasonable” and “cost-effective” proposal to meet reliability concerns as well as Virginia Clean Economy Act requirements. A hearing examiner oversees SCC cases when a utility makes a request, such as for a project like this or a rate increase.
Appalachian’s proposal to build a battery energy storage system is a small part of a larger national trend. S&P Global said in August that by the end of the second quarter, total U.S. battery storage capacity had increased 87% year over year to 23.8 gigawatts. Most of that growth was in California and Texas.
