How Solar and Storage Can Reduce Coincident Peak Loads and Payments: A Case Study in Austin, TX

Abstract

This study builds a generalized tool to forecast the change of 4 coincident peak (4CP) loads and payments based on varying amounts of solar, storage capacity, and population estimates over a 10-year period for utilities within the Electric Reliability Council of Texas (ERCOT). It also incorporates an optimization model for the energy storage systems (ESSs) that maximizes the sum of the revenue earned from their operation as well as the net 4CP payments received by the utility by attempting to arbitrage the ERCOT energy market. The tool is illustrated by using empirical data from the municipally-owned utility in Austin, TX (Austin Energy). 4CP payments can be on the order of tens of millions of dollars. Results indicate that solar and storage capacity can substantially lower these payments. For example, a 20 MW increase in solar capacity in 2018 would reduce Austin Energy’s payment by an estimated $200,000 for each subsequent year. By using the novel approach of incorporating coincident peak demand charge reductions at the DSP level, this study highlights the economic value of local generation and storage.