The largest community solar farm in Massachusetts now also has the state’s largest utility-scale energy storage system, which allows Holyoke’s municipal utility to reduce electricity demand charges from the grid based on peak usage.

On Sept. 25, Holyoke Gas & Electric unveiled a 3-megawatt battery system built and owned by ENGIE North America at Mt. Tom, the site of a coal plant that closed in 2014 after five decades and is now home to a 22-acre, 5.76 megawatt solar farm that began operating in 2017.

Rising demand charges from the ISO New England regional transmission system sparked the pursuit of the storage system, according to Holyoke Gas & Electric Manager Jim Lavelle. Per ISO New England rules, the utility must demonstrate it has enough contracts for sufficient capacity to meet peak loads for its more than 18,000 customers.

The utility has seen those demand charges, determined on peak days and hours, rise from a little more than 10 percent of the utility’s expenses to about 30 percent.

“If we know we’re on a peak day or peak day scenario, we’ll operate the battery. If we run a megawatt of battery storage on our system, it effectively reduces our peak by that 1 megawatt,” Lavelle said. “So we use that to offset. Because our demand charges are based on our peak loads, our peak ends up lower than it was otherwise.”

The battery is estimated to reduce peak charges by about 3 percent, Lavelle said, and because peak charges are a “huge line item,” every bit helps with insulating customers from rising charges.

Lavelle said the utility researched peak saving measures such as battery storage systems, issued a request for proposals, and ultimately selected ENGIE. The utility and ENGIE reached a 20-year power purchase agreement on the system, which avoids any capital outlay by the utility.

Lavelle said it would be worthwhile – even for cities and towns without a municipal utility – to solicit interest from battery companies. While the city or town may not benefit from an energy cost standpoint, he said, if the battery vendor can extract value from the system, selling services to a third-party such as another utility, the city or town could realize some additional revenue. And if the municipality has demand-based rates, it could similarly use a storage system to reduce its peak loads.

Massachusetts as a whole will benefit as well through the state’s Peak Demand Management Program, which awarded Holyoke Gas and Electric a $475,000 grant from the Department of Energy Resources.

That funding will allow researchers from the University of Massachusetts Amherst to study the system and its peak reduction value to the distribution system, with the goal of providing recommendations to other municipalities on battery storage systems.

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