New energy storage system has city put chips on the table

·3 min read

The city could be on the hook for $4.6 million if it lands a bigger federal fish.

A grant application to CleanBC — to add a battery energy storage system (BESS) to the Nelson Hydro Grid — requires the city to fund its share of the project if the grant application is successful.

The city’s share of the project would be $4.6 million and would be drawn from the Nelson Hydro capital reserve — reallocating forecasted costs from projects that will be deferred or displaced by the BESS project.

Based on a recommendation of Prism Engineering, the BESS project arose when a peak load management study for Nelson Hydro was conducted, providing an estimated installed cost of $9 million plus engineering and lands costs for a BESS with five megawatt capacity and four-hour duration based on historical pricing, noted Nelson Hydro general manager Scott Spencer.

“The ‘Class B’ cost estimate, completed as part of the application to accurately capture all anticipated project costs reflects current supply chain challenges, inflationary forecasts and project contingency, is $16.7 million, a significant increase from the pre-feasibility estimate provided by Prism Engineering,” he wrote in his report to city council on June 7.

“The benefits analysis indicates an IRR of five per cent and a break-even period of 13 years for the City of Nelson’s portion of the investment.”

Nelson Hydro had to develop a complete project plan for the grant application to account for all project activities, projected material and labour costs, taxes and contingency — resulting in a total project cost of $16.7 million.

Should the BESS grant application not succeed, the city’s utility would continue with its plans for the new substation and the Coffee Creek transformer replacement.

Saving on costs

There would be significant savings for Nelson Hydro ratepayers if the project is realized, said Spencer.

As part of the engineering work completed to develop the costs, a benefits analysis was done to estimate the savings as a result of the project.

“The primary benefits are accrued from a reduction in the monthly peak load which translates to reduced power purchase costs resulting from demand charges under FortisBC Tariff 41,” said Spencer in his report to council.

He added that there would be improved reliability of the system in the form of increased revenue from customers not without power.

“It is also possible that a further revenue stream might be available by providing FortisBC spinning reserve capacity, however these have not been included as the conditions of supply would need to be worked out between both parties and discussions are at an early stage,” Spencer wrote.

North Shore substation

There was been a plan to construct a new North Shore substation in Nelson Hydro’s five-year capital plan.

Spencer said the intent was to relocate the Six-Mile substation and create a new interconnection with FortisBC to provide greater “operational flexibility, increased capacity and outage mitigation.

“A BESS installed on the North Shore would provide similar benefits and potentially negate the requirement for a new interconnection or defer the project for 10-plus years,” he said.

“This is equally true of the capacity increase to the transformer at Coffee Creek which is also in the Nelson Hydro five-year capital plan.”

Plus side of the ledger

Other potential benefits of BESS include:

- supporting the BC Ministry of Transport and Infrastructure (MoTI) plans to electrify the Kootenay Lake and Harrop Ferries — served by Nelson Hydro’s North Shore distribution system.

- a system connected to BESS also has the potential to support the increase in EV adoption and electrification targets required to meet 2030 GHG emissions reduction goals.

Source: Nelson Hydro

Timothy Schafer, Local Journalism Initiative Reporter, The Nelson Daily

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