Danville plans to add a second battery energy storage system to its municipal utility portfolio, which officials say will save customers tens of millions of dollars over the next two decades.
The battery systems store electricity during periods of lower demand and release it during periods of higher demand.
This reduces the utility’s dependence on the electric grid during the periods of highest electricity demand and can help it mitigate certain demand-related costs, a practice known as “peak shaving.”
“We’re always looking at innovative ways to stabilize, even possibly lower rates, but the name of the game right now is stabilizing electric rates,” said Jason Grey, director of Danville Utilities.
The city’s first such system, a 10.5-megawatt project dubbed “Danville I,” went online in 2022 on Monument Street near Danville Utilities’ warehouse.
The newer 11-megawatt system, “Danville II,” will be built at 900 Mount Cross Road, the site of a former city-owned propane storage facility.
It’s expected to begin operating in the second quarter of next year. The Danville City Council approved a special use permit for the project in November and a site lease last month.
Arlington-based Lightshift Energy will build, own and operate the $13 million Danville II battery system, Grey said.
The project is supported by a $1.5 million grant from the Virginia Tobacco Region Revitalization Commission.
Danville Utilities will pay Lightshift about $1 million a year to use it, Grey said.
Lightshift estimates the system will save Danville Utilities $30 million over 20 years.
Similarly, Danville I is on track to save $40 million over 20 years, according to Lightshift.
Danville Utilities provides natural gas, water, wastewater and telecommunications services to Danville. It also distributes electricity to 42,000 customers in a 500-square-mile region consisting of Danville, part of Pittsylvania County and small parts of Halifax and Henry counties.
Like other electric utilities, Danville Utilities pays what are known as transmission and capacity costs. These help cover the expenses of operating the power grid and ensuring that electricity is available, especially during periods of highest demand.
Each year, how much Danville Utilities pays in transmission and capacity costs is influenced by its electricity usage during peak times of the previous year. Those costs have been rising over time, Grey said.
By using battery systems to provide customers with stored-up power during the hottest hours of summer and the coldest hours of winter, the utility can reduce how much power it draws from the grid during peak times and lower its future transmission and capacity costs.
The average Danville Utilities residential customer’s monthly electric bill is about $150 a month, he said.
On Tuesday, the Danville City Council is scheduled to hear a proposal to increase the average electric bill by 3%, or $4.50.
Grey said it’s difficult to put a figure on how much the battery systems will directly impact a customer’s monthly bill.
But, he said, peak shaving practices such as using the battery systems, along with economic development efforts bringing more business to the area, help offset rising expenses.
“Without those two in combination, our 3% could easily have been close to 10%,” he said.
Danville isn’t alone in using a battery energy storage system for its municipal electric utility. Martinsville has a 9-megawatt system that was developed by a subsidiary of American Electric Power and began operating in 2022.
Lightshift spokesperson Laura Coriell said Danville I is the largest municipal battery energy storage system operating in Virginia.
The company is planning further projects.
“Lightshift is developing a portfolio of additional energy storage projects with Virginia utilities, including other municipal utilities, electric cooperatives, and investor-owned utilities,” Coriell said. “These projects are progressing through various stages of development, with several expected to commence construction within the next year.”
For its part, Danville Utilities hopes to roll out a new residential program this summer that also aims to reduce electricity usage during peak demand.
In exchange for a one-time $55 rebate, the customer would allow the utility to remotely adjust their thermostat.
The goal, Grey said, would be to preheat or precool a home during off-peak hours when electricity is cheaper, so less electricity is used during peak demand times.
