INTERVIEW: Sunnova talks massive New England DER

Sunnova Energy will be ramping up its Northeast presence with its imminent participation in ISO New England's (ISO-NE) Forward Capacity Auction 15 (FCA15), allowing the solar and storage provider’s distributed energy systems (DERs) to help meet the market’s future demand for electricity.

The company's portfolio of residential solar DER systems is expected to take part in the regional capacity market as early as 2021, with complete participation anticipated for the FCA15 commitment year beginning June 2024. 

“We entered into the FCA15, which puts our resources in the markets starting in 2024 and 2025, so ISO-NE can count the energy that’s generated from our systems as part of their obligation to meet the energy needs of the market,” Michael Grasso, Executive Vice President and Chief Marketing Officer at Sunnova, told New Project Media. “This happened 14 times before, so for 14 years. We’re probably a little late coming to the party, but we came at a good point in time when we had enough capacity, when we had a large enough network, when we felt confident that we could deliver the volume of homes that we’re talking about here and growing into this and meeting those obligations. So why now? Well, now it would make good business sense for us as a company. The program is well-structured, and we believe that we’ll get the right return on the investment that we’re making based on the level of effort that we have to bring these systems to the market.”

The developer is hoping to grow its already significant presence in the Northeast and New England regions, recently announcing its expansion of solar+battery storage offerings in Pennsylvania, Rhode Island, Connecticut and New Hampshire. 

“Sunnova has been the leader in the New England markets for some period of time,” Grasso said. “That's been one of our stronger presences in the U.S., and it's a critical market for us. Just thinking about New England, Massachusetts, Connecticut, New Jersey--these are principal markets for Sunnova. We also have a very strong presence in Rhode Island and Pennsylvania. It’s a critical part of the country, and the customer base is in need of a more resilient solution.”

Sunnova's investments into New England's regional market are expected to reach well over USD 350m, serving as a critical economic driver to local communities, particularly during the COVID-19 pandemic.

“I think the investments we’re making are relatively significant,” Grasso said. “When you think about the level of participation that we are assuming with our bid, we talked about the fact that we expected to clear in the capacity market about 95 MW. That’s close to the 10,000-12,000-system range, so 10,000-12,000 system homeowners would be getting a solar system on their roofs. It's something along the lines of USD 30,000 on average for the region, so you’re talking about an investment along the order of USD 360m in systems that get built and installed in these markets. We’re paying permitting on all those systems; we've got local engineers participating in those systems. There’s a lot of other value through that ecosystem that is benefiting from the investment that we’re making.”

The company works with an extensive network of local dealers in each of its service markets to help bring on additional systems and incentivize the development of those systems.

"That's really where your growth is coming from," Grasso said. "They need to hire more salespeople, they need to hire more installers, they need to continue to reinforce their resources that are on the ground. I think solar in general, just because of the level of job creation that has occurred because of the distributed energy category--and more specifically residential rooftop solar--has far outpaced any other energy categories. So, I definitely think that these communities benefit. It means that they’re going to have a more resilient grid, which is critically important."

All eyes on 2222

The Federal Energy Regulatory Commission (FERC) recently issued Order No. 2222, aimed at removing barriers that prevent DERs from competing on a level playing field in the organized capacity, energy and ancillary services markets run by regional grid operators.

The new rule enables DERs such as storage, intermittent and distributed generation, demand response, energy efficiency, thermal storage, and electric vehicles and their charging equipment to participate alongside traditional resources in regional organized wholesale markets through aggregations.

These aggregations can help satisfy minimum size and performance requirements that each resource may not be able to meet individually.

“I think it was groundbreaking in a lot of ways in regard to the fact that it should, if implemented the way it’s expected, drive more of a national focus on energy storage, which is something that we really believe in,” Grasso said. “Today when Sunnova sells a system, one in three of those systems comes with storage. So, one in three of our customers who buys a solar system from Sunnova also adds storage to that system. We’re a leader in the attachment rate on storage with our systems, and we believe that the FERC order will drive additional incentives. Those incentives might be through programs or might be directly to developers such as ourselves. But we expect it to drive additional incentives that will encourage consumers to add storage, and it will encourage Sunnova to deploy more storage in the markets in which we operate."

Grasso cited ConnectedSolutions, a demand response incentive program operated by Eversource and National Grid in five states, which rewards consumers for allowing utilities to use their home battery systems during peak demand.

“We get the resiliency level for the overall grid up when people have storage because we can use that storage product to manage the way they consume and discharge energy,” Grasso said. “I think FERC Order 2222 will standardize those types of programs to expand more progressively and allow us to continue to grow our fleet of resources and better serve the utilities in the RTOs and ISOs.”

Sunnova is currently exploring cutting-edge technologies to improve energy load control for consumers under a variety of scenarios.

"If you're connected to the grid, if you’re not connected to the grid, if you have a lot of charge in your battery, if you don't have a lot of charge in your battery," Grasso said. "In order for consumers to get that level of certainty and satisfaction with these distributed resources, we need to put more capability in the home. That's control devices that complement it, that’s hardware and software within those devices. We also really think there’s probably a home for many of these consumers to have a secondary source of generation. That could be some type of a generator product or a fuel cell or something else. Many times, we think that if you can't build a large enough array on your roof or you don't have the ideal sun conditions to that roof, some secondary generation could complement that. So, you’ll see us continuing to push the edges of services that complement what we already do.”