Sarah Peterson: Without the grant, I'm not sure where this project would be. Having the ability to do this now and not having to wait, the five or 10 years-- it's huge. It's bringing more than just a microgrid to Minnesota Valley. It's bringing training. It's bringing the collaboration and partnership with our membership and our large C&I and our tribe. It's huge to us right now.
Teri Viswanath: That’s Sarah Peterson, she’s the vice president of engineering at Minnesota Valley Electric Cooperative and she’s talking about the importance of federal funding that will deliver billions of dollars to rural communities across the country.
Hello, I’m Teri Viswanath, CoBank’s energy economist and your co-host of Power Plays, a monthly audio program where we connect you with top energy and environmental innovators who share their insights, experience and observations of the market. As always, I’m joined by my colleague and co-host, Tamra Reynolds a Managing Director here at the bank. Hello Tamra.
Tamra Reynolds: Hey Teri. I’m excited about this program. As you know, I wanted to spotlight the work that NRECA’s director of energy solutions, Tolu Omotoso, has been involved with over the past year. Tolu has been diligently working with our co-ops to submit competitive applications for federal infrastructure funding. And our listeners are going to here about two successful initiatives.
Viswanath: Tamra, I know you know this, but I didn’t realize that Tolu was formerly the manager of grid solutions for Tipmont REMC in Indiana, so he has been involved in smart resource planning for some time. And with new funding, he has his work cut out for him.
Under the Biden administration, the Energy Improvements in Rural or Remote Areas DOE program (Tolu refers to this program as “ERA”) received $1 billion from the Bipartisan Infrastructure Law to improve the resilience, reliability, and affordability of energy systems in communities across the country with 10,000 or fewer people. But, I’m going to let Tolu describe his efforts with organizing co-ops for this particular opportunity.
Tolu Omotoso: One of the things that I learned while working at the co-op is that developing clean energy solutions in rural areas is always a challenge, and the major challenges are around funding. Then the other major challenge is in terms of securing partners to actually build, deploy, operate, and maintain these projects. When I joined NRECA, I started working on this partnership framework bringing together utilities, electric cooperatives, and then also industry partners that we can aggregate projects that would make it more meaningful for those partners to work with co-ops.
When the prize came out, we just used this statement of work from our partnership framework to apply for the prize. We were one of the 67 organizations selected to win the prize. The prize offers a $15 million cash prize pool to kickstart development of clean energy projects. It was intended to incentivize competitors to take first steps necessary to develop a clean energy project. Among other things, the prize was seeking to demonstrate innovative and replicable partnership and financial mechanisms that act as initial steps towards clean energy projects. This is in a way to better prepare rural or remote communities to secure funding for clean energy projects.
The first phase of the prize was a $100,000 award to NRECA and the co-ops that we're working with. We have three co-ops on that project: SECO Energy in Florida, Horry Electric in South Carolina, and Holston Electric in Tennessee. The first phase of the prize is just to demonstrate that you can actually work with partners in the communities to develop clean energy solutions.
Now we are in the second phase of the prize where we are putting into practice what we told them we're going to do in the first phase of the price. What we plan to do in the second phase of the prize is to conduct feasibility studies for microgrids at these locations to make sure that the co-ops are very prepared to deploy these microgrids in their territory. The techno-economic feasibility studies is basically the first step that you take before you can build a microgrid. That will tell you if your microgrid is both financially and technically feasible in that location.
It's a small pot of money, but at the same time, it helps us to prepare both NRECA, our partners, and the co-ops to start working together to develop trusting relationships to deploy clean energy solutions in these remote areas.
Reynolds: DOE’s ERA aims to fund community-driven energy projects that demonstrate new energy systems, deliver measurable benefits to customers and build clean energy knowledge and capacity throughout rural America. But, what does that actually look like?
Viswanath: I want to spend a little bit more time, and let's focus in and dive down into the SECO Energy project with a little bit more detail. Let's hear about the benefits of the co-ops, the timeline for completion, the goals of the projects, et cetera.
Omotoso: SECO Energy in Sumterville, Florida, they're one of the largest co-ops in the nation. They serve The Villages area, that's a very, very high-growth area. They've been exploring non-wire alternatives to providing capacity on the grid. These projects with the college I think came as part of their engagement with their community. This college came up to them and said, "Hey, we are looking at the possibility of developing a net zero campus with renewable energy solutions: solar battery storage, microgrids," to reduce their energy consumption, reduce their carbon emissions, and then also provide a site where students can actually learn about these new energy solutions.
Reynolds: Exciting, so a demonstration project that might be able to get greater traction with keeping up with that community’s growth challenge.
Omotoso: We reached out to SECO and they were also interested in working with us to develop these solutions alongside their key account. Lake-Sumter State College is one of the key accounts with SECO Energy. The spirit is unique in the sense that it demonstrates an innovative win-win-win partnership between the electric utility, their member, and their host community.
Viswanath: That's amazing. We're really hearing about this virtuous cycle as we think about how this project can be really leveraged within that community. That's exciting.
Reynolds: Tolu, you've recently in the last week were notified about another grant award, which is really exciting, focused on I think seven co-ops and coined the CARED project through the DOE microgrid funding. Can you talk about that and what's included in that, what the goals are, and just a highlight of that project?
Omotoso: We are really, really excited about this project, and it's just the natural, maybe next step, after we won the ERA prize because the ERA prize was a way for us to demonstrate this unique partnership between co-ops, their community, and technology providers. Despite the significant benefits of microgrids, rural and remote communities often lack the resources and technical know-how to pursue them. Then also you'll see that the microgrid developers who have this expertise, they often avoid small community projects because of high customer acquisition costs.
To this end, NRECA, we proposed the CARED project, which is microgrids for Community, Affordability, Resilience, and Energy Decarbonization, which is going to be a national microgrid deployment effort to demonstrate region-specific energy systems that deliver measurable benefits. This effort is there to improve energy access and resilience, and increase capacity for renewable energy deployments at the community level throughout rural America. Our project aim to utilize innovative technologies, partnerships, and financing approaches to address energy challenges in several of DOE's proposed region of interest.
We're going to create, with this project, a consortium of rural co-ops and deploy microgrids, including solar PV battery storage systems, and also distribution of grids across seven rural communities i. We have, like you mentioned, seven co-ops involved in this. We have Anza Electric in California, Blue Ridge Energy in North Carolina, Flathead Electric Cooperative in Montana, Minnesota Valley Electric Cooperative in Minnesota, Missoula Electric Cooperative in Montana, Trico Electric Cooperative in Arizona, then, Volunteer Electric Cooperative in Tennessee.
Reynolds: When the DOE sought to look at how you solve the challenges with some of these things, they were looking really at three areas or application cases for microgrids. That was affordability, resilience, and decarbonization. Can you speak a little bit about the seven co-ops that you guys highlighted in your project and how maybe their projects specifically are keen to meet those three areas of application?
Omotoso: In addition to those three terms that you mentioned just now, the other thing that DOE was looking at is in terms of replicability and then the ability to scale the solutions in rural and remote America. Our proposal was basically telling them that, hey, we have these seven co-ops out of possible 900 that are having these challenges. If we can solve these challenges using these co-ops as some kind of practice area for these solutions, we are able to scale and replicate these solutions across almost 900 other cooperatives. That was another unique thing with our project.
For Anza Electric, they're proposing to install about 200 distributed battery energy storage systems at residential locations throughout its service. These systems are supposed to consist of battery storage and system controllers designed to act as backup resources for outage mitigation. That's a unique project there and the innovation is surrounding community resilience and behind the meter, battery storage financing. All of that put together, you can see that meets their goal of getting this project to decarbonize and also improve resilience and increase affordability in rural America.
Viswanath: Another interesting application that Tolu pointed out to us was the project in Minnesota Valley. This microgrid project is going to be created with a tribal government that is keen on developing both resiliency and a net-zero footprint. Let’s hear from the leadership of that co-op about this project.
The voices that follow will be from Mike Dietz, the co-op’s vice president of operations, Ryan Fedie, he’s the vice president of energy resources, and then Sarah Peterson, who you already heard from, the vice president of engineering. We start off with Mike providing a little background on Minnesota Valley Electric Cooperative, then Ryan and Sarah.
Mike Dietz: Minnesota Valley is located in Jordan, Minnesota. We reside on the southwest side of the Twin Cities. If you come down Highway 169 out of the cities, you would pass right through Jordan. That is our service territory. It's about 900 square miles. We are a balance between rural and urban. We have a high saturation of urban in our north and north east and west side of our territory. We have about 45,000 members currently. We cover about nine counties and we have about 4,000 miles of line.
Our major growth areas that are coming in, is our Chaska area, our Victoria area, our Savage area, and our Prairie Lake area, where we're seeing large commercial growth in that area. Then further out from there is our residential and our rural customers.
Ryan Fedie: In the areas we have large growth, it's a mix of urban, essentially new suburbs that are coming in and acquiring the land is challenging, acquiring the right of ways is challenging, and getting new service into that area. We're definitely looking for those alternative solutions. Even if it's a hedge on timelines to help make sure we're continuing to provide service as we look for the long-term solutions that are needed. I'll say it's opened a new discussion with our membership, just microgrids at large.
Viswanath: We understand that your co-op was one of the participants in the NRECA Consortium, and it was selected for $45 million in DOE funding for rural microgrids, and that’s really exciting. I want to get an understanding of your project, the timeline of the project, and maybe why that DOE funding will play an important role in bringing this project into fruition.
Peterson: We have a lot of opportunities to partner with some of our larger members that we have on our system, and one of those is a local tribe. They have a lot of high-reliability goals that they're looking to reach in the next five to 10 years, and being able to partner with them, not only to benefit them as a tribe, but also to benefit our membership as a whole, and that's what this microgrid is bringing to MVEC's system. Right now, the microgrid is planned to sit inside one of our substations near this tribe.
It is a double-ended substation, meaning it's basically two substations within one fence, and it's one of our higher-capacity substations. As the tribe is looking to grow and add solar, renewables, anything from that capacity, being able to take what they're generating and then put it into a battery in our substation to not only feedback onto the tribe when they need it and they would like to use it, but also maybe some peak times of transmission or any power supply issues. We can also use it elsewhere. It's also bringing the capacity down at our substation, which is delaying any future substation needs or upgrades we may need there.
Also, it's solving an issue with transmission source. This tribe land is served from one transmission feed. In the past, there's been conversations about potentially bringing another transmission source and building another substation just for backup in case there's a major transmission outage. Economically, that wasn't really feasible. What this is doing in a large-scale outage where Minnesota Valley may not be able to help in restoration on the transmission side, this is going to bring in that other source, getting that area back up quickly. Again, it could be the tribe, it could be the membership as a whole.
Reynolds: When you think about the project, at least initially, how do you plan to measure success, and what's the most important thing to you all as you study the outcomes of this project?
Peterson: To our membership, the number one goal always is reliability. Also increasing our capacity on a really heavily loaded substation, which is going to save costs on our membership and rates. We're not going to be upgrading a substation as quickly as we had thought we would need. Then it's also adding to our DER portfolio in that perspective as well. In Minnesota, we have that legislature of carbon-free by 2040. This could play into that as well. It's hitting a lot of not just Minnesota Valley goals, Minnesota goals, and then working with that tribe, it's hitting their goals as well. There's actually a lot of key components to help measure success on this project.
Dietz: This is another opportunity to essentially use a microgrid in place of a substation transformer to add some capacity in there for not having to build an additional substation. Adding capacity to our current substations, that allows us transmission capacity, which allows us to get past building more substations in challenging areas, especially like we have. In our footprint, it's very expensive to buy land.
Viswanath: So, I’m hearing—in addition to reliability — there are other opportunities for savings for your membership. Is there anything else?
Fedie: As we get these new assets out there, we're starting a deeper conversation with them about how these assets are coordinated, where they're placed, is a microgrid within the building or is it the coordination up to the substation and the microgrid is at that level and how these different assets work together? It's really deep in the conversation.
In this case with the tribe, we just had them in this morning, having a longer-term planning discussion with them on how these things will fit together. These different pathways we're pursuing as they pursue their tribal goal, which is a carbon-neutral goal by 2035. How do we help them meet their goal and plan for these together down that pathway? Just leading to a deepening conversation with the membership and opening up new doors and conversations we haven't had before.
Viswanath: That’s terrific.
Peterson: I'm going to piggyback off that a little bit too. From an engineering standpoint, having this opportunity from the DOE to build this microgrid where we're building it, is not only going to help our service territory, but it's going to help our team members to expand our knowledge and what options we have to build for the entire membership.
Reynolds: Fantastic. Tolu stressed that the NRECA Microgrid Consortium was unique, having the ability to scale and replicate microgrid solutions across almost 900 other co-ops. So let’s talk about scalability within the Minnesota Valley service territory.
Fedie: Our membership conversations around energy are changing and our membership's expectations are changing as well. We look at this as a way to look across our membership, how we continue to take our great reliability, increase our reliability, increase resiliency, especially local resiliency, and continue to drive more value to our membership and meet their expectations into the future.
It's a test bed for us to test how we can take our local grid and orchestrate all the assets across our portfolio, better interact with distributed resources up to the bulk grid and independent system operator that sits around us. And start to get ready for that future where we have a layer decomposition model of these assets and start to bring that value together to these different asset streams, start to optimize for our needs and our membership needs. Start to put together whether you call it a virtual power plant or moving into a distributed system operator scenario in the future that we know the orchestration of our assets of our membership to drive membership value on the cost side, on the reliability side, and for resiliency.
Reynolds: Teri, as we were wrapping our call with Minnesota Valley, they were really appreciative, not only of this funding opportunity, but the important work that Tolu and NRECA are doing here, bringing co-ops together to share their own insights on developing new, dynamic grid solutions. This was in the tail end of our call but we thought it was important to share that upbeat message.
Dietz: You think that not only DOE's award of this is an accelerant for us to put this in, and it really accelerated not just our internal thinking, but the coordination across all the teams and really with NRECA. A big shout out to NRECA without BTS and the research team helping us put this proposal together. I'm not sure we would have done it on our own. It's not something our co-op has done much of in the grant space before, and as we know, those opportunities are getting larger and there's a lot of them out there. They were really helpful in having us be part of this consortium with the other co-ops and strengthening our proposal to something DOE could fund across the nation.
Viswanath: Sometimes, we are just not better off going it alone. Here’s Tolu to wrap up our program.
Omotoso: Having all of these projects aggregated, we are able to negotiate at scale on their behalf. Even though the projects would be independent, the co-ops are independent, they can work with whichever vendor that they want, but we can offer them that opportunity to say, "Hey, we can navigate all this project, we can bid it at once to all the developers to get everybody else lower cost of deployment. Then also, we would be guaranteed that these small reputable and big companies will be around for the next 20, 30 years to make sure that the systems now are operated and maintained properly."
Partnerships are very key, and we're happy with the work that we're doing with our co-ops and then also our technology partners to try and deploy these clean energy solutions in rural America.
Reynolds: You know, it’s really encouraging to share these co-op wins and to know that this investment will benefit their communities for years to come. I hope all of you have enjoyed this conversation and will join us next month as we navigate the new world order of bi-directional power flows and better understand TVA’s roadmap by sitting down with Middle Tennessee’s Chris Jones.
Viswanath: Well, that’s it for today’s program. I hope you’ll join us next month. Bye for now!
