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Discover how Tri-State and our members are embracing the opportunity to power the West in our new podcast, Western Watts!
We'll dive into the heart of energy issues, from reliability to wildfire mitigation, and share firsthand insights relevant to rural, agricultural and mountain communities across Colorado, Nebraska, New Mexico and Wyoming.
This podcast may contain certain forward looking statements concerning Tri-State's plans, performance, and strategies. Actual results may differ materially because of numerous factors, and Tri-State undertakes no obligation to update these forward looking statements. We urge you to review Tri-State's filings with the Securities and Exchange Commission for a discussion of these factors.
Sarah Ruen:Every minute to minute, hour to hour, the loads are changing, the resources coming online, going offline, having outages, various conditions are changing. Batteries can help by stabilizing some of those changes as they're happening because the batteries are very responsive in a very short time frame.
Elizabeth Schilling:Thank you for joining us for Western Watts. I'm Elizabeth Schilling.
Julia Eshelman:I am Julia Eshelman.
Elizabeth Schilling:And today, have the pleasure of talking with Sarah Ruin. Sarah, thanks for joining
Sarah Ruen:us today. Thanks for having me.
Elizabeth Schilling:Okay. So tell us about your role at Tri-State. What's your title? What do you do?
Sarah Ruen:I am vice president of regulatory and origination, and I lead the teams at Tri-State who are ensuring our state regulatory compliance, who are originating new generation and sales contracts, and are obtaining and maintaining our transmission service contracts, which help deliver our power from our generation to our load. That's a lot.
Elizabeth Schilling:What is what is your day to day look like? Yeah. Great question.
Sarah Ruen:No two days look alike. We have some days where I'm working with the team on strategies to develop our testimony or hearing materials. We are working on pathways to address our contractual obligations. Other days, we have discussions with external regulatory stakeholders or negotiations with contract counterparties. And we're often fielding inquiries from our members and other external groups or helping prepare analytical briefings on a large variety of different energy management topics.
Sarah Ruen:Additionally, our teams work closely with other teams at Tri-State to implement and manage some of our member programs, including the Bring Your Own Resource program. Could you explain what origination means? Origination relates to contracts. That's really what we're talking about is the creation of a new contract agreement.
Julia Eshelman:Thank you. I was like, actually,
Sarah Ruen:what does it make sense?
Elizabeth Schilling:So there's a lot of elements. What drew you to this space and this work?
Sarah Ruen:I've spent my entire career in the energy policy and regulatory arena. I've always enjoyed energy because you learn something new every day. And this field is constantly evolving. And I enjoy the challenging nature of our work and collaborating with people who have differing perspectives and backgrounds so that we can come up with solutions to meeting our members' needs.
Julia Eshelman:There's a lot specifically going on right now too in the energy universe. The sector's really evolving,
Sarah Ruen:and it just continues to change.
Elizabeth Schilling:So you're looking at this industry that's constantly evolving. Your work is constantly evolving and trying to look to the future. So as you're helping Tri-State procure the resources that match our future energy demand, what kind of new resources are we looking at adding?
Sarah Ruen:Our 2023 resource plan called for the addition of approximately 1,650 megawatts of new gas, renewable, and battery storage resources. So we're adding storage to our portfolio for the first time, which is really exciting.
Elizabeth Schilling:What's the benefit of battery storage for electric utilities? How would we use batteries?
Sarah Ruen:As utilities like Tri-State are adding more and more renewable generation to their mix and retiring some of the older units in our fleets, we see that batteries are an increasingly valuable asset. Renewable resources are intermittent. So the timing of their production of energy doesn't always align with the timing of our peak load needs. And so using batteries gives us the flexibility to store the energy for use at a more optimal time. Batteries can help make low cost renewable generation available at times when market prices might be high or when severe weather events impact our other resources or cause changes in our loads.
Sarah Ruen:Batteries can help strengthen our network and improve reliability by reducing the strain on transmission lines during peak times. They offer a range of services, which are referred to ancillary services. A technical term, which just means that they're preventing outages by responding to changing conditions on the grid. We're at the generation and transmission level, the G
Elizabeth Schilling:and T level. What's the difference in the use of batteries at the G and T level versus the distribution utilities, the ones serving those end consumers?
Sarah Ruen:Tri-State is going to operate battery storage at what we would refer to as utility scale. These are really large 50 to 200 megawatt batteries. They're similar in function to distribution level storage but on a much bigger scale. And they're interconnected to the transmission system, which will enable the power to be moved across the system to where it's needed. Additionally, by working with our members, distribution connected storage can also be added to the system through the Bring Your Own Resource Tariff, the demand response rider, or board policy one fifteen programs.
Julia Eshelman:You talked about batteries being able to help transmission. What's the broad generalization of how it supports it?
Sarah Ruen:Essentially, it's those ancillary services that I was referring to when there are issues on the grid. Minute to minute, hour to hour, the loads are changing, the resources coming online, going offline, having outages, various conditions are changing. Batteries can help by stabilizing some of those changes as they're happening because the batteries are very responsive in a very short time frame.
Elizabeth Schilling:What about cost? Is there a
Sarah Ruen:cost saving element to it? Every resource needs to interconnect to the transmission system in order to deliver its power. And some are gonna require costly transmission upgrades in order to interconnect at a given point. Surplus interconnection for some of the batteries can mitigate transmission expenses because surplus allows two resources to share the point of interconnection rather than having to further build out the transmission system to accommodate more injection capacity.
Elizabeth Schilling:I have an analogy, though, in my head. Okay. We have this highway, which is the transmission lines, and there's some places we've already built on ramps, and they're not at capacity. They aren't full of cars coming on. We have room to use those on ramps that are already built rather than build a whole new on ramp.
Sarah Ruen:I like that. Yeah. At times, we have room on that handle connection highway.
Julia Eshelman:Okay. It's locked in here now.
Sarah Ruen:I get it.
Elizabeth Schilling:Thank you. Okay. So reliability, you kinda touched on that a little bit, but can you talk more about how that plays in?
Sarah Ruen:Our resource plan modeling shows that the 10 bids that were selected in our electric resource plan are expected to be the most cost effective investments that are needed to help maintain our systems reliability. The semi dispatchable resources are critical to managing reliability on our system, especially with our diverse resource mix. The battery can be kept on standby and begin supplying power in a matter of seconds, which is really much faster than other conventional power plants. And this means they can respond quickly to keep the lights on in emergency conditions.
Julia Eshelman:Can you touch on how important speed is and how much of a game changer that is for the system?
Sarah Ruen:We're placing these batteries across the system, and weather conditions are obviously gonna change really rapidly. And that's not something we're able to forecast. We're certainly looking at weather patterns and trends, but those weather conditions are gonna impact our system resources and the loads. We really need to be able to have that quick response time so that if there is an issue and we've got stored capacity in that battery, it can be turned on in a matter of seconds and respond.
Elizabeth Schilling:What kinds of batteries is Tri-State looking at? This is not the watch battery that I need to replace. What are we using?
Sarah Ruen:We're contracting for lithium iron phosphate batteries. These are four hour storage batteries. The batteries themselves are housed in enclosures that look a little like shipping containers. And the fact that they're modular really makes them relatively quick to install and very space efficient. A little bigger than the watch battery.
Sarah Ruen:That's right. How
Julia Eshelman:many megawatts of battery resources are we planning on building for?
Sarah Ruen:Our 2023 electric resource plan calls for 650 megawatts of hybrid and standalone storage resources.
Julia Eshelman:I know it can be variable depending on how many megawatts each one is, but is that like four
Sarah Ruen:sites? I think we had five projects, five different projects, different locations in our resource plan for standalone storage. Could you speak to with those five sites, what's the strategy behind where you place those? In terms of where we locate the batteries, first, Tri-State software modeling identifies broad regions of our system where we generally need a resource just based on our load areas where we need to serve the optimal transmission availability, which we discussed, and some other factors. Then the specific projectations for the batteries within those regions are really up to the developers to propose.
Sarah Ruen:A developer has to take into account the topography, land availability, permitting, the financials, and a lot of other factors to find and secure a viable site where their project can be developed.
Julia Eshelman:We're in four states. Are all of those states equally open to batteries, or is there a
Sarah Ruen:lot of regulation going on about those right now where maybe some states are more favorable than others? In our resource planning process, we have the availability for these projects to be located anywhere in the system where they're needed. But the driver is really about, as I said before, where are the load pockets? Where's the transmission capacity to get the resource to the load? And that's really what's driving the selection of the locations for these resources.
Sarah Ruen:All of the states, as far as I'm aware, there's no restrictions specifically on batteries or other technologies that can or can't be located. There we are seeing some counties popping up around various locations in our system, looking at permitting regulations, really at more of a local level, not specifically for batteries, but just in general, technologies, especially those that maybe take up a little more land space. The local planning departments wanna look closely at that and think about their constituents and what the impacts would be. But as far as the states that we operate in, I think they're all open for business for resource citing. But, again, it's up to a lot of factors.
Sarah Ruen:You have to have a certain amount of land. You have to have landowners that are willing to work with you. You have to have if you were talking about the renewables, you'd have to have a good sense that there's wind power capacity out of the given site. Solar has a good strength at those locations for storage, probably a little more flexibility.
Elizabeth Schilling:How long do the batteries last? What's the lifespan of one of these batteries?
Sarah Ruen:We haven't performed any direct studies of the lifespan of batteries since Tri-State isn't going to be the entity owning them. But the developers that we work with are contractually obligated to ensure that the batteries can meet certain performance requirements throughout the duration of our contracts, which go twenty or twenty five years. So in midst that may require them to augment the storage by either adding or replacing some of the cells over time. It's great that
Julia Eshelman:you even have the ability as the efficacy of the battery goes down, being able to swap those components out. I'm sure it's not in my mind, you just go puck and you just swap them out. I'm sure it's slightly harder than that, but talking about
Sarah Ruen:the benefits, how flexible the technology is. There are fewer components in these batteries. When you think about a gas facility or other power plants, there are lots of little nuts and bolts and things that can go wrong in these very large facilities that require a lot of maintenance and can require an outage to address those maintenance issues. Whereas the battery technology, as you I think you were alluding to, we're really talking about the cells, the battery cells. And that's really what they're doing is just switching those out.
Sarah Ruen:I keep thinking of my stepdaughter had an electric scooter and it had the batteries. But, yeah, you could replace just one portion of it. If one portion wasn't working, you could swap that out. Whether you're growing or shrinking or just replacing as needed, it seems really versatile. But how do you plan for technology that's constantly evolving?
Sarah Ruen:How are we looking at that? We do expect that as these batteries become operational and the technology evolves, that we hope to see longer duration batteries become more cost competitive over that time period and for new technologies to emerge as well. We have to start somewhere, and the technology for these four hour batteries that we're contracting for today are already proven. They've been deployed at utility scale in many areas of The US and elsewhere. So we're excited to get them in place.
Julia Eshelman:Is there interest from members to use batteries in the BYOR program?
Sarah Ruen:My recollection is we didn't see that in the first cycle of the BYOR program, but I certainly would not be surprised if we saw those in the next cycle in 2026 BYOR program or batteries starting to participate in our demand response programs.
Elizabeth Schilling:Looking at getting these contracts done, what are some of the biggest challenges that you're facing along the way?
Sarah Ruen:These agreements are always challenging. We're trying to get the absolute best deal for our members. And the biggest challenge right now is really that we have 10 projects approved in our 2023 ERP. That means we have 10 separate contracts that need to be negotiated. These are really important deals.
Sarah Ruen:We're doing our best to be quick, but we're also being meticulous. While we're in the midst of this work, the policy and economic landscape continues to evolve. We have to monitor that as well and always be ready to pivot if we need to.
Julia Eshelman:The batteries are almost like an extra layer of glue that's holding everything together. You get more bang for your buck out of renewables. You're able to be more flexible during critical situations. You do have the benefit of being able to buy and sell and store that energy, but just the sheer flexibility of the batteries is helping everything run efficiently and smoother and gives you more options when you're having to make these tough decisions.
Sarah Ruen:Yeah. It's a new type of resource that we haven't had before. We've had these resources that are dispatchable, which is great. They're fuel based, and we can turn them on relatively quickly when we need them to serve the load. And then we've started to bring on these intermittent renewable resources, which are great.
Sarah Ruen:They're delivering a low cost energy, but not always at the times when we need that energy. And so the battery is really that additional piece of the puzzle. It's semi dispatchable. It's somewhere in the middle. It's not fuel based, and it's not always gonna be there if the battery's not fully charged or we've already depleted it, but it's giving us a lot more flexibility.
Julia Eshelman:Dispatchable resources, it's not instantaneous. You still have to work to get everything, we always say, ramped up and ramped down, but that's not just a you give a guy a call, he clicks a switch, and then instant power right away.
Sarah Ruen:That's exactly right. These batteries, when they're sent the signal to be dispatched or charged, they ramp in just mere seconds.
Julia Eshelman:I think that really does tie into the increased flexibility in this new type of resource being able to be even more important moving into organized markets.
Elizabeth Schilling:As we're looking to the future, we're we're not just looking at Tri-State and our needs, we're looking at joining organized markets and looking at the bigger need over a larger region. When we think about that transition, how does battery storage fit into that shift? Is this extra valuable at this particular time?
Sarah Ruen:Yeah. As we started in the beginning talking about how everything continues to evolve and change in the energy industry, the emergence of markets in the West is another piece of that. And so when we start to participate in the SPP RTO, for example, with the batteries, we can offer up their unique services into the market as a potential source of revenue. And the revenue will come from what are called ancillary services. These are frequency regulations, spinning reserves, voltage support.
Sarah Ruen:Those services are valued because they contribute to overall grid reliability and then bring that financial value back to the members.
Julia Eshelman:They're considered ancillary service, so those wouldn't count towards, like, our generation capacity. Right? Batteries or would they?
Sarah Ruen:Batteries do get capacity credit in our resource mix.
Julia Eshelman:So kinda two for one. Yep. We don't have any batteries we're currently using on the system, so you might not know the answer to this. But do you think batteries are gonna be useful right out the gate for Tri-State?
Sarah Ruen:I do. And the reason is because we've been increasing the amount of renewables on TriState system for many years, and we have two more solar facilities coming online this year. As soon as those batteries come online in the next year and a half and beyond, we're gonna see that value in being able to move the power to points in time when we need it most, which we don't have that ability today. We're really at the mercy of whenever those facilities are generating power to be able to store it, capture it, and discharge it later is gonna be valuable.
Julia Eshelman:My understanding is that renewables are a use it or lose it resource. So if we have excess that isn't able to be sold or used, does that energy just get shed off the system? It's almost like a waste product. We call that curtailment when essentially the unit, the renewable is
Sarah Ruen:backed off because we can't put that much power on the system. Sometimes we still have to compensate under our contracts for that curtailment. That's something that's concerning. I found my food metaphor. Batteries are like being able to put your leftovers in the fridge and eat them later.
Elizabeth Schilling:If you're generating too much, we're not having to throw away that extra food. You're taking it and putting it in the batteries, storing it for later. Pull out those leftovers when you're hungry. That's my food metaphor. That's all I have for today.
Julia Eshelman:As you're increasing renewables onto the system for that lower energy cost, you really need the batteries to support and get the best bang for your buck. Otherwise, you just have the curtailment, and it's just product that you can't use essentially, which sucks.
Sarah Ruen:That's right. Batteries are really going to unlock more of the value of the renewable resources that we have online. I'm happy with my food in metaphor. I hate wasted food.
Elizabeth Schilling:That
Julia Eshelman:was a really good one.
Sarah Ruen:It's not just the leftovers. There's other value. Right? We're not just capturing that with these standalone batteries. They can also take power from the grid and then just will use it later.
Sarah Ruen:It's also just about moving things around. The other part of your analogy is probably if you bought all those great groceries and put them in your fridge, the batteries are gonna let you eat them later in the week. Yeah. I like it. Just keeping it fresh.
Sarah Ruen:But
Elizabeth Schilling:The superfood highway metaphor. So looking ahead to 2027, what has to happen between now and then to bring these projects online?
Sarah Ruen:The developers that are responsible for making these projects operational are going to have to take some key steps. They have to get permits, procure their equipment, prepare the site, maybe some grading, building perimeters, and then there's testing of the facility before it comes online. The developers are going to do that, but also Tri-State will have a period where it gets to test the dispatch of the battery to make sure it meets all the conditions that we require. And additionally, on our end, Tri-State, we have to make sure that we have agreements in place with the transmission service providers to deliver the power from the batteries where they're interconnected to the load where the power is needed. And so we're working on that.
Sarah Ruen:And once these batteries are operational, our energy markets team is gonna be responsible for sending those signals to the battery to have them charge or discharge at any given point in time.
Julia Eshelman:I don't know if I remembered this correctly, but I thought there was some talk of wind combined with battery specifically. Is that part of the battery piece?
Sarah Ruen:Yes. That's what we would call a hybrid unit. We're actually looking at in our preferred portfolio, a solar hybrid where the battery is then solely charging from that renewable that it's co located with and not taking charge from the grid.
Julia Eshelman:But sounds like the hybrid systems, those get paired with renewable resource, which I assume would just be solar and wind.
Sarah Ruen:Could you talk about how batteries work with each resource? If you're asking about a hybrid where we have a battery colocated with a renewable resource, sharing that interconnect when the solar is producing and that energy otherwise might be curtailed or we just wanna store it for later, we're gonna use it to charge battery. And then when the sun is set, the solar's not producing, but we still need energy on the system, we'll use what has been stored in the battery to discharge onto the system. It's moving that power around to those different segments in time when we need it.
Elizabeth Schilling:When Tri-State's thinking about our battery strategy, I imagine there's other entities that might wanna weigh in on that. How do stakeholders play into that conversation?
Sarah Ruen:Tri-State is always in communication with our external stakeholders. These groups often include developer associations, environmental advocates, state agencies, and our members, of course. And as the technologies are evolving, both for batteries and other resources, We do have direct industry research that we look at and review in preparation of any electric resource planning process that we're doing. But we also learn from our stakeholders about emergent technologies that we should really be considering over time. And when these technologies mature and they're market proven, that's when we can evaluate them as specific project bids submitted by the developers.
Sarah Ruen:And then we get to see how they stack up in that evaluation process. Our stakeholders are very in tune with our modeling and our resources, and they do ask a lot of great questions and give a lot of input.
Julia Eshelman:Was there anything a stakeholder brought up as a question or something that surprised you?
Sarah Ruen:What I recall us discussing in our last resource plan is stakeholders were interested in at least seeing if we could get bids for longer duration storage technologies. We did at least open the door to see what those technologies might be out there in the marketplace and whether or not they were competitive.
Elizabeth Schilling:What excites you most about the future of battery storage in the cooperative space?
Sarah Ruen:I'm really looking forward to seeing these four hour batteries come online and begin delivering value for the Tri-State system, but also to see what the future holds for other types of storage and emission reducing technologies that can continue to enhance reliability, responsibility, and affordability of the system for our members in the years to come.
Julia Eshelman:Is there any plan to try and pair a battery up with one of the solar facilities that Tri-State just built? We don't have any plans for that. That's an interesting idea.
Sarah Ruen:The way to think about it is our solar facilities are injecting into the grid. We're moving the power to where it needs to be. And the way that our resource plan modeling looks at these batteries and where they should be sited takes into account the opportunity cost and where is the best location for these resources based on the loads, the existing resources, transmission constraints, environmental considerations, all of those factors, batteries, they're gonna be in the same transmission areas of some of those renewables.
Julia Eshelman:I would be really interested, and I'm sure you guys will have to show results to the board too after you've had them for maybe, like, a year or so. What were the cost benefits and all that stuff?
Sarah Ruen:Absolutely.
Julia Eshelman:That'll be really cool. Charts. We all love charts. Let's get we're gonna have more of them. We've got
Sarah Ruen:a lot of them now, and we're about to have more.
Julia Eshelman:Yeah. Even, like, avoided costs from weather events just like a running tally of all of the things that they were able to either prevent or mitigate or exploit for market prices and stuff because you don't know any of that yet.
Sarah Ruen:Exactly. We have forecasts, and we believe we see the value there. But the exacts, the specifics, you know, how this will all work once we're in the market, I think we're gonna learn a lot, and we're gonna find out how good of a job we did in forecasting. Exciting.
Elizabeth Schilling:Sounds like a lot of work has already been done. We're not to that point where we can see all the benefits of the batteries, but seems like huge progress. Thank you for taking the time to sit down with us and get into some of the details.
Sarah Ruen:Happy to do it.
Elizabeth Schilling:Thanks for tuning in to WesternWatts. You can find us on Spotify, Apple Podcasts, YouTube, or on our website at tristate.coop/wwpod. We'll catch you next time.