Vermont Electric Cooperative is trying an innovative method of energy management to save members thousands of dollars while fighting peak costs in the wholesale electricity capacity markets.

VEC recently signed a 10-year agreement to lease up to 400 kilowatt-hours of storage per year from a utility-scale lithium-ion battery system owned and operated by Viridity Energy Solutions, said Craig Kieny, manager of power planning at the Johnson, Vermont, co-op.

"If we operate the leased energy perfectly, we could experience annual savings of nearly $100,000," said Kieny.

VEC incurs 13 hours of peak electricity market costs a year. The 400-hour window will allow the co-op to achieve a pretty high success rate of picking the correct day and hour of the peak, he said.

Kieny and his team have been studying the state and regional power markets since February 2017 to determine when peaks will occur so the co-op can call on its leased hours at the most opportune time.

They practiced dispatching a theoretical battery system and hit the Vermont peak in 11 of the past 12 months and also zeroed in on the New England annual peak, he said.

"We need the ability to use the battery several days a month because you never know which day is going to be the coldest one or the hottest one as weather drives the peak in most months," he said.

The lease arrangement also allows the co-op to avoid the high cost of buying an energy storage system and the operating or maintenance risks of owning batteries, he said.

About the size of two tractor-trailers, the battery system will have 1 megawatt of installed power and 4 megawatt-hours of energy storage capacity. It will be assembled beside the VEC's substation in Hinesburg, Vermont, and begin operation by June 30, 2019.

Approval of the project by the Vermont Public Utility Commission is expected in early next year.