Punctuated at times by “revolutionary” innovations, scientific and technological evolution often takes place via incremental advances. Such is the case with energy storage, which is rapidly emerging as the missing piece of the puzzle that could not only drive use of distributed, renewable energy resources well into the mainstream of the U.S. energy mix, but signal an inflection point in the drive to combat climate change by drastically reducing the need for, and use of, fossil fuels.
Coupled with innovative “green” policy-making, innovations in energy storage technology have been coming hard and fast in recent years, driven by advances associated with manufacturing of plug-in hybrid and all-electric vehicles (EVs). Lithium-ion (Li ion) battery manufacturing costs, for instance, have been coming down rapidly even as their safety, performance and reliability have dramatically improved – both for mobile and stationary applications.
California, which is hosting the 2014 Energy Storage North America (ENSA) in San Jose this week, recently demonstrated its willingness to lead the nation when it comes to innovative public policy-making and development of a sustainable “green” economy, the state legislature last October passed the nation's first energy storage mandate. AB 2514 requires California's investor-owned utilities (IOUs) to acquire 1.325 gigawatts of energy storage capacity by 2020.
Strategen Consulting – whose founders also organized the first, as well as latest, ESNA industry gathering – is currently tracking 181 utility-scale advanced energy storage projects around the world. The technologies involved range from thermal, compressed air and electrochemical energy storage systems, to flywheel, gravitational and hydrogen energy storage systems, Cedric Christensen, Strategen’s director of market development said.
What's driving utilities to deploy energy storage capacity? The top three use cases, according to Strategen, are the need for additional electric supply, the need to “time-shift” electrical energy, and the need to better manage a mix of energy generation assets – variable energy flows from renewable energy resources in particular.
Relieving transmission congestion and voltage support (as in frequency regulation) are two other big drivers of utility-scale energy storage projects, as is the need to enhance resiliency, Christensen added.
“Demand response, energy efficiency, and energy storage are becoming part of contingency plans for closures of existing fossil fuel and nuclear power plants,” Christensen added. “As new incentives for disaster response gain momentum in states like New York and California, there will be an increasing incentive to use energy storage as a tool for energy managers and grid planners.”
Energy storage systems are now playing the same role that natural gas 'peaker' plants have traditionally served (coming online during times of peak demand), and energy storage project developers, in turn, are playing a key role in making this happen.
“Frequency regulation and other ancillary services are growing revenue streams that provide bankable applications,” Christensen said. “The benefits of running a highly 'dispatchable' resource on both sides of the electric meter are currently being tested throughout the country.”
At this early stage, there are three facets to growth and development of “a real market” for utility-scale energy storage “that I'm not sure you could say was generally expected even two years ago,” said John Jung, CEO of Greensmith Energy. One, a number of U.S. states, along with Ontario, Canada and countries in Asia and Western Europe, have launched energy storage mandates or incentive programs.
Greensmith has bids out on 300 megawatts of energy storage projects, almost all of which is grid-scale. The projects, Jung went on, are either owned or operated by utilities or independent power producers entering the market along with EV charging and vehicle developers “as energy storage as a service providers.”
Further along the electricity supply chain, commercial, industrial and residential customers are using advanced energy storage solutions to capture value by “mitigating demand charges, performing energy arbitrage, and enabling new EV charging solutions in congested distribution areas,” Christensen added.
Utility demand charges – the rates charged larger customers for power at times of peak demand – have been steadily escalating over the past five-plus years, at times dramatically. San Diego Gas and Electric (SDG&E), for example, raised its supplemental Electric Energy Commodity Cost (EECC) tariff from $5.73/kW to $11.30/kW – an increase of almost 200 percent – for summer peak power demand, according to Santa Clara, Calif.-based intelligent energy storage solution provider Green Charge Networks.
The EECC tariff comes on top of the regular demand tariff SDG&E charges its commercial customers, which is already one of the highest in the state, according to Green Charge. “Businesses are looking for relief and a hedge against rising demand rates,” the company noted.
Agnostic when it comes to underlying energy storage technology, Greensmith recently released GEMS IV, the fourth generation of its integrated energy storage management platform. Greensmith is on track to add support for four new battery types this year, adding to the eight types GEMS IV already supports. In addition to interfaces to battery storage systems, GEMS IV comes with seven ready-made applications. Offering greater flexibility, end-users can develop their own, custom-built applications, as well as custom tailor the software platform's rules-based engine.
Greensmith has viewed energy storage as sort of an all-purpose utility for electric utilities and electric utility customers since the company was formed some five years ago, Jung said.
Thinking of intelligent energy storage platforms as a generation and transmission asset is a perspective that more and more electric utilities and customers are coming around to, Jung said. Energy storage capacity can be managed more intelligently using methods, tools and techniques akin to those that have driven ongoing advances and widespread use of distributed computing and telecommunications technology, Jung explained.
“It's not enough to optimize a system or cluster of systems. As you deploy hundreds, if not thousands, of energy storage assets, the need to manage and optimize them as an integrated system emerges. It all comes down to fleet management. Other industries have been doing that for a long time.”
Millbrae, Calif.-based Stem is taking a similar approach to the advanced energy storage market. Stem deploys advanced energy storage systems on towers capable of managing geographically and technologically disparate energy storage assets in an integrated manner. “That's kind of our base form factor,” Tad Glauthier, Stem's VP for Hawaii operations, said in an interview. “Our technology is about 'always-on' energy storage platforms. They're not passive assets, like a PV [photovoltaic] system. They require constant management.”
Good predictive analytics, rapid ramp-up and ramp-down and recovery capabilities are critical attributes of any advanced energy storage platform. “That's where the rubber meets the road, where we create value for commercial customers and be available to utilities at any performance level they need,” Glauthier explained.
Such systems are not yet economic in every electricity market, he pointed out. “They make sense in markets where you have congestion issues, where you have aging distribution grids, where you have a changing mix of supply and demand, and where there's a lot of renewable energy resources coming online.”
2015 will be a critical year that will be remembered as the turning point for mass deployment of grid storage,” Christensen said. “Rules that reward storage for its flexibility, 'dispatchability,' and 'locational' benefits will continue to drive adoption in the leading energy markets around the world.”
Greensmith, Stem, Green Charge Networks and other advanced energy storage market pioneers are affording utilities a means of adapting their business models, assets and operating modes to better match customers and society's needs and demands. Rather than a utility “death spiral,” Glauthier prefers to think about the disruption to utilities' long-held business models and operating modes as “Utility 2.0.”
“It's more about managing distribution and transmission systems,” Glauthier said. Even in a market where customers are generating their own power and communities do likewise by building microgrids, “customers are still going to need utilities to sell and buy electricity between themselves. There can be some real win-win situations here, but it's going to take time, and different sides meeting in the middle.” This evolutionary process, moreover, “is inherently a political issue,” he added.
This story was originally published by FutureStructure.