Energy Storage: Changing the Game, Changing the Grid
Originally published September 11, 2015
Energy storage can range in scale from tiny batteries that power cell phones for hours to massive reservoirs that drop water through turbines from hundreds of feet above.
With a range of technologies, energy storage can provide services on both sides of the electric meter, directly to consumers or through utility-scale power generation sites.
It is its versatility that makes it unique, but its uniqueness that creates challenges.
Utilities have been storing energy since they have been producing it, but the technology has not always looked the same. “A pile of coal is stored energy,” said Matt Roberts, executive director of the Energy Storage Association. “A pumped hydro facility is stored energy. A battery in your cell phone is stored energy. It’s different scales, it’s different technologies, different approaches.”
Roberts notes that utilities realized the importance of storage 25 years ago and have been trying to understand and work with it since then. “It was very pilot scale in the first decade of the last 25 years or so. Over time, though, it started to pick up scale. We’re really starting to kind of see the era of the big projects start to come along and some of these large projects are really starting to go into the grid. Now that we have more of a track record and then data available about these systems, how they perform, the value they provide.”
Evolving storage technologies
The lowest-cost energy storage system is pumped hydro, according to the Institute of Electrical and Electronics Engineers. Tennessee Valley Authority’s 1.6-gigawatt Raccoon Mountain facility drops water 990 feet from its upper reservoir to turbine pumps. The 528-acre upper reservoir on top of a mountain takes 28 hours to fill. It’s TVA’s largest rock-fill dam. But pumped hydro only makes up about 25 GW — 2.5 percent — of total generation capacity in the United States.
Roberts said pumped hydro has been being installed for nearly a century, but about 25 years ago, when the predecessor group to ESA was formed, the focus shifted. ESA focuses on batteries and other newer technologies.
“Storage over the last couple of decades has been taking technologies that have been in other applications and kind of learning how to integrate them into the grid and how to operate them on the grid,” Roberts said. “Now, I think the value proposition is readily apparent. There’s almost no one in the energy industry anywhere that would say that safe, affordable, reliable energy storage is a bad thing. Everyone supports the concept.”
Big deal, big players
Until recently, batteries may not have crossed consumers’ minds unless their cell phones or laptops were dying. Tesla in late April announced its rechargeable residential lithium-ion storage solution, Powerwall. The announcement launched energy storage to the forefront with consumers who were already interested in residential solar installations.
On the same day that Tesla made its announcement, solar energy provider SolarCity on April 30 said that for residential solar customers, SolarCity will provide a turnkey battery backup service that includes the Tesla Powerwall and allows permitting, installation and ongoing monitoring. Incorporating Tesla’s new battery technology, SolarCity said that it would now be able to configure a solar system — along with other energy management technologies — as a stand-alone, off-grid power supply.
But Tesla certainly isn’t the only player in the energy storage game. Companies such as Younicos have announced projects since the Powerwall, and many others have been in the game for much longer.
According to Roberts, “This is Tesla jumping into a market that’s already happening” although they are “not quite late to the game.”
Roberts said Tesla is “great at getting attention for what they do and they bring great engineering and great experience in building products. But they are definitely entering into a marketplace where a lot of people were ahead of them. So they’re doing it very well and they’re aggressively approaching this market, which is great, but they already have plenty of competition. There are a number of companies who are moving into that space.”
In December 2014, the California-based SunPower Corp. and Sunverge Energy, unveiled an exclusive agreement that offers SunPower’s solar power systems and Sunverge’s “Solar Integration System” energy storage solutions to residential customers and utilities in the U.S. The two companies are providing a similar solution to Australian customers. At the time of their announcement, SunPower and Sunverge said that they expected to make combined solar and storage solutions broadly commercially available in early 2015.
“Over the next five years, we expect to see a disruptive shift in the energy market, with solar power, energy storage, smart devices, energy management technologies and electric vehicles being combined,” said SunPower CEO Tom Werner in a news release.
ABB Inc. has been in business exploring power and automation technologies since 1883. Pat Hayes, ABB’s business development manager for energy storage, is banking on utility-scale storage projects rather than residential.
“From most of the market analyst reports, residential storage is relatively small in comparison to the amount of utility-scale storage installed at this stage,” Hayes said. “Plus, for energy storage to make an impact on the value it can add it is best to add as many value-added benefits as it can offer. Utility-scale storage can usually operate in many types of applications as the grid can need many different kinds of support depending on the load and contingencies it is facing at the time. Residential storage is usually focused on the load it is serving.”
AES Corporation is a leader in grid-scale energy storage. Globally, AES has 86 MW of energy storage projects in operation and has announced 260 MW of interconnected battery-based storage, equivalent to 520 MW of flexible power resource, in construction or late-stage development. Indianapolis Power & Light Company, a subsidiary of AES Corporation, is developing grid-scale, battery-based energy storage to improve reliability and lower costs for its customers, the utility said in June. The facility will provide 20 megawatts of interconnected advanced, battery-based energy storage, equivalent to 40 MW of flexible resource, to the electric grid. IPL said that this will be the first grid-scale energy storage array in the 15-state Midcontinent Independent System Operator grid system.
Southern Company Chairman, President and CEO Tom Fanning on May 27 disclosed at the investor-owned utility’s annual meeting of stockholders that Southern has reached an agreement with Tesla to test commercial-scale battery storage.
Duke Energy currently owns nearly 15 percent of the grid-connected, battery-based energy storage capacity in the U.S., according to independent research firm IHS Energy. “Fast-responding energy storage is recognized for the tremendous benefits it provides to grid operations, because it can instantaneously absorb excess energy from the grid or release energy,” said Phil Grigsby, Duke Energy’s vice president of commercial transmission, in a news release. “Delivering that power in seconds, as opposed to a power plant that could take 10 minutes or more to ramp up, is the unique value the battery system provides to grid operators.”
Square batteries, round policies
“Storage doesn’t fit nicely into the asset classifications that we have set up,” Roberts said. “It doesn’t fit nicely into our tariff structures. And that’s presented a number of challenges for energy storage because you can provide a value but have no way to get remuneration for that value or to get any kind of compensation for that value.”
Policies have been evolving that would include energy storage as a generation source, a Federal Energy Regulatory Commission economist said earlier this year. But the next step depends on the industry, whose role it is to tell policy makers what energy storage can do.
“Energy storage doesn’t make energy,” Roberts said. “It has round trip efficiency so it does consume some energy in that regard, but it doesn’t make any of its own energy. So when it’s delivering energy on to the system, it looks like a generator, but when it’s consuming energy it looks like a load. When it’s moving energy about and using its timeliness as one of its values, it looks like a transmission line.”
And while storage providers may not be properly compensated for their services provided to the grid, the cost of the technology has been an even bigger issue. Experts from Deloitte said in a June webinar that cost has been the biggest issue challenging the widespread deployment of energy storage technologies.
The technology itself tends to be expensive, ABB’s Hayes said. ABB has been working to lower soft costs by using modularity and standard materials. “This usually helps in a few areas such as repeatability, which increases reliability and familiarity,” he said.
Storage technologies are seeing investment from venture capital as well as government innovation funds. Compressed air energy storage, a variation on pumped hydro, is receiving government investment, according to consultants at Deloitte. The technology has been successful in Germany and is used to store energy from wind farms, according to IEEE.
Powerful paradigm shift
IEEE predicted in a 2012 whitepaper that energy storage coupled with smart grid technology would see major leaps in the next 25 years. ABB’s Hayes agrees that storage technology has huge growth potential in North America, especially as the grid evolves to accommodate distributed resources.
“Now the flow of electrons are a lot tougher to follow,” Hayes said. “It’s not always generation, transmission, distribution, load. This makes protection schemes and loading of equipment much more challenging. Plus, with renewables as part of the portfolio now, that creates a generation resource that is changing output rapidly. When you are trying to balance supply vs. demand and you have one of those two changing their output rapidly, that is tough for a grid to handle. This is where energy storage has a huge value.”
Energy storage capacity is positioned to grow four-fold by 2019, according to GTM Research, which also predicted that distributed generation such as community solar could grow seven-fold by 2020. And these developments are bound to change the grid. As these technologies proliferate, Roberts said, energy will experience a paradigm shift.
“[Electricity] is the world’s longest supply chain that has almost no warehousing ability whatsoever. And that change [storage] is massive, that brings about the ability to do things that we weren’t able to do before,” Roberts said.
With storage, pointed out Roberts, we can move energy long distances at night even when there’s no demand on the other end because we can charge up batteries or pump air into a cavern for a compressed air energy storage system. “And then we don’t have to burden the transmission system when we do have high demand,” he said. During the day when it’s needed, energy can be consumed and it appears to be generated locally, but obviously it was generated somewhere else.
“Storage allows us to operate the grid from a different approach and over the next 15–20 years, I think we’re going to start to see it play a larger and larger role in capacity markets,” predicted Roberts.
“We always talk about two-way energy flows and how we’re going to help make consumers into market participants where they’re basically being an active and engaged partner with utilities, with grid operators, to use the system more efficiently to respond to price signals and time of use rates. And energy storage is among the tools that enable those next generation concepts for how we want to be able to operate the grid,” Roberts explained.
Roberts predicts that even though grid-scale energy storage has driven the industry over the last 5–10 years, storage is going to increasingly be distributed on the system. Behind the meter storage is already picking up pace and will be the next gamechanger.
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