Energy Storage

Storage group CEO outlines priorities, benefits for public power

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In a recent interview with the American Public Power Association, Energy Storage Association CEO Kelly Speakes-Backman outlined her priorities and detailed some of the ways in which public power utilities can benefit from energy storage.

Speakes-Backman was named the ESA’s first CEO, effective July 1. Prior to joining ESA, Speakes-Backman was the senior vice president of policy and research at the Alliance to Save Energy. She has also served as a commissioner at the Maryland Public Service Commission.

In the interview, which took place on Sept. 13, Speakes-Backman was asked to detail her priorities as the new CEO of the ESA.

“This is such an exciting time to be a part of the conversation around storage and how it can help the grid to become more efficient, more cost effective, more sustainable and more resilient,” she said.

“It’s pretty clear to me that the storage industry is going through unparalleled growth. We are looking for a vision of 35 gigawatts by 2025,” she said. “That is a vision that was set out well before I got here, and it will be detailed in a report that we expect to issue later this year about how we’ll achieve that 35 gigawatts by 2025. That is, first and foremost, our North Star for priorities for the energy storage industry as a whole.”

Speakes-Backman said her other priorities as CEO “are to figure out how we play in the overall energy markets, to figure out what our role is in affecting that cleaner, more modern, more flexible grid, and working with our members to lay out this clear and actionable path that’s going to get us to that 35 gigawatts.”

She noted that the association has 150 members across the entire spectrum of energy participants. ESA’s members include electric utilities, independent power producers, project developers, technology manufacturers, integrators and component suppliers.

“As some of my first actions, I’ve had meetings with a large number of our members and some of our stakeholder organizations to find out where that center of gravity is that we can create that clear and actionable pathway for industry success,” Speakes-Backman said.

Public power and storage

Public power utilities across the country have developed -- or are in the planning stages of developing – various innovative energy storage projects.

Given public power’s focus on local communities, Speakes-Backman was asked to comment on what she would say are the benefits that a public power community can derive from the use of energy storage technology.

“Of course, there’s the big money saving and being able to integrate more sustainable energy, if that should be the local community’s policy and political desires,” she said.

“But there’s also this need for resiliency and an increasing need for local communities to ensure that there are islands of refuge in the cases of external forces,” whether it be storms “or any major outage events, to be able to have storage distributed among the grid in the public power local community areas, I think is important.”

She noted that an August 2017 Department of Energy staff report “talked about that, highlighting the difference and the importance of energy storage, not just on the regular operations, but on the resiliency of the grid, and the need for that and I think that’s going to be a big play for public power utilities.”

Public power utilities pursue storage projects to address severe weather, outages

Public power utilities are actively pursuing storage projects in part to proactively address the threat of severe weather and outages.

In Massachusetts, for example, Sterling Municipal Light Department in 2016 installed a 2-MW, 3.9-MWh battery system.

The project was designed to provide Sterling with emergency backup power during severe weather events, as well as lower utility costs.

Sterling Municipal Light Department’s storage system went live for the first time during a cold spell in December, just 33 working days after breaking ground, and shaved demand charges by about $17,000 for the month of December.

Meanwhile, Guam Power Authority, in June said it signed an agreement with storage provider LG CNS of South Korea to provide the island utility with 40 megawatts of energy storage.

At the time the agreement was announced, Guam Power Authority General Manager John Benavente said that this “investment will help alleviate system frequency issues, forced outages and support renewable integration."

Action at the state level

States are taking different approaches when it comes to encouraging the deployment of energy storage. Some states have adopted storage procurement mandates or goals, while other states, as seen recently in New Mexico, are directing utilities to include energy storage as a resource for utility planning purposes. The New Mexico Public Regulation Commission took its action in early August 2017.

More recently, the Washington Utilities and Transportation Commission on Oct. 11 issued a formal policy statement addressing how Washington’s investor-owned electric utility companies should include energy storage to meet future resource requirements.

In the statement, the Washington UTC reviewed the landscape of energy storage technologies and how they can be incorporated into a utility’s resource mix. The UTC determined that companies will need to account for storage options in both regular energy resource planning analyses and investment plans. The policy statement lays out a framework to guide the commission’s ongoing rulemaking for integrated resource plans.

Speakes-Backman was asked whether the ESA believes there is an ideal approach for states to take when it comes to removing barriers to the deployment of energy storage and putting storage on an equal footing with other resources.

“I think that there are a number of approaches that you can take and it depends on the jurisdiction,” she said in the interview. “Because storage is new to so many of these jurisdictions, it means that we’re learning what’s the best path for each state.”

Speakes-Backman said that California’s move to set up a target of 1.325 gigawatts of energy storage by 2020 “was pretty amazing, we were happy with that.”

At the same time, the ESA is “also happy with procurement targets. We’re not saying that there has to be a specific mandate in every state. We’re not going for one-size-fits-all for every state,” she noted.

“What we’re going for is encouraging the deciding bodies to include it in the analysis. Whether that is participating in restructured markets with targets or whether that is including it in integrated resource planning, we’re for -- open it up, do a fair and open apples-to-apples comparison of what values that storage can bring overall and may the best resource win,” Speakes-Backman said.

Arizona utility chooses storage over T&D

Investor-owned Arizona Public Service recently announced that it is installing a battery storage system instead of rebuilding about 20 miles of transmission and distribution poles and wires.

Speakes-Backman was asked whether the ESA expects to see this type of utility planning decision -- where energy storage is chosen over traditional transmission and distribution investments --- become more prevalent in the years ahead.

“We certainly hope to see it and this is part of that grid, if you will, of all the different values that storage can bring to offset or to defer costly transmission upgrades and replacing that with storage, while it can at the same time provide value on the shorter-term markets like regulation, ramping, et cetera,” she said.

“You’re getting multiple values from a singular response to a need, so I can see non-transmission alternatives being critical to future grid planning and modernization,” Speakes-Backman said.  

“Technology and markets are changing really rapidly, and so as planning is a long-term [proposition], you’ve got to be able to be nimble and to be flexible even in the long-term planning to be able to react more quickly to the changing technologies that are coming on,” she went on to say.

With changes in demand, resource profiles and economic growth in certain regions, storage “can be helpful to all of those,” she said.

One non-wires approach to planning that has received a lot of attention in the power sector and includes an energy storage component is Consolidated Edison's Brooklyn Queens Demand Management, or BQDM, program.

The New York State Public Service Commission in July extended and expanded the BQDM program, citing the success the program has experienced to date.

Through energy efficiency programs and demand management, Con Edison's BQDM, which began in 2014, is expected to save customers approximately $24.5 million over the life of the program, the PSC said.

These energy reduction measures have allowed the investor-owned utility to defer the construction of a $1 billion substation and, with the PSC's order, BQDM is adding additional distributed energy resources, such as fuel cells, solar power, battery storage and thermal storage, "that will enable the deferral of additional traditional infrastructure, creating additional savings for customers," the commission said this past summer.

Declining costs

Meanwhile, the costs for lithium-ion batteries have dropped significantly in recent years and the ESA expects the trend of lower storage costs to continue going forward.

“Storage costs have fallen 70 percent on the grid scale for the past six years and more than 80 percent within the last two years for the C&I installations, so we see this as a quickening drop in cost and we see these trends continuing,” Speakes-Backman said in the interview.

In an Oct. 3 hearing before the House Energy and Commerce Committee’s Subcommittee on Energy on defining reliability, Speakes-Backman said that storage technologies -- primarily lithium-ion batteries — “are declining rapidly in cost, dropping by 50% every 3 to 4 years and projected to continue at this rate.”

She also told the hearing that driven by these cost declines, the U.S. is forecast to quadruple its installed storage capacity in just five years, representing $3 billion in annual sales.

“But more importantly, these sharp cost declines also mean that storage will get larger and perform at longer durations, increasing their range of applications,” the ESA CEO told lawmakers.

A September 2017 report from the Smart Electric Power Alliance said that the declining price of energy storage technologies is driven by several factors, including manufacturing efficiencies, technology improvements from research and development, raw material extraction improvements, competition, and scale of production due to the parallel emergence of electric vehicles.

“Competition among a growing list of lithium-ion manufacturers is increasing across market segments, applications, and business models,” the SEPA report went on to say.

Lithium-ion storage continues to be the dominant battery storage technology used in the U.S. A September 2017 ESA/GTM report (U.S. Energy Storage Monitor) on second quarter 2017 storage activity said that lithium-ion batteries dominated the energy storage market for the eleventh straight quarter, holding 94.2% of the market in the second quarter.

The report noted that the majority of utility-scale projects deployed in the second quarter employed lithium-ion chemistry, “and the technology is also favored in the behind-the-meter segment. Growing acceptance of lithium-ion is expected to cause this trend to continue over the next few years.”

The American Public Power Association plans to publish a paper focused on energy storage this fall.