Energy Storage to hit Prime Time

24 Jan Energy Storage Is Going Prime-time in 2015


Energy Storage

on December 12, 2014 at 10:00 AM

Battery Storage

The electricity grid is set for a major transformation – arguably one of its biggest since the inception of the grid – and energy storage is going to play a centre stage role. The radical pace of innovation is driven by governments, utilities and energy companies whose understanding and acceptance that the way energy is generated and distributed has changed, and is continuing to change at an increasingly rapid rate. With renewable energy now a major part of the mainstream grid and the drive to move away from nuclear and fossil fuels, it is clear that energy storage is the missing link.

This expanded role for energy storage began with the mandates issued by the California Public Utilities Commission (CPUC), who regulate the publicly-owned utilities that deliver over two-thirds of total electricity demand in that state. These policies require adoption of procurement targets for utilities to acquire viable and cost-effective energy storage.

Because of the top-down nature of this push to require the utilities in California to buy energy storage, there was great scepticism in the anticipated level of commitment. The CPUC approved a bill to establish storage procurement targets of at least 1.3 GW of storage by 2020 in four solicitations beginning December 2014, for the Pacific Gas and Electric (PGE) Company, Southern California Edison (SCE) and San Diego Gas & Electric (SDGE).

With SCE’s announcement earlier this month to bring about 2,200 MW of grid resources online by 2022, the stage has been set for utilities nationwide to incorporate distributed and customer owned energy assets into grid operations. This move by SCE transformed the traditional stodgy image of utility companies to that of a forward thinking, innovative leader set to trail-blaze energy-efficient paths and shift power consumption away from costly peak-load periods while incorporating ever-growing amounts of intermittent renewable energy resources.

On September 5, 2014, SDG&E issued its 2014 RFO seeking eligible resources to meet its requirements: a minimum of 200 MW of preferred resources (energy efficiency, demand response, renewables, combined heat and power, distributed generation or energy storage), of which 25 MW must come from energy storage systems. And now PG&E issoliciting offers for new energy storage systems at five distribution substations. In addition, more business opportunities will open up for grid-savvy utilities such as the ability to  manage loads behind the meter and purchase energy and power services from anywhere on the grid.

A year ago, there was significant reluctance from utility companies to pursue energy storage, and the typical refrain being parroted was the “high expense” and “low returns.”  With California mandating energy storage only if it is deemed to be economic, a dramatic shift has seized the sector with other governments and major corporations jumping on the bandwagon to grab economic and energy efficiency savings made possible through the use of energy storage.

Battery Storage

On the heels of energy storage advances from the Golden state come grid developments from its Lone Star neighbor with Texas utility, Oncor, announcing it will seek regulatory approval to spend up to $5.2 billion on 5 GW of energy storage resources to tighten up its grid, improve reliability and lower costs. It turns out that everything really is bigger in Texas which includes their proposed deal, which represents a monumental development for grid battery energy storage. Oncar’s proposal increases the total U.S. battery storage capacity by nearly ten-fold just in one state and grid.

A study commissioned by Oncor demonstrates that deploying electricity storage on distribution systems across Texas could provide substantial net benefits to the state including increased grid reliability, reduced residential electric bills and the ability to auction energy storage capacity to independent power producers.

As reported by The New York Times, “to meet global climate change commitments, the International Energy Agency called on the United States, the European Union, China and India to invest a combined $380 billion in energy storage by the middle of the century. That would fund a total of 310 gigawatts of new projects, or more than 28 times what is currently expected to be built by the end of the decade.”

As each utility sees the energy and economic efficiencies of the grid, more and more of their fellow utility companies will come onboard. In addition, look out for future announcements from many large companies in the coming months about their energy storage initiatives.

My prediction: 2015 will be the year that major purchasing of energy storage begins. With the intense focus on storage, it is likely that 2015 will also be the year we realize that the currently-popular mix of storage products and technologies aren’t ideal in terms of reliability, longevity and scalability to meet grid needs.

For example, while lithium ion technology has already reached production scale due to the overcapacity of the facilities set to meet the EV car boom that didn’t happen, it has the limitation of being the right fit for the shorter duration energy storage needs (<2 hours) while the new, big demand is for the longer duration (4 – 12 hours), and longer lifetime (20 years). And while the pace of innovation for energy storage solutions has increased dramatically over the past year or two, it is no minor engineering feat to stretch the capabilities of these technologies enough to meet desired duration and lifespan metrics.

It is going to be a bumpy ride meeting the looming tsunami of energy storage demand, and those technologies and products that have been able to prove their reliability and scalability will have a strong first movers’ advantage in 2015 – the year energy storage goes primetime.

Credit for this blog goes to:

Bill Radvak the CEO of American Vanadium and the North American Master Sales Agent for GILDEMEISTER energy solutions’ CellCube vanadium flow energy storage systems.

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