Clean energy's rise fuels push for better batteries(Read article summary)
As the use of intermittent energy sources like sun and wind continues to rise, battery storage is increasingly entering the conversation about the nation's electrical grid. A new energy storage mandate in California is pushing the issue further.
Solar PV has been the belle of the ball when it comes to distributed energy resources of late. But fromÂ microgrids in MarylandÂ toÂ NRGâ€™s solar pergola, battery storage is increasingly entering the conversation, too. Now, Californiaâ€™s new energy storage mandate,Â AB 2514, is pushing the issue further.
AB 2514, which passed unanimously in October, instructs Californiaâ€™s investor-owned utilities (Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)) to expand their electricity storage capacity and procure 1,325 MW of electricity and thermal storage by 2020. Such energy storage is one important strategy of many that can help to manage and balance the inherent variability of renewable electricity generationâ€”for example from cloud cover or at night when solar panels arenâ€™t cranking out kilowatt-hours. But storageâ€™s role goes well beyond that.
California has a very high renewable portfolio standard (RPS), currently set at 33 percent, with active policy discussions about a possible higher future level,Â perhaps 50 percent. As higher and higher penetrations of renewables are added to the grid, the California Independent System Operator (CAISO) hasÂ predicted the potentialÂ for disruptions to grid operations as soon as 2015.Â
Itâ€™s not clear exactly what level of disruption California could see. Certainly discussions around whatâ€™s known asÂ the duck curveÂ have shown that CAISO is deeply concerned about rapid ramp rates that could come with significantly higher solar penetration and how it can be mitigated.
Yet,Â a recent study released by regional transmission organization PJM and General ElectricÂ suggests the answer might be â€śnot much.â€ť The multi-year study found that if PJM added 100,000 MW of wind and solar across its service area (13 states and Washington, D.C.) only around 4,000 MW of additional non-dispatchable generation resources would be needed for regulation to manage the variability of the renewables. However, CAISO doesnâ€™t have the same market structure nor power flow dynamics as PJM, and installing storage at the transmission level will at least somewhat improve utilitiesâ€™ and CAISOâ€™s ability to manage changing system conditions brought on by renewablesâ€™ variability and reduce the need for reserve services.
In addition, Californiaâ€™s regulatory environment and rate structure assigns a high value to the services storage can offer to the grid, including high demand charges for commercial customers (which can be lowered with storage), and one of the only state-levelÂ self-generation incentive programsÂ that covers distributed storage.
The California Public Utilities Commission (CPUC) has also allowed both SDG&E and PG&E toÂ rate-basesignificant storage development investments: $26 million earlier this year for SDG&E and $30 million for PG&E in 2011. This is not the norm across the U.S.â€”most storage projects currently under development or in operation are funded by government grants (e.g., DOE Smart Grid Stimulus Grants, American Recovery and Reinvestment Act), under the commercial arm of a utility (i.e., not part of the regulated business), or as part of a R&D/pilot budget that doesnâ€™t get full rate-basing scrutiny. Rate-basing investments allows storage to become a sustainable and more certain part of the utilityâ€™s business plan in a way that a one-time grant or an investment at the whims of the shareholders cannot.
A curious focus for California's mandate
Yet Californiaâ€™s energy storage mandate raises some questions, even as many celebrate the development. For example, under AB 2514 storage connected at the transmission level has the highest procurement target (700 MW), followed by storage at the distribution level (425 MW), and then customer-sited storage (200 MW). There is significant flexibility to shift procurement targets by as much as 80 percent between transmission and distribution grid domains, yet the initial breakdown remains perplexing in light of recent market trends with storage.
Utilization of our countryâ€™s current transmission-level, fully depreciated â€śbatteriesâ€ťâ€”pumped hydroâ€”is ata 10-year low. Some prominent companies that have tried to compete in the transmission storage space have goneÂ belly up. Developers of concentrated solar power with thermal storage have found the U.S. market insufficiently supportive of transmission-level storage and recentlyÂ moved most of their development activities overseas.
Meanwhile, customer-sited storage business models and companies seem to be springing up daily (witnessÂ SolarCityâ€™sÂ storage activities, not to mentionÂ Solar Grid Storage,Â Green Charge Network, andSTEM, for just a handful of the many examples). Also, on the most rudimentary of screens, one would assume power (and therefore, stored power) has more value at the retail level where itâ€™s used than at the wholesale level, where it rides on transmission lines many miles away.
Beyond balancing variable renewables
Regardless of past trends, the future of storage is moving beyond a focus solely on the technologyâ€™s ability to store energy for use when the sun is not shining, or provide back-up power in the case of an outage, to a broader set of services storage offers, many with higher value potential.
The majority of technologies being developed today focus on providing ancillary services, peak load (demand charge) shaving, and transmission and distribution services, rather than customer-sited storage alone. Itâ€™s this bundling of benefits that makes storage more competitive in todayâ€™s market and economic climate.
Unfortunately, high-value opportunities are not universal, and storage is not currently economic everywhere. â€śWhen you look at different parts of the country, weâ€™ll have to cobble together revenues and values to make it worthwhile,â€ťÂ Solar Grid Storageâ€™s CEO Tom LeydenÂ told Greentech Media.
But that is precisely what theÂ 213-and-countingÂ active storage projects in the U.S. and the new storage mandate in California are trying to change. This is also why Californiaâ€™s mandate proposes energy storage procurement targets for each utility at each point of interconnection, but is also flexible in allowing utilities to defer procurement targets from one solicitation period to the next and shift targets between the transmission and distribution grid domains.
Mandates are likely not the long-term solution for integrating storage into the grid and market-based solutions must prevail. But Californiaâ€™s program will serve as a big kick-start and experimentation enabler, and can significantly accelerate the timing of the economic viability of investing in storage. Looking at storage and batteries not just as an energy-only supplement to the grid, but also as a broader source of value for grid services across a variety of applications is the right way to go.
There is still a lot we do not understand about the value and future potential of storage, but if we look at the results of a recent EPRIÂ cost-effectiveness study, which found that the benefits from storage increase as the quantity of renewables increases, it becomes clear why California is pursuing this technology in a manner that is both boldly aggressive and flexibly vague. The principles underlying the mandate in California underscore that this initiative is aimed at not just environmental goalsâ€”specifically GHG reductions and the integration of renewablesâ€”but also grid optimization.Â