"Energy Storage Critical to Solar Industry"

At the Intersolar conference held last week in San Francisco, energy storage was covered in a pre-conference session, as if storage were an optional topic solar companies could ponder, rather than something critical to the industry’s future. Could it be that most solar folks are still getting their minds around storage?

Because wind and solar are intermittent energy sources, their presence on the grid creates additional costs to balance the load, and in some cases, utilities “invoke curtailment” – i.e., reject solar energy and don’t pay for it as a result, said Andy Skumanich, CEO of SolarVision in a session on smart grid. In the future, solar and wind developers may be required to pay for storage, either through a rate schedule or by investing in their own storage devices to balance services, said Janice Lin, co-founder and director of California Energy Storage Alliance (CESA), a coalition working to expand the role of energy storage to promote the growth of renewable energy.

http://blogs.forbes.com/ericagies/2011/07/21/energy-storage-critical-to-solar-industry/

Storing energy is a problem that has long troubled physicists, but with renewable energy — and its variable nature — becoming an increasingly large part of our energy mix, the need for energy storage has become unavoidable. To keep power flowing reliably, grid operators must smooth out supply and demand on a second-to-second basis (known as frequency regulation), an hourly basis (intermittency), and on a daily, weekly, and annual basis (meeting peak demand).

Traditionally energy managers relied on extra fossil fuel generating plants to ramp up and down as necessary to meet these needs. But fossil fuel plants run most efficiently at full power, so “peaker plants” are even more polluting than those used for baseload power. In the 1970s, some pumped hydropower storage was built at existing dam reservoirs to store nuclear power that otherwise went largely wasted at night. But then storage stagnated until the recent boom in wind and solar.

Storage is a broad asset class that encompasses several technologies. Aside from bulk gravitational storage (pumped hydro), there’s bulk mechanical storage (underground compressed air), chemical storage (batteries), mechanical storage (flywheels), and thermal storage (using ice).

More important, storage has several potential value streams, said Lin in a presentation at Intersolar.

+ Systems operators can use storage for ancillary services — frequency regulation and addressing intermittency and peak demand — improving reliability.

+ Together, even small, distributed systems can have a grid-scale impact to reduce peak demand.

+ Charging storage technology during off-peak when power is cheaper and discharging during peak can reduce businesses’ demand charges.

+ Using the same strategy, utilities can use storage to get the best price for their energy.

+ Storage can provide backup power in an emergency.

+ It reduces energy costs for the customer.

+ Storage coupled with renewable energy generation means fewer emissions and more jobs.

+ Storage reduces the need for expensive, difficult-to-site transmission lines.

That last one is a real boon. For example, the new transmission required for California to meet its target of 33 percent renewables by 2020 will cost about $12 billion, according to the state’s Public Utilities Commission.

While building new transmission and distribution infrastructure can be a multiyear process, storage can be deployed quickly, Lin pointed out. By charging storage devices at night and discharging them during the day to flatten demand, “the pipe doesn’t need to be as fat,” she said.

California has approved the first tranche of the $12 billion. “For next tranche, we want them to consider storage,” Lin said.

The Federal Energy Regulatory Commission is thinking along the same lines. On May 19, FERC issued a notice of inquiry to promote transmission investment through pricing reform. A key goal is to encourage energy storage as part of the transmission system.

Such efforts are required to overcome barriers to deployment. One of the biggest is that markets and regulators currently recognize just three types of businesses on the grid: generation, transmission, and distribution. Because storage can play any of these three roles, market and regulatory structures must be revised to take advantage of it.

That might happen soon. On June 16, FERC issued a notice of inquiry to consider ways in which it would set regulations to allow storage developers to get paid, perhaps by creating a separate asset class for storage.

FERC Chairman Jon Wellinghoff has said the agency is interested in allowing payment for the multiple services that storage provides. “FERC is directly attempting to deal with the classification problem,” said Lin. “Storage fits into every silo but doesn’t have a home. No one can figure out how to pay people for storage: distribution, transmission, or load leveling.” In the future, storage might be able to capture multiple payments for different services, she added.

Also on May 19, FERC issued a notice of proposed rulemaking that would require all qualifying generating and nongenerating resources to be paid for regulation services. That means storage technology would qualify as well as, say, gas-fired power plants. The rule also says better quality frequency regulation should earn higher payments. Storage can provide frequency regulation nearly instantaneously, whereas a gas plant takes five minutes to ramp up or down. So storage provides a more valuable service it should therefore earn more, said Wellinghoff.

In 2010, two investment tax credit bills for storage were introduced in the House (H.R. 4210) and Senate (S. 1091), but the energy bill is currently taking a back seat to budget issues. Still, Energy Department investments into storage technologies are ramping interest from venture capitalists.

Some energy wholesalers have also introduced policies to promote storage. The New York Independent System Operator has defined short-term energy storage devices like flywheels and batteries as frequency regulators, allowing them to participate in regulated markets. Independent system operators in Texas, California, and the Midwest have been creating policy, procedures, pricing, and other mechanisms to support storage services.

But among states, California is perhaps the leader in storage, said Lin. The state passed energy storage procurement targets (AB 2514) last year, the first to do so.

Other California policies support storage more indirectly, she pointed out, including the Global Warming Solutions Act of 2006 (AB 32), the renewable portfolio standard, and incentive programs for self-generation, smart grid systems, and solar systems. The state is currently considering whether incentives for self-generation should apply to storage as well.

The key players understand the advantages of storage, Lin said. “But the pace of the beast, our whole energy regulatory system, is like the Titanic. It takes awhile to turn the ship. It’s now headed in the right direction, but it’s slow.”