The storage industry is progressing, slowly but surely.
In the United States, policy initiatives are beginning to shape the market. A twin picture is emerging as a result of incentives or lack thereof.
The market for ancillary services is growing in places where incentives exist and resources are being diverted from places where incentives lag. The recent shift by AES Energy Storage LLC of a 40-megawatt battery from Houston to the PJM region is one example. The company is responding to incentives set by independent system operators or ISOs as a result of FERC Order No. 755, notably PJM Interconnection, the New York ISO and the California ISO, that reward power providers for the quality of their responses to signals from the operators. The Electric Reliability Council of Texas, or ERCOT, is not governed by FERC Order No. 755. It is moving to make its own rules.
Another example is Stem Inc., a California-based leader in advanced energy storage systems, which has secured $5 million in financing from Clean Feet Investors, to bankroll installation of up to 15 megawatts of customer-sited systems with no down payment. Stem Inc. is focusing on California which has relatively high demand charges, subsidies for energy storage and a 1,300 megawatt mandate for grid storage.
Yet another example is General Electric’s largest grid-scale application of its sodium-nickel-chloride Durathon battery to back up the Discovery Science Center in Santa Ana, California. As part of California’s permanent load shift program, the array is meant to shift 10% to 20% of the building’s electrical load from expensive peak times to cheaper, off-peak use, while also providing power when the grid goes down. It is one of the first deployments of battery technology aimed at such a large-scale shifting of power in a behind-the-meter setting.
In Germany, the energy storage subsidy, which has been available since May 1, 2013, is forecast to kick start the adoption of solar photovoltaic energy storage systems very much as the feed-in-tariff boosted the photovoltaic industry eight years ago. The subsidy provides a grant of up to 30% of the storage cost, lowers the cost of installing a storage component in a photovoltaic system up to 30 kilowatts in size and enables a photovoltaic system owner to increase the level of self consumption from 30% to 60%. A total of €18.7 million has already been allocated from the €25 million budget for 2013. The subsidy, coupled with winding back of feed-in-tariffs, potentially makes self consumption and energy storage an attractive business model. While the cost of Germany’s renewable energy policy, which is expected to soar to more than €20 billion this year, has become a growing concern, return to nuclear power is inconceivable and the broad goals of its renewable energy law are expected to remain unchanged.
In the United Kingdom, distributed energy storage is expected to become a major growth sector as the country attempts to maintain grid stability. The market is set to reach US$1.2 billion by the end of the year. The government has set a target for more than 23,000 megawatts of renewable energy generation by 2020. A modernized grid is contemplated to require a minimum of 2,000 megawatts in new distributed storage for cost effective delivery of variable generation from renewables. The grid is facing an ever-increasing need for balancing power to handle wind variability. The present practice of curtailing wind energy output at times of high output and low demand, which cost a record £1.8 million in “constraint payments” in Scotland alone this year, no longer seems feasible.
In Canada, the Ministry of Energy has updated Ontario’s long-term energy plan that includes Canada’s most significant commitments to energy storage. The ministry announced, among other things, storage technologies will be included in procurement processes starting with 50 megawatts by the end of 2014, a study will be commissioned to establish the value of storage technologies on the electricity grid, and the ministry will work to address regulatory barriers that may limit energy storage from competing in the market.
On the technical front, the recent successful commissioning of the Solana Generating Station is noteworthy. Solana is the world’s largest parabolic trough solar plant with a total capacity of 280 megawatts and also the first solar plant in the United States with thermal energy storage. The plant has passed commercial operation tests that included operating the plant at the turbine’s full capacity while charging the thermal storage system, continuing to produce electricity after the sun went down, and starting up the plant and producing six hours of electricity using only the thermal storage system. The project is located near Gila Bend, Arizona and Arizona Public Service, the state’s largest utility, will purchase all of the electricity produced by the plant for 30 years through a power purchase agreement.
Likewise, UL 1778 certification procured by Sunverge Energy Inc., a leading California-based developer of distributed energy storage solutions, from Intertek Testing Services for its Solar Integration System is a step forward. The certification signifies that the system meets the product safety standards for connection to a utility power grid anywhere in the United States or other countries where UL standards are accepted.
The industry seems to be on the cusp. As storage technologies mature and costs fall, even with lagging policy initiatives, the global markets will present opportunities due to increasing grid challenges and existing inefficiencies.