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Energy Storage is Injecting Itself Into Utility Markets

Now that Duke Energy is firing up a 36-megawatt energy storage and power management system at its wind project in west Texas, it is saying that such progress could lead to an increasing amount of green energy. How realistic is this?

Energy storage systems not only harness power but also inject that energy into the grid so that providers can more efficiently meet their demands. With a focus on reducing harmful air emissions and on increasing the use of cleaner energy, such systems are getting the attention they deserve. And while some suppliers are now using the technology, they readily acknowledge that prices must come down if the tools are to proliferate.

“Battery storage is an important innovation to address the variability of wind and solar energy generation,” says Duke Energy Renewables President Greg Wolf. “Developing an expertise in this advanced technology will enable us to expand the use of renewable energy, better integrate it into the power grid and become even more efficient at serving our customers.”

Duke is partnering with the U.S. Department of Energy, with each contributing $22 million. The project, which revved up in December 2012, is in Notrees Windpower that is capable of generating 153 megawatts. It’s all part of the 2009 stimulus act.

The Notrees project “will demonstrate the capability of energy storage to mitigate the variability of wind energy and to contribute to the stability of the grid,” says Imre Gyuk, program manager at the Energy Department.

According to the National Alliance for Advanced Technology Batteries, 150,000 megawatts to 300,000 megawatts of installed energy capacity could get integrated into the electrical grid. To get there, regulatory hurdles must fall along with the cost of technology and grid interconnection. To that end, it is suggesting that local ratepayers be able to recover their investments. It is also saying that government should continue to fund the research and development.

Meanwhile, a DNV Kema study is forecasting that if those storage devices are given the right financial incentives then 2,000 megawatts to 4,000 megawatts of energy storage would be built over five years. The study also says that the cost of the now-expensive storage will fall.

Economies of Scale

To reach the size and scale that is needed to cut prices, the Electricity Storage Association is advocating for tax and financial incentives like the investment or production tax credits given to wind and solar. It also wants to see energy storage included in the Obama administration’s clean energy standards as well as in those states with renewable portfolio standards.

“Energy storage costs now relative to what it may cost 20 years from now is not a fair metric,” says Chris Shelton, president of AES Energy Storage in Arlington, Va., who spoke earlier to this writer. “If you use that as a basis, you may not get to the 20-year end-state. There are opportunities to create value today and we are pursuing those but, technically speaking, we need no additional performance.”
 
Today, storage adds value to power systems because it can create capacity. And that has the potential to allow utilities to defer investment in expensive infrastructure. In the case of AES, an independent power producer, it owns such storage assets and offers them under contract. Altogether, it has 84 megawatts in operation and construction and another 500 megawatts of near-term development.
 
For example, it developed a 12 megawatt project in Chile that went into service in 2009. There, the battery storage system AES uses optimizes traditional fossil fuel generators. Batteries help meet those requirements as well as back up unforeseen failures on the grid. Meanwhile, AES has also deployed a 32-megawatt storage project as part of a wind farm in West Virginia.

Meantime, Toronto Hydro is now helping to spearhead an energy storage demonstration at a community center in New York. The goal is to take what it learns and to then optimize the utility’s aging electrical grid in Toronto. 

The company says that its technology is like taking thousands of cell phone batteries and putting them together so that the enterprise will have a system capable of storing power and then delivering that energy when it is needed. Unlike other technologies, Toronto Hydro says that its batteries will be installed at the customers’ premises, not at a remote, central site.

“An opportunity like this comes every 40 years,” says Ivano Labricciosa, vice president of asset management for the utility. “Toronto Hydro’s distribution grid is facing a number of challenges and community energy storage can address some of these challenges ...”

Power producers are infatuated with energy storage, realizing that it could be a game-changer. But they are readily acknowledging that technical and financial barriers exist and that overcoming them is paramount if the devices are to reach their potential. 


EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been honored as one of MIN’s Most Intriguing People in Media.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com

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