Are Regulators and Policy makers Helping Investments in Energy Storage?

Posted on May 27, 2011
Posted By: Ajay Singh
 
To a large degree, the success in the electric grid is defined by regulatory structure and history, and energy storage lacks both which poses trouble for its adoption. For instance, before California's AB 2514 (which is also known as energy storage law adopted by California in September 2010), there is no mention of energy storage in any of the federal or state energy laws1, and there are only a few regulations that address energy storage, and without any specific regulations the main stake holders (aka investors) will most likely remain uncertain on how energy storage investments will be treated, how the costs for these systems will be recovered, and how energy storage will be permitted to operate in a regulated environment.2 This largely impacts energy storage from investment perspectives for private players. Furthermore, there is no overarching strategy that tries to address such concerns and would try to impact its adoption.3. The foremost reason for this lack of regulation is that energy storage as a concept is very new for utilities, exception to that is pumped hydroelectric storage which have gained some traction. So far, utilities have not wrapped their hands around how energy storage can address their capacity needs.

Even to complicate matters further, several reports (from EPRI, Sandia etc.) have written how energy storage systems can in parallel address multiple applications within generation, transmission, distribution, and end customer use. This makes it difficult for the investors and government to decide what kind of regulatory benefits energy storage can apply for. For instance, an energy storage solution could be installed in an industrial facility (which will be an end-user usage) for its peak time electricity demand. Moreover, an energy storage plant could be installed at a transmission center as an auxiliary unit to provide the voltage support, which will be a usage by a transmission system. This shows how "cost recovery, market regulation, and tariff decisions classify assets narrowly into the familiar spaces of generation, transmission, distribution, and consumer."4 Some of the possibilities for solutions could be investment tax credits, new effective cost recovery mechanisms and a favorable awareness on possible benefits of energy storage at both utilities and end consumers level.

Laws and Regulations -- Current and Under consideration

There are no current specific federal laws which have energy storage as their focus area.5 However, recently, the big win for the energy storage proponents was in California where Governor Arnold Schwarzenegger signed AB 2514, an energy storage bill, into law. Apart from this, there is the Storage Technology for Renewable and Green Energy Act of 2010 (the STORAGE 2010 ACT) which is still under consideration, and will likely promote energy storage technologies through Investment Tax Credits (ITCs) if passed. On the regulation side, FERC has issued order from time to time which have created venues for investments in the energy storage space.

California AB 2514

On September 29, 2010, the California governor signed AB 2514 into law.6 The bill is noteworthy because it is the first legislation in the US which puts emphasis on ability of energy storage in meeting a state's goals to increase its usage of renewable electricity. The law would "require the [California Public Utility Commission] (CPUC), by March 1, 2012, to open a proceeding to determine appropriate targets, if any, for each load-serving entity to procure viable and cost-effective energy storage systems and, by October 1, 2013, to adopt an energy storage system procurement target, if determined to be appropriate, to be achieved by each load-serving entity by December 31, 2015, and a 2nd target to be achieved by December 31, 2020."7 The law doesn't mandate that utilities must install their own energy storage devices/systems or buy services from separate entities/owners of large storage farms, which means that potentially businesses/end-consumers that will install energy storage systems along with solar panels on the rooftop will be able to sell their stored solar electricity back to the respective utilities in the area in return of money (which is also known as distribution generation market). Moreover, it probably also means that solar installation businesses that currently own and operate solar arrays and sell the electricity to its customers at a charge might end up in the energy storage service business and compete with pure-play energy storage service providers.8 Although much is yet to be seen on how CPUC will define things in the future, this law will significantly promote the investments in the energy storage space.

Although there is no discussion over similar laws in other states so far, there are various parties and associations -- such as Electricity Storage Alliance (ESA) -- who are initiating discussions with several stakeholders (from the list mentioned above) to promote similar efforts in other parts of the U.S.

The STORAGE ACT 2010

Senators Jeff Bingaman (D-NM), Ron Wyden (D-OR), and Jeanne Shaheen (D-NH), introduced legislation in the senate for debate that would introduce and add grid-connected energy storage to the list of technologies that will be eligible for the federal investment tax credit (ITC). The legislation is Storage Technology for Renewable and Green Energy Act of 2010 (the "STORAGE 2010 Act").9 Under this legislation, various technologies will be eligible for categorization as "energy storage property" which would include pumped hydro storage, fuel cells, compressed air energy storage (CAES), batteries, capacitors, superconducting magnetic energy storage, flywheels and thermal energy storage systems. The condition for this definition would be any systems that might be least one megawatt (1 MW) for a minimum of one hour would be eligible for a "20% tax credit" under the ITC program.10 In case the bill becomes law, the investment tax credit would provide significant assistance to intermittent energy resource developers that are seeking new ways to shape and firm their projects' output. It is presumed that the STORAGE 2010 Act would provide up to "$1,500,000,000" in tax credits to storage projects which are connected to the U.S. electric grid and no single project party can be allocated more than "$30,000,000."11 The bill mentions that the grid-connected energy storage property will qualify for Clean Renewable Energy Bonds (CREBs) under section 54C of the Internal Revenue Code (IRC). The bill if passed will most certainly promote and directly impact the investments in the energy storage space.12

Although it is very difficult to predict how the legislative processes will turn out, it appears that the Storage Act is close to becoming reality, most likely in 2011.13 This will significantly impact the energy storage industry -- according to Pike Research, it could help by transforming the energy storage industry with forecasts of 30 gigawatts by 2020.

Huge blow to energy Storage -- FERC ruling on LEAPS project

This is a ruling by FERC which has gone in the negative direction for the proponents of energy storage. In 2008, FERC issued a ruling on Lake Elsinore Advanced Pumped Storage (LEAPS) project which is is a pumped hydro installation in Southern California.14 This mandated that storage ownership may not be operated or functionalized as transmission by ISO/RTO for rate recovery purposes. This is negative as a transmission operator can interpret it that the cost recovery will not be possible as a transmission tariff on the storage projects. Specifically, an ISO/RTO would not be able to pass along the cost of putting an energy storage project onto his ratepayer customers. This could be viewed as a barrier to transmission (ISO/RTO) ownership of storage project/asset or even a distribution utility's ownership of storage project/asset. Although no specific impact is seen in the investments in the energy storage space due to this ruling, there might be some de-motivating aspects of this ruling.

Work in positive direction

To give credit to FERC, the agency has in the past enacted several orders (market rules) that have shaped some pathways for energy stakeholders. The rules were drafted in Order 888, Order 889, Order 2000, Order 890, and Order 719. Below are some of more recent initiatives in this direction, helping investors receive some guidance.

FERC Improving Future Regulation

FERC is currently requesting comments from companies that have received Department Of Energy (DOE) grants on how future regulations should be drafted, in order to support more innovation in the space. This will significantly help FERC in changing and improving its future regulations in order to have sustainable innovation in the energy storage technology area. Also, there are other programs working in promoting storage.

Federal Agency Financial Support for the Pre-Commercial Technologies

The US Department Of Energy has a program called Advanced Research Projects Agency-Energy (ARPA-E), which supports advancements in niche high risk technologies in the energy space. The program is modeled after DOE's successful Defense Advanced Research Projects Agency (DARPA) program and received $400 million out of stimulus fund (American Recovery and Reinvestment Act) for the technologies - fuels, carbon capture, energy storage etc.15 Apart from many other programs under ARPA-E initiative, there is a specific program for energy storage -- GRIDS (Grid-Scale Rampable Intermittent Dispatchable Storage). With GRIDS, ARPA-E is seeking to develop new technologies that are coming up with cost-effective grid-scale energy storage with a focus on technologies that balance "the short-duration variability in renewable generation."16 Moreover, "[s]pecifically, GRIDS considers two areas: 1) proof-of-concept storage-component projects focused on validating new, over-the-horizon, electrical energy storage concepts, and 2) advanced system prototypes that address critical shortcomings of existing grid-scale energy storage technologies."17 There are various projects already funded under GRIDS -- for instance, Massachusetts based company General Compression received money under this program for developing a "novel compressed air energy storage process (GCAEST) that is highly efficient and requires no fossil fuel."18

Apart from these programs, there are other collaboration programs between US national research labs and state commissions to promote technology demonstration projects. For instance, the Sandia National Laboratories' ESS program collaborates with the California Energy Commission (CEC) and the New York State Energy Research and Development Authority (NYSERDA) in demonstration projects including super capacitors, zinc-bromine batteries, sodium-sulfur batteries, lead-acid batteries, and flywheels. Increasing financial support for these efforts would facilitate the commercialization of promising technologies.

These programs have directly impacted the investments in energy storage technologies by funding the companies.

What More Could be Considered to Enhance Investments

Energy storage is not only an important enabling technology for reducing carbon emissions and building a low-carbon power system, but also to stabilizing the power grid. Furthermore, it enables in improving power quality and preventing tremendous costs of power failures. However, investments in the space have lagged due to several concerns -- foremost is the lack of legal framework and national policy agenda. There have certainly been steps towards it, but much of the work is still to be done. This paper intends to summarize all the progress so far and suggest next steps that can be taken to promote energy storage.

There is a clear need to promote the expansion of the energy storage space, due to its various benefits. Sandia National Research Lab has defined 17 benefits that energy storage can provide to the grid.19

Mandates for creating demand of storage technologies

With the programs such as ARPA-E and loan guarantees, there is some help coming from the government. However, substantial additional financial resources need to be identified. A significant commitment is required from the private investors -- who are not very keen on the sector due to the lack of demand side of the technology. One of the potential ways the skepticism can be eradicated is that the government can manage the demand side of the equation by mandating such standards which can foster demand of energy storage technologies. For instance, rules or regulations can be drafted which will ask utilities to ask for more reserve power available through energy storage mechanism rather than constantly running generators.

Another method could be developing energy markets so that multiple revenue streams can be harnessed by energy storage technologies. Sandia National Research Lab has defined 17 benefits that can potentially be accrued from a given energy storage technology. Not all 17 benefits can be traded in a given geographic energy market because most of them are only related to utilities (such as transmission upgrade deferral -- which allows deferring any upgrades that a RTO/ISO will be needing for the transmission system). However, there could be few benefits for which markets can be developed. For instance, regulation service is an ancillary service that is constantly needed by a grid operator to stabilize the grid and it is a revenue stream available in some markets (such as ISO New England market) for storage. Similarly, there are other ancillary services such as load following and voltage support which are constantly needed and can have markets developed for them. In addition to what FERC has already mandated (as discussed above), a joint effort between ISO/RTOs and FERC need to be there on deploying rules which can open up more ancillary services for capturing revenue.

Increase Financial Support

Energy storage technologies are new in the market, and deployment of energy storage projects is capital and time intensive process, which creates high risk for private investors. A government, utility and private sector collaboration at multiple levels could be a good solution for this. For instance, federal/state/utility/private investor collaboration could be a good approach in bridging this gap between incubation to going-to-the-marketplace. All the parties can share the cost (or fund the innovation) and hence funding the practical technologies. This approach is beneficial from balancing the risk and reward between the parties and reduces the agency costs. There could be situation when if the government provides funds for the entire cost of a demonstration project then the project could be politically influenced in accessing the funds. There could be a multi-party system in financing the projects, so that risk can be shared among the parties. There are more benefits beyond cost-sharing, such as technical, market and regulatory knowledge that each partner will bring to the table. Of course there are more details in this proposal that need to be ironed out before taking it at the face value. For instance, there is a widespread belief in the private community that involving government in any investment opportunity is very time intensive process, as government takes long time in approvals and implementations. If government has some internal efficiency parameters added to its investment process then this belief can be easily eradicated in the private community.

Apart from ITCs that are already discussed and getting considered under the STORAGE Act, DOE can also try to put in place Production Tax Credits (PTCs) for energy storage projects. Currently, PTCs are provided to renewable power projects; however, there are no rules for availing PTCs for energy storage. Electricity storage indirectly affects and promotes the renewable energy adoption. Therefore, steps could be taken in the direction of allowing energy storage projects to qualify for these PTCs because of the overall effect of improving the grid's ability to accommodate intermittent renewable energy sources.

Also, the demonstration projects are very capital intensives and this has significantly hindered the development of projects or at least has elongated the time periods. For instance, Norton CAES (Global Power Report 2002) and Lake Elsinore PHS (Burgin 2007) projects took a while for demonstration and have created a bad taste for the investors. For now, most of the project developers in this space have looked upon government (Department Of Energy) for some sort of financial help. The Energy Policy Act 2005 (EPACT) has authorized loan guarantees for "innovative technologies" that avoid greenhouse gases, but there is no mention of energy storage technology so as to qualify for the loan guarantees.20 Most of the energy storage technologies directly avoid greenhouse gases (with the exception of conventional CAES technology which has natural gas burning stage, although significantly lower than a combined cycle power plant) by enabling carbon free energy technologies such as nuclear and wind power. In future, having a loan guarantee program for energy storage projects will significantly help the investment landscape for such technologies.

Lastly, there is a definite need for some coordinated effort to be undertaken by a regulatory body specifically for energy storage. For instance, DOE has been the channel for implementation of programs like ARPA-E and Loan guarantees. However, there is no regulatory body (or arm of DOE) where energy storage investors, entrepreneurs or project developers can go for any guidance or requests. This will certainly foster encouragement in the energy storage community to move forward with the developments.

Ownership Resolutio

One of the other debates that create more skepticism in the private investor community is the ownership of the energy storage assets/systems. There is not much guidance as to how these assets can be treated. Many states have restrictions on the ownership of power assets amongst customers and service providers. For instance, in a de-regulated market transmission companies are not allowed to own any generation assets. As a benefit, storage facilities can help alleviate both the transmission congestion and lack of transmission capacity problems. On the other hand, storage can also provide benefits on the generation side by providing operating reserves, voltage support etc. Hence, there needs to be some flexibility designed around the ownership structure of storage devices. Giving flexibility on the ownership will yield the maximum value capture by any or all of the owners of the assets, making it more viable for future investments.

Energy storage can enable ratepayers to save money, protect them against blackouts, create new jobs for them, and ultimately build cleaner environment for them by promoting renewable. However, with lack of mandates and directions in this space from policymakers and regulators, there is a fear of losing this important and critical space. Specifically, the possible approach needs to deploy a multi-prong approach -- (1) create a regulatory body (may be under DOE or separate) (2) which will provide much needed regulatory support by creating demand for the energy storage technologies/projects and providing financial help through various chartered programs. A coordinated effort is needed to be undertaken to open the "rules of the game" to unleash innovation and investment in the energy storage space.

References

  1. Sanjay Ranchod, California Enacts Landmark Energy Storage Law, 2010, http://www.paulhastings.com/assets/publications/1753.pdf
  2. SBI Energy Report, Energy Storage Technologies in Utility Markets Worldwide, 2010, http://www.sbireports.com/Energy-Storage-Technologies-2435740/
  3. Id.
  4. KEMA Consulting report, Electricity Storage: Policy Issues, 2010, http://www.kema.com/Images/KEMA%20Energy%20Storage%20Policy%20Briefing.pdf
  5. Sanjay Ranchod, California Enacts Landmark Energy Storage Law, 2010, http://www.paulhastings.com/assets/publications/1753.pdf
  6. 2010 Cal ALS 469; 2010 Cal AB 2514; 2010 Cal Stats. ch. 469
  7. Id.
  8. Battles Over Cali's Energy Storage Mandate Has Only Begun, 2010, http://gigaom.com/cleantech/battles-over-calis-storage-mandate-has-only-begun
  9. S.3617, 111th Cong., 2nd Sess. (2010)
  10. Id.
  11. Id.
  12. Senators Propose Making Energy Storage Property Eligible for ITC & CREBs, 2010, http://www.lawofrenewableenergy.com/tags/pumped-storage/
  13. Pike Energy Research, http://www.pikeresearch.com/blog/articles/putting-energy-storage-on-a-level-playing-field-the-storage-technology-of-renewable-and-green-energy-act-update
  14. Order Conditionally Accepting Interconnection Agreement, 123 FERC  61,140 (2008).
  15. U.S. Department Of Energy, About, http://arpa-e.energy.gov/About/About.aspx
  16. U.s. Department Of Energy, Program Description, http://arpa-e.energy.gov/ProgramsProjects/GRIDS.aspx
  17. Id.
  18. U.S. Department Of Energy, General Compression: Fuel-Free, Ubiquitous, Compressed Air Energy Storage and Power Conditioning, http://arpa-e.energy.gov/ProgramsProjects/GRIDS/FuelFreeUbiquitousCompressedAirEnergyStora.aspx
  19. Jim Eyer, Garth Corey, Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide, 2010, http://prod.sandia.gov/techlib/access-control.cgi/2010/100815.pdf.
  20. 42 U.S.C. 16513
 
 
Authored By:
Ajay is a JD-MBA Candidate at Northwestern University School of Law and Kellogg School of Management in Chicago, IL, and is an enthusiast and professional in the field of energy. Prior to his graduate studies, Ajay worked for GE Energy in both India and US for about 5 years in areas ranging from finance, operations, risk to restructuring. Post graduation from the JD-MBA program, Ajay will be joining Siemens Smart
 

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Comments

May, 31 2011

Bryan Leyland says

Why is there a need to promote energy storage? Surely the electricity market will provide an adequate reward if it is really needed. I suspect that the motivation is purely to overcome the serious problems involved in solar and wind powered generation. But these are beyond the ability of any available storage technology to solve at any price.

Wind and solar generation are intermittent, unpredictable and seasonal. To fit them into any power system requires storage for periods of days, weeks and even months. There is no available technology that will store electricity economically and efficiently for more than a week–in fact, perhaps only a few days. Pumped storage hydro power, which is the best technology available, usually has enough storage for 10 hours operation. Increasing this to 100 or even 1000 hours required an enormous increase in the amount of water stored and there are very few sites available for this. If it was possible, it would be impossibly expensive.

The real problem is that people are madly promoting wind and solar power in the blind belief that it will make a substantial reduction in emissions of carbon dioxide–which it will not do–and in a blind belief that man-made carbon dioxide causes dangerous global warming. Right now, the world is cooling–2011 will, for sure, be a cool year–and the chances are that the cooling will continue driven by the sunspot cycle. So it is an expensive and futile solution to a non-existent problem.

May, 31 2011

Michael Keller says

Legislation and the desires of politicians can not trump basic physical laws and economics. I suggest you ponder that in conjunction with your studies. Unfortunately, the California legislature has moved well past common sense and will never understand they can not decree how the planet's future will unfold.

May, 31 2011

Garth Barker says

Very good article, well done. To Byran Leyland, your first statement Why is there a need to promote energy storage? Surely the electricity market will provide an adequate reward if it is really needed. Is so wrong, the utilities are fighting storage because it will remove some if not all of their asset base if that base is natural gas fired peakers. Storage particularly bulk grid storage, compressed air or closed loop pumped storage is a profound threat to any fossil fueled generation used to integrate variable renewable generation. When storage has it's benefits valued in dollars and added to the grid, the grid will never be the same again. It is coming soon to a utility near you.

May, 31 2011

Malcolm Rawlingson says

Brian, Ahhh music to my ears "an expensive solution to a non-existent problem" that just about sums it all up doesn't it. Words of wisdom. We will look back at this period in history and wonder why we covered our beautiful landscapes in windmills and fifty years from now they will be rusted relics standings as a testament to the stupidity of mankind

As for storage. If there were a practical means of doing it Garth we would already be doing it. As Ajay Singh notes there are a few pumped storage facilities but they depend on a unique set of geological features that are not commonplace and therefore cannot be not widely used. As for compressed gas storage the efficiency of such a process is going to be low since a significant amount of non-recoverable heat will be produced when the gas is compressed. (that is why they fit air compressors with intercoolers to get rid of the heat of compression so I doubt the process is going to be very energy efficient. That is why they are not used of course. If someone comes up with a way of compressing gas without it getting hot then patent it - you're on a winner.

So don't see any threat to fossil plant operators. If energy storage was as simple as it sounds nuclear would be operated at base load and there would be no need for any other plants since anything above base load would be made up with storage facilities. Of course it is not easy and such plants are not efficient (hydro pumped storage excepted) so it is easier and cheaper to build gas peaking plants. With the vast quantities of shale gas now available to the US and Canada I suspect this is going to be the trend for quite a few years to come. In fact shale gas is becoming available in many countries in the world so I suspect this will be a worldwide trend.

Suggest you buy shares in gas pipeline companies like TransCanada. Moving that gas around is going to be a very profitable.

And of course one can absolutely count on the politicians in California to get it completely wrong. These are the same folks that have brought the State of California to bankruptcy. If you place your faith in those people I have some swampland I'd like to sell you.

Malcolm

May, 31 2011

Malcolm Rawlingson says

Not even the Gubbernator could change the laws of physics although I am sure he thought it was as easy as it is in the movies. Most of the politicians in that State are living in never never land and are about to walk into the wall of reality when there is no money left to finance their nutty schemes and nobody will bail them out.

It's gonna hurt but hopefully will result in people in power who know what they are doing or maybe I am living in never never land.

Malcolm

May, 31 2011

bill payne says

Heat Rate may not apply to solar and wind generation of electricty in New Mexico.

Wednesday May 25, 2011 12:18

http://www.prosefights.org/pnmratehearing/pnmratehearing.htm#zelicoff

zalan8587@q.com

Hello Al,

Receipt of

SWITCHING ON FOR WEST SIDE/SANDOVAL - PNM powered up its new 40-acre switching station northwest of Rio Rancho on Tuesday that is designed to meet the rapidly growing needs of customers in northwest Albuquerque and southwest Sandoval County, including Rio Rancho. Peak demand there has grown 25 percent since 2007.

From: "ABQjournal Business Insider" bizinsider@abqpubco.com To: bpayne37@comcast.net Sent: Tuesday, May 24, 2011 4:00:03 PM Subject: ABQJournal Business Insider

coupled with PNM and Albuquerque Journal PR efforts to convince

Clothes dryer (the single largest energy waster in - ABQNews:Dr. Zelicoff

citizens to use less electricity raises the possibility of another questionable New Mexico business venture.

Are PNM electric customers funding the Rio Puerco switching station?

Perhaps new west-side new construction should be discontinued for possible future electric shortages reason?

Increased cost of electricity which powers pumps for San Juan-Chama Drinking Water Project is currently under consideration by the PRC.

CARE's Executive Director Ms Marita Noon did not acknowledge receipt of email requesting help to evaluate whether Heat Rate applies to solar generation of electricity or not.

New Mexico large-scale solar generation of electricity possible scam is at question.

Therefore, in view of your physics background, solar energy interests,

Alan Zelicoff, M.D. - Dr. Alan Zelicoff is an Albuquerque physicist and physician. He has written an outstanding online book called, "Saving Energy without Derision" and many editorials that champion energy efficiency and solar technology. He has also lobbied PNM to increase their incentives for clean energy.

and Albuquerque Journal energy-savings articles, I ask that you tell us your opinion and reasons whether

From: "Jake Rudisill" j.rudisill@meridianenergyusa.com To: bpayne37@comcast.net Sent: Tuesday, May 10, 2011 4:37:20 PM Subject: Heat Rate misconception

Mr. Payne,

The definition of heat rate is not the heat content of just the fossil fuel inputting the conversion system—it is the conversion efficiency of the system with whatever is the heat input.

Every plant’s heat rate can thus be calculated.

Geothermal energy has a very high heat rate because it utilizes a relatively low grade of heat source—at its best, 350F, 100 psi steam, and thus 1200 btu/lbm. In a modern gas-fired boiler, steam is at 1000F and 2500 psi, with a much higher heat content of around 1770 btu/lbm.

http://www.simetric.co.uk/si_supersteam.htm

http://www.energyvortex.com/energydictionary/heat_rate.html

heat rate

A measurement used in the energy industry to calculate how efficiently a generator uses heat energy. It is expressed as the number of BTUs of heat required to produce a kilowatt-hour of energy. Operators of generating facilities can make reasonably accurate estimates of the amount of heat energy a given quantity of any type of fuel, so when this is compared to the actual energy produced by the generator, the resulting figure tells how efficiently the generator converts that fuel into electrical energy.

http://www.engineeringtoolbox.com/power-plant-efficiency-d_960.html

Heat Rate (Energy Efficiency)

Overall thermal performance or energy efficiency for a power plant for a period can be defined as

fhr = H / E (1)

where

fhr = heat rate (Btu/kW, kJ/kW)

H = heat supplied to the power plant for a period (Btu, kJ)

E = energy output from the power plant in the period (kWh)

is correct or not?

In writing, of course.

Please ack if you receive this email.

Regards,

:-) bill

No ack.

We're going to try to check-out Rudisill's statements

May, 31 2011

Jack Ellis says

Mr. Singh,

I have analyzed a number of storage projects over the course of my career in this industry, which spans almost 40 years, and I can tell you why storage doesn't make sense. It's simply too expensive. Reports produced by EPRI and at least one of the national laboratories confirms this. A report that's due to be published in June under the sponsorship of the California Energy Commission's PIER program will outline the numerous technical challenges that still have to be overcome before even proven technologies like lead-acid batteries, Li-Ion batteries and CAES will be cost-effective enough to compete with alternatives. Investing modest amounts of R&D money in an attempt to surmount those challenges is fine. Investing large amounts of money and paying sizable subsidies for a large-scale build-out of storage when it is extremely cost-ineffective is a waste of consumer and taxpayer money. Technology is the problem right now, not production economies of scale.

Moreover, storage that is subsidized will crowd out off-peak electric vehicle charging. If storage flattens the existing (and relatively modest) day-night price differentials, customers will have no incentive to charge their electric vehicles when energy is cheaper, because those time periods will not exist. Instead, they'll plug in when they arrive home, and in doing so will cause the peak demand to shift and to grow. That's hardly an efficient outcome.

Storage advocates cite its numerous benefits, but they clearly do not understand power system operations and they also haven't considered the ways in which promoting storage are likely to adversely impact other policy priorities. Storage is a solution looking for a problem, except that advocates are more likely to create new problems than to solve existing ones.

Jack Ellis, Tahoe City, CA

June, 01 2011

Len Gould says

I must agree with many of the criticisms, electricity storage (other than pumped storage where conditions permit) is definitely not ready for prime time. Support of R&D at a relatively low level is fine, but first step is to exploit modern communications and computer processing to implement load-curve leveling by exposing all customers to market prices on short intervals. This will level the load curve far faster, cheaper and more economically efficiently.

Another smart initiative would be to promote thermal storage at solar thermal plants, but I notice the author carefully excluded that storage method from the proposals. ??

June, 03 2011

Jim Beyer says

Only area where the government could play a role would have been to clear out the patent mess that helped to kill large format NIMH batteries. I'm not convinced that overall NIMH isn't still better than Lithium Ion. But we may never know as an oil company (Texaco, then Chevron) sat on the technology until research interest dried up and died.

Large format NIMH cells built for the RAV4-EV are still running today, 10 years and 250,000 miles later.

June, 04 2011

Malcolm Rawlingson says

If there were any viable electricla energy storage schemes there would be one built alongside every nuclear plant in the world as the fit to nuclear is exact. Current nuclear plant designs are ideally suited to base load high capacity factor operation they cannot easily raise or lower power so adding storage to a nuclear plant would be able to provide peaking power in times of high demand and in a short time frame. What is the point of storing wind and solar electricity. The best storage is to make use of the energy stored in natural gas a few billion years ago. Gas plants can be started and loaded to full power in minutes so why bother with expensive storage schemes.

Malcolm

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