Energy Efficiency Professionals Community

With demand on the rise and fossil fuels on the outs, utilities are turning to energy efficiency to help them bridge the gap. This is the digital spot to trade ideas and lessons learned in this brave new electric world. This group is part of the Energy Management Network.

10,873 Subscribers

Article Post

Charging Up – Battery Storage Becomes Real

Batteries.  We think about them all the time.  How compulsive are we about keeping our smart-phone charged?  And while utilities have been thinking about batteries for a while, it’s only recently that they’ve become a little compulsive too.   Why?  Because suddenly batteries, really big and powerful batteries, are dropping in price at the same time that the deployment of intermittent renewable energy is increasing and the need to bolster grid stability is becoming ever more critical.  For years, battery storage was more hypothetical than real, limited by high cost and technical problems to small, experimental applications.  All that is changing very quickly.

The technology, driven in part by environmental concerns and the revving up of electric cars, is driving battery prices lower, especially for lithium-ion batteries, although advances in sodium chemistries, flow technologies and lead-acid batteries are contributing to the downward spiral in prices.  The second driving force is the exponentially expanding installation of renewable energy systems.  In 2016, battery storage deployments grew to 335 MWh, double the installed capacity in 2015; the deployment in the final quarter of 2016 gives an idea of the rate at which battery power is advancing, with 230 MWh coming online in that quarter, more than twice the sum of the previous 12 quarters combined, according to GTM Research.

That upswing in deployment marked another key turning point for battery storage.  In previous years, most of the grid-connected battery storage was used for short-term applications, including energy arbitrage and brief generation capacity deferral.  The burst of installation in the last quarter of 2016, however, included large, four-hour systems, a trend that is likely to persist.

One of the worst environmental disasters in American history, the 2015 catastrophic methane gas leak at the gigantic Aliso Canyon gas storage facility in California, was responsible for about 88 percent of the installed capacity in the fourth quarter of 2016.  That leak threatened to drain the region’s natural-gas supply and raised the likelihood of shortages that could disrupt the region’s power deliveries, with fear of rolling blackouts across the nation’s second largest metropolitan area, by the summer of 2017.  The California Public Utilities Commission decided in May, 2016, that rather than trying to establish new gas supplies, it would expedite approval of about 100 MW of battery storage for Southern California Edison and San Diego Gas & Electric, and by the end of February, 2017, seven of eight projects had been completed; only 5 MW of the 104.5 MW that were contracted had yet to come online.  That’s an incredibly quick response to a serious threat.  GTM estimates that as much as 1.8 GW of new energy storage, mostly from lithium-ion batteries, will come online by 2021.

These energy reserves can be quickly dispatched to address power outages, shave peak demand charges and generally enhance grid reliability.  It is also essential for the anticipated surge in renewable energy.  Battery storage can help utilities delay or even eliminate the need for large expenditures for peaker plants which, especially in light of the uncertainty utilities now face, can be very economically risky.  And because battery storage can be quickly deployed and is modular, it is far more flexible than traditional plants.

By avoiding construction of very expensive new generation facilities, which have to be planned far ahead of actual need, battery storage takes a great deal of pressure off of utilities, especially in markets that are expected to be flat or falling.  They can provide far cheaper alternatives to address the need to maintain reliability, smooth frequency regulation and meet the demands of load shifting.

At the same time that battery storage is becoming economically attractive for utilities, it poses a real threat to them behind the meter.  As small, inexpensive battery backup becomes available for individual homes and businesses, solar and wind generation becomes ever more practical.  Utilities have traditionally responded to these intermittent sources by designing rates that reduce the incentive to install them by moving to time-of-use pricing structures and trying to reduce their payments for electricity exported to the grid.  As storage becomes cheaper, customers will shift from exporting excess power to simply using that power themselves.  When they begin generating as much as 80- to 90 percent of the energy they need, customers will become ever more reluctant to pay meaningful fees just to remain connected to the grid for its reliability.  This could result in ever increasing grid defections.

Battery storage is just beginning to disrupt the traditional business model of the electric utility.  As prices continue to fall, as battery storage becomes ever more flexible, as it penetrates the space behind the meter, utilities will be forced to further adjust that traditional model.  Just how individual utilities embrace this technology, which promises to cut costs at the same time it threatens the historic model of highly regulated rates, could determine which utilities remain viable and which will either shrink or disappear.

Explore Related Topics:

Discussions

No discussions yet. Start a discussion below.