Utility Energy Storage Pragmatism

I guess it is time to revisit this topic again.  The advent of utility storage is a long postponed value proposition that was become more pressing because of new variable energy resources.

This item makes it clear that we are both moving ahead and also quite confused over the best ways to actually proceed.  We really do want to pump water efficiently uphill.  While we are at it, build two reservoirs in order to do it efficiently.  It might all work.

All the present objections are going to be overridden by a massive leap in power demand that is emerging over the next several years.  Solar and Wind do need utility storage while base line geothermal and nuclear will need storage to access the peak markets.

Distributed power generation will also need backup, but may be able to rely on the advent of the electric car which is after all a mobile battery used for a couple of hours per day.

Possibly most of our storage can be solved simply by insuring all electric cars can plug in at every parking spot available.

Utility-Scale Energy Storage According to Maurice Gunderson of CMEA, et al.

ERIC WESOFF: AUGUST 20, 2010

http://www.greentechmedia.com/articles/read/vc-cmeas-gunderson-on-utility-scale-storage

“Utility-scale energy storage is one of the game changers,”  according to veteran investor and energy thought leader Gunderson.

Maurice Gunderson, senior partner at CMEA Capital, believes that grid-scale storage is a "game changer" in the alternative energy battle.  Gunderson has been working in the energy industry for more than 30 years and co-founded the first greentech investing firm, nth Power.

CMEA Capital’s portfolio companies include A123 (lithium-ion batteries), Contour Energy (advanced battery technologies), Solaria (solar panels) and Codexis (biofuels).

We spoke to Mr. Gunderson about technology, policy and the investment landscape for energy storage.

"Large-scale energy storage can turn renewables into dispatchables"

Gunderson believes that grid-scale storage is the next frontier in renewable energy investments.  CMEA does not yet have an investment in this sector, but Gunderson says, "we are looking at three of them now."  Expect to see an announcement in the coming months.

Gunderson continues, "At CMEA, we're looking at novel chemistries -- they won't be lithium-ion or sodium-sulfur (NaS) and they will be suitable for utility applications."

"The holy grail is very large-scale batteries, but they have to work at grid lifetimes and duty cycles."  Unfortunately, at present, "There are no batteries that last decades."

As for flow batteries, Gunderson said that there are fuzzy distinctions separating fuel cells, flow batteries and batteries.  There is plenty of research on various materials for flow batteries. People get them to work, they look promising, but after a few years they get a show-stopper problem. That issue eventually gets solved, but then new problems arise.  "We've never gotten to the point where they're reliable enough for utility use,"  he said, adding, "There are a lot of people working on this and I think we're going to get there in the 5-to-10-year time frame."

"I've been looking for this for thirty years"

Gunderson continues, "There are lots of folks working on energy storage ideas, but most of them are half-baked. Most storage on the market is not really market-ready -- the economics are unknown. It causes increased costs and uncertainties."

He adds, "If I were a wind power developer and had a reliable battery that I could install behind the fence, it might double the price, but I can sell the power when people want it and triple my revenue by selling at peak."

We already have as much wind as we can use in California, yet all of the capital budget is going towards wind and solar and "we can't use it."  He adds, "Interestingly, in California, we have a very high quality Public Utility Commission and Energy Commission, but they often are not listened to."

Other Storage Technologies

Gunderson cited other energy storage schemes: ice storage, for instance.  Ice is cheap, it works, and there are no environmental hazards.  "Imagine a convention center: you make the ice at night and melt it for cooling during the day."  A convention center that has little activity at night would be a good fit for this type of solution versus a building like a hospital that has energy loads both day and night.

Sodium sulfur (NaS) is "a bit of a headache because of high temperature and could be replaced by new battery concepts."

As for compressed air energy storage (CAES) and pumped hydro, Gunderson had this to say: "If nature gives you a canyon, you should use it [for pumped hydro]. If you happen to have that, you're lucky: you can put in as much wind as you can finance.  When the wind blows, you pump the water uphill."  Unfortunately, the ability to do that varies widely, and in California, "we're taking down dams not putting them up."

Energy storage is a "baby industry" according to Gunderson, and there are a number of potential business models, such as Megawatt Storage Farms' Independent Storage Provider concept, as well as "inside the fence" applications.

Gunderson is an optimist, a necessary quality for a venture investor.  He concluded, "We can go to Mars, we can go the the Moon, we can do this.  All we have to do is focus."

Energy Storage Policy

In late July, the U.S. Senate introduced new legislation, known as the Storage 2010 Act, that will provide up to $1.5 billion in tax credits to storage energy projects connected to the U.S. electric grid. The initiative is intended to support intermittent energy sources, including wind and solar power, which can moderate demands during peak hours and facilitate a “smart grid,” using the power when it’s actually needed.  This might provide a boost for the energy storage industry, broadening the potential for better returns and increased investments in this area.

AB 2514 is a bill currently in the California legislative process that has been, in part, suggested by Ed Cazalet of Megawatt Storage Farms and recently championed by California gubernatorial candidate Jerry Brown. It has gone through some changes as it has made its way through the legislative sausage maker but nevertheless, the measure remains a mandate for energy storage.  If you are a Californian and believe that storage needs to be part of our renewable energy future, you might want to look into the bill and call your state senator.

Differing Viewpoints on Storage

Amory Lovins of the Rocky Mountain Institute challenges the concept of baseload power and the roles that renewables can play.

We have a commenter on Greentech Media's comment boards who, when I write about storage and dispatchability, seldom fails to to inform me of the following: "Large-scale energy storage co-located with VERs [Variable Energy Resources] is unlikely ever to be commonplace.  It is irrational and based on a fundamental misunderstanding of variability and grid integration.  For a good summary, I recommend this recent report out of NREL (this means you, Eric Wesoff):

Here's the URL for the NREL PDF:  http://www.nrel.gov/docs/fy10osti/47187.pdf

Here are a few excerpts from the cited report's conclusions that the commenter might have in mind.  The report's conclusions don't seem to match the commenter's vehemence:

·                        The increasing role of variable renewable sources (such as wind and solar) in the grid has prompted concerns about grid reliability and raised the question of how much these resources can contribute before enabling technologies such as energy storage are needed. 

·                        Fundamentally, this question is overly simplistic. In reality, the question is an economic issue: It involves the integration costs of variable generation and the amount of various storage or other enabling technologies that are economically viable in a future with high penetrations of VG. To date, integration studies of wind to about 20% on an energy basis have found that the grid can accommodate a substantial increase in VG [variable generation] without the need for energy storage, but it will require changes in operational practices, such as sharing of generation resources and loads over larger areas [emphasis is mine].

·                        Beyond this level, the impacts and costs are less clear, but 30% or more appears feasible with the introduction of “low-cost” flexibility options such as greater use of demand response. However, these studies have not necessarily focused on storage and generally do not attempt to determine the optimal system (including the amount of storage) that provides the lowest cost of energy.  There are technical and economic limits to how much of a system’s energy can be provided by VG without enabling technologies based on at least two factors: coincidence of VG supply and demand and the ability to reduce output from conventional generators.

·                        At extremely high penetration of VG, these factors may cause excessive (and costly) curtailment, which will require methods to increase the useful contribution of VG However, the concern regarding how much VG can be used before storage is the most economic option for further integration currently has no simple answer, primarily because the availability and cost of grid flexibility options are not well understood and vary by region.

·                        It is clear that high penetration of variable generation increases the need for all flexibility options including storage [emphasis mine], and it also creates market opportunities for these technologies.

·                        Historically, storage has been difficult to sell into the market, not only due to high costs, but also because of the array of services it provides and the challenges it has in quantifying the value of these services – particularly the operational benefits such as ancillary services. The challenge of simulating energy storage in the grid, estimating its total value, and actually recovering those value streams continues to be a major barrier. 

·                        VG complicates this issue because variability adds additional analysis challenges. The ability to simulate the cost impacts of VG and benefits of storage is still limited by the methods and data sets available. It is understood that VG increases the need for flexible generation and operating reserves, which can be met by energy storage. However, the value of energy storage is best captured when selling to the entire grid, instead of any single source.  Evaluating the role of storage with VG sources requires continued analysis, improved data, and new techniques to evaluate the operation of a more dynamic and intelligent grid of the future [again, emphasis mine].

The report doesn't say that storage is unlikely; rather, it is complicated and has to be carefully assessed, economically, technologically and from a regulatory standpoint.  On that we agree.

Despite objections from our commenter, utilities and power providers are incorporating storage into the grid.  Note that Tres Amigas chose Xtreme Power to furnish energy storage and power management at the Tres Amigas SuperStation, a PE-backed transmission facility linking the Eastern, Western and Texas Interconnections.  The storage is being implemented, in part, to integrate variable generation.

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