Energy Storage: Value is Clear, but who will Pay?

Energy Storage: Value is Clear, but Who Will Pay?

Aug 28 - Power Engineering

No one disputes that energy storage devices have great value to electricity production, delivery, and use, and that commercial technology options across the size spectrum are available today. The challenge to widespread adoption of these devices and systems is getting all the stakeholders who derive the value - transmission service providers, generating companies, regional transmission organizations, independent wind generators, distribution utilities, etc. - "on the same page" to pay for it. This was the sentiment, expressed in many different ways, from the 100 attendees and presenters at the Electricity Storage Association's annual meeting, May 19-20 in Columbus, Ohio. Another way of looking at it: The disaggregation of the electricity supply and delivery chain has not been kind to storage.

Michael Morris, CEO of meeting host American Electric Power Corp (AEP), offered an optimistic assessment when he kicked off the conference by noting that, in gas storage, utilities kept saying, we do what we do. Entrepreneurs then forced the business. Morris was referring to how traditional gas companies ignored bulk wholesale storage after the industry was deregulated in 1986, and focused on gas transmission and pipelining until entrepreneurs entered to provide the service. Morris also offered support for the future of distributed generation, which includes distributed storage, stating that it was analogous to wireless communications. He suggested that, from a business perspective, the storage proponents think in terms of "leasing the equipment to the customer."

Studies performed by the Tennessee Valley Authority (TVA) show that frequency regulation, one of several so-called ancillary services necessary for grid operations, is one of the highest value markets for storage, according to a presentation by TVA's Robert Taylor. "If utilities knew what frequency regulation costs, this market would emerge." Unfortunately, most of them don't. Taylor also noted that wind energy enhancement, along with frequency regulation, "drives the value." Storage allows owners to transform wind energy from intermittent supply to a shaped electricity product that has far higher value to a utility or grid operator. In other words, a non-fuel electricity generating resource can be packaged and sold into peak demand markets.

Perhaps the biggest news at the conference was delivered by Brad Williams, PacifiCorp, Portland, Ore. The flagship demonstration of one of the most important advanced battery technologies, vanadium redox, has been functioning in full power cycling operations since March. As a result, feeder deviations have improved by 2%, and the power factor improvement has reduced line losses by 40 kW. PacifiCorp installed the 250 kVA, 2000 kWh battery, supplied by VRB Power Systems, Vancouver, BC, Canada, on an 85-mile, 25-kV distribution feeder at a substation near Moab, Utah. Upgrading the substation would have taken three to five years and fuel-based solutions were out of the question because of the remote site. PacifiCorp, an electric-only utility, has had to deny new service on this line and respond to complaints from the Public Service Commission.

It is difficult in the storage community to ignore the head-to- head debate between battery and flywheel proponents, but a session headed up by Matthew Lazarewicz, Beacon Power Corp, Wilmington, Mass., did just that. John Sears, Active Power, Austin, Texas, boiled the debate down to the issue of life-cycle costs. In an uninterruptible power system (UPS), for example, on the customer side of the meter, the life cycle costs of a flywheel are, by his calculations, 1.6 times the installed cost. The figures for a flooded battery, or a valve regulated lead acid (VRLA) battery, are 2.5 and 2.8, respectively. "Long series (strings) of batteries are trouble," Sears commented, and battery monitoring is always an issue. He noted that the telecom industry, where batteries are popular, only use 24 cells in series while other applications might have hundreds of cells. Sears notes that flywheel systems integrated into UPS products should be differentiated from flywheels used as generic battery systems. Beacon and Active both supply flywheel storage systems.

Jerry Haahr, Atlantic (Iowa) Municipal Utilities, updated the attendees on the Iowa Stored Energy Project, a 200 MW compressed air energy storage project planned for central Iowa that would be the first to use an underground aquifer (instead of a cavern) as the storage medium and the first large-scale system in the U.S. coupled to a wind farm. Iowa has secured federal funds to more fully evaluate aquifer geology and complete conceptual engineering studies.

Steve Lefton, Aptech Engineering Services Inc, Sunnyvale, Calif., showed why storage is often considered an optimization strategy for other assets. Analysis by Aptech for a 9000 MW portfolio of generating assets, 65% coal and 35% gas, reveals that the range of savings can be from $520/kW-year of storage capacity. Higher coal capacity factors are possible when coupled with energy storage and allow coal generation to replace expensive gas generation during seasonal peak periods. The benefit is achieved with less than 10% of the capacity of the portfolio as storage. Fuel costs used in the evaluation are $1.10-$1.90/MMBtu for coal, and $4.50-$6.00/MMBtu for natural gas.

BY JASON MAKANSI, EXECUTIVE DIRECTOR, ENERGY STORAGE COUNCIL, PRESIDENT, PEARL STREET INC.