Ken Silverstein EnergyBiz Insider Editor-in-Chief

Energy storage gives utilities, power marketers and large commercial or industrial customers flexibility to how they respond to power shortages, price spikes or brownouts. Utilities, for instance, must precisely measure their load generation with the demands of their end users -- a difficult task given that energy usage fluctuates, particularly at industrial sites that routinely implement new processes. Without adequate generation capacity, all wholesale buyers of electricity would be subject to the whims of the market.

Utilities sometimes have excess generation and distribution services that serve to back-up the system in case of a failure, or during periods of peak demand. The reality is that those assets are often underutilized because they may only run at capacity for a fraction of the day -- or year. A storage device could enhance the performance, for example, by putting less strain on the system. In other words, users can power-up with the "battery" instead of directly from the grid that might have its resources tapped at a given time.

"The successful development and delivery of this high-performance ... energy storage system is the realization of a vision the Department of Energy shares with the California Energy Commission and the ISO," says Imre Gyuk, head of energy storage programs at the U.S. Department of Energy. He spoke during a press event in which Massachusetts-based Beacon demonstrated its technology. "I am most pleased with the results, and I look forward to being able to test the larger, higher-power (technology) that Beacon has begun working on."

One of the most challenging aspects of today's electricity grid is that the amount of power generated and the amount consumed must be in exact balance at all times. When imbalances occur, the frequency of electricity (60 hertz in the U.S.) that end users require will not be maintained, which adversely affects grid stability. The constant balancing of power demand and production to maintain a stable frequency is called frequency regulation.

Beacon is working with authorities in California and New York to install energy storage devices. Most such devices, which run on batteries, might be the size of a house and are linked to the transmission grid where they siphon off power and store it. That process can occur at night when the cost of electricity is lowest and it can be dispatched during the day when prices rise. The battery will remain fully charged until the power is needed. That is usually when demand and prices are higher -- a situation that may allow for arbitrage, or for owners of such batteries to sell power they have procured inexpensively to those who need it during peak periods.

The market potential, according to the Energy Department, is $3 billion to $5 billion a year. Besides utilities, businesses might also benefit. They could hook up the batteries at night and use them during the day when demand on utilities is highest.

Some Questions

To be sure, the technologies to allow for energy storage are in their infancies. And, even if they can be shown to work, there are still downsides to using them. At this point, it is difficult to gauge just how efficient such devices are as well as the potential environmental affects. It's a technology, for example, that gets its energy supply from a generation source and must therefore be used in combination with either central or distributed generation resources. At the same time, batteries are now relatively expensive and a limited life expectancy.

But VRB Power out of Vancouver says that energy storage batteries are becoming increasingly efficient and cost effective solutions to help utilities balance the load on their transmission wires. They are furthermore environmentally friendly techniques, noting that it is working with PacifiCorp in sensitive areas of a national park in Utah.

There, the battery is hooked to the main grid and is able to provide power for eight hours. PacifiCorp implemented the technology to relieve constraints in the Moab area and thought energy storage a more compelling method than building a new substation at this point in time. The cost of its investment can be passed through to ratepayers.

"Through the successful implementation of this system, the true potential of applying large-scale storage in distribution systems is being demonstrated," says Tim Hennessy, CEO of VRB. "The technology is no longer theory but realizable in a commercial and repeatable form."

PacifiCorp, for example, looked at traditional alternatives that involved the building of a new substation. It thought, however, that it could achieve better returns by investing in a "non-traditional" solution. It therefore looked at distributed generation and energy storage. It decided against the former because access to a low-cost fuel source proved to be an impediment at the planned location.

An energy storage device, by contrast, could be connected to the grid and then juiced up during non-peak hours. At the same time, the technology is expected to relieve the congestion and in doing so, extend the life of the current utility infrastructure. The battery is only temporary and a substation will eventually get built. But, PacifiCorp's installation is mobile and can be transported to another area where it might be needed.

Utilities and industrials alike can ill-afford the risks of potential future blackouts. Energy storage devices are a promising technology on the horizon, albeit there remain some unanswered questions as to their efficiencies and effectiveness. But additional research coupled by advances in the product would create a societal benefit that could mitigate energy shortages and wide price swings.

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