Redding Electric Utility (REU) is putting the freeze on summer-peak demand by deepening its investment in thermal energy storage.

The Redding City Council on June 19 approved a $5.8-million, five-year contract agreement between REU and distributed energy-storage provider Ice Energy for 3 MW of thermal energy storage, with the potential for extending the contract to $8.2 million over seven years for 4.2 MW of storage.

Under the contract, REU will install the company's "Ice Bear" energy-storage units at commercial building sites throughout Redding. Separate from the contract, but undoubtedly sweetening the deal, Ice Energy has also announced it plans to establish assembly operations in Redding.

Thermal energy storage for air conditioning has been around for decades. But it's only in the last few years that the technology is being deployed at utility scale in California, with municipal utilities taking the lead. Ice Energy earlier this year relocated its corporate headquarters to Glendale from Windsor, Colo., in part to better serve California's municipal utilities.

REU, a municipal utility serving about 42,000 customers with a peak load of 230 MW, will own and remotely operate the storage units -- switching them on and off as needed using a Web-based control system. The utility has installed nearly 100 Ice Bears at 40 commercial buildings; those sites have shaved their peak demand by 95 percent, according to the utility.

The storage units, which are integrated with rooftop air conditioners, freeze 450 gallons of water at night during off-peak hours when energy prices are lowest. During the day, when power consumption is highest, cooling for air conditioning can be provided by the ice in the storage unit, rather than by running an energy-intensive compressor in the air conditioner, for up to six hours.

Building owners who allow for the installation of the Ice Bear units on their rooftops reap a savings in the form of lower energy bills. Ice Energy pegs those savings at about $1,000 per year, give or take 25 percent, depending on the age of the air conditioner the unit is paired with.

The more noteworthy benefits of thermal energy storage are on the utility side of the meter, especially in places like Redding, where temperatures frequently exceed 100 degrees during the summer months.

REU officials find thermal energy storage attractive because they say it provides peak-load reduction at a cost that is comparable to that of purchased power-contract options, while also reducing the reserve requirements that REU needs for operating stability.

Patrick Keener, REU's energy services manager, offered an example of how, two weeks ago, there was a hot spell and the energy supply was more constrained than usual given the outage at the San Onofre Nuclear Generating Station.

Keener said that as market power prices reached $1.88/kWh at peak demand -- $1,880/MWh -- REU was tapping into the cooling power of the Ice Bears, which contain ice created at night when electricity prices are in the 7.5 to 8 cents/kWh range.

The technology "has been proven as a real good fit for Redding," observed Keener. "When we shift the peak to off hours we can keep our entire generation costs down."

In 2010, the Southern California Public Power Authority signed a $115-million deal with Ice Energy on behalf of its 12 member utilities for installation of 6,000 Ice Bear units with the goal of shifting 53 MW of peak demand to off-peak hours.

Through the SCPPA arrangement, Glendale Water & Power has installed 180 Ice Energy storage units totaling 1.5 MW at 28 city buildings and 58 local businesses (including 100 Ice Bear units at Walt Disney Co. facilities), and the utility is currently evaluating an additional 10 MW of energy-storage capacity.

Investor-owned utilities have been dabbling in thermal energy storage as part of their demand-response and energy-efficiency programs.

In 2009, the CPUC ordered the IOUs to study ways to expand "permanent load shifting" in their service territories. Permanent load shifting, or PLS, is enabled by a number of technologies and strategies including different types of thermal energy storage (ice, chilled water or molten salt), battery storage and changes in industrial processing practices.

A proceeding is under way at the CPUC to determine budgets for the IOUs' 2012-2014 demand-response programs, including PLS. A proposed decision issued in October allocates a combined IOU budget of $50 million for PLS -- far less than the $120 million the storage industry requested. A key factor in the ongoing debate is cost [A11-03-001].

A study of PLS commissioned by the IOUs found "the avoided cost benefits provided by PLS include electrical energy, losses, ancillary services, system (generation) capacity, transmission and distribution capacity, environmental costs, and avoided renewable energy purchases." The study also looked at the renewables integration benefits of load following and overgeneration that could be provided by PLS.

The life-cycle value of the avoided cost benefits of PLS technologies given a 15-year project life, the study determined, is in the range of $500/peak kW to $2,500/peak kW "depending on the number of hours the PLS system can shift load, and what hour the load shifting starts."

The cost of a utility-scale Ice Bear project starts at about $2,200/kW fully installed and decreases based on MW scale, according to Mike Hopkins, executive vice president of corporate development for Ice Energy.

The value of an Ice Bear unit, as expressed in kWs shifted from peak to off-peak, "is entirely determined by the age of the AC unit to which it is connected and the climate zone in which it is located," Hopkins said. He also emphasized that Ice Bears have an asset life of 25 years -- a decade more than the projects in the IOU study.

A 2011 report on energy storage commissioned by the CEC cited a number of benefits of thermal ice energy storage. It highlighted that large-scale deployment "defers investment in new peak-matching generation or lessens the need to run existing peaking generation."

"An advantage of this particular thermal storage system is the ability to deploy the units either tactically or strategically across the power grid," the report states. "With proper controls and response feedback, grid operators could use this type of energy storage as virtual spinning reserve, and the devices could bid into demand markets or participate in any number of internal and external load management programs."

While the investment of smaller utilities like REU represents a boon for energy-storage companies like Ice Energy, the real turning point will be when the IOUs invest in a big way.

As Hopkins stated, "That's when we'll know we've arrived."

- Leora Broydo Vestel

 

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