Comments have poured into the Federal Energy Regulatory Commission (FERC) in recent weeks on proposed rules that industry players say would boost energy storage in wholesale markets and open new opportunity for microgrids.

Issued in November, the FERC Notice of Proposed Rulemaking (NOPR) attempts to smooth the way for energy storage to transact in six regional wholesale markets that span much of the U.S. The proposal (RM-16-23) also gives distributed energy aggregators wholesale market inroads.

As is customary, FERC has called on stakeholders to comment on the ideas before it puts them into effect. More than 100 companies, utilities, organizations and state agencies have weighed in.

The interest isn’t surprising. Ted Ko, policy director at Stem, says the proposal has monumental significance.

“It is probably the most significant thing at the federal level ever in terms of the rules changing for our business model,” said Ko. Stem aggregates energy storage so that it can participate in energy markets. The company’s mission is to build and operate a digitally connected energy storage network.

Under the FERC proposal, such aggregations could at last get the chance to compete against the power plants that now dominate the wholesale markets.

“It is finally going to make the different wholesale markets around the country adjust their rules to accommodate what energy storage is capable of doing,” Ko said in a recent interview.

Existing rules were designed long before the rise of energy storage and microgrids. Hence, they accommodate the sale of energy, capacity and ancillary services by large, centralized generators, but not small distributed energy resources (DERs) and energy storage in wholesale markets.

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Australian firm 1414 Degrees, formerly Latent Heat Storage, has developed a molten silicon thermal energy storage system it says can store 500 KWhs of energy in a 70-centimeter cube.  

If true, this is approximately 36 times the capacity of Tesla’s 14KWh Powerwall 2 lithium ion home storage battery utilizing the same space.

A prototype of the system had its first successful run on September 30, 2016.

By way of cost comparison, 1414 can build a 10MWh storage device for about $700,000. The 714 Tesla Powerwall 2s needed to store the same amount of energy would cost approximately 10X that amount, 1414 Degrees said in a news release.

Kevin Moriarty, a former chairman and managing director of zinc and gold miner Terramin Australia, joined the company late last year to help get commercial operations off the ground.

He says 1414 Degrees needs $10 million to $20 million to forward its plans, and is involved in “investment discussions” with several large energy companies.

The technology involved is unique in that it stores electrical energy by using it to heat a block of pure silicon to melting point – 1414 degrees Celsius. It discharges through a heat-exchange device such as a Stirling engine or a turbine, which converts heat back to electrical energy.

If the device stands up to commercial testing it could substantially reduce the costs of storing energy from solar and wind farms.

Rather than just sell its storage devices, 1414 Degrees wants to enter into joint ventures with customers – or partners – and share in the benefits.

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Tesla, Inc.’s CEO Elon Musk has made his company’s mission to help the world to transition away from reliance on fossil fuels and toward the embrace of sustainable energy sources. Now a U.K. energy-storage startup called Powervault is now in competition with Tesla, Inc. to outfit homes with affordable backup battery power across the pond.

WHY IS SOLAR POWER AND STORAGE THE KEY TO THE WORLD’S ENERGY INDEPENDENCE?

Solar photovoltaic (PV) power generation is at the heart of a transformation that will revolutionize the world’s electricity systems, letting consumers produce power for their own needs and feed surplus energy into the grid. Solar power is becoming ubiquitous: from large-scale utilities to micro-grids; from billion-dollar corporate HQs to rural rooftops; and from urban sprawl areas to small islands and isolated communities. We see solar next to airports, along highways, in fields, powering road signs, even at local small businesses like breweries.

Energy storage is an essential link needed to make intermittent solar energy reliable. Batteries installed inside homes can store excess energy produced by panels during peak hours of operation. When combined with smart meters and digital technologies, batteries can help utilities regulate the grid by providing power reserves which can be tapped and transmitted on demand.

As prices have dropped, solar PV generation uptake by households and local communities has increased dramatically. In 2015, around 30% of solar PV capacity installed worldwide involved systems of of less than 100 kW. This is gradually changing the face of power system ownership. Two companies — U.K.’s Powervault and the U.S. Tesla — are helping consumers to make the shift to solar installations combined with battery energy storage and a chance at energy independence.

POWERVAULT

Founded in 2012 with money from the U.K. government and private investors, Powervault has made a mission of reducing the cost of batteries in order to make them affordable to more homes. Powervault stores electricity in a home using either Lithium-ion Phosphate cells or Lead Acid batteries.

Powervault’s Lead Acid version is for customers who want a product with a low up-front cost and the prospect of upgrading to Lithium-ion technology when their Lead Acid batteries reach the end of their useful life in three to seven years. With Lithium-ion technology forecast to fall dramatically in cost over the next five years, customers can benefit from a low-cost Powervault using Lead Acid batteries now, then replace its batteries later. A Powervault lead battery that can store 3 kWh of power sells for 2,500 pounds ($3,117) a unit, or, about $1,039 for each kWh of electricity stored.  That price is about 12 percent cheaper than the $1,175/kWh average price in the industry, according to Bloomberg New Energy Finance.

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Vermont Business Magazine South Burlington-based Dynapower, the global leader in energy storage inverters, and Intertek, a leading provider of quality solutions to industries worldwide, have jointly announced that Dynapower’s MPS-250(link is external) is the first storage-only energy inverter to be confirmed by Intertek to meet the UL 1741 SA draft requirements for a “smart” inverter.

Compliance with this standard ensures that Dynapower’s MPS-250 smart inverter is California Rule 21 and Hawaii Rule 14H compliant through development of advanced inverter features. This was achieved by Dynapower through the use of Intertek’s SATELLITE™ Data Acceptance Program.

The first energy storage inverter to be given the distinction of being UL 1741 SA listed. Dynapower Company photo.

“Dynapower has always been on the forefront of energy storage inverter technology and we are extremely pleased and proud to receive confirmation from Intertek that our MPS-250 inverter meets the UL 1741 SA draft requirements,” said Chip Palombini, sales manager of the energy storage group at Dynapower. “Working through the Intertek SATELLITE program enabled Dynapower to have full control over the timeline of the compliance process.”

“Intertek is proud to work with global leaders like Dynapower to advance the energy industry through smart inverter functionality, enabling PV integration and improving grid resiliency, crucial steps toward smart grids and smart cities,” said Sunny Rai, Vice President of Renewable Energy at Intertek. “Dynapower’s storage-only energy inverters are the first confirmed by Intertek to meet the UL 1741 SA draft requirements, and they achieved this through Intertek’s SATELLITE program, which allows manufacturers to run more efficient compliance programs.”

In addition to the smart inverter features required by the new standard, Dynapower also incorporated Dynamic Transfer as a standard feature into the Generation 2 MPS-250. Dynamic Transfer enables a “backup power” mode of operation for energy storage systems.

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A research team at Oregon State University is very excited over their new energy storage system, and not just because it is the world’s first hydronium-ion battery. They’re also excited because the new device provides a way forward to the next generation of grid scale stationary batteries that will enable the US grid to accommodate more solar and wind power.

A hydronium ion (H3O+) is what happens when you add a proton to a water molecule. They have been the object of much study these days, partly because of their emerging importance in battery systems.

Here’s an explainer from our friends over at Quirky Science:

…the water molecule allows acids to ionize. This is possible because of the formation of the hydronium ion. This is of immense importance not only to the physical properties of the universe, but to life itself.

Okay so that’s a little over the top but QS provides a hint why energy storage researchers are so interested in hydronium:

While the hydronium ion contains the hydrogen ion in its structure, the hydronium ion itself is surrounded by yet more water molecules. This serves to spread the positive charge further, stabilizing the system to a greater extent. The number of molecules associated with a given hydronium ion can range from perhaps six to many more than a dozen.

First Energy Storage Device With Hydronium Ions

In the new energy storage breakthrough, the OSU team created a rechargeable battery with hydronium ions as the charge carriers.

The break with conventional energy storage devices is a big one. Until now, positively charged ions that are used in batteries have belonged to the metals family.

The electrode which stores the hydronium ions is made of PTCDA, short for perylenetetracarboxylic dianhydridem. That sounds exotic but it’s basically just a solid crystalline material with a lattice structure, in the class of organics (think: plastic, not metal).

OSU explains why PTCDA was selected for the new battery:

…PTCDA material has a lot of internal space between its molecule constituents so it provides an opportunity for storing big ions and good capacity.

The hydronium ions also migrate through the electrode structure with comparatively low “friction,” which translates to high power.

Here’s chemist Xiulei Ji of OSU enthusing over the potentials:

“This may provide a paradigm-shifting opportunity for more sustainable batteries…It doesn’t use lithium or sodium or potassium to carry the charge, and just uses acid as the electrolyte. There’s a huge natural abundance of acid so it’s highly renewable and sustainable.”

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Parker Hannifin (NYSE: PH), an American energy company, recently announced the completion of the Cochrane energy storage facility, a project undertaken with AES Gener.  The partnership with the Chilean energy producer and supplier has resulted in a large plant located Mejillones, Antofagasta, Chile. The facility will provide spinning reserve and grid reliability services to Northern Chile, part of the Norte Grande Interconnected System. This system in particular primarily provides energy to the country’s mining operations, which take place in the north. The facility can provide 20 megawatts of energy storage.

AES is also partnered with Parker Hannifin in the building of an energy storage facility in San Diego, California. The contract with San Diego Gas & Electric includes the installation and commission of two storage arrays, which will help energy reliability and renewable energy grid integration. 75 megawatts of flexible storage capability will be added to the grid when completed. One of the arrays included in this project is in Escondido, supplying 30 MW of the power. When completed, this array will be the largest battery-based storage project in the United States.

The storage containers for the Chilean Cochrane project were commissioned and manufactured in Charlotte, North Carolina. It consisted of ten 2.2 MVA outdoor 890GT-B PCS and 2-MW containers. These units are essentially large batteries, and the storage allows for better integration of both traditional and renewable energy. Renewable energy sources provide high-output fluctuation, making it hard to match supply and demand. This is especially true of solar and wind energy. Storage facilities such as these allow for better management of the difference between forecasted and actual energy usage and production, which increase price efficiency. Furthermore, some analysts have gone as far as to suggest that renewable energy sources will not be able to effectively penetrate the energy market without extensive battery and storage systems in place.

Jim Hoelscher, General Manager of the Energy Grid Tie Division at Parker Hannifin, had the following to say concerning the project’s completion: “We have a proven record of accomplishment in engineering and commissioning advanced battery energy storage systems around the world, and we look forward to meeting global demand for clean energy solutions for many years to come. Our power conversion systems are highly scalable and can be customized for many applications, making them ideal for use by AES, our longtime partner.” This scalability is of particular importance as the rise of renewable energy will require more energy storage units across the world.

The Cochrane project added 20 megawatts of storage capability to Chile’s grid. The US as a whole has over 21.6 gigawatts of energy storage, and the world as a whole has 149.91 gigawatts (as of June 2016). Between 2013 and 2016, storage facilities in America increased 105%. However, the US falls behind in terms of how much energy is cycled through these storage facilities; only 2.5% of delivered electric power comes from a storage facility. This compares to 10% in Europe, and 15% in Asia. As America and other industrialized countries transition from traditional to renewable energy, the need for storage facilities will certainly increase.

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This excellent infographic on global megacities from Visual Capitalist caught my eye because of what we might be able to extrapolate about energy/transport issues. The infographic notes that while in 1950 30% of the global population lived in cities, by 2050 70% will live in urban areas, many of which will be megacities. I think this dynamic has the potential to significantly impact future fuel demand because, as I’ve pointed out before, cities are already struggling (and will continue to) with traffic and transport-related air pollution.

This is an underlying force propelling transport policy solutions such as improved/expanded public transport, zero emission vehicles (ZEVs) and outright car bans (or limitations). I believe that’s going to continue. And oddly enough, neither the recent BP and ExxonMobil energy outlook appear to account for these potential impacts. The focus from some other stakeholders has been on the disruptive force ZEVs (particularly battery EVs (BEVs)) present to future oil demand. But I wonder if the real attention should be paid to the potential power shift from national/provincial governments to the cities — especially as it pertains to future energy/transport policies.

It will be cities, for example, that institute car bans, expand and improve infrastructure for both public transport and ZEVs, autonomous, shared driving, and redesigning cities to promote walking and cycling. Some advocates are encouraging and planning for this power shift, and recently, a Global Parliament of Mayors was created to “leverage the collective political power of cities.” It may be cities that end up carrying much of the water to actually implement the Paris Agreement. And consider: McKinsey has estimated that the 600 top urban centers contribute whopping 60% to the world’s total GDP today.

The infographic notes seven types of global cities, with these classifications and data coming from the Brookings Institute.

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Energy storage deployments in emerging markets could grow 40% annually over the next five years, from 2GW today to 80GW, but barriers include the lack of access to low-cost capital, a new report from the International Finance Corporation has found.  

The IFC, which finances and provides advice for private sector ventures and projects in developing countries, has produced Energy storage trends and opportunities in emerging markets. Its authors, analysts Alex Eller and Dexter Gauntlett of Navigant Research, took an exhaustive look at everything from physical grid infrastructure to market design and regulatory structures and the different uses and applications for energy storage.

At present, some 1.2 billion people in the world lack access to electricity. Eller and Gauntlett quote the United Nations Sustainable Energy for All Initiative (SE4All) that US$45 billion in investment through 2030 would be required to provide universal access to “modern electric power”.

Energy storage is a vital tool for enabling the increased use of renewable energy and other distributed resources and in providing resilience to power supplies, the report says, but the development of energy storage systems (ESS) has been confined to a small number of select markets.

“Despite rapidly falling costs, ESSs remain expensive and the significant upfront investment required is difficult to overcome without government support and/or low-cost financing,” the authors write.

Eastern Europe and Latin American countries showing promise

Much of the report is an overview assessment of the global picture including the factors which might influence the speed and scale of adoption of energy storage in different regions. Worldwide the report’s authors anticipate the addition of 378.1GW of solar and wind generation capacity over the next five years, with the added variability forming a powerful driver for utility-scale storage in particular. The reduction of carbon emissions mandated by the multilateral Paris Agreement could also mean inertia on the grid is provided increasingly by large-scale storage systems.

While existing grid infrastructure could lean on energy storage to provide a growing number of services, remote microgrids could drastically reduce their dependence on diesel fuel to meet energy demand, the report highlights. Cost comparisons show both utility-scale and distributed lithium ion battery storage systems competing favourably with diesel in terms of annual fuel savings, with an installed cost of US$2,062 per kilowatt and US$2,150.3 per kilowatt respectively and saving US$2,223.6 per kilowatt in fuel costs in either case.

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A US-based coalition featuring companies such as Apple, Microsoft, Amazon and Tesla as members has applauded the efforts of the Federal Energy Regulatory Commission (FERC) to open-up US wholesale electricity markets to energy storage and demand response initiatives.

The Advanced Energy Economy (AEE) seeks to impact policy decisions to influence energy concerns. Its members, which also includes General Electric, Veolia, Siemens and a host of renewable energy companies have penned a joint statement to the FERC over the integration of energy storage into selected US electricity markets.

The FERC issued a Notice of Proposed Rulemaking (NOPR) for the energy storage market in November last year, after external campaigning form organisations such as AEE. Under the rulemaking, companies and organisations were invited to submit comments about expanding the market, which were due last week.

“We are entering a new era where advanced energy technologies can compete based on lower costs and increased reliability but are not allowed to do so because of market rules that were designed with incumbent technologies in mind,” AEE’s vice president of federal affairs Arvin Ganesan said.

“This rulemaking can remove some of the market barriers these technologies face, allowing advanced energy businesses to provide reliable energy at lower cost.”

The FERC established the parameters for what types of organisations and what types of energy and infrastructure can connect to power grids in the US, and how the technologies will be subsidised. The latest NOPR has agreed that battery storage can support the grid and ruled that the technology should be viable to receive income from transmissions, making them more attractive to investors and private sector companies.

The new amendments will likely target markets overseen by US Regional Transmission Organisations (RTOs) and Independent System Operators (ISOs). These third-party operators were put in place to ensure that no bias or preference is given to certain generators, and cover two-thirds of the US’ economic activity.

The NOPR will now seek to remove barriers for energy storage and demand response in these markets and RTOs and ISOs will likely be required to revamp tariffs. However, any amendments will have to wait until the FERC is at full capacity. Currently, the Commission is waiting on the appointment of three new commissioners to fill empty seats, and the vetting process could take at least two months.

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Solar Leaderboard (solarleaderboard.com) published its January 2017 Solar Index report and initial estimates indicate that installation activity declined by approximately 40% year over year. The Solar Index tracks permits issued in select areas and is meant to be an indicator for activity across the state.

The report is available for download here.  There are a number of factors that are likely causing the decline including record precipitation, high solar penetration and net metering changes.  We believe that weather has had the most significant impact.

Weather Impact

California experienced strong rain in January, which likely had a major impact on the decline.  Most areas of California experienced rain levels 300% higher than average for the month of January, as reported by the National Weather Service of California.  January is already a slow month for solar and the rain constrained sales and installation activities.

High Solar Penetration

Certain areas in California have high solar penetration and early adoption may have hit a saturation point.  Our research indicates that residential solar penetration in CA reached 7.2% in mid 2016 with some areas reaching as high as 20%, as indicated in the map below and the list of the top 20 CA zip codes with the highest solar penetration.

Net Metering Changes

Net metering 2.0 was introduced in much of California in 2016 with SDG&E switching in mid-2016 and PG&E in December 2016.  SCE is expected to meet the cap by mid-2017.  The changes include TOU rates, interconnection fees and other charges.  Although the financial impact of the changes is relatively minor, it may cause pause for some potential solar adopters.

2017 Outlook

The long-term outlook for rooftop solar is positive, particularly as prices have come down and February and March activity will help validate that the January slowdown was primarily weather related.  Subscribe to our Weekly Solar Index to receive an update on February activity the first week of March.

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