Every year, committees in the U.S. Congress get together to give an additional lease on life to tax breaks through special legislation, a process known as “tax extenders”. And for the past few weeks, rumors have been circulating that this year’s tax extenders bill could include an extension of the U.S. Investment Tax Credit (ITC) to energy storage, as has been proposed in separate legislation.

This now looks like wishful thinking, as no such provision is in the tax extenders mark put forth by the House Ways and Means Committee. The latest version includes a one-year extension of the Production Tax Credit (PTC) for wind and the renewal of credits for what American Council on Renewable Energy (ACORE) describes as “orphan” renewable energy technologies, but no mention of energy storage.

“The House Ways and Means Committee extenders mark is a modest start to a really important near-term opportunity,” states ACORE CEO Greg Wetstone. “While an extra year of the wind PTC and renewal of the orphan renewable technologies are to be welcomed, this year’s extenders process should not conclude without the inclusion of a tax credit for energy storage and other critical measures to help combat climate change and decarbonize the grid.”

Energy storage and the ITC

To be clear, energy storage projects can currently claim the ITC – but only if they can show that they are charged with solar, and not conventional sources. To make matters more complicated, there are different rules for residential and commercial systems. As explained in a fact sheet by Solar Energy Industries Association (SEIA):

Current IRS guidance regarding eligibility of storage to receive the federal solar ITC is unclear. The IRS has concluded that storage systems owned by homeowners must derive 100% of their power from an onsite solar array to qualify for the ITC. The IRS previously said storage systems owned by businesses apply a different rule, as those systems would be eligible for the ITC only if at least 75% of the charging of the storage unit is provided through solar generation.

SEIA explains that this is not a good solution for energy storage, or the grid. “Requiring the owner of storage technologies to account for the source of their energy imposes an unreasonable burden and undermines certainty,” argues SEIA. “It also expressly prohibits most of the grid services a solar plus storage system can provide to grid operators to help with resiliency.”

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Siemens Gamesa has launched an innovative volcanic rock energy storage site.

The firm’s new pilot facility in Hamburg-Altenwerder, Germany, can store 130MWh of energy for up to one week.

It works by using excess electricity to power a resistance heater and a blower, which are used to heat around 1,000 tonnes of volcanic rock to 750°C.

The heat storage facility then converts heat back into energy using a steam turbine, making it possible to store large quantities of energy cost-effectively.

Siemens Gamesa says the project has a storage capacity target in the GWh range, which would be equivalent to the daily electricity consumption of around 50,000 households.

It notes the storage capacity of the system remains constant throughout the charging cycles, improving the reliability and durability of the system.

Markus Tacke, CEO of Siemens Gamesa Renewable Energy, said: “Our technology makes it possible to store electricity for many thousands of households at low cost.

“We are thus presenting an elementary building block for the further expansion of renewable energy and the success of the energy transition.”

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Solar Power World recently spoke with Zachary Cox, VP of operations at U.S. Battery Manufacturing, about the current state of the U.S. energy storage market. The deep-cycle, lead-acid battery manufacturer attributes the recent increase in energy storage system deployments to improved battery technology and utility flexibility, but Cox noted there’s still a long way to go to figure before cost-effective, long-duration storage is more commonplace.

Solar Power World recently spoke with Zachary Cox, VP of operations at U.S. Battery Manufacturing, about the current state of the U.S. energy storage market. The deep-cycle, lead-acid battery manufacturer attributes the recent increase in energy storage system deployments to improved battery technology and utility flexibility, but Cox noted there’s still a long way to go to figure before cost-effective, long-duration storage is more commonplace.

SPW: What do you think is the reasoning behind batteries finally finding some traction in the United States?

Cox: Improvements in battery technology have fueled the increased adoption of energy storage over the past decade or so. More recently, I think a major factor has been the curtailment or elimination of net metering with many utility providers. If net metering is eliminated or curtailed, the economic benefit of solar power is significantly diminished. Batteries provide a way to store the excess generation for use at night, reducing or eliminating the need for grid provided power.

In addition to net metering playing a role for residential and commercial users, utility companies themselves are implementing storage technology to give them flexibility on the grid. Energy storage provides utility companies the ability to distribute load during peak demand or ride through supply interruptions.

Another big factor for increased storage installations is the formal commitment to clean energy in states like California, Washington and New York. Last year, Governor Brown of California signed legislation committing to 100% renewable energy by 2045. In order to make this goal a reality, energy will need to be stored somewhere. The big question is where: front-of-the-meter, residential behind-the-meter, commercial behind-the-meter, or a combination of all three? If you take a look at where we are now, all three are seeing somewhat even deployment capacities.

SPW: How can we make storage adoption even greater in the United States?

Cox: One of the biggest challenges will be developing battery technology that is safe, has a low cost of ownership, provides high performance characteristics and is environmentally friendly. Lithium-based battery technologies can provide high performance, but their high cost, low recyclability and spotty safety record create huge challenges for further growth. Lead batteries provide safety, the lowest cost of ownership and the highest recycling rate of any product in the world (99%), but they currently lack the performance needed for large-scale systems. The key to the future of energy storage will be the improvement of both of these technologies and the development of new technologies to meet the growing demand.

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US software and data company Autogrid has continued its roll-out of solutions into Japan’s evolving electricity market, joining a virtual power plant (VPP) project that could add more than 10,000 assets by the end of 2021.

Autogrid has been one of the prominent early movers in aggregating distributed energy resources (DERs) including solar, battery energy storage and demand response, into so-called VPPs that perform the role of conventional power plants on the grid, without dependency on large-scale centralised generation assets and associated transmission and distribution infrastructure. Energy-Storage.news covered the California company’s activities in this space as early as 2015, when it delivered solutions to what was described as “the world’s first software-defined power plant”, a VPP in Holland that incorporated 100MW of dispatchable resources including CHP and demand response.

Japan’s electricity market is opening up to competition while the country remains largely dependent on imported fossil fuels and solar feed-in tariffs start coming to an end. Analyst Izumi Kaizuka of Tokyo-based RTS PV told this site recently that owing to these and other converging factors, including a zero energy buildings policy for new homes coming in place next year, Japan’s ‘solar boom’ is far from over. This changing market landscape is also opening up opportunities for new technologies, and the application of data, with major utility TEPCO’s recently reported blockchain project a case in point. Meanwhile, Autogrid and others including the UK’s Moixa Technology have struck deals to allow them to partner with energy solutions providers on aggregated VPP projects. Meanwhile, domestic providers including Softbank and Kyocera have also joined in partnership with utilities, grid operators and other stakeholders to execute virtual power plant (VPP) projects backed by the government.

Japanese energy management services company ENERES has contracted Autogrid to supply its virtual power plant and customer engagement software, which will “aggregate, market and dispatch energy from demand response and DERs”, Autogrid said yesterday.

“Japan is in the midst of a massive market transformation that requires much greater supplies of flexible energy,” Autogrid CEO Dr Amit Narayan said, adding that the VPP with ENERES is a “scalable platform to meet this challenge”.

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Spanish renewable energy giant and offshore wind energy leader Siemens Gamesa Renewable Energy last week inaugurated operations of its electrothermal energy storage system which can store up to 130 megawatt-hours of electricity for a week in volcanic rock.

Siemens Gamesa, a company known more famously for its offshore wind turbines, is nevertheless a large-scale renewable energy technology manufacturer, with its hands in various renewable technology pots. One of these pots is energy storage, and last week the company announced the beginning of operations of its electric thermal energy storage system (ETES), claimed by the company as a world first. The opening ceremony for the pilot plant in Hamburg-Altenwerder was held last week to celebrate the beginning of operations.

The newly-opened electric thermal energy storage system is billed by Siemens Gamesa as “The Future Energy Solution” and as costing “significantly” less than classic energy storage solutions. Specifically, according to the company, even at the gigawatt-hour (GWh) pilot scale, ETES “would be highly competitive compared to other available storage technologies.”

The heat storage facility consists of around 1,000 tonnes of volcanic rock which is used as the storage medium. The rock is fed with electrical energy which is then converted into hot air by means of a resistance heater and a blower that, in turn, heats the rock to 750°C/1382 °F. When demand requires the stored energy, ETES uses a steam turbine to re-electrify the stored energy and feeds it back into the grid.

The new ETES facility in Hamburg-Altenwerder can store up to 130 MWh of thermal energy for a week, and storage capacity remains constant throughout the charging cycles.

“With the commissioning of our ETES pilot plant, we have reached an important milestone on the way to introducing high-performance energy storage systems,” said Markus Tacke, CEO of Siemens Gamesa Renewable Energy. “Our technology makes it possible to store electricity for many thousands of households at low cost. We are thus presenting an elementary building block for the further expansion of renewable energy and the success of the energy transition.”

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Australia’s largest solar-plus-storage project has come online in Victoria with Tesla batteries, proving that existing PV projects can be successfully retrofitted with battery storage.

The 25MW/50MWh battery is co-located and integrated with the 60MW Gannawarra Solar Farm, near Kerang, in the Northwest of Victoria. The battery is now owned by Edify Energy and its partner Wirsol, who developed the project.

Minister for Energy, Environment and Climate Change Lily D’Ambrosio, who visited the project, said: “Big batteries help to stabilise our power grid and provide much-needed backup power – which is vital to maintaining a reliable and affordable energy supply for Victoria.”

“By investing in renewable energy and storage technology, we are continuing to modernise our electricity grid, strengthen our energy security and deliver real action on climate change,” D’Ambrosio added.

The Andrews Labor Government has invested AU$25 million (US$17.25 million) into two big batteries in North Western Victoria – the Gannawarra Energy Storage System and the Ballarat Energy Storage System – to help integrate new renewable energy into the Victorian grid and alleviate stress points in the electricity network.

The Australian Renewable Energy Agency also provided AU$25 million to co-fund these projects, with close to AU$20 million investment from private equity.

This is Tesla’s second biggest battery in Australia and among the largest of its kind in the world. It can power 16,000 households for two hours during peak demand.

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The U.S. energy storage market is expected to continue its exponential growth after increasing a record-breaking 232% from Q1 2018 to Q1 2019, Wood Mackenzie U.S. Energy Storage Monitor. But the storage market, along with renewables and EVs, precariously relies on critical minerals, and any disruption in the supply from China could potentially damage that progress.

To decrease this reliance, coupled with China’s threat to use those types of minerals as leverage in the ongoing trade dispute, the U.S. State Department created ERGI.

“Over 80 percent of the global supply chain of rare earth elements, important minerals for electric vehicles and wind turbine components, is controlled by one country,” the department said in its fact sheet.

Under the plan, the U.S. will share mining expertise with other countries to develop their mineral resources, as well as advise them on governance frameworks to help attracted foreign investors.

The hope is to ensure global supply for energy minerals meets increasing demand. “Global investment in mineral-intensive renewable power generation and battery storage technologies continues to outpace investment in fossil fuel power generation by over 100 percent annually,” according to the fact sheet.

Even though the United States possesses critical minerals, the growth of battery storage, as well as electric vehicles, will require more sources than the ones domestically available, George Crabtree, director at Argonne National Laboratory’s Joint Center for Energy Storage Research, told the Senate Energy and Natural Resources Committee June 4.

Canada and Australia, two large mining countries, have partnered with the U.S. in its efforts and others could join later, acccording to media reports said, citing a U.S. official.

The Energy Storage Association (ESA) and the American Council on Renewable Energy (ACORE) did not provide any comment on the new initiative.

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As companies and states pursue aggressive decarbonization goals, the pressure to find a cost-effective storage solution is mounting.

A growing number of companies are deploying on-site energy storage, usually paired with solar. Commercial and industrial behind-the-meter storage just had its best quarter yet, reaching 44.9 megawatts of capacity in Q1.

But C&I buyers aren’t driving the growth in storage. Utilities are, with massive energy storage deployments and announcement becoming more common. In fact, the United States just became the world’s largest grid-connected energy storage market, and researcher Wood Mackenzie’s Energy Storage Monitor shows that Q1 2019 was the best quarter for deployments, with 148.8 megawatts coming onto the grid.

Projections show utility energy storage deployments are just getting started; they’re expected to double in 2019 and triple in 2020.

Utility energy storage is growing like gangbusters
Utilities have been announcing 100+ MW energy storage plans at an impressive clip over the last six months:

Southern California Edison selected a portfolio of energy storage projects in April, with a collective capacity of 195 MW, deciding against a 262-MW natural-gas peaker plant to fill the same function.
Reason: Falling prices for energy storage and the rise of policy that prioritizes low-carbon energy options.

Pacific Gas & Electric (PG&E) gained approval from the California Public Utilities Commission for four energy storage projects, totaling 567.5 MW, to replace a gas plant in South San Francisco late last year.
Reason: A policy priority from regulators to shift from natural gas to clean energy sources for flexible capacity.

Arizona Public Service (APS) disclosed in February that it plans to install 850 MW of energy storage by 2025 (the single largest storage procurement from a utility to date).
Reason: A policy that sought to grow capacity during the peak demand period, between 3 and 9 pm.

Eversource is considering a $7 million energy storage backup system for Westmoreland, a small town in western New Hampshire that suffers from frequent power outages.
Reason: Energy reliance, as the town relies on just one power line (and no backup source), which is susceptible to falling tree branches in storms.

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The Trump Administration is in a strange position. Given its strong nationalism and specifically anti-Chinese sentiment, it wants to diversify sources of imports away from China and preferably bring back some manufacturing and other operations to the United States.

But this same administration also strongly backs the fossil fuel and nuclear industries and appears to be in denial of the unstoppable momentum of the energy transition. When one of the main promises of your campaign was to “bring back coal”, you are inherently not in a good position to even grasp the significance of China’s growing dominance of solar, wind, energy storage and electric vehicle supply chains.

Earlier this week the earlier tendencies of nationalism appear to have won out, at least in Director Mike Pompeo’s State Department, which has launched a new initiative to counter China’s dominance in clean energy.

The Energy Resources Governance Initiative starts by admitting what the Trump Department of Energy has been fighting for years:

Increasing demand for renewable energy, electric vehicles, and battery storage technologies will create unprecedented demand for energy resource minerals.

It then goes on to focus on three “strategic objectives”: 1) Engage resource-rich countries on responsible energy minerals governance 2) Support resilient supply chains, and 3) Meet the expected demand for clean energy technologies.

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After approving investment for the acceleration of energy storage deployment in developing countries to the tune of US$1 billion a few months ago, the World Bank has now approved a US$300 million loan to do the same in China.

China is the world’s most prolific installer of renewable energy and by the end of 2018 had about 1,038MW of batteries performing power system applications and is in line to build some of the world’s biggest planned energy storage facilities.

Nonetheless, according to a World Bank document outlining the aims of its US$750 million China Renewable Energy and Battery Storage Promotion Project, several big gaps still exist between early pilot stage and private or sponsor-funded development and a sustainable commercial industry.

The country as a whole has large regional pockets of energy poverty and a dependence of almost 60% on coal in the national energy mix, while the renewable energy already installed often sees low asset utilisation rates due to oversupply or transmission and distribution network congestion, as well as low levels of interconnection between the various provinces due to regulatory reasons.

The World Bank Group International Bank for Reconstruction and Development (IBRD) will finance US$300 million of the total sum as stated above. The group’s 2018 document said the remaining US$450 million would be found from counterpart funding and in a release yesterday named Chinese commercial bank Hua Xia Bank as that counterpart.

Meanwhile, the Global Environmental Facility (GEF) and Energy Sector Management Assistance Program (ESMAP) will provide financing for technical assistance towards regulatory reforms, “shaping appropriate technology and safety standards, and developing institutional capabilities,” the World Bank said.

The World Bank, in creating the China programme, said there is an appetite to invest in energy storage from a number of sectors, but more needs to be done to bridge the gap to create sustainable investment plans to give them better assurances around entering the market.

“SMEs are very keen on investing in power system battery storage applications but face a series of obstacles,” the World Bank’s April 2018 document said.

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