A new model that involves paying customers to host energy storage batteries in front of the meter should help stakeholders to optimise financial gains from storage, according to analysis from Navigant Research.

US-based utility Consolidated Edison (Con Ed) partnered with microgrid developer GI Energy and announced plans for this new business model in January. They aim to capture the most advantageous aspects of locating storage both on the utility-side and behind the meter, by “blurring the lines” between the two markets.

Navigant cited troubles with the rapidly growing behind the meter market, such as the value of storage systems varying significantly between customers and regions. Furthermore, despite well-touted opportunities to participate in competitive wholesale markets, realising genuine revenue streams also remains uncertain or unavailable in certain locations.

Importantly, with individual customers installing storage on their own, opportunities to benefit from economies of scale are being missed.

To counter this, Con Ed hopes to be able to deploy a far larger number of systems using third-party financing and its new leasing model. This involves deploying storage systems at customer sites and paying those customers a set rate for leasing their space. Under this type of ‘real estate transaction’, customers then don’t have to understand the complexities of tariffs and time-of-use rates to benefit financially from their storage system.

Navigant claimed: “This should make hosting storage a lucrative opportunity for a much greater number of customers, regardless of their energy usage patterns.”

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California-headquartered provider of low-cost, long-duration storage systems Primus Power has launched the EnergyPod 2, the second generation of its long-duration, fade-free flow battery.

Primus is shipping systems to US and international utilities, including Puget Sound Energy in Washington State.

With a five-hour duration and  20-year life, EnergyPod 2 delivers a total cost of ownership up to 50% less than leading conventional lithium-ion battery systems, the company claims.

The solution is ideal for peak shaving for commercial and industrial (C&I) customers that typically face high electricity bills during peak periods. Long duration energy storage can shift loads from on-peak times to off-peak times, thereby significantly reducing demand charges.

The California Public Utility Commission wrote in a recent staff report that “more hours of peak shifting capability would be more effective in removing generated energy from the grid at peak supply times and injecting it into the grid at peak demand times.” This exemplifies the growing need for long-duration storage solutions.

Recent reforms to California’s Self Generation Incentive Programme (SGIP) benefitted long-duration technologies that previously missed out on the incentive, through the extended US$83 million a year awarded to behind-the-meter storage.

EnergyPod 2 also features a flow battery that lasts far longer than its lithium-ion counterparts, which is essential given that multiple hours of battery power are required to bridge power outages for industrial microgrids.

Furthermore, utilities can employ long-duration batteries instead of costly and dirty fossil fuel-based peak shaving systems. Such batteries can also contribute to cheaper system upgrades and offset the variable generation of solar PV. Modular battery systems, like EnergyPod 2, offer compelling economics compared to their fossil fuel-based alternatives for the purposes of substation upgrades. 

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Aliso Canyon leak contributed bulk of Q4’s energy storage

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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An energy trade association which includes Apple, energy storage maker AES and solar giants SunPower and First Solar in its leadership has welcomed the proposal by US energy regulator, FERC, to remove barriers to participation in wholesale markets for energy storage and distributed energy resources (DERs).

Advanced Energy Economy (AEE), which seeks to have an impact on policy matters shaping future energy concerns, was among the groups submitting lengthy documents to FERC, which was soliciting views until 13 February on its Notice of Proposed Rulemaking (NOPR).

The NOPR was issued in November last year and proposed to integrate electricity storage into organised markets, specifically the wholesale markets operated by the US’ Regional Transmission Organisations (RTOs) and Independent System Operators (ISOs), which between them ensure the reliability of the majority of the country’s electricity supplies.

In order to remove barriers to participation in these markets, RTOs and ISOs would be required to alter tariff structures in order to recognise specific characteristics of energy storage resources and give energy storage operators a new classification for their assets.

Critical first step

Acting chairwoman of FERC, Cheryl LaFleur, was widely quoted as saying the regulator had received “a lot of comments” in her appearance at the National Association of Regulatory Utility Commissioners (NARUC) earlier this week.

Advanced Energy Economy, which also includes Johnson Controls, Schneider Electric and GE in its leadership council, along with general members that include Amaresco, Alevo, Tesla, Sunverge and Younicos, from the world of energy storage along with diverse mainstream names such as Amazon and Facebook, was “strongly supportive” of the FERC NOPR, its comments said.

“The NOPR is a valuable and critical first step in what must be a comprehensive effort to eliminate unjust, unreasonable, and unduly discriminatory barriers to participation for advanced energy technologies in FERC-jurisdictional wholesale markets,” AEE said.

Currently, FERC, which should have a five-person executive board, is led by former utility executive LaFleur and just one other board member, Collette D Honorable, who is set to step down in summer as her five-year term ends. The NOPR cannot be acted upon definitively until the full board is completed, which requires nominations from the White House, followed by a vetting process and confirmation vote, which some sources said could take at least two months.

Battery-friendly PJM’s ‘supportive’ response

PJM Interconnection, which is noted in energy storage for being the first of the US RTOs to allow batteries to provide frequency response grid services in a competitive market, said it was “supportive” of the NOPR. PJM coordinates wholesale markets in 13 US states and the District of Columbia.

“…Electric storage resources (“ESRs”) have already flourished in a number of PJM markets, and through its stakeholder process, PJM is working to expand its market rules to allow for additional opportunities for ESRs and distributed energy resources,” PJM’s comment said.

Nonetheless there were two areas where PJM said it wanted to see changes in the NOPR before it passed into a new set of rules. The first was on “key threshold issues such as potential jurisdictional issues” which relate to charging and discharging of behind the meter resources, the second was that rules should be flexible enough to accommodate the sometimes subtle differences between each RTO/ISO.    

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There is a significant opportunity for energy storage under the Trump administration, the US Energy Storage Association has said.

“We’ve been striving to get the engagement from the federal government, the worst they could do is not talk to us. But they’ve already indicated and shown an interest in engaging with this industry so all signs point to some sort of opportunity to advance storage within this administration,” Matt Roberts, executive director of the ESA, told Energy-Storage.News.

In fact, storage has been on the radar of the GOP since the election, when a brief line regarding electricity energy storage was mentioned in the official party platform. Now, president Trump has made clear that infrastructure and grid modernisation are key priorities in his wider energy policy; whereby energy storage certainly has a part to play.

“If you want to talk about grid resiliency, energy storage is part of that conversation. If you want to talk about load modulation, demand response, storage is a part of that conversation,” Roberts said.

“Whatever front this administration moves on, there is a sizeable opportunity for energy storage to be a big part of that conversation and currently it looks like the focus of this administration, least in the first 100 days, or the first year, is to push through on infrastructure…things like tax parity or other treatment of storage could be a part of that conversation as well.”

FERC’s proposals to implement market participation rules

More specifically, the storage industry hopes to engage with the federal level through the Federal Energy Regulatory Commission (FERC) on proposals. The body is in the middle of processing three different proposals including docket AD 1620 that would seek to implement market participation rules; which are key for a burgeoning industry.

“It basically seeks to acquire all the wholesale markets that have treatment for energy storage for the value that it delivers,” explained Roberts. “So that’s a major initiative at the federal level that is really going to unlock multi-billion dollar markets – for capacity, energy and also for transmission deferral and upgrade that energy storage has a big opportunity in.”

So far, Roberts is confident that there is at least “an appetite” to learn about energy storage through that specific proposal from the Trump administration. Whilst there is not an extensive amount of energy storage mentioned in the new administration’s agenda, this plan to engage with it is a big step forward, considering storage has traditionally lacked any engagement at the federal level.

“We are probably the one industry out there saying ‘hey – please regulate us!’ We want to be regulated because to be regulated is to be recognised. Someone has to put pen to paper and go, what is this thing? How much is it worth? How much of it do we need?”

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The Southern California Public Power Authority (SCPPA), an organisation comprising the municipal utilities of 10 cities and one irrigation district, has ordered a potential 1MW of ice battery storage systems from Ice Energy.

The systems, to be installed at customer residences, will help the utilities to tackle the difficult problem of mitigating residential peak demand “in a reliable and cost-effective manner”, Ice Energy CEO Mike Hopkins said.

Up to 100 systems, each of 9.6kW, will be deployed, replacing the outdoor condensing units of homeowners’ air conditioning systems. Ice Energy’s ice battery uses copper coils to pump cold refrigerant through regular tap water, making ice, with the idea being that this can be done during off-peak hours.

The residential model, branded Ice Bear 20, can cool a home continuously for four hours, with the company claiming it can save 95% of associated electricity costs. The larger Ice Bear 30 model is available to commercial users.

Ice Energy claims Ice Bear is smart-grid enabled, including bi-directional communications technology and can completely replace existing home air conditioning units. The systems installed for SCPPA should allow the utilities to reduce their peak demand, in effect saving energy, increasing efficiency and lowering emissions. The four hours’ continuous cooling they offer allow the utility to load shed for that time.

Evaluating the thermal storage proposition

The SCPPA systems will be installed by the end of this year, with installations beginning in June. Their performance will be evaluated and reported to SCPPA. Backed by a five-year warranty, the Ice Bear systems will be owned by participating homeowners and installed by local Heating, ventilation and air conditioning (HVAC) professionals.    

Another maker of cooling energy storage, Viking Cold, told Energy-Storage.News in May last year that an unnamed California utility was investigating using its products to help counter the challenge posed by the famous “duck curve” of PV energy supply and demand. It is thought that procurement of such systems can be counted as contributing to the mandated 1.3GW of energy storage California utilities must procure under AB2514.

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Financial services giant Morgan Stanley has anticipated that the US energy storage market will grow faster than current consensus expectations, while Deloitte has earmarked the technology for exponential growth – although not perhaps this year.

Morgan Stanley’s “Energy storage: An underappreciated disruptor” says it expects US utilities to “deploy a large amount of storage in the next two to five years”, driven forward primarily by the need to accommodate ever-growing amounts of wind and solar on power networks. It projects growth in the industry from less than US$300 million per year now to a value of US$2- US$4 billion per year by 2020.

Looking at some of the key players in the space, the investment company also identified LG Chem and Tesla as likely dominators of the supply chain, with the scale and manufacturing efficiency to outpace rivals. It expects LG Chem’s production output for energy storage system batteries to reach 11GWh by 2020, while Tesla’s well-documented Gigafactory should be churning out 35GWh of cells and 50GWh of battery packs by 2018, albeit to also serve its electric vehicle range. Nonetheless it rated stock price upside on both of these players as “modest”.

The report’s base case scenario sees the US addressable market for energy storage as around 85GWh, worth US$30 billion. This addressable market could vary greatly in size based on ongoing regulatory wrangling, primarily whether the Federal Energy Regulatory Committee (FERC) will allow utilities to deploy storage in deregulated markets as competitive generator assets.

This could mean a boost of as much as 60GWh over the base case scenario if allowed. The outcome of this dynamic is partly dependent on President Trump’s new appointees to FERC and the answer is likely to be found by late in this year or early next. However, the report’s authors, led by analyst Stephen Byrd, said they did not believe FERC would decide to allow utilities to deploy storage in those deregulated power markets due to the commission’s recent record on the matter.

The report claims utilities will be the majority customers of energy storage systems, rather than individuals or businesses, because the range of benefits offered to utilities is much greater, allowing greater utilisation of grid infrastructure, for example, and also because utilities can factor investment of storage into their business planning.

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Following years of hype and underwhelming products, the plug-in vehicle market had a breakout year in 2016. Not only do consumers now have the option to buy an electric vehicle with more than 200 miles of range and pay less than US$40,000, but the year was littered with announcements of automotive OEMs committing serious resources to building their own electric vehicles – and not just compliance cars. Cost reduction in Li-ion batteries has enabled this revolution, as have better performing batteries optimised specifically for electric vehicles. Increasing Li-ion demand will help to continue to lower energy storage costs, but also bring up an important issue: what should be done with the batteries after they are used in vehicles?

Historically batteries are recycled, and the lead-acid battery remains one of the most recycled products humans produce, but the high cost of processing most Li-ion chemistries makes this process unprofitable. This has fostered interest in reusing batteries for other applications, mostly for stationary energy storage applications, which would delay but not eliminate the need for battery recycling. On the surface this seem like an excellent opportunity to recapture value that would otherwise be wasted in Li-ion recycling batteries. While this is true in some applications, there are several reasons why reusing EV batteries is not ideal for most stationary energy storage applications.

Complexities of second-life use

Reusing Li-ion batteries in second-life applications is not as simple as removing a battery from a vehicle then installing it directly into a stationary system. Before a battery can be reused, it first must be manually removed from a vehicle and the pack disassembled into individual cells. The cells must then be tested to determine the battery’s state of health, sending batteries without sufficient remaining capacity to be recycled. Even within the batteries suitable for reuse, cells must be sorted by similar remaining capacity, or else the second-life system performance would suffer. These are labor and energy intensive processes, but efforts in both academia and industry are underway to reduce costs. Introducing automation in the process will reduce time and labor costs, as will convincing battery manufacturers to use clearer labels and design for disassembly.

Even with better processing techniques there are some limitations to our current understanding of the second-life battery opportunity. As the first mass-market electric vehicle was released about six years ago, and few vehicles have reached the end of their life, there isn’t a clear indication of how much remaining capacity can be expected from these batteries after typical use. There will be further variation among the different chemistries being used in the Li-ion batteries: the nickel cobalt aluminum oxide (NCA) batteries preferred by Tesla are unsuitable for most stationary applications, even when new, due to poor cycling characteristics. Other chemistries such as lithium iron phosphate (LFP) and nickel manganese cobalt oxide (NMC) preferred by other manufacturers in batteries made by LG Chem, Samsung SDI and BYD are better suited for second-life applications.

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Energy storage should be properly valued and supported at federal level in the United States, according to a government document analysing and evaluating energy policy released by officials of the outgoing Obama administration.

The Quadrennial Energy Review (QER), a directive ordered by the president in 2014, is on its second instalment, with the first instalment published in April 2015. Although the name implies it be published once every four years, the review’s task force’s work is ongoing and therefore published in these instalments. The documents are designed to inform policymakers and will therefore undoubtedly be on reading lists for President-elect Donald Trump’s incoming administration.

While the April 2015 instalment, titled “Energy, transmission, storage and distribution infrastructure” looked at pipelines, wires and other aspects of the whole energy network in the context of how it could be modernised “to promote economic competitiveness, energy security and environmental responsibility”, the latest instalment looks at these three key areas within the confines of the electricity sector. Titled “Transforming the nation’s electricity system”, the report projects out to 2040 and makes more than 70 recommendations that it says “must be implemented to optimise and modernise the electricity sector”.

Looking at electricity from generation to end use, the report lauds progress made in certain areas, such as the rapid growth of environmental technologies as an industry in the US, quoting that 1.6 million people are employed in this sector, raising revenues of US$320 billion and exports worth US$51 billion, according to 2015 figures. It also highlights that in the US, air pollution has fallen even as electricity generation has grown between 1970 and 2014.

Among other key findings, it also recognises the growing need for system flexibility as more variable generation from renewables is added to the grid, which is transitioning from controllable generation and variable load to variable generation. This requires better controllable load, the report states, and cites energy storage, along with fast ramping natural gas generation and demand response as among a “number of flexibility options”.

From an economic and industrial standpoint, the report finds that the proliferation and combination of distributed generation such as solar PV, smart home devices and electric battery storage is leading to new business opportunities, which it says will “require a wide array of skills”.

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