There are many reasons batteries are appearing across the electrical grid—their price is falling, they may save utilities more than they cost, and they can support solar and wind by capturing peaks in production and saving it for troughs.

But their progress has been slowed by a web of regulations at every level, two grid experts said in Chicago last week.

“We have examples in New York where there are projects ready to go and they can’t get a permit from the Fire Department,” said Richard Kauffman, New York state’s energy czar. “Or there are building-permit related issues. It really raises the cost, the soft cost, a lot.”

In other places, there’s no incentive to store energy when it’s cheap, and sell it when it’s expensive, because it costs the same amount all the time. “There’s not time-of-use pricing in many places, so there’s no financial incentive to shift load,” he said.

Battery manufacturers like Tesla Motors, Panasonic, AES and LG report steady growth. Tesla, AES and Altagas cut the ribbons this week on massive new projects in California. But these companies see far more potential than they have realized. The market, as Tesla’s Elon Musk said, is “staggeringly gigantic.”

It shouldn’t come as a surprise that disruptive technologies like storage get stuck in a legacy system, said Susan Tierney, a former assistant secretary of energy.

“We think of what we’re talking about as energy policy,” Tierney said. “It’s tax policy, it’s land-use policy, it’s fire code—all of these things shape the way that things can be changed. You actually have to solve the inertia in the system on all those engineering, legal, political, financial (levels). All of those things have to fit to make the kind of changes we have.”

The Energy Policy Institute at Chicago invited Tierney and Kauffman to discuss opportunities and obstacles facing cities as they strive for their own clean energy goals, regardless of federal support.

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The impact Elon Musk and Tesla (NASDAQ:TSLA) will have on the energy industry may be larger in the power storage segment than anywhere else. Sure, his company is a leader in electric vehicles and residential solar, but in the worlds of automakers and solar energy more broadly, Tesla is a very small player. 

Energy storage is another matter: Tesla has been more aggressive in that space, and could take a leadership position very quickly. And its product could very well upend the electricity market as we know it.

Energy storage saves natural gas from itself

The future of energy can be seen in the emergency energy storage system built in Southern California after the Aliso Canyon natural gas storage field’s massive leak late in 2015. Because of that blowout, which released close to 100,000 metric tons of methane into the atmosphere, operations at the facility were curtailed, and there was a chance the region wouldn’t have enough natural gas to meet its energy needs at peak times in the summer, leading to brownouts or blackouts. 

Most of the time, the issues at the facility weren’t a big deal relative to California’s power supply, because there was still enough energy overall to meet demand. But there was the potential for a disparity during evening hours, when people get home and turn on their lights, that demand could exceed supply. And that was a concern for the grid operators. 

Their solution was to install a large array of batteries that could store energy when it was abundant and easily deploy it to the grid when needed. Sempra Energy‘s (NYSE:SRE) San Diego Gas & Electric contracted with Tesla, Greensmith Energy, and AES Energy Storage to build 70 MW of energy storage with 280 MWh of capacity to offset the Aliso Canyon outage. Just six months after the request for proposal went out, the projects were complete. 

Energy storage added an incredible amount of value to Southern California’s grid, and it did so in very little time. And proving out these capabilities will allow more energy storage growth in the future. 

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If only I were a battery, I could be hanging out in Hawaii right now.

The islands have seen a fair number of batteries deployed in recent years, to help solar households self-consume and to smooth large amounts of solar generation on the grid. What they haven’t seen is a thriving commercial storage market like the one California has seen emerge. That hasn’t changed yet, but Californian commercial storage specialist Stem has deployed a pilot network of 29 business-sited battery systems to show how this model might work with Hawaiian utilities.

“What we’re really trying to do with this first set of customers is help to pave the way for the coming industry, which will include multiple players,” said Tad Glauthier, Stem vice president of Hawaii operations, in an interview at the DistribuTech conference in San Diego. “It’s significant in that this is [Hawaii’s] first aggregation of energy storage systems across diverse commercial sites for the utility, that they can see and use in the management of the grid.”

Stem uses its software to operate batteries on behalf of commercial customers, giving them savings on demand charges, while also aggregating across the network to provide grid services like demand response. In Hawaii, that made for a double challenge: educating customers about why they would want a battery, and convincing Hawaiian Electric Company that the batteries can reliably deliver 1 megawatt of capacity to the grid when called upon.

Some of the participants in the pilot are local branches of chains Stem has worked with, like Whole Foods and Albertsons. For some of the locally based customers, including an auto body shop, a sheet metal company and a florist, Stem had to start from scratch pitching why storage would be useful.

Hawaii has the nation’s highest electricity rates, so saving money on electricity is top of mind for consumers there. Most of the companies that participated already had rooftop solar or were in the process of acquiring it. Often, though, “They don’t think about the peak; they think about using less,” said Tad Glauthier, Stem’s vice president of Hawaii operations. 

The business case for commercial demand management isn’t as strong in Hawaii as it is in a place like California, because the demand charge there is smaller — $11.69 per kilowatt for small commercial customers in Honolulu. The revenue stream for business-sited batteries providing grid services didn’t exist either, because HECO didn’t have a model for it.

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While Brexit looms, bringing uncertainty into the country’s economy and international relationships, the role energy storage will play in a decentralised, low(er) carbon and more flexible energy system at least seems a little more assured than it did before.

Even Prime Minister Theresa May has namechecked energy storage and claimed a mooted research institute overseen by the government’s chief scientific advisor, Mark Walport, could make the UK a leader in battery and energy storage R&D as part of its industrial strategy reforms. It will have some catching up to do to meet advances in regions like California’s Silicon Valley and New York, but the announcement provided some rare optimism in Britain’s gloomy Brexit winter.  

Also at government level, the Department of Business, Energy and Industrial Strategy (BEIS) successor to the Department of Energy and Climate Change (DECC), is apparently currently “wading through” the many responses it received to a so-called Call For Evidence. This quasi-consultative solicitation of stakeholder responses to issues pertaining to reform of the energy sector, which was welcomed by the industry, closed in mid-January.

BEIS official David Capper, who is its Deputy Director and Head of Future Electricity Networks, told trade association the Electricity Storage Network’s annual symposium event last week that key themes emerging were the need to foster markets for flexibility services and allow developers to ‘stack’ revenues. Priority number one, he said was to remove the policy and regulatory barriers storage faces, including providing much-needed regulatory clarity. BEIS recognises that storage is important for “reducing the UK’s emissions going forward,” Capper said.  

Tendered agenda

Over the past few months readers of Energy-Storage.News have seen that a 200MW tender for enhanced frequency response (EFR), grid-balancing that responds within one second of registering a frequency deviation, was completely filled by battery projects. Those contracts are just for four years, but quickly following that tender was the T-4 capacity market auction, guaranteeing capacity to ‘keep the lights on’ between 2020 and 2035. Of 3.2GW capacity secured, 500MW of storage won out in that process, with both tenders held under the auspices of the transmission operator, National Grid.

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Zen Ecosystems is leveraging its smart thermostat to extend the range of residential batteries for home energy savings.

The nearly four-year-old company sells its signature thermostat individually for homes, as well as in enterprise-wide commercial packages. It saves money by shifting a building’s heating and cooling load to optimize for time-based electricity tariffs or demand response events.

Another trendy technology advertises load-shifting and demand response: energy storage. Customers interested in those functions could pick one or the other, but Zen decided to try pitching both. The company’s smart thermostat will be bundled with batteries from Swell Energy, an L.A.-based storage marketplace turned vendor, in what appears to be the first partnership of its kind. 

“We’re very aware that storage is hot in the market right now, and our ambition is to be a part of that,” said Zen Ecosystems CEO James McPhail, in an interview on the floor of the DistribuTech conference in San Diego. “Having such a fast ROI, we’re able to partner with companies that don’t have that same luxury to help them expedite their ROI and become an even more attractive solution to their customers.”

The pitch goes something like this: Storage and smart temperature controls enable a customer to exert greater control over energy consumption. Storage is more expensive and has a longer payback time; a customer with a limited budget could simply choose a thermostat and start saving in a matter of months. If a battery already pencils out, however, the inclusion of a Zen thermostat will open up deeper savings for a negligible additional cost.

“With the same amount of storage and the same number of customers, a smart thermostat lets us aggregate a larger grid resource,” the folks at Swell tell GTM. “So the synergy is both customer-facing and grid-facing.”

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A proving grounds for energy storage is in Southern California, where a large project is underway to compensate for the Aliso Canyon natural gas storage facility, which has not been allowed to accept new gas since methane leaks caused serious problems in 2015.

This week, Southern California Edison (SoCal) and Tesla Motors took the wraps off what the Los Angeles Times calls one of the largest energy storage facilities in the world. The 1.5 acre site, at the Mira Loma substation, harnesses almost 400 Tesla PowerPack lithium-ion batteries. The batteries, the story says, can power 2,500 homes for a day or 15,000 homes for four hours.

The overall initiative is much broader:

In addition to the Tesla-Edison project, storage facilities of similar size are being rolled out by San Diego Gas & Electric with AES Energy Storage and by Greensmith Energy Partners with AltaGas. In all, the projects are adding 77.5 megawatts of energy storage to the state’s electricity grid.

Storage technology is a key to enabling the state to meet its mandate of producing half of its electricity from clean sources by 2030 and to reduce greenhouse gas emissions to 80 percent below 1990 levels by 2050.

The overall project is controversial.

In a commentary in The Whittier Daily News state senator Henry Stern — a Democrat representing Calabasas — says that the Aliso Canyon is set to reopen. The decision, the story says, is being driven by the threat of blackouts. Stern objects. The crisis was met by innovation in storage and renewables, he writes. That is making the quick reopening – before, he says, the reason for the blowouts have been determined – unnecessary.

The general outlines of what Stern is advocating are described at The Signal, a news site in the Santa Clarita Valley. The details have not been determined, but Stern wants to established 120 MW of clean energy storage projects involving Santa Clarita-run and investor-owned projects during the next year. Talks are underway with the California Energy Storage Alliance, SoCal and San Diego Gas and Electric, the story says.

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In less than six months, Tesla’s ambitious new Mira Loma energy station went from idea to broken ground to up and running. Located roughly 35 miles east of downtown Los Angeles in Ontario, California, the project was developed and built with the help of utility giant Southern California Edison, as well as Ontario’s local government. A blistering pace in terms of conception-to-operation, perhaps Mira Loma’s greatest native feature is the fact its humming energy storage facility boasts the capability to powering roughly 15,000 homes for upwards of four hours — during maximum energy usage periods, no less.

Earlier this week, Tesla’s Chief Technology Officer, JB Straubel, officially unveiled the new 1.5-acre space to a throng of employees, government workers, and media personnel. While speaking to the gathered crowd, rows of Tesla’s massive Powerpack batteries (i.e., the commercial version of Tesla’s Powerwall battery) and industrial inverters lined the property, dotting the dusty environment with the company’s trademark white and red color scheme. Aesthetics aside, Mira Loma’s sole existence is to store surplus energy that would otherwise dissipate without use. Instead of power stations creating energy that goes unused, Tesla’s new grid stores that surplus for when energy needs rise.

“This project is exactly in line with our mission to accelerate sustainable technology and sustainable energy broadly for the world,” said Straubel at the event. “Storage is a piece that’s been missing on the grid since the grid was invented, so thanks to these technologies, we’re right at the turning point of being able to deliver storage and use renewables — solar, wind, and others — that can power people’s needs for longer parts of the day.”

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A new report from the World Bank has concluded that energy storage capacity is set to increase dramatically in emerging markets in tandem with and enabling greater renewable energy development.

More specifically, the new report — which was authored by Navigant Research and commissioned by the International Finance Corporation (IFC), a member of the World Bank Group, along with the Energy Sector Management Assistance Program (ESMAP), a global knowledge and technical assistance program administered by the World Bank — predicted a 40-fold increase in the stationary energy storage capacity in developing countries by 2025, adding more than 80 gigawatts (GW) to the already 2 GW installed.

The report concluded that by 2020, “developing countries will need to double their electrical power output to meet rising demand” and that by 2035, “these nations will represent 80 percent of the total growth in both energy production and consumption.” Unsurprisingly, therefore, to meet these needs while also adhering to global emissions reductions targets, the authors of the report conclude that “a substantial portion of this new generation capacity will likely come from renewable sources.”

“Energy storage technology will be critical in the expansion of renewable energy in remote and rural areas that lack grid infrastructure or reliable electricity supplies,” said Philippe Le Houérou, IFC Executive Vice President and CEO. “By dramatically expanding the capacity to store energy, these technologies will help countries meet their renewable energy targets, support the demand for clean energy, and help bring electricity to the 1.2 billion people who currently lack access.”

According to the conclusions of the report, deployment of energy storage across emerging markets is expected to grow by 40% annually over the next decade.

The report predicts that the largest energy storage markets over the coming decade are likely to be China and India, thanks in large part to the tremendous renewable energy ambitions of those two countries. Latin America will also represent an attractive market for the development of energy storage, as several countries in the region are moving hard toward increasing their renewable energy capacity — including Mexico, Chile, and Brazil.

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In a speech to the National Press Club yesterday, Prime Minister Malcolm Turnbull declared that the key requirements for Australia’s electricity system are that it should be affordable, reliable, and able to help meet national emissions-reduction targets. He also stressed that efforts to pursue these goals should be “technology agnostic” – that is, the best solutions should be chosen on merit, regardless of whether they are based on fossil fuels, renewable energy or other technologies.

As it happens, modern wind, solar photovoltaics (PV) and off-river pumped hydro energy storage (PHES) can meet these requirements without heroic assumptions, at a cost that is competitive with fossil fuel power stations.

Turnbull and his government have also correctly identified energy storage as key to supporting high system reliability. Wind and solar are intermittent sources of generation, and while we are getting better at forecasting wind and sunshine on time scales from seconds to weeks, storage is nevertheless necessary to deliver the right balance between supply and demand for high penetration of wind and PV.

Storage becomes important once the variable renewable energy component of electricity production rises above 50%. Australia currently sources about 18% of its electricity from renewables – hydroelectricity in the Snowy Mountains and Tasmania, wind energy and the ever-growing number of rooftop PV installations.

Meanwhile, in South Australia renewable energy is already at around 50% – mostly wind and PV – and so this state now has a potential economic opportunity to add energy storage to the grid.

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