Part I: Texas assumes a leading role in defining the value of storage

This first of four posts examining energy storage in Texas provides an introduction to storage technologies and describes the numerous utility-scale battery technologies currently operating in the state. The storage of electric energy is often called the “holy grail” of the future electric grid. While Massachusetts, California and Oregon have led in storage development through mandates and financial incentives, Texas is assuming a lead role in the nation through its innovative application of storage that further defines the vital role storage can play in enhancing grid reliability and lowering rates.

The combination of geology, climate, regulated and unregulated electric utilities, an independent system operator (ERCOT), Federal tax incentives that encourage intermittent wind and solar generation, and importantly, a business-friendly environment makes Texas an ideal test bed for storage technology. The diverse range of storage applications —now operating, and those in the pipeline — are defining how, when, and where storage will thrive in the future Texas market.

Storage Basics

Storage is not achieved through just a single technology. Different mechanisms include flywheels; compressed air energy, thermal, and pumped hydro storage; supercapacitors; and batteries, including solid state and flow batteries. All of these technologies except pumped hydro are active in Texas as either a research and demonstration project, a behind-the-meter end-user resource not connected to the grid, a resource to improve generator efficiency, or an active or planned third-party owned system connected to a utility distribution or transmission system. Including storage in the Texas market structure has been difficult because storage can function as both generation and load and can serve multiple functions. The language of the age-old electric market structure with clear separation of generation, transmission, distribution, and end-use does not comfortably accommodate the storage asset. Add to this ambiguity a diverse market structure and the complexity grows.

A structure that fits storage into Texas’s both restructured and vertically integrated market is now in place save for one major issue: The establishment of conditions under which regulated “wires” companies can own and operate storage and include the cost of the investment in the rate base. This issue is now squarely in front of the Texas Public Utility Commission (PUC). Under current rules, storage projects 10 MW or greater that are connected to the ERCOT grid require an Interconnection Agreement (IA) as specified in a standard protocol set up by ERCOT. Co-ops and municipally owned utilities (MUNIs) are exempt from the ERCOT IA requirement but must follow a separate PUC rule for distributed generation resources (DER). All projects smaller than 10 MW, if connected to a utility grid, need an IA between the utility and the storage provider.

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REDWOOD CITY, CA–(Marketwired – Oct 12, 2016) – AutoGrid Systems, the Energy Internet leader, and sonnen, Inc., the global leader in smart energy storage systems, have partnered to fully integrate AutoGrid’s flexibility management application suite, AutoGrid Flex™, with sonnen’s award-winning residential and commercial energy storage technology. Through this partnership, AutoGrid and sonnen will help energy project developers, utilities and other energy service providers better manage, optimize and aggregate sonnenBatterie systems and other distributed energy resources (DERs).

“sonnen’s advanced battery storage systems are already accelerating the world’s transition to a more distributed, renewable-friendly energy grid. By providing a platform that enables energy service providers to more easily aggregate these distributed storage systems, we will further accelerate this transformation,” said Dr. Amit Narayan, CEO of AutoGrid. “Our new partnership with sonnen will combine AutoGrid Flex software with sonnen’s intelligent battery storage systems, delivering higher project ROI to energy project developers and utilities who are seeking to deploy and manage fleets of DERs.”

The AutoGrid Flex application suite provides advanced forecasting, real-time controls and scalable architecture to manage large numbers of distributed sonnenBatterie systems in combination with other DERs. This fleet management is key to optimizing the utilization of battery storage capacity for both the local site and the regional grid network, and AutoGrid Flex is already integrated with multiple wholesale markets, including CAISO, PJM and ERCOT, and underpins several of the world’s leading utility DER systems.

By combining the best-in-class technologies of sonnen’s innovative battery systems and AutoGrid’s fleet management software, energy project developers, utilities and other energy service providers can rapidly monetize storage projects across multiple flexibility value streams by:

• Optimizing self-consumption in real time across multiple factors including peak demand charges and time-varying prices.
• Participating in utility demand response and resource adequacy programs.
• Creating a virtual power plant to participate in wholesale capacity, energy and ancillary services markets.

“By integrating our technologies in the U.S. market, sonnen and AutoGrid provide a solution that elegantly and intelligently manages DERs, including grid-connected sonnenBatterie systems, maximizing return-on-asset, reducing project delivery time and unlocking new revenue streams for utilities, energy project developers and energy managers,” said Christoph Ostermann, CEO of sonnen GmbH. “In Germany we have seen the value the virtual power plant model provides in balancing energy supply and demand by aggregating our sonnenBatterie systems. By adding AutoGrid Flex’s ability to optimize DER assets in support of grid services and wholesale energy programs for the U.S. market, our smart sonnenBatterie energy management systems will accelerate the adoption of a smarter, cleaner utility grid by reducing integration costs, improving ROI and increasing the use of DERs.”

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Critics called 2015 a “banner year” for energy storage. 

Now after a year of unprecedented growth, energy storage could be poised to best that performance, according to Navigant Research’s third quarter energy storage tracker.

“The North American market this year definitely has the potential to surpass the deployed capacity in 2015, especially considering how quickly new projects are being built today,” Ian McClenny, a research associate at Navigant, said.

Navigant projections show the North American storage market reaching just above 300 MW by year end.

A total of 221 MW (161 MWh) of energy storage was deployed in 2015 compared with 65 MW (86 MWh) in 2014, according to the Energy Storage Association.

Among the key drivers in the storage market, according to Navigant, are the proliferation of distributed, intermittent generation sources such as solar and wind power, which require increased load balancing, and the restructuring of electricity markets that will create new value streams for energy storage.

Among the notable developments so far this year is an increase in storage projects that use flow batteries and hybrid battery systems, the authors said, citing a Duke Energy project in North Carolina that combines a hybrid Aquion battery and a Maxwell Technologies ultracapcitor that will be used to fill both short and long duration energy needs from the single site at Duke’s Rankin substation.

The report also noted that distributed energy storage, which includes both behind-the-meter residential storage and community energy storage installations, accounted for about 14.2% of new the new storage installations so far this year, the highest percentage of any year yet.

Distributed energy storage systems (DESS), which includes C&I and microgrid installations, also accounted for 45.6% of the storage installations so far this year with the remainder, 54.4%, of the market comprised of utility scale installations.

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Outsiders could be forgiven for thinking that UK energy policy has abandoned renewables — consider the high-profile commitment to nuclear at Hinkley Point, and the Cameron government’s attack on feed in tariffs. It’s less well known that industry and government alike are taking a hard look at the possibilities forenergy storage.

While the Department for Energy and Climate Change (DECC) has been scrapped, its work wasn’t killed off. Last year came signs of the ‘smarter energy’ concept gaining ground — using systems and technology that could cut the need to invest in grid reinforcement and generation plant.

The government’s adviser, the National Infrastructure Commission, has calculated that a more flexible power system could save consumers up to £8 billion (US $9.8 billion) a year by 2030. Storage, of course, is a big part of this.

Before it was scrapped, DECC put out a call for evidence from all interested parties about the prospects for smart energy. Its findings are due to be published soon. Meanwhile the UK Solar Trade Association (STA) has been doing its own work.

“The combination of storage and solar is a long-term game changer rather than a short-term market bubble,” its report concluded.

STA wants to encourage field trials and for case studies to be made widely available. It’s especially keen to see the end of double-charging. Electrical storage systems are treated as generation: there’s a charge both for storing and importing (intermediary consumption); also for discharging and using that energy (final consumption).

No one knows what the impact of Brexit might be on, for instance, collaborative research. But, says David Pickup, STA policy manager and the report’s author, things could be done now. “We can learn from Germany,” he toldRenewable Energy World. “There you see the value of a 3-5-year strategy. They had a grant scheme for domestic systems, but the safety and standards requirement for these was quite strict.”

He feels there’s no reason why such knowledge and regulatory practice couldn’t be imported into the UK. Moreover, Pickup thinks the new government could be open to persuasion on storage.

“What’s been striking over the last few months is its evidence-based voice,” he said. “With solar and storage, costs are coming down and the benefits are clear — there are huge amounts of evidence that this is the right way to go.”

Is it worth pushing the newly-created Department for Business, Energy and Industrial Strategy (BEIS) for California-style targets? California has ordered its three largest utilities to reach 1.3 GW of storage by 2020. Interestingly, Pickup doesn’t think so.

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A Dutch startup called LeydenJar is boldly going where no one else in the energy storage field has apparently gone before. The company, a spinoff from the Energy Research Centre of the Netherlands, has come up with a new version of lithium-ion battery technology that uses 100% silicon instead of graphite.

At first glance, that’s a risky proposition, because normally silicon goes through destructive cycles of shrinkage and expansion when used in rechargeable batteries. However, if the new battery can be manufactured at scale with a reasonable lifespan, the payoff is an increase in capacity of up to 50% over conventional graphite-based energy storage.

With an all-silicon recipe, the LeydenJar team claims that it has increased the capacity of the anode in its new lithium-ion battery by a factor of 10.

They managed to do that without ending up with crumbled bits of battery on the floor by applying a one-machine, plasma-based fabrication method to the anode.

The silicon is deposited onto a copper substrate in nanoscale columns, achieving a height of about 10 microns (that’s the thickness required for commercial application, according to LeydenJar).

The resulting pattern of filled and empty spaces provides enough room for the silicon to expand safely when the battery is recharged.

Yet Another Happy Accident

The team also drew on lessons learned from failed experiments in the solar field. The silicon column approach dates back at least a dozen years, when researchers at the Energy Research Centre were trying to develop the material for use in solar cells.

That didn’t work out as planned, but all that effort was not lost since the technology has been transferred to the energy storage field.

The new battery’s ties to the solar field also carry over to the manufacturing process.

The plasma-based method enables commercial-scale production of what was previously possible only in small batches. As described by LeydenJar, there is a huge difference between their one-machine, one-step process and conventional anode production.

Conventional graphite anodes can be enhanced with small amounts of silicon, but that requires “active material, binder, and other components in a capital-intensive process consisting of slurry making, a coating process, a baking process, calendering and slitting.”

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We often hear that energy storage is a few years behind the solar industry. Comparing these industries’ respective trade shows helpfully illustrates this point.

Solar Power International drew 18,000 people to Las Vegas in September, with panels sprawling throughout the convention center and two massive expo floors. There were espresso bars, two-story display stands and plenty of lights, shiny things and after-parties at swanky Vegas nightclubs.

By contrast, the 2,000-person Energy Storage North America in San Diego last week felt quiet and provincial, closer to a hometown parade than a county fair. The expo had some familiar names from SPI, but focused more on fostering conversations between like-minded storage wonks than on wowing an audience with bells and whistles.

Many of the conversations at the conference dealt with how to put storage on track to where the solar industry is now. Most of the air time went to addressing policy and regulatory obstacles so that the existing storage technologies can get paid for the services they provide. There weren’t any earth-shaking revelations, but a steady march toward the boom that the industry and its observers have predicted.

Here are a few of the insights stumbled upon while wandering the halls.

Massachusetts storage companies are getting fired up

At the state level, California has long dominated the storage game, having passed the first statewide storage mandate in the U.S. back in 2013. Employment in the storage industry is correspondingly concentrated in California.

This summer, the Massachusetts legislature authorized the state’s Department of Energy Resources to decide if it thinks a target would make sense. That same department released a study last month saying that up to 1,766 megawatts of storage capacity would provide a net benefit to ratepayers, so chances are good that a target will become reality.

This, plus New York City’s new 100-megawatt storage target, creates the strong possibility of a high-growth market in New England. There’s already a cleantech hub around Boston, and companies based there will be well placed to nab new contracts. The opening of a new market there could create space for new companies to jump in as well.

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As the demand for clean energy rises, so too has the demand for energy storage. Batteries and other storage products extend the ability of renewable energy systems to provide clean power when the sun isn’t shining or the wind isn’t blowing. In the last few years, Aquion Energy introduced innovative, saltwater-based electrochemical batteries. Recently Aquion commissioned its first battery system in Africa. Together with SolarAfrica, an African solar energy services company, Aquion transformed power generation and supply at the Loisaba Conservancy.

This world-class ecotourism destination and hub for wildlife research in Kenya, East Africa, is far from any power grid. “Loisaba comprises 56,000 acres of pristine lands, populated by hundreds of animal species and enjoyed by thousands of visitors and guests each year,” says Tom Silvester, CEO of the Loisaba Conservancy.

Guests and staff of the conservancy used to put up with noisy diesel generators. Now, Loisaba has a microgrid consisting of two independent systems, each of which has 106 kWh of Aquion batteries paired with a 37 kW solar array. The microgrid powers a commercial laundry, swimming pool, kitchen, business services, lighting, cooling, and other facility loads during the day. It also charges the Aquion batteries, which discharge overnight and during cloudy periods.

“We embrace the idea of living lightly on the earth, minimizing our carbon footprint and maintaining a clean, safe, and sustainable environment,” says Silvester. “The use of Aquion saltwater batteries in tandem with SolarAfrica’s solar powered solutions is perfectly aligned with our approach to preserving nature, enabling us to generate power from the sun and store it for later use.”

Off-grid microgrids, common at remote lodges, have often relied on diesel fuel, which has a large carbon footprint and, in some regions, can be painfully expensive. With the solar power system and storage, Loisaba expects to reduce diesel consumption by 95% and save 53 tons of CO₂ per year.

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The federal agency that tries to ensure equal access to the nation’s grid is holding a technical conference to see how energy storage can weave itself more efficiently into generation, transmission and distribution. It will be November 9.

“The Commission wants to explore the circumstances under which it may be appropriate for electric storage resources to provide multiple services, whether the RTO/ISO tariffs need to include provisions to accommodate these business models, and how the Commission may ensure just and reasonable compensation for these resources in the RTO/ISO markets,” says the Federal Energy Regulatory Commission, as noted inEnergyChoiceMatters.com. 

“The subject of the conference will be the utilization of electric storage resources as transmission assets compensated through transmission rates, for grid support services that are compensated in other ways, and for multiple services,” FERC said.

What’s to be discussed?

— the potential models for cost recovery for electric storage resources utilized as transmission assets, while also selling energy, capacity or ancillary services at wholesale;

— the potential models to enable an electric storage resource to provide a compensated grid support service (like a generator providing ancillary services under a reliability must-run contract) rather than being compensated for providing transmission service, and

— the practical considerations for electric storage resources providing multiple services at once (i.e., providing both wholesale service(s) and retail and/or end-use service(s)).

“A flexible grid is more efficient and reliable — for all types of generation,” says Matt Roberts, executive director of the Energy Storage Association, in a Twitter exchange with this writer. “It’s is already commercial. It’s value is to make the grid more flexible and resilient — not to be a savior for renewables.”

The common perception is that the energy storage is used to harness electrons and to release them later on when the sun is not shining or the wind is not blowing. That’s a bit further out. The reality is that energy storage is now used to smooth out fluctuations in voltage — to prevent the lights from flickering out.

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The combination of battery storage and solar is beginning to take off, and project developers are working to position themselves for more installations. Borrego’s new division recalls Tesla’s acquisition of SolarCity, announced this summer, but on a smaller scale. 

Borrego will focus on long-duration energy storage, which officials say is necessary to integrate renewables into the grid. 

“We’re realizing that all across our customer base—from cities, school districts and public agencies to businesses, manufacturers and electric utilities—it is more frequently making economic sense to evaluate energy storage in conjunction with solar,” said Berwick. “We knew that this technology shift was around the corner.”

Borrego’s storage unit will spend the next year focusing on developing megawatt-scale projects with utilities across the United States. “It’s something that our customers, electricity regulators and policymakers are asking for,” said Borrego Solar CEO Mike Hall.”

While Tesla has many residential offerings, the deal with SolarCity may yield even greater value in the utility sector. Last summer, Tesla founder Elon Musk told the annual convention of the Edison Electric Institute that he anticipates the utility-scale Powerpack storage product will comprise between 90% and 95% of Tesla’s total stationary storage sales.

On the residential side, Navigant has forecasted the 2025 North American market for residential solar PV plus energy storage nanogrids to be over 1.8 GW, with 30% to 40% of those nanogrids aggregated into virtual power plants. The use of solar and storage together in nanogrids is expected to continue expanding, leading to “new organized markets for ancillary services and efforts by utilities and grid operators alike to manage increased DER portfolios in ways that capture value upstream.”

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They may not get it this year, but boosters of energy storage technologies want their sector to get the same tax credits that the federal government extends to the wind and solar industries.

“It would be a good economic investment for us as a government and as a nation to invest in advancing these technologies,” said Matt Roberts, executive director for the industry’s trade group, the Energy Storage Assn.

Under a bill introduced by Sen. Martin Heinrich (D-N.M.), qualifying energy storage technologies such as batteries, thermal energy storage and regenerative fuel cells would get a 30% investment tax credit.

The Heinrich bill essentially runs parallel with the 30% tax credit that wind and solar receive from the federal government and, like the wind and solar credits, eventually would taper off.

Reps. Michael M. Honda (D-San Jose) and Tom Reed (R-N.Y.) have introduced a similar but more complicated bill in the House of Representatives.

The prospect of a tax credit created some buzz at the Energy Storage North America conference that wrapped up Thursday in San Diego.

“Storage is too expensive,” said Keith Martin, an attorney at the Washington, D.C., law firm of Chadbourne & Parke, one of the panelists at the conference. “If the government can help with the cost-sharing, it will then get more people into the market.” 

Under current rules, energy storage can receive a federal tax credit only if it is paired with wind and solar electricity production, most often seen when a storage component is matched with a rooftop solar system.

The proposed legislation would establish tax credits for standalone storage systems.

Extending the tax credit “would encourage deployment of storage throughout our electric power sector,” said Janice Lin, executive director of the California Energy Storage Alliance, an advocacy group. “The consequences of that are dramatic for ratepayers.”

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