The project to build one of the world’s largest lithium-ion battery storage systems started out as a bet—on Twitter. Last March, Tesla CEO Elon Musk tweeted to Australian billionaire Mike Cannon-Brookes, CEO of software company Atlassian, that Tesla could get a massive 100-MW/129-MWh energy storage system installed and working in 100 days, and he did.

The proposal was to help mitigate a chronic power shortage South Australia faced after the state shut down its last coal-fired power plant in 2016. The aging Northern power station in Port Augusta had been rendered uneconomical by an oversupply of generation, owing partly to a surge in renewables that was encouraged by the state. Though reeled by a series of blackouts—including during the summer of 2017—the state stuck doggedly to an energy plan introduced in March that sought to cut its reliance on an electricity interconnector with eastern Australia feeding it coal power, stressing it wanted to produce its own power from wind, solar, and natural gas (for more on South Australia’s energy plan, see “After Blackout, South Australia Wrests Control of Its Power Security” in POWER’s May 2017 issue).

A major facet of that energy plan entailed the construction of the country’s largest grid-connected battery. For Musk, who is known for his ambitious entrepreneurial style, the challenge was seemingly irresistible. In March, Cannon-Brookes asked Musk via Twitter how serious he was about the bet. Musk responded, “Tesla will get the system installed and working 100 days from contract signature or it is free. That serious enough for you?” Cannon-Brookes replied, “legend! You’re on mate. Give me 7 days to try sort out politics & funding. [Direct message] me a quote for approx 100MW cost—mates rates!”

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While acknowledging that the economics “vary significantly” by region and application, Navigant Research has forecast that energy storage for integration of renewables and co-located with solar or wind could be worth more than US$20 billion by 2026.

‘Energy storage for renewables integration’, a new report from the Colorado-headquartered research and analysis group, looks at the point at which the falling costs of new solar and wind generation will meet with the falling costs of lithium and other advanced batteries to converge on a ‘sweet spot’ for adding storage to generation assets.

To date, the higher value applications of batteries have been found not in their combination with solar or wind – where they could maximise self-consumption of PV or minimise the grid curtailment of wind – but in areas such as providing ancillary services to the grid like frequency response. While the huge drop in the cost of renewables has provided a driver for the addition of energy storage, the cost of the storage systems themselves still remains the biggest obstacle, authors Adam Wilson and Alex Eller said. The challenge presented in adding ever-higher shares of renewables to grids around the world means it is increasingly likely energy storage will be used as a facilitating agent.

Many factors influence the cost and suitability of energy storage for this use, including the condition, state and size of the local grid, the amount of renewable generation being added to it, local electricity rates, policies and the available options for financing. Meanwhile the industry, still in its early stages, lacks standardisation and a dearth of the aforementioned financing options, Navigant found. Complicating the picture further still is the fact that solar PV prices have dropped in some regions to the point where it would be simply uneconomical at this point to add the more expensive energy storage component.

Navigant said that while some regions have stripped back policy support for solar PV, phasing out or removing feed-in tariffs (FiTs), leading to a corresponding drop in demand from customers behind-the-meter, even some of these regions, where electricity prices are still rising, the economic competitiveness of solar and energy storage grows. The research firm also pinpointed Australia, California, New York and Germany as solid examples of regions where policy support and rising electricity retail rates have converged to see “strong deployment” of energy storage for renewables integration (ESRI).

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Most of the focus on energy storage safety has been on mobile applications, given the spate of exploding laptop and phone batteries.

Lithium-ion batteries used in those applications are under tighter restrictions for size and density that can lead to higher risks. 

Stationary storage applications are often safer than mobile uses because there are not the same space constraints. But in some markets, space can also be an issue for stationary storage, especially with projects that use lithium-ion batteries.

Such systems could get a higher profile this year with the expected release of new safety protocols.

New York standards

New York City is a prime example. The Fire Department of New York (FDNY) is working on drawing up standards to ensure the safe installation of battery storage projects, but population density and bureaucratic overlap still make New York one of the most restrictive markets for energy storage projects.

FDNY is collaborating with the New York State Energy Research and Development Authority (NYSERDA), the National Fire Protection Association, insurance companies and Consolidated Edison. Together they are working to come up with procedures and protocols for battery safety.

NYSERDA also is working with Con Ed on a joint battery energy storage safety initiative that aims to answer critical safety questions confronting FDNY and other agencies that are responsible for reviewing applications for energy storage installations. The initiative was undertaken in support of Gov. Andrew Cuomo’s Reforming the Energy Vision, which, among other things, looks to reduce peak demand by using battery storage.

The city saw its first behind-the-meter installation last May — a 300 kW, 1.2 MWh lithium-ion battery project in Brooklyn. But that project is sited outside, where fire safety concerns are muted.

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Deployment of energy storage, especially batteries, will increase substantially in the next few years.

Three underlying trends in the energy markets will drive the growth. They are favorable federal and state regulations on energy storage, falling costs for batteries due to advances in technologies, and an improved ability by energy storage owners to tap into multiple revenue streams.

However, as with any novel technology, the array of opportunities for storage brings new types of risks. Project developers and investors need to understand the risks so that they can plan for contingencies and mitigate risks.

This article describes changes in the market that are driving deployment and improving the economics of storage and then identifies unique risks for storage projects and how participants in such projects can mitigate the risks.

Regulatory drivers

The storage market is poised for exponential growth. By 2022, Greentech Media is projecting an annual market of 2,600 megawatts, which is nearly 12 times the size of the 2016 market.

New market rules will enable owners of energy storage systems to earn revenue from a growing number of sources, such as deferred transmission and distribution upgrades, integration of intermittent resources, reduced demand or increased generating capacity to address peak load, the provision of ancillary services, and enhanced grid reliability and resiliency.

Until recently, storage was a square peg jammed into the round hole of historic regulation.

The existing federal regulation of wholesale power sales and transmission in interstate commerce was designed for a world largely devoid of any significant energy storage. Although pumped-storage hydroelectricity has been around for a long time, it has very different characteristics from modern storage technologies such as batteries, flywheels or thermal energy storage projects.

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Energy storage for the residential solar market has always been something of a holy grail for advanced energy companies. If storage becomes cheap enough, it could allow a rooftop solar system to provide all of the energy a homeowner needs, potentially making it possible to go off-grid. It could also be the energy hub for the home, deciding how to use energy most efficiently and connecting the smart devices that are beginning to become more common. 

In 2017, the commercial and utility energy storage markets started to thrive and grow, and in 2018, it looks like the residential energy storage market will start to show the same promise. Here’s why that is and why SunPower (NASDAQ:SPWR), SolarEdge (NASDAQ:SEDG), and Sunrun (NASDAQ:RUN) — and not Tesla (NASDAQ:TSLA) — are the three to watch next year. 

Energy storage systems finally make financial sense

The reason energy storage hasn’t been common in the home is that there was no financial reason to have it. Net metering allowed customers with solar systems to sell excess electricity to the grid at the same price they paid for electricity, effectively making the grid their storage location. 

As net metering has come under pressure across the country the economics of residential energy storage systems have changed. In some cases, like Hawaii, utilities are paying lower rates for rooftop solar exported to the grid, allowing a storage system to perform arbitrage. In others, there are demand changes based on the peak energy use of a home during a month, and if a storage system can lower those charges, they can be economical. Another popular structure is time-of-use rates, which adjust the cost of electricity throughout the day, something California has begun implementing. If a storage system can shift when a consumer uses grid electricity from an expensive time to a cheap one, it can make the storage system economical. 

These rate structure changes have only become widespread in the last year, driven by rate changes in California, which also happens to be the biggest solar market in the U.S. And those changes are what will make residential energy storage a booming business in 2018.  

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PALO ALTO, Calif., Dec. 26, 2017 (GLOBE NEWSWIRE) — Infinity Electrostatics LLC, a technology development firm for additive 3D printing and graphene production, is pleased to announce development of a unique process to produce a continuous formed super-capacitor to store energy.

Using graphene, or eco-friendly hemp and bamboo, almost any carbon-based energy dense material can be used to make a super-capacitor or battery.

Roll forming using a matrix of structural materials and carbon based material (such as graphene, hemp, or bamboo) allows assembly to become a battery or super-capacitor.

Layering of fine particles may be done using electrostatics and a tribo-effect similar to a laser printer. Depending on output layered matrix, the result may be a thread, tube, or meso-scale pole. Flexibility is determined by the infrastructure infusion compound, which allows the final product to be thread, rope, or a structural panel. A continuous form loom can be used to incorporate multiple fiber types, including conductors and optical transmission fiber.

When the infrastructure (supporting) material  includes carbon fiber, hemp, or bamboo mat, resin or epoxy infused composites are continuously fed so that the layered material can be vacuum bagged into a solid structure (including a 3D printer). The result of which is a structure which becomes a super capacitor, or energy storage device. Using conventional carbon fiber lay-up methods, this energy storage structure could become a aircraft wing, car body, or a ship hull. When supporting infrastructure material is combined with closed cell foam, or air, the unique insulating qualities of the structure allow it to be used to form flat, or shaped panels.

In smaller applications, a tunable electrolyte can be used between layers, including CO2. The unique qualities of the supercritical energy dense molecule allow the carbon-based energy tube to be used in energy harvesting. Since CO2 can go supercritical at 31C, low-grade heat can now be used to produce electricity using the qualities of CO2 with tribo-effect.

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It’s been an interesting year for mergers and acquisitions in the distributed energy space, with some unexpected developments.

We haven’t seen the same massive M&A deals of years past, such as GE’s purchase of Alstom or Honeywell’s acquisition of Elster — although Tuesday’s announcement that smart metering and utility software provider Aclara was being sold for $1.1 billion to Hubbell Inc. helped bring this year’s total closer to the peaks of the past. 

But when you look at the activity in 2017, a pattern emerges.

Over the past year, we’ve seen a number of major European energy companies — and some Japanese, American and Israeli ones as well — buy into the proposition that providing distributed energy technologies and services to their customers will be a significant part of their futures. 

This pattern stands out most clearly in the big European energy giants’ shopping spree this year, starting with Enel’s purchase of Demand Energy in January and closing with Centrica’s purchase of REstore in November.

In between, we’ve seen Total, E.ON, Engie and Shell also make significant acquisitions ranging from demand response and electric-vehicle management to energy storage and the connected home. 

Only a handful of these acquisitions have publicized their purchase price, including Enel’s $300 million purchase of demand response provider EnerNOC, Centrica’s $81.4 million purchase of REstore, and Ormat’s $35 million for Viridity Energy. This makes it difficult to calculate total values for the year’s M&A activity compared to multi-billion dollar deal of the past. 

But the pace of M&A activity, plus the observations of industry insiders, indicates that European utilities are in a bit of a land grab for acquisitions that can help them break into competitive distributed energy opportunities outside their core businesses — or as part of spun-out arms directly focused on the market.

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