Global and country-level dynamics

The energy storage industry needs better financing to break out of its early stages. So far, commercial project financing is becoming more widely available, but residential financing has barely gotten started.

The high upfront cost of storage makes it hard for behind-the-meter customers to purchase out of pocket, and they can’t call on the kind of capital available to utilities or large power producers. For financiers, meanwhile, energy storage poses several risks: It’s a relatively new technology with emerging business models and revenue streams, both of which are subject to the influence of shifting tariff structures.

“If the energy storage market is going to grow beyond the early adopters, there’s going to have to be more widely available, low-cost financing,” said Brett Simon, a behind-the-meter storage analyst at GTM Research, who recently published a report on storage financing.

Here are the key indicators of where storage financing stands today.

Grid reliability is a growing concern as the world transitions to renewable energy and existing infrastructure ages. To address these challenges, Toronto Hydro is testing a grid-scale energy storage system that can be attached to poles already present around the city. The system has been in place since August of last year, and it’s already displaying positive results.

Toronto Hydro is running a pilot program with the pole-mounted energy storage system in the city’s North York neighborhood. Drawing on eCAMION battery technology, the energy storage system was first developed at Ryerson University. According to the press release, the system completely lacks a footprint, because it can be attached to existing infrastructure

The energy storage system can be mounted 16 feet up on power poles, and can store as much energy as around 2,100 smartphone batteries could. During off-peak hours, it stores power and then releases it when there’s a demand. Energy storage technology could lengthen the lifespan of some of Toronto Hydro’s equipment, and offer reliability as a backup power source in case of an outage.

Bala Venkatesh, Academic Director at Ryerson University’s Center for Urban Energy, described this energy storage unit as the first of its kind in the world, saying in a statement, “This project showcases how the use of energy storage and smart grid technologies can enhance distribution system performance and reduce asset upgrade costs.”

The team monitoring the pole-mounted system is scrutinizing how it reacts to real-time data. So far they’ve found the system can indeed lower the burden on local transformers. Should the pilot project continue to go well, Toronto Hydro is considering implementing the technology on new installations on the more than 175,000 power poles in Toronto.

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Much has been made of the interoperability problem with home energy storage systems. Existing solar customers need battery systems that can connect easily with their legacy equipment. AC-coupled storage has proliferated to solve that problem.

When Maine-based Pika Energy got to work designing power electronics for a new residential storage platform, the team decided to go in a different direction.

“AC coupling is attractive because you can retrofit it. However, actually getting the new battery inverter to talk to the legacy PV inverter is not a simple thing to do,” said company President and co-founder Ben Polito. “Do you want to send your best technician to figure out how to interact with that 2011 inverter in an optimal way? It becomes more like a science project than a scalable solution.”

The desire for easily scalable deployment and reduced installation time led Polito to a plug-and-play platform approach. That product is now available for order as the Harbor Smart Battery, a collaboration with Panasonic Eco Solutions North America.

The system will ship later this year in 10- and 15-kilowatt-hour configurations, offering up to 6.7 kilowatts of instantaneous power. It integrates Panasonic lithium-ion battery modules and is designed for easy pairing with solar generation using the same inverter for both. It can handle islanded backup as well as solar self-supply.

The different elements link up through Pika’s REbus nanogrid platform, which Polito describes as “USB for clean power.” It provides a ready-made hookup so that different home energy assets can all communicate with each other, coordinating system performance based on market price signals. 

The Harbor system has built-in electronics to connect the Panasonic batteries into the REbus system. That makes it easy to slide the battery modules into place with minimal electrical work. The individual components weigh less than 75 pounds, so they don’t require large teams to carry.

“The whole 15 kilowatt-hour battery solution can be installed by one guy or gal in less than an hour,” said Polito, whose company recently raised $2 million.

The design concept reflects a theory of what the residential storage market will look like in the future. 

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The White House recently announced that $200 billion in tax cuts will be allocated through federal funds to incentive private companies to re-build US infrastructure. The expectation is that the resulting improvements will be ultimately valued at $1-trillion. While this is hardly a plan that states and cities can currently run with, a 50-slide document released in January offers at least a small amount of insight as to where these funds may go.

Fifty infrastructure projects that have potential to restore value to the economy are listed in the document. For each project, the document outlines estimated costs, potential number of jobs created, sources of funding (federal, public, and private), and a summary of a projects’ long-term value. Most projects in the document are related to the construction and maintenance of waterways and dams, mass public transit, highways, and pipelines. 50% are privately funded.

Out of the 50, seven projects focus on electricity, and five focus on “clean power”. Two projects led by private company, Anscuntz are covered in the report, with the TransWest Express Transmission line spanning 725 miles to transport electricity from 1000 wind turbines at the Chokecherry and Sierra Madre wind farm in Wyoming. The transmission leads to distributed load centers in Las Vegas, southern California, and Arizona. Another transmission line project for transmitting renewable energy in mid and eastern southern states is listed in the report, along with two more projects aimed at restoring hydropower plants, one of which would supply power to the NYC metro (slide 21).

But only one project in the document addresses grid modernization and implementation of storage system for renewable energy. This is the grid modernization project in southern California, which was initiated to cut down on the use of fossil-fuel backup generators during grid failures, and expedited after a natural oil shortage in Aliso Canyon. 

The Energy Storage Association notes that there will be a higher demand for energy storage as buildings, HVAC, and transportation add more than 3,500 TWh in grid loading over the next 8 years. Aging grids will require upgrades, and adding automatic controls can help to meet the higher electricity demands of a growing population. Storage can also help mitigate grid disruptions that are likely to become more frequent and severe. The ESA predicts that 35 GW of energy storage will be installed to supply electricity the grid by 2025.

The U.S. needs storage to reap the benefits of its existing and future renewable energy infrastructure. In 2016 alone, more than 7.8 GW of U.S. wind energy was installed, and now exceeds 72 GW installed capacity. 15 GW solar energy infrastructure was installed in the U.S. in 2016. By 2022, corporate-procured renewables are expected to reach 60 GW, and businesses and states will continue to invest in renewable energy infrastructure.

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Power provider Aggreko is jumping big into the energy storage sector with its acquisition of Younicos announced this weekend.

Green energy is a popular topic right now, with many countries signing on to the Paris Climate Accord and planning to move away from fossil fuels toward renewable energy.

While most countries are working toward establishing solar and wind power farms, some countries like Canada are looking toward the creation of compressed air storage plants for power storage and generation.

How can compressed air change the way countries use and store green energy?

Compressed Air as Energy Storage

Compressing air in porous caves can serve as a backup form of power that can be tapped when the demand for power is high. Essentially, the compressed air is stored in caves of porous basalt rock when power demand is low. When more power is needed, the air is heated and piped through turbines to generate power.

This is a great way for countries that already rely on wind power to hedge their bets, so to speak—to ensure that there is a sufficient supply of power even if the wind doesn’t blow as much as they would like.

But a problem with this type of energy storage is that it relies on natural gas to heat the air. As of 2016, natural gas use made up more than one third of the USenergy industry, and while it is more efficient than coal power, it is still a non-renewable resource.

A Step Away From Natural Gas

The biggest difference between traditional compressed air storage plants and the new 7 MWh plant approved to be built in Goderich, Ontario, is the way the air is heated before being piped through the turbines. As mentioned, standard plants rely on natural gas to heat the air used to generate power. The new Goderich plant, on the other hand, uses a heat exchange system.

This heat exchange system stores the heat that is generated when the air is initially stored. When the air needs to be heated to generate power, that heat is simply released, making this an emission-free form of energy storage.

This is a step away from the traditional energy storage markets. Lithium-ion batteries like the ones in the Tesla Home battery system currently hold the majority of the market. Most of these batteries, though, are designed for small, single-home applications. Compressed air storage, on the other hand, can generate power for entire communities or power grids when the need arises.

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