In recent months, the Federal Energy Regulatory Commission (FERC) has taken several steps toward fully incorporating energy storage in U.S. wholesale energy markets — which, if successful, could be a major boon for the energy storage industry.

These actions reflect the fact that there’s an exponential amount of energy storage slated to come on-line, as well as its “unique abilities to help in different ways,” said Acting FERC Chairman Cheryl LaFleur, speaking this week at the National Association of Regulatory Utility Commissioners’ winter meeting.

“Sometimes it [benefits] transmission, sometimes it’s generation, sometimes it can help with ancillary services, and we’re proposing to require changes in the wholesale market to reflect that,” said the commissioner, who is a Democrat.

In November, FERC issued a proposed rulemaking that would require each regional transmission organization and independent system operator to remove any barriers in their tariff structure that are inhibiting the market participation of storage resources.

“We wanted them to be able to participate to the full extent of their capabilities,” said LaFleur.

The same proposal would also allow distributed energy resources, including but not limited to energy storage, to be aggregated and bid directly into organized wholesale markets. The proposal specifies that resources looking to participate at the wholesale level cannot already be receiving payments through the distribution system, such as net metering.

Commissioner LaFleur has expressed some concerns over opening up market competition and is viewed by some as more friendly to traditional market players. And with three seats currently unfilled on the five-member FERC panel, there’s uncertainty around how, and how quickly, energy storage and other advanced energy technologies will be recognized at the national level. 

Several clean energy stakeholders filed comments on Monday urging FERC to allow advanced energy technologies to compete on providing energy and reliability services.

The proposed rule was just the first step in opening up energy markets. FERC commissioners still have to decide whether to finalize it — which will have to wait until the open seats are filled. Regional markets will then have 18 months to change their tariffs, which is a process that goes through FERC review and is also judicially challengeable.

“These technologies aren’t new,” said Arvin Ganesan, vice president of federal affairs at Advanced Energy Economy. “So it’s not a matter of whether they can technically provide [grid] services, but it becomes a question of whether RTOs will change their tariffs to allow these technologies to compete to provide that service.”

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The news has been flying thick and fast about Germany-based sonnen, maker of the sonnenBatterie “eco compact” energy storage system. Billing its technology as “the smart way to capture the sun,” sonnen seems determined to race neck and neck with Tesla to fill strong demand in the US for small scale batteries with slim, sleek silhouettes.

In the latest development, sonnen has just just announced the opening of a new manufacturing and R&D center in Atlanta, Georgia. So, why Atlanta?

Another New Innovation Hub For Atlanta

The new facility, dubbed the sonnen InnovationHub, will start churning out product in April.

As an R&D facility, the InnovationHub will ramp up sonnen’s US business, which is already growing at an “exponential” rate according to the company. Here’s a snippet from Christoph Ostermann, sonnen Group CEO:

We expect that linking our US manufacturing and R&D teams in one facility will increase the rate of product innovation, and enable us to better adapt to the future needs of the high-growth U.S. residential energy storage market.

Like Tesla, sonnenBatterie is based on lithium-ion technology. One difference is that sonnnen enables its customers to dip into the community aspect of small scale, distributed energy production and storage, paving the way for the “virtual power plant” of the future:

Through its sonnenCommunity, energy independent homeowners throughout Europe can produce, store and share their own electricity. sonnen’s latest developments, the sonnenFlat-Box, which connects non-solar customers to the sonnenCommunity and grid services, and the sonnenFlat tariff, which provides community members with energy at $0 for 10 years, are changing the way energy is used.

As for the choice of Atlanta, that’s a natural. Sonnen already has a foothold in California and when it went shopping for an east coast location, Atlanta’s Midtown Alliance probably caught its eye with pitches like this:

Vibrant. Innovative. Sustainable. A community at the epicenter of life and business, urban and natural, technology and culture. Home to the city’s premier green space, historic neighborhoods and Southern landmarks. This is Midtown Atlanta – in the heart of it all.

Midtown Atlanta’s Innovation District is already a hotspot for clean tech companies and other R&D, anchored by Georgia Tech University, so there’s that.

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Profitable production of electric vehicles is highly important. Our capitalist society revolves around profitability and therefore, if electric vehicles are to prevail over gas-powered cars, they need to be profitable to manufacture in mass.

A new study published this month by McKinsey & Company and embedded below looks into how automakers can move past producing EVs as compliance cars and “drive electrified vehicle sales and profitability”. Unsurprisingly, it describes battery economics as an important barrier to profitability and though the research firm sees a path to automakers making a profit selling electric vehicles as battery costs fall, it doesn’t see that happening for “the next two to three product cycles” – or between 2025 and 2030.

That’s despite battery costs falling from ~1,000 per kWh in 2010 to ~$227 per kWh in 2016, according to McKinsey.

The company wrote in the report:

Despite that drop, battery costs continue to make EVs more costly than comparable ICE-powered variants. Current projections put EV battery pack prices below $190/kWh by the end of the decade, and suggest the potential for pack prices to fall below $100/kWh by 2030.

We are talking about complete battery pack cost and not just the battery cells. The costs of both are often confused.

Automakers capable of staying ahead of that cost trend will be able to achieve higher margins and possible profits on electric vehicle sales sooner.

Tesla is among the automakers staying ahead of the trend. While McKinsey projects that battery pack prices will be below $190/kWh by the end of the decade, Tesla claims to be below $190/kWh since early 2016.

That’s how the automaker manages to achieve close to 30% gross margin on its flagship electric sedan, the Model S.

Though the Model S has a starting price of $68,000 and battery costs need to fall again in order to allow a starting price of $35,000, like for the upcoming Model 3.

Tesla aims to reduce the price of its batteries by another 30% ahead of the Model 3 with the new 2170 cells in production at the Gigafactory in Nevada.

It should enable a $35,000 price tag for a vehicle with a range of over 200 miles, but McKinsey sees $100/kWh as the target for ” true price parity with ICE vehicles (without incentives)”:

Given current system costs and pricing ability within certain segments, companies that offer EVs face the near-term prospect of losing money with each sale. Under a range of scenarios for future battery cost reductions, cars in the C/D segment in the US might not reach true price parity with ICE vehicles (without incentives) until between 2025 and 2030, when battery pack costs fall below $100/kWh, creating financial headwinds for automakers for the next two to three product cycles.

It matches the estimates of most battery manufacturers, but of course, Tesla is again pushing for a more aggressive timeline. CEO Elon Musk has previously hinted at a possibility of achieving a battery cost of $100 per kWh in 2020 – 5 to 10 years before most estimates.

They plan to achieve the price target with economies of scale and manufacturing efficiency improvements through the Gigafactory program. Whether they can achieve it or not remains to be seen, but it’s not impossible if they are truly currently below $190 while projections didn’t estimate that price point until 2020.

It wouldn’t be surprising to see other automakers following Tesla with their own efforts to build giant battery factories in order to reach similar price points. Another explanation for the cost lead could be the type of cell and the pack architecture. Tesla has been mostly alone in producing battery packs for electric vehicles using thousands of individual cylindrical li-ion battery cells in each pack. In contrast, established automakers, like Nissan with the LEAF or even GM with the Chevy Bolt EV, have been using fewer but larger prismatic cells to build their electric vehicle battery packs.

Recently, new electric vehicle companies have been following Tesla with cylindrical li-ion battery cells instead of prismatic cells like most automakers.

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An Adelaide company has developed a silicon storage device that it claims costs a tenth as much as a lithium ion battery to store the same energy and is eyeing a $10 million public float.

1414 Degrees had its origins in patented CSIRO research and has built a prototype molten silicon storage device which it is testing at its Tonsley Innovation Precinct site south of Adelaide.

Chairman Kevin Moriarty says 1414 Degrees’ process can store 500 kilowatt hours of energy in a 70-centimetre cube of molten silicon – about 36 times as much energy as Tesla’s 14KWh Powerwall 2 lithium ion home storage battery in about the same space.

Put another way, he says the company can build a 10MWh storage device for about $700,000. The 714 Tesla Powerwall 2s that would be needed to store the same amount of energy would cost $7 million before volume discounts.

Most of us nowadays are lucky enough to not think twice before consuming electricity in our home. From switching on kettles to flipping a switch, we’ve become accustomed to the blink of an eye being a transition to an invisible force that spreads through the walls and powers our appliances and devices.

Electrical grids currently bring energy to millions of people, but the fundamental characteristics of the system are strained and flawed. In addition, the costs to access such energy networks in remote areas can be high. Grid efficiencies are also very low. Loss during generation and transition phases cause efficiencies to be as low as 33%.

The hindrances, coupled with the impacts of fossil fuel electricity method, the crippling indirect cost of healthcare (through respiratory illnesses) and global warming clearly show that the electrical grid is need of a major revamp.

Where do we go from here?

To decentralise the electricity supply and accelerate the adoption of large volumes of electricity from renewable sources will require advances in energy storing technologies. The ability to efficiently, and reliably, store intermittent energy will keep homes warm and the kettles going through the cold and dark winter days, and the calm summer nights.

Luckily for us, there are many researchers around the globe innovating and developing novel technologies to help make single-home and community energy storage as widespread as current power lines that visually pollute our neigbourhoods.

Anyone would be negligent to discuss home battery technologies without at least acknowledging Tesla. Tesla’s small ‘Powerwall 2’ battery can store a huge amount of energy which is able to power a 2-bedroom home for a full day. However, Tesla is currently facing fierce competition from other Li-ion battery producers.

German manufacturer, Sonnen, offer a similar home battery and is developing an AirBnB-style platform for electricity sharing. Tesla also face sharp competition from China. Many Chinese companies have recently come out with promises to undercut Tesla’s batteries and has even put into question whether Tesla’s Gigafactory is still a worthwhile and viable endeavour.

It is critical to drive Li-ion innovation, as it continues to be the standard ‘tried-and-tested’ method for rechargeable energy storage. This extends from homes, to vehicles and mobile devices.

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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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The problem with today’s power grid isn’t the lack of electricity but rather the lack of it at certain times. The United States has progressively moved towards adding renewable energy to the grid but solar and wind power are rather intermittent. Worst of all, some of this power is completely wasted because our grid is unable to store it properly. Tesla, along with other companies, has begun to solve this pressing issue.

Three new storage plants are in the works and they’re unlike anything before. The plants will be completely reliant on lithium ion storage. Lithium powered batteries have seen rapid reductions in price in the past several year’s thanks to the high demand for electric cars. Tesla is also developing a gigafactory in Nevada to mass produce these batteries, some of which will be used in the storage plant. AES Corp. and Altagas Ltd. are the other two companies creating battery plants in California. The Altagas plant was activated January 27th. AES has another battery plant in Arizona scheduled to go online within the next several months as well as a project internationally in India.

These plants will reduce the number of blackouts due to power shortage at peak hours and prevent loss of power generated but not used. When it comes to renewables there’s virtually no carbon dioxide emission or risk of spills harming the environment. Electricity generated from renewables will be stored appropriately and reinforce the notion that our power grid really can go green.

This does not bode well for fossil fuel producers. Combustion plants using fossil fuels see this as an imposing threat to their industry. With 67 percent of our grid currently relying on nonrenewable energy, there could be a sizeable portion of market share up for grabs. The push to reduce climate change has governments betting on these batteries. President Trump, however, has promised to bring coal and crude production to a new level of activity. Economists are unsure how his policy will play out but all this guarantees oil producers is a little more sweet time before this inevitable adaptation.

AES has remained steady while Altagas dropped $2.18 per share since the week of their plant’s opening. Even with these losses, investors should consider Altagas as well as AES. The projects show promises of growth but only a fraction of what’s expected of Tesla. The company’s stock has grown nearly $70 since December and analysts don’t see momentum slowing. Tesla’s plant is now online and the gigafactory is to be completed next year. Investors should see strong returns in Tesla’s stocks around these times, especially with a lot riding on the gigafactory’s planned opening.

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A 200-kWh advanced energy storage facility at Texas Electric Cooperatives’ Master Distribution Center in Georgetown, Texas is designed to help its 75 member co-ops learn about the benefits of energy storage — and tap into a special pricing deal with a vendor.

“Our project here at our Georgetown facility will provide an up-close opportunity for our members to see this technology at work,” said Archie Lopez, director of strategic initiatives for Texas Electric Cooperatives (TEC). “They will be able to see the equipment and software in a real-world application and any lessons learned here will assist our members in finding the right application of this technology for their customers.”

TEC partnered with Advanced Microgrid Solutions — which installed and operates the system — to offer services to the co-ops at “preferred pricing,” according to AMS. Lopez said TEC doesn’t know how many co-ops will acquire storage systems, and that all the co-ops are very different from each other, with differing needs.

The storage system at the 160,000-square-foot Master Distribution Center will reduce TEC’s peak demand and provide support to the electric grid.

Energy storage helps meet the goals of the co-ops, said Lopez.

“Electric cooperatives exist to serve their members with safe, reliable electricity delivered in a cost-effective manner. Because battery storage has a variety of applications to help meet those goals, cooperatives are well-suited to explore the opportunities battery storage may have for their systems,” he said.

The Georgetown storage system will be financed and owned by AMS and AMS and TEC will share the savings generated by the storage system, said Manal Yamout, vice president of policy for AMS.

“The primary revenue stream to finance it will be demand charge savings on energy bills,” she explained. “We are sharing in the energy bill savings with the customer.”

She noted that the financing arrangements differ from host to host, and couldn’t reveal the details of the TEC contract. However, she provided details about another deal to illustrate the contracts AMS signs with clients.

The Inland Empire Utilities Agency in southern California has a contract with AMS for a 3-MW system plus 3.5 MW of solar, 1 MW of wind and 2.8 MW of biofuel cell generation. This system is expected to reduce peak energy demand up to 15 percent, according to materials provided by AMS.

In the Inland Empire case, expected savings are $68/kW/year.  The utility and AMS split the savings 50 -50 under the agreement.

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