Microgrids and energy storage can help U.S. states assure energy supply during disasters, according to two papers recently issued by the National Governors Association (NGA).

The papers emerged from an effort NGA undertook last year to identify best energy practices that have emerged from Superstorm Sandy.

A six-state team studied lessons learned from New Jersey after being pummeled by the storm in 2012. The teams, from Hawaii, Maryland, Michigan, North Carolina, Oklahoma and Rhode Island, then went on to create action items to guide their own state efforts.

The action items are described in the paper, “Improving State Coordination for Energy Assurance Planning and Response.”

Among other things, the states are exploring the feasibility of using microgrids and other forms of distributed energy resources, creating robust energy plans, improving utility/government communications, and cataloging critical energy assets.

For example, Rhode Island is working to identify microgrid sites as part of a statewide program, according to the report. The New England state is funding the microgrid effort with a grant from the U.S. Department of Housing and Urban Development and proceeds from the Regional Greenhouse Gas Initiative (RGGI).

The report also noted that as a result of Sandy, NJ Transit is developing a microgrid to power the transit system during outages, NJ Transit, the nation’s third largest provider of bus, rail and light rail transit, is partnering on the project with New Jersey Board of Public Utilities (BPU), the U.S. Department of Energy and the Federal Transit Administration.

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We knew the Mercedes-Benz residential battery would be coming to the shores of America in early 2017. Now we know it will arrive with a whole new company.

Parent company Daimler AG has created Mercedes-Benz Energy Americas, LLC to sell stationary storage of all sizes to the U.S. market. Like Tesla, this is a car company that developed electric vehicles (EVs) and then put its battery expertise to work in a stationary storage product.

The Mercedes home batteries will also go head-to-head with fellow German emigrant Sonnen, a competition made all the more personal because Daimler hired Sonnen’s former U.S. CEO, Boris von Bormann, to lead the effort. After three years of working on Sonnen’s U.S. entrance, he’s learned about the American appetite for storage and how to market to it, and now combines that experience with the resources and reputation of Mercedes-Benz.

Energy Americas will act as the U.S. counterpart to Germany’s Mercedes-Benz Energy GmbH. Both companies develop and sell batteries made by Daimler’s wholly owned subsidiary Deutsche Accumotive. This company has been manufacturing lithium-ion battery systems for Mercedes-Benz electric cars, so the batteries have seen rigorous testing and are built for much more intensive use than most stationary systems ever see.

Mercedes isn’t just dipping its tires into the electric mobility craze. By 2025, the company wants to sell 10 or more EV models, and it’s investing 1 billion euros in scaling its battery production capacity. The company has bigger ideas than just cars, too — it’s envisioning an “electric mobility ecosystem” including automation, ride-sharing and home improvements like battery storage and EV chargers.

The residential market will be an early focus for the fledgling U.S. enterprise. The metallic gray modular system looks like a home appliance, stacks from 2.5 kilowatt-hours up to 20 kilowatt-hours and comes with a 10-year warranty. That goes on sale the first quarter of next year, as will larger commercial packages. Mercedes is looking for channel partners to distribute and install the systems.

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The optimism in the energy storage industry is based on soaring demand, rapid technological advances, expanding capacity and, for some, what will likely be a scary competitive environment.

First, the good news. Lithium ion battery packs over the last ten years have declined faster than the cost of solar, said John Carrington, CEO of Stem, which makes behind-the-meter storage systems for hotels and other commercial customers looking to shave peak power costs, during a hallway meeting at Finance West sponsored by the American Council of Renewable Energy this week.

Solar panels have declined by 50% or more in the last five years. Batteries have declined by 80% in three years, he said. Battery packs hit the under $300 per kilowatt hour mark last December, Carrington added. By 2020, battery pack prices could drop to $190 per kilowatt hour. (In 2007, lithium ion battery packs in the wholesale markets sold for around $1,000 per kilowatt hour.)

The volumes of batteries shipped at the same time is expected to grow by 6x 2025, he added, citing a Goldman Sachs report, fueled in part by the rapid adoption  of solar, wind and microgrids. Stem has approximately 75MWh under management. Stem doesn’t generally sell batteries: it installs them at commercial sites and charges a subscription fee based on a formula that takes into consideration the cost of power minus rebates and fees received from utilities for grid balancing. Everybody wins.

Goldman Sachs also predicts energy density will increase from 200 watt hours per kilogram to 500 Wh/kg by 2025 before the still experimental solid-state batteries take over for lithium ion.

Declining prices, improving technology and growing demand—what could go wrong?

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Energy storage systems (ESS) are growing in importance as renewable energy sources like wind power, wave power and solar are being commissioned and connected to the grid at an ever-increasing rate. Energy Storage Systems are needed to help the grid deal with the instability and unpredictability of such power generation systems and match them to equally variable consumer demand. 

In the UK, renewables currently produce over 20% of the country’s electricity and this is likely to exceed 30% by 2020. The current installed capacity is in the region of nine gigawatts indicating the nation’s reliance on more environmentally friendly forms of energy generation into the future.

Battery-based systems are rapidly gaining market share for use as ESSs and gaining acceptance due to advances in their design. Other energy storage approaches can use a range of media, including compressed air, pumped hydro and flywheel. Properly packaged, battery-based systems offer advantages in transportability and size. Advances in battery design and construction have helped manufacturers improve efficiency and lifespan, as well as enhance safety of these systems. 

The configuration of batteries and the set-up of the system can bring a variety of benefits to grid quality. Some configurations are useful for rapid response short-term discharge to maintain grid frequency stability and power quality, others meanwhile can supply a longer duration output to perform load balancing and peak shaving, or even backup power on a microgrid. 

The technical capabilities and benefits of a battery energy storage system (BESS) can address multiple aspects of power quality and storage.

Frequency regulation – Because utilities must maintain their output within a narrow frequency range, this is a common application for a Power Conversion System (PCS)/BESS. High demand can cause a slight drop in frequency, especially on systems of lower capacity. A BESS can compensate for peak loading with a high-energy discharge through the PCS within a second.

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Tesla-SolarCity could become an energy equivalent to an Uber or AirBnB, with a merger between the two creating “an integrated sustainable energy company, which does not own any centralised generation assets”, one expert has commented.

Julian Jansen, analyst and energy storage research manager at Delta Energy & Environment (Delta EE), spoke to Energy-Storage.News about an investor presentation issued by Tesla ahead of the merger talks, which go to a shareholder vote on 17 November.

Tesla, led by CEO and chief product architect Elon Musk, and SolarCity, headed up by Musk’s cousins Lyndon and Peter Rive – CEO and CTO respectively – are seeking to become an integrated provider of electric vehicles, rooftop solar, battery energy storage and now also BIPV solar roof tiles.

At last week’s launch event for the solar roof tiles, Musk also launched Powerwall 2, with an increased 14kWh of storage capacity and a new look. The unveiling of the updated home storage system which will retail at US$5,500, followed the lower key announcement via Tesla’s official blog of the new generation of Powerpack commercial, industrial and utility-scale batteries.

Delta EE’s Jansen said that the unification of Tesla and SolarCity follows the path of convergence seen between energy storage and solar over the past couple of years and the acquisition “is really part of the wider transformation of the energy system”. While it was somewhat novel for an energy storage manufacturer to move into solar through acquisition, there are plenty of examples of other big companies moving from solar PV, automobiles or energy into energy storage, such as Panasonic, Mercedes-Benz and Total.

Jansen said therefore that the new entity created by a potential merger would be in some ways analogous to taxi app Uber, which hires out drivers and their cars rather than owning its own fleet of cars.

“It’s not hard to imagine Tesla evolving into a company that provides new energy solutions for different customers groups, connecting customers and aggregating loads and distributed generation, as well as providing flexibility to the system,” Jansen said.

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When it comes to the future of the solar power industry, some trends have built up enough momentum to be pretty close to inevitable — including the continuing importance of operational cost reductions, the escalating need for storage, and the ongoing development of microgrids, to name just a few. 

These and other important trends in the solar industry are on the radar of the China-based string inverter manufacturer Huawei. 

The quest to push costs down

Already, it’s possible to see the vital role string inverters are playing in boosting solar’s continuing growth — particularly when it comes to driving down costs so that solar can compete with and ultimately replace fossil fuel generation.

“The future trend of the solar plant will be a higher level of reliability and lower operational costs,” said James (Yuyu) Qiao, vice president of operations and product solutions for Huawei Smart PV Solutions North America.

String inverters help with both.

Lower operating costs are directly related to improved reliability, which Qiao notes is a function of both string inverters’ higher reliability design and the evolution toward a distributed solar plant architecture.

Having a multitude of string inverters instead of a few central inverters means solar plant operators are not as susceptible to failure-related downtime. Indeed, if a string inverter at a solar plant stops working, it has only a small impact on generation because only a very limited number of panels are affected.

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Energy storage company Younicos has signed an agreement with strategic partner Panasonic to design and build a solar-plus-storage system at Peña Station NEXT in Denver, Colorado, which includes the operations hub for Panasonic Enterprise Solutions Co. and Panasonic CityNOW.

The system will make use of multiple Younicos Y.Cubes, the “energy storage-in-a-box” solution for C&I applications from the German-American industry pioneer.

The project calls for four Y.Cubes to be installed at the Panasonic facility in Denver, Colorado. The 1 MW storage resource, which will be connected to the Xcel Energy power grid, will provide frequency regulation, solar grid integration through ramp control, grid peak shaving, passive energy arbitrage, and backup power – enabled by Younicos’s Y.Q storage control software.

This multi-mode operating capability will enable Panasonic, Xcel Energy, and other microgrid stakeholders to derive maximum benefits from Xcel Energy’s 1.6 MW solar PV system sited on a parking structure nearby, along with 259 kW of PV on the building’s rooftop.

“The solar-plus-storage microgrid is an anchor, not just of Panasonic’s new Denver operations hub, but also for the broader Peña Station NEXT development, which is a 400-acre, smart and sustainable transit-oriented development in Denver,” said Jamie Evans, managing director of the Energy Solutions Group at Panasonic Enterprise Solutions Company. “We are excited to partner with Younicos and Xcel Energy to bring this innovative project to life.”

“We’re very pleased to work with Panasonic on this project, which highlights the advantages of our plug-and-play Y.Cube system for commercial and industrial use cases,” said Stephen Prince, Younicos CEO. “Like Younicos, Panasonic is a technology leader with a strong focus on the benefits of solar-plus-storage for different applications. They and the local grid will benefit enormously from this resource.”

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Tesla’s unveiling of its new Powerwall 2 battery with a built-in AC inverter — along with some upcoming solar roof tile products — takes a leaf from the Apple playbook of vertical integration. It’s the latest step on a corporate path, including the imminent merger with SolarCity, that moves Tesla closer to being a vertically integrated provider of energy solutions.

As with the Apple product ecosystem, this aims to establish Tesla as a single entry point for energy generation and storage systems in the home environment. Tesla has both the name and the resources to become a strong player in this realm.

AU Editor’s Note: Simon Hackett is the executive chairman of Redflow, an Australian battery energy storage company that builds battery systems for residential, commercial and industrial use. Previously the founder of Internode, Hackett also sat on the board of the NBN between 2013 and 2016.

This article was originally published on his website.

Tesla’s vertical stance contrasts with the ‘horizontal’ orientation of the rest of the industry — a commercial ecosystem that offers choice at all layers of the energy storage system, using standardised interfaces to allow mix-and-match assembly of devices in the solution ‘stack’.

Tesla’s evolving approach stands to put it into direct opposition to former allies — both existing inverter/charger vendors that may be cut out of the Tesla solution set and experienced energy system installers, who may see the presence of hardware ‘handymen’ installing generic/entry-level solutions to often complex underlying energy management problems.

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All grid operators know their job is a balancing act, a case of managing supply and demand as efficiently as possible.

But grid operators also know the current trends in global energy generation – rising levels of renewables on the grid, rapidly falling rates of conventional power plant construction – pose a significant challenge to the grid equilibrium they work so diligently to maintain.

Operators are under pressure – particularly those managing ageing grids in America, Canada and the UK – to find a cost-effective way to handle the growing intermittency and volatility of a renewables-reliant grid, and are in turn latching on to utility scale energy storage as the answer.

The sector is forecast to enjoy stellar growth over the next four years, with Navigant Research predicting a compound annual growth rate of 48 per cent between 2016 and 2020.

Leclanché is one of the companies getting a slice of the action. At the beginning of this year the Swiss energy storage firm announced it would supply one of the largest grid ancillary services projects in North America – a 13MW, 53MWh system for Ontario’s Independent Electricity System Operator.

And yesterday it announced its second North American venture – a 20MW/ 10MWh grid-scale storage project in the US region overseen by PJM Interconnection, a regional transmission operator covering states from Michigan to North Carolina, which is in charge of delivering electricity to a population the size of Germany.

The Marengo Energy Storage Plant, Leclanché’s first US project, will provide real-time frequency regulation services to PJM in the Chicago area, helping to stabilise the grid as it handles the electricity load from conventional power stations and intermittent renewable sources.

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