Energy storage is becoming a hot product in corporate energy procurement, with everything from solar paired with energy storage to stand-alone storage systems on companies’ wish lists. The market is still small, but it’s growing quickly, and as companies consider their procurement plans for the future, we should see more growth in 2019 and beyond.

As much as energy storage may be important for making large amounts of renewable energy work effectively in the grid, the reason companies are investing in energy storage is all about the bottom line. There’s real financial justification for energy storage, and that’s what keeps the business going.

How energy storage makes money

Energy assets like energy storage need to make financial sense before companies deploy them at scale, and it’s not a slam-dunk that energy storage meets the minimum return on investment. Still, there are a few ways energy storage can make financial sense both through cost savings and revenue from the battery’s value to the grid:

Demand charges can be up to half of a commercial building’s energy cost and are based on the peak amount of electricity demand going to the building. So, a big spike in demand for 15 minutes for one hour a month can mean thousands of dollars in added costs. Energy storage can help reduce those peak demand numbers and therefore save customers money.

Virtual power plants are a relatively new concept in energy, and what they’re essentially trying to do is band a group of energy storage assets together to act like a much larger power plant. When they work together, they can offset the need for expensive peaker plant power by using up cheaper electrons generated in off-peak hours. Utilities are starting to pay companies like Tesla (NASDAQ:TSLA), SunPower (NASDAQ:SPWR), and Sunrun (NASDAQ:RUN) for their virtual power plants, adding value to the energy storage they put into buildings.

Backup power is a more intangible benefit, but companies who rely on electricity to keep operations going definitely put a premium on having a quality backup, which energy storage is perfect for.

These aren’t the only ways energy storage can add value to companies or the grid, but they show the biggest selling points. When corporations are looking at their energy needs, energy storage can be a lot more appealing when you consider the cost savings, revenue potential, and value in backup power.

Highview Power recently unveiled its modular, giga-scale cryogenic energy storage technology, the CRYOBattery™. The company has announced a partnership with Tenaska to help develop four giga-scale plants in the U.S., with the first expected in in Texas. The company also is working on a fifth project in the Midwest.

The technology uses ambient air to store energy. Highview Power’s CEO, Javier Cavada, recently told POWER that the technology “can enable renewable energy baseload power … making 24/7 renewable energy a reality today.” Highview in a news release said the company’s “proprietary cryogenic storage technology … is currently the only long-duration energy storage solution that is locatable and offers multiple gigawatt-hours of storage, representing weeks’ worth of storage, rather than hours or days.”

Highview Power recently won the 2019 Ashden Award for Energy Innovation with the CRYOBattery. Ashden is a London, UK-based charity that works in the field of sustainable energy and development. Highview earlier this year announced a joint venture with TSK, a global engineering, procurement, and construction company, to co-develop CRYOBattery projects in Spain, the Middle East, and South Africa. The company also has partnered with Finland-based Citec to modularize the CRYOBattery system, helped by simplified design and streamlined engineering from Citec.

Highview said the modular cryogenic energy storage system is scalable up to multiple gigawatts of energy storage and can be located anywhere. It said the technology “reaches a new benchmark for a levelized cost of storage (LCOS) of $140/MWh for a 10-hour, 200 MW/2 GWh system.” The company has said the system “is equivalent in performance to, and could potentially replace, a fossil fuel power station,” and enables “renewable energy baseload power at large scale, while also supporting electricity and distribution systems and providing energy security.”

The technology uses liquid air as the storage medium. It provides time shifting, synchronous voltage support, frequency regulation and reserves, synchronous inertia, and black start capabilities. The CRYOBattery has a small footprint, even at multiple gigawatt-levels, and does not use hazardous materials, according to the company.

Highview Power has developed and optimized its own proprietary BLU2 core controller system, which integrates the control of all CRYOBattery components to provide optimal facility performance, which Highview said enables “managing the balance between flexibility, efficiency, and response. The BLU controller enables a system to be configured to a particular application through the selection of individual operational modes. It also provides operation and performance monitoring feedback, ensuring a facility’s optimal efficiency. The system’s embedded flexibility further ensures that the controller has the built-in capacity to adapt as a facility’s demand varies with market development.”

Nikola Power will launch a suite of software tools at Solar Power International 2019 that will help project developers take energy storage opportunities from development to deployment. The platform consists of two key tools: Ratio, an analytical tool that determines the optimal design and operation of a storage system; and Intellect, an Energy Management System that maximizes the value of an energy storage system in the field.

“Customers want to be sure they’re getting the savings they’ve been promised, developers want to take care of their customers and asset owners need to see a return on investment. That’s why we’ve designed our platform to span pre-build analytics and post-construction operation, maximizing the consistency between what’s promised and what’s delivered.” said Nikola Power’s founder and CEO Jonathan W. Postal (J.W.).

“We built our sizing and analysis software, Ratio, to help developers, EPCs and asset owners more accurately model, design and ultimately complete storage systems,” said VP of product Emerson Reiter. “Our energy management system, Intellect, uses the same foundational optimization algorithms as Ratio, maximizing consistency between analysis and operations. In the field, Intellect uses proprietary algorithms to forecast load and PV production, optimizes solar-plus-storage system performance and drives economic value across multiple use cases.”

Intellect is hardware-agnostic and can maximize revenue for both behind-the-meter and front- of-the-meter energy storage systems. It readily manages use cases such as peak shaving, time-of-use arbitrage, solar self-consumption and non-export, and is compatible with multiple early energy storage market programs such as the California SGIP Program, Massachusetts SMART and Clean Peak Energy Standard programs and the Hawaii market.

Ratio is a sizing and analysis tool designed to help developers tackle the key challenges in solar-plus-storage and standalone storage project development. One major hurdle developers face is determining the optimal battery size for the system because of the wide variety of factors that go into storage system performance. A core component of Ratio is its sizing feature that determines a system’s optimal battery size. Ratio accounts for numerous factors when optimizing a system, such as capital expenditures, tariff structure, load profile, financial targets and operational needs. Ratio also gives the user the flexibility to tailor their analysis to a project by providing optionality regarding tariff structure, operational limitations and financial parameters.

Ratio will be launched as a beta version at SPI and is available at no cost.

Intellect EMS is designed to optimize solar-plus-storage system operations and maximize customer returns in multiple use-cases. The software uses proprietary algorithms to forecast load and PV production data and then run an optimization for maximum economic benefit and asset health. Intellect can maximize savings both behind the meter and in front of the meter and is capable of operating in a number of use cases such as peak shaving, time-of-use arbitrage, self- consumption and non-export.

Mayor Eric Garcetti’s appointees on the Los Angeles Department of Water and Power (LADWP) Board of Commission unanimously voted to approve power purchase agreements for the Eland Solar and Storage Center, the largest solar and battery energy storage system in the United States. The agreements are subject to City Council approval.

“The climate crisis has never been more dire, but the solutions have never been clearer or cheaper — and Los Angeles is investing in renewable energy and cleaning our air as part of my DWP reform agenda,” said Mayor Eric Garcetti. “The Eland Solar and Storage Center will help us keep the lights on without the help of dirty fossil fuels — even when the sun isn’t shining — and power our progress toward a low-carbon, green-energy future.”

The recent unanimous vote from the LADWP board of commissioners approves two power purchase agreements with 8Minutenergy to develop the project and begin commercial operation no later than December 31, 2023. The contract will cost less than US$5 per year for each LADWP customer.

Located on 2650 acres in Kern County, California, the project will include two large-scale solar facilities that will capture 400 MW of solar energy and store up to 1200 MWh of energy — all of which can be distributed to meet peak demand, reducing the need for natural gas at night or on cloudy days. The site will hold enough energy to power 283,330 homes across Los Angeles.

The Eland proposal, which will be built in two phases, was selected out of a pool of 130 proposals because of the project’s scope and competitive price, which includes a fixed cost of less than 2 cents per kilowatt-hour for solar power, the lowest price offered in U.S. history. 8Minutenergy will cover all costs associated with the development, maintenance, and operation of the facility.

8Minutenergy has finalized and signed a project labor agreement with the local labor unions of Kern County to ensure the project will provide good-paying, green jobs for Southern California workers. The project is expected to create 700 jobs over the 14-month construction period and employ 40 long-term operations and maintenance staff when in service.

Currently, the LADWP receives 31% of its energy from renewable sources, and the Eland Solar and Storage Center will increase that number by up to 7.1%. This will enable the city to prevent up to 727,360 metric tons of greenhouse gas emissions from a conventional fossil fuel power plant — which is equivalent to taking 148,700 cars off the road for a year.

“You could say that maybe 10 or 12 years ago, it was interesting and cutting edge, then it sort of went and fell by the wayside, a lot of companies went into administration; and now we’ve come out of the other end now.”

For some people, like Adam Bond of fuel cell maker AFC the interest in hydrogen and fuel cells in terms of repowering the planet with cleaner energy, never went away. While a few years ago, we observed efforts in Japan to build on years of academic work in the technologies through launching vehicles for the consumer market, it’s fair to say that hydrogen, and its use in conjunction with fuel cells, was put aside by some of its early big players.

This week at the Solar & Storage Live show in England, Energy-Storage.news met with system integrator and inverter maker Multi-Source Power (MSP), the CEO of which in turn introduced us to Alkali Fuel Cell (AFC). MSP chief exec Simon Patterson told Energy-Storage.news that in addition to working with battery and energy storage system providers such as Tesvolt, as we had heard in the past, MSP is now also working with the fuel cell player, in this case developing technologies to charge electric vehicles through strategically-sited systems placed in so-called ‘soft grid’ locations.

“The core of our product is in our flexible inverter technology, which allows us to integrate multiple energy sources. That can mean energy storage, power generation or in this case, a novel power source, which is AFC’s fuel cell.”

AFC’s Adam Bond agrees with the assessment that a lot has changed in the fuel cell space over the past decade or so, but disagrees that the exit of many companies, particularly big names, mean the battle for a place for fuel cells in the energy transition is far from over.

“The hydrogen economy has largely been driven by academic institutions. AFC stands for Alkali Fuel Cell: our technology was originally used in space programmes, so it was ‘the original’ and from there you’ve seen different variants of fuel cell,” Bond said.

“But as the renewable market starts to kick in, prices go down, everyone realises that there’s a gap in the market for a baseload clean energy solution.”

The supplier of what has been touted as “one of the largest” grid-connected batteries in the world, to be installed alongside the 200MW Solar River Project in South Australia, has been revealed as GE Renewable Energy.

In an announcement on Thursday, GE said it had been selected to supply and integrate a 100MW/300MWh big battery for the 200MW solar PV plant.

By our calculations, if built now, it would be the biggest lithium ion battery in the world, besting the Tesla big battery at nearby Hornsdale which stands at 100MW/129MWh. However, other big batteries may beat it to the title before it is completed as several are under construction in the US.

Construction of the Solar River Project is due to get underway by Christmas this year, after its developers snared a power purchase agreement with major utility, Alinta Energy.

That deal, announced in July, locked in finance for the $480 million project, which is being developed by Jason May and Richard Winter near Robertstown, in South Australia’s mid-north, the starting point for the proposed new inter-connector to NSW.

The company has not disclosed the financial details of the 15-year PPA, but told RenewEconomy at the time that the deal with Hong Kong-owned Alinta was for 75 per cent of the solar farm’s output, making Solar River “very bankable.”

At that time, the supplier of the battery system remained a mystery, but May, who is the Solar River Project CEO, suggested the decision had already been made.

“This is the first purpose-built PV battery system in the world,” he told RE. “It’s never been deployed before, but because of who (the company supplying the battery) are, it can be banked.”

In comments this week, May said locking in GE as the supplier of the big battery system marked another major milestone for the project.

“General Electric is a world leader in renewable energy storage technology… (and) brings a cutting-edge technology to South Australia, by delivering huge energy transfer capacity with an intelligent operating system,” May said.

The world has watched on as some of its leading regional markets, China, South Korea, Australia, Japan, parts of the US, the UK, and many parts of Europe have raced ahead in deploying energy storage in the last five years, mostly, but not only, lithium-ion batteries. IHS Markit says that the US in 2019 will deploy around 712MW, becoming the world’s largest market for grid-connected batteries this year, while another research firm, Wood Mackenzie Power & Renewables, has predicted that 4.3GW could be installed worldwide during 2019.

Record-breaking figures have been reported in the US and other territories such as the UK, year-on-year. Yet from other territories reports come in of interminable delays, of hotly contested jurisdictional rights, the difficulty in overhauling not only the technical design of the grid but the ways in which we think about energy markets too. Everyone seems certain energy storage is a key part of the decarbonised energy system, but no one seems certain when we will be able to breathe a sigh of relief that that place is assured. And of course, there’s the question of whether success in these leading markets can be replicated all over the world.

In those leading regions, the rapid rise is happening both in front of and behind the meter, with economic cases that are finally starting to make sense and often – but not always – with specific policy support. And while solar industry investor and commentator Jigar Shah predicted confidently that utilities would try to take ownership of energy storage as much as they could themselves at the beginning of 2018, it seems as though 2019 was the year that this really took shape.

A quick case study of a utility in one of those ‘leading regions’ is municipal power provider LADWP in California, which over the next few years will deploy enough batteries to cover more storage output and capacity than its existing 1.5GW pumped hydro plant. We also asked Janice Lin and Jack Chang at consultancy Strategen, itself based in California, to write about the ‘challenges in the sun’ California faces and some of the initiatives, both private and public, that are seeking to overcome them (see p.32 of PV Tech Power Vol.20 and on this site here).

Meanwhile in Australia, major utility AGL is now offering rebates of up to AU$7,000 (US$4,811) off the cost of residential ESS purchases, as well as a virtual power plant programme which benefits homeowners in some states to the tune of AU$280 credit for a year for enrolling.

Last week, the city of Los Angeles inked a deal for a solar-plus-storage system at a record-low price. The 400-MW Eland solar power project will be capable of storing 1,200 megawatt-hours of energy in lithium-ion batteries to meet demand at night. The project is a part of the city’s climate commitment to reach 100 percent renewable energy by 2045.

Electricity and heat production are the largest sources of greenhouse gas emissions in the world. Carbon-free electricity will be critical for keeping the average global temperature rise to within the United Nations’ target of 1.5 degrees Celsius and avoid the worst effects of climate change. As world leaders meet at the United Nations Climate Action Summit next week, boosting renewable energy and energy storage will be major priorities.

Wind and solar skeptics are quick to point out that such systems are expensive and can’t keep the lights on 24/7. The first argument is wilting as renewables become cost-competitive with fossil fuels. The second one also boils down to cost: that of energy storage, which will be essential for sending large amounts of renewable energy to the grid when needed.

“Low-cost storage is the key to enabling renewable electricity to compete with fossil fuel generated electricity on a cost basis,” says Yet-Ming Chiang, a materials science and engineering professor at MIT.

But exactly how low? Chiang, professor of energy studies Jessika Trancik, and others have determined that energy storage would have to cost roughly US $20 per kilowatt-hour (kWh) for the grid to be 100 percent powered by a wind-solar mix. Their analysis is published in Joule.

That’s an intimidating stretch for lithium-ion batteries, which dipped to $175/kWh in 2018. But things look up if you loosen the constraints on renewable energy, the researchers say. Then, storage technologies that meet the cost target are within reach.

The team picked four locations—Arizona, Iowa, Massachusetts, and Texas—and gathered 20 years of data on those solar and wind resources there. Such resources can change considerably with the seasons and over the years, and their longer-term analysis—while previous studies had used data from just a year or two—captures the variations that may occur over the lifetime of a power plant, the researchers say. They modeled the costs of wind-solar-plus-storage systems that would reliably meet various grid demands, such as providing baseload energy 24/7 and meeting peak-hour spikes in demand for a few hours.