Navigant Research Blog

FERC vs. EPSA Ruling: A Win for Demand Response and Energy Storage

— February 1, 2016

Control panelWhen independent system operators (ISOs) and regional transmission organizations (RTOs) were structured over a decade ago, rate structures were primarily based on participation by conventional energy generation methods. During that time, new technologies and services like energy storage were not contemplated. The Federal Energy Regulatory Commission (FERC) Order 745, approved in 2012, called for grid operators to pay the full market price (known as the locational marginal price) to economic demand resources in the real-time and day-ahead markets, so long that it is cost-effective.

In short, Order 745 allows third parties (i.e., customers) to circumvent utility prices and provide flexibility via demand-side management. The United States Supreme Court (SCOTUS) made headlines on January 25 by upholding the FERC’s authority to regulate demand response (DR) programs in wholesale markets. Known as FERC vs. Electric Power Supply Association (EPSA), the Court reaffirmed in a 6-2 decision that FERC acted within its authority under the Federal Power Act when it issued Order 745, setting standards for DR measures and pricing in wholesale markets. This ruling is a big win for energy conservation service providers like EnerNOC, which saw its stock shares jump 65% midday after the ruling.

Battery Storage

The decision is not only big for DR, but has huge implications for resources at the edge of the grid like energy storage. Battery storage is gaining popularity among commercial and residential sectors as a cost-effective solution to reduce peaks, manage demand charges, and integrate renewables; Navigant Research forecasts that 102.4 GW of new distributed battery storage will be deployed from 2016 to 2025. As the new ruling could catalyze a sharp growth in the distributed storage industry, utilities and their customers have a unique opportunity to leverage it in a variety of ways to provide value on both sides of the spectrum.

Battery storage offers enriched DR options in a number of ways, one being the speed at which storage can be deployed. With storage, utilities are able to instantaneously declare DR events, rather than hours or a day ahead. Additionally, with advanced battery management systems, atypical events that occur on the grid can be responded to autonomously. Distributed storage as a resource is dependable in terms of its performance, power capabilities, and location, which further enhances DR. Batteries have a finite amount of energy they can provide, allowing grid operators to schedule other energy resources with increased certainty. Conventional DR is prone to under or overestimating customer behavior, which can lead to decreased system efficiency.

Rise of Variable Generation

DR and energy storage have significant implications when compounded with increasing penetration of variable generation (VG). A study conducted by the National Renewable Energy Laboratory found that the grid can accommodate approximately 30% of annual electricity demand from VG with “flexibility options” (namely changes in operational practices) that increase the penetration of renewable energy resources. As renewable penetration exceeds the 30% threshold, integration becomes increasingly difficult because conventional generators cannot readily moderate output, causing assets like wind and solar to be curtailed, which could raise system costs. Even with increased curtailment of conventional generation, renewables offset less fossil fuel generation, effectively decreasing their overall value. This creates a huge market opportunity for DR and energy storage with their ability to shift load patterns, solidify capacity, and increase grid flexibility.

SCOTUS made a monumental ruling for the cleantech industry, and there will be increased DR participation to come as a result. The market has already seen several DR/storage systems like Schneider Electric and Johnson Controls (both leaders in DR), and even partnerships like that of EnerNOC and Tesla. The nexus of energy storage and DR provides efficient, economical solutions for utilities and their customers. As a result, how energy is produced and consumed will drastically change, requiring rate-makers to be more versatile with evolving regulations.


More Automakers Are Revisiting Fuel Cell Vehicles

— January 5, 2016

Consumers are waiting for the next big thing in clean transportation, yet nobody has a clear idea of what it may look like. While battery electric vehicles (BEVs) are a popular option in this niche market, fuel cells vehicles (FCVs) offer similar environmental benefits. Though the buzz surrounding FCVs has waned over the years, many believe that growing government incentives and advancements in the technology position this class of vehicles for a major breakout in the coming years.

Fuel cells are devices that convert chemical energy into electrical energy, much like a battery. Proton exchange membrane fuel cells (or PEMFCs) have been the leading type of fuel cell for light duty vehicles (LDVs) and buses due to their shock resistance, compact construction, and fast startup time. Toyota made headlines a few months ago with its rollout of the Mirai FCV in the United States. The fuel cell stack utilized within the car is Toyota’s proprietary stack with W.L. Gore’s polymer exchange electrolyte. Preorders well exceeded expectations, totaling just under 1,900 units by October. Toyota plans to sell 3,000 units in the United States by the end of 2017. Navigant Research documented the market for FCVs in its recently published research brief, Fuel Cell Vehicles.

New Developments in FCVs

In 2015, the Tokyo Motor Show served as a platform for auto manufacturers to showcase their efforts within the FCV space. Toyota made further news with its Lexus LF-FC Concept, which utilizes a fuel cell electric system that drives the rear wheels and also can send power to front in-wheel motors for all-wheel drive. Honda revealed its new production version of the Clarity set to go on sale early this year. The Clarity’s entire fuel cell stack and drivetrain is now packaged under the hood. This model will likely be the basis of Honda’s new BEV and plug-in hybrid electric vehicle in the next few years. Additionally, Daimler showcased its Vision Tokyo concept at the show, an autonomous-capable lounge on wheels with a plug-in hybrid fuel cell drivetrain similar to the F015 Concept shown at the Consumer Electronics Show. There is no lack of technological innovation in the transportation sector, but other issues like infrastructure and cost must be resolved before widespread FCV adoption can occur.

Research institutions, automakers, and cleantech manufacturers continue to push new developments with fuel cells, and new ways to improve them are underway. Through nanotechnology and advanced microscopy, scientists have found ways to decrease the amount of platinum used in PEMFCs by up to 84%, possibly even eliminating the need for it all together. This would translate to a significant decrease in vehicle cost if it is able to be fabricated at scale. Companies like Ballard Power Systems and Hydrogenics are frequently enlisted to have their fuel cell modules utilized in different applications (e.g., defense, aerospace, and stationary power), and have made developments to incrementally improve roundtrip efficiency. Furthermore, key partnerships (like BMW and Toyota and Daimler, Nissan, and Ford) dedicated to researching and improving fuel cells technologies will continue to be important in decreasing costs.

Electric drive is the leading opportunity to improve our transportation system’s efficiency. With fuel cells there is one more way to generate that electricity. Fuel cells also help ensure that there is an option for everyone as the push toward electrification and efficiency continues throughout the transportation sector. The years 2016 and 2017 should prove to be a breakout year for FCV announcements and deployments. Increased government, private sector, and public sector support will determine how deeply integrated FCVs will become in the global transportation fleet.


A Better Battery through Better Materials

— August 6, 2015

Through the past decade, primary and secondary battery technology has boomed across all different kinds of applications. Incrementally improving chemistries compounded with decreasing costs have paved the way for a golden age in energy storage across multiple sectors, and developing technologies that create safer, more efficient means of procuring storage will be imperative to successfully integrating renewables on a global scale.

Business owners, manufacturers, and electrochemical scientists are searching for new battery chemistries that can be engineered to serve a multitude of purposes. Lithium ion (Li-ion) batteries are widely regarded as one of the best chemistries, and Navigant Research forecasts exponential growth in terms of energy capacity and cell shipments in the next decade. Current Li-ion batteries with cobalt boast approximately 4 times the energy of lead-acid, with specific energy densities anywhere between 80 and 220 Wh/kg and cycle life of 1,000 to 5,000. Though they perform better than traditional storage devices, they typically have electrodes that are subject to rapid degradation at elevated temperatures and electrolytes that have low flash points, which can lead to a significant loss in capacity. Li-ion technology performance is dependent on the rate of intercalated lithium between electrodes, but due to growing demands for lighter and more powerful devices, a need for new materials has emerged as the gateway for a better battery.

New Developments

Researchers in South Korea have developed a solid-state Li-ion technology that utilizes a porous solid electrolyte rather than a traditional liquid. It is said to greatly improve performance and reduce risks due to overheating. The solid nature and material structure enables ions to travel more freely between electrodes, helps regulate cell temperature, and negates the need for separators typically found in batteries. Ion transference rates of the solid electrolyte were recorded to be between 0.7 and 0.8 compared to 0.2 and 0.5 of traditional electrolytes, which could translate to a substantial increase in rate of discharge and energy density. This battery then could be used in applications such as load leveling, frequency regulation, and voltage support for utility-scale energy storage systems. The cells also underwent elevated temperature testing (ranging from 25°C-100°C) over a period of 4 days, resulting in little change in ion conductivity and no instances of thermal runaway.

What makes this innovation valuable is its ability to be integrated with existing lithium technologies as well as next-generation advanced batteries. As lithium sulfur and metal-air increase in manufacturing feasibility and decrease in cost over the years, implementing solid-state electrolytes could position new batteries to provide long-term energy and storage solutions to the residential, commercial, utility and transportation sectors. The transportation sector also could benefit from solid-state battery technology. Currently, companies like Volkswagen and General Motors are interested in and actively investing in solid-state batteries, potentially for their next wave of electric vehicles. Both companies have acquired stakes in different U.S. startup battery companies that specialize in these types of batteries in order to achieve longer driving distances from a single charge. Despite the hurdles, developing functional, cheaper materials for advanced batteries seems to be a priority across the board. Doing so successfully could have transcendental effects on renewable energy.


Regulatory Focus on Air Transit of Li-Ion Batteries Increases

— July 2, 2015

Lithium ion (Li-ion) batteries have been highly touted for their long lifespan, high discharge rate, and ability to perform effectively in a number of different energy storage applications, which has led to their widespread adoption across the consumer electronics, automotive electrification, and utility grid energy storage sectors. The key factors driving the design and application of Li-ion battery technologies include power capacity, energy capacity, cost, lifespan, and safety. On the cost side, Navigant Research sees the maturation of the automotive and energy storage manufacturing and supply chains creating market forces that are expected to drive costs to new lows. However, the safe transport and use of Li-ion batteries is paramount and must be factored into each step of the manufacture, sale, transport, and use phase of the battery.

Since Li-ion cells are shipped partially charged to maximize their lifespan and reduce the chance of oxidation over time, they are classified as dangerous goods for transport, according to the United Nations (UN) Model Regulation for the Transport of Dangerous Goods.  Further, it has been well-documented that heat generation coupled with metal contamination and poor battery management systems can increase the risk of thermal runaway and fires during the use phase of a Li-ion battery. Whereas design, manufacturing, and quality control improvements have been implemented to reduce these risks during battery use, new scrutiny is being placed on the air transport of partially charged Li-ion cells and battery packs due to combustion risk from extreme temperatures. These developments are creating a challenge for Li-ion battery manufacturers that are considering export strategies due to the increasingly complex set of regulatory challenges facing airline carriers.

For example:

Assessing and Addressing the Risks

To address safety risks during transport and use, scientists at NTT Facilities, Inc. have tested adding a chemical flame retardant called phosphazene to lithium batteries to increase their safety in different applications. Their study has shown that fully charged 200 Ah packs, like those commonly used in portable electronics, did not explode, ignite, or undergo thermal runaway when undergoing significant laboratory testing protocols. Further, larger battery packs were also tested and operated for 400 days in a state of floating charge with positive results and minimal impact to battery capacity.

Though this advancement is still in the early stage of development, the prospect of integrating a material that is commercially available with a high voltage resistance and low cost to further improve safety while balancing costs merits a watchful eye. Whereas battery manufacturers are loath to add materials, those battery manufacturers and energy storage systems integrators looking to ship (or procure) Li-ion batteries from long-distance manufacturing sites will want to track these developments.


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