Cleantech Market Intelligence
In Energy Storage, The Numbers Don’t Add Up – Yet
If you take a close look at Duke Energy’s Rankin Avenue Retail substation in Mount Holly, North Carolina, you’ll notice a few pieces of equipment that you usually don’t see. Two 20 ft containers sit on cement pads in a corner of the fenced-in area. Inside are a bank of batteries and the power electronics and inverter required to control them. Even stranger is the large, H-shaped structure that looms over the trailers. It’s an old-fashioned version of line disconnects that are rarely utilized in distribution networks anymore. It’s been resuscitated for this project – and the reasons point to why most energy storage projects are not quite ready for prime-time.
The overhead switches installed in Rankin are there because the line crew that worked that sector was uncomfortable with a simple hand-operated lever-switch. To move the overhead device from on to off, a linesman must hold a reach pole and physically disengage a blade from its enclosure. It’s a 19th-century tool for a 21st-century battery system. The switch itself costs approximately $15,000, but Duke Energy designers felt that it was important to include it to make the linesmen comfortable with the addition of the battery at the substation.
Making the Case
I heard about the Rankin overhead line disconnects during a presentation by Dan Sowder, a project manager at Duke who deals with energy storage, at the Marcus Evans Energy Storage Conference held in Phoenix last week. The point I kept hearing in multiple sessions is that we’re in the very early days of understanding the economics of energy storage – both the cost of the systems and the value of the services they provide. The overhead switches at Rankin are just one example: an extra $15,000 was spent on the system to ensure linesman safety (utilities never skimp on safety). Here are two more examples I heard of energy storage systems that lack clearly visible costs and benefits:
- San Diego Gas & Electric (SDG&E) will soon hear from the California Public Utilities Commission about whether the request SDG&E made for rate-basing $50 million for energy storage systems is approved. The ruling should come down by the end of February. If approved, the program will be the realization of every battery vendor’s dream: a large, rate-based energy storage request for proposal (RFP). However, Bob Lane, a consultant with SDG&E, stressed that even if the program is approved, that doesn’t mean that SDG&E will issue an RFP. It might decide that there are better ways of spending the money than for energy storage units. The financial case has still not been made for the utility to jump into a major energy storage project.
- Nathan Adams of Puget Sound Energy also gave a talk on the financial models for energy storage – and why they just don’t work today. He pointed out that any battery project will be at least twice as expensive than building a combined-cycle natural gas plant. Distributing the energy storage units throughout the distribution network might make more sense, but Adams emphasized that he has no solid method for providing a viable dollar figure for the value of the services such a network could provide.
In other words, energy storage might make sense at the edge of the network – or it might not. And until an electric utility can positively answer that question, no major orders will be placed.