Navigant Research Blog

Energy Storage Enjoys a Breakthrough Day

— November 5, 2014

While most Americans were paying attention to election results, news emerged out of California that truly heralds a new era for the energy storage industry.  Southern California Edison (SCE) announced that it will acquire 2,221 MW of new generation assets, of which 250 MW will be energy storage systems.  This is the end result of the lowest-cost resource request for proposal (RFP) that is designed to eventually replace the generation provided by the shuttered San Onofre nuclear power plant.

While the sheer scale of the announcement is staggering (no utility has ever purchased 250 MW of non-pumped hydro energy storage before), the details of the announcement are even more impactful.  SCE was expected to use some of this bid for energy storage (it listed energy storage as a preferred resource on the RFP), and Navigant Research assumed the energy storage part of the purchase would be about 50 MW.  By ordering 5 times that amount of energy storage, SCE is making a very loud statement about how highly it values energy storage as a grid management tool.

The Land Rush Begins

Another important aspect of this move is that it was done on a completely level playing field.  SCE decided to purchase 250 MW of energy storage because it felt it had a higher value than any other generation asset (including natural gas, wind and solar).  That in itself is an extremely important positive note for the energy storage industry.

Even more important for the industry is that SCE’s big vote of confidence for energy storage happened just before the launch of three big RFPs that were designed as part of the energy storage mandate that California is forcing on the big utilities.  By December 1, 2014, all three of the large investor-owned utilities in the state will introduce a total of more than 200 MW of energy storage purchases.  It’s the energy storage industry’s equivalent of the Oklahoma land rush.

Other Big Deals

A couple of other important nuggets regarding the SCE announcement:

  • AES Energy Storage will be building a 100 MW battery plant that will dwarf all existing battery power plants.  Over the last few years, AES Energy Storage has discussed how such a plant might work, but now it will have a chance to actually implement a battery peaking plant.  If this project is successful, it will open up a completely new business model for the energy storage industry that could, in the long run, be the largest segment of the stationary storage market.
  • San Francisco-based startup STEM won an 84 MW contract that will make up hundreds (if not thousands) of distributed battery packs working on the customer side of the meter.  Like many other behind-the-meter energy storage system integrators, STEM has preached the concept of distributed battery packs that, in aggregation, work like a virtual power plant (see Navigant Research’s report, Virtual Power Plants).  STEM will be the first company to implement such an idea at scale in the real world.  If it succeeds, then other players like Coda Energy and GreenCharge Networks will also benefit.

Whatever your politics, for the energy storage industry, it is morning in America.


In South Korea, an Energy Storage Bonanza

— October 14, 2014

South Korea has gone from having little to no energy storage to procuring about 50 MW in the span of a few months.  This procurement makes the early projects in deregulated markets in the United States, such as PJM Interconnection, seem small in comparison.

Korea Electric Power Corporation (KEPCO) is procuring 52 MW of advanced batteries for frequency regulation in 2014 through two installations totaling 28 MW and 24 MW.  Proposals will be evaluated in the coming weeks, and four consortia, including major South Korean lithium ion (Li-ion) vendors and systems integrators, are bidding in the procurement.  Located at the West Anseong Substation and the New Yongin Substation, these installations will handle power supply to Seoul and the surrounding area.  KEPCO estimates the cost for these two projects will be ₩60 billion ($58.3 million).  The total market size for frequency regulation in South Korea is estimated by to be 1.1 GW, and in order to meet this requirement, KEPCO typically requires thermal generators hold back 5% of capacity, for which it pays them ₩600 billion ($583 million) per year.

Less Regulation = Lower Costs

Instead of using thermal generators for all its frequency regulation requirements, KEPCO estimates it can procure 500 MW of energy storage for frequency regulation for ₩625 billion ($607.8 million) between now and 2017.  By investing in these resources, KEPCO would be able to avoid a portion of the yearly payments to thermal generators.

Lessons from existing projects and market reforms in Chile and the United States suggest that these changes will have major effects on the South Korean grid.  First, wholesale energy prices should decrease once thermal generators are not obligated to hold back 5% capacity for frequency regulation.  Although KEPCO is not planning to displace its entire frequency regulation requirement with Li-ion batteries, releasing half the power plants from this obligation (or halving the obligation to 2.5%) would make a difference in energy prices.

Ratepayer Returns

Second, the overall amount of frequency regulation that KEPCO must procure should decrease with the addition of fast, accurate resources such as Li-ion batteries.  Fast and accurate resources correct the deviation in frequency more quickly, meaning that less frequency regulation is required overall.  Therefore, 5% (52 MW) of fast-response resources could deliver more than 5% of the regulation required on the South Korean grid.

Ultimately, the South Korean ratepayer will benefit because these savings should be passed on to the customer.  Keeping energy prices low is an economic and political issue in South Korea, where many key industries rely on energy-intensive exports.  Manufacturers are keen to keep their products priced competitively, and the government is under pressure to keep improving economic growth.


A New Dawn for Lead Batteries

— October 2, 2014

Donald Sadoway, a materials scientist at the Massachusetts Institute of Technology, is considered one of the smartest and most creative battery scientists in the world.  So admired is Sadoway that, when former Microsoft CEO Bill Gates wanted to learn about batteries, he took Sadoway’s course.  Afterwards, he approached Sadoway and the two discussed the topic of how to rethink battery design from a blank page of paper.  That discussion led to the founding of Ambri, a startup company that is based on Sadoway’s ideas for how to build a better battery.  And at the heart of Ambri is Sadoway’s concept of a high-temperature liquid metal battery whose cathode and anode literally float one on top of each other.

Ambri’s first attempt at a prototype involved the metals antimony and magnesium.  The concept worked, but the high melting point of magnesium (650 degrees Celsius) and the relatively high cost of that material made the prototype battery too expensive to compete against lower-cost batteries like lithium ion and lead-acid.  So Sadoway and his research team kept working.  In a paper just published in the journal Nature, the team released the results of their second prototype, which uses an old standby material of the battery industry: lead.

Melting Point

The battery consists of three basic inputs: lithium salts, lead, and antimony.  The lithium serves as the anode, or negative electrode, which holds the energy in storage while the battery is being charged.  Alloyed together, the lead and the antimony form the cathode, or positive electrode, which releases electrons during the discharge of the battery.  Once the battery is heated so that the alloy mixture and the metallic lithium melt into liquids (which requires a temperature of 253 degrees Celsius), the battery can start cycling through charges and discharges.  The lower temperature means that there are fewer parasitic losses during cycling, which makes the battery more efficient (the paper claims a 73% round trip efficiency, which is similar to the efficiency of many flow battery technologies).

More interestingly, Sadoway’s team calculates that the cost of input materials for the battery would be a mere $68 per kWh, which compares favorably to almost every other battery chemistry.  Finally, the Nature paper shows that accelerated testing of the battery predicts that, after 10 years of daily 100% cycling, the battery will still have a usable capacity above 85% of the capacity the battery had when it went through its first charge/discharge cycle.  In that regard, it compares to accelerated testing of other high quality batteries.

Lead Leader

Will Ambri’s new battery take over the market share of the other incumbent battery technologies?  It’s not likely.  Because the battery needs to be kept at a high temperature, it won’t function well in situations that require maximum flexibility and uncertainty.  However, it will be an excellent choice for any application that requires a long-duration and highly consistent charge/discharge cycle.  Although that’s a niche of the overall stationary energy storage industry, it could eventually be a large one.  Decades from now, when people talk about lead batteries, they might just be referring to Ambri’s molten battery, not their car starter batteries.


A Comeback for Community Storage

— August 20, 2014

Two years ago, community energy storage (CES) was heralded as the most promising distributed storage market.  The market subsequently stalled when demonstrations failed to take off.  Originally, most utilities in the United States pared back on ambitious pilots due to high transaction cost.  Although the business-to-business model of community-level systems was appealing, North American utilities struggled to secure permission from homeowners to install systems and transaction costs skyrocketed.  System development for distribution transformers in North America was also costly, and this, combined with the high cost of customer engagement, killed all large-scale projects.

Now this model could be staging a comeback.  Toronto Hydro, along with eCAMION Inc., the University of Toronto, and Dow Kokam LLC, recently installed a CES system at the Roding Arena and Community Centre in Toronto, Canada.  The pilot project will allow Toronto Hydro to monitor the technology and will help validate its benefits to Toronto’s electrical grid.  This system uses 250 kWh/500 kW Dow Kokam lithium polymer nickel manganese cobalt cells, along with thermal management and controls from eCAMION.  The University of Toronto is managing the control, protection, and power management.

Small Is Beautiful

Situating storage near the customer provides several benefits.  First, it allows a utility to correct power quality where it matters most – near the customer.  Community storage can also help utilities maintain service during grid outages, at least for a few hours.  Finally, CES gives the utility information about what is happening at the edge of the grid, which is an important management tool.

More interest is developing in Europe, where distribution system operators are experiencing difficulty with behind-the-meter solar PV and instability from intermittent renewables upstream.  The United Kingdom is especially bullish, with several departments funding community storage.

Sharp Laboratories of Europe was awarded a grant of £396,541 ($661,858) from the United Kingdom’s Department of Energy & Climate Change to develop and scale up a new battery technology for residential energy storage and CES systems.  Electrovaya began delivering systems to Scottish and Southern Energy Power Distribution (SSEPD) in the second quarter of 2014 as part of an order for 25 distributed and independent energy storage systems.  The systems range in energy capacity from 12.5 kWh to over 80 kWh.  SSEPD has a separate community storage demonstration with S&C Electric that consists of three 25 kWh lithium ion units on the low-voltage network.

Europe is emerging as a leader in community storage by launching small pilots to test and prove the concept, instead of ambitious 80-unit projects.


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