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Breaking New Ground While Exploring Value of Energy Storage in Southern California

— June 7, 2016

Cloud ComputingThe closure of the 2,150 MW San Onofre Nuclear Generating Station (SONGS) has left a huge hole in the power supply portfolio that Southern California Edison (SCE) had traditionally relied upon to serve customers. On top of that, the massive leak of methane from the Aliso Canyon natural gas storage facility has further aggravated the electricity supply challenges facing Southern California.

The leak is the largest known leak of methane into the atmosphere in U.S. history. It continues to make headlines, but longer term impacts could still be felt this summer.

Filling the Gaps

“When full, Aliso Canyon has enough natural gas stored to supply fuel to 18 regional power plants located in the Los Angeles basin for 21 days. But it takes 2 to 3 days for that natural gas to get into the basin where it is needed. So when the sun goes down, we can’t get the gas fuel to power plants where it is needed in time,” said Susan Kennedy, CEO of Advanced Microgrid Solutions (AMS), a company that has won a contract with SCE to deploy up to 50 MW of distributed energy storage to help fill regional supply gaps via hybrid electric buildings such as those owned by the Irvine Company.

“One major heat wave this summer could have major impacts, leading to curtailment of electricity service,” a prospect recalling the power outages that plagued California in the 2000-2001 timeframe, when Kennedy, working on behalf of then-governor Gray Davis, had to resort to emergency measures seeking drastic demand reductions in order to keep the lights on. “Few people seem to make the connection between this natural gas supply and our reliable electricity system,” she noted. But Kennedy does. “What we clearly need to get through this summer and into the future is fully dispatchable demand response [DR], the ability to use customer load as a resource in the same way we use supply. Energy storage allows us to create such a resource that also provides economic value for customers, such as the Inland Empire Utility Agency [IEUA].”

Water-Energy Nexus

The agreement with IEUA is addressing the water-energy nexus in California, an issue that is also raising concerns in light of lingering droughts. IEUA has been leading on renewable energy since 2008, with solar, wind, and biogas resources already part of its electric resource portfolio. With the help of AMS and its partner Tesla, these energy storage devices will allow the agency to maximize value to reduce its energy costs by an estimated 10%, or as much as $230,000 annually.

IEUA did not have to pay any upfront capital costs under the terms of the unique contract with AMS. Yet the biggest surprise to emerge in this project was SCE’s flexibility in contracting. The investor-owned utility had to adjust the existing tariff with IEUA in order to bring the energy storage devices online. “There was no template of how to do this,” said Jesse Pompa, a senior engineer at IEUA. “Batteries had never been connected to a grid in this way before. This was indeed a risk for us, and the biggest surprise is that they accommodated us.”

“I have to say, SCE is the most open-minded of all California utilities in viewing energy storage as a grid resource,” added Audrey Lee, AMS’s VP of analytics and design. She noted that the artificial intelligence software that AMS provides enables the fleet of Tesla batteries to provide a firm, dispatchable DR resource to help SCE get through this summer.

 

Australia Leading Solar PV plus Storage Innovation

— May 23, 2016

Rooftop SolarImprovements in technology and cost have allowed solar PV plus storage systems to become an attractive investment in many parts of the world. However, what remains to be determined are the optimal business models to unlock the full value of these systems. Pairing solar PV directly with energy storage holds the potential to dramatically transform the electricity industry and provide customers with cleaner and more secure power at a predictable price. Despite the potential, there has been little consensus in the industry on the best way to deploy these systems on existing grids and on how to overcome the significant barriers that the required upfront investment presents. 

Although solar PV and energy storage systems (ESSs) have been paired up in microgrids and remote settings for decades, their integration into existing electrical grids presents new challenges. Innovative models for the ownership and operation of these systems are being explored around the world, driven in part by the increasing funding flowing into the distributed energy industry. Australia has been at the forefront in the development of distributed energy resources, and two recently announced projects in the country offer different paths forward.

Dueling Approaches

In early adopter markets around the world, two primary models for deploying solar PV plus storage systems are emerging. Many stakeholders in the industry believe the optimal way to deploy these systems is through incumbent utilities and electricity providers that can leverage technical experience and access to financing. The recently developed suburb of Alkimos Beach in Western Australia was seeking a community-scale solution to help manage an increasing number of distributed solar PV systems and limit the need for new infrastructure to serve its growing population. The neighborhood elected to work with local energy provider Synergy to deploy a 1.1 MWh lithium ion ESS that is being fed by over 100 solar PV systems located on rooftops throughout the area. In addition to reducing costs for customers, managing the intermittency of PV generation, and limiting the need for new infrastructure, the project provides Synergy an opportunity to use community engagement as a way of combating the threat of grid defection.

Alkimos Beach is not the only community in Western Australia exploring innovative ways to harness the power of the solar PV plus storage combination. The community of White Gum Valley has chosen a different path toward a sustainable, local energy system both in terms of ownership and technical design. Most homes in the community will have both solar PV and battery ESSs onsite that will be operated in concert. In addition to the physical distribution of energy storage in this model, systems in White Gum Valley will be owned by the company managing most of the community’s apartment buildings. The company will act as a utility by owning assets and retailing energy directly to customers, a rare situation in Australia’s regulated electricity markets.

The Path Ahead

These two projects may provide some unique insights into how solar PV plus storage solutions can be optimally developed. They provide clear examples of some of the major debates in the distributed energy storage industry, such as whether it is better for systems to be centrally located or distributed, or if they should be owned by utilities or by customers. While it may take several years for these projects to illuminate the merits of one approach versus the other, they may be a sign of things to come as the distributed energy industry takes shape.

 

Dyson and Sakti3 Move Toward Solid-State Deployments

— May 13, 2016

BatteriesAs power and energy requirements are proving to be increasingly sophisticated for large-scale grid energy storage and automotive applications, many companies and research institutions across the globe are looking for alternatives to the lithium ion (Li-ion) battery. U.K. company Dyson acquired the rights to battery startup Sakti3 last December for $90 million and announced that it will invest an additional $1.44 billion to develop new battery technologies over the next 5 years. A portion of the investment will go toward building a new battery factory and R&D center.

Sakti3 is a pre-commercial battery technology firm based in Ann Arbor, Michigan, specializing in lithium solid-state battery chemistries. The company was founded with a goal of bringing next-generation battery technology to electric vehicles (EVs) and consumer electronics, stating that it intends to double the energy density at lower costs than current commercially available Li-ion batteries. Historically, solid-state batteries have been plagued by the solid-solid interface’s high resistance to ion intercalation (resulting in low power density) and performance scalability; Sakti3 believes that it has reduced design cycles and is on track to find the critical mass to take its technology to market.

Solid-State Battery

Ian Blog Image

 (Source: Dyson)

A Start in Consumer Electronics

Li-ion batteries started in early consumer electronic markets in 1991 when they were first discovered and now are being deployed in complex applications globally. Navigant Research expects 93.1 GWh of Li-ion capacity will be deployed globally for EVs in 2025 alone, along with an additional 59.1 GWh deployed for grid storage. Dyson has been developing an in-house battery technology for its cordless appliances for the past several years and now plans on utilizing Sakti3’s prototype technology in existing and future products. The biggest questions to be answered will be how this acquisition affects Sakti3’s process of innovation—and what it could mean for battery industry stakeholders.

The complementary nature of the acquisition could help Dyson develop competency in cutting-edge aspects of solid-state batteries and commit to the reutilization of the technology as a whole. Starting in smaller consumer electronic markets and growing toward others could put Dyson in direct competition with battery giants Panasonic, LG Chem, and Samsung SDI. The company has not ruled out the option of licensing out Sakti3’s technology to other companies, further expanding its market reach. Dyson’s CEO says it is transitioning to become more of a technology company as opposed to a home appliance vendor and plans to develop a more sophisticated product catalog in the coming years.

Supporting the Investment

One challenge the company may face is how its R&D expertise and support teams support this investment. To push the technology forward, it is imperative that Dyson thoroughly understands how integrating Sakti3’s battery affects its existing product catalog. As a home appliance company, teaming with a battery company could make sense in the long run and translate to developing robust synergies down the supply chain. Focusing on niche applications, making deployment a priority over research, and rushing the development of R&D projects could potentially lead to failure. One of the biggest risks after mergers and acquisitions is the threat of organizational upheavals. Hiring and maintaining key employees that drive research forward will be important. Sakti3 founder Ann Marie Sastry will continue to lead the development of the technology as an executive for Dyson.

Can large battery companies and automotive OEMs learn something from this acquisition? Only time will tell. Dyson plans to get Sakti3’s technology to market within the next 2 years; it will be fascinating to see how it plans to overcome engineering issues faced by other companies that have attempted to bring solid-state batteries to market. How well-equipped is a home appliance company to accomplish such a feat? History says to remain skeptical while the technology says to remain optimistic.

 

Smaller Utilities Explore Energy Storage-Enabled Solutions

— April 20, 2016

GeneratorWhile California’s investor-owned utilities have received the most media attention for their high-profile energy storage procurements, smaller municipal and cooperative utilities around the country are beginning to recognize the value that energy storage can provide. The services that energy storage systems (ESSs) can provide these smaller utilities may differ from larger organizations, as will their procurement processes.

One notable difference is that municipal and cooperative utilities are generally able to make much quicker decisions regarding investments, as they are not as burdened by regulatory oversight and financial commitments to shareholders. Many of these organizations have been exploring the diverse benefits that energy storage and microgrids can provide, particularly as renewable energy developments become more common for smaller utilities. It is estimated that member-owned electric cooperatives in the United States have nearly 240 MW of solar PV capacity online or in development, which may bring about the need for energy storage to effectively integrate these resources and ensure grid stability.

Problems to Solve

Much of the interest from publicly owned utilities in energy storage and microgrids stems from the generally large geographic area that these entities control. In addition, many customers are located at the end of long feeder lines in relatively remote areas. As utilities see load growing at the end of these isolated circuits, issues around relatability and the need for significant new investments will arise. This challenge is magnified by the fact that many public utilities do not own generation assets, making it different to control frequency and voltage on their system when the generators feeding power are potentially hundreds of miles away. Increasingly cost-effective energy storage is emerging as an ideal solution to these problems by allowing utilities to defer investments in new infrastructure, enabling greater control over their networks and improving reliability for remote customers.

Emerging Solutions

Municipal utilities are able to solve challenges using energy storage either distributed throughout their service territory or at a single facility. For example, the Eugene Water & Electric Board in Eugene, Oregon is developing a solar PV and energy storage microgrid utilizing a 500 kW lithium ion battery from developer Powin Energy. The system will ensure the operability of critical facilities in the event of an outage as well as reduce the expensive peak demand energy the utility buys on wholesale markets. Eventually the utility may look to sell excess capacity into energy markets themselves. An alternative model is being tested by the Glasgow Electric Plant Board in Kentucky, which will deploy distributed ESSs at the homes of 165 customers in partnership with Sunverge. The systems will charge at night when costs are low and discharge during the day or during peak demand, reducing the need to supply additional power and lowering overall costs. This network of ESSs will also provide detailed, real-time insights about the local grid’s performance and ensure customers have power in the event of an outage.

These programs demonstrate the various ways that smaller utilities can enjoy the benefits of energy storage while improving service for their customers and integrating local renewable resources. As energy storage costs continue to fall, there will be numerous opportunities for the nearly 3,000 publicly owned and cooperative utilities in the United States to benefit from the technology.

 

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