Currently, two markets have subsidies for distributed solar photovoltaic (PV) systems plus energy storage.  Germany and Japan are both trying to encourage distributed PV users to consume the electricity generated onsite, using energy storage systems (ESS).  Announced in early May, the German government program offers both a subsidy and a low-interest loan to encourage ESS.

In addition, the feed-in tariff for distributed solar has dropped below the retail price of electricity, in order to encourage self-consumption of PV energy.  Germany will spend up to $32.17 million (€25 million) in 2013 to support distributed PV+ESS, in an effort to defer upgrades to the distribution grid, which is overtaxed thanks to the successful campaign to encourage distributed PV adoption.  The subsidy increases the existing subsidy for systems that are only solar PV from €600 ($785) per kilowatt (kW) to €660 ($863) per kW if a battery system is also installed.  The maximum payment for the entire system is €3,000 ($3,926) total.

Financing Storage

Representatives from KfW – the German development bank – have stated that a similar amount of funds (€25 million, or $32.17) will be available for 2014.  All battery systems are eligible, but must have a 7-year warranty.  KfW is administering both the subsidy and low-interest loans.

Specifically, KfW, is offering low-interest loans to finance the capital expenditures associated with adding battery energy storage systems to PV systems in Germany.  KfW will finance up to 100% of the upfront cost for battery ESS and PV systems (not including VAT).  In addition, the battery portion of the system can qualify for a repayment bonus.

These loans are being offered to a cross-section of the market similar to the one served by the subsidy for residential storage plus PV.  The loans are available to ESS retrofits for PV installations that went into operation after December 31, 2012 and are targeted at solar PV systems as large as 30 kW.

If the German program succeeds, it will mean increased flexibility and resilience for the German distribution system with less investment on the part of DSOs. Germany is also a model for the rest of Europe; other markets with high PV penetration such as Italy, Spain, and France may adopt a similar scheme once the benefits to the grid and customers is better understood.

The world’s largest uninterruptible power supply (UPS) battery monitoring company, IntelliBatt, has unveiled a more comprehensive battery monitoring system and announced that it is changing its name to Canara.  The San Rafael, California-based company, which has been monitoring UPS battery systems for more than 2 decades, recently completed a new round of investment that will allow it to roll out its new monitoring product ‑ and could also fund the acquisition of regional UPS installers.

The new name of the company ‑ Canara ‑ is meant to evoke the memory of canaries that would descend into the coal mines of 19^th century England as an early warning system for dangerous gases.  Canara performs a similar feat (although without sacrificing birds’ lives in the process) for data center UPS battery systems.  By monitoring the batteries via a cloud-based architecture, the company can diagnose power system issues and employ predictive analytics to extend the life of the batteries and improve overall power quality in the system.  Navigant Research estimates that the overall global UPS battery market was worth $3.4 billion in 2012 and will grow to $6.7 billion in 2023.

Single to Branch

The task of monitoring and maintaining the lead-acid batteries that provide backup power in the case of a grid blackout is a notoriously unloved job among data center managers.  They tend to be computer people, not battery people, so Canara’s outsourcing model is especially appealing to them.  The company currently monitors more than 265,000 individual lead-acid cells in more than 3,000 systems throughout the world.  Most of those systems are monitored as a single circuit today; Canara is now offering a branch circuit monitoring product that will allow the company to monitor individual strings of battery cells.  By ensuring the proper functioning of the system, Canara’s service can extend battery life in a typical system by up to 40%, which usually leads to a direct savings of 40% in the battery system operating budget.

While the company continues to lead the battery monitoring industry, it also hopes to begin offering other power management services, including energy cost management and even participation in local demand response markets through Canara’s monitoring infrastructure.  In that regard, Canara is in an excellent position: few other companies can claim that they have monitored more than 1 million batteries to date distributed throughout the world.

Using plug-in electric vehicle (PEV) batteries to support ancillary services for the grid has been a promise of the PEV revolution for years, but signs of the market’s viability have been limited until recently.  Two recent developments are driving innovation and development in this market, and proving the worth of vehicle-to-grid (V2G) technology.  In January, the U.S. Department of Defense (DOD) announced it will purchase 500 V2G-capable vehicles this year through a $20 million investment.  Additionally, last month, PJM Interconnection and NRG Energy successfully tested a fleet of V2G-enabled Mini-E’s.  The Mini-E’s accrued an average of $5 per day by participating in PJM’s frequency regulation market.

The DOD’s order is significant not only because of its size, but also because the Pentagon plans to make money on the program.  Often, government programs for clean technology investments are based on environmental objectives (reducing greenhouse gas emissions) or national security concerns (reducing consumption of foreign oil), rather than achieving a net positive financial return.  In this case, the program’s financial goal is explicit: the Pentagon is making a business decision to invest in V2G.

V2G’s profitability has much to do with Federal Energy Regulatory Commission (FERC) Order 755, issued in late 2011.  The order mandates that energy generation assets participating in frequency regulation markets managed by independent service operators (ISOs) and regional transmission operators (RTOs), such as PJM, must prioritize and compensate generation sources according to how quickly and accurately they are able to respond to the operator’s generation signal.

Aggregation Required

Advanced batteries in PEVs are one of the few generation assets that can respond quickly and accurately.  This means that when PEV batteries are used for frequency regulation they can be compensated around 3 times more per kilowatt (kW) than slower, more traditional assets, like natural gas power plants.  PJM was the first ISO or RTO to implement the rules. Additionally, PJM reduced the minimum power capacity generation assets must produce to participate in its frequency regulation market to 100 kW.

The last point is pivotal, as it represents a major challenge to V2G development.  Though PEVs store a substantial amount of energy, the power any single PEV can discharge or absorb from the grid is limited by the battery size, and by bi-directional electric vehicle charging infrastructure.  Thus V2G-enabled PEVs must be aggregated to participate in ancillary service markets, as in the case with the NRG Energy/PJM trial.  While 100 kW is substantially higher than most PEV batteries can discharge or absorb from the grid, the reduced minimum allows V2G proponents to participate with fewer vehicles, especially when using medium duty PEVs that typically have higher power and energy storage capabilities than light duty vehicles.

The military has a large fleet of non-tactical, medium duty vehicles, such as refuse trucks, maintenance vehicles, and buses, at bases around the country.  Many of these vehicles are largely sedentary and can be connected to the grid for more hours than most vehicles in commercial fleets, making V2G a better fit for the DOD than for many private sector fleets, at least so far.  The DOD’s use of this technology will advance it considerably, laying the foundation for software and infrastructure developers to make this technology a possibility for greater numbers of private fleets – and making PEVs much more attractive.

The motto of Berlin-based microgrid vendor Younicos is “Let the fossils rest in peace.”  In a previous blog, I discussed the practical viability of creating 100% renewable energy systems, including microgrids.  Younicos is among the companies that purport to be able to create such systems, thanks to the robustness of its smart bi-directional inverter, which eliminates the need for a fossil prime mover within a microgrid, and to careful selection of appropriate energy storage technologies.

While the company’s microgrid efforts are focused primarily on remote systems ‑ such as the 3 MW pilot project on the Portuguese island of Graciosa, designed to achieve 75% renewable generation ‑ the company has also recently marked several major milestones with grid-tied applications, some of which also feature the ability to disconnect from the wider grid.

Younicos has already deployed a 1.2 MW battery park for the Swedish utility Vattenfall in Berlin, which has been providing grid balancing services since December 2012, the first grid-tied system prequalified to provide frequency response in Europe.  Frequency response is a vital ancillary service in regions where the high penetration of renewables places stress on power quality.  This initial hybrid battery park project relies upon both sodium sulphur and lithium ion battery technologies.

Replacing Fossil Fuels

Last month, on Earth Day, the company announced a major partnership with Samsung SDI to deploy Samsung’s lithium ion battery in projects with an exclusive system integrator agreement for grid-tied battery parks in Germany, Austria, Switzerland, and other European markets.  With Samsung SDI providing a unique 20-year performance guarantee, the new partnership will soon have bragging rights to the first standalone 5 MW/5 MWh battery park in Germany for WEMAG, a municipal utility serving West-Mecklenburg that currently relies upon wind and solar for 80% of its power generation.  Ideal for addressing the volatile nature of distributed renewables that rely upon feed-in tariffs, the system is expected to be commissioned in June 2014.

This enhanced battery park will be able to not only adjust the frequency of the utility grid, but also provide voltage control, black starts, and short circuit power, services previously provided inefficiently by fossil generation sources.  In fact, the battery parks can respond to grid signals in less than 10 milliseconds, which is 3,000 times faster than conventional approaches.

According to Samsung and Youncios, the ideal size for these battery parks is actually 10 MW/10 MWh, and they can be financed solely on the basis of revenues from frequency regulation and other ancillary services.  This is yet another new business model for smart grid/microgrid applications, providing further evidence that high-penetration renewable energy systems are grounded in real demand from emerging markets for grid reliability services.