Navigant Research Blog

Pending Blackouts Highlight Benefits of Energy Storage

— June 2, 2016

Production Plant - NightConsequences of the largest natural gas leak in U.S. history continue to be felt across Southern California. The leak at the Aliso Canyon storage facility in Porter Ranch, California had a major impact on the local environment, forcing thousands of residents to abandon their homes and releasing the equivalent of the annual greenhouse gas pollution of 572,000 cars. While the leak has been stopped, the facility is now out of commission and the region faces a major shortage of natural gas, which could lead to 14 days of blackouts this summer and potentially 9 more in the coming winter unless action is taken.  The situation highlights the danger of relying too heavily on any one source of energy and is accelerating plans to transition to a system based on renewable energy.

What the Grid Needs

The potential blackouts this summer result in part from the shortage of gas supplies to fuel peaking power plants needed when demand spikes on hot summer days. In order to avoid widespread outages, the peak demand on the system needs to be reduced. Reducing the overall peak demand has been a focus of grid operators for year, and a number of solutions, including energy efficiency programs, demand response and energy storage systems, are being employed to meet this challenge. While these solutions all have their downsides (such as a low reliability or high upfront costs), the current situation in Southern California highlights the benefits of distributed energy storage systems in particular.

California is already a leader in the distributed storage market, and the threat of numerous blackouts may result in increased demand for these systems. As explored in Navigant Research’s Solar PV plus Energy Storage Nanogrids report, distributed storage systems can provide backup power during an outage (perhaps indefinitely when paired with solar PV) in addition to reducing electricity bills. While backup power is one of the main drivers of interest in distributed storage, these systems can provide much greater value to the grid as a whole. Storage systems aggregated into a virtual power plant can allow grid operators to reduce demand on the system at peak times, shifting energy usage to maximize the use of solar PV and limiting the need for gas-fired generation.

Central vs. Distributed?

As grid operators in California consider how storage can reduce the risk of blackouts, they are examining one of the key debates in the energy storage industry: Is it better to deploy centralized or distributed storage systems? While some of the issues facing the grid can be solved with centralized storage, distributed systems are being installed in increasing numbers without any action from utilities. Centralized storage systems won’t keep the lights on for customers in the event of a major outage and can take much longer to develop, an important consideration given the immediate need for new resources. Overall, it seems distributed storage systems are in the best interest of the California grid. While some customers get improved resilience, everyone benefits from the improved reliability that comes with these flexible assets on the grid.

 

Surge of Growth for Southern California EV Charging

— February 4, 2016

Machine parkingThe Southern California electric vehicle (EV) charging market is about to get a surge of growth, as the first utility-led charging deployment programs have been approved by the California Public Utilities Commission (CPUC). Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) each received the go-ahead for their proposals to deploy thousands of EV charging stations within their service territories.

This marks a major transition in the EV charging market in California, as utilities had previously been forced to sit on the sidelines while the plug-in electric vehicle (PEV) market launched and EV charging demand grew. This meant that utilities could not directly participate in a market that could provide a significant new revenue stream over the long term. The CPUC’s December 2014 decision to allow utility ownership of EV chargers has opened a new avenue for funding charging deployments via a stakeholder with (relatively) deep pockets and a stake in the growth of electricity as a transportation fuel.

California did have something of an EV charging gold rush when the U.S. Department of Energy (DOE) funded two major public charging deployment programs in 2009. The ChargePoint America and The EV Project programs resulted in over 6,300 public and private charging station installations (excluding residential). California got around a third of these; roughly 2,000 Level 2 and direct current (DC) fast charging stations were deployed in the state from 2011 to 2013. At the same time, California saw its DC fast charging installations grow thanks to the settlement between the CPUC and NRG Energy. The company, through its EV charging arm eVgo, committed to installing 200 fast chargers under this settlement from 2012 to 2014.

Charging Stations on the Rise

This new surge of stations will target a different segment of the market. The focus on public stations is waning somewhat, as utilization rates of public Level 2 stations have been mixed and as the market anticipates long-range battery electric vehicles (BEVs) that will have little need for short-term opportunity charging. What the PEV market does still need is charging at workplaces and at condos or apartment complexes. The DOE reports that there are 5,500 charging stations deployed at office facilities operated by its 250 partner companies in the DOE Workplace Charging Challenge. Navigant Research estimates that in total there may be around 9,000 charging stations in workplaces in the United States.

While this is a good start, workplace chargers need to expand beyond early adopters, as offices are going to be key to supporting PEV charging needs. SDG&E has said it will target multifamily communities, another critical next frontier to support increased PEV demand. SDG&E notes that 50% of its housing consists of multi-unit dwellings, representing a large and relatively untapped market for PEV drivers. Through all of this, utilities will need to manage the deployment process carefully to ensure that chargers are being placed in the best locations; that their charging company partners are secure, long-term partners; and that funds are optimized to buy charging stations that provide necessary data and management capability but are not over-equipped for the job they’re asked to do.

 

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