Navigant Research Blog

Energy Storage Association Offers a Call to Action for New Policy

— December 14, 2017

In collaboration with Navigant Research, the Energy Storage Association (ESA) recently published its latest white paper, 35×25: A Vision for Energy Storage, analyzing the evolving needs of the electric grid and the market drivers powering rapid energy storage industry growth. The study introduces the current state of the industry along with a vision where widespread storage deployments result in major economic, environmental, and social benefits.

Key to the paper’s findings is a call to action section outlining policies and programs being implemented around the country to support the growth of the industry. Over the coming years, changes in both government and regulatory policies will have a substantial effect on how the market develops and at what scale. Players in the market should ensure they fully understand the changes that may be coming and how they will shape future opportunities.

ESA’s call to action highlights considerations and actions for both legislators and industry regulators that seek to capitalize on the multitude of benefits provided by energy storage. For legislators, there are four primary categories of initiatives being explored that offer both direct and indirect support as follows:

  • Energy storage impact studies: A strong understanding of the benefits of energy storage is a great first step, allowing local stakeholders to quantify the impacts of storage deployments, such as upfront and ongoing expenses, grid operating cost savings, improved reliability, emissions reductions, and job creation. 
  • Procurement targets or mandates: Multiple states have implemented targets that serve to clarify long-term policy objectives for the industry, spurring action from utilities and providing operational experience for stakeholders. 
  • Incentive programs: Including subsidies, grants, and tax credits, which lower the costs for new storage projects to accelerate market growth and establish a sustainable local industry. 
  • Clean energy standards: A clean energy standard, or clean portfolio standard, is similar to a renewable portfolio standard; however, it often has a broader focus. States including Connecticut and Vermont have implemented standards to ensure storage is compared side-by-side with other resources in planning processes and require electricity providers to implement new technologies.

Many of the legislative actions taken to support energy storage, such as subsidies and procurement mandates, have received significant media attention. However, in many cases, the local regulators have more influence over a market’s growth. Out of an obligation to protect ratepayers and oversee utility investments, regulators must work collaboratively with all stakeholder groups to facilitate constructive dialogue around the deployment and integration of storage systems. ESA’s white paper outlines steps that can be taken by regulators as follows:

  • Clear rules regarding storage: Do current regulations adequately account for energy storage participation? If not, work with utilities, industry participants, and research organizations to better define participation methods and strategies for new technologies.
  • Updated modeling in proceedings: Many of the modeling tools used in integrated resource planning proceedings today lack sufficient granularity and an evaluation methodology that properly incorporates energy storage. For example, models for storage should assess the effect of deployments at specific locations and over sub-hourly time intervals.
  • Streamlined interconnection standards: Despite efforts, current interconnection procedures often pose a significant barrier to new entrants. Streamlining interconnection processes is critical to enable grid modernization.
  • The effects of rate design: New rate structures that accurately reflect the locational and time-based costs and benefits of integrating distributed energy resources, including energy storage, should be explored.

At this stage, it is critical that industry participants with in-depth knowledge on the true costs and benefits of energy storage technologies participate in policy development to ensure a level playing field is created. Along with greater detail on the policy initiatives listed above, ESA’s white paper quantifies the diverse benefits of energy storage and how this disruptive technology can transform the electricity industry.

 

Postcard from Puerto Rico

— November 1, 2017

It has been more than a month since Hurricane Maria swept through Puerto Rico. The majority of this US territory remains without reliable electricity and is facing a crisis of unprecedented proportions. The lack of power in Puerto Rico, as well as the hurricanes that struck Florida and Texas, have turned up the heat on utilities, regulators, and the federal government regarding how best to rebuild power grids for greater resilience to protect against future outages during natural disasters.

While companies such as Tesla proclaim that Puerto Rico provides the perfect opportunity to deploy solar PV plus energy storage microgrids to rebuild regional power supplies, others argue the quickest way for restoration lies with fixing the traditional hub-and-spoke centralized transmission grid. Where does the truth stand? As is often the case, somewhere between these two extremes. Though I personally would invest more heavily into microgrids, I would not restrict them to solar energy because hurricanes can both damage and limit power production. Nonetheless, wind-powered mobile microgrids were part of the immediate response, smart dual-fuel generators should also be vital parts of the microgrid solution mix.

Can Lessons from the Military Rebuild Puerto Rico?

There are some important lessons that Puerto Rico can benefit from if it listens to the US military, a key responder to the crisis in Puerto Rico.

As I noted in a recent blog, the US Department of Defense (DOD) and data centers have been wrestling with how to maintain uptime while scaling back its reliance upon diesel generation. In a new Navigant Research white paper sponsored by Schneider Electric, I argue that innovative business models, such as microgrids as a service, may be the ticket to transforming industries reluctant to embrace distributed energy resources (DER) innovations. Likewise, military bases are following similar pathways forward, eliminating capital costs and financing upgrades through energy efficiency savings. Case in point is the Marine Corps Logistics Base in Albany, Georgia, which is the DOD’s first net zero energy military base.

The military microgrid market was viewed as an early adopter before budget issues helped stall the market. While a uniquely US market in terms of adoption for stationary bases, its effect is global since the DOD has sites scattered across the globe. Forward operating bases and mobile tactical microgrids can operate as standalone systems or interconnect with traditional grids and have been featured in recent conflicts in both Afghanistan and Iraq. A new report from Navigant Research notes that momentum for DOD microgrids is picking up.

Military Technology – Civilian Implications

The DOD has played a remarkably consistent role in commercializing new technologies that provide tremendous social benefits within the larger civilian realm. The Internet, created by the Defense Advanced Research Projects Agency (DARPA) in 1969, is perhaps the most ubiquitous of the DOD’s contributions to consumer markets. Along with accelerating the commercialization of traditional manufactured products such as aircraft, the DOD has also pushed the envelope on IT. These advances have been vital to all smart grid platforms, including microgrids.

Hurricanes and related rain and wind do pose challenges to all forms of power supply, including microgrids. Yet, developing a distributed and diverse portfolio of resources is always the best bet, whether one is talking about the wholesale or retail delivery system (note that Cuba’s reliance on microgrids limits outages compared to its Caribbean neighbors). While the Trump administration favors traditional energy pathways, the DOD has forged new ground in DER. One option for Puerto Rico could be to carve out a lead role for the DOD in rebuilding its power system, showcasing lessons learned from both domestic bases and remote power bolstering national security, while at the same time delivering the humanitarian services so direly needed by the local population.

 

Storage in the Northwest: Overview of Threats and Opportunities

— October 10, 2017

Last week I had the opportunity to open up day 2 of the Northwest Demand Response + Energy Storage Summit. I gave an overview of what is happening with energy storage in the Pacific Northwest.

What Is the Current Market?

The region has a long history with pumped and dispatchable hydropower, so energy storage is not a new concept. However, battery powered systems are relatively new. Since 2010, many utilities have deployed 22 MW worth of projects for research, development, and pilots. Some of the larger projects include Portland General Electric’s Salem Smart Power Center and Puget Sound Energy’s Glacier Project. In the near term, the region’s pipeline for non-hydro project is small, but several drivers are quickly changing that.

Energy Storage Tracker for Oregon, Washington, Idaho, British Columbia, and Montana

(Source: Navigant)

What Is Driving Growth?

Key drivers for new storage developments include resilience needs, evolving business models, renewables integration, and greater access to financing, but the largest drivers are the following:

  • Policy: In Oregon, House Bill 2193 is requiring all investor-owned utilities (IOUs) to procure at least 5 MWh (but up to 1% of 2014 peak load) worth of energy storage. In Washington, the Clean Energy Fund has sponsored many storage demonstrations and the Utilities and Transportation Commission has directed all IOUs to include energy storage in their integrated resource plans.
  • Improving project economics: Energy storage costs continue to fall and we expect that to continue. Falling costs make energy storage competitive in more and more applications.
  • Customer interest: Customers of all types—from residential to large industrial—are getting interested in energy storage to help manage energy costs, provide resilience, and support sustainability.

What Barriers Does Storage Face in the Region?

Potential barriers that could slow down storage deployment in the region include the following:

  • Business models: Not finding the right regulatory and business models that allow a range of values to be captured for individual projects.
  • Pilots and projects: Poorly executed and evaluated pilots and early projects.
  • Technology issues: Technology—including communications, data gathering and management, and operations—that is not ready for energy storage.

Click here for a copy of my presentation.

 

Energy Storage to Optimize and Advance CHP Generators

— August 31, 2017

Energy storage is often associated only with the integration of renewable energy. However, recent market developments have highlighted the potential for storage to optimize both existing and new fossil fueled generators. While large-scale pumped hydro energy storage has been used on the grid for decades, those systems were rarely tied directly to any generation plants. A recent storage project built by General Electric in California is evidence that the falling costs for battery storage are opening opportunities to improve the efficiency and flexibility of existing generators.

There are attractive advantages for energy storage to optimize generators at a smaller scale. Gas-powered combined heat and power (CHP) systems are becoming increasingly popular due to the improved efficiency these systems offer customers that need a reliable supply of both heat and electricity. Because of the varying energy needs of these customers and the dynamics of CHP systems operation, there is frequently an overgeneration of either electricity or heat. This energy is often wasted, as establishing contracts that export excess energy is costly and challenging. Both thermal and electrical energy storage systems can greatly reduce wasted energy when tied to CHP systems and can provide attractive ROI for customers.

Industry Actions

Several recent acquisitions in the industry have emphasized this dynamic. In a recent blog, my colleague Adam Forni discusses these developments and the efforts of generator manufacturers to expand their offerings and participate in the emerging Energy Cloud. Notable recent investments in storage providers include Wärtsilä’s purchase of Greensmith and Aggreko’s acquisition of Younicos.

In both cases, incumbent generator providers moved to acquire storage companies focused on the software and controls required to optimize storage systems and integrate them into electricity markets. These tie-ups are mutually beneficial, as the storage providers gain access to new sales channels and potential new customers. The generator providers are likely focusing on developing the capabilities to integrate storage into their offerings and utilize new combined solutions to provide energy and capacity services in competitive electricity markets. The additional revenue generated by these grid services can greatly improve the overall economics of new storage and microgrid projects, including those that expand the capabilities of existing generators.

Into the Future  

The move toward microgrids and local power systems to improve the resilience of energy supply is an important driver for the integration of energy storage with conventional generators. Navigant Research’s recent Market Data: Combined Heat and Power in Microgrids report anticipates that 11.3 GW of new CHP capacity will be added in microgrids around the world over the next decade. The addition of these systems presents a major opportunity for both thermal and electrical energy storage to improve overall efficiency. Through the integration of energy storage and the sophisticated software platforms used to connect to energy markets, large amounts of new distributed energy capacity will become available on the grid.

 

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