As batteries join power grid, industry looks for clear regulations to help it grow

Source: Mike Lee, E&E reporter • Posted: Monday, June 1, 2015

DALLAS — The energy storage business is waiting on governments and electric grid regulators — and financiers — to come up with policies that allow it to take part in the nation’s power business alongside renewable generation.

California and Hawaii have created a demand for storage companies by revamping their electric grids to run on solar and other alternative sources, Lisa Frantzis, a senior vice president at the trade group Advanced Energy Economy, said during a meeting of the Energy Storage Association here. New York and Massachusetts are working on plans to modernize their electric grids.

Use of storage systems — ranging from batteries to systems that store and release water for power generation — could get a further boost as generating plants start to retire once the Obama administration’s proposed Clean Power Plan takes effect.

First, though, the industry needs rates that allow companies to get paid not just for providing watts on demand, but for their role in providing flexibility to the system, Frantzis said.

“The technology is there, but the business model needs to change,” Frantzis said.

Energy storage companies installed 5.8 megawatts of capacity in the first quarter of 2015, up 18 percent from the first quarter of 2014, and they’re on track to build 220 MW, according to the storage association and GTM Research (ClimateWire, May 28).

New York has a pilot project that will allow Consolidated Edison Inc. to earn financial incentives for building a $200 million battery system, because it will help avoid $1 billion in spending on grid upgrades, Frantzis said.

It’s one of several efforts to find ways to pay for the different values that storage brings, Frantzis and other speakers said. Batteries and other systems provide power during California’s “duck curve” — the period in the afternoon when demand rises and solar generation typically starts to wane. They can also soak up excess power when wind and other alternative sources overproduce. And, as in New York, they can serve as a cost-effective alternative to expanding the grid.

It’ll take further action by the Federal Energy Regulatory Commission and the state regulators to create a full-fledged market for storage systems, Sky Stanfield, an attorney at Keyes Fox and Wiedman in Oakland, Calif., said during a panel discussion.

“It’s not just like one docket that you can, you know, snap and have a storage market,” Stanfield said.

The uncertainty about the regulation may be preventing further investment in the systems, Jeff Cramer, state policy director for the storage association, said on the sidelines of the conference. Currently, banks and money managers know how much they can earn with a power plant or an electric grid, but batteries and other systems are a new breed.

“That’s one of the key issues the industry faces,” Cramer said.

That’s why Tesla Corp., best known for its electric cars, is designing so much flexibility into its newly announced battery systems.

Tesla CEO Elon Musk captured the spotlight from a lot of competitors when he announced the company’s Powerwall system for home use and the Powerpack for businesses and industrial use (EnergyWire, May 6).

The systems are designed around interchangeable batteries that can be linked and stacked to meet each customer’s demands from a single-family home to a sprawling utility, said Mateo Jaramillo, Tesla’s director of power train development.

“We don’t feel quite confident to pick a winner in terms of exactly where we’re going to optimize the system,” Jaramillo said.

“There’s a thousand, thousand flowers blooming in the world of energy storage right now around the world. It makes sense to have the flexible ability, basically, to serve all those markets.”