Energy storage grabs spotlight in Southeast utility tech plays

Source: Kristi E. Swartz, E&E reporter • Posted: Friday, October 9, 2015

Leaders of the Southeast’s utilities are making bold statements about where they see their companies heading when it comes to advanced energy storage, a corner of the technology world that even die-hard enthusiasts say is nascent.

“I want to be the leader in energy storage in the country,” NextEra Energy Inc. Chief Executive Officer Jim Robo said at an analyst conference in New York last week.

Two days later in Washington, D.C., Southern Co. CEO Tom Fanning said his company was “engaged in storage in perhaps the most significant way in America.”

Meanwhile, Duke Energy Corp. officials have circulated a list of the company’s energy storage projects, making note that those started years ago.

Energy storage is fast becoming the next step in the continuing transformation of the electric utility sector. In just a few years, executives have moved from a “we’re studying it” phase to figuring out how to make storage actually happen on a larger scale.

What’s more, all three of these electric companies have significant or growing renewable energy operations outside their regulated utility territories, creating opportunities to use storage across the United States and elsewhere, analysts say.

“You are developing a technology for use around the country and for around the world,” said Scott Segal, an industry lobbyist with law firm Bracewell & Giuliani.

“There’s obviously a linkage in interest in renewables and interest in storage,” he said. “You might have storage taking place in areas that are close to the renewable asset and that might be outside of a traditional territory.”

The interest in energy storage is expanding for several reasons. As utilities continue to add renewables to the grid, storing electrons and releasing them as needed is key to solving the intermittency problem, particularly with wind and solar. Secondly, evolving technology now gives consumers more control of their energy use, and companies have formed to take advantage of that.

Both will become more important as states have to figure out how to comply with U.S. EPA’s Clean Power Plan, which targets existing fossil fuel plants and calls for more renewables.

An eye for technology

There’s also an image issue that even the most progressive of utilities still face. Gigantic energy companies such as Duke, NextEra and Southern have made significant headway into adding solar and wind and are looking at other new technologies. But, as with other large electric companies, they still can be pegged as being resistant to change.

The best example of this is solar. All three companies have pushed heavily into utility-scale solar, which mirrors a centralized power plant. When it comes to customers having it on their own roofs and generating their own electricity, policy barriers remain in some states.

“It’s important for these utility executives to not appear complacent about the technology in the industry because the changes are happening, and they are serious,” said Paul Patterson, a utility analyst with Glenrock Associates Inc. “It behooves them to be on top of the changes because they can be very disruptive.”

Battery technology is developing and getting cheaper, and renewables continue to fall in cost also, Patterson said.

“If batteries get cheap enough, you could have people leaving the grid,” he said.

South Florida-based NextEra’s robust renewable energy unit, NextEra Energy Resources, plans to spend roughly $100 million a year to explore and develop storage technology, executives said during an earnings call earlier this year.

In New York last week, NextEra’s Robo said the company is focusing on areas that include the PJM Interconnection, Arizona and possibly California. The projects would help deliver firm renewable energy and beef up grid reliability, he said.

NextEra owns the largest regulated electric utility in Florida, but NextEra Energy Resources is the largest wind and solar developer in the United States. This gives the company endless options to expand storage once the technology is developed.

“If we can deliver firm power to our renewable energy customers, you will see renewables explode even more than they already are,” Robo said.

His prediction: If storage costs continue to fall like renewables, there may never be a need for utilities to build peaker plants after 2020.

Patterson cautioned that the industry isn’t there, yet.

“It’s great that you have this battery, but is it cheaper than simply firing up a gas-fired peaker?” he said.

‘Critical interface’

Speaking about energy innovation at a Bipartisan Policy Center event, Southern’s Fanning said storage is more than just batteries. Fanning did not elaborate, but he has been talking about Southern’s storage efforts for more than a year. In an earlier interview with EnergyWire, Fanning said Southern is trying to figure out a way to “play offense” and get in front of the technology that could make storage common (EnergyWire, May 30, 2014).

His ideas include a technology called Compressed Air Energy Storage and hydroelectric power with pumped-storage hydroelectricity. The company is eyeing the potential of using these technologies outside its four-state territory in the Southeast.

Southern and the Electric Power Research Institute also kicked off a three-year, 1-megawatt battery storage project in Georgia. The project’s goal is to help the utility review three things: the overall technical performance; how it supports grid applications such as peak shaving, regulating voltage and integrating solar; and its economics (EnergyWire, Sept. 18).

“It shouldn’t be a surprise that the utility sector is leading the way in storage,” said Segal with Bracewell & Giuliani. “They are the critical interface between the consumer demand and the provision of power. As a result, they have significant motivation to understand all that can be understood about power storage.”

Shortly after Southern’s battery demonstration announcement, Duke officials talked up the company’s projects in Texas, Ohio, North Carolina, Indiana and Florida. The utility has projects in its regulated and unregulated territories, at everything from substations to solar farms.

“We think it’s promising; it’s a matter of where is the right fit for it,” company spokesman Randy Wheeless told EnergyWire. “The Duke way is, ‘Let’s get some projects out there, see what the limitations are, what the possibilities are.'”

The idea is to figure out what else batteries can do besides store electrons and make the grid more stable. The more uses they have, the more valuable they will be for the utility, Wheeless said.

Wheeless said some of the projects are at the point where the batteries are getting older and not working as well. Duke is trying to recommission those batteries and replace them with new ones that are more effective.

“We’re hoping to move the meter as getting batteries more acceptable and a help to utilities,” he said.