Energy storage seen as boom business for Wisconsin companies

Source: By Thomas Content, Milwaukee Journal Sentinel • Posted: Wednesday, April 1, 2015

ZBB Energy’s manufacturing facility in Menomonee Falls.

Journal Sentinel files. ZBB Energy’s manufacturing facility in Menomonee Falls.

A new report commissioned for a Milwaukee-based energy collaborative suggests the global market for products in this market will grow by 400% by 2020 — with some segments forecast to grow at a clip of 40% a year.

Better battery technology can help businesses combine renewable energy with energy storage to shield themselves from high utility costs, particularly in costly energy markets like Hawaii, California or New York.

“This market really is going to get big — very, very big,” said John Bobrowich, director of market and industry expansion at the Mid-West Energy Research Consortium. It will be a global market, and 75% of the sales will take place overseas, primarily in China, India and the Asia-Pacific region, he said.

“This is a big opportunity in terms of wealth creation potential for the region because so many of the products for this market will be exported,” Bobrowich said.

From an estimated $6 billion in sales today — primarily in the area of pumped hydroelectric storage that’s on a utility scale — the market is projected to grow to $26 billion, according to an analysis performed for the consortium.

On smaller-scale energy storage systems, like those that would help keep power running to a home or an office building, the last few years have seen a shift from research and development to installation of actual systems. And local companies and researchers are playing a role.

Storage and controls

Johnson Controls, which produces batteries for vehicles and building-control systems in separate businesses, is moving into stationary energy-storage systems.

The company has developed a lithium-ion battery for stationary use that is slated to be made in the United States, at the lithium-ion plant in western Michigan the company opened with funding from the American Recovery and Reinvestment Act.

The new stationary energy-storage business at Johnson Controls is positioned to tap expertise of both the company’s battery and building businesses, said Brian Dillard, executive director of energy storage system integration at Johnson Controls.

A modular energy storage system that the company is prototyping would include products the company’s battery and building businesses already produce, including building controls and the batteries themselves, he said.

ZBB Energy Corp. in Menomonee Falls recently released a new battery aimed at the building energy storage market. The company is making a sales push in Hawaii, where the price of electricity is nearly triple what it is in Wisconsin and the rest of the U.S.

ZBB’s EnerStore system can be packaged with a variety of battery technologies, including the company’s zinc bromide flow batteries as well as lithium-ion, said Dan Nordloh, ZBB executive vice president.

ZBB had an initial project installed in Hawaii several years ago, combining solar panels with a battery to use energy storage instead of a diesel generator to power an apartment building’s elevators during times when power from the grid was unavailable.

This year, ZBB has introduced a new battery for commercial and industrial buildings, and signed a contract with a Honolulu condominium building with more than 350 units.

Under the new venture, the condo will buy electricity that will come from a combination of solar and stored energy, Nordloh said.

ZBB has gotten experience deploying its systems around the country, with an emphasis on projects awarded by the military, said Tony Siebert of ZBB.

Those systems have been deployed on islands, creating microgrids where the military combines renewable energy and generators with batteries and power management systems.

The military’s interest in energy storage isn’t limited to those remote locations. DRS Technologies, a contractor for the U.S. Navy on Milwaukee’s north side, is seeing strong growth thanks to new projects to supply power electronics and propulsion systems for Navy destroyers and ships.

The business, a contractor to the Navy for more than 100 years, is seeing an increased emphasis on energy storage systems for future ships, said Don Klick, director of business development at DRS.

Earlier destroyers were equipped with three natural gas engines — two of which would operate and one would serve as a backup. Now the Navy is focused on being able to power everything on a ship from one engine — with a storage system supplying backup power, he said.

Recent contract wins are translating into job growth in Milwaukee for DRS, which now has more than 400 employees. The company has hired more than 100 engineers in the past year and has openings for at least 50 more.

Competition grows

The Midwest region has significant participants in the emerging industry, including S&C Electric in Illinois.

But recent announcements by Elon Musk, whose companies include automaker Tesla and SunEdison, make for serious competition for the rest of the industry, Bobrowich said at the research consortium meeting last week.

“What Tesla is doing right now, building the largest gigafactory for lithium-ion batteries, is going to be earth-shattering to this industry,” Bobrowich said.

The scale of that factory, under construction near Reno, Nev., could drive down the cost of lithium-ion batteries, which will place pressure on competitors and expand the size of markets for battery technologies, he said.

In recent months, Musk has expanded his vision to one that would not only power vehicles but also provide home energy storage systems that homeowners could combine with solar panels.

Other than Tesla, the biggest challenge facing this emergent sector for Midwestern companies is the fact that it’s developing so much more quickly in other parts of the country.

Power rates have risen sharply in Wisconsin and are above the national average but still remain well below places like California or New York.

And energy storage systems are most conducive to areas that have an unreliable power grid or an abundance of renewable energy systems that can’t operate around the clock.

The Midwest and Wisconsin have been aggressive about expanding power supplies, said Bobrowich, noting the strong performance of We Energies in industry rankings of reliability. The utility has led the Midwest in one firm’s utility-reliability rankings for four straight years.

Does this make this region the wrong place for companies looking to move aggressively into this business?

“I don’t think so,” said Bobrowich. “We’re in a very good region because we have a lot of the technologies covered within our region. It’s just that our market is not as ready as the coast markets are.”

It’s for that reason that local companies need to find partners or set up shop in markets like California that are moving more quickly.

That’s why ZBB’s Nordloh finds himself returning time and again to Hawaii, given the market opportunities there.

So much solar has been developed in Hawaii that utilities have balked at adding more, and storage technologies for multitenant buildings can be cost-effective given the islands’ high power prices, he said.