Opportunity Abounds as Washington Builds the Modern Electricity Grid

Source: By Benjamin Romano, Xconomy.com • Posted: Tuesday, August 29, 2017

The Horn Rapids Solar, Storage, and Training Project—which would be the largest solar installation in Washington, and one of a relative few anywhere with a significant amount of energy storage incorporated—embodies a long chain of public and private sector efforts that have positioned the state, and the broader Pacific Northwest, as a leader in the grid modernization and energy storage industries. The project is funded in part by a Washington state grant program that has helped several companies get their technologies in the field.

Grid modernization—a broader term for what is also called smart grid—presents a large economic development opportunity for the region, supporting up to 13,800 jobs in Washington by 2030, as companies meet growing global demand for products and services needed to create electricity systems that are more dynamic, decentralized, flexible, and clean, according to a recent report from the American Jobs Project. Electricity production accounted for 29 percent of U.S. greenhouse gas emissions in 2015, according to the U.S. Environmental Protection Agency.

But the report calls out roadblocks including a dearth of technical training for workers in the industry. Horn Rapids will go a long way to addressing that shortage, co-located as it is with an existing training center for electricians in Richland, WA. It will also provide real-time data to universities and federal labs, where researchers and students are designing and learning about the modern grid.

When it’s completed, the new Horn Rapids project could be a model for the grid of the future.

What is Modern?

The old-line grid, in which large centralized power plants—often coal- or gas-fueled—respond to changes in electricity demand, is by no means simple, but it is, in some respects, fairly straight forward. “It was really one-way communications,” says Daniel Schwartz, director of the Clean Energy Institute at the University of Washington, which partnered with the American Jobs Project on the report. “Customers did something and then the behemoth centralized system responded to it. … When I flip on a light switch, somewhere, a generator is spinning a bit faster in order to supply that differential energy.”

The idea behind grid modernization is to build an electricity system that can handle an expanding array of electricity consumption and production scenarios:

  • Customers are both consumers and producers of energy. Think of the house with an electric vehicle charger in the garage and solar array on the roof.
  • Individual and business customers manage their power consumption dynamically. For example, a commercial building with a heating and cooling system could automatically shut down for 15 minutes in response to price signals from the grid.
  • A growing fleet of renewable energy sources operates smoothly. The grid accommodates large solar and wind farms—spread across the landscape, as opposed to the concentrated power production of fossil-fired plants—whose output fluctuates with the vagaries of weather.
  • Energy storage technologies, such as lithium ion and flow batteries, play a crucial new role in many of these scenarios.

Technology companies in the Northwest are well-positioned to enable this transition. Software and automation—two strong-suits of the region’s IT industry—as well as Internet of Things devices are necessary pieces of the grid modernization puzzle. For example, several Washington companies provide software to help manage electricity usage at the point of consumption, or the “edge” of the grid. Others make novel, large-scale batteries or the software that manages their interactions with the rest of the system.

“It’s about putting all the pieces together when there’s not one command-and-control place that owns it all,” Schwartz says.

Washington Gov. Jay Inslee speaks at the opening of the Washington Clean Energy Testbeds. University of Washington Clean Energy Institute director Daniel Schwarz looks on at left. Photo by Benjamin Romano / Xconomy

The transition to a modern grid is well under way, but, obviously, it’s no small task. The grid is sometimes described as the most complex machine ever built. And you can’t shut it down while you modernize.

“This is a remodel you have to live in,” says Schwartz.

Through it all, the lights have to stay on, and energy costs must be kept in check.

Decades of Innovation

Risk-averse utilities are focused on reliability and cost as they adapt the electricity grid. That posture can make it difficult for purveyors of innovative technologies to win critical first customers.

To help utilities get comfortable with new-to-the-grid technologies such as energy storage systems, Washington state has shouldered some of the costs of initial battery storage and grid modernization projects at Washington utilities through the Clean Energy Fund (CEF), which has allocated $76 million to a variety of clean energy and efficiency capital projects in the last four years, including Horn Rapids.

The CEF built on momentum already rolling in the Northwest, which has a history of electricity system innovation, as well as cheap, clean hydroelectric power that has been “turning our darkness to dawn”—in the immortal words of Woody Guthrie—for eight decades, thanks to massive federal power projects such as the Grand Coulee Dam. (The federal Bonneville Power Administration, which markets power from dams and operates the majority of the region’s electricity transmission system, marks its 80th anniversary later this month.)

“Our ridiculously large hydro-backed grid has always made us an interesting electricity place,” says Brian Young, clean technology sector lead at the Washington Department of Commerce, which oversees the CEF.

The CEF, a signature initiative of Washington Gov. Jay Inslee, has helped Snohomish Public Utilities District (SnoPUD) in Everett, WA, install battery systems and locally developed software to integrate and control them. It supported a storage project by Avista Utilities at a substation in Pullman, WA. Puget Sound Energy, too, received funding to install a battery that’s helping keep the lights on in the small mountain town of Glacier, WA.

“Utilities were really craving that need to understand battery storage and how it fits into our grid and how they operate,” Young says.

In addition to money focused on utility grid modernization, the CEF has provided early research and development funding to companies working on a broad sweep of clean energy technologies, and revolving grant funds to nonprofit lenders for energy efficiency upgrades.

(The CEF was set for about $40 million in additional funding for the coming two years, but that is on hold for now because the Washington Legislature failed to pass a capital budget.)

Newer companies such as UniEnergy Technologies (UET), which is commercializing technology from Pacific Northwest National Laboratories (PNNL) to build utility-scale batteries that fit inside shipping containers, have benefited from these early state-supported deployments, creating a track record upon which they can sell their wares to utilities and large commercial customers around the world.

“The Pullman project for Avista was UET’s first sale in the U.S.,” says Russ Weed, UET’s vice president of business development and marketing, via e-mail. The battery it provided to SnoPUD was the largest of its kind in the world, “further accelerating UET’s commercial traction,” Weed adds. “Now UET is up to 170 megawatt hours of systems deployed, contracted, or awarded.”

The UniEnergy Technologies flow battery installation at a substation in Everett, WA. Photo courtesy of UniEnergy Technologies

Before the CEF, there was another major regional funding source for innovation on the electricity grid.

The Pacific Northwest Smart Grid Demonstration Project, a five-year, $178 million region-wide effort—the largest of 16 such projects backed by the Department of Energy in the wake of the Great Recession—deployed and tested new infrastructure including smart meters and transformers, energy storage systems, controllable thermostats, and perhaps most importantly, a “transactive control” signal, which would serve as the beating heart of a modern grid. The signal communicates the price of power at a given time and place on the grid, telling a business to turn off its HVAC system if power prices are spiking, or a utility to charge up its battery when electricity is cheap.

The demonstration project “laid a base for us, and the state, through the Clean Energy Fund, has built some amazing things on top of that base,” Schwartz says.

Horn Rapids

The Horn Rapids Solar, Storage, and Training Project, planned for a 20 acre parcel just down the road from PNNL, began as an idea of the International Brotherhood of Electrical Workers and the Regional Education Training Center (RETC), located adjacent to the project site. The RETC, a nonprofit with operations in Richland and Olympia, collaborates with labor, utilities, businesses, and other organizations to offer hands-on competency-based training to incumbent workers, Robert Topping, executive director of the RETC in Richland, says via e-mail.

Those groups brought the project to Energy Northwest, a joint operating agency of 27 public utility districts that also runs power projects including the Columbia Generating Station nuclear plant, to develop further and tap state funds. (Only utilities can apply for grid modernization grants from the CEF, and they must match state dollars at least one for one.) The project’s CEF grant is $3 million, Young says. The total project cost has yet to be determined.

The project consists of a 4 megawatt solar array to be built by Sumner, WA-based energy services company Potelco, and a flow battery storage system, capable of storing 4 megawatt hours of energy. (One megawatt of solar can provide enough energy to power about 164 average American homes, though the exact amount varies depending on location, according to the Solar Energy Industries Association.)

The solar and storage combination will allow the plant to produce a predictable flow of zero-emissions electricity. Also, the battery enables a host of modern grid operations—such as demand response, electricity arbitrage, peak demand reduction, and stability—at the city of Richland’s municipal utility, which is the potential customer for the project, says project manager Clint Gerkensmeyer of Energy Northwest, pictured at top.  [The previous two paragraphs were updated to indicate that the battery vendor and customer for the project have not yet been finalized.]

“It’s very unique,” Gerkensmeyer says of the project and its combination of large-scale solar, energy storage, and an explicit focus on training. “We’re only going to get more and more storage on the grid. As we rely more on renewables, more storage is going to be required in order to make those renewables fit the energy patterns.”

Horn Rapids’ greatest promise may be the people who will gain expertise in these technologies, equipping them to build the modern grid of the future.

“As we continue on, this technology is going to become more ingrained, and hence you’ll need a work force to maintain and operate it,” Gerkensmeyer says.

The RETC is developing a specialty curriculum connected to the project to provide electricians and utility workers with hands-on training in solar and energy storage plant siting, construction, operations, cyber and physical security, and maintenance, Topping says.

Researchers in the control room at the UW Clean Energy Institute’s Washington Clean Energy Testbeds. Photo by Matt Hagen for UW Clean Energy Institute, used with permission.

Once operational, sometime in late 2018 or early 2019, a dedicated high-speed communications link from the project will stream data back to researchers at PNNL, who are at the forefront of designing operational structures for the modern grid. It will also link to universities across the state, including the UW’s Clean Energy Institute, where a campus control center in the new Washington Clean Energy Testbeds facility today allows students to get a feel for managing the UW’s microgrid. (A microgrid is a system to optimize energy use, and often production as well, in a small area, such as a university campus or neighborhood. UW’s microgrid is joined, through the transactive control signals developed during the smart grid demonstration project, to similar microgrids at Washington State University and PNNL, allowing them to act in concert and manage energy use in response to the needs of the broader system.)

“This is an example of how, on campus, our Testbeds are plugging into this vision of grid modernization so that we can train people to be ready for it,” Schwartz says.

Foreign Investment, Export Opportunity

The market for these technologies within Washington itself is small compared to states such as California and New York, which have more acute problems on their electricity grids and are deploying large amounts of energy storage to help solve them, Young says. (The Pacific Northwest, it should be noted, has been a leader in energy storage on a massive scale for decades. That storage just happens to be in the form of water held in reservoirs behind hydroelectric dams.)

Through CEF-backed projects brought online in recent years, Washington companies have bolstered an already strong reputation in grid modernization technologies. Established companies such as Itron (NASDAQ: ITRI), based outside of Spokane, is among the world’s largest makers of smart meters, which give utilities a real-time view of energy consumption, rather than estimating usage based on monthly reads of analog meters—a key unit in the bigger grid modernization picture. (Seattle City Light selected Itron competitor Landis+Gyr for the 420,000 smart meters it plans to install across its service area by the end of next year.) Grid technologies maker Schweitzer Engineering Laboratories, whose facilities in Pullman, WA, host one of the state’s early CEF-funded storage projects, is a household name in the industry. Newer companies have landed on the map for energy storage innovation, too, with a string of significant international investments and M&A deals during the last two years adding further momentum.

Grid modernization M&A in Washington

“When you get [large international companies] either investing or buying up your technology, that really gets people’s attention,” Young says, adding that the Department of Commerce has recently hosted foreign investor delegations from China, Japan, South Korea, Germany, and Italy.

David Kaplan, founder and CEO of 1Energy Systems, and Daejin Choi, of Doosan Heavy Industries & Construction.

To continue the momentum, the American Jobs Project report suggests more of what Washington is doing already: It calls for a strengthened foreign direct investment strategy; improved small business access to university and national lab resources (which both of the state’s flagship research universities and PNNL already provide); and incentives for utility innovation, such as the CEF.

The report also calls for tax incentives for companies in the grid modernization industry, and more opportunities for high school students to connect with careers in grid modernization.

The state also needs to cultivate a new crop of startups in this sector—one that’s notoriously difficult for young companies because of the inherent conservatism of utility customers and typically long sales cycles for anything that attaches to the electrical grid. There are significant efforts afoot here, with new incubators, seasoned entrepreneurs launching second or third ventures in the industry, and specialized investors focused on the space—though never quite enough of the latter. (Xconomy will explore the next generation in a subsequent story later this year. We’re collecting data on startups and established companies in energy storage and grid modernization in the Pacific Northwest. Please send an e-mail to bromano@xconomy.com to make sure you’re on our radar.)

In the meantime, work on Horn Rapids progresses with construction expected to start early next year. When it’s complete, Washington will have, in a single project, an end-to-end pipeline to further develop grid modernization expertise.

“We’ve now got this ability to reach from training of electricians all the way up to training of PhDs,” Schwartz says. “It’s really about building the ecosystem for grid modernization.”

Benjamin Romano is editor of Xconomy Seattle.