PROJECT EASY GREEN

SAN JOSE, California — Reporting from the ESA (Energy Storage Association) annual event.

The big turnout and high energy at this year's event speaks to the progress, potential, and emerging businesses coming out of the utility-scale energy storage industry. California Assembly Member Nancy Skinner, the author of a pioneering energy storage bill, kicked off the event yesterday evening.

As we've discussed before, there is a lack of regulatory clarity when it comes to energy storage. Regulatory agencies like the FERC don't oppose storage — they are looking to public comment and utilities to drive their policy.  

And utilities like PG&E are cautiously looking at new energy storage technologies and applications as they engage in a number of pilot projects. Pilot and demonstration projects are needed for utilities to test-drive new technology and grow a level of comfort around these new potential assets. Most utilities don't have a specific budget for energy storage, so they depend on getting federal and state grants for this sort of thing. The danger for an energy storage startup is in falling into pilot project purgatory with no view of commercialization.

Jon Eric Thalman, Director for Regulatory Strategy and Support at PG&E, spoke at the ESA event on Tuesday with an update on that utility's forays into energy storage. (Here's a video of Thalman from another recent storage event.)

PG&E has 15 million customers and 430 megawatts of photovoltaics in its service territory, according to Thalman.  Under one CPUC scenario, PG&E expects to have an energy mix with 13 percent solar and 10 percent from wind power in a few years. The utility is no stranger to large-scale energy storage — its Helms pumped storage facility is a 1,200-megawatt storage unit near Fresno, California that's been in operation for 25 years. But it was built in different regulatory (and environmental) times.

PG&E does have another pumped hydro site in development, Mokelumne, that's potentially the same size as Helms and has the potential to be used to help buffer the 4,500 megawatts of wind power coming in from the Tehachapi wind developments. So, PG&E understands pumped hydro.

Electrochemical storage might be a different story.

PG&E has two pilot projects using sodium sulfur (NaS) batteries from NGK. NGK's NaS batteries were selected because they are one of the few technologies and vendors with a performance and reliability track record. According to Thalman, the pilot can help the ISO develop the storage markets with this test bed.
 
The first project is a 4-megawatt, 28-megawatt-hour battery system servicing a large office development at the end of a long distribution feeder where there's been a history of outage problems. It's expected to be operational in the fourth quarter of 2011.  

It's meant to address:

• Reliability
• Power quality
• Islanding
• Frequency regulation
• Load shaping
• Ancillary services

The second project is at a substation near the Vaca Dixon Solar Plant of Vacaville, California.  It's a 2-megawatt, 14-megawatt-hour installation due to be operational in a few months. This project addresses load shaping, renewables integration, and ancillary services.

Storage economics depends on capturing multiple simultaneous high-value revenue streams.

The larger view, according to Thalman, is a sustainable electrical system integrated with EVs and renewables in light of the changing mindset of customers, who are increasingly aware of energy efficiency.

SAN JOSE, California — Reporting from the ESA (Energy Storage Association) annual event.

The big turnout and high energy at this year's event speaks to the progress, potential, and emerging businesses coming out of the utility-scale energy storage industry. California Assembly Member Nancy Skinner, the author of a pioneering energy storage bill, kicked off the event yesterday evening.

As we've discussed before, there is a lack of regulatory clarity when it comes to energy storage. Regulatory agencies like the FERC don't oppose storage — they are looking to public comment and utilities to drive their policy.

While the FERC collects opinions and considers how storage should best be classified and regulated, pioneering entities like AES with batteries from A123 are deploying grid-tied utility-scale energy storage in real-world, non-demonstration projects.

Importantly, the projects are generating revenue.

I spoke with A123 VPs Chris Campbell (Marketing and Business Development) and Andy Chu (Marketing and Communications) at the ESA event.

A123 (NASDAQ: AONE) builds nanophosphate lithium-ion batteries and systems for the transportation, electric grid, and commercial markets. The corporate revenue mix is 50 percent transportation, 40 percent grid, and 10 percent consumer. That might not have been the original vision of A123's initial business plan — but business plans have to change when business environments change.

As far as the battery technology winner, Chu sees it as a two-horse race between Li-ion and Sodium Sulfur (NaS), with NGK as the "grandfather in the space." EPRI, the Electric Power Research Institute has suggested that the steep scale-up in lithium-ion electric vehicle applications will drive down the price of that battery technology and allow it to lead in the utility-scale race.

A123 will have 100 megawatts of energy storage online by the end of the year in commercial and pilot projects, according to Campbell.

The 100 megawatts include at least four projects in partnership with Independent Power Producer (IPP) AES Energy Storage. Here's a list of some of A123's current projects:

• There are two projects in Chile. One of the projects is a 20-megawatt storage system supplied to AES Gener for its 500-megawatt plant in Chile acting as spinning reserve. In 2009, A123 and AES began commercial operation of a 12-megawatt spinning reserve project at AES Gener’s Los Andes substation in the Atacama Desert in Chile. It continuously monitors the condition of the power system and if a significant frequency deviation occurs — say, the loss of a generator or transmission line — the energy storage system can provide up to 20 megawatts of power nearly instantaneously. This output is designed to be maintained for 15 minutes at full power, allowing the system operator to resolve the event or bring other standby units online.
• A frequency regulation project at an AES generation plant in Johnson City, N.Y. It's the first of its kind to be classified as a generator by the FERC for emissions-free reserve capacity to the power market operated by the New York Independent System Operator.
• A 32 megawatt-hour demonstration program with Southern California Edison (SCE) partially funded by the DOE ARRA program to potentially work with the 4,500 megawatts of wind energy coming from Tehachapi wind projects.
• DTE has a 500-kilowatt/250-kilowatt-hour demonstration project.

Note that A123 is not just selling a battery — they're selling a turn-key system. Because A123 has been building EV storage packs for transportation applications, they've learned that 30 percent or more of the cost is devoted to balance-of-system. They suggest that grid-based energy storage systems would require a higher percentage of balance-of-system.

There seems to be a shift in the electrochemical utility-scale storage market — commercial activity genuinely seems to be coming online in a meaningful way. We'll continue to report from this show.