Regulation Boosts Storage Adoption, Breakthroughs

A new piece of proposed legislation in California may require energy companies to invest up to $3 billion on power-storage systems in the state so consumers and businesses can make more use of renewable energy.

If passed, the California Public Utilities Commission’s proposal would require utilities owned by PG&E Corp., Sempra Energy, and Edison International to secure 1,325 megawatts of storage capacity by 2020.

“This ruling recognizes that storage is going to be a valuable component of California’s supply mix,” Praveen Kathpal, vice president of market and regulatory affairs at AES Corp.’s storage unit, told Businessweek. He estimated that 1,325 megawatts of storage could require between $1 billion to $3 billion in investment.

Lithium-batteries storage retains electricity, and molten salt, which holds heat that’s used to run a turbine to produce energy, could help utilities meet new legal requirements, according to Bloomberg New Energy Finance analyst Brian Warshay.

The California proposal could also set a national precedent that would boost development of high tech energy storage systems. In fact, storage systems are gaining in importance as companies search for ways to maintain sustainable and accessible levels of renewable energy.

Advances in energy storage could help make wind and solar power available not just in large and largely deserted areas of land, but also in high-density urban areas, according to a report in Scientific American.

In cities pockets of energy storage distributed throughout a municipality would make the grid more flexible and perhaps even more reliable. That’s because instead of only shipping energy from big centralized power plants, batteries could supply power closer to where it is actually needed and used, such as on hot summer days when power plants are struggling to meet demand for air-conditioning.

Renewable energy storage presents a potentially lucrative opening for scientists and tech entrepreneurs trying to get around the low price of incumbent technologies by developing both technical storage breakthrough and clever business models, according to Scientific American.

Meanwhile, upfront capital expense is often cited as the biggest barrier to adoption of energy storage, according to Navigant Research, who published a blog on increasing incentives paid for energy storage. California is one of four markets that offer a subsidy for adopting energy storage, along with New York, Germany, and Japan.

Scientific American cites a 58-story luxury apartment building in lower Manhattan, Barclay Tower, as an example of a company taking advantage of investment and subsidies. It added a two-megawatt-hour battery in its basement, resembling a few rows of commercial refrigerators. Based on its ability to supply about half the 550-kilowatt peak load in common areas for a few hours, saving thousands of dollars per month, building owner Glenwood Management now plans to invest in and install similar systems at three more commercial buildings this year.

The City University of New York plans to install a 200 kilowatt-hour commercial prototype of a novel zinc–nickel oxide rechargeable battery this summer, made by start-up Urban Electric Power, the company’s second test installation.

Unlike a battery bank in an off-grid home, high-tech battery systems save on utility bills by drawing on batteries rather than the grid during peak hours, thus avoiding demand charges.

At the InterContinental Hotels in San Francisco, power charges represent about two thirds of the monthly electricity bill. To lower them, it installed Silicon Valley start-up Stem’s refrigerator-size batteries in its historic Mark Hopkins Hotel. They worked well, so the company ordered bigger batteries from Stem for 16 other hotels in California. The assumption is the hotel chain can save $2.2 million over 10 years.

There’s more good news about battery storage: A typical commercial or industrial company confronts little red tape compared with a utility in installing a battery on site. It just needs to make economic sense and the support of building owners.

Con Edison, the power utility that serves New York City, plans on testing how well zinc–air battery from start-up Eos Energy Storage can add to the local power distribution grid. Energy storage innovators hope that dramatically lower costs and safe designs will compel more utilities to consider the technology.

Eos, which recently raised $15 million in a Series B funding, intends to introduce a system in 2014 that supplies one megawatt of power for up to six hours at a price of $160 per kilowatt-hour. That’s far cheaper than lithium ion technology, for instance, and is designed to last for as long as 30 years, far longer than traditional lead–acid batteries.

Battery technologies are not the only way to store energy.  A few innovators are working on storing energy using a cheap, abundant resource—air, says Conservation Magazine.

Compressed air energy storage, or CAES, uses excess power from the electricity grid to compress some air, and then let it expand and turn a turbine when you need the electricity back. “It’s a pretty simple idea,” says Steve Crane, the CEO of LightSail Energy, one company refining compressed air technology with the hope of making a dent in the storage market soon.

One factor limiting CAES development is geology.  Industry has managed to build only two full-scale compressed air facilities—one in McIntosh, Alabama, and one in Huntorf, Germany. In both cases, the air is stored in large underground caverns. Such geologic formations are not evenly distributed around the world. Alabama’s plant was built specifically because of the suitability of the salt formation underground, not because any particular power source was nearby.

LightSail and SustainX address this issue with modularity. Instead of using one big underground storage cavern, they store the air in smaller tanks or pipes, which can be added or deleted as needed. The Alabama and Germany facilities both exceed 100 megawatts in size, whereas the new companies’ systems start in the one- or two-megawatt range and can build up from there.

Cold storage is also gaining momentum, and a recent research report from IDC and SageCloud’s fresh round of funding validate this trend.

Boston-based cold data storage startup SageCloud announced this week that it completed $10 million in Series B financing. The round was led by Braemar Energy Ventures, with participation from its existing investor, Matrix Partners.

A recent IDC report cites power management as a critical data center need, and it forecasts that the market for solutions to address energy-efficient data storage will exceed $25 billion by 2016.

To read the Businessweek article cited in this story, click here

To read the Scientific American article cited in this story, click here

To read the Conservation Magazine article cited in this story, click here

To read the VentureBeat article cited in this story, click here

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