November 30th, 2013 by James Greenberger
November 23rd, 2013 by James Greenberger
For reasons that are unclear, the blogosphere was buzzing this week with references to a study published last August by Stanford’s Global Climate and Energy Project. The study calculated the overall energetic cost (i.e., the total amount of fuel and electricity required to build and operate a system) and the energy return on energy investment (EROI) (i.e., the ratio of energy delivered to the total lifetime energetic cost of a system) of pairing electrical energy storage (EES) systems with wind and solar electricity generation systems. The study sought to calculate whether, on the basis of energetic cost only, it is better to curtail energy produced by wind and solar systems at times when electricity production exceeds demand or to store that electricity for future use.
The somewhat surprising conclusion of the study is that while it might make sense to use batteries to store electricity produced by solar systems, it makes no sense to use batteries to store excess electricity produced by wind systems. The study looked at the total energetic costs of solar systems and wind systems. The study concluded (at my substantial risk of oversimplification) that because the energetic cost of producing 1 MW of electricity by wind generation was lower than the energetic cost of storing and reusing 1 MW of electricity by means of a battery EES system, it made greater sense to curtail an excess MW of electricity than to store it. Because electricity generated by solar systems has a substantially higher energetic cost than that generated by wind, the study came largely to the opposite conclusion with respect to storing excess electricity generated by solar arrays.
The study went out of its way to emphasize that it looked at the energetic costs of storage only. It did not consider or calculate other benefits of electricity storage, such as electricity market economics, insuring reliable power supplies to critical infrastructure, ancillary benefits to power grid operation and application in disaster relief and war zone scenarios.
But the study does purport to create a new theoretical framework for quantifying how storage affects net energy ratios. In a widely reported quote, lead author Charles Barnhart summarized the study’s conclusion saying “You wouldn’t spend a $100 on a safe to store a $10 watch.”
Not so fast, Charles. The problem with the Stanford study is that it assigns an energetic value to the 1 MW of excess electricity based upon the historic energetic costs of the system that produced it. That is why the study assigns a higher energetic cost to 1 MW of electricity generated by solar than to 1 MW of electricity generated by wind.
But at the moment of decision, at the time one must decide whether to curtail or to store, historic costs are irrelevant. Historic costs are sunk costs and, for purposes of making going forward decisions, must, like all sunk costs, be disregarded. What matters for purposes of energetic calculation is: what is the energetic cost of replacing the 1 MW of electricity you have elected to curtail with 1 MW of new generation (plus the costs of wheeling that new generation to load)?
A better energetic analysis of pairing electricity storage with renewable energy would compare the energetic costs of battery EES systems with the energetic cost of peaker plants and their related additional infrastructure that will be required to replace electricity curtailed from renewable energy generators. That analysis should inform the decision whether to store or curtail, not the sunk, historic energetic costs of the renewable energy generator. In fact, this analysis has been done by the State of California and the result was the California Public Utilities Commission’s electricity storage mandate based on AB2514.
The simple answer to Charles Barnhart’s proposition, that you wouldn’t spend a $100 on a safe to store a $10 watch, is: yes you would—if the $10 watch costs $200 to replace. That is the analysis that California has done and that other jurisdictions in the United States and around the world are doing. And that is why pairing electricity storage with all forms of renewable energy makes good sense on an energetic basis.
November 15th, 2013 by James Greenberger
I am pleased to announce that NAATBatt has published today on its Web site the first in a series of quarterly reports on intellectual property developments in the field of advanced battery and capacitor technology. The reports, called Advanced Battery PatentEdge™, detail statistical developments and trends in patent claims pertaining to electrochemical energy storage technology in the United States and around most of the world
The Advanced Battery PatentEdge™ reports grow out of a project undertaken several months ago by eight NAATBatt member firms and IP Checkups, a Berkeley, California-based consulting and publishing firm that compiles and analyzes patent databases. The idea was to create a way of categorizing advanced battery and capacitor technology in a manner that would permit IP Checkups to track through patent filings trends and developments in the markets for that technology that might be of use to our members.
With the help of our member firms, IP Checkups has now completed its first compilation and analysis of trends in advanced battery and capacitor markets. Pursuant to its agreement with NAATBatt, IP Checkups has provided the first of eight quarterly Advanced Battery PatentEdge™ reports on these trends. Future editions of the report will be made available exclusively to NAATBatt members on the secured, members only section of our Web site. But we have posted this first, initial report on the unrestricted “Publications” section of our Web site for all visitors to review without restriction.
There are not too many surprises in this first edition. Patent filing trends indicate that advanced materials seem to attract the greatest amount of research from among those companies doing business in the advanced battery space followed somewhat closely by innovations in battery modules. Among research targeting specific applications for advanced battery technology, on-road vehicles and telecommunications seem to generate the most new research and patent activity.
Among companies working in the battery industry, Toyota, LG Chem and Samsung SDI hold a significant lead over all other companies in the number of U.S. battery-related patents applied for and granted in the 3rd quarter of 2013. An interesting fact that can be gleaned from the report is the ratio by company of patents applied for vs. patents granted. A high ratio of grants to applications might indicate that a company is slowing its investment in advanced battery research. Companies with a possible waning interest might be Toyota, Bosch, BYD, General Motors and Qualcomm. Companies stepping up investment in battery research might be LG Chem, Sanyo, Sony and Li-Tec.
And what would any survey of intellectual property be without a league table of the most prolific inventors in the field of electrochemical energy storage during the 3rd quarter of 2013? The winners are: Tim Schaefer of Li-Tec, Kostantinos Kourtakis of DuPont, and Masaya Yamamoto of Toyota.
There is a surprising amount of information that can be learned about an industry by studying trends in patent filing. Big Data is a powerful tool and we hope through the quarterly Advanced Battery PatentEdge™ reports to provide access to such a tool to our members. Check out the Advanced Battery PatentEdge™report for 3rd quarter 2013 at: http://naatbatt.org/uploads/Advanced-Batteries-Q3-Update_111813_Final.pdf. But keep in mind that to see the reports for the 4th and all future quarters, you will have to be a NAATBatt member.
November 8th, 2013 by James Greenberger
The NAATBatt DES Demonstration Project initiative continued this week with a meeting of the DES Advisory Committee on Wednesday in Chicago. The purpose of initiative is to help the U.S. Department of Energy better define where to deploy its demonstration project dollars in order to move distributed energy storage (DES) technology more quickly into commercial application. Having surveyed the views of 22 electric utilities on this question, NAATBatt selected a group of industry and utility representatives to serve on an Advisory Committee and turn the survey results into substantive recommendations. It was this group of industry advisors that met in Chicago on Wednesday.
The Advisory Committee that met in Chicago consisted of 24 representatives of electric utilities, battery manufacturers, systems integrators, battery testing experts and consultants and Sandia National Laboratory. The committee discussed the survey results and identified six possible combinations of storage applications that could be the basis for model projects to be funded by the DOE.
My substantive take-aways from the meeting were as follows:
- There is a general consensus among the Advisory Committee that future demonstration projects should focus less on proving out the technology of storage than on proving out the economics of storage. The ultimate goal must be to show how storage projects can capture and monetize the maximum amount of value.
- Monetizing value from storage in the real world will be constrained by regulatory barriers in many jurisdictions. For purposes of designing demonstration projects, however, these regulatory barriers should be ignored. Regulatory reform will grow out of new technological and economic possibilities in storage, not the other way around. If we can demonstrate that the economics of storage will work, we must assume that the regulatory reform necessary to exploit it will follow.
- The key to maximizing the value of storage is the information and control logarithms that will determine how the storage resource will be used and when. This process must be a fully automated. It was the view of several of the participating utilities that this is the piece of the puzzle that has not yet been adequately demonstrated.
- Demonstration projects should focus on utilities. While many storage assets will ultimately be owned and operated by non-utility owners, utilities will be more inclined to share information from demonstration projects than independent business entities engaged in a highly competitive market.
- The goal of the Advisory Committee should be to identify four or five projects “that everybody will want to do.” These projects should then be replicated, with some allowance for local variations, by different utilities in different locations around the country. The results and experience of deployment should then be benchmarked and shared among the participating utilities through a mechanism to be administered by the U.S. Department of Energy.
The DES advisory committee plans another meeting in conjunction with the 2014 NAATBatt Annual Meeting and Symposium next January in San Diego. A final report is due to the U.S. Department of Energy on January 31, 2014.
November 2nd, 2013 by James Greenberger
It is rare that the ups and downs of the advanced battery industry are so thoroughly represented by a single company in one ten-day period. But this has been that kind of a week and Tesla Motors has been that kind of a company.
A week ago Wednesday, Tesla and Panasonic Corporation announced an agreement to expand their longstanding (since 2011) battery cell supply agreement by an additional four years, over which time Panasonic has agreed to supply Tesla with a minimum of 1.8 billion lithium-ion battery cells. The agreement gives substance to earlier statements from Tesla management suggesting that there is a huge market, and a potential undersupply, of high quality lithium-ion battery cells.
This past Tuesday, more interesting talk: On a conference call with analysts, Elon Musk suggested that Tesla Motors was looking to build the largest lithium-ion battery factory in the world. The factory would reportedly manufacture both cells and packs and, significantly, would be built in North America. The largest lithium-ion battery manufacturing plant today is owned by Liotech, a Russian-Chinese joint venture, and reportedly has a capacity of 1 GWh a year.
On Wednesday, of course, the excitement generated by Tesla crashed back down to earth. A fire in a Tesla Model S in Tennessee—the third such incident in six weeks—caused Tesla’s stock to plummet 7.5% in a day. The cause of the fire is still under investigation. Initial reports suggest that, much like the first incident in Seattle, the cause was a major kinetic impact, which could have resulted in a catastrophic thermal event in almost any car, whether powered by electric drive or an internal combustion engine. That does not matter, of course. The public, the media and the investment community are and will continue to be easily rattled by reports of safety problems in a new technology—particularly if those reports come with a good video.
So it is that all of us drive a Tesla. We work in an industry with incredible potential, but one which will inevitably see plenty of bumps in the road along the way. Advanced electrochemical energy storage will be a lynchpin technology of our future economy: a technology that is critical to future developments in motor vehicles, the power grid, mobile electronic devices, military technology and computer systems, just to name a few. The prospects for growth in the industry, if notoriously overestimated over the past two years, have been are widely underestimated over the next ten. Buckle your seat belt.
October 24th, 2013 by James Greenberger
We are less than 90 days away from the 2014 NAATBatt Annual Meeting and Symposium and I am pleased to announce that we have just posted the preliminary agenda for the program. Each year try to do something a little different than what is done at the larger trade shows–to present topics that are timely, new and interesting. Next January I am confident we will succeed.
We also try hard to mix fun and good social networking in with business education. NAATBatt is about the business of advanced batteries. But good businesses grow out of good business communities. Building and supporting a good community is a big part of what NAATBatt and its programs are all about.
A copy of the Agenda can be read in its entirety by clicking here: https://origin.library.constantcontact.com/doc203/1102926161246/doc/YCV6c9rgVBS2e3lc.pdf. Some of the highlights of the program are:
- A workshop on graphene and its applications in electricity storage. Workshop sponsor Grafoid promises that delegates will get a “hands on” experience with graphene that will make them understand what all the hoopla is about.
- A tour of multiple energy storage demonstration sites operated by the University of California-San Diego at its East Campus, in the Hopkins Parking Facility and at the La Jolla Playhouse.
- A visit to and reception at the SCDE Energy Innovation Center in San Diego, where delegates will hear presentations by SCDE executives about SCDE’s experience with electricity storage projects and its plans for the future.
- An overview of present and future market opportunities for storage on the U.S. power grid presented by Judith Judson McQueeney, former chairperson of the Massachusetts Public Utilities Commission.
- A panel discussion about what the advanced battery industry can expect in 2014 from the capital markets. Who let the dogs out?
- Flash presentations by 20 emerging companies working in advanced battery or ultracapacitor technology that are looking for investment, licensing or acquisition opportunities from larger companies.
- A panel discussion about safety issues in ESS projects. This is a hot topic that is only going to get hotter in 2014. Learn the answers from this panel before someone else asks you the questions.
- New data concerning the use of second life EV batteries in ESS applications. We are starting to get real data about second life performance (previously most second life data was extrapolated from laboratory experiments). Hear what the new data shows and what it means for the prospect of secondary use.
- A panel of independent power developers, with deep experience in wind, solar and co-gen projects, will talk about how independent storage projects will likely be structured and what project developers are going to expect from their battery supplier partners.
- Finally, a Hawaiian Luau reception, a gala awards dinner, a spouses program (yes, we know that if you go to San Diego in January for business you will never hear the end of it, so we want you to bring your significant other along), and lots of opportunities to socialize with people you might just end up doing business with.
Registration for the 2014 Annual Meeting and Symposium is open now. Register for the meeting and book your hotel room by going to: http://events.constantcontact.com/register/event?llr=5kjlyfdab&oeidk=a07e85uth8s99033842. We expect quite a turn-out this year. Don’t wait to book your room; you might be sleeping on the beach.
October 18th, 2013 by James Greenberger
The California Public Utility Commission’s approval last week of the 1.325 gigawatt storage mandate in California is unquestionably watershed event for the electricity storage industry. If implemented tomorrow, the mandate would roughly double the capacity of grid-connected, non-hydro electricity storage resources deployed in the world today.
While the California mandate provides a much needed commercial opportunity for storage companies, it also teaches an important lesson about how best to create similar opportunities in the future. Much is made, and properly so, of the need to verify that the economic benefits of storage exceed its costs and that those costs do not exceed those of competing technologies. The California mandate itself contains an economic feasibility condition. But the important lesson of the California mandate is about the primacy of politics over economics in the world of regulated electric utilities. The mandate happened because political bodies in California wanted it to happen, not because the numbers necessarily added up. This is a lesson that the storage industry must take to heart.
Regulated electric utilities are companies that use economic tools to operate in a political marketplace, not the other way around. In order to incent those utilities to buy storage, electricity storage companies spend hundreds of thousands of dollars each year on conferences and studies trying to prove that storage is cost effective. By comparison solar and wind energy advocates, which sell many times the amount of product to utilities as do storage providers, engage in no such debate. Their products, solar and wind energy, are pre-sold to utility customers through the political process. A lot of people who vote for members of their state PUC or the persons who appoint them simply care that utilities renewable energy. That is what makes the sale. Economic considerations may play a role in wind and solar procurements, but it is very much a secondary role.
So how can we in the storage industry take a page out the wind and solar playbook and pre-sell our products through the political process? The answer has two components: messaging and communications.
As for messaging, storage advocates need to tailor our message better for members of the general public, who don’t know much about power system engineering and have absolutely no interest in becoming better educated about it. Talking about storage as an enabler of clean energy may be a good if somewhat complicated message. A better message might to promote storage as an enabler of reliable power. This seems a more intuitive message and one that might have strong resonance in areas that have experienced a recent power disruption.
As for communications, that is a matter of money. Educating the general public about the benefits of storage will not be an inexpensive proposition. It will require strategic outreach and a savvy media strategy. This kind of money cannot come from an industry that has limited sales. It must come from foundations and public interest groups, which understand the more complicated and compelling case for storage and who will stand with us to help educate the general public about it.
In short, the industry needs to organize a 501(c)(3) charity to raise money for public education. Educating the general public about the benefits of electricity storage is that fastest way to sell it to politically sensitive utilities and to make storage a ubiquitous feature of the grid.
October 11th, 2013 by James Greenberger
This past Thursday NAATBatt members participated in a member site visit meeting at Duke Energy in Charlotte, NC. Our member site visit meeting programs are an increasingly popular feature of NAATBatt membership. I expect these programs will only grow in popularity following our great experience this week at Duke.
The meeting started in the Vista Room at the top of Duke Energy headquarters in downtown Charlotte, with presentations by Zak Kuznar and Dan Sowder recounting Duke’s experience with electricity storage technology. A major thesis of the presentations was that the success of electricity storage on the grid will largely depend on proving the practical ability of individual storage projects to bundle multiple value streams and to provide their operators with multiple sources of revenues or value. Only by proving their ability to bundle multiple benefits, Zak and Dan suggested, can storage projects hope to justify the cost of their installation. Many of Duke’s several demonstration projects are designed to study and demonstrate the ability of single projects to perform that bundling function.
Duke believes that there is much that still needs to be learned about how storage works on the grid and about how operating a storage system to perform multiple functions will work in actual practice. Zak and Dan suggested that the costs of this obtaining this education cannot be placed on utilities and their ratepayers alone. Collaboration and cost share by the storage industry is necessary, they suggested, for storage technology to develop and ultimately to find its place on the grid.
Following the presentations at Duke, attendees boarded a bus for a tour of the McAlpine and Rankin electricity storage projects, which Duke Energy operates in the Charlotte metropolitan area. The McAlpine project is deployed in conjunction with a ground-based solar array generating about 50 kilowatts of electricity, allowing its 500-kilowatt storage battery, supplied by BYD, to demonstrate load smoothing from a source of variable renewable energy generation. The McAlpine project also serves as a key component of a local microgrid, providing uninterrupted power to a local fire station and facilitating smart grid energy efficiency programs in the surrounding residential community.
The Rankin project, built around a 402 kilowatt sodium nickel chloride battery provided by FIAMM and S&C Electric, is also intended to absorb solar-induced power swings, in this case from a nearby 1.2 megawatt rooftop solar project. The Rankin facility also provides frequency regulation and voltage support to the distribution system on which it is located. Duke recently deployed a software package created by NAATBatt member 1Energy Systems to optimize Duke’s operation of the storage resource at Rankin. Representatives of Duke, FIAMM, S&C Electric and 1Energy Systems were all on hand for the tour and took questions from attendees.
I was deeply gratified by the multiple compliments about the program that I received from many of the more than 50 participants, who came from all around the country to attend this event. In these member site visit meetings, NAATBatt has hit upon a formula that provides real value to our members, both from a standpoint of education and networking, which goes far beyond anything they can get out of a traditional trade show. I look forward to announcing the next such meeting soon.
October 4th, 2013 by James Greenberger
The news this week has been dominated by the government shutdown, the pending credit default crisis and, most recently, by optimistic reports of negotiations between the White House and House Republican leadership. This optimism stems from a possible agreement on a continuing resolution and a small increase in the federal government’s borrowing limit that will allow federal employees to return to work and forestall a default on government debt
I regret to say that I do not share the optimism. While reopening the government would be positive and avoiding a credit default critical, the fact that these things pass for a resolution of the crisis in some circles concerns me deeply. I am not sure that those in Washington fully understand how the current crisis is playing out among those doing business in the U.S. economy. I would offer NAATBatt’s experience as one small example.
The National Alliance for Advanced Technology Batteries (NAATBatt) is a trade association whose mission is to support the commercial interests of our members by promoting advances in science and markets for advanced electrochemical energy storage technology. We are primarily a networking organization, helping our members identify opportunities, technologies and alliances that will make their businesses more successful.
In the short term, the government shutdown has had little impact on NAATBatt. NAATBatt is not funded by the federal government. None of our revenues or programs have been lost or delayed. Some conferences in which our members have participated over the past 10 days have been impacted by the inability of government employees to participate. We also have great sympathy for employees of government agencies with whom we regularly deal, who are likely suffering some personal, though hopefully temporary, financial hardships because of the shutdown. But all these issues will be resolved by a successful outcome of the negotiations now being so optimistically reported.
What will not be resolved is the longer-term impact that this crisis will have on NAATBatt’s future activities. We are in the early stages of planning a Pan-Pacific Advanced Battery Summit, which will bring together senior executives of leading battery firms and their supply chain partners. The idea of the Summit is driven by the desire of NAATBatt member firms to have better access to the growing Chinese battery market and for Chinese companies to have better opportunities in North America. Ordinarily, we would plan to hold the Summit at an attractive venue in the United States. As a U.S.-based organization, this would be the easiest and preferred option.
But the prospect of future government shutdowns occasioned by one political disagreement or another must now figure into our planning. In the best of times getting travel visas for Chinese businessmen to enter the United States has been a little unpredictable. Compounding that unpredictability by the prospect of occasional government shutdowns and their attendant halts to and backlogging of visa processing is simply more risk than NAATBatt can afford to bear. With great regret we must at this point plan to hold the Summit somewhere outside of the United States next year.
The $16 trillion U.S. economy will little notice the few hundred thousand dollars it will lose by NAATBatt holding the Pan-Pacific Advanced Battery Summit overseas. But multiply NAATBatt’s predicament by the tens of thousands of other U.S. businesses that must be making similar calculations and the staggering long-term cost of the shutdown becomes readily apparent.
For the last fifty years, the great strength of the U.S. economy, and its great advantage over other nations, particularly developing nations, was been its political stability. That we have arrived at a point where business people must account for political instability in the United States in their planning is a big deal. I fear that our political leaders in Washington just don’t understand how big a deal that is.
Reopening the government and paying back salaries to furloughed government employees may seem like a solution to some. But it does not address the more fundamental issue that threatens to become a major problem for the U.S. economy: the perception of real and consequential political instability.
The only effective solution is a political consensus, vocally and credibly voiced across the political spectrum, that a federal government shutdown and threatened credit default will never again be allowed to occur. Political differences can and should remain, and can and should be passionately debated and acted upon through the legislative process. But no matter what the political disagreement, shutting down the government must be placed permanently and irrevocably off the table.
September 28th, 2013 by James Greenberger
The YouTube video showing a Tesla Model S on fire outside Seattle brought home this week the heightened sensitivity of the public to thermal events involving advanced electrochemical energy storage. The safety of automotive traction batteries has been the subject of intense ongoing study by NHTSA, SAE International, and others. But the safety of electrochemical energy storage in grid-connected energy stationary storage (ESS) has received comparatively less attention. For the sake of accelerating the deployment of ESS systems onto the grid, this needs to change.
The general public may not be much concerned about safety at substations or at other points on the grid where storage may be used. But the safety record of ESS systems will be a key determinant of the rate at which utility and non-utility customers are willing to deploy such systems. Safety will impact the rate of deployment in three ways.
The first, and most obvious, is because of concern for safety itself. Although an incident at a substation or on an electricity distribution system will generally not threaten the public in quite the same way as incidents involving automobiles, grid incidents involving storage can endanger workers and others involved in the servicing of electrical systems. Safety is always the top priority at electric utilities. Until technology and procedures exist which ensure that ESS systems will not unduly jeopardize worker safety, deployments will be slow.
The second concern of most electric utilities after safety is reliability. In fact, safety and reliability are two sides of the same coin. An ESS system that has had a thermal event cannot perform its function on the grid. Moreover, an incident on one ESS system may require the shutdown of similar systems for an indeterminate period of time. A better understanding of the frequency of thermal incidents and their consequences will be critical to the willingness of utilities to deploy ESS systems on the electricity systems that they manage.
Finally, establishing standards of safety and reliability will be important to the ability to finance ESS systems. While many electric utilities will be able to finance ESS systems off of their balance sheets, third party providers of ESS services will need to look to the capital markets for financing. Those markets are notoriously unforgiving of any issues involving the safety or reliability of the systems being financed (i.e., the ability of those systems predictably to generate cash flow). The wind industry is a case in point. For many years, only a handful of wind turbine manufacturers could produce reliability data satisfactory to project lenders. This resulted in a windfall for that handful of manufacturers while all others were effectively locked out of the market. The same thing is likely to happen in the ESS market.
NAATBatt looks forward to playing a helpful role in starting a discussion about ESS safety, and how that safety can be improved and documented. We expect to announce shortly the formation of a committee, likely to be led by our new members UL and GCube Insurance Services, that will soon start discussions on this subject. Stay tuned to the NAATBatt Advanced Battery Weekly for reports as to the progress of this initiative.
Earlier this week I spoke with an old friend, who works in the utility practice group of a major management consulting firm. We commiserated about the challenges of getting conservative electric utilities to adopt new technology. My friend opined that the only way to get the attention of utility management is to paint a picture of Armageddon. And there is no surer way to do that, he said, than by talking to them about distributed generation.
Electric utilities’ fear of distributed generation is understandable. The business model of most electric utilities is based on their administration of a large, centralized electricity grid or some aspect of it. The rise of distributed generation—electricity customers going off or partially off grid and generating their own electric power—directly threatens that model. The role of a traditional electric utility on a grid largely based on distributed generation is difficult to foresee. This is the Armageddon scenario that keeps utility executives awake at night and, apparently, attentive to their management consultants.
We in the electricity storage business have always assumed that the rise of distributed generation is a good thing for the grid, and a good thing for the electricity storage business. But both assumptions need to be questioned. While a grid largely based on distributed generation will have some benefits, it will also come with serious drawbacks. And while electricity storage could help enable large scale distributed generation, it could also be that its greatest commercial value is as a tool to help traditional utilities preserve the centralized structure of the grid by addressing the consumer concerns that are driving demand for distributed generation.
Today, three factors drive demand for distributed generation: environmental concerns, reliability and cost.
Environmental concerns are a prime driver of demand for distributed, renewable generation. Homeowners and businesses wanting to do their part (and wanting to be seen to be doing their part) to reduce greenhouse gas emissions are an early market for such systems. Yet it is a fact that distributed systems are no “greener” than centralized wind or solar power plants. Electricity storage technology enables utilities to more easily integrate bulk wind and bulk solar generation onto the grid. As important, utilities can use distributed electricity storage systems to address the desire of consumers to “see” green power. Deploying a “sun-in-a-box” or “wind-in-a-box” electricity storage system in a neighborhood can do much to demonstrate a utility’s commitment to providing its customers with green power while at the same time saving those consumers from having to endure bulky and unsightly power generation equipment in their communities.
Increasing concerns about the reliability of centralized power also drives a growing interest in distributed generation. Utilities can use electricity storage systems to address this concern. In fact, distributed electricity storage systems owned and operated by a utility are likely to be significantly more robust than consumer-operated PV arrays and small wind turbines in the event of a storm or other power disruption. A visible commitment by a utility to provide back-up power to its customers in the form of distributed electricity storage systems would do much to reduce demand for customer-owned distributed generation motivated by reliability concerns.
The third factor driving the growth of distributed generation is cost. As the price of PV solar panels has declined and as regulatory schemes in some markets have become more favorable for distributed generation, many consumers are calculating that they can reduce their electricity bills by installing rooftop PV systems. This calculation stems in part from the fact that the distribution systems over which centralized power plants must wheel power tend to be congested during times of peak solar generation potential. Accordingly, consumers calculate that with rooftop PV systems can replace high cost, peak electricity with their own, self-generated power.
Utility-owned, distributed electricity storage systems can, of course, directly address this issue. One of the principal benefits of distributed electricity storage systems is their ability to decrease congestion, by giving utilities the ability to wheel power over their systems at the time determined by a utility’s needs and not by its customers’ demands. When power is “used” on the grid is different from when power is “used” by a consumer. If utilities assume responsibility for the former, time of use charges become unnecessary.
Another more troubling cost driver for distributed generation is consumers’ calculation that they can avoid grid legacy costs by reducing their reliance on the grid. The battle over allocation of legacy costs is an old one and is fought out in many contexts other than distributed generation. But the growth of distributed generation is likely to give rise to a particularly bitter battle. As wealthier customers install distributed generation systems, go off (or partially off) the grid, and bring their political muscle to bear on reducing the legacy costs they have to pay, there is the very real prospect that those who are unable, financially or otherwise, to install such systems will find themselves severely disadvantaged. Thoughtful commentators are already warning about the dangers of a system where the rich have private PV and the poor are shouldered with the enormous burdens of grid legacy costs. If distributed generation pushes parts of the population into “energy poverty”, distributed generation cannot honestly claim to be part of a system of “sustainable” power.
Distributed electricity storage is the key to whichever alternative society chooses with respect to distributed generation. Storage can clearly help facilitate the growth of distributed generation. But just as importantly, storage can be used by utilities to address the very customer concerns that are today driving the explosion of distributed generation systems around the country and the coming of Armageddon for the traditional electric utility.