On Monday, August 9, NAATBatt will file with the FERC comments in response to its Request for Comments Regarding Rates, Accounting and Financial Reporting for New Electric Storage Technologies, Docket No. AD10-13-000. The filing of NAATBatt’s comments will culminate a process that has involved numerous meetings and telephone conference calls among more than 20 companies, including automotive OEM’s such as General Motors and Nissan, battery makers such as EnerSys, A123 Systems, Saft America and Altairnano, and electric utilities such as AEP, SCE and Xcel.
NAATBatt’s comments should be helpful in focusing the FERC’s attention on regulatory issues that must be resolved in order for community energy storage (CES) and other advanced distributed energy storage systems to be productively deployed onto the grid. Without resolving those regulatory challenges, advanced energy storage, and distributed energy storage applications in particular, will face an uphill fight. But more important than the comments themselves was what was learned by the participant going through the comment process. Automakers sat with battery makers and with electric utilities, and, ultimately, with the highest officials at the FERC, and all learned much from each other.
First, we learned that CES is real and can bring unique benefits to the grid. Pushing energy storage out to the edge of the grid makes storage more flexible and more valuable. Revolutions in energy storage and telecommunications technologies mean that thousands of boxes in the backyards of America can now, though the power of a network, perform many of the same functions that were once the sole province of large generators and transmission providers.
We also learned that CES is still a new technology and that the business models necessary to exploit fully its potential are still being developed. One interesting model is joint ownership of CES facilities. In a joint ownership model different entities would own the right to use a CES facility at different times and for different purposes. A local utility may own the right to use the CES facility at peak times but convey to an unregulated entity the right to bid power from the CES facility into the wholesale power market at other times. Current regulatory schemes, however, make such innovative models problematic, which is one of the issues NAATBatt will address in its comments.
Finally we learned that the nature of CES is such that no matter how ownership is divided, at the end of the day all CES facilities will likely be operated in some form by local, regulated utilities. It is difficult to imagine how an independent, unregulated third party might be able to finance or service thousands of power boxes in consumers’ back yards. This means that, regardless of what ownership models and regulatory models develop for CES, it is likely that local electric utilities will probably be the customers of the battery manufacturers hoping to play in the CES market.
That utilities will be the ultimate customers for CES is an important realization. For whatever its theoretical benefits, CES will only be successful and deployed in mass when it makes economic sense for utilities to deploy it. Too often, storage advocates have taken positions that are adverse to the utility industry. Battery makers need to concentrate their efforts on working with the utility industry, and on listening carefully to it, if battery makers are going to move this technology forward. A few demonstration projects funded by the DOE and studied endlessly will never build an industry. Listening to the customer is key. If utilities are going to be the ultimate customers of advanced battery systems, it is critical that the battery industry not get sideways with its customers.
