Innovation vs. Invention: NAATBatt White Paper Asks for Support of Distributed Energy Storage

This past week, a coalition of 12 leading utilities and industrial companies assembled by NAATBatt finalized a white paper detailing the “national benefits” of distributed energy storage technology.  The paper points out that some of the most important benefits of distributed energy storage (DES) systems—their ability to stabilize the national power grid, to enable states to meet renewable energy goals, and to reduce dependence on imported petroleum by promoting the electrification of light vehicles—are essentially invisible to the local ratepayers and regulators who are asked exclusively to pay for and approve investment in DES systems.  The inability of local ratepayers to be compensated for the benefits that locally deployed DES systems provide to persons outside the local service territory often make DES systems appear expensive and uneconomic when, in fact, their deployment is highly beneficial to the nation as a whole and should be supported.

The utilities and companies that participated in the NAATBatt coalition are ABB, American Electric Power, Altairnano, Boston-Power, DTE Energy, The Dow Chemical Company, Dow-Kokam, Duke Energy, EaglePicher Technologies, General Motors, International Battery and S&C Electric.  The full white paper will be presented to senior policy makers in Washington during meetings with coalition representatives in mid-March.

The white paper is well-timed, as interest in current deployment of distributed energy storage and other energy storage technologies may be fading at the U.S. Department of Energy (DOE).  Although the 2013 fiscal year budget proposed by the Obama Administration includes a 3.2% increase in overall funding for the DOE, the DOE’s budget cuts about $5 million for a community energy storage program and proposes other cuts for microgrid research and development.  The budget cites a proposed shift in emphasis for the DOE away from applied energy applications and towards more basic scientific research through programs such as ARPA-E as a reasons for the cuts (see page 248 of the budget).

As a recent corporate advertising campaign (by Dow Chemical) points out, there is a difference between invention and innovation.  Getting the balance right between the two is a tricky thing.  DOE support for new invention is important.  Developing new technologies that might reduce the cost of high power advanced batteries from $750 per kilowatt hour to $100 per kilowatt hour, for example, would be helpful and potentially transformative in some storage applications (such as automotive).  But it would be a serious mistake to believe that what is needed to solve the problem of bringing electricity storage to the grid is a new invention.  In fact, the problem and its solutions are substantially more mundane.

The problems that preclude the deployment of energy storage technology on the distribution portion of the grid have less to do with a lack of basic technology than with a lack of experience among utilities in deploying and operating these novel and complex systems.  The cost of the battery cell inside a DES system is a fraction of the costs that utilities face in testing, deploying and networking the systems themselves.  Reducing total system costs, not just the cost of the battery cell, must be the primary focus of DES deployment efforts and DOE support.  Reducing DES systems costs, by helping utilities gain experience with such systems and standardizing their components, will be a function of innovating better ways to use and integrate existing technology, not just the invention of new technology.

The technology necessary to bring the national benefits of distributed energy storage to the grid largely exists today.  What is lacking is a mechanism by which utilities and local ratepayers, who must pay the costs of developing the knowledge and experience necessary to deploy that technology onto a power grid which must be 99.999% reliable, can be compensated for that investment and the funding of DES system deployments assured.

The national benefits that widespread deployment of distributed energy storage systems would bring to the country as a whole do not await discovery of a magic technology bullet.  They await the innovation necessary to integrate new, 21st Century energy storage technology onto a power grid that still operates based upon a 19th Century design.  They also await the innovation of new mechanisms for paying for the installation of local power assets that provide benefits on a national scale.  Promoting those innovations should be as high a priority for the Administration and the DOE as the search for any next generation technology.

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