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Summary:

Utilities know they have to figure out how to store energy produced intermittently, such as wind and solar, or store energy from fossil-fuel power plants to keep the grid loaded when wind turbines and solar energy equipment aren’t doing their best.

How California’s Landmark Energy Storage Bill Works

Utilities know they have to figure out how to store energy produced intermittently, such as wind and solar, or store energy from fossil-fuel power plants to keep the grid loaded when wind turbines and solar energy equipment aren’t doing their best. In fact, the global market for utility-scale energy storage could grow 15.8 percent per year to over $10 billion in 2015, according to an SBI Energy report released Wednesday.

The storage market has been growing steadily over the years, averaging 10.9 percent annually: from $3.2 billion in 2006 to over $4.8 billion in 2010, the SBI said. The U.S. market has seen a 14.4 percent boost per year to reach $0.6 billion during the same period, and its growth is expected to accelerate to a 26.6 percent increase per year to nearly $2 billion in 2015.

It’s not surprising to see a forecast of strong growth in the U.S. market. After all, utilities in many states have mandates to sell renewable electricity, but most are in the early stages of meeting their goals and are still evaluating their needs to invest in new storage (pumped hydro, for example, has been around in the U.S. since 1929). The emergence of smart grid will also require utilities to be more nimble in managing their demand and supply.

Even in California, which has a tougher renewable energy requirement, utilities have only recently stepped up efforts to carry out storage projects. Pacific Gas and Electric has won about $25 million from the federal government to do a feasibility study on a 300-megawatt compressed air storage project in Kern County. In January, the California Public Utilities Commission approved PG&Es request to match the federal funding and use it for the project’s phase 1 (permitting, transmission interconnection and plant design). The utility was working on the final contract with the U.S. Department of Energy when I asked about it last week.

Compressed air storage involves using an underground reservoir to store the compressed air (pumped into storage when extra energy is produced, mostly in non-peak hours) before releasing it to produce electricity during peak hours. PG&E has estimated the project would take five years to design and build.

Interestingly, PG&E isn’t just looking at new types of storage technologies to meet its needs. Last Friday, PG&E filed an application with the CPUC to study the feasibility of building a 400-megawatt to 1,200-megawatt pumped hydro storage system –which would pump water to a reservoir at a higher elevation so it could be released to generate electricity as needed — on the Mokelumne River in eastern California. The utility said the project is necessary to help it manage its growing hoard of solar and wind power.

“The wind can blow strongly for hours, only to die out for days at a time. Solar modules can gush electrons in full sun, and then go dormant when clouds pass overhead. Since customers don’t want their lights to flicker on and off as the weather changes, today’s utilities — lacking much of any stored energy to call upon — must ramp generators powered by fossil fuels up and down as needed to keep supply in balance with demand,” according to the PG&E’s blog.

PG&E, along with Southern California Edison and other utilities across the country, is also looking at various battery chemistries, flywheels and other types of storage technologies. The federal government has been playing the banker to fund projectsto investigate a variety of storage technologies. Edison won $8 million of federal stimulus money to do an 8-megawatt lithium-ion battery project, for example. Beacon Power recently scored a federal loan guarantee to borrow $43 million for a 20-megawatt flywheel project in New York.

California could become a hot market for energy storage technologies if state legislators pass a bill, AB2514, that could lead to storage procurement mandates for its investor-owned utilities.

Earlier this year, IDC predicted that over 50 megawatts of lithium-ion batteries for utility energy storage will be shipped this year.

For more research on solar trends check out GigaOM Pro (subscription required):

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  3. Hossein Pakravan Sunday, August 29, 2010

    Hello Ucilla,

    Can we use Energy Storage Products using of the shelf products for small energy storage 1-4 Megawatts?

    Cost effective practical energy storage (5-20+ Megawatt) products and solutions will be available in about 3-5 years. Our analysis indicates until then, an energy solution package of wind, sun, and cogeneration, if they are integrated properly to meet a load of 1-5 MW, are available.
    These energy storage products are available now, off the shelf, and pay back for capital investment is about 3-4 years for 1-4 MW.
    The only challenge is to integrate the right balance of energy generation by solar, wind, and cogeneration. Around 100+ universities/colleges and 300 + municipality in New England have the right load profile for integrated generation(Sun, Wind, Cogeneration) packages.

    When practical and cost effective energy storage is available, then it can take the place of cogeneration.

    Regards

    1. Hi Hossein, you raised an interesting question about energy storage for small-scale generation. I’ll have to ask around. So far the pilot storage projects carried out by utilities tend to be larger, and that’s certainly the case for developers of those huge solar thermal power plants. But given states like California want to encourage small-scale generation, perhaps storage technologies for that type of generation will take off sooner.

  4. If the energy storage technologies can be developed for usage in one smaller district and then support not just industrial but even household units I believe it can cut down the energy prices. Anyway the whole idea about storage of energy can brings a lot of effort to eliminate our dependency on fossil fuels…

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