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Summary:

Battery startup Xtreme Power just landed its biggest grid energy storage deal yet, a 36-megawatt battery for Duke Energy. Could its secretive, solid-state energy storage technology challenge sodium sulfur and lithium ion for reigning grid champion?

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One of the biggest projects ever to combine wind power and energy storage will soon be coming online. Battery startup Xtreme Power just landed a whopper of a 36 MW grid energy storage deal with Duke Energy, to back up Duke’s 153 MW wind farm in Texas. And if Xtreme’s secretive solid-state energy storage system lives up to its claims, it could set a new price point for the industry.

Duke has hired Xtreme to build a “Dynamic Power Resource” system to back up its wind farm, and has agreed to provide matching funds for a $21.5 million Department of Energy grant. That puts the cost of the project at a cool $43 million, to be completed by late 2012, according to a Duke press release. (Hear from execs with A123 Systems and AES Energy Storage about energy storage and the grid at our Green:Net event on April 21 in San Francisco).

That’s actually pretty cheap for battery-based grid storage. Right now, sodium-sulfur (NaS) batteries from Japan’s NGK Insulators dominate the wind power backup market. Those systems have been installed in the hundreds of megawatts in Japan, as well as by U.S. utility AEP and Xcel Energy. General Electric is working on a new line of NaS batteries for grid energy storage as well. They’re cheap, but they also weigh a ton and heat up to 900 degrees Fahrenheit and up — not friendly for mass consumption.

As for lithium-ion batteries for grid storage, A123 Systems leads the market, with big projects for utility AES. On the smaller-scale, utility AEP is testing out a set of lithium-ion batteries for its neighborhood energy storage project in Ohio. Lithium ion battery technologies cost more than sodium sulfur, but they’re likely to catch up through cheaper production as they scale to match demand for electric vehicle batteries. But they also require careful thermal management to avoid overheating and catching fire.

Xtreme, on the other hand, describes its PowerCell battery chemistry as a “chemical capacitor” that can beat lithium ion batteries in terms of energy storage, efficiency, cycle life and cost — and be shot full of holes and not catch fire. The technology was born out of a 1990′s joint venture between Ford Aerospace and defense contractor Tracor. Xtreme bought the technology in 2004 and put its first 500-kilowatt PowerCell in place at the South Pole Telescope in 2007.

Since them, it’s installed about 33 MW of batteries, including a 15-MW battery and control system for a First Wind wind farm in Hawaii. It’s working on the Tres Amigas transmission hub project in New Mexico, and is building a 750-kilowatt solar storage project at a Ford Motor Co. factory in Michigan, with the idea of scaling it up to back up industrial rooftop solar systems. Eventually, Xtreme wants to build a $425 million plant with the capacity to pump out 2 GW of batteries per year, but with about $$43 million raised so far, it’s still a long way from getting there.

How does it compete on price? Last year, IDC Energy Insights analyst Sam Jaffe estimated that Xtreme has been targeting around $500 per kilowatt-hour as a profitable price point for grid storage systems, comparing well to about $800 per kilowatt-hour for sodium-sulfur batteries or $622 to $1,500 per kilowatt-hour for flow batteries, another technology competing for grid-scale markets. Lithium ion grid storage batteries are still more expensive — for now.

Duke wants the project to both increase the supply of renewable energy during periods of peak demand and also help stabilize the frequency of grid electricity. Duke says it’s working closely with Texas grid operator ERCOT on the project, which manages all the wind power generated in the state.

At the same time, wind farm operators have their own reasons to want to store grid power. In the wind-rich regions of West Texas, wind farms are sometimes forced to sell their power to the grid at a loss, just to keep production figures up to claim the production tax credits that underwrite the industry.

Image courtesy of The Russians are here via Creative Commons license.

  1. Please learn the difference between power and energy.

    Batteries don’t store power (measured in Watts), they store energy (measured in Watt-hours). There’s no such thing as a “36 MW battery” — unless you’re talking about how much instantaneous power it can release, in which case it’s meaningless without also telling us how long it can sustain that power output. Did you mean a 36 MWh battery?

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