PG&E — Full of Compressed Air

Energy storage is the ignored stepchild of the smart grid world: It’s received little funding compared to other smart grid technologies and is just starting to get more attention from entrepreneurs. But Northern California utility PG&E (s PCG) says it’s eager to add energy storage capability to its footprint, and is most interested in adding compressed air to its portfolio.

Compressed air energy storage technology involves taking excess energy from a power plant or renewable energy, using it to run air compressors, which pump air into an underground cave where it’s stored under pressure. When the air is released, it powers a turbine, creating electricity. Utilities could use the technology, which is decades old, to help make the grid more reliable, dispatching the stored energy when needed, and storing the energy when clean power is available (in other words, when the sun is shining and the wind is blowing).

PG&E’s Annabelle Louie, who works on emerging clean technology policy, said at a UC Berkeley conference on energy storage yesterday that PG&E has been looking at different geologic areas that could be suitable for holding a large amount of compressed air and has been talking to both the California Energy Commission to help explore geology, as well as the Department of Energy for funding options.

But one of the big hurdles is finding appropriate and safe places to pump the air underground. The carbon capture and sequestration industry faces the same hurdle. That’s why the process of regulating and building compressed air sites takes so long — several years, according to Louie, who also said that a project started now likely wouldn’t be fully functional for many years down the line. That’s also why PG&E has already started discussions with the CEC. There’s only a handful of compressed air energy storage projects in the world, according to Louie, including one in Alabama and one in Germany.

Another hurdle is that compressed air hasn’t gotten a lot of investment funding, so the technology hasn’t seen a lot of innovation or commercial-scale projects. Louie pointed to a lack of market funding as a reason why PG&E hasn’t deployed this technology already. At the Berkeley event, Mohr Davidow Ventures partner Marianne Wu said that compared to an industry like solar compressed air, the market for energy storage is very immature. One of the rare entrepreneurial plays in compressed air is a joint venture called Energy Storage and Power, a partnership between Public Service Enterprise Group, owner of New Jersey’s largest utility, and inventor Michael Nakhamkin. ESP plans to develop and market compressed air energy storage systems with $20 million from PSEG.