Can the electric grid handle the growing flow of wind and solar that will come online in the next few years? According to a report out Friday from the California Independent System Operator (Cal ISO), which runs the state’s grid, the answer is yes. . . with a few caveats. In particular Cal ISO needs to help shape policies around the integration of energy storage.
California’s renewable portfolio standard, which says that 20 percent of a utility’s electricity needs have to come from renewables by 2010, will lead to a cumulative capacity of 2,246 megawatts for solar and 6,688 megawatts for wind in the state by 2012 (the 2010 deadline comes with a grace period for utilities). But Cal ISO expects that with the addition of all that solar and wind, conventional, natural-gas power plants will be turned on and off more often, by 35 percent, to make up for any excess or shortfall of power from the variable nature of wind and solar.
Cal ISO found that there are a variety of things it needs to do to make sure the addition of wind and solar to the grid goes smoothly, including pursuing incentives and rules to attract and curtail the amount of renewable energy being fed to the grid, and turning to more cutting-edge weather forecasting tools to estimate in advance the likely output from wind and solar farms.
But one of the most important moves over the long run will be to make sure that policies around energy storage will enable the economical integration of novel storage technologies on the grid. The report doesn’t go into details about this missing piece, but the fact is the Cal ISO has already been lobbying the Federal Energy Regulatory Commission (FERC) on how to classify new storage technologies that could help grid operators manage the supply and demand of the grid. Cal ISO wants FERC to treat most storage systems as a form of energy generation rather than transmission, a distinction that affects how storage system owners get paid and, by extension, which emerging technologies could find warmer reception in the near term.
Cal ISO contends that storage can safe-keep the power for long hours but also inject it into the grid at a short notice, so it should be considered a generation asset that gets wholesale market prices, said Gregg Fishman, a spokesman for CalISO. If it’s counted as a transmission asset, then its owner can get a guaranteed recovery of the investment from rate payers.
Cal ISO already treats pumped hydro, a conventional technology, as generation, Fishman said. A pumped hydro operation uses excess electricity to move water uphill to a reservoir and let it run downstream to turbine generators when electricity rates are higher.
Similar discussions about how to regulate storage are happening throughout other parts of the country. New York ISO, for example, has gotten approval from FERC to set rules that say electricity from batteries and fly wheels can fetch market prices set specifically for power that is used to balance the grid. Beacon Power has gotten a federal loan guarantee for $43 million to build a 20-megawatt flywheel energy storage operation in New York. AES Energy has snagged $17.1 million in federal loan guarantees to build a 20-megawatt storage plant in New York using A123Systems’ lithium-ion batteries.
While regulators figure out how to marry storage technologies with the grid, companies such as SunPower (s SPWR) and SolarCity are looking at packaging storage systems with solar electric systems for businesses and homes. Both have gotten grants from California to figure out the costs and benefits of adding storage.
SunPower has gotten nearly $1.86 million to see how batteries and ice energy can be a good fit for solar energy systems it sells to commercial customers, who have to deal with a more complex rate structure. “For net metering, residential rates tend to be simpler than commercial rates,” said Julie Blunden, executive vice president of public policy and corporate communications. “You might arrange your solar and storage to maximize of your net metering.”
SolarCity, meanwhile, is looking into the possibly of adding storage to its offering in the future. The installer has gotten $1.77 million from California to see if lithium-ion batteries are a good fit for residential solar electric systems and teamed up with with Tesla Motors (s TSLA), which will provide the batteries for six, yet disclosed, test sites.
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