Energy Storage Tech Catches On, But Policy Is Still Catching Up

The electric grid we have today operates largely as it has for decades—electricity produced and dispatched across power lines is used by customers right away. But nearly 30 years ago, a tiny North Carolina electric cooperative did something no other electric utility had done before. It used a battery to store some of that grid power for later.

By storing electricity when it was less expensive, and reserving that energy for expensive peak periods, the Crescent Electric Membership Cooperative in Statesville, NC, smoothed out its peak power demand and saved its members money. Crescent became the first U.S. electric utility to employ a battery for “peak shaving,” according to a U.S. Department of Energy and Electric Power Research Institute report.

Battery technology has gotten better since Crescent first connected to a 500 kilowatt battery in 1987, and energy companies are now trying to find a place for storage in the electric utility playbook. In recent years, utilities have launched energy storage projects throughout the country, each of them trying to figure out how to integrate these new storage capabilities with old grid infrastructure.

While the concept of energy storage is catching on, energy policy is still catching up. The utility business was designed to generate and deliver power, not to store it. Utilities that built their businesses on selling power as it was produced are trying to figure out how storing it can make money. The energy industry will discuss these issues, and others, this week during the Energy Storage Association’s annual conference, an event expected to draw more than 2,000 people to Charlotte, NC.

One reason why few utilities followed Crescent’s early battery example is the expense of the technology for grid-scale applications. Prices for these large batteries have started to come down in recent years, helped by the entry of battery startups into the market. The Crescent battery was removed from service in 2002 due to its age but North Carolina still has connections to energy storage technology. Alevo, a Switzerland-based battery startup, opened a battery manufacturing facility in Concord, NC, in 2014. Each of Alevo’s utility-scale batteries is about the size of a shipping container.

The hurdles to energy storage now aren’t entirely about the technology, or even its cost. Batteries are a quirk for utility infrastructure because, strictly speaking, storing energy is different from generating it. Nonetheless, storage is considered “generation” because it sends electricity to the grid. When utilities plan the generation and transmission investments they’ll make to meet projected energy demand, regulators allow them to recover those costs through their rates. Energy storage helps make the existing grid operate more efficiently. Consequently, utilities can avoid building new power plants and defer plans for new transmission lines, explains Matt Roberts, executive director of the Energy Storage Association. But he says utilities accustomed to recovering the cost of grid investments through rates are still unsure how to capture the economic benefits of investments that they did not have to make.

The ability to store energy to push onto the grid at precise times brings benefits, such as improved reliability and flexibility, Roberts says. Speaking at an energy roundtable in Chapel Hill, NC, in February, Roberts likened energy storage to the impact refrigeration had on food distribution. Before refrigeration, food needed to be produced close to where it would be sold and consumed. Food had to be consumed soon after it was produced, so the supply chain was planned around food’s perishability.

Refrigeration changed the food supply chain by allowing the distribution, sale, and consumption of food to be less closely linked to when and where it was produced. Likewise, energy storage means that electricity is no longer a perishable commodity. Utilities can make different choices about when to generate power and when to dispatch it, Roberts says. Rather than sending power to the grid as it is generated, batteries can … Next Page »

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Frank Vinluan is editor of Xconomy Raleigh-Durham, based in Research Triangle Park. You can reach him at fvinluan [at] xconomy.com Follow @frankvinluan

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