It would seem like a good question to ask and applies the same logic has been used for the past fifty years in determining grid strategy. However, when peak demand is not required the inefficiencies of idling coal, nuclear and gas powered power plants has become both very uneconomic and non-responsive to changes in demand for today’s market. This has led to a change in thinking of how energy generation is optimized and a new strategy has developed in which flexible energy generating sources are deployed to meet peak requirements while maintaining a steady state base load from low cost less-flexible solutions.

“Why do you need energy storage on the grid, when the grid is full of power plants that generate all the energy that is needed?”

With the world’s growing population and the political, environmental and economic pressures in place to reduce the reliance on fossil fuels, alternative energy has become this flexible energy means. Supplementing baseload coal-, nuclear- and gas-powered power pants in a grid strategy for tomorrow. This is demonstrated in figure 1. Baseload energy is generated (coal, gas, nuclear) at a steady state and stored when not used, supplemented by flexible energy devices (hydro, solar, wind) for shoulder peak demand and stored energy for priority peak demand.

Due to the inherent capital costs and characteristics of the leading alternative energy mediums: Hydro, Wind and Solar, Solar deployment has started to emerge as the leading candidate of choice. Hydro is limited by geography and the building of dams is very time and capital intensive, Wind generates most of its energy at night, during off peak demand and is drawing more visual pollution criticism. In contrast, solar provides energy during peak periods, is mostly unobtrusive when installed and is becoming more economical with technology and scale.



Figure 2. Solar field annual output. Click to enlarge.

The largest disadvantage with both wind and solar is, however, the issue of what happens when it is not sunny or the wind is not blowing. For example, in June, California experienced an 1800MW drop in electricity production in one hour due to wind fluctuations. The variable output from a solar field is shown in Fig 2. The need for energy storage should start to seem obvious.

Whenever energy storage is mentioned the majority of us think batteries, however from a United States grid perspective, pumped hydro is the incumbent technology, followed by compressed air (CAES) and then the relativity new grid storage concepts of flywheels and electrochemical batteries. This order of preference is also representative of the capital cost, high to low, and the flexibility of deployment low to high—which is the fundamental driver for the growth of large format batteries on the grid. Although the largest potential benefit for storage on the grid is peak load shifting, other benefits are also realized in the form of: load firming, voltage support, frequency regulation, ramp management, community storage and security of the grid.

The United States is, however, faced with a dilemma: the Federally structured markets of generation, transmission and distribution do not allow for the recognition and compensation of storage placed on the grid. This leads to its current limited use in frequency regulation (power plant hybridization) and pilot projects, and requires either bold market steps from independent power producers or a change in the Federal market structure for the majority of the market to embrace its deployment.

With the implementation of the renewable energy portfolio standards, the penetration of wind and solar energy generation will only increase along with the variability it places on the grid. Although not an issue today, it is expected that once these renewables reach 20-30% of energy generated on the grid, the grid will not be able to guarantee a continuous supply of power across all its spectrums of demand without storage—placing the United States in its current stand-off situation between the Federal structure of the markets, renewable implementation goals and the power producers that generate energy for the grid.

Other countries are not faced with this Federal dilemma; as such the United States is lagging behind the rest of the world in developing a flexible grid structure, only having the capability today of storing 2.2% of its energy compared with the average of 4-5% for other developed countries.

For example, the State of Abu Dhabi is implementing a 1.35GW storage system with the objective of peak load shifting. Mexico is adding a 1GW energy warehouse to its grid to improve its reliability. India is deploying an energy storage plan to address the 1.2% loss in its GDP due to unreliable power. China, the largest growth market for solar and wind, has made energy storage a fundamental part of its five year renewable energy plan. Even in the mature German market, the use of energy storage is regarded as strategic enabler to the decommissioning of its nuclear footprint, in favor of increased use of renewable energy means.

This changing grid architecture represents an incredible opportunity in the market, not only from the direct sales opportunities associated with renewable energy and energy storage, but also the systems that make them more efficient—systems that incorporate the electric fleet onto it; the market for secondary-life batteries; and the potential to incorporate vehicle fleets into grid storage solutions.

About The Townsend Company. The Townsend Company l.l.c. is a consultation and business development practice formed to help companies wanting to enter, grow and become more profitable in the alternative energy market.