Onsite Energy Storage-Opportunity or Threat?

A great deal of research and investment is being ploughed into onsite energy storage but where does this leave the utility?
Published: Tue 20 May 2014

The energy industry is sitting on the edge of its seat as researchers race to find the best and most-cost-effective energy storage solution.

Energy storage is certainly the missing link to a clean, reliable, flexible, affordable and decentralized energy future. The right solution will certainly prove to be a major game-changer for the entire sector as well as its power consumers. [Read Engerati:Energy Storage-Benefits for the Entire Electricity Supply Chain.]

Utilities will definitely need to revise their business models in preparation for onsite energy storage solutions which may see a number of consumers go off-grid to become prosumers. [Read Engerati:Energy Storage Business Models-Focus on the Potential]. Tesla Motors has just announced that it aims to sell cost-effective battery packs to anyone who wants to buy them. The company plans to develop a US$5 billion gigafactory to supply cheap batteries for its latest electric vehicle model, as well as storage solutions for energy storage. [Read Engerati:Tesla’s Gigafactory Battery Prices Even Lower.]

Energy storage could revolutionize the grid

With this kind of investment on the horizon, it seems that energy storage may be nearing a tipping point. This will certainly have an impact on the grid, utility business models and infrastructure. We spoke to Chris King, Chief Regulatory Officer, eMeter, A Siemens Business, about this development and he said that while economics are improving, storage remains cost-effective today only in certain situations. He points out that storage has the potential to revolutionize the grid at substantially lower costs.

He adds that in the “distribution grid as platform” business model, the distribution operator could then easily integrate intermittent and distributed renewable resources easily and reliably into the grid. Low-cost storage would solve many current challenges caused by fluctuation in distributed energy supply and the inability of grid operators to turn such resources on and off as required.

While energy storage offers a number of business opportunities, it is inevitable that the industry will face various challenges when incorporating this new technology. Mr King agrees and explains that the opportunity-and challenge-is developing and delivering low cost storage solutions that can be deployed widely and with great flexibility. Even with such storage, a smart grid that has communications, sensors, and controllers, is needed to operate efficiently. Fortunately, that challenge can be solved with today’s digital technologies – and we are well on our way to doing so, adds Mr King.

Building and water thermal storage have already been used effectively – think of night-time electric water heating in Europe – but have far greater potential than seen in the past. Lithium-ion batteries are a popular choice and are being tested in major experiments, such as Southern California Edison’s project which uses this battery to offset fluctuations in wind power production in the mountains north of Los Angeles.

Energy storage-the secret sauce

Energy storage is expected to play a major role in the smart grid space.

It will be a key-enabling technology in the smart grid, explains Mr King. He expands, “The physics of electricity create the unique difficulty that supply and consumption must be balanced in real-time – every four seconds in a typical grid. Beyond being fast, such balancing must be very precise; otherwise, voltage and frequency go out of range and destroy electrical and electronic equipment.”

In the past, central generation stations have increased or decreased output to achieve balance. However, with decentralized power production by wind and solar – which usually has priority access to the grid – other tools are required.

“Cost-effective storage is the secret sauce in such a Smart Grid,” adds Mr King.

Energy storage opportunities and threats for the utility

Engerati has written a number of articles about how onsite energy storage can offer the utility major benefits and business opportunities. However, some traditional utilities may view energy storage as a glaring threat to existing business models.

Mr King explains that utilities, unable to provide storage on the grid, may see customers turn to alternative providers. For instance, Solar City is starting to combine battery storage with solar photovoltaic systems. However, utilities can make energy storage work for them too as long as utilities have the ability to control power flows either directly through automated Distributed Energy Management Systems or indirectly through dynamic prices and maximum demand charges for distribution service.

In conclusion, we asked Mr King whether onsite energy storage should be viewed as a friend or foe. He responded by saying that it depends on a number of factors-how the storage is implemented, the regulations applying to the situation, the financial incentives provided by policymakers to utilities, and the financial costs and benefits of the storage itself.

“In the end, such storage should be “friend,” so long as we get the policies, regulations, and technologies right.”

Mr King will be expanding on this subject in our webinar, Onsite Storage-Friend or Foe?, on the 22 May 14:00 UTC. Ian Lloyd, Network Technology Project Manager, Northern Powergrid, will also be presenting his company’s view and experiences during the session.