ACCORDING TO ONE RECENT SURVEY, MORE THAN HALF THE U.S. population now lives in states with customer choice. Moreover, industry executives expect 20 to 50 percent of these customers to choose a new electricity supplier by year end. %n1%n

With changes expected in the way electricity is generated, delivered and sold, exerting pressure on prices, what does the future hold for energy storage technologies?

After all, restructuring efforts appear most active in the highest-cost states -- those with average electricity prices running above 7 cents per kilowatt-hour. %n2%n This focus on price should create demand for new technologies, including energy storage. Residential customers show no sign of turning away from telecommuting and home offices, with all the attendant computer-driven equipment. They can be expected to demand premium and convenience services such as power quality and short-term back up. Some customers may request storage to supplement renewable generation, such as photovoltaics and wind power. Industrial customers, striving to increase productivity, will likewise rely more and more on storage systems.

Moreover, storage technologies should see heightened demand as well in wholesale markets. Most of the state restructuring legislation is likely to result in reductions in electricity rates. Achieving those cuts will require diligence and creativity from power producers and marketers. Fundamentally, however, suppliers must reduce the cost of generating and distributing electricity. Consider pumped storage, a mature technology that is playing in competitive markets.

When the National Grid Co. in the United Kingdom sold its two pumped storage plants, Ffestiniog and Dinorwig, in 1995, competition was spirited for those 2,000 megawatts of capacity. The plants were sold to First Hydro, a division of Edison International. The plants are used to provide ancillary services and capacity reserves to the national network, as well as to provide peak power capacity into the power pool.

First Hydro's purchase price exceeded $1,500 per kilowatt, despite the age of the plants. Their strategic value had been recognized as First Hydro has operated the plants profitably for three years. %n3%n

More recently, Oglethorpe Power Corp. has realized the strategic importance of storing electricity as the competitive market unfurls. While the company's 1,800-megawatt pumped storage hydro plant in Rocky Mountain, Ga., was designed for peak power duty, the plant ran every day but one last year to take advantage of strategic power marketing deals. The plant's capacity, and therefore its profitability, already has exceeded its projections of 10 to 11 percent. %n4%n

Three Early Markets

Energy storage can be thought of as any technology that converts and stores electricity to resolve the mismatch between generation and end use. Storage duration can range from microseconds (ultracapacitors, superconducting magnets, flywheels, batteries) to minutes (flywheels and batteries) to hours (batteries, compressed air and pumped hydroelectric storage).

Energy storage can increase the value of electric power by instantaneously correcting for power fluctuations. Such power quality systems can be installed at a customer's large commercial or industrial facility or at the utility substation near customers in need of guaranteed power.

In hospitals and other facilities with critical loads, energy storage is used for power during short outages, usually less than 30 minutes, to buy time for the transfer to backup generators. Uninterruptible power supply units provide back-up power and activate in cases of complete power outages, unlike the power quality systems that perform on-line corrections.

Upstream from the retail product services, energy storage can offer lower-cost options for ancillary services and capacity reserves, as well as avoiding transmission or distribution overload.

Electricity transmission companies or independent system operators must provide ancillary services to regulate frequency, manage voltage sags and provide area control to avoid damaging utility or customer equipment. Energy storage systems can provide several megawatts for more than an hour to correct generator and transmission line imbalances. Energy storage systems can be immediately available for reserve power, making them a more effective option than thermal plants and combustion turbines, which must be left in constant operation, meaning higher emissions and costs. Energy storage increases the ability of non-generating electricity providers to respond to demand spikes by delivering power until backup units are running.

Energy storage can help by extending the life of generating units by responding to load swings that would otherwise require a more rigorous duty-cycle from the unit. Similarly, in a peak power capacity applications, storage can be used to supplement generation during periods of peak demand. It also can assist power producers by mitigating stress on the wires.

At the generation end, energy suppliers must minimize costs, relying more on lower-cost resources. For example, some areas generate electricity for between 2 and 5 cents per kWh. Utilities may achieve required rate reductions by moving this lower-cost electricity to higher-cost areas such as Southern California. However, if large amounts of electricity are moved, reliability may be diminished due to overloaded transmission lines.

A storage system can support transmission systems by giving utilities the ability to increase energy transfer and stabilize voltage levels. The alternative -- building transmission and distribution lines -- is becoming more unattractive with tougher siting conditions and pressures to reduce capital expenses.

At the distribution level, when demand is excessive, equipment overloads, excessive voltage drop, poor power factor and increasing fault levels may occur. Storage can help protect and prolong the life of existing equipment by supplying real power and regulating voltages. Storage has the added benefit of allowing utilities to add capacity incrementally when and where it is needed to solve specific capacity bottlenecks.

The proliferation of green power products in newly competitive electric markets should also create demand for energy storage technologies.

For instance, energy storage increases the value of electricity generated from solar and wind resources by making it available regardless of when it was generated. For grid-connected renewable energy storage systems, energy storage can provide peak-shaving capability or reduce peak demand charges by charging from the PV array or, during off-peak hours, from the grid. In competitive markets, energy storage will allow customers to take advantage of net metering and avoid paying for electricity during high-cost periods.

Of course, grid-independent or remote power applications all employ energy storage to allow the intermittent resource to serve a required load. Hybrid renewable systems integrate photovoltaics or wind power with storage and generator sets for grid independent and remote power applications. Larger systems may be used at distribution sites to meet peak loads while smaller systems may be used for residential applications. It's anticipated that hybrid renewable systems also will become more widely used for grid-tied applications.

Development Barriers, Research Initiatives

Despite the advances in energy storage, many barriers still exist for product commercialization. Consider three primary roadblocks:

n System integration, including power electronics;

n Need for improved energy storage and power conversion components (batteries, flywheels, superconducting magnets, etc.); and

n Compelling the quantification of the value of energy storage.

The majority of operating energy storage is in the form of battery energy storage (BES) that relies on flooded lead-acid and valve regulated lead-acid (VRLA) battery technology. A recent Frost & Sullivan market analysis indicated significant potential for BES technology in the U.S. %n5%n There are about 60 MWh of lead-acid batteries in electricity delivery installations in the U.S. In 1995, one MWh was added for PV applications. Every year, that number increases with growth in the photovoltaics market. %n6%n There are about 5 MWh of the more advanced VRLA batteries installed in demonstration projects in Alaska and California.

Perhaps the most important technical and business barrier is refinement of integrated systems for unmanned, turnkey operations. This step will require sophisticated system engineering of available energy storage products. These systems integration issues relate to distributed technologies such as photovoltaics, fuel cells and hybrid power systems. Improved electronics and controls are critical, including high-power, fast-switching, inexpensive, and reliable power conversion electronics.

Much progress remains to be made to improve the critical energy storage component. In particular, the reliability of energy storage and power conversion components must be improved so that the "up-time" for systems reaches electric utility industry standards. Parasitic losses need to be reduced. In some cases the round trip efficiency of the energy storage component needs to be increased to reduce the costs for charging the energy storage system. Flywheel rotors, superconducting magnets and ultracapacitors are just now emerging from research laboratories and being incorporated into integrated systems. Some technologies need significant manufacturing engineering. Only then can they be used in high-volume production so that costs can be reduced to competitive levels. Recent progress in superconducting magnetic energy storage and flywheel energy storage has made these technologies increasingly viable energy storage options in the U.S.

The value of storage has proven difficult to quantify, and as a result, recovered value for existing energy storage projects in the U.S. has been lower than expected. This means that larger volume production has been slow to materialize. Costs have remained relatively high. Battery systems, for example, including controls and electronics, typically cost $1,000 per kW. The industry goal is to reduce that cost to $400 per kW. With a commercial market for electricity, however, the real value of energy storage should become apparent to users.

The Department of Energy with the Sandia National Laboratories collaborate with industry in cost-shared projects that will increase the efficiency of electrical equipment, enabling the increased penetration of renewable generation, and improving the reliability of U.S. electricity delivery. DOE goals include energy security and enhanced productivity of American business.

n STORAGE COMPONENTS. An assessment of storage technologies, focusing research efforts on storage components. Projects planned for the next few years cover (1) prototype advanced storage (e.g., flywheels or SMES) for power quality and reliability and, (2) advanced batteries for transportable energy storage systems.

n INTEGRATED SYSTEMS. Research that could increase the efficiency of electricity use and support development of renewable generation-storage systems and improve T&D reliability.

The DOE plans to publish a Handbook on Energy Storage for Renewable Systems, offering unbiased technical guidelines for the PV and energy storage communities. %n7%n

Applications Currently Available

Recent advances have greatly expanded the range of available technologies and applications, leading to many promising new opportunities for energy storage. Table 1 provides an overview of the present state of energy storage technologies. Following is a brief review of some of the exciting energy storage projects being developed in the United States.

INDUSTRIAL MANUFACTURING (RELIABILITY). High-power energy storage systems, which address the $26 billion annual national power quality and reliability problem, provide a few minutes of protection for commercial/industrial customers. %n8%n

A project co-sponsored by DOE is based on the PQ2000 power quality system, developed by AC Battery/Omnion. In a 50-50 cost-shared, $2-million project, the PQ2000 system has been used as the basis for the design and construction of the Transportable Battery Energy Storage System, the nation's first trailer-mounted, integrated power quality system. TBESS is a 2-MW/15-second system that can be easily located to solve highly critical problems. The system is being tested by Virginia Electric Power Co. and will enable the utility to provide premium power services to select commercial/industrial customers. The PQ2000 also is being used by Oglethorpe Power Corp. for a lithography plant in Homerville, Ga. During the first six months of operation, the system corrected more than 90 percent of the plant's power quality events.

ENVIRONMENTAL CONTROLS (POWER QUALITY). A 3.5-MW VRLA battery energy storage system installed at a lead-acid battery recycling plant in Vernon, Ca. is designed to improve productivity by providing multiple customer benefits such as peak demand reduction and uninterruptible power. The system's primary benefit is its ability to carry critical loads during power outages, ensuring that pollution control equipment remains operational. Since its installation in 1996, the system has greatly reduced the power quality events that had previously resulted in increased lead emissions and costly non-compliance fines.

ISLAND POWER SYSTEMS (ANCILIARY SERVICES). Large energy storage systems enable utilities to have a source of electricity in reserve to prevent service interruptions in the event of a failure of a power generator. Puerto Rico Electric Power Authority installed a $21 million battery energy storage plant at its Sabana Llana substation in 1994. This, the first of several storage units to be installed, guarantees instantaneous power when one of the island's thermal power plants suffers a shutdown. The quick-response battery system can simultaneously provide 20 MW of spinning reserve during outages, frequency control and voltage regulation.

ISLAND POWER SYSTEMS (BACKUP GENERATION). Energy storage systems offer a cleaner, less polluting alternative to diesel engine systems that must operate continuously to handle power fluctuations. On an Indian reserve located on an island in southeast Alaska, DOE assisted the local utility, Metlakatla Power & Light, in designing a storage system to displace a diesel generator installed to handle large load spikes caused by a local lumber mill. The state-of-the-art 1.4-MWh VRLA battery system developed by GNB Technologies has greatly reduced fuel costs and improved power quality for the island's residents.

GRID SYSTEMS (PEAK SHAVING). The commercial success of a photovoltaic storage system developed by Omnion Power illustrates the opportunities for smaller-scale, grid-connected systems. The PV-31 is an integrated 31-kW/40-minute battery storage system co-developed by Niagara Mohawk Power Corp. for use with 30-kW photovoltaic arrays. The system provides peak shaving capability by storing 40 minutes of photovoltaic-generated electricity. A commercial-scale version of this system would allow customers to avoid expensive peak electricity purchases by charging the battery from the photovoltaic generation or from off-peak power purchased from the utility.

HYBRID SYSTEMS (COMMUNICATIONS). Hybrid power systems that integrate renewables with fossil generation and energy storage meet the needs of remote facilities. The Department of Defense, which spends about $1 billion a year on electricity for off-grid facilities, is promoting development and installation of these systems. A 1986 study found 21,000 potentially cost-effective projects in this category for 33 application categories. By 1992, the DOD had installed more than 2,000 systems with about 2 MW of PV generation. Most of these systems were used for lighting and communications applications. %n9%n Since 1992, the DOD has invested $28 million for 124 systems that represent 2.1 MW of PV generation capability. %n10%

Christine E. Platt, Ph.D., is program manager of the Energy Storage Systems Program for the U.S. Department of Energy. Jonathan W. Hurwitch is executive director of the Energy Storage Association.

1 Washington International Energy Group,. 1998 Electric Industry Outlook, Washington, D.C., January 1998.

2 Ibid.

3 Proceedings of the Energy Storage Technologies for Utility Network Optimization Conference and Workshop, EA Technologies, Capenhurst, Chester, UK, April 1996.

4 Jason Makansi, "Electricity 'Storage' Pumps Up Power Marketing," Power Magazine, May/June 1998.

5 Frost & Sullivan, Battery Energy Storage Market Feasibility Study, September 1996.

6 Calculated from: R.L. Hammond; J.F. Turpin; G.P. Corey.; T.D. Hund; S.R. Harrington; Photovoltaic Battery and Charge Controller Market and Applications Survey, Sandia National Laboratories (SAND96-2900), December 1996.

7 The Energy Storage Association (www.energystorage.org) also has produced a library of reports, articles, videos and company information on these efforts.

8 C.A. Hampton, R.O. Winter, 1992 Distributed Battery Survey: Results and Analysis. Pacific Gas and Electric, San Ramon, Calif., April 1993.

9 R.N. Chapman, "Photovoltaics in the Department of Defense," Sandia National Laboratories Quarterly Vol. 1, March 1997.

10 General Accounting Office, Federal Research: Changes in Electricity-Related R&D Funding, (GAO/RCED-96- 203), August 1996.

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