The intelligent grid cannot be achieved without energy storage.
Rick Nicholoson is vice president of research, and Nadav Enbar is research manager with Energy Insights.
The intelligent grid has gone from a relatively arcane topic of interest, primarily for a small number of industry insiders, to holding a high profile place in the Obama administration’s plans for economic recovery. It was even featured in a television commercial during the Super Bowl. Yet, while much has been written about the intelligent grid of late, little attention has been focused on the role of energy storage in achieving its expected benefits. Energy storage is an essential component of the intelligent grid. Indeed, a recent report released by the U.S. Department of Energy titled, The Smart Grid: An Introduction, lists energy storage as one of five fundamental technologies that will enable the intelligent grid’s realization. Energy storage provides greater grid integration of variable renewable energy resource output (e.g., wind, solar); improved system reliability via the provision of grid regulation services; and peak demand reductions and, in turn, deferred capital spending on new and upgraded transmission and distribution assets.
Smart Grid Predictions
Intelligent-grid technology spending will reach $70 billion in 2013. This prediction is based on a number of drivers. Among them is the need to integrate renewable and distributed energy resources. Other factors include reliability concerns and mandatory grid-reliability standards. As a consequence of these issues, about $4.5 billion of the economic stimulus package was earmarked for the intelligent grid’s development. Furthermore, intelligent grid subsidies embedded in the economic stimulus bill will dramatically accelerate technology investment during the 2010-2013 timeframe. The industry, however, will face critical constraints imposed by workforce availability, manufacturing capacity, and project complexity.
Additionally, some of the same dynamics driving intelligent-grid spending also are driving utilities to emphasize distributed energy as a grid-support tool. Grid constraints also will push the market toward distributed solutions for generation and storage, while advances in communications, monitoring and control technologies will facilitate increased distributed energy operation. With respect to energy storage in particular, investor funding for utility-scale energy storage—especially for grid-scale applications—will rise markedly, accelerating the deployment of commercial stationary storage applications.
Taking these predictions together, the intelligent grid’s roll-out should occur in tandem with the greater commercial deployment of energy-storage technologies. The two can be considered to be inextricably linked. In fact, there cannot be an intelligent grid without the considerable presence of advanced energy-storage systems embedded within it.
Energy storage long has been considered the Holy Grail for more efficiently managing the single commodity—electricity—that needs to be used when generated. But so far, successfully commercializing a so-called disruptive utility-scale energy storage technology has proved to be an elusive undertaking. Although significant (and mounting) investments made by government, private industry, and power-sector companies have led to steady gains toward the production of economically viable bulk-storage systems, institutional risk aversion and the perceived low value of the application’s energy storage have hampered utility and ISO/RTO adoption efforts. This situation appears to be gradually changing, however, as the industry searches for novel ways to handle the increasingly greater demands being placed on U.S. energy infrastructure. Indeed, a growing number of next-generation storage solutions are being piloted that lend themselves to the development of the intelligent grid.
At present, the only electricity-storage technology under widespread use is pumped hydro stations, with over 100 GW of storage capacity worldwide—equivalent to roughly 2 percent of global generation capacity. But this resource is not likely to grow significantly given its geographic limitations and regulatory checks. Research, development and deployment (RD&D) activities exploring a range of other advanced energy- storage arrangements are, however, underway and accelerating. Many of these technologies offer the ability to satisfy a range of applications helpful to alleviating transmission and distribution system constraints in a potentially economic way. Moreover, efficiencies are likely to rise with greater development and grid integration of these technologies, and, in turn, increasing familiarity with their operation (see Figure 1).
To be sure, storage technologies face a number of considerable, though surmountable, barriers to mainstream commercialization and adoption. Cost—from both a power (megawatts) and an energy (duration of storage) perspective—and return-on-investment horizon are the foremost obstacles. Most advanced storage technologies are, however, likely to see decreases in capital cost as the cumulative number of projects increases.
Beyond sticker shock, storage technologies have been unable to justify significant utility investment given that the applications they perform often compete with cheaper conventional alternatives. For instance, it’s often more cost effective to build a natural gas peaking plant that offsets the variability of a wind farm than to build a dedicated storage solution to serve the same function. Furthermore, attempts to add functionality to storage systems in order to offset initial capital costs generally have been undermined by both inherent technical conflict and split incentives for stakeholders. For example, individual applications such as load leveling, spinning reserve, and backup reliability provided by a singular storage unit compete amongst themselves, consequently cannibalizing respective value streams.
Meanwhile, various storage applications tend to offer scattered value to a diversity of stakeholders, thereby raising questions about who should buy and own energy storage systems. For example, a 1-MW sodium sulfur (NaS) battery installation at a Long Island, N.Y., bus company was paid for by the local utility, the local transmission company, the state power authority, and the bus company. Accurately determining respective project costs and benefits proved to be a difficult, if near impossible, undertaking. Moreover, assigning value and fiduciary responsibility to energy storage’s disaggregated benefits is further compounded by a utility sector inertia that can obstruct the level of cooperation necessary for multi-stakeholder collaboration.
Still, continued grid constraints and associated reliability concerns, ambitious goals (mandates, in many cases) to integrate intermittent renewable energy (RE) resources, intraday energy arbitrage benefits, and emerging greenhouse-gas reduction initiatives are helping to economically justify utility-scale storage projects. In this environment, manufacturers are ratcheting up efforts to develop and test new storage solutions. And utility companies are, for their part, also beginning to more aggressively collaborate on, and deploy, energy storage to satisfy progressively more cost-competitive applications.
NaS batteries are, for example, trending toward a practical blend of cost, performance, and flexibility to compete in niche markets. NaS batteries offer the power and energy required for many utility power system applications—particularly backup power and grid investment deferral—at zero emissions and with plug-and-play operation that easily integrates into T&D systems.
All told, these and other applications are enhancing utility practices by adding predictability and helping to eliminate risk. Still, while the value of energy storage may be growing, the technologies’ long-term success remains yoked to further system cost reductions that will come only from greater commercial deployment. But the prospect of future high-volume sales should trigger escalating project demand and a gradual reduction in up-front costs.
Several recent commercial energy-storage deployments have potential implications for the intelligent grid’s development. Their demonstrated ability to provide enhanced grid management and end-user reliability is offering an alternative strategy to addressing a number of issues that traditionally have been solved via investment in conventional generation, transmission, or distribution assets.
Several Lithium-ion (Li-ion) battery makers—including A123Systems (A123), Altair Nanotechnologies (Altairnano), and Saft—are making commercial inroads into the increasingly competitive electrical energy storage space. In particular, recent Li-ion technology vendor activity is focusing on the deployment of novel products that provide grid-stabilization services, like frequency regulation and spinning reserves, to enable greater grid penetration of variable renewable energy resources and also to introduce alternatives for conventional power plants to meet reserve requirements.
Li-ion technologies in their various chemistries are considered to be promising candidates to handle a number of utility-scale stationary storage applications (and they are also a major focus of research to serve as the batteries in electric vehicles and plug-in electric hybrid vehicles). Part of a growing legion of emerging systems that are attempting to tap the growing energy-storage market, some Li-ion battery systems are now being positioned to provide shorter-term grid ancillary services, putting them in direct competition with other technologies such as flywheels.
Historically, energy density has been a major challenge for batteries intended to support the grid. Lead-acid batteries, for example, are far too large to provide substantial transmission and distribution system backup. Furthermore, they charge slowly and require regular maintenance and replacement. Li-ion batteries, however, have the potential to solve the density problem; in addition to their high-energy density attributes, they have a high cycling capability, long calendar life, short response time, and high power charge and discharge capability.
Though cost—and its proper valuation (i.e., using metrics that more accurately portray the costs of power delivery versus energy delivery)—remains an issue, Li-ion technology manufacturers are encouraging initial utility and system operator adoption of their systems by citing their technologies’ ability to load balance and effectively smooth the power intermittencies of variable resources such as wind and solar. Furthermore, they are justifying investment in their systems as a way to free up thermal power plant capacity reserves typically set aside for frequency regulation and synchronous reserve. The upshot: Greater plant capacity that can be dedicated to baseload electricity production, and in turn, generate higher revenues. An added benefit: Reduced CO2 and NOx emissions achieved by the avoidance of ramping thermal plants up and down to provide ancillary services.
Recent developments by leading storage equipment manufacturers, delineated below, indicate their belief that utilities and others in the electricity sector are becoming more receptive to using Li-ion batteries as a grid-stabilization tool.
• A123Systems installs inaugural Hybrid Ancillary Power Unit (H-APU). A123Systems—a developer and manufacturer of advanced nanophosphate Li-ion battery systems—deployed its initial commercial unit at a Southern California power plant owned by AES Corp. in mid-November. A123 claims that the system is capable of delivering 2 MW of power at close to 90-percent efficiency. The H-APU unit will be used primarily to support variable RE resources, as well as provide frequency regulation services. Looking ahead, A123 is under contract to deliver several additional H-APUs in 2009 for use in grid-stabilization applications at other AES facilities.
• Altairnano receives green light to commercially operate advanced lithium-titanate battery system in PJM Interconnection control area. Intended to provide grid-regulation services, Altairnano’s 1-MW, 250-kWh system is the first of its kind to receive approval for use in one of the largest electricity markets in the United States. The product of a joint development agreement between Altairnano (based in Reno, Nevada) and AES, the system can provide on-demand power for 15 minutes of frequency regulation and has a 90- percent cycling capability. Altairnano reports that it is in negotiations on a number of future projects that encompass frequency regulation, photovoltaic (PV) smoothing, and wind-energy mitigation applications.
• Saft and ABB unveil jointly developed high-voltage Li-ion battery system designed to manage short-term load or supply variations and enhance overall distribution grid stability. The new system, which was unveiled in late November, combines Saft’s 5.2-kV battery with ABB’s SVC (Static Var Compensation) Light technology, providing the dual ability to respond to grid disruptions and perform dynamic voltage control. The system reportedly can deliver 200-kW for an hour and 600-kW for over 15 minutes. Meanwhile, in combination with dynamic energy storage, an 11-kV pilot system can deliver 600-kVAr reactive power and 600-kW active power. The companies plan to field test a unit in 2009 at an undisclosed location with an eye toward installing full-scale commercial systems in 2011.
Additionally, utilities continue investing in storage systems using other battery technologies. For example, Xcel Energy is installing a 1-MW NaS battery from NGK Insulators to directly store up to 7.2 MWh of wind energy and then transfer it to the grid when needed. The system is being installed in Luverne, Minnesota, just south of the wind-rich Buffalo Ridge area. The NaS system will be adjacent, and connected to, an 11-MW wind farm owned by Minwind Energy LLC.
The project, which also involves the University of Minnesota, the National Renewable Energy Laboratory, and the Great Plains Institute, will be a test-bed for using storage to better coordinate the output from variable wind-generation facilities with transmission availability and energy demand. And, according to Xcel, this is the first U.S. application of an NaS battery as a direct wind-energy storage device. (American Electric Power and Pacific Gas & Electric, among other utilities, also are considering the technology as a wind-smoothing tool.)
Storage technologies such as the NaS battery system could be crucial to achieving ambitious renewable portfolio standard mandates in some states— for example, Minnesota’s target is 25 percent by 2025, with Xcel required to supply 30 percent of its energy from renewables. Studies to date of integrating variable wind onto the grid find that many control areas easily can handle 10 to 20 percent of wind penetration, but costs are likely to escalate as percentages grow higher. The Xcel project and others like it will be watched closely by stakeholders to gauge the costs and benefits of using storage to better integrate wind energy.
Storage Goes Mainstream
It will be difficult to attain the widely held vision of the intelligent grid without the simultaneous development of efficient, cost-effective electricity storage solutions. Innovators are, today, discovering previously unexplored, yet beneficial, applications for energy-storage technologies both at the transmission and distribution levels. Early utility and industry adopters are leveraging recent or planned storage implementations to defer T&D asset investments; supply frequency regulation, spinning reserve, and off-peak wind-energy storage; and also provide load leveling for energy arbitrage opportunities. With greater awareness, storage technologies and their associated applications will proliferate, helping to transform the transmission and distribution system into a dynamic and intelligent grid.