Much of the popular discussion around energy storage has focused
on its utilization as part of a broader "edge of grid"
strategy for homeowners and businesses.
For example, a residential battery storage solution, if
competitively priced, could permit a homeowner who has deployed
roof-top solar panels to arbitrage electricity prices by filling up
batteries with cheap power (from an abundant solar resource that
generates electricity during the workday) and using that stored
energy rather than peak-priced electricity purchased from the local
utility to serve the increased home load that results from the
family's return at day's end.
But even in a world of sharply falling lithium-ion cell prices
made possible by the likes of Tesla Motors' planned gigafactory in
Sparks, Nevada, the near-term demand for energy storage is less apt
to be a result of people seeking to leave the grid and more likely
to come from utilities seeking fast-response resources to regulate
the frequency of electrical current and keep the grid stable.
In jurisdictions like California where renewable generation
resources are plentiful as a result of both policy and geography,
the juxtaposition of renewable resource availability and demand
requires an abundance of standby power most often in the form of
gas-fired peaking facilities. As California strives to achieve its
aggressive renewable portfolio standard, the need for peakers and
their importance to grid stability continues to increase. That
said, gas peakers are not inexpensive to build, are subject to
commodity price risk with respect to their fuel requirements, emit
greenhouse gases, and take several minutes to
come online for their intended purpose.
Battery storage provides a compelling alternative to the
traditional gas-fired peaking facility for purposes of frequency
regulation and grid stability. As prices for battery storage have
dropped, the cost of a grid-level battery storage unit has achieved
rough parity with the construction cost of a simple cycle
combustion turbine gas-fired peaking facility. For example, at the
2014 NY–BEST Capture the Energy Conference, John Zahurancik,
Vice President of AES Energy Storage, quoted pricing for AES's
Advancion lithium-ion battery storage solution of $1,000 per
kilowatt and $250 per kilowatt-hour. That equates to an installed grid-level battery storage system
for $1 million per MW with a four-megawatt-hour discharge
capability.
In addition to a competitive acquisition cost, battery storage
generally has the added advantage of a zero fuel cost and, due to
fewer moving parts, a more predictable and likely less burdensome
operating cost. As importantly, a battery bank can respond to power
demand almost instantly: less than a millisecond as opposed to
several minutes. Finally, a battery storage unit can serve both as
load—storing the energy produced by wind and solar resources,
for example—as well as a generation resource.
In 2013, California mandated that by 2020, the state's three
large investor-owned utilities add a huge amount of
storage—about 1.3 gigawatts, or more than 10 times the amount
of storage deployed worldwide in 2011. For now, in California and
elsewhere, the likes of those utilities are most likely to use
battery storage solutions to relieve their distribution systems of
peak loads that would otherwise require the construction of
gas-fired peakers, the expensive improvement of wires and other
equipment, or both. That said, grid stability and frequency
regulation are only two of energy storage's evolving faces.
With time and the continuing reduction in costs, batteries will no
doubt also play a meaningful role in the ongoing and rapid
development of distributed generation, in particular moving away
from large utility-scale, centralized solar farms and toward
residential or neighborhood-scale solar power.
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