Electricity is the ultimate in a perishable commodity. If it is not used or transformed as it is generated it will be lost. So the systems that supply electricity have been designed with flexibility in mind so that supply may be made to closely match whatever the demand happens to be.

Consumers take this balance for granted but our local electric company closely studies historical demand, accounting for the change in seasons, changes during the day, weather forecasts and even whether there is a baseball game at the stadium. When utilities turn to their supply side they may have hundreds of generator sets all varying in kilowatt rating size, cost efficiency and on/off flexibility. The electric company has taken its best bet as to which of the large inflexible turbines to have powered on. They would like to maximize the use of these turbines as they are generally the most efficient turbines to run and cleanest turbines for the environment. Due to the need to be able to follow demand they also need to have in the mix a spectrum of smaller turbines that may be turned on and off easily. this is the most expensive electricity and these are also the dirtiest turbines.

The electric company is more likely to own the larger capital intensive gensets and issue supply contracts with independent power producers for the smaller turbines (where there are deregulated markets). The contract prices are usually priced based on the kilowatts that can be provided and the speed at which they may be turned on or off. This spectrum of adjustability is referred to as "load following" on the broad scale and "frequency regulation" on the fine scale.

The need for frequency regulation is the main reason that power generators have to match supply to demand. It would sometimes be easier simply to create more electricity than is being demanded. But this is more dangerous than not supplying enough electricity. When there is more supply of electricity than is demanded the frequency of the alternating current goes above 60 Hz and when the supply is exceeded by demand the frequency drops below 60 Hz. (In Europe and other parts of the world this standard is 50 Hz.) Electric companies are mandated by federal laws to maintain 60 Hz on the grid. The bigger the disparity above or below 60 Hz the larger the fines that may be imposed on them.

Power companies are used to having a deterministic supply side. If they tell a supplier to fire up a turbine that is rated for 30 MW they can count on having 30 MW delivered within the contracted time with near certainty. With wind and solar energy, however, we are now asking the power company to deal with intermittency on their supply side and not just on their demand side. Although renewable energy sources (not counting hydroelectricity) account for less than 2 percent of the total energy generated in the United States, the popular press and politicians are talking about having 20 percent of our electricity generated by renewables within 10 years. Common sense suggests that load following and frequency regulation will become more difficult and expensive with this increase in supply side variability.

At the same time, however, a great degree of flexibility already is built into electricity supply. The classic demand curve in Figure 1 shows that within a particular regulation area with an average of 10,000 MW produced all the time, demand at any one time varies from 5,000 MW to 20,000 MW, which is a significant spread. It is sometimes insinuated that renewable energy sources will require a whole new fleet of turbines standing by when the wind dies or when clouds obscure the sun. This is simply not the case. Large utilities and control areas typically will have thousands of megawatts in reserve most of the time. And even at peak demand times they will be glad for the extra capacity.

The electric company though, has an obligation to supply the electricity that is being demanded. As the percentage of possible variability increases in their supply they will have to increase the value of contracts with deterministic generation sources. If the wind does stop blowing, the turbines they will have to turn on may not be as efficient or as clean as the turbines they might have selected in the absence of wind variability. This would have a negative impact on the value of wind energy, but new turbines and huge storage facilities will not be necessary.

The hope for renewables is aggregation. The idea is that as more renewables come on line their intermittency will average out, at least to some degree. The wind blowing harder at night will average with the sun shining bright in the day on a macro level. Likewise, as a gust of wind blows through a wind farm it won't much change the average output of the farm on a micro level. There is no doubt that there will be an averaging of renewable generated power, but on the macro side this averaging is limited by transmission constraints.

Energy storage technologies are often referred to as a way to shift time and smooth the delivery of renewable energy such as wind and solar. But the cost of energy storage infrastructure is not insignificant. Today's cost for advanced lithium batteries (one of the leading energy storage candidates) capable of storing 1 MWh of electricity is about $2 million, about the same capital cost per megawatt-hour as the wind turbine. So if a 1 MW-rated turbine has good wind and is able to produce its megawatt hour rating for 10 hours it will produce 10 MWh of energy. Storing this energy would require $20 million worth of batteries. This obviously is not an economic model.

Although energy storage does not play a significant factor in our current electrical distribution system it certainly seems like it should. One way to look into the future or see examples of how energy storage is used in smart grid applications is to have a look at what the U.S. Navy has been doing.

Navy ships historically have had mechanical, hydraulic and even steam-operated equipment on board. A Navy ship at sea has its own independent smart grid with multiple generation sources and a high requirement on the supply's reliability and capability. The ship needs to be able to go from economical cruising to full battle readiness within seconds. If there is an application where energy storage would be valuable, this is it.

One of the energy storage projects which the Navy is working on is the electromagnetic aircraft launch system (EMALS). Everyone has probably seen film footage with planes launched off aircraft carrier decks with the help of huge steam pistons located just below decks. This is still the way it's done today on modern aircraft carriers. But the Navy is planning to switch to a lighter, less maintenance-intensive linear motor that offers greater capability than current steam catapults.

The energy requirements of such electronic catapults are impressive. A 20-ton airplane needs to be accelerated to 200 miles an hour in about two seconds. This is equal to about 500,000 kWh or 0.5 MWh of energy. Remember that this energy is consumed in less than two seconds, so to maintain a constant acceleration much of that energy will be consumed in the last half second. Even if we spread the energy evenly across the two seconds the power required approaches 1,000 MW. This is equivalent to the power from larger utility steam turbines, which are obviously not practical to put onboard a Navy ship. So some type of energy storage is required.

There are multiple ways of storing energy: chemically, potentially or kinetically. A battery stores energy chemically, capacitors and pumped hydro store energy electrically and a flywheel stores energy kinetically. After evaluating the alternatives the Navy selected a flywheel system to provide kinetic energy storage for its EMALS project.

The principle behind the flywheel is that a relatively small generator can spin up or charge a flywheel over a period of, say, a minute and then take the power off the flywheel over a period of several seconds. Because it takes about a minute between aircraft launches on an aircraft carrier, the flywheel can be charged during this time. When called into action, utility-scale power can be delivered even if for only short periods of time.

Although energy storage may not be practical as a method for load following, there appears to be an application for energy storage on the finer side, frequency regulation. Earlier, we noted this is the most expensive electricity to the electric company, based on the general principle that the faster capacity can be supplied the more the utility will pay for it.

In Figure 2 the green line trending upward represents the electricity demanded and the blue line represents the supply and the utility's effort at load following. It can be seen the electric company increased the supply of electricity to meet increasing demand by about 400 MW between 7 a.m. and 9 a.m. Notice also that electricity demand is not a perfectly smooth line, but displays some randomness that cannot be predicted. The red line represents the difference between what is being instantaneously demanded and instantaneously supplied. When the red line is above zero as measured on the right-hand scale there is more electricity on the grid then is being demanded and the frequency is above 60 Hz. This is wasted energy. When the line is below zero there is not enough electricity on the grid and the frequency is below 60 Hz. In this example the supply line crosses the demand line about 10 times each hour.

This presents a huge opportunity for energy storage technologies as today this variability is dealt with by the electric company telling its contracted suppliers either to turn turbines on or off on a per-minute or per-second basis.

It can be seen in the example that a 1 MWh capacity energy storage device could have been completely charged and discharged five times in each hour meaning that 5 MWh of electricity could have been sold in a single hour. In contrast a 1 MW radiated wind turbine would require one hour to generate 1 MWh of electricity under the best wind conditions. The price for electricity in the regulation market is about 10 times what can be negotiated in a power purchase agreement for wind energy. This is not to disparage wind generated electricity; the object here is to point out the possibility of realizing healthy returns on investments in the energy storage sector and reducing carbon output from the dirtiest generators.

Returns on an energy storage investment targeted at frequency regulation are also more predictable than other renewable energy efforts as frequency regulation is a problem that needs to be addressed 24 hours a day, 365 days a year. It is also a safer and easier way to implement investment. In the case of flywheels they are sustainable, having no limitation on their cycle capability, no gearbox to wear out and no visible presence.

When you consider that almost 4 TWh of electricity were generated in the United States in 2008 a 1 percent regulation market would represent 40 GWh for profit opportunity. Energy storage for frequency regulation would also be one of the most cost-effective alternatives to carbon capture, or for earning carbon credits. Remember, eliminating the dirtiest 1 percent of turbines by definition means eliminating more than 1 percent of all the carbon generated.

Other significant advantages exist for grid reliability and safety. For example, the ability to distribute electric potential away from actual generators and close to demand centers or substations increases energy storage system effectiveness. This is especially true with other ancillary services like reactive power and voltage support, which are much more effective when implemented locally rather than trying to affect them through transmission lines. And last but not least, energy storage systems with the capacity to supply large power ratings for short periods of time (like our 1 MWh-capacity flywheel that could supply 30 MW of power for two minutes) are one way to make up for instantaneous outages and offer time to get other generators started.

So why don't we already have more energy storage built into our grid distribution system? There are multiple answers to this question. One is that energy storage technologies with the capacity to deal with utility-scale demand–including the Navy's recent accomplishments–are only just being developed. A second is that the cost of natural gas or even kerosene used in frequency regulation turbines has been relatively low and there is no additional cost penalty to the turbine for being dirty, in other words no carbon tax. A third is that frequency regulation has been perceived as a marginal issue and not as sexy as wind turbines or solar power to talk about. And probably the most significant reason is that electric companies typically are not inclined to pay what these services are actually worth. Rather antiquated rules currently govern much of the contracting of purchase agreements for providing the marginal power for frequency regulation.

Considerable opportunity exists for utility-scale energy storage. Just as the Department of Energy is making an effort to bring market forces to influence the use of electricity, it also should apply the same emphasis in using market forces to influence the way electric utilities procure electricity. This would be faster to deploy than demand response through smart meters and could be stimulated simply by changing rules and laws rather than throwing billions of dollars at it.

Drew Devitt is chief technical officer at New Way Energy LLC.