A long time in coming, advanced energy storage solutions are beginning to make their mark on the U.S. power grid and energy supplies — not only in terms of their capacity to store energy, but as “all-purpose” power grid assets.
Southern California Edison (SCE) set a precedent for California and the U.S. power industry on November 5, awarding local capacity procurement contracts for 2.221 gigawatts (GW) of energy resources across the Los Angeles Basin. For the first time in U.S. power industry history, SCE intends to make strategic use of advanced energy storage systems — both in front of and behind the meter — to meet local long-term electricity needs.
SCE’s contract awards marked at least a few industry firsts. It was the first time a U.S. electric utility evaluated a diverse range of conventional and preferred “green” energy resources — natural gas-fired power plants, solar PV, advanced energy storage, energy efficiency and demand response — in “head-to-head competition.” It was also the first time a U.S. utility solicited proposals from advanced energy storage solution providers to meet projected long-term electric power needs.
SCE awarded more than five-times the 50-megawatts (MW) of energy storage capacity it was required to by state power authorities, California Energy Storage Association (CESA) co-founder and Executive Director Janice Lin pointed out. Contracts to deploy 260.6 MW of advanced energy storage capacity were awarded to AES (100 MW), Stem (85 MW), Advanced Microgrid Solutions (50 MW) and Ice Energy Holdings (25.6 MW).
SCE’s Customer-sited Advanced Energy Storage Contract Awards
In addition to helping meet the energy storage capacity targets set out in California’s historic AB2514 energy storage mandate, SCE’s contract awards make a strong statement about the advantages and benefits it sees in deploying energy storage capacity both on its own and customer sides of the grid.
One of the key reasons supporting that, Advanced Microgrid Solutions’ (AMS) Chief Commercial Office Katherine Ryzhaya explained in an interview, “is that this not only checks the box on [California’s] energy storage mandate, we provide firm, dispatchable local capacity in places where you can’t site a huge generator. I really think this is the key value that we bring.”
“Demand response, energy efficiency, and energy storage are becoming part of contingency plans for closures of existing fossil fuel and nuclear power plants,” Cedric Christensen, Strategen Consulting director of market development, pointed out. “The benefits of running a highly ‘dispatchable’ resource on both sides of the electric meter are currently being tested throughout the country.”
Though it may take as much as 12 months until California’s Public Utilities Commission (PUC) approves them, the impact of this initial crop of advanced energy storage contract awards is going to ripple across California’s and the entire U.S. power sector as the state’s investor-owned utilities (IoUs) over the course of the decade acquire the 1.325 gigawatts (GW) of energy storage capacity stipulated in AB2514.
Grid Storage: A ‘Eureka’ Moment
Years of empirical research and investigation has revealed that intelligent, distributed energy storage systems can enable grid operators and utilities to strengthen and enhance the reliability and resiliency of the power grid more efficiently and cost-effectively than conventional grid assets, Lin told REW.
Following 1-1/2 years of research and analysis, California’s PUC found that advanced energy storage solutions are highly efficient, cost-effective multipurpose grid assets. They can provide flexible capacity in the from of spinning or non-spinning reserves, fast ramping (up and down), peak load shaving and demand shifting, frequency regulation and voltage support, black start, renewable energy integration and capture to avoid curtailment, emergency back-up, EV (electric vehicle) charging, Lin highlighted.
“The really cool thing about storage is that it can do so many things — all from the same asset,” she continued. “That was the real ‘Eureka’ moment. It can be used instead of a ‘peaker’ (typically natural gas-fired power plant), and when it’s not doing that it can be used for frequency regulation, voltage support — it’s an incredibly valuable asset.”
Moreover, Lin added, intelligent, distributed energy storage systems “are modular and easy to install down to the house level. “They can be put anywhere,” avoiding the costs of having to upgrade or build new transmission lines and other supporting grid infrastructure.
California’s power industry regulators are the first to institute policies and restructure market pricing to recognize the value advanced energy storage can provide, and that’s giving innovative, young U.S. power electronics companies a big boost.
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Pioneering Energy Storage Start-ups
San Francisco’s Advanced Microgrid Solutions (AMS) is one of several young companies positioned at the leading edge of innovation and development of behind-the-meter advanced energy storage solutions. Marking a major milestone for the company, SCE on November 5 awarded AMS “a 50-megawatt contract…to develop the first grid-scale fleet of Hybrid-Electric Building project in the world.”
With zero in the way of carbon and greenhouse gas emissions and zero in the way of the need for transmission infrastructure upgrades, “we are turning customer load into virtual power plants,” Ryzhaya said.
AMS takes a technology-agnostic approach to designing, installing and managing distributed fleets of advanced energy storage systems at customer sites, using “best-in-class” technology for specific sites and grid requirements. Though she declined to name names, AMS has a “line of sight” to the entire 50-MW of behind-the-meter energy storage capacity stipulated in its contract with SCE, Ryzhaya said.
“We’re quite excited about it [the SCE contract award]. The women that started and now are running the company have nearly a century of combined industry experience.”
Akin to AMS, Millbrae, California-based Stem takes a technology-agnostic approach to deploying and managing fleets of intelligent energy storage capacity distributed across customer sites. The young company has a dedicated team in place in lining up customers and sites for the 85 MW of energy storage systems it is to deploy for SCE.
“Given the distributed nature of our offering and the deployment timetable outlined by SCE, Stem’s solution will be rolled out incrementally over the course of several years,” CEO John Carrington told REW. “During that time, we are required to hit monthly performance milestones to keep us accountable along the way.”
Stem will manage that 85 MW of distributed energy storage capacity as a single SCE grid resource. The result, Carrington said, “offers the opportunity to reduce energy bills and gain enhanced visibility and control over energy usage. Additionally, Stem’s customers will be eligible to capture additional revenue by participating in SCE’s grid response programs.”
Utility Energy Storage: A Long Time Coming
Reading a 2011 CESA white paper and speaking with Lin, it’s hard to understand why energy storage hasn’t already been deployed much more widely, not just in California but across the U.S.
“The perception that the cost of these technologies is quite substantial has persisted, but what we’re now seeing is that there’s a greater umbrella cost associated with any type of generation or demand-side product,” AMS’ Ryzhaya responded.
“When looking at cost of storage versus conventional power plants, you have to consider the overall cost of bringing the solution online — infrastructure upgrades, emissions increases, air permits. For example, in the Edison solicitation they were looking for a new solution in the load pocket where a new conventional power plant would have to purchase expensive air permits, not to mention the timelines it takes to bring a battery project online vis-a-vis a new generating plant.”
More fundamentally, it has been focus — or rather the lack thereof — that has been the main reason advanced energy storage systems haven’t been deployed more quickly and widely, Lin posited. That’s changed, and seemingly rather quickly, at least in California.
“The benefits could have been known sooner. Essentially, what you focus on is what you get,” Lin commented, alluding to an epistemological weakness in human thinking. “CESA was the first recognized advocacy group to focus in on storage, and we weren’t formed until 2009. Now, we have a dedicated group at PUC studying energy storage.”
As to the actual financial costs of deploying distributed energy storage capacity across SCE’s Los Angeles Basin service territory, “it’s too early to say,” Ryzhaya said, “but we’re very confident it will come in lower than conventional natural gas ‘peaker’ plants. And that’s not to mention the emissions reductions and the fact that we won’t require any new transmission or distribution infrastructure.”
lead image: From Question to Idea via Shutterstock
