Green Tech

CAMBRIDGE, Mass.--Utility company American Electric Power (AEP) plans this year to place equipment in residential areas capable of storing a few hours of electricity, one of the first tests of distributed storage on the power grid.

Ali Nourai, AEP's manager of distributed energy resources, calls the storage program a potential "game changer" for the utility industry. Nourai spoke during a panel on grid energy storage at the MIT Energy Conference here Saturday.

"The key for distributed energy is not because it's cheaper. The key is national security--we don't have a huge storage (device) that can be blown up," Nourai said.

The storage units would be the size of a relatively small "backyard transformer," each wired to provide enough electricity for four to six houses, he said. Together, those storage units could provide back-up power to neighborhoods during outages and potentially for other applications, Nourai said.

"Aggregated, hundreds of these units controlled (by AEP)...effectively do the same as one big storage unit," he said. "It's closer to the load, and it has the potential to (create) competition on price."

AEP is one of the few electric utilities in the U.S. that has already deployed storage on the electricity grid, which is very expensive. The utility, which operates in Midwestern and Southern states, started three years ago with a one megawatt sodium sulfur battery. It now has six megawatts worth of storage in three locations using this technology, Nourai said.

In these cases, AEP can do "peak shaving" in which it draws on the stored electricity during peak times, such as the middle of hot summer day when air conditioning loads are high. Because the stored energy supplies electricity to the grid, the utility doesn't need to pay for electricity at high peak-time rates.

Although this has proved to be a viable application, speakers on the energy storage panel said that the high cost of batteries and other storage technologies makes it difficult for utilities to justify investments in the technology.

Because of the high cost, energy storage devices need to be used for a number of applications to generate sufficient revenue, the speakers said. For example, a large battery could provide back-up power, do peak shaving, and be used to stabilize dips in grid signal frequency.

"At the end of the day, it's going to be cost that drives acceptance of storage on the grid," said Gary Colello, CEO of Premium Power, which makes a zinc bromide fuel cell that provides short-term storage to utilities in the U.S. and Canada.

This is a large megawatt storage device already on AEP's grid. Click on the image to see a photo gallery of power grid storage technologies.

(Credit: AEP)

Another problem is that current utility regulations are structured around utilities making investments in power generation. "Without a fairly radical rethink of utility regulations, to get the mass movement of energy storage beyond a handful of utilities--it's not going to happen," said Matthew Nordan, the president of consulting firm Lux Research.

AEP's Nourai said the regulators need to be educated on the different values that energy storage can provide. Some of those are economic, like providing back-up power, whereas others are societal benefits because they help the environment. For example, storage makes bringing renewable energy sources onto the grid more feasible.

Wind, solar forcing the issue
The growing interest in renewable energy, in fact, is what prompted AEP to explore energy storage in the first place, said Nourai.

"Our business was being threatened by something that everybody loves--renewable power," he said, noting that the amount of solar power from its customers grew from kilowatts to megawatts over the past five years. "We love it, too, but we have no control over it. (Customers with solar) could turn off megawatts of power or not maintain it."

Wind and solar energy are also variable, meaning they can't deliver electricity as reliably as a fossil fuel power plant. Energy storage, through batteries or compressed air storage, is one way to deal with that variability.

To deal with the projected increase of renewable energy, utilities need a "buffer" in the form of storage so that it can control the flow of electricity onto the grid in a managed way, Nourai said.

Although the basic technology for energy storage hasn't changed in decades, interest has peaked substantially in the last few years. Nourai said that five years ago, only engineers went to energy storage conferences; now half of the attendees are venture capitalists and politicians. The energy storage session at the MIT Energy Conference was standing-room only.

For its distributed storage plans, AEP said that just four hours of back-up power could address 90 percent of the outages the utility has to deal with. "When (storage) is closer to the customer, it's more reliable," Nourai said.

Giant cousins of your laptop batteries are going to provide storage to the electricity grid.

Altairnano on Tuesday said that Indianapolis Power & Light, a division of utility AES, completed tests for using two megawatts worth of its batteries to maintain grid frequency.

Inside a semi-trailer that houses one megawatt of lithium-titanate batteries for grid storage.

(Credit: Altairnano)

The two one-megawatt units--each housed in a semi-trailer--can store up to 15 minutes worth of electricity, or 250 kilowatt-hours each. (The average U.S. home consumes 920 kilowatt-hours per month.)

The tests are important because they demonstrated that lithium-ion batteries can be used for utility-grade energy storage. Right now, most short-term energy storage is done by lead acid batteries.

The certification also suggests that these types of batteries can be used for other grid applications, such as storing electricity from renewable energy sources.

"This two-megawatt validation project is one of the final steps in our move towards commercial deployment of grid-scale energy storage," Chris Shelton, director of energy storage development at AES, said in a statement. "Fast-responding, high-efficiency energy storage systems such as these will create a more resilient grid and allow for increased use of variable generating sources such as wind and solar."

Energy storage on the power grid, for the most part, is not widely done.

But there are a number of companies now pursuing that market in addition to Altairnano, which also makes batteries for plug-in hybrid cars.

Another battery upstart, A123 Systems, last month said that it is testing its lithium-ion batteries with utilities right now.

In addition to the need to develop utility-specific technology, energy storage--particularly for several hours or days-- faces a number of financial hurdles from risk-averse utilities.

Another utility, AEP, already has megawatt-class storage units from NGK Insulators of Japan installed on its grid and has a program to put 25 megawatts of storage on the grid this decade.

Update at 8:15 am PT on July 9: Correction to the last paragraph, stating that AEP already has a grid storage program in place.

Someday, the electricity grid will operate with the equivalent of a giant hard drive. But in the short term, grid storage will look more like a PC's cache or RAM, able to serve up small bursts of power to keep things from crashing.

A panel of experts, organized by the New England Clean Energy Council, earlier this week said that the utility storage field has enormous potential. But rapid deployment of storage devices is held back by concerns over technology risk and financial complexity.

Technology optimists say that wide-scale energy storage will change the face of the transmission grid and make wind and solar power more compelling economically.

In this scenario, utilities store electricity made from renewable sources or produced during off-peak times. Then, when demand for electricity peaks in the middle of the day, they could draw from the stored-up charge.

This "peak shaving" practice avoids the need to build new power plants to meet growing demand. Utilities could also idle dirty and expensive "peaking plants," which are only turned on during times of high demand, such as very hot summer days when air conditioners max out the load.

But moving megawatts' worth of electricity around the grid like files on a computer is more theory than practice these days.

"Buying power at night and then selling it during the day--something like that will happen maybe in 30 or 40 years when storage technologies are one-tenth the costs they are today," said Ric Fulop, co-founder and vice president of business development at lithium-ion battery company A123 Systems.

But as utilities try out new technologies for different uses, Fulop and others predicted that storage will start to take hold in a variety of ways.

"I think we will see a lot of deployments in the next few years that will change how the grid works," Fulop said. "Then we'll see utilities jump on the bandwagon."

Two markets for energy storage
A123 Systems, which makes batteries for plug-in hybrids and power tools among other devices, is actively pushing into utility storage with more than 100 people dedicated to the market, said Fulop.

It's targeting what's called grid stabilization, or grid support, where warehouse-size installations of lead-acid batteries are the incumbent technology. That alone is a multimillion dollar market and will pave the way for different grid storage applications, he said.

With grid stabilization, kilowatts' or a couple of megawatts' worth of electricity are pumped onto the grid for a short amount of time, from a few seconds to under an hour. It's used to match grid demand and supply to make generators run more efficiently or to ensure a steady frequency.

Earlier this year, grid operators in Texas had to shut down power to its customers because the wind died down momentarily, effectively cutting off supply from its wind farms, noted Lawrence Gelbien, vice president of technology at utility NStar.

"If you could take the wind power, store it in batteries, and discharge when the wind starts again, then that's a fine application of storage," he said.

Gelbien said that storage units could be deployed in place of installing more "wires and poles" in a place that isn't served with enough electricity to meet demand for only a few days of the year. Because storage devices are movable, they could be redeployed in other places after a few years as the need arises.

Grid support is relatively mature at about $2.4 billion and growing at 3.3 percent per year, said Lux Research President Matthew Nordan.

Batteries with different chemistries as well as ultra-capacitors, such as the ones being developed by secretive start-up EEStor, serve this end of energy storage, Nordan said.

Flywheels are also a viable alternative. Flywheel maker Beacon Power earlier this month said it expects to have a megawatt-size machine, able to store 15 minutes of power, on the grid by the end of this year.

Dizzying array of technologies
At the opposite extreme are companies pursuing the "bulk storage" market where power is delivered for more than an hour.

This part of the market, where companies are developing a range of technologies, from so-called flow batteries to compressed air storage, represents the biggest business opportunity in grid storage.

The end game is to allow utilities to provide baseload power--meaning electricity during the middle of the day when demand is highest--with stored energy.

If only 10 percent of the installed wind power plants adopted large-scale energy storage, the market would hit $50 billion, according to Lux Research. That's because electricity costs more for utilities to purchase and deliver during peak times.

But utilities are risk-averse, and power plants take 5 to 10 years to construct. As a result, Lux Research pegs the market at $600 million in 2012, growing at about 25 percent per year.

One company tackling bulk storage head-on is General Compression, which is developing a wind turbine with an integrated air compressor.

Air is compressed and pumped underground into geological features like depleted gas wells or limestone caverns. There are currently two compressed air energy storage (CAES) plants in operation with a few others in development. But some utilities are seriously considering CAES.

"There is an increasing gap between the growing demand for electricity and the availability of options," said Julianne Zimmerman, chief marketing officer for General Compression. "With increasing shareholder resistance to new fossil fuel and nuclear plants, there's a shrinking set of options."

Different types of batteries are competing for bulk storage as well.

So-called flow batteries, where liquid chemicals move between huge storage tanks to deliver a charge, are also being tested on the grid.

Start-up Deeya Energy says it is developing a flow battery for grid backup power or to integrate wind and solar power that will be far cheaper than lead-acid, lithium-ion, or nickel-metal hydride batteries and cheaper than fuel cells. Its products will be able to delivery between 2 kilowatts and 2 megawatts of electricity for 2 hours or up to 24 hours, it says.

Another flow battery maker, VRB Power, is currently testing systems, including a 5-kilowatt, four-hour prototype in Florida.

Pumped hydro, where water is pumped up a mountain and released as needed in a hydro plant, is also used, but its use is limited by the number of available sites.

The latest generation of concentrating solar power plants are being developed with integrated storage, in the form of hot water or even molten salt to deliver electricity after the sun goes down.

Challenges
But for all the promise of making the grid operate more like a hybrid car, there are serious challenges, panelists said.

Many of these technologies don't have a 15-year track record that utilities like to see, which makes them skeptical. Large-scale battery projects requires systems integration that involves batteries, electronics, software, and thermal management systems, said A123 Systems' Fulop.

They are also very capital intensive. To get around that problem, Beacon Power doesn't sell its flywheel. Instead, it bids on power generation contracts and sells the electricity to utilities.

Regulations for utilities are written around power generation units, but not energy storage, said Matt Lazarewicz, vice president and chief technology officer of Beacon Power.

"The market rules have to change to allow nongeneration assets to connect to the grid and get paid for it," he said. "And to make the grid look more like a Prius, utilities need to change their mindset to make more efficient use of the generation system."

Rising fossil fuel prices are an incentive to explore energy storage, as well as the rising costs of constructing new plants.

Ideally, a utility would be able to get money from a storage unit in multiple ways. One rural co-op installed a four-hour, 300-kilowatt storage system to offset peak electricity rates and to provide backup power to a nearby industrial company, said Matthew Johnson, director of business development at Gaia Power Technologies.

Utilities are showing interest in more options, but storage is still very much an emerging technology.

"There's a lot of technology development and new work. But one of the reasons we don't see more of it today is because the economics of this are actually quite complex," said Bruce Phillips, director at Northbridge Group.