Case Study

Energy Storage

Indispensible to a Cleaner, More Resilient Electricity Grid

In a long career at Eveready and Pacific Northwest National Laboratory, Z. Gary Yang had a chance to explore many different battery technologies, from lithium to sodium ion. But in the late 2000s, he got particularly excited about an approach invented in Australia in the 1980s: the vanadium redox flow battery.

The guts of the battery are two big tanks of dissolved vanadium, with a battery cell in between. It works because the vanadium can have different electrical charges. When a solution of vanadium with a high charge meets a low charge solution across a membrane, the result is a flow of electricity. Pumping electricity back in restores the difference in charge between the two tanks of vanadium, thus ‘charging’ the battery1.

Yang and his PNNL colleague Liyu Li realized that the vanadium flow battery has big advantages. It can be fully charged and fully discharged almost endlessly, unlike the lithium batteries that power cell phones and Tesla cars. It can be scaled up to any size by making the tanks bigger. And with nothing flammable, there’s no risk of fire.

The problem, though, was that the original vanadium batteries were weak, fragile giants. They required huge tanks of vanadium to store relatively small amounts of electricity, and couldn’t operate at high or low temperatures, thus requiring power-sapping heating and cooling equipment.

So Yang and Li set out to make a better battery. Tinkering with the vanadium solution, they discovered that adding hydrochloric acid solved both problems. “We doubled the energy density and were able to design a simple, reliable product without a complicated heat management system,” says Yang. The approach was so compelling that Yang and Li left their safe jobs at PNNL to start a company, UniEnegy Technologies.

Now, one of UniEnergy’s vanadium flow batteries sits in a parking lot in an industrial park nestled in the green hills on the outskirts of Pullman, Washington. Housed in 10 standard 20-foot shipping containers and funded with a $3.2 million grant from Washington State and $3.8 million from local utility Avista, it can supply 1 MW of electricity for up to four hours to the Avista grid or to a nearby grid equipment maker, Schweitzer Engineering. When the battery was turned on in April 2015, Washington Governor Jay Inslee said: “We’re laying the groundwork for the most transformative change in the electric grid system in 60 years. When we flip the switch today, we won’t just be making clean energy. We’ll be making a commitment to future generations.2

One 4 MWhour battery in Pullman won’t change the world, of course. But batteries and other forms of energy storage “could have a tremendous impact on our energy future,” says Heather Rosentrater, vice president for energy delivery at Avista. There is a long list of uses, roughly divided between those requiring short bursts of power and those needing hours worth of energy.

Short-term storage enables utilities to improve power quality by regulating frequency and voltage, and to integrate solar and wind into the grid by smoothing out minute-to-minute fluctuations. Because a battery can respond almost instantly instead of the few minutes it takes to ramp up a powerplant, “it is just a better technology,” says Richard Fiorvanti, vice president for distributed energy resources and storage at ICF International.

Those advantages have created a new and growing business—energy storage systems integration (ESSI). “ESSI players were rare 3 years ago, [but] today new entrants are populating the market,” says a recent report from Navigant Consulting. One of the leaders is giant AES, which installed the first grid-scale battery system in 2008. The company now has 40 MW of lithium batteries, which are ideal for the short-term power applications, in Moraine, OH and 64 MW in Elkins, WV, among many other deployments around the world3. The utilities using the batteries “are finding the systems to be so good, so accurate and so fast, they are starting to use them to replace power reserves that will run for 1-2 hours,” says Matt Roberts, executive director of the Energy Storage Association. This short-term energy storage market “has been wildly successful,” he says.

Adding large amounts of renewable power to the grid, however, requires longer-term energy storage. In fact, some areas in California with lots of solar power are seeing the beginning of the ‘belly’ of a ‘duck curve’, where solar electricity plus base load power in the afternoon outstrips demand, causing the net load to plunge4. A system like UniEnergy’s vanadium flow battery can soak up the excess electrons, then feed them back to the grid for up to eight hours as demand rises (the neck of the ‘duck curve’) in the late afternoon and evening as people get home from work and crank up air conditioners, do laundry and watch TV. That’s why California is mandating that utilities add 1.325 GW of storage on the grid by 2020, with procurements by Southern California Edison and others running ahead of schedule. UBS Securities estimates that, globally, storage capacity is already 3-4 GW, and will increase to about 6 GW by 20205.

But the benefits don’t end with regulating voltage and making renewable power possible. Judiciously placed storage can replace expensive new transmission lines and generating capacity. A 2014 study by the Brattle Group for Oncor Electric Delivery Company concluded that investing in 3,000 to 5,000 MW of distributed energy storage in Texas would save money, improve reliability and lower customers’ electricity bills, for example6. It can also make the overall grid—and smaller microgrids—far more resilient in the face of extreme events like Superstorm Sandy. “Energy storage is the bacon of the grid, because it makes everything better,” says Katherine Hamilton, Principal at 38 North Solutions.

Meanwhile, putting storage behind the meter—in homes, stores and businesses—enables customers to operate during blackouts, to lower bills by buying electricity when rates are low, and to help utilities manage demand. In the future, “we’ll have a battery in every utility substation and a battery in every commercial building and lots of homes,” predicts Jon Wellinghoff, former chairman of the Federal Energy Regulatory Commission.

And not just batteries. Competing technologies include storing energy by pumping water uphill or by forcing compressed air into salt caverns or tanks. They also include thousands of the “Ice Bear” units that a company called Ice Energy has already installed in buildings across the U.S.7. These units are seamlessly hooked up to existing air conditioning systems to make ice at night when electricity costs are low and when air conditioners run more efficiently, and to produce cool air during the hot day. In one typical application, the Staples store in Howell, NJ cut daily load by 25 percent. “There will be a race for the best technologies,” says Wellinghoff. “A lot will fall by the wayside.”

The race is partly about cost. Innovation, manufacturing improvements and economies of scale have already sent the price of lithium batteries plunging “far faster than people can keep up with,” says Fiorvanti. “Even the best minds have been wrong.” Lithium battery costs have dropped from more than $1000/kWh in 2007 to under $150 today8. And when Tesla’s gigafactory in Nevada (and perhaps Alevo’s less publicized plant in North Carolina that will make a competing lithium technology9 starts production, prices are expected to drop further.  If the cost goes low enough, lithium could make the leap from short-term power quality applications to longer term energy storage, displacing better technologies like vanadium flow batteries, which now cost $400 to $800/kWh depending on hours of electricity provided, unless their price drops as well.

Another key question is how quickly broader markets will develop. The challenge now is that public utility commissions typically pay individual utilities or transmission companies for only one or two of the many benefits of energy storage, such as frequency regulation, explains Jigar Shah, former CEO of solar provider SunEdison, now co-founder of Generate Capital. So while “energy storage is already worth more than it costs, but it is also worth way more than it pays,” says Roberts. “That has held storage back.”

As a result, the main drivers of the market in the U.S. have been California’s mandate and change in FERC rules that allow regional transmission organizations like PJM to pay for frequency and voltage regulation technologies, like energy storage, that are faster and more accurate than ramping up a back-up gas plant. Looking ahead, however, storage is viewed as an essential part of modernized smarter grid. “Safe reliable and affordable electricity is not enough anymore,” says UniEnergy’s Yang. “It must also be cleaner, more resilient and flexible and cheaper. To make that transition, storage is indispensible.”

View footnotes

  1. U.S. Department of Energy. 2012. “Vanadium Redox Flow Batteries,” October, available at http://energy.gov/sites/prod/files/VRB.pdf.
  2. Kramer, B. 2015 “Schweitzer Labs puts ‘game-changing’ battery power to test in Pullman,” The Spokesman, April 3, available at http://www.uetechnologies.com/Schweitzer%20Labs%20Puts%20’Game-Changing’%20Battery%20Power%20to%20Test%20in%20Pullman.pdf.
  3. AES Energy Storage, “Deployments,” available at http://www.aesenergystorage.com/deployments/ (last accessed August 2016).
  4. See Appendix 3 for more on the duck curve.
  5. Dumoulin-Smith, J., M. Weinstein and P. Zimbardo. 2015. “Breaking Down the Value Proposition of US Storage,” UBS, September 8, available at https://neo.ubs.com/shared/d1N9klYRsJ/.
  6. The Brattle Group. 2014. “The Value of Distributed Electricity Storage in Texas,” November 2014, available at http://www.brattle.com/system/news/pdfs/000/000/749/original/The_Value_of_Distributed_Electricity_Storage_in_Texas.pdf?1415631708.
  7. Ice Energy, “About Ice Energy,” 2016, available at https://www.ice-energy.com/company/.
  8. Neil, D. 2016, “In the Future, Chevy’s Going to Need a Bigger Bolt,” The Wall Street Journal, February 12, available at http://www.wsj.com/articles/in-the-future-chevys-going-to-need-a-bigger-bolt-1455215871.
  9. Downey, J. 2015. “Alevo making battery components in Concord as it nears production line completion,” Charlotte Business Journal, August 19, 2015, available at http://www.bizjournals.com/charlotte/blog/energy/2015/08/alevo-making-battery-components-in-concord-as-it.html.

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