Robert H. Edwards, Jr., Partner & Co-Team Leader Energy, Project Finance...

One of the major hurdles to improving upon the prowess of utility-scale PV is the fact that it is an intermittent resource. In this context, it is vital to assess how energy storage can help in catapulting utility-scale PV to another level.

While experts differ on the exact “tipping” point where solar/ wind integration makes it too costly and too difficult to manage in an integrated system – all experts will agree that there does exist such a tipping point, points out Robert H. Edwards, Jr., Partner & Co-Team Leader Energy, Project Finance & Technology Team, Kilpatrick Townsend & Stockton.

Washington, DC-based Edwards says this intermittency impacts not only grid stability, but the total MW hours generated by the solar resource that a load serving entity can confidently rely on in its baseload planning and dispatch algorithms.

“The intermittency has multiple costs to system operators and therefore, eventually to consumers.  To the extent that economical energy storage solutions can be integrated into utility-scale PV systems, the value of that system as a generating asset increases and the cost and burdens that the intermittency places on the grid are reduced.  This in essence can move the tipping point upward and permit higher levels of utility-scale PV penetration,” says Edwards.

Riding through events

Energy storage today can allow utility-scale PV to ride through cloud events and present a consistent output to the grid, says John Wood, CEO, Ecoult Energy Storage Solutions.

“In a limited sense it can also allow shifting from the mid-day solar peak to a later time and grid-scale testing of algorithms to maximise this are ongoing at our installation in New Mexico,” says Wood.

He says the first step change for large PV operators could come immediately through multi-purposing. Multi-purposing means using a single energy storage installation for more than one application.

“So for instance a large bank of solar-smoothing batteries could earn significant revenue 24 hours a day providing frequency regulation support to the local grid operator. In this way the cost of the batteries is amortised over a 24 hour use period, instead of only the 8-hour period of sunshine,” says Wood.

He says that another secondary use for the battery bank beyond frequency-regulation exists, including grid demand management, where use of the stored energy could be leased to the utility or to a nearby business to assist in managing demand.

Perception

How energy storage is being perceived by PV plant operators and project developers, utilities and grid operators depends on many variables. As Edwards says, citing an example, in closed loop electric systems and islanded settings such as Hawaii and Puerto Rico, gird operators view energy storage as a “very welcome” technology which can significantly and quickly pay for itself through improving grid stability.  This is especially true as these closed loop systems attempt to integrate higher levels of intermittent renewable resources.

The “monetizable” value of energy storage can also be demonstrated in large isolated loads (such as mining in remote areas in emerging markets) where the energy storage technology can be put to multiple uses including back-up power, and buffering arrangements in the event that there are interconnections with a state owned utility whose level of service may not always be perfect.

Edwards says project developers are beginning to integrate energy storage as a specific resource to meet specific requirements under RFPs for new renewable generation.

“Again, no simple single metric; however more examples are occurring where the procuring utility requests that energy storage be part of an integrated solution,” he says. “All in all, we are at the very early stages of proving out “use cases”, confirming technology readiness, which together form the backbone for financing models that will facilitate the introduction and scaling of energy storage technologies.”

Major developments

Edwards refers to three distinct areas which collectively will drive the pace of deployment and scaling in energy storage: (i) regulatory environment including mandates and incentives; (ii) technologies are improving; and (iii) business and financial models are emerging.

The environment for energy storage is not completely clear yet, even if one acknowledges the significance of tax incentives, mandates and overall regulatory environment in to the growth of the renewable energy sector.

Edwards says California is implementing mandates for storage under a well-developed overarching scheme of greening its electric sector. “New York is taking a slightly different path focused more on incentives and driven by concerns of grid resiliency following hurricane Sandy. We do not yet have a Federal approach around storage like we had for wind and solar with the PTC and ITC IRS programmes,” he says.

Call for a unified position

He believes that the energy storage industry would serve itself well to develop a unified position on what is needed to move the technologies to deployment and scaling and adopt a realistic approach that takes into account the continuing pressures to restrain Federal government spending and provision of tax credits for clean energy.

Technologies are improving, and one should expect gradual improvement in factors such as efficiency, performance as well as reduction in associated cost. Of course, one cannot rule out a few unexpected results, too, but all this is part of any industry that takes a leap from small scale to large scale.

For example, how will the supply chain from global commodity inputs (e.g. lithium) to integrated manufacturing of lithium ion batteries at scales never before achieved – what will the true all-in-costs be when the dust settles?

Industrial policy

Edwards also says developments, such as those that impact industrial policies undertaken in Asia, Europe and the US, including those with experience and cost curves obtained in the industry five to ten years from now, will need to be understood.  

“We have lived these uncertainties in the auto industry, solar module industry, and now we are going to live it in the battery storage industry,” says Edwards.

In 2009, when under the Recovery Act, the Department of Energy (through cost share grants and DOE loans) deployed more than $35bn into the clean energy economy. They did this by investing in solar, batteries, electrification of vehicles, energy efficiency and so on; these investments changed the arc of progress in these industries.

From his own experience - from his position as Deputy General Counsel for Energy Policy at the U.S. Department of Energy (2009-2011), Edwards witnessed companies going from start-up venture capital backed entities to well-known public companies. He also saw investments that did not fare as well as planned. “Expect the same in the energy storage industry,” he says.

Another critical “prominent” development will be the emergence of business and financial models that will support deployment and scaling.  Who should own the battery storage system?  How shall it be financed?  How can we monetize the value being created – peak shaving, ancillary services and other benefits.

“Some of these services and benefits do not currently have “market prices” or for that matter prices at all as these activities may take place within an integrated utility which heretofore did not separately account for a particular use or feature that is now available through integration of energy storage technologies.  Look to companies like solar City and SunEdison and others to be amongst the first to figure innovate and create these new business and financial models,” explains Edwards.

Efficiencies to bring down LCOE and end user demand are crucial factors in helping build energy storage-related projects for utilities and EV car charging stations alike. For example, Japanese auto giant Toyota recently reported that it plans to introduce its new hydrogen car in the US sometime next year.

The car, which will be called Mirai, is an electric vehicle that uses a fuel cell instead of an electric battery for power. According to company management, the car can be refueled in less than five minutes, a considerably smaller time than that required at a Tesla charging station, which is a reported 20 minutes. Now Toyota and other EV car makers invest in constructing the required power stations, then there is likely to be more demand for their products. Or they partner with existing gas/petrol station owners, should those companies get on board with hydrogen power.

Power stations can be powered by solar panels and hydrogen alike. That will mean more efficient energy storage at power stations, in general. Solar powered car ports are already being installed in parts of Europe and the US where the uptake of electric vehicles has been most prevalent.

Future

Ecoult’s Wood expects the major future step-change for PV operators to come when pricing for 12-hour storage makes it cost-competitive with fossil-generated grid energy.

He points out that at present the price for stored energy through some storage mechanisms has fallen to near-parity with retail energy prices – hence homeowners have for the first time the option of grid-independence.

“However these prices will continue to fall (and grid energy prices will continue to rise) so that stored energy will eventually become consistent with wholesale energy prices. Pumped hydro is at this point today, but geographically it is quite limited. At that point there will be incentives to vastly increase the area of land devoted to PV since it will be cost-effective to store energy for large-scale night-time use,” he says.

This may even become commercially viable ahead of cost-parity, since parts of the community may be keen to purchase stored solar energy as a premium product.

[Data below shows the blue PV supply and the green shifted ouput (the vertical axis is kW)]