Energy Storage, Executive Insight, Smart Grid

A Rush of Cautious Optimism Reigns in Energy Storage Circles

From the gleaming halls filled by Washington D.C. policymakers to the highlands of southeastern Australia surrounded by solar panels, energy storage is increasingly getting the nod as a resource player on the various grids around the world.

States with high renewable goals see batteries as a way to help tame the duck curve. Others see it as an intriguing option to building new gas-fired peaking plants, but one that is hugely expensive.

Yet, on the eve of the industry’s biggest annual U.S. get-together, one industry insider believes it is ready to compete on its own merits; no special favors, just fair compensation.

 “Where we’d like to see this going…..is see 90 percent of integrated resource plans reasonably reflect the cost and benefits of energy storage in peaking,” said Kiran Kumaraswamy, market applications director Fluence, in an exclusive interview with EL&P. “This is not asking for special treatment or incentives. This is asking for equal opportunity.”

Companies such as Fluence are cautiously optimistic about the future as they get ready to attend the Energy Storage Association Conference and Exhibition set April 18-20 in Boston. The 28th annual event is feeling charged up, no doubt, as U.S Energy Storage Monitor research shows 431 MWh installed last year.

Fluence itself is off to a running start worldwide, noting, of course, they had a leg up as a joint venture of longtime battery technology players Siemens and AES. The new company is a provider in newly announced installations in Victoria, Australia, while 50-percent parent AES also is working on new construction in India.

Kumaraswamy talked about the positives and potential pitfalls of energy storage’s emerging status within the power grid’s ever evolving array of options, from renewables to microgrids to gas-fired peaker plants. Grid-scale battery technology has gotten big boosts with major projects involving San Diego Gas & Electric and wherever wind and solar happy states need frequency balancing, but there also are dangers for those entering the game.

Case in point: Alevo, the Swiss battery maker which swooped into North Carolina behind big promises and a well-heeled Russian investor, shut down its Concord production plan after only a few years and declared bankruptcy. Alevo failed because it was ultimately strapped for cash and could not meet certain delivery obligations to customers.

Fluence’s market director would not speak directly to the former potential rival’s fate, but noted that some things about survival are universal in business.

“Our view is: To be successful in this marketplace, you have to have a high volume of projects, cater to a broad range of applications that customers need and have a track record of executing and delivering to a customer base,” Kumaraswamy said. “I would say my feeling on the dangers are really trying to be too many things at once, getting overextended. You need to have financial muscle to pull through the initial stages.”

The U.S. Federal Energy Regulatory Commission recently gave energy storage a giant boost with its Order 841. The ruling said that barriers should be removed so that energy storage can compete in capacity markets operated by Regional Transmission Organizations and Independent System Operators (RTOs/ISOs).

A Brattle Group study recently estimated that the impact of FERC Order 841 sets the course for a potential U.S. energy storage market of 50,000 MW. Companies like Fluence may like the sound of that, but the Brattle report also warned that state regulators and transmission operators need to remove their barriers and offer “granular and cost-based and stable rate design.”

Better late than never, Kumaraswamy noted.

“It should have happened a year ago, but happy that it happened now,” he said. “One of the key things that 841 can do is remedy some of the structural defects that happen in ISO markets with energy storage participating and getting paid for it.

Energy storage previously has been forced to define itself as part of a large resource type, whether generation or transmission or otherwise.

“In our view, it should not matter what type of resource you are. What matters is the capacity you bring to the table,” Kumaraswamy added. “You should be able to provide that and get compensated.”

(Editor’s Note: Photo courtesy of Fluence)