Report: What Can The U.S. Government Do To Create A Big Energy Storage Market

The rise of renewable electricity generation and electric cars is driving a growing interest in energy storage technology, which is in the very early stage of being used by power companies, businesses and consumers. How do you nurture this emerging technology field that is supposed to play a critical role in our overall aim to battle climate change?

The U.S. Department of Energy on December 12 released a report that points out big challenges — and potential solutions — for promoting energy storage technology development and installation. Cutting the price of energy storage systems and ensuring they are safe to operate are among the big obstacles.

The report is looking specifically at energy storage for the electric grid, which is slowly undergoing major and long-term changes as a result of an increasing amount of solar and wind energy flowing into it. A grid runs well when it maintains a balance of supply and demand, something that can be hard to achieve when wind and solar power generation can vary quite a bit at different times of the day and from day to day. Using storage will enable utilities to bank renewable energy and release it at a steady pace into the grid.

If electric cars become popular, then utilities will have to make sure they can meet that demand.

Solar and wind power remains a tiny fraction of the country’s electricity mix, so it’s not significant enough to cause problems for the gird now. Solar electricity produced by power companies will likely make up just 0.4% of the total power supply in 2014 while wind power is set to take up over 4% next year, according to the U.S. Energy Information Administration. An increasing number of homes and businesses also are installing solar panels on their rooftops, and those systems send electricity that isn’t used onsite to the grid.

But utilities, grid operators and policy makers need to start to figure out how to make sure the grid will hum along just fine as wind and solar power generation increases. This effort will take billions of dollars and last over decades because the emergence of renewable energy — and the ability of homes and businesses to produce electricity on their own — is causing a significant change to how the electric power industry has been operating for over a century.  Up until now, we rely on coal, natural gas, nuclear and hydropower plants that can generate electricity steadily around the clock.

The United States has about 24.6 gigawatts of energy storage capacity, or 2.3% of the country’s total electricity generation capacity. But 95% of that is pumped hydro, which pumps water up to a reservoir when electricity demand and pricing is low and sends water through hydropower equipment to produce power when demand is high.

Pumped hydro is an old technology that is limited in where it can be built. Energy storage technology companies, from startups to public companies, are working on all sorts of new ways to bank electricity, from batteries to the use of gravel and gravity.

The energy department’s report identified four major challenges for creating a market for energy storage:

*Reducing the price of energy storage: Energy storage technologies cost too much for mass deployment at this point. Advanced battery systems tend to be priced at over $1000 per kilowatt-hour. The Electric Research Power Institute, which serves the utility industry, believes the energy storage market will grow a lot quickly once the price falls below $500 per kilowatt hour. The energy department’s report has set a goal of reaching $250 per kilowatt hour in 2018 and under $150 per kilowatt hour by 2023.

*Setting safety and performance standards: Since the energy storage market is new, there hasn’t been enough field data to show how well various types of batteries and other storage technologies can perform over time, say, 10 to 20 years. That makes it difficult for investors to calculate returns and decide if they want to finance energy storage projects. The safety of storage equipment is also a concern, particularly when it’s installed near or at where people live and work.

*Creating sources of revenues for storage owners: Storage makes it possible to control the rate and amount of electricity that gets injected into the grid. That ability should allow storage plant owners to make money in more ways than just helping utilities manage renewable energy. There are several types of services that natural gas power plant owners currently provide, such as sending bursts of power into the grid, that help to ensure that balance of supply and demand. Energy storage developers want regulations that make those money-making opportunities available to them as well.

*Making storage a part of grid planning: Utilities and grid operators need software and processes in place to figure out how to analyze where and how much energy storage is needed and create short- and long-term plans accordingly.

To overcome these challenges, the report recommends funding various types of research and development projects for energy storage technologies — and the technologies for analyzing their performance and operation — and for testing all those technologies in the field. Plans also are underway for setting technical and safety standards and for the public and private sectors to work together.

Source: Forbes



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