Energy storage research just published

EPRI report provides insights on pros/cons for utilities

Phil Carson | May 01, 2011


On Friday, I wrote about the "tangled web" of issues surrounding energy storage. It is important to acknowledge and address the pros and cons, from the technology to the business case to the market and public policy.

(I produced the "web" analogy as a result of a well-populated workshop at the California Energy Commission in Sacramento last Thursday, in Friday's column "Renewable Energy and Storage." While this CEC effort has implications for the California Public Utility Commission, I erroneously attributed the latter with hosting the meeting in an earlier version of this piece.)

Taking a hard-nosed look at any nascent technology and its costs, as well as the implications of public policy, famous for unintended consequences, is merely one component of due diligence. Another aspect is giving a technology a fair assessment and seeking out well-vetted opportunities for getting it to market.

One reader on Friday dismissed energy storage as "wishful thinking" without demonstrating any knowledge of its complexities. This attitude, frankly, makes me sick. Of course, I sense a lot of undisguised anger that the world is changing. The so-called "cheap electricity" we have enjoyed has come at vast expenses in environmental damage and clean-up as well as massive tolls in human health. The fact is, we live in a barely post-industrial society that still deludes itself that "cheap electricity" and massive environmental and health impacts and their costs are two separate things. Sadly, we're only just beginning to insist the two go together.

Thus I welcome the report, "Electricity Energy Storage Technology Options," from the Electric Power Research Institute. Here is a rational document from very smart people who work for the electric utility membership of EPRI, who are sincerely attempting to assess the technology, explore the costs and benefits, acknowledge and weigh competing alternatives and examine the market implications. The report identifies the public policy issues, without taking a position.

The only suggestion I have on the potential cesspool of societal deliberation at this juncture is that we immediately lose the mantra of "it'll never work." That is the epitome of defeatist thinking and I reject it outright. (And in the process, of course, ignoring my own advice: "'It'll never work' will never work.")

The report's project manager Dan Rastler, EPRI's director of energy storage and distributed energy resources, told me in an interview last week, that the report "should provide a sense of how to stitch together the benefits, which are quite site-specific, that make a business case for energy storage." (More from that interview with Rastler tomorrow.)

I'll quote and paraphrase from the report's abstract to encourage readers to tackle it.

First, those who don't understand the long-range attractiveness of renewable energy (RE) and the historically massive and continuing subsidies and tax breaks for fossil fuel industries need to face the first sentence. RE is one of three drivers that will increase electricity costs.

"A confluence of industry drivers—including increased deployment of renewable generation, the high capital cost of managing grid peak demands and large capital investments in grid infrastructure for reliability—is creating new interest in electric energy storage systems."

That interest, I'd argue, comes at an opportune time. The low cost of natural gas will not hold forever, nor will slackened demand for electricity. We have a lull in which to prepare for changes in the landscape.

The report offers 10 key storage applications from generation to end-user. Those applications stretch from pumped hydro to compressed air to a variety of batteries to flywheels. A couple key points about the report's contents are delivered up-front.

Capturing multiple benefits for any single technology is crucial for high-value applications and their business cases. That is, "applications that achieve the highest revenues do so by aggregating several benefits across multiple categories." Further, an analytical framework is offered to guide utilities in assessing lifecycle costs and benefits.

EPRI did not shrink from teeing up the thorny societal issues I mentioned earlier:

"Because storage systems have multi-functional characteristics, which complicate rules for ownership and operation among various stakeholders, policy challenges were identified that need to be resolved to realize the true potential of storage assets."

The report notes that utilities are well-positioned to evaluate the gamut of storage challenges and, indeed, nearly three dozen are working with EPRI in that role. (I note too that EPRI also worked closely with vendors to keep the report realistic and useful.) The abstract underscores the notion that practical people and organizations indeed are moving forward to find out what works and what does not work in a rational, cost-effective manner.

"Despite the large need for energy storage solutions, very few grid-integrated storage installations are in actual operation in the United States. This landscape is expected change around 2012, when a host of new storage options supported by U.S. stimulus funding begins to emerge and, in turn, catalyzes a portfolio of new energy storage demonstrations."

Personally, I look forward to reading the report's details and to constructive comments on this and other forums on where the value lies and where unintended consequences lurk. Just don't tell me "it'll never work." That'll never fly.

Phil Carson
Intelligent Utility Daily

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Excellent comments all and a gratifyingly broad spectrum of viewpoints as well. As a singer once sang, "many fish bite if you got good bait."

These comments are illuminating various aspects I didn't delve into in sufficient detail or due to lack of knowledge, so I'm much obliged for these insights.

I have a feeling that the various factors and variables involved in making storage viable, if it is, will shift with time. Let's keep the discussion going. More to come...

Regards, Phil Carson

At What Cost does "It Work"?

From the article: "The so-called 'cheap electricity' we have enjoyed has come at vast expenses in environmental damage and clean-up as well as massive tolls in human health. The fact is, we live in a barely post-industrial society that still deludes itself that 'cheap electricity' and massive environmental and health impacts and their costs are two separate things."

The author implies (ironically, without demonstrating any knowledge of its complexities), that so-called cheap electricity comes with no benefits....only environmental liabilities. I doubt that's what he sincerely believes, yet the sentiment is loud and clear.

Unfortunately, many proponents of RE, the SG, high capcaity storage, etc. focus on the notion that "it works" rather than the harder question "at what cost". I frequently rail against the "all things green at any price" crowd not because of a knuckle-dragging wish to avoid change but rather out of a sense that the underpinnings of the proposed changes are being dictated by persons that ignore (or reject) the rather obvious downside economic consequences of dramatically higher electricity pricing.

While our nation is encouraged to chase thinly justified (and often unjustified) grid technologies via outright subsidies, other important means to address the so-called "energy crisis" are belittled. This, frankly, is the danger that results when the government picks winners and losers: an "industry" becomes co-dependent with (and subject to) political aims. Worse, the co-dependency becomes economically self-sustaining to the exclusion of worthy technologies that fall outside of modern eco-politics.

No one misses the point

Basically anyone who pays their own bills understands the connection between price and value, as most of our readers do. Add some knowledge of the history of the grid and it's only appropriate at this stage in our evolution as a nation and an industry to look longer term than lowest-cost at any price. And to look at the full cost of a future dominated by coal.

The point our correspondent probably overlooked is that cheap electricity is good, but we haven't had "cheap electricity." Our kWh rates may be low, but we're paying enormous costs to mitigate the impacts on human and environmental health. 

Just to help our reader, it's important at this juncture to look forward and find sustainable energy practices and sources to complement "the mix" that you can read about in my work. It's easier, of course, to look backwards and say "it's good enough," or refuse to acknowledge the many massive costs associated with burning coal as our main source.

The point, of course, is that electricity has not been cheap. The per kWh rate has been low, but we pay far higher costs in cumulative health and environmental impacts, making that coal-driven electricity anything but cheap. As a taxpayer and ratepayer, I pay both bills and I'd prefer that the full cost of coal-driven electricity be made clear, so we don't pretend any longer that coal = cheap electricity.

It's a simple point, but it's way past time we face it.

Regards, Phil Carson  

Illegitimi non carborundum


I can sense the frustration in your response to some of the comments you received on your last posting.  The important thing is to remain focused on the important message that you are trying to communicate and not be deflected by those who are not interested in exploring the possibility that there is any truth out there other than that to which they subscribe.

That truth includes the fact that energy storage has been around for many years in the form of pumped hydro and other existing technologies that work very effectively.  Twenty five years ago, I installed a form of stored energy solution in my apartment in London: storage heaters which used low cost electricity during the night to store heat that could be released during the day.  Both of these technologies demonstrate an important point, electric energy doesn't have to be stored in the form of electricity.  That energy can be converted into many forms and either used directly in those forms (as in the case of the storage heaters) or converted back into electricity (as in the case of pumped hydro) at a later date.

One thing that you have not touched on is the potential lifecycle environmental impact of storage.  All energy solutions, including storage solutions have an environmental footprint and some are more significant than others.  Pumped Hydro requires that land be set aside for holding the water that is used in that technology.  Batteries have significant environmental impact both in their manufacturing and their eventual disposal.  That is not to say that these technologies do not have a net positive environmental impact but it is important that the entire lifecycle impacts of each technology be evaluated and compared.

Thanks Also to Jack Ellis for his insightful comments.

Niall McShane

President Green Technology Organization of Greater Chicago

Energy Storage

While you express disdain concerning those who decry your previously stated positions about positive advancements in the electric storage arena you make the following statement wwhich I find just as offensive and incorrect:  "and the historically massive and continuing subsidies and tax breaks for fossil fuel industries need to face the first sentence. RE is one of three drivers that will increase electricity costs.".  It is the fossil fuel industry which gives us the opportunity to transition without massive increases to certain renewables and continued research and the fossil fuel industry has not "enjoyed" benefits that other industrial segments and businesses receive in different forms.  Tthe mining and timber industries recieve a similar recognition of a depleting asset.  Other businesses just get writeoffs..

Firstly, what other industry has the risk of assembling  prospect acreage, geology, geophysics, and drilling only to find absolutely nothing but information.  Writeoffs of legitimate expenses are parsed out not taken like other industries get to do.  Depreciation is afforded all businesses.  Depletion (not available to producers with more than athousand barrels equivalent a day) recognizes that an asset is depleting and exists to encourage continued exploration and is used just for that.  the government has done R&D for every industry, hardly a subsidy there.  the taxes paid by large and small segments of the oil and gas industry have been an enormous part  of our nation's budget not including the royalty payments and lease bonuses.  It is this industry that has given us our historical gdp and competitive place among goods producing nations.

I too favor renewable and storage R&D but do not want to see the costs of traditional energy go so high that all other sources become immediately economic for that will create a deeper and wider chasm bewtween the haves and have nots and our economy will be second class.  Hydrocarbons are the bridge and it will be a long bridge.  To elevate by tearing down will be seen as a political statement not a business approach.


Storage Will Work

There's no question storage will work, and many of the options outlined in the EPRI report will work just fine.  The issues are cost and value, and here the EPRI report outlines a number of challenges but omits an important factor.

For vertically integrated utilities operating in a stand-alone mode, value is likely determined by the long-run cost of alternatives that are avoided if storage is installed.  That's the method I used when I evaluated storage many years ago. Those estimates are uncertain, they rely on a number of critical assumptions, and they typically assume storage will displace some other peaking plant.

However for utilities and others who operate in regional wholesale markets, the important but missing factor is that value is determined largely based on the price of capacity, energy, frequency regulation and contingency reserves that can be sold from a storage project.  When regulators step in to guarantee reliability or minimize the cost of capacity by mandating new build, their actions have the effect of artificially depressing prices for these grid level services, which makes storage look less cost effective.  In other words, mandates and set-asides for one technology has the perverse but perfectely reasonable side-effect of either making all other technologies look less cost effective in a market context, or requiring that they also be subsidized or supported outside the market.  After a few years of this, the regional market collapses.

A quick look at sections 4 and 5 of the EPRI report confirms that the cost-value gap for most storage technologies is still unfavorable.  CAES looks interesting, but CAES is not a mature technology.

At this stage, small-scale technology demonstration projects to help advance the state-of-the-art make sense.  According to comments at two recent workshops on storage in California, it would appear that large-scale subsidies or a set-aside mechanism would lead to construction of a lot of high-cost storage that could be superseded by newer technologies within a few years, and in any event, the amount and type of storage that would be cost-effective for various applications is still not well-defined.

Jack Ellis, Tahoe City, CA