Four ways to think about energy storage

California utilities share their approach

Phil Carson | May 06, 2011


We've kicked around energy storage this week and it's appropriate to finish up the week's focus with a few points straight from the horse's mouth: four large California utilities that last week shared their thinking with the California Energy Commission. (Two were large municipal utilities, two were investor owned.) Their points weren't exactly news but certainly deserve a wider audience.

I encourage you to look over the four utilities' (and other parties') presentations through the link above or through the specific links below, as they contain much food for thought.

The presentations were based around three key questions:

  • How does the role of energy storage differ from the utility or market perspective?
  • Who should own grid connected energy storage?
  • How will California's utilities implement the energy storage development, demonstration and deployment plan for meeting AB 2514 requirements?


Rather than trot out four utilities' answers to three questions, I'll just share a few standout comments that reveal current thinking by these utilities, now driven by a legislative mandate to explore storage options.

First, it was good to hear a theme emerge that both simplifies a potentially complicated subject and encourages me that utilities are acting thoughtfully in this area.

"Energy storage is not a single application or technology," according to San Diego Gas & Electric (SDG&E).

"Identifying where and how storage may be used on the electric system (i.e., applications) is a logical and ideal starting point for discussions about storage," according to Southern California Edison. "'Storage' as a unified concept is impractical and misleading."

"The focus should be on the cost effectiveness of benefits delivered," according to the Sacramento Municipal Utility District (SMUD). "We shouldn't pursue storage for storage's sake, we should pursue the value it provides. Other technologies such as renewables, energy efficiency and load control may provide equivalent value more cost effectively."

On that question—is storage really an answer to real-world needs or would existing alternatives meet the same requirements?—Pacific Gas and Electric Co. (PG&E) had the following thoughts: First, identify the need, which is technology neutral. Then use a competitive process to determine the best resource to meet that need.

All the utilities were of one mind on the question of mandates.

"Do not create a set aside for storage," PG&E said. "Set asides lead to sub-optimal solutions and higher customer costs."

Further, "wide-scale deployment of energy storage technologies is not yet mature," said SDG&E. "Energy storage systems are currently expensive. Energy storage systems should be assessed on a case-by-case basis."

Readers, take any angle you'd like. Or aim for the editor.

Phil Carson
Intelligent Utility Daily


Related Topics


Good points

Again, the discussion here puts some flesh on this column's bones and illuminates new angles. Thanks for the comments.

Regards, Phil Carson


There is a certain amount of resistance from the utilities concerning storage and the reason isn't that it doesn't provide numerous benefits, rather (1) the addition of storage will reduce the need for combustion generation used for integration, balancing and firming of variable renewable generation. (2) It will create the opportunity for sub-hourly markets and (3) it will create a bi-directional market. Though all three reasons should reduce customer energy cost plus reduce Ghg emissions the utilities stand to lose part of their assets which include peaking energy generation. As more renewable come on line and if that energy is coupled with storage not only does natural gas fired peakers lose the amount of base needed is also reduced. There is a profound amount of resistance by the utilities to even model storage for transmission planning efforts. Statements such as "There isn't enough variable renewable generation to justify modeling storage" are found in the WECC transmission scenario planning decision concerning project modeling requests. The utilities are about dollars not efficiency nor RPS goals. California's CPUC effort to place a value on the benefits of storage will be torpedoed by the large PUCs outside California.

Energy Storage in Electric Vehicles

If energy storage in batteries has a benefit/cost ratio greater than 1 let’s install the batteries next to the generators.  Let’s not put wheels, seats and windshields on them and use them as cars.

Dennis Fleming, P.E.

Uses for storage

The potential services for storage aren't a mystery - time shifting of supply, bilateral firming of renewables across various time-frames,  system frequency regulation, spinning reserve, load-following, local voltage and other power qualitly support.  Regulators should focus on ensuring markets are sufficiently developed so that owners of storage can get compensated for the value they bring to the grid.  Then the market can decide where storage makes sense and where it doesn't.  Of course the big concern is that whatever market rules are adopted, they'll change a year later, and then again which makes it hard for developers to figure out asset value. 


Bob Shively


More About Storage

I think the utilities have part of the story correct.  Figure out where you need it before opening the floodgates to developers.  Subsidies are inappropriate, particularly in California because subsidized storage undermines other policy priorities.  At some point, establishing too many priorities means nothing is a priority.

However it might also make sense to leverage storage that's already available at customer sites.  I wrote this for an another forum earlier today.

Why should customers pay for the IOUs or the ISO to acquire storage when they can sell some of the services storage would provide instead?  Customers with refrigerators and electric hot water heaters, cold storage warehouses, and those customers who live near the coast or up in the mountains could provide hundreds of megawatts of ancillary services for the cost of a wholesale spot market that produces credible prices and a few bits of wire and electronic components.  Why aren’t we developing these resources, which could be done pretty cheaply, before we spend hundreds of millions of dollars subsidizing larger, more expensive projects that don’t have a clearly demonstrable need?  


Then there are electric vehicles, which provide a nearly perfect form of flexible demand.  If we had credible wholesale prices, a few hundred thousand EVs equipped with smart chargers would provide enough demand flexibility to manage infrequent overgeneration conditions at a very reasonable cost. 

These ideas aren’t just “low hanging fruit”.  They’re fruit that’s been rotting on the ground for fifteen years.  We’ll know the state agencies are really serious about demand management, which is after all at the top of the state’s loading order, when we see some meaningful progress on credible spot prices and these simple, cost-effective ideas for harnessing latent flexibility.

Jack Ellis, Tahoe City, CA

Energy Storage

PG&E has it right!  First a utility should 'identify the need".  Identification of the need should be in the form of a written problem statement.  Potential solutions can then be evaluated based upon how well they solve the problem.  A benefit to cost ratio for each solution that solves the problem can be calculated.

Other approaches are similar to attempting to find one's way out of a wilderness without a compass or map.  One doesn’t know if they are moving towards civilization or just consuming resources while walking in circles.

Dennis Fleming, P.E.