4 reasons energy storage will become an essential part of the power grid's ongoing evolution
October 16, 2015
Multiple major utilities in the Southeast are looking to lead the local adoption and application of energy storage technologies. According to Environment and Energy Publishing, representatives from NextEra Energy, Southern Company and Duke Energy have publicly announced their respective companies' interests in establishing themselves as thought leaders with regard to using energy storage to update the power grid and account for modern demand. This trend is no accident, noted Paul Patterson, an analyst with Glenrock Associates:
"It's important for these utility executives to not appear complacent about the technology in the industry because the changes are happening, and they are serious," Patterson said. "It behooves them to be on top of the changes because they can be very disruptive."
As utilities across the country work to update the grid and make it more resilient, energy storage is expected to have a multi-faceted impact on this effort. The following factors highlight just a few of the ways that energy storage is likely to play an important role in the country's energy future.
"Storage is likely to play an important role in the country's energy future."
1. Opportunities for storage increase as grid modernization efforts move forward
Whether a utility is interested in avoiding a cascading grid failure or desires to maximize an investment in renewables, power companies seem to be collectively embracing grid modernization. Utility Dive reported that these updates will likely include the addition of thousands of new transmission lines and the adoption of new technologies to integrate with the grid. This new trend would follow years of increasingly innovative grid upgrades, including successful integration of energy storage technology.
Industry interest in energy storage is so widespread that hundreds of utility executives have recognized the technology as the top emerging force in the industry. Speaking at the VerdeXchange 2015 conference, former Southern California Edison Senior Vice President Jim Kelly summed up the relationship between utilities and storage technology:
"Energy storage is such a big deal that in the electric utility business we called it the holy grail," Kelly said, according to Utility Dive. "We knew that if we tried to get higher amounts of wind and solar on the grid, eventually it would break unless we had energy storage."
Given this overwhelming interest and support for storage, it's no surprise that the technology will play a special role in the grid's future.
2. Energy storage offers unique value to states with fully realized renewables
One of the main perks of energy storage that has piqued the interest of utilities for years is the technology's potential to act as a bridge toward reliable renewable adoption. However, energy storage also has the potential to improve operations in scenarios where renewable technology has already been successfully deployed. For instance, Texas utilities are currently facing issues with an overabundance of renewable energy thanks to widespread wind turbine deployment across the state. Generation by wind is so successful that utilities are forced to sell electricity to consumers at a loss, noted CleanTechnica.
Energy storage presents utilities with the ability to be more flexible with their distribution of excess renewable energy. In addition to providing a safety net to account for cases of intermittency, energy storage also allows utilities to qualify for additional tax credits by generating even more electricity from their renewables installations. Wind renewables in Texas don't look to be slowing down anytime soon, and the continued success of energy storage in this region will help set the precedent for the rest of the nation's utilities.
3. The Clean Power Plan may turn storage into a matter of compliance
The most recent iteration of President Barack Obama's Clean Power Plan includes strong endorsements for renewables and energy storage as solutions to the ills of the nation's utility companies. In fact, Greentech Media noted that the inclusion of these technologies into the plan may have a noticeable impact on how states across the country seek to comply with new federal standards.
Furthermore, the text of the Clean Power Plan emphasized the use of demand response as a solution for helping to manage the power grid. Energy storage is a proven tool with regard to managing demand response efforts, serving important roles both behind and in front of the meter. Even if energy storage technologies themselves are not included in the Environmental Protection Agency's latest guidelines as necessary for compliance, the new rules will certainly create new opportunities for these technologies to thrive.
4. Commercial facilities will also deploy storage to address peak energy consumption
By exposing the commercial building industry to the advantages of energy storage, electric utilities also inspire commercial companies to put the benefits of the technology to good use. For example, data collected by Navigant Research predicted that the number of commercial facilities taking advantage of demand response will jump from about 600,000 in 2012 to over 1.4 million in 2018.
This commercial-side adoption of demand response strategies will likely coincide with greater deployment of energy storage, especially technology designed to cut costs in commercial buildings, such as CALMAC's IceBank energy storage tanks. Recent moves by the Internal Revenue Service will play a positive impact in this regard as well. Utility Dive said that the IRS is seeking to expand its 30 percent energy project tax credit to include additional technologies, including the use of energy storage as a demand response solution or backup power for solar.
