As 2013 proves a good year for energy storage, what is ahead for 2014?
This author no longer works for DNV GL.
On Thursday, February 20th, our storage and distributed energy resources group teamed with Energy Central to conduct another webinar on electricity storage…This one titled “What’s ahead for Storage in 2014, Trends and Implications for the Energy Industry.” Over 1,000 people registered for the call, a number that simply amazed the Energy Central folks but the participation numbers were also consistent with another webinar our team conducted with Energy Central in October 2013, where over 1,100 people registered for the event. The participation shows that interest in this area is still extremely high but also forces stakeholders to ask the question of “so where are all the devices?”
Each year, advocates and stakeholders of the storage industry hope that we have reached the “tipping point” where the technology reaches a state of mass deployment. Such hope glosses over the 720 MW already installed world-wide or the advancements that companies such as AES have made in this area. But for manufacturers, such advancements are still relatively small. What are we expecting to see in 2014?
Essentially, the continued steady advancement of the technology and the leveraging of State programs that are going to start accelerating installations. For the electricity storage industry, 2013 was a tremendous year. The State of California approved a ruling that initiated a mandate to deploy 1.325 GW of storage over the next 10 years. This action is in addition to CPUC (California Public Utility Commission) directives for SCE to install 50 MW and approving a similar request from SDG&E. The State of New York has jumped in as well by opening their own proceeding to examine the benefits of storage while ConEdison and NYSERDA, in response to their projected closing of the Indian Point nuclear plant, are in the process of releasing incentives of up to $2,100/kW of energy storage devices to help fill the gap.
2013 was the year of “valuation” for storage, as DNV GL and other groups introduced sophisticated modeling tools to allow adopters of storage get accurate assessments of the potential benefits the devices can offer.
In fact, as these advancements continue, the industry is beginning to focus more on the issues around deployment and safety to ensure storage devices can meet the initiatives, but that they are also integrated and installed safely on the grid.
As one steps back, plots the course for storage, the trend lines still remain in a very positive direction and the market segment is no longer having theoretical debates but rather examining the performance of actual applications. One major point made in the webinar focused on the entrance of large multi-national manufacturers into the space and how this may impact that market, the emergence of storage applications closer to the edge of the grid as opposed to the whole-sale, generation side, and interest in combining applications such as solar-storage systems.
Despite the progress, hurdles still remain. Costs of the devices continue to be a concern but at this stage, we still see a great deal of emphasis being put on demonstration and proving long term performance capabilities. As the demonstrations evolve into real installations, focus will return to the cost of the units.
The second issue where progress does seem to be being made is in utility adoption of storage systems. Their reluctance has seemed somewhat of a mystery to date, though advantages can be found through:
- As a grid reliability asset, utilities may have the ability to rate-base the technology, allowing the utility to increase its asset base and stabilize its current business model
- Unlike fossil fuel generation, storage delivers all the capacity benefits and little loss of KWhs. The technologies are essentially distributed generation with an automatic “off” button
- The asset will mitigate the issues caused by large penetration of PV on the distribution system and allow utilities to regain control of the power flow on their system
- The devices can improve reliability and defer system upgrades.
However, the efforts in New York and California will drive utilities to focus on the multiple benefits that can be provided by storage and not simply the cost. There are still issues to overcome before we consider storage to be commercialized, but if utilities start successfully deploying technologies on the distribution portion of the grid, one the last remaining barriers to storage will fall. At that point, our discussion becomes one purely of performance and whether the unique characteristics of storage can begin to demonstrate how beneficial they are to the grid.
Hence, as we begin 2014, we are going to see utilities starting to deploy storage in larger numbers—from SCE’s early procurement, to California’s procurement ruling, and with the “Indian Point” initiatives in New York. It is the time to not only get a significant amount of field performance data on the storage technologies, but the use case applications will be examined as well. It is anticipated that utilities will see more advantages than disadvantages at that stage, viewing advanced storage as a friend to their operations rather than a distributed energy resource that creates problems for their operation.
Storage is being successfully deployed at the wholesale level, what is exciting about 2014 is that we are going to start seeing similar success at the utility level as well.
Learn more about DNV GL’s energy storage expertise here, and make sure to view our recent whitepaper: Will Distributed Energy Resources Change How Electricity Is Delivered?