Can 'energy storage as a service' beef up the grid?

Battery technology is evolving rapidly, but two companies offering grid services say the business model for getting power from storage to utilities needs to develop as well.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
3 min read

There are many research efforts to radically improve energy storage for both vehicles and the grid, but the business models for bringing that technology online are also still maturing.

AES Energy Storage is one of the few companies that has developed a business to sell grid storage services to utilities, a model where the utility doesn't need to invest in the storage hardware itself. The rough analogy in the computing world is providing a computing service, such as server processing power, for a fee, rather than owning and operating servers themselves.

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The company, which owns and operates many types of power generation facilities, later this year plans to open a 32 megawatt storage system attached to 100 megawatt wind farm in West Virginia, according to AES Energy Storage President Chris Shelton. If done by the end of the year, this and three other projects will add up to 84 megawatts of storage, mainly in the form of truck-size lithium ion batteries buffering the grid, he said.

The ultimate goal of many technology developers is to design a battery that can store many hours of power from solar and wind farms, making renewable energy available on demand whenever needed. But AES and flywheel maker Beacon Power have found a niche providing power to the grid in short bursts, which is valuable to grid operators tasked with keeping a steady balance between supply and demand.

Batteries are flexible in that they can deliver power in seconds, compared to a natural gas plants, which ramp up more slowly. Having relatively fine-tuned control over that resource is valuable to utilities and is a service they are willing to pay for, Shelton said. Also, batteries and flywheels don't have any emissions while operating.

Some utilities, such as AEP, have moved ahead with installing and owning their own battery storage systems. But to spread broadly, grid storage will likely follow the same path that solar and wind did, where third-companies own and operate the energy projects, Shelton said. "There's a long cycle of third parties delivering finished solutions to utilities," he said. "There's no reason that storage won't go through the same cycle."

Centrally managed resource
Beacon Power, which manufactures flywheel storage systems, is another company that has taken this grid services approach. In some deregulated markets, the Federal Energy Regulatory Commission (FERC) has created electricity tariffs that specifically recognize the speed with which energy resources can be brought online, said Gene Hunt, a representative for Beacon Power.

The downside of offering services, rather than selling products, is that it's very capital-intensive, Hunt said. With the aid of a $69 million Department of Energy loan guarantee, the company is in the process of developing a 20-megawatt plant in New York that will provide frequency regulation services to the grid.

With a few projects now online, more utilities are paying attention to storage, he added. Beacon Power last week announced that a utility customer in Montana will lease and operate a one-megawatt flywheel system that will be used with a natural gas plant for frequency regulation.

Batteries are also used for providing short-term reliability. AES is buildinga 20-megawatt plant in Chile that monitors the grid and supplies power to improve the reliability of the system. Similarly, AES Energy Storage's planned West Virginia project, batteries will be valuable by managing the variability of wind power, he said.

Advances in battery technology for autos open up more possible applications beyond renewable because storage can provide a flexible power source for nuclear, natural gas, or renewable power generators, Shelton said. "Storage should be centrally managed," he said. "We think of it as a horizontal slice of the market we participate in."