Utility-scale energy storage has been the hot topic in utility circles in the past week. Just when the industry was focused on a large announcement out of California, Texas went one (much) bigger.
Last week Southern California Edison (SCE) announced the results of a competitive solicitation, revealing it signed agreements for 250 MW of storage. The utility had indicated it expected about 50 MW of storage projects to be selected, so the 500% boost got the industry talking—for about a minute. And then Oncor Electric came out with a plan so large it dwarfed SCE's announcement. The Texas utility has about 10 million customers, and will ask state regulators to authorize it to spend $5.2 billion on a storage solution to better integrate renewables into the grid.
So just how big are these announcements for the burgeoning utility-scale storage sector?
"Southern California Edison is just getting its feet wet in this area," said Sam Jaffe, a research analyst at Navigant Consulting. "This was a dry run."
Beginning Dec. 1 the investor-owned utilities in California will begin a 10 year process of putting 1.3 GW of storage in place. SCE's solicitation took place outside of that state-mandated storage goal, instead resulting from a plan to meet local reliability needs due to the closure of the San Onofre Nuclear Generating Station and anticipated retirement of older gas-generation plants along the Southern California coastline.
"The fact that storage made such a huge splash is a good sign for the larger process that's about to happen," said Jaffe, who has completed some analysis on the procurement.
Oncor, however, "that's closer to being a referendum on utility-scale energy storage, just because Oncor was under no pressure to buy energy storage. They're doing it on purely an economic basis," Jaffe said.
Details are scant on Oncor's plan, but according to new research from the Brattle Group backed by Oncor, installing 3-5 GW of grid-integrated, distributed electricity storage would be the most cost-effective way for the Texas grid to solve issues with the integration of renewable power. Brattle economists estimated the battery storage could be installed at a cost of $350/kWh.
SCE's solicitation procured 2,221 MW of power, representing about 10% of the utility's current total customer peak usage. SCE said it received more than 1,800 final offers and, for the first time, a wide range of resource types were evaluated in a head-to-head competition to meet a specific reliability objective.
In addition to five offers with new natural gas generation plants, SCE said it selected 69 offers from preferred resources and energy storage facilities. It is the first time SCE has contracted with energy storage projects through a competitive solicitation.
“No single energy source can give us everything we need all of the time, particularly with our emphasis to use environmentally clean resources. To provide for flexibility, we need to accommodate a mix of energy resources," said Colin Cushnie, SCE vice president of energy procurement and management.
“Using energy more wisely, improving energy diversity and increasing flexibility are the keys to maintaining and improving the reliability of Southern California’s grid while incorporating renewables and new technologies,” he said.
According to Jaffe, it is the range of resources that makes SCE's procurement most impressive.
"The diversity of the winners was interesting and surprising," he said. "It's very encouraging for the energy storage industry because there were many different possibilities … and they ended up choosing all of the above."
AES—The largest project
The largest storage project SCE announced is AES Corp.'s 100 MW of interconnected battery-based energy storage, equivalent to 200 MW of flexible energy storage resource. This new capacity will be built at AES' existing power plant sites in Huntington Beach and Long Beach, located south of Los Angeles, California.
AES will also provide 1,284 MW of combined cycle gas-fired generation to SCE.
“By using advanced energy storage and modern combined cycle technology, we are laying the groundwork for a better, smarter and cleaner power grid," said Ken Zagzebski, president of AES US.
The projects raise AES’ planned investments in new and improved capacity in the United States over the next five years to more than $3 billion.
For the gas-fired capacity, AES said financing agreements are expected to be finalized in 2016, construction is expected to begin in 2017 and commercial operation is scheduled for 2020. For the energy storage capacity, commercial operation is scheduled for 2021.
Stem—'A major win'
SCE awarded energy storage and data leader Stem Inc. an 85 MW contract to deploy its behind-the-meter energy storage solution at customer locations in the Western Los Angeles Basin to act as dispatchable capacity.
“SCE has a track record of leadership and national influence in embracing innovative preferred resources, from its support of solar power and energy efficiency to its rollout of demand response programs,” said John Carrington, CEO of Stem. “We have spent several years building software, financing, and innovative distributed storage solutions that provide a dynamic grid resource. The result is a solution that looks and feels familiar to utilities and benefits their customers.”
“This is a major win for behind-the-meter storage, demonstrating that this technology is a valuable tool for both utilities and their commercial and industrial customers,” said Janice Lin, co-founder and executive director for the California Energy Storage Alliance.
AMS—Commercial buildings as a grid resource
Advanced Microgrid Solutions was selected by SCE to develop the company's first grid-scale fleet of Hybrid-Electric Buildings.
AMS will install 50 MW of advanced energy storage systems in commercial and industrial buildings in thew West Los Angeles service territory to provide large-scale grid support to utilities. According to the company, equipping individual buildings with battery technology and advanced energy management software enables the building load to be shifted from electric grid to battery power during peak demand periods. Hybrid-electric buildings are then aggregated into “fleets” and operated as a single resource, allowing SCE to shift the entire fleet of buildings to stored energy when grid resources are strained.
“By harnessing the power of energy demand in commercial buildings, SCE is turning its largest energy users into its cleanest, most efficient grid resource,” said Susan Kennedy, founder and CEO of AMS.
“Installing storage directly at the load center builds resiliency into the electric grid from the foundation up,” said Jackie Pfannenstiel, co-founded of AMS. “Distributed storage provides greater reliability and lower costs to SCE customers while simultaneously providing firm, dispatchable load management to the utility.”
Ice Energy—The coolest proposal
The smallest storage project SCE awarded was 16 contracts for for 25.6 MW of behind-the-meter thermal energy storage using Ice Energy’s proprietary Ice Bear system.
Ice Energy’s product attaches to one or more standard 5-20 ton commercial AC units. The Ice Bear freezes ice at night when demand for power is low. Then during the day, stored ice is used to provide cooling, instead of a power-intensive AC compressor.
According to the company, each Ice Bear can reduce harmful CO2 emissions by up to 10 tons per year and installation is similar to deploying a standard AC system.
“Using ice for energy storage is not new, we’ve just made it distributed, efficient, and cost-effective," said Mike Hopkins, CEO of Ice Energy. "The direct-expansion AC technology is robust and proven, which is important because SCE and other utilities require zero risk for their customers.”