What’s the future market for grid-scale energy storage? Not nearly as big as previously assumed, according to Pike Research. The research firm has adjusted its expectations for the market for grid-scale batteries, flywheels, air and hydro storage reservoirs and other energy (and power) storage technologies from a previous estimate of $35 billion by 2020 down to $22 billion over the next decade. At the heart of the reduced estimate are some updated figures from the utility-backed research group, the Electric Power Research Institute, that lay out a pretty tough and complicated path forward for energy storage technologies seeking to justify the cost of their investment with today’s grid economics. That’s too bad, because the grid could really use the backup storage capacity to help manage the flood of on-again, off-again power that wind farms and solar power plants will be providing to it in ever-increasing amounts over the next decade. Pike predicts that nearly half of the growth to come in grid energy storage will be to help manage those intermittent power generation resources. Interestingly, Pike has named flow batteries — energy storage systems that share some characteristics with fuel cells, in that they use a pumped electrolyte material to recharge — along with pumped hydro systems as the two top contenders for major growth in grid energy storage over the next decade.
What’s going on with the smart grid in Europe? About €5.5 billion ($7.7 billion) worth of projects, according to this new report on the European smart grid scene from the JRC Smart Electricity Systems, the European Commission’s smart grid research group. Sounds like a lot, but according to the report, it’s only a fraction of the anticipated €56 billion ($78.4 billion) to come across Europe by 2020. So where is Europe ahead of the rest of the world, and where is it lagging? Well, much like the U.S. smart grid buildout, most of Europe’s smart grid investments to date are in smart meters, with less going to distribution grid managements systems and automation. The report also cited a relatively small investment in R&D projects, “suggesting the need to invest in larger scale demonstration projects to gain a better knowledge of the functioning and impacts of some innovative solutions.” In another echo of U.S. smart grid discussions, the report cites a pressing need to get consumers involved in smart grid education and use, “to give consumers the freedom to choose their level of involvement and to ensure data privacy and protection.”
Vehicle-to-grid (V2G) technology — using parked electric vehicles (EVs) as grid batteries — is a no-brainer. Many cars are parked most of the day, which means their expensive batteries sit without payback. Using those batteries to stabilize up-and-down inputs of wind turbines and solar panels offers EV owners a revenue stream to cover plug-in cars’ extra costs. But tapping batteries also presents a host of technical, regulatory and financial challenges that have kept the V2G idea strictly one for pilot projects — until now.
U.S. startup Nuvve says it’s picked Denmark for the world’s first commercial V2G service. The company plans to start with a 30-car collection of EVs with batteries programmed and ready to feed power back to the grid for a few minutes per day. In return, car owners can earn as much as $10,000 over the life of their batteries. Potential partners include 1 million-customer cooperative utility NRGi and Danish transmission operator Energinet.dk.
Why are these developments worth keeping an eye on? Let’s examine a few reasons, as well as a few challenges that Nuvve and every other player in the V2G space faces.
Why Nuvve’s plan could work
Nuvve is choosing a low-stress way to tap batteries. The company isn’t asking its collected EV batteries for a lot of power. Instead, it’s targeting frequency regulation — that is, adding or absorbing small increments of power to keep grid frequencies steady and preserve power quality. In this case, batteries are usually tapped for 2 to 4 minutes at a time, promising vehicle and battery makers that deep and repeated discharges from V2G activity won’t shorten battery life and threaten warranties.
The technology has a track record. Nuvve’s technology comes from the University of Delaware, where lead researcher Willett Kempton and his team have tested it with EV drivetrain systems maker AC Propulsion, grid operator PJM, utility Pepco and demand response company Comverge. That seven-car test showed the technology worked to tap car batteries based on real-world utility commands, a nice proving point for a startup.
Nuvve is targeting the right market. Wind power provides much of Denmark’s power supply, but its wild swings from high to low power output gives the grid major intermittency and stability problem. At the same time, Denmark’s competitive power markets allow small-scale operators to play into frequency regulation markets. Globally, frequency regulation pays out about $6 billion a year, which could grow to $12 billion by 2020.
Why Nuvve’s plan might not take off
Nuvve needs more electric cars to work with. Its technology works better when electric vehicle and drivetrain manufacturers install hardware and software based on its licenses, though it could work with other vehicle batteries. Whether OEMs will build Nuvve’s technology into their vehicles remains to be seen, however. Nuvve’s current plans for 30 cars just barely meet Energinet.dk’s minimum of 300KW to participate in frequency regulation markets. For U.S. grid operators like PJM, the minimum is about 500KW — about 50 to 100 cars, depending on utility regulations.
Nuvve hasn’t landed big partners yet. While Nuvve and other startups have set their sights on V2G commercialization in the shorter term, the big boys in the field — Ford and Microsoft and General Electric and Nissan, to name a few — are playing a long game. Plug-in cars are still on the horizon, meaning that even “commercial” projects of today will be working with fleets not much larger than the test vehicles pumped out for big corporate and national EV projects, such as the big V2G pilot by IBM, Siemens and utility Dong Energy, to name one Denmark-specific example.
Still, Pike Research projects that electric vehicle sales will reach 1.7 million worldwide by 2015, with 640,000 in the U.S., 500,000 in China and much of the rest destined for European shores.Consider the collective power of just 1,000 cars — about 10 megawatts — as a grid resource, and ask yourself, would you pass up that market?
Question of the week
Do green energy marketers really pose a threat to utilities’ monopoly on power? An interesting report this morning says yes, if you’re talking about deregulated markets such as Great Britain. That’s where companies like Co-Operative Energy and Good Energy are trying to eke out customers for green power from the 99.5 percent of power supplied by the country’s six big utilities. In the United States, companies like Green Mountain Energy (now owned by NRG Energy) have constructed similar business plans around selling renewable power (mainly wind) to retail customers — different than the big, block power purchases we’ve seen from buyers like Google. As for how utilities will manage the growth of distributed, customer-owned power generation such as rooftop solar panels or campus backup power generators, that’s where microgrid operators like Balance Energy, Lockheed Martin, Viridity Energy and others want to play. It’s an interesting set of concepts to watch — and still a long way from major market penetration. Most of the United States remains non-competitive, with traditional utility-customer relationships that would make it difficult for new entrants to gain market share for their differentiated power supplies.
India is ripe for smart grid investment — but it’s going to be a very different kind of smart grid than the ones being built in the United States, Europe and China. That’s the gist of a recent “smart grid playbook” report from Smart Grid News, which cited reports that place India as the third-largest potential smart grid market behind the U.S. and China over the next 20 years. But while the U.S. is focuing on smart meters, distribution automation and demand response, and China on its “strong, smart grid” with massive high-voltage transmission lines, India’s grid is far more fragmented, and far less reliable. The country suffers from frequent blackouts, and many large industries build their own power generation to have a reliable source of electricity — a set of circumstances that could make so-called microgrid systems far more attractive in India. Meanwhile, many rural areas lack grid power, which could open the door to clever and cost-effective distributed generation and energy storage systems. As for smart meters, IBM’s energy and utilities chief Guido Bartels notes that “non-technical losses” — a nice way of saying energy theft — remains the top concern of India’s utilities in terms of installing newer, smarter meters. Energy theft is also a big problem in South America, the Caribbean and other developing regions, making up an interesting market for lower-cost, tamper-proof smart meter systems.
Grid energy storage is an expensive and complicated affair, as EPRI’s latest update on the industry indicates. But which combination of technologies and markets can make storage pay itself off today?
It’s Friday, and that means it’s time to kick back with some weekend reading — in this case, the latest grid energy storage white paper from the Electric Power Research Institute. EPRI’s new report (available for download here) goes deep into the nitty-gritty of different storage technologies, different energy and power applications, and different price points in terms of dollars per kilowatt-hour of storage. The take-away finding is that the U.S. energy storage market could grow to as much as 14 gigawatts of capacity, if energy storage systems can be installed for $700 to $750/kW-h and “the energy storage owners and operators could monetize the estimated benefits.” That last part is critical when it comes to bringing batteries into the mainstream for grid storage. Some energy storage projects can balance out at today’s high costs per kilowatt-hour, as VPs from lithium-ion battery company A123 and energy company AES noted at last week’s Green:Net conference. But building beyond these niche applications will require a whole host of technical, economic and policy issues to be aligned to allow batteries that can, for example, provide high-value grid-balancing services as well as longer-term load-shifting capabilities — and capture the revenue streams from both to make the projects pencil out.
The U.S. military is leading the charge in the development of an interesting subset of smart grid technology — the so-called microgrid. This morning, on-site power generation and management company PowerSecure announced the commissioning of its “Smart Charging Micro-Grid” for the U.S. Army — a platform meant to control generators, solar panels, plug-in vehicles and all that power-sucking equipment that Army units use in remote field encampments. A movable microgrid is about as “micro” as these systems get — most are built to control standing infrastructure, such as the U.S. Marine Corps’ Twentynine Palms base in California, which is being outfitted to run independently of the power grid by General Electric. Eaton is also working on a grant-funded military microgrid research project. Last month, the Department of Defense said it would work with the Energy Department’s ARPA-E program to figure out how to generate and store power at more than 500 military installations around the world. Those bases need to keep running during blackouts, which gives them an excuse to spend pretty freely on microgrid projects. While the world microgrid industry was worth about $4 billion last year, according to Pike Research, more integration is needed to make their blend of home-made power and islanding capabilities pencil out against grid power. Hospital distributed power and demand response technology company Blue Pillar is working on ways that U.S. Air Force base microgrids could feed their power back to the grid to help pay for their costs, for example.
Can Oracle help utilities link smarter grid systems and more energy-aware utility customers? That was the subject of an interesting phone conversation I had yesterday with Linda Jackman, Oracle Utilities Group vice president of product strategy and management. Oracle’s been much more of a back-end player in smart grid to date, with its utility customer billing and management platform, as well distribution grid management with partners such as Grid Net and Current Group. But its next steps involve helping utilities manage all the new forms of customer-facing technologies — smart meters, rooftop solar panel management systems, plug-in vehicle chargers and the like — from their back-end systems, Jackman said. Examples include work Oracle’s doing with the Irish utility Bord Gáis Energy, which operates in a deregulated market where retail power providers can offer various plans like pre-pay, time-of-use and variable pricing plans, or a real-time pricing pilot Oracle’s setting up for 200,000 smart meter-enabled customers of an unnamed California utility. Utilities certainly face a lot of challenges bringing their back-office systems up to handle the more real-time interaction that new smart grid technologies can provide.
Backyard batteries that back up nearby homes and businesses as well as the neighborhood grid could provide a lot of value to utilities and their customers, but they come at a high price. Utility AEP’s “community energy storage” (CES) pilot project should help see how the concept pencils out in the real world.