Monday, October 22, 2012

Energy storage must be supported in the Energy Bill

There have been many calls for energy efficiency to be supported in the Energy Bill as it is being reformulated, before it is presented again to Parliament next month.

I totally support these, but I would like to add that there must also be support for energy storage.

Energy storage is the next big thing alongside the smart grid. But there is only a passing mention of it in the current draft of the Energy Bill.

Energy storage systems enable electricity generated at a time of low demand to be stored and used at a later time when electricity demand is high. They go hand-in-hand with the development of the smart grid.

Energy storage significantly increases the effectiveness of wind, solar and tidal generated electricity because the energy is time-shifted to peak demand, which strengthens the business case for investment in a renewable generation scheme and means fewer generation plants need to be constructed.

There is another advantage: if storage is located near the point of use, this reduces the need to invest in power delivery infrastructure and reduces transmission losses.

According to a recent Frost and Sullivan report, some energy storage technologies under development also increase the efficiency of the CHP, waste-to-energy plants and distributed gas-based smaller power plants by utilising excess electricity (and heat) to make it available when it is needed.

Finally, storage can be deployed in tandem with virtual power stations and demand-service response. This gives a national grid the ability to tap into backup power and storage owned by any company of any type connected to the grid. This will considerably open up the market for distributed energy supply, with the potential for huge business opportunities.

The UK Government is supporting innovation in this area with a freshly announced £20 million fund for feasibility and demonstration competitions.

This is fine, but we need regulatory change too. The inability of the market to support energy storage at present needs addressing.

There are many competing storage technologies, all of them interesting:

  • Pumped hydro: at present there is only one example in this country

  • Ceramic bipolar batteries, being supported already by the Technology Strategy Board for use with PVs

  • Compressed air energy storage (CAES) and liquid air, where the main challenge is to develop adiabatic (zero-heat loss) compression to improve efficiency

  • Flywheels, which are achieving ever higher speed rotation (e.g. hubless design)

  • Hydrogen, generated from renewable energy, and used in conjunction with fuel cells

  • Liquid metal batteries, a bizarre but fascinating innovation

  • Lithium-based batteries, where developers are improving solid-state conductors, and lifetime

  • Sodium-based batteries, where the challenges to improve durability and electrolytes (including solid-state)

  • Redox and hydrid flow batteries, where the need is to develop low-cost membranes and real-time impurity sensing

  • Supercapacitors, where the challenge is to improve high voltage electrolytes

  • Thermal-to-electric storage, where the energy needs to be quicker to access and convert when required.

The UK’s Low Carbon Innovation Coordination Group estimates that, combined with the smart grid, storage solutions could save the UK £4 - 19 billion in deployment costs up to 2050.

Furthermore, innovation can help create UK based business opportunities that could contribute an estimated £6 - 34 billion to the economy from exporting our know-how abroad up to 2050.

Around the world, new energy storage deployment totaled 121MW in 2011. A forecast from Pike Research projects that this will rise to 2,353MW in 2021. In China, the world’s largest market for renewable energy, which also has the world’s largest electricity grid, GTM Research anticipates that the market for energy storage will grow to a $500 million per year market by 2016.

All of this means that there are great prizes ahead for the companies that deliver the winning solutions.

In America, energy storage is already being supported. Various projects have been funded by the American Recovery and Reinvestment Act (ARRA), with $185 million of public money, which attracted $585 million of private investment.

We risk losing out in this huge global market if we do not back our own companies to the extent that America is doing.

Steven Berberich, the President and CEO of the California Independent System Operator, is of the opinion that "storage plus renewables is a marriage made in heaven".

California has a 33% renewable energy mandate and a cap and trade system starting next year. 12GW of distributed wind and solar power is expected to enter the market. Storage has the ability to cover for when there is no wind or at night time.

"It's the economics of storage we need to sort out," Berberich says.

That’s exactly what the Energy Bill should address. But Berberich believes that frequency regulation is the first market opportunity for energy storage, because it is already economic.

A ruling in the States by the Federal Energy Regulatory Commission (FERC) that forces Independent System Operators to take into account the benefit of storage is making them see its cost-effectiveness when used for this purpose.

Two pilot projects are establishing this near New York: one, run by Beacon Power, uses 20 MW of flywheel power, the other, by AES, uses 8MW of lithium batteries.

Another frequency regulation energy storage project in EastPenn, Pennsylvania, uses 3MW of innovative batteries that look like lead acid but with one electrode containing carbon; a cross between ultracapacitors and lead acid batteries with ten times the cycle life of other batteries.

Ian Ellerington, Head of Innovation Delivery at DECC, said earlier this year that if it was possible to fit energy storage support into the Energy Bill it would be a real boost to the industry.

“The energy system has to make sure it’s cost competitive and if storage can be part of that then it would be good to have the commercial mechanism in place to take advantage of the benefits that can be realised through that,” he said.

The Institution of Mechanical Engineers has also called upon the Government to support electricity storage through market reform. It criticises the “lack of understanding about the flexibility of electrical storage and the wider financial benefits it can deliver”.

The way to do this in the Energy Bill is to introduce a separate market category from generation, transmission, distribution and supply.

This will mean that a market support mechanism can be targeted specifically at storage.

The proposed Capacity Mechanism, whose details require fleshing out, should be used for this purpose.

Last week, Tim Yeo, the head of the select committee on energy and climate change, called for a feed-in tariff to support energy efficiency. A similar scheme could also be an option for energy storage.

The rule change in America that made it possible for energy storage to enter the market was to force suppliers to consider energy storage on an equal basis alongside generation before making a decision on investment. This is another option that could go in the Bill.

Energy storage is an exciting and fast-moving field with huge potential, and an essential part of tomorrow’s electricity supply system.

Not to support it in the Energy Bill would be another missed opportunity.

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