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Behind-the-meter energy storage: A new scheme?

Thu, 01/23/2014 - 15:00 -- Anonymous

Batteries & Energy Storage Technology visited San Diego for NAATBatt 2014 (National Alliance for Advanced Technology Batteries).

I have found NAATBatt to be an agreeable conference. Maybe it’s due to leaving the soggy shores of England for the sunny, warm climes of Southern California, or maybe it was just the warm optimism emanating from the more idealistic delegates who want to play their part in changing the world.

Yet despite this optimism about renewable energy storage - particularly in California - there was a faint hint of bitterness in the air. The good times/bad times of the Federal stimulus in the aftermath of the big crash are over.

Having suckled at the taxpayer teat for the past few years, some battery firms are not in great financial health, particularly the type with a ‘Great White Hope’ chemistry. Since A123 went to the wall, which ultimately resulted in taxpayer-funded factories and expertise being bailed out by the Chinese for a song, battery companies are no longer flavour of the month.

The firms that may have bagged finance in the bad/good old days are struggling to raise capital. NAATBatt attracts exactly this type of start-up.

And why not? There are plenty of large battery companies to sell out to, not forgetting utility companies to tap up for energy storage projects, safe in the knowledge their returns are regulated.

California is the world leader in such energy storage schemes. In October 2013, California Public Utilities Commission mandated 1.325 GW of energy storage by 2020 and utilities like San Diego Gas & Electric (SGDE) are exploring how they should go about it.

Hitherto, SDGE has installed a few megawatts as technology demonstrations. By the summer it will have installed a further 5 MW/14 MWh, including network investment deferments rather than mere technology demonstrations.

But to get to 1.325 GW, it may take more than a few containers of lithium battery packs dotted around the state. SDGE and other utilities are exploring ‘behind-the-meter’ storage, i.e. in the home.

SolarCity already rents used Tesla car battery packs to be used as storage for domestic solar PV for $10/month, but utilities like San Diego Gas & Electric (SDGE) are looking at installing them too.

Domestic energy storage could be useful to utilities to soak up surplus PV storage, but there is also an inherent advantage to storage in its fast ramping capability to balance the grid by reducing inefficient usage of polluting fossil fuel plant as spinning reserve.

The great thing about behind-the-meter storage is it competes with the retail price rather than the wholesale price, potentially making it an attractive option to the hundreds of thousands of Californians with solar PV. With dynamic tariffs, consumers could charge their batteries at off-peak times to discharge at peak load and make significant savings.

Before we get carried away, a significant caveat is California has ‘net metering’, which requires utilities like SDGE to pay retail rates when solar PV production exceeds on-site demand. This somewhat quells the desire for storage; so, too, does the cost of lithium-ion battery packs, especially when compared to a generator.

But one day net metering will disappear; and utilities like SDGE will have to cope with ever more (unwanted) solar PV.

Cynics may view battery storage as the ultimate solution for avaricious energy firms. Not only could consumers be charged more for stored power but, armed with batteries, utilities could potentially control how much they use and when they use it (or face the financial consequences). Whether this could get past the regulators is less certain.

One must remember that electricity markets are not really about getting power to the consumer as efficiently as possible but about getting as much money from the consumer as possible. This maxim will also apply to storage, however well intentioned.

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