More Discussion on Energy Storage
In today’s discussion on energy storage, senior energy analyst Glenn Doty writes:
As far as who should pay for storage, that’s easy… the storage facility should pay for itself by the value that it adds to the grid. If it cannot do that, then the storage is clearly not worth the benefit.
So, you’re suggesting that storage become a brand new stake-holder in the electricity supply chain? Create a new entity and compensate it according to the value it provides?
That’s an interesting concept, but I’m wondering how practical it might be. I have no idea how we’d begin to sort this out, given that, not only does storage provide benefit to numerous stake-holders, it provides numerous benefits: peak shaving and load balancing, integration of intermittent renewables, frequency regulation and 5 – 6 other “ancillary services.” Not that you need to see this, Glenn, but here’s a good article on this for the more casual reader.
I think the answer lies in re-examining how utilities serve their constituents – not to say that this is politically feasible. But let’s look at this: it’s fine to have RPSs (renewable portfolio standards) that force utilities to integrate renewables. But what we really want is energy efficiency and conservation, i.e., generating and consuming less energy – whether it’s dirty or clean. This will come from things like smart meters and other ways to encourage businesses and consumers to use less electricity and to shift their use to off-peak hours.
Utilities need an incentive to make all this happen. Right now, they have none. They make money chiefly by building some massive thing and getting permission to pass its costs on to ratepayers. It’s really the exact opposite of what we need and want as a society.
You forget the added value of storage where an uninterrupted power supply is needed anyway! How about installing energy storage at hospitals, data centres military facilities and such like where some storage is needed anyway? That way, you just add extra energy giving a longer time off grid permitting peak shaving.
Yes, I overlooked the obvious. See: http://2greenenergy.com/energy-storage-benefit/32683/.
Right now we’ve got wind farms installing storage so that they can fulfill sales agreements without having to go to the market and purchase expensive peaking power when the wind doesn’t blow quite as much as they projected.
Early storage customers are likely to be businesses who can increase their profits by buying cheap off-peak electricity and using it to offset peak power. Just like rooftop solar, there’s likely more price spread at the end user level.
A single business or group of businesses might employ a electricity broker to find them the best price on off-peak.
Utilities will purchase storage in order to use cheap off-peak to avoid paying peak wholesale prices.
I’m guessing we’ll see little of companies springing up just as stored power companies. The other players are going to what those profits.
Craig,
In most of the cases you list here, the benefit is fully priced: The value of peak shaving is reflected by the very high price that grid energy attains as the power plants approach their capacity limits… a storage facility selling power into that grid should make tremendous profit whenever peak shaving would be an issue, as the price of energy might well be above $1000/MWh.
Frequency regulation should be easily priced, as the power companies currently have to spend money on regulating the frequency of their distributed power… they could simply charge a separate price for FR energy than they do for “dirty” energy, and the storage could see the gain…
etc…
I think for places that need uninterrupted power that is extremely clean, there will be sufficient value added that they can justify a large end-use storage system. But for most of us that just are watching TV or typing on word, the power is clean enough, so the massive battery storage simply won’t be justified.
It’s worth mentioning again that a grid which has WindFuels plants plugged into it would have PERFECTLY clean power and would have no integration challenge for renewables, even as wind power exceeds 50%.
Good points. Thanks. And yes, you’re right about WindFuels.