October 13, 2010

What Happens to the Grid on a Cloudy Day?

Most energy investors and utility executives agree that gigawatt quantities of energy storage will be needed to handle the onrush of variable power from wind and solar technologies.

Maurice Gunderson, a partner at venture firm CMEA Capital, believes that grid-scale storage is one of the “game-changers” in the alternative energy battle. (Gunderson has been working in the energy industry for more than 30 years and co-founded the first greentech investing firm, nth Power.)

Utilities are accustomed to the consistent output and always-on availability of coal plants, natural gas plants and nuclear power plants. The problem is that solar power produces zero power at night and wind turbines tend to produce power only when the wind blows.

Solar power and wind energy, the great hopes of renewable energy, are unpredictable, variable and have steep ramp-up and ramp-down curves. In many cases, a wind turbine or solar resource requires having a hydrocarbon resource as back-up.

Energy storage advocates assert that utility-scale energy storage will turn “renewables into dispatchables” and allow utilities to dispense with natural gas-fired back-up.

But which energy storage technologies — compressed air, pumped hydro, flywheels, thermal storage, ice-based thermal storage, flow batteries, hydrogen, fuel cells or the cookbook of battery chemistries will work, and who will pay to build them?

Will the smart grid with its increasing efficiencies and microgrids reduce the need for storage? Some detractors don’t think that storage is necessary — asserting that wind resources averaged out over a large territory will mitigate the variable nature of the wind resource.

Others assert that the price of storage, as expensive at is at the present time, is not worth it and that the practical alternative is to build more inexpensive natural gas plants.

Storage supporters favor policy and legislation that imposes storage technologies on the grid, much like renewable portfolio standards. Others insist that technology, not policy dictate the makeup of the grid.

Utilities and power providers are starting to incorporate storage into the U.S. grid. The proposed utility interconnect, Tres Amigas, looks to use Xtreme Power’s battery technology to furnish energy storage and power management at the Tres Amigas SuperStation, a PE-backed transmission facility linking the Eastern, Western and Texas Interconnections. The storage is being implemented, in part, to integrate variable generation.

It seems intuitive that energy storage would help mitigate variable wind and solar resources. And as prices for batteries and other storage technologies drop, energy storage becomes economically practical. One of the pieces missing from making storage a part of the smart utility grid is legislation and utility commission action. But we are starting to see movement — in fact California just passed an energy storage bill that will mandate energy storage on the emerging smart grid.

What do you think?

Eric Wesoff is a Senior Analyst at GreenTechMedia. Eric’s expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley’s premier venture capitalists.

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