The McDonnell Group

Written by Marc Marton

ATLANTA- August 2, 2010 - A day hardly goes by without news of some development boosting the profile of electric energy storage (EES) in utility and energy markets.  Sample headlines from the past week include a battery manufacturer receiving fresh private equity funding; a high-powered public/private consortium securing DOE funding to develop even better batteries; a flywheel technology company announcing a project to provide 7 MW of storage for a Fortune 500 company data center; and yet more DOE funds flowing to a demonstration project for compressed air.

This is all good and indicative of healthy activity in this piece of the energy sector.  EES is acknowledged as a fundamental building block of future smart grid implementations and the more investment made to develop grid-scale applications, the better.  Storage will not only be an enabling technology to merge renewable sources on the grid, it can improve reliability of power transmission, enhance energy efficiency and reduce greenhouse gas emissions.

One barrier that can be addressed right away is mainly perception.  Federal and state regulators regard EES as a type of electric generation hardware rather than as a strategy for maximizing transmission capacity.  Transmission and distribution utility companies are generally barred from integrating EES as an owned asset.  And in most instances, incentives for adding renewables to an asset portfolio exclude EES despite its acknowledged capacity to expand the use of renewables on the grid.  These restrictions need to be lifted and EES has to become a true utility asset category.

Much of the heavy lifting has to be done by various public utility commissions on this score, but they’ll need strong public policy to help clear a path.

In July, “The Storage Technology of Renewable and Green Energy Act of 2010 (S. 3617)” was introduced in the U.S. Senate.  This bill would provide tax credits to qualifying storage projects that are connected to the electric grid.  This is a revision of a bill (S. 1091) introduced in 2009.  In the absence of a larger energy bill, this type of incentive could accelerate EES applications.

It might be wise of Congress to consider adding loan guarantees into the mix along with tax incentives.

Earlier in the year, the California legislature introduced AB 2514, a bill essentially mandating storage as a percentage of state utility assets by 2030.  That approach might not sit well with some utility executives, but the state already has an aggressive mandate for renewable energy sources coming online in the next ten years and energy storage will be important to achieving those goals.

For full disclosure here, it has to be pointed out that The McDonnell Group is the public relations firm of record for Ice Energy, developers of a distributed thermal energy storage device that’s actually ready for prime time.  The company inked a deal in January 2010 to provide a 53 MW, grid-scale deployment of storage units throughout the Southern California Public Power Authority (SCPPA) service territories. SCPPA is able to roll out this program over the next two years - without subsidies or other incentives – thanks in part to an accommodating regulatory environment.  SCAPPA member utilities will maintain ownership of storage units deployed to help cool thousands of government and commercial buildings at no charge to rate payers.  The utilities can justify the investment through reduced peak energy costs and greenhouse gas emissions, and other system savings.

Perhaps the SCPPA project can serve as a model for the rest of the country.  Regardless, EES will be a critical component of the U.S. energy infrastructure and it has to become part of the top level consciousness of regulators and legislators.