FERC Determines That Battery Storage Devices Qualify as Transmission Facilities. Is the Door Open for Other Energy Storage Devices?
In late January, FERC issued an order in response to a filing by Western Grid Development LLC that asked FERC to declare that Western Grid's proposed battery storage devices are transmission facilities eligible for certain rate incentives. Western Grid described its battery technology as 10 to 50 MW sodium sulfur batteries that would be installed at strategic places on the California ISO transmission grid in order to provide voltage support and protect against transmission overloads. In a description that seemed significant to FERC, Western Grid stated that its batteries would only enhance transmission reliability at the California ISO's direction, and that the batteries would not operate or participate in energy markets or provide electricity for commercial sale.
FERC examines energy storage devices on a case-by-case basis because storage devices don't fit squarely within the traditional transmission, distribution, or generation categories of assets. In this case, FERC gravitated to the notion that the battery devices would not provide capacity or energy to be sold in the energy market, and that Western Grid would not retain any revenues outside of the transmission access charge (unlike generators). For these and other reasons, FERC distinguished Western Grid from similar filings (see Nevada Hydro II--pumped storage), and determined that Western Grid's technology will act enough like transmission assets to warrant eligibility for transmission rate incentives. FERC's approval of rate incentives, however, was conditional upon the California ISO approving Western Grid's projects in the transmission planning process.
Although FERC repeated numerous times that its decision was based on the "specific circumstances and characteristics" of Western Grid's projects, the order shows potential for energy storage devices. If such devices can show that they act sufficiently like traditional transmission assets (like capacitors), they may be able to obtain very valuable transmission rate incentives. Whether this opens the door for compressed air energy storage and pumped hydro (but see Nevada Hydro II) is still up in the air, but rest assured that these questions will be at FERC before too long.
DOE Awards $620 Million for Smart Grid and Energy Storage Projects
Yesterday, DOE announced awards of $620 million in American Recovery and Reinvestment Act (“ARRA”) funds for Smart Grid demonstration projects and large-scale energy storage systems. The $620 million is broken down as follows:
• $435 million to support 16 fully integrated, regional Smart Grid demonstrations in 21 states, representing over 50 utilities and electricity organizations with a combined customer base of almost 100 million consumers. The Smart Grid demonstration projects incorporate smart meters, distribution and transmission system monitoring devices and DOE wants the awardees to be role models for the deployment of integrated Smart Grid systems on a broader scale. An additional $1 billion will come from the private sector for a total of $1.6 billion in Smart Grid projects nationally.
• $185 million to fund 16 utility-scale energy storage projects including advanced battery system, flywheels, and compressed air energy systems.
A copy of the DOE’s press release can be found at http://www.energy.gov/news2009/8305.htm
Show Me the Money: $2.4 Billion for NexGen Batteries and Electric Vehicles
48 new advanced battery and electric drive projects will receive a total of $2.4 billion under the American Recovery and Reinvestment Act. The projects, which were selected through a competitive bidding process by the Department of Energy, will support U.S. manufacturing of batteries, electric drive components and electric drive vehicles. The dollar amount of the awards will be matched by the recipients and industry experts believe that the sum of $4.8 billion will create thousands of new manufacturing jobs in the U.S. battery and auto industries.
The awards were divided up as follows:
- $1.5 billion to produce batteries, battery components and to expand battery recycling capacity
- $500 million to produce electric drive components for vehicles
- $400 million to purchase thousands of plug-in hybrid and all-electric vehicles and charging stations.
Show me the Money: $11.8 Million Awarded for Solar Energy Grid Integration
Today, in recognition that solar energy is a critical factor in the President's clean energy agenda, the U.S. Department of Energy (DOE) announced that $11.8 million ($5 million from the American Recovery and Reinvestment Act) will be deployed to five projects related to the development of solar energy grid integration systems (SEGIS). This follows our earlier client alerts regarding funding opportunities for solar technologies.
SEGIS activity began in 2008 with a partnership between DOE, Sandia National Laboratories, industry, utilities, and universities interested in complete system development. Funded projects are related to the integration of solar technologies into the U.S. electrical grid while maintaining or improving power quality and reliability.
DOE announced funding of the following projects:
PVPowered of Bend, Oregon. Up to $3 million is available to fund a project that optimizes interconnections across the full range of emerging PV module technologies through innovative systems integration. This project includes the following partners: PVPowered, Portland General Electric, South Dakota State University, Schweitzer Engineering Laboratories, and SENSUS.
Petra Solar of South Plainfield New Jersey. Up to $2.9 million is available to fund a project that supports improving reliability and resiliency so that high levels of PV integration can be adapted. This project includes the following partners: Petra Solar, University of Central Florida, and fifteen electric utilities.
Princeton Power of Princeton, New Jersey. Up to $2.8 million is available to fund a project that focuses on lowering manufacturing costs through integrated controls for energy storage and the development of new inverter designs. This project includes the following partners: Princeton Power, Transistor Device Inc, LaGuardia Community College, Idyllwild Municipal Water District, National Oceanographic and Atmospheric Administration, Princeton Plasma Physics Laboratory, Premier Power, SPG Solar, and Spire.
Apollo Solar of Bethel, Connecticut. Up to $1.5 million is available for the creation of innovative inverters using energy storage and two-way communications between solar electrical systems and utilities. This project includes the following partners: Apollo Solar, Saft Batteries, the Electric Power Research Institute, and California Independent System Operator.
Florida Solar Energy Center / UCF. Up to $1.3 million is available to solve technical challenges that impede the deployment of higher PV penetration levels in larger scale systems. This project includes the following partners: Florida Solar Energy Center, Satcon Technology Corporation, SENTECH, Inc., Cooper Power Systems EAS, Northern Plains Power Technologies, and Lakeland Electric Utilities.
Energy Storage Developers Call for National Storage Portfolio Standard
On July 13-14, 2009, I attended Infocast’s Storage Summit in La Jolla, California. The conference attracted over 200 attendees.
On day one, Jim Woolsey, Venture Partner and Senior Advisor for VantagePoint Venture Partners and Former Director of the CIA, delivered a keynote address that focused on the theme of the role of energy storage in achieving energy independence and security. Panel discussions included the following topics:
- Bringing Energy Storage to the Power Grid
- State Regulatory Policy
- Revising Regional Market Designs to Facilitate Storage: System Operators Views
- Utility Perspectives on Implementing Energy Storage
- Views of Storage Suppliers: What Policy and Market Change are Needed to Stimulate a Robust Storage Market?
On day two, Dr. Imre Gyuk, U.S. DOE Program Manager for Energy Storage Research, reported on ARRA stimulus funding initiatives and described research funding opportunities. With respect to the challenges facing DOE as it attempts to deploy massive amounts of funding, Gyuk stated, “It’s like trying to drink out of a fire hose.”
Many storage system developers reported that they are having problems “creating value” and monetizing their systems. These developers consistently called for a national storage portfolio standard similar to the RPS for renewable energy. This vibe created a lack of confidence in the attendees that were contemplating entering the market.
There was not much discussion of co-location of storage and renewable projects, but the wind and solar developers in attendance seemed open to the concept of co-location of storage if the price is right.
There was definitely a sense that the market is still in somewhat early stages. However, a few days later, on July 16, 2009, the Federal Energy Regulatory Commission issued a policy statement that identified energy storage as one of four grid functionalities that FERC views as key to the development of future standards that will apply to smart grid technologies. Hopefully, FERC's support of the energy storage industry will stimulate further development and deployment of energy storage systems.
