This week I attended the 21st Annual Meeting of the Energy Storage Association in San Jose, California. The meeting broke its attendance record by attracting over 420 attendees, including representatives from electric energy storage (“EES”) technology companies, utilities, venture capital funds, consultancies and government agencies. Key note speakers included Dr. Imre Gyuk of the U.S. Department of Energy, Assemblywoman Nancy Skinner of the California Assembly, Fan Wong of Pacific Gas & Electric, and Vinod Khosla of Khosla Ventures. Over 50 other distinguished speakers presented lectures and materials on various topics including flow battery applications, advanced storage technologies, smart grid interface, lithium ion battery applications, economics and policy, and venture capital markets.
The record attendance at the meeting and reports of successful pilot projects were strong indicators that the EES industry has matured over the past years. The general sense at the meeting was that the EES industry is poised to emerge from the product development stage and move into the commercialization and deployment stage. In order to successfully make that leap, the EES industry must first overcome several hurdles.
Prospective EES customers, including utility representatives, contended that, except for pumped hydro, EES applications are not yet cost competitive and that EES systems must achieve significant price reductions before they can be competitive. Various utility representatives encouraged the EES industry to continue to bring down costs with the goal of becoming cost competitive with gas peaker plants.
Project developers and technology companies acknowledged this reality, but stressed that when comparing EES applications to gas peakers, it is imperative that the market recognize the broad range of combined value streams and utility benefits that EES applications offer. These benefits include:
- Ancillary services and frequency regulation
- Reactive power, voltage, and power quality
- Renewable integration and smoothing
- Multiple hour peak shifting
- Demand response
- Deferred T/D upgrades
- Minimizing spinning reserves
In addition to these benefits, various speakers emphasized the siting and permitting advantages EES enjoys over gas plants. From a land use perspective, EES applications are relatively low impact. Many EES projects can obtain required permits based on a negative declaration and thereby avoid the lengthy siting proceedings that can drag on for years for some thermal generation projects. These siting and permitting advantages that EES applications enjoy translate into reduced costs and quicker development timelines and give EES a distinct advantage over gas peakers.
The future of EES will in part hinge on the development of supportive federal and state regulations. Accordingly, ongoing proceedings at the Federal Energy Regulatory Commission and the California Public Utilities Commission are critical to the future of EES.
Further, EES system providers will face challenges in structuring transactions to finance and build EES projects. Consultants and legal advisors, including Stoel Rives attorneys, are currently wrestling with various options to solve these challenges.
The EES industry will meet again in San Diego for Infocast’s Storage Week on July 11-14, and several Stoel Rives attorneys will be presenting and attending.