Update from the Road: Energy Storage Times Two

Last week I attended the 6th Annual Storage Week Summit in an uncharacteristically rainy and cool Austin, TX. It was great to see so many NY-BEST members in attendance and as presenters during the two days of sessions. I came away with a pile of business cards, five 'pages' of notes on my iPad and some observations that I thought I'd share here.

The lead-off presentation from ERCOT drove home the point (for me, anyway) that from a grid standpoint, Texas is an island. With a summer peak of over 65,000 MW and ability to interchange only about 1200 MW to surrounding regions through DC links, coupled with rapid growth in wind power production (a record 8,638 MW of wind on Christmas Day 2012 represented 25.7% of the system total 39,847 MW load) and it is clear that Texas holds great promise as a home for energy storage.  Several speakers made reference to the recent installation of a 36 MW (or should that be 72 MW...more on that later) by Xtreme Power and Duke Energy at a wind farm in Notrees, Texas that has been in operation since December of last year. As a side note, if there is a better named location for a wind farm than "Notrees", I'd like to hear about it. The system is one of the largest in the US and was co-funded by the US Department of Energy.

On the second day of the conference, Chris Shelton, President of AES Energy Storage, delivered a keynote in which he rather persuasively argued that energy storage resources on the grid actually provide twice their 'nameplate' rating, e.g. a 100 MW energy storage system provides 200 MW in total flexible resource to the grid--100 MW of generation equivalence plus 100 MW of load resource.  He described AES's experience with an ERCOT resource designation form when they applied to connect a system in Texas. The form had no way to designate a resource as 'energy storage', and required them to designate the resource as 'load' or 'generation' resource. In order to accurately describe the function of the system, AES elected to check both 'load' and 'generation' resource--and each at the full rated capacity of the system. In Shelton's words, "If I build a 100 MW battery, it can be a 200 MW resource, because in the model of ERCOT it is both 100 MWs of generation resource and 100 MWs of load resource." 

I'll admit that my first reaction to this logic was that it was a clever way to effectively double the installed capacity of energy storage world-wide (or, perhaps to halve the cost per MW for that same storage resource) but that the rubric was built more on marketing spin than reality.  Then I thought about it further, and have come to think the idea has real merit and is built on a solid foundation in terms of the value that storage brings to the grid.  The value of a 100 MW generator is determined by how much energy it can deliver to the grid, or 100 MW. Likewise for the value of a load resource--100 MW load is 100 MW.  

Energy storage, however, is both. A single system can 'move' up or down in response to signals from the grid operator or other control system, and that makes all the difference. That one system, in fact, generates value and gets paid to move up...just as it does to move down.  This may seem like a fine point, but it is both inherent to the technology and a unique advantage that delivers additional benefits.  For example, the interconnection to a 100 MW energy storage system (that provides 200 MW of equivalent resource) is, of course 100 MW--but the nature of the energy storage system doubles the value of that interconnection because the resource behind it is both generation and load.

I've been talking about this concept with a number of our members and others in the field, and I have to say that once people stop to think it through, it's tough to argue with Shelton's logic. If enough of us start to adopt this approach and, perhaps a common language to describe it ("equivalent resource?") we just may have found a way to more accurately describe the value of storage.

2-for-1 deals are hard to pass up, aren't they?

John Cerveny (jcerveny@ny-best.org)