POWER May 2015 - 25

DISTRIBUTED GENERATION AND STORAGE
3. Backstop. This 1-MW, 3-MWh lithium-ion
battery storage system in Southern California
was one of five deployed by storage solutions
firm Greensmith in 2014. Courtesy: Greensmith
Oncor-which owns ERCOT's largest grid-
said in November that it wants to install up to
5 GW of storage on its system, but it can't do
so unless the rules are changed.
Oncor's proposal would allow transmisa
variety of opportunities for storage resources
to participate, among them combining their offers
with other demand response and efficiency
measures. " [T]he ability of these resources
to receive revenues for superior performance
provides a new revenue stream that does not
exist under today's capacity construct, " it said
in its filing with FERC.
Market Potential
There's little dispute that battery storage is only
just getting started. Navigant Research projected
in January that the global storage market
would total $68.5 billion through 2024.
" We're seeing several markets move beyond
the 'Will it ever be economic?' stage, "
Zahurancik said. " Not everyone is there yet,
but you have leading markets in California,
New York, and PJM, that have done these
things. I don't think the general market is
there yet, but the progressive leaders in the
industry are there, and they're understanding
this is a better economic solution for some of
the jobs they have to do. "
AES is looking at a number of projects that
are larger than what it's doing for SCE, both
in California and elsewhere, such as Texas,
Arizona, and New York. New York is the No.
2 market for energy storage after California,
though for somewhat different reasons. Both
states offer generous policy support, but in
New York-particularly the New York City
area-the primary impetus is a heightened
concern for grid resiliency in the aftermath
of Superstorm Sandy and the uncertain future
of the Indian Point Energy Center, rather than
booming solar generation. (See " New York's
Reforming the Energy Vision " in this issue
for more on New York's approach to storage
and evolving markets.)
Texas is also considered a fertile market for
storage-assuming Electric Reliability Council
of Texas (ERCOT) rules can be tweaked to
allow energy storage to function economically.
Currently, ERCOT rules prohibit utilities
from owning generation, which is a problem
for a solution that straddles that divide and can
perform functions across the grid. Texas utility
May 2015 | POWER
sion and distribution system owners to auction
off the wholesale generation portion of their
storage resources to independent generators,
who would then sell the generation directly
into the ERCOT market. While, at press time,
the Texas Legislature had not yet taken up the
issue, ERCOT has been looking at revising its
ancillary services market to make it friendlier
to storage. Proposed changes announced last
year would open up the grid-balancing market
to make it profitable for fast-responding
reserve resources like batteries to operate.
In addition, such responsive reserve requirements
will be calculated in the short term,
rather than as a year-ahead market.
Behind-the-meter storage has thus far been
almost entirely confined to commercial systems
designed to reduce demand charges (Figure 3).
But storage paired with solar photovoltaic (PV)
generation is drawing increasing attention. IHS
predicted this year that by 2018, 9% of solar
PV systems in North America-around 700
MW-will include storage. Almost all of these
will be commercial and utility-scale systems
because very few residential customers pay demand
charges, meaning there is no economic
incentive to install storage.
That, however, may change rapidly because
of the pressures on net metering and
its effect on utility revenue. A possible harbinger
of things to come occurred in late
February when Arizona utility Salt River
Project changed its rate structure to include
a demand charge for customers with rooftop
solar. While the intent was to close a
revenue gap, observers noted that the move
also opens the door to residential storage (see
" Fixed Solar Fees Are Tesla's Best Friend
and a Utility Own Goal " on the POWER
blog at powermag.com). Rooftop solar firm
SolarCity immediately sued to overturn the
decision, but it is also poised to cash in on it
through its partnership with Tesla-the two
companies have paired to offer solar-plusstorage
systems. Solar developer SunEdison
is also taking aim at the residential market,
having acquired li-ion battery firm Solar Grid
Storage earlier this year.
While the model of residential storage connected
to solar PV systems has grown more
strongly in Europe than North America-
largely due to electricity markets that make
home storage economic-Europe is about
two to three years behind the U.S. when it
comes to both the pace of grid-scale installations
and manufacturing. Navigant Research
estimated in January that 696.7 MW of energy
storage projects (of all sorts other than
www.powermag.com
4. Island power. French battery maker Saft
announced in February that it will install a 1-MW,
520-kWh battery system on the Japanese island
of Niijima as part of a microgrid project that will
include renewables. Courtesy: Saft
pumped storage) have been announced in the
2014-2015 period. Of that, North America
accounts for the large majority, with 436.4
MW, half of it in California. Asia Pacific,
with 165.1 MW, and Western Europe, with
95.2 MW, lag well behind.
Meanwhile, not long after Tesla broke
ground on its gigafactory, German firm BMZ
announced a similar factory initiative-said
to be Europe's largest-though one with a
projected production capacity of 5 GWh per
year, far less than Tesla's planned output.
While Europe is home to one of the leading
battery storage vendors-French firm Saft-
much of its recent activity has been outside
Europe, such as a 1-MW, 520-kWh system
on the Japanese island of Niijima to be built
for a subsidiary of Tokyo Electric Power Co.
later this year (Figure 4).
Still, Zahurancik is optimistic about the European
market, saying he expects to start seeing
pockets of activity emerging this year and next.
AES is currently developing a 100-MW facility
in Northern Ireland that will be integrated
into existing AES infrastructure at the Kilroot
power station on the country's east coast.
Outlook
Zahurancik said he expects to see battery
storage upend the power sector over the next
few years in much the same way that solar
PV has, for many of the same reasons: falling
costs and dramatically expanded manufacturing
capacity.
" I think we can see growth happen very,
very quickly. I think we're going to see significant
amounts of new storage facilities
coming online across a whole variety of markets, "
he said. " You just don't have the long
construction timeline that you might have
with a big power plant. "
Jung agreed that the potential impact of battery
storage is huge. " It is just such a pervasive
market and set of technologies that are really
going to touch and affect pretty much everything
that is happening on the grid, " he said.
" It's no longer just about batteries in a box. " ■
-Thomas W. Overton, JD is a POWER
associate editor.
25
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POWER May 2015

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