Energy Storage Journal — issue 7 Winter 2014

Issue 7: Winter 2014

The next utility revolution

Existing business models redundant in a decade It’s payback time TSO study finds lithium ion batteries still too expensive

Lead, glorious lead Why the grid’s future depends on the oldest of battery chemistries

Lost in transmission Italian utilities fight intermittency with energy storage www.energystoragejournal.com

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CONTENTS COVER STORY: UTILITIES’ LAST STAND

26

The coming revolution in the way energy will be delivered threatens the earnings streams of today’s utilities — it could even spell the end of many of them, say some forecasters. But it also throws up some exciting partnerships and new business models

EDITORIAL

4

Finding relevance in the new world energy order

PEOPLE NEWS

6

IPVEA rebrands to Solar United • New president and board for Solar United • John Edward Searle, 1954-2014 • EnerSys reshuffles as Shaffer is promoted • Ovan becomes president of Navitas • Callihan joins Intersolar to head North America sales • Trojan wins award for best India solar work • EnerDel names Altairnano global VP as new chief executive • Ballard appoints former Solar Integrated president MacEwen as new chief executive • A123 Systems makes Hurley new CTO • Sunpower’s Butterfield joins Stem as CCO • sPower expands board with ex-CAISO and SunEdison executives • Californian utility veteran joins Aquion’s board of directors • ViZn Energy Systems appoints two new vice presidents

ANALYSIS

Ast: new president of Solar United (previously IPVEA) 6

11

According to a recent study by the UK’s National Grid, most electrochemical energy storage systems don’t pay for themselves over their lifetime. So why all the interest?

news

14

Potential advantage for lead after study shows cost of lithium ion batteries unlikely to fall below 200MWh-300MWh • Imergy cuts costs of flow battery power to $300 per kWh • Advanced lead-carbon Axion wins solar storage and frequency contract • Energy storage to the fore as large scale electricity generation set to fade, claims bank report to investors • Ergon Energy orders battery storage from S&C • Lead prices to fall near term with strengthening probable in 2015 • SMA and German TSOs partner on project for balancing power with solar PV • Maxwell reveals new supercap • Andalay Solar partners Highpower for ESS • New Vyon materials safeguard from battery explosions • EPRI tests integration of EVs to respond to utilities’ power needs • ABB and BYD partner on energy storage worldwide • Green Charge Networks signs battery supply deal with Samsung SDI • PNNL team develops hybrid Mg-Li battery

OPINION: LEAD ACID, THE GRID’S FUTURE

Grid storage moves to the fore across Europe 32

20

A new generation of expander formulations is creating a new generation of lead acid batteries. The implications are huge.

Italy’s resolves north-south divide over renewables 38

EUROPEAN GRID COMES OF AGE Large scale energy storage moves to the fore in Europe as momentum for change gathers

32

Energy storage offers way to unify renewable power gap in Italy’s north-south divide

35

Forthcoming events

42

HEROES OF THE GRID — CHARLES MERZ

45

A tribute to Charles Merz who originally devised the concept of one transmission system into what eventually became the National Grid

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Charles Merz: creator of the first national grid 45

Energy Storage Journal • Winter 2014 • 3

editorial Sara Verbruggen • sara@energystoragejournal.com

Utilities need to wake up to new world order for power provision It may be odd to apply this quotation to the future of the world’s energy supply. But it’s apposite. ‘Most human beings have an almost infinite capacity for taking things for granted.’

The phrase, coined by author Aldous Huxley in the early 1930s, rings as true now as it did then.

But it has an unexpected relevance when one sees the giant power utilities — those that have dominated the developed world for almost a century — slumbering while their business models start to fall apart.

The challenge of renewables is not just about whether they can save the planet from those troublesome fossil fuels and pesky greenhouse gases.

Because, irrespective of whether you believe in

global warming or not — and, on balance, we do — a revolution in energy generation and energy storage is upon us.

In previous times the electricity customer was, well, the customer. But in the coming decade, the customer will also be the provider.

Grid parity — where PV, for example, is cheaper than mains electricity — and beyond is already achievable in some places and in sight elsewhere.

Get the energy storage package right, something that has yet to properly arrive, then the days of the consumer as provider have emerged.

At which point mass adoption of solar panels will become a no-brainer for domestic home and commercial business alike.

Supplements editor: Wyn Jenkins, wyn.jenkins@serenglobalmedia.com, +44 1792 293 222

Energy Storage Journal — Business and market strategies for energy storage and smart grid technologies Energy Storage Journal is a quarterly publication.

Publisher: Karen Hampton, karen@energystoragejournal.com, +44 (0) 7792 852 337 Managing editor: Michael Halls, mike@energystoragejournal.com, +44 (0) 1 243 782 275 Editor: Sara Verbruggen, sara@energystoragejournal.com, +44 (0) 7981 256 908

4 • Energy Storage Journal • Winter 2014

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editorial he had a vision of what cheap, available power would mean to the country, particularly for the rural poor in the south.

He was prepared to gamble that the costs of building the T&D would pay for themselves.

He saw the social consequences — reversing the flight from the countryside to the city — as something worth achieving.

The first casualty in the way that we integrate renewable energy into our lives will — at least in part — be more about how the giant power companies of the past find themselves becoming irrelevant.

If your power needs can be generated at home — although clearly that may never be the case for large swathes of people — what is the role of the utility?

Does it become the ultimate deliverer of UPS? Or provider of power to a diminishing percentage of the population? Who should pay for the grid infrastructure that provides a service on an occasional basis?

There’s a host of unanswered questions that need to be posed and answered. Every permutation of the laws of unexpected consequences is going to be faced by consumer and utility alike.

But for the moment our almost infinite capacity to take things for granted means that some parts of the industry are sitting complacent while the world is set to fall about them.

If the status quo is no longer good enough, then vision is needed.

When US president Franklin Roosevelt introduced the Rural Electrification Act in 1936 www.energystoragejournal.com

It was a gamble worth taking. And also one that paid off. Those grids bequeathed from brave US politicians and businessmen — however, fault ridden they may seem nowadays — serve as reminders of the huge task that these leaders took on and won.

Similar bold measures were taken across Europe. The UK’s national grid, for example, came about in the mid-1920s by connecting some 120 of the best power plants to restore a stricken economy by providing reliable and cheap power for industry.

And so to 2015.

Some of the utilities appear unaware of the massive challenges that are facing them. Some are trying to adapt to the future — one German utility is moving into a business model that incorporates selling electric vehicles! And some are equally desperately trying to push back the wave of change about to engulf them.

Irrespective of their perceptions, the provision of power and the role of the utility is just about to change forever.

But as ever with change come challenges — and also opportunities.

Sara Verbruggen Editor Energy Storage Journal • Winter 2014 • 5

people NEWS

IPVEA rebrands to Solar United The International Photovoltaic Equipment Association — better known as IPVEA — has changed its name to Solar United, following a membership vote of the trade association in September.

The new name reflects the association’s ambition to become a global business and technology group for the whole photovoltaics industry.

Bryan Ekus, who has been executive director of IPVEA for the past seven years, told Energy Storage Journal: “The name change is important. Over the past years we’ve seen the PV industry go through both good and bad times but the overall theme of the industry is now clearly one of both consolidation and collaboration.

“The lines between who does what — and how they do it — remain important but we all realise that if we want this industry to create the revolutionary changes in the way that the world’s energy storage business incorporates photovoltaics, then we need to emphasise the theme of unity.

“This isn’t mere sloganizing, it’s about how we present an entire industry to both the public and the energy business itself.”

IPVEA members voted on the change of name and rebranding at a board meeting during the 29th EU Photovoltaic Solar Energy conference and exhibition held this September in Amsterdam.

“This organization unifies leaders across the solar industry and associations, and our company is proud to contribute to this important first ever global initiative,” said CSUN’s EMEA general manager Engin Yaman, one of

Bryan Ekus executive director of Solar United

the newest members of the organization.

The decision was also taken to open up Solar United utilities and grid operators. In addition the association wants to facilitate opportunities between national and regional organizations.

“The concept behind IPVEA’s new name expansion is that we want to unite the whole solar industry value chain as well as associated industries through a collaborative approach,” said the association’s incoming president Eric Ast. “The next steps to for Solar United will be to organize strategy committees to focus on the main issues for the solar industry, which will include leaders and experts along the PV value chain,” said Ekus.

The original association was set up in 2008 to represent the interests of production equipment and technology providers in the upstream portion of the PV industry — companies that have invested in developing more advanced production techniques and processes to bring down the cost of solar energy.

These types of businesses, which in-

clude Manz, Meyer Burger, Schmid Group, Jonas & Redmann, M+W, and others, continue to account for the largest portion of the association’s membership base.

While the association will remain focused on technology, Ekus says that expanding Solar United’s membership base and influence will bring about more opportunities for members to promote issues such as quality and reliability to the wider industry.

Many of these initial member companies are also expanding into lithium batteries, fuel cells and energy storage.

Ekus continues to expand the reach of the association. This January he was appointed an advisory board member of GCC Solar Alliance representing SASIA — better known as the Saudi Arabia Solar Industry Association.

The Solar GCC Alliance exists to encourage each of its affiliate countries to pursue independent solar development, while simultaneously providing an infrastructure for international collaboration.

Ekus is also a board member of the Asian Photovoltaic Industry Association. APVIA represents members active along the whole solar Photovoltaic value chain. APVIA aims to encourage technological and economic information exchange, strengthen connection with governments, and to expand the PV market share in the renewable energy sector.

Solar United/IPVEA’s new member companies are: Trojan Battery, Coveme, DSM, EVASA, Hellmann, JinkoSolar, Multi-Contact, Shoals Technologies Group and SolarPV.TV Consulting.

New president, board for Solar United Solar United — then called IPVEA — elected new board members during the association’s annual general meeting held during the Intersolar conference and exhibition meetings in June in Munich.

Eric Ast, global business development manager photovoltaics at Multi-Contact, replaces Sven Jarby from Oerlikon as president of the IPVEA. Richard Moreth from

Vitronic was elected as vice president, replacing Stefan

6 • Energy Storage Journal • Winter 2014

Schiller. Under the association’s article both Jarby and Schiller had reached the end of their terms.

Laura Azpilicueta, from EVASA, was nominated as secretary, Bernhard Krause, from Singulus Technologies, as assistant treasurer while Elke Hoffmann from Jonas & Redmann was reelected for an additional term of three years as treasurer.

Ortrun Asslaender from

ACI Eco-tech term also came to the end of her three year term and did not run for re-election and has joined the advisory board.

Ast thanked past board members for their leadership, as well as vision during the most recent difficult times.

“This has built the foundation for more growth and new opportunities for the association’s members”, said Ast.

www.energystoragejournal.com

people NEWS

John Edward Searle

EnerSys reshuffles as Shaffer promoted

while still energetically leading Saft through some difficult times,” said one senior manager.

Another said: “His French was fluent.

Easily enough to be persuasive — or amusing — in both languages but always with a strong, and to my ears charming, English accent.”

After graduating with an engineering degree from Cambridge University, John traded his technical abilities to making things happen. John joined SAFT in 1990 as a commercial director, first in the UK and then later he steadily rose through the ranks as he moved to France.

In 1999 he was appointed head of the SBG division and in 2002 became in charge of SAFT group’s operational activities. He became president and chief executive office of Saft in March 2005 and also chairman of the management board of Saft Groupe.

“Under his management, the group made significant developments, notably becoming a listed company, accelerating its international expansion, and by successfully developing and deploying lithium-ion technology,” said the firm.

Perhaps his most successful moment was his role in the management buyout of SAFT Batteries in 2003 when the Alcatel subsidiary was bought by private equity firm Doughty Hanson.

Andy Lynch, head of Schroders European Dynamic Growth Fund, later said that he had admired the way that SAFT had coped with the post-buy out environment. “Saft faced enormous challenges after floating. It had a contract for night goggles with the US military, which suddenly turned the taps off. Then the price of nickel for SAFT’s batteries went from $10,000 per tonne to $50,000 per tonne; Yet the management throughout delivered good results and gave investors clear guidance on the impact of the cost of the raw material changes.”

His successor is Bruno Dathis who has been chief financial officer of the group since 2008. Dathis becomes interim chairman of the management board.

He leaves behind his wife of many years Jane, and two daughters.

He was just 60.

John Craig — the face of EnerSys and its predecessor Yuasa for almost two decades — stepped down as president of the company in November but remains as chairman and chief executive officer.

David Shaffer, who was president of EnerSys’ EMEA and Asia operations has been appointed to the newly created position of president and chief operating officer at the parent. Shaffer is widely known and respected in the European energy storage scene and is an active member of EUROBAT. Shaffer, who has over 24 years’ experience in the battery industry, joined EnerSys in 2005.

Craig said the reshuffle was a further element in the company’s goal of reaching $4 billion in revenue by 2018. “This new position is one more element that will help ensure we achieve this objective,” he said.

1954-2014

It is with sadness that Energy Storage Journal has to report that John Searle, chairman of Saft’s management board, died suddenly of a heart attack on September 24. For the past decade John had been the charismatic and much respected face of SAFT. He was also one of the masterminds behind the successful management buy-out of the company from Alcatel in 2003 and responsible for the firm’s steady growth since then.

Alfons Westgeest, secretary general of EUROBAT, the Association of European Automotive and Industrial Battery Manufacturers, told Energy Storage Journal: “all our board members recognize his commitment to the company, his employees as well as EUROBAT where he served many years as vice president. His eloquence, insight and wit shown at board meetings, dinners and in chairing our forum will be very much missed by all.”

Yann Duchesne, president of the supervisory board, said: “John Searle transformed Saft and made it into an undisputed leader in its markets. He was both a visionary and a great industry leader. Throughout his career within the group, John constantly shared his passion, his professionalism, and his values with the teams at Saft.”

However, the tributes to John from his staff were more personal. “He was not just a decent man but a fair and kind man who retained both those qualities

www.energystoragejournal.com

Craig: moving sideways

Shaffer: promotion

Energy Storage Journal • Winter 2014 • 7

pEoplE NEWS

Ovan becomes president of Navitas Navitas, the US energy storage and electronics firm, has appointed Mil Ovan as president. Ovan has over 30 years of experience in bringing new products to global markets, with the most recent 12 years as a founder and CEO of energy storage and renewable energy companies.

“Over the past three years, Ovan has been instrumental in the formation and growth of our company” said Navitas Systems’ founder Alan ElShafei.

“His leadership in the last 18 months as chief marketing officer has continued to positively impact all areas of our products, business divisions, and served markets.

Ovan becomes responsible for overseeing all functional areas of the company.

Before Navitas, Ovan was a principal of Nova Associates, providing marketing and business development consulting to renewable energy and advanced materials companies.

Ovan was previously senior vice president and cofounder of Firefly Energy, an advanced lead acid battery start-up.

Separately, David VanAssche is joining the company as a vice president of operations and strategic programs.

Callihan joins Intersolar to head N America sales

Intersolar North America recruited renewable energy industry publisher Jim Callihan as director of sales and marketing for the region in October.

Callihan, who has nearly two decades of experience in the solar industry, will work with the event organizer’s exhibitors and partners to boost their corporate presence at the show and will oversee event marketing programmes.

Callihan will help grow the energy storage part of the show by tapping into

8 • Energy Storage Journal • Winter 2014

the event organizer’s European energy storage activities, which includes the Electrical Energy Storage exhibition within Intersolar in Munich. He will also work with Intersolar North American energy storage exhibitors.

Callihan says: “Energy storage today reminds me of where solar power was 15 years ago … It took policy shifts, further technology advancement and new business models to expand solar power to its significant place in our energy mix today. However, electrical energy storage with basic technology in place and advancements rapidly on the way, does not have to wait for policy, sales channel development or financing — that has largely been provided by solar power.”

Callihan co-founded the solar industry news site, SolarAccess.com, which was rebranded as Renewable Energy World.

Trojan wins award for best Indian solar work Trojan Battery, the US manufacturer of deep-cycle batteries, and its project partner, Team Sustain, were named winners of the Intersolar “Solar Projects in India” at the Intersolar India conference in Mumbai on November 18.

The companies were recognized for their remote telecom project.

“Trojan and Team Sustain were selected based this exceptional pioneering project in the field of solar building, industrial and commercial use projects based in India,” said the conference organizers.

“Team Sustain’s solution with Trojan’s Smart Carbon battery enhances the ability of remote mobile towers to serve as the communication backbone for rural India, contributing to the region’s development,” said a Trojan official.

EnerDel names Altairnano global VP as new chief exec EnerDel, the lithium ion battery firm formally appointed Michael Canada as its chief executive officer in September.

Canada joined as chief operating officer in January and has worked as interim CEO since April.

Canada has over 15 years’ experience in engineering, operations and project management and strategic planning across the automotive, aerospace and clean energy industries, according to an EnerDel statement. He has worked with global companies such as DaimlerChrysler, Goodrich Aerospace, Harman/Becker Automotive Systems and Praxair.

Before EnerDel, Canada was global vice president of engineering and operations and general manager of Altairnano. There he was involved in commercialization initiatives delivering multiple large-scale grid and micro-grid systems for renewable

integration. Canada launched expansion initiatives in Asia, establishing more than one million square feet of manufacturing space to serve the transportation and stationary markets, said EnerDel. At Praxair, he was in charge of the global engineering group with project P&L responsibilities for 38 facilities worldwide.

www.energystoragejournal.com

people NEWS

Ballard appoints former Solar Integrated president MacEwen as new chief exec

Randall MacEwen took over as chief executive and president of fuel cell firm, Ballard Power Systems, on October 6.

MacEwen has spent most of his career in and around clean energy — and particularly the solar sector — as well as an extensive experience in high-end corporate finance.

Before setting up his consultancy NextClean Tech in 2010, he spent five years at Solar Integrated Technologies, lastly, from December 2006, as president and chief executive. Solar Integrated is a manufacturer and installer of commercial photovoltaic systems.

MacEwen was made company secretary and general counsel of the Los Angeles based firm in September 2005.

Before that he was executive vice president corporate development and general counsel of Stuart Energy Systems Corporation.

MacEwen was heavily in-

volved in the corporate-led Stuart Energy’s $120 million initial public offering, its $23 million acquisition of its largest competitor, based in Belgium, in 2003, its $20 million follow-on public equity offering in 2004, and its $125 million sale to Hydrogenics Corporation, an onsite hydrogen production company, in January 2005.

Solar Integrated Technologies, was bought by Energy Conversion Devices in 2009 but was sold off by its parent following the PV industry down-turn in 2012.

MacEwen replaces John Sheridan at Ballard who is retiring. Sheridan will ad-

vise MacEwen during the transition before leaving the board of directors on December 31.

MacEwen has a legal background: he studied law at the University of Western Ontario in Canada and after graduating in 1995 spent the first six years of his career as a corporate and securities lawyer at international business law firm Torys.

Ballard Power Systems, headquartered in Vancouver, Canada is principally engaged in providing clean energy fuel cell products for a range of applications that include back-up power, and distributed generation.

A123 Systems makes Hurley new CTO A123 Systems, the lithiumion battery manufacturer, has appointed Patrick Hurley as its new chief technology officer. Hurley also becomes in charge of A123 Venture Technologies, the company’s research and development unit which focuses on a collaborative business model for innovation in lithium-ion battery technology.

Hurley brings to A123 both academic and industry experience in transportation applications of advanced batteries, according to the company.

Hurley earned his doctorate in inorganic chemistry from Purdue University in Indiana and then did 2-1/2 years of post-doctoral research at the California Institute of Technology. While at CalTech he focused on multiple cleantech innovations including projects on energy storage materials.

www.energystoragejournal.com

Hurley left academia in 2006 and then worked at Air Products and Chemicals as a senior research chemist.

In 2011 he joined Johnson Controls as a senior strategic technology planner where he was responsible for the identification of new business opportunities for energy storage systems. The following year he was made a director of research and development and xEV segment lead.

In 2013 he won two inhouse Johnson Merit awards for micro-hybrid vehicle platform development team and for a lab project at the University of Wisconsin known as the Energy Advancement Centre.

The centre provides an R&D environment in which scientists, students and faculty have a dedicated space to conduct research, as well as helping Johnson Controls’ exploration and develop-

New A123 CTO Hurley: has explored collaborative business models

ment of new chemistry and technologies for energy storage. Later that year he won a Gold Edison Award for the same project.

Most recently he was executive director of global core engineering in the power solutions division at Johnson Controls.

While at Johnson Controls, Hurley developed a solid network of relationships with academia and government research organizations, says A123. The firm says his role as the industrial liaison for the Joint Center for Energy Storage Research helped him form collaborative relationships with the US Department of Energy.

Hurley will have to integrate the company’s battery development activities in Hangzhou, China. The development organization in China was originally part of the Wanxiang Group’s battery investments before its acquisition of A123 Systems in early 2013. Through this initiative A123 says it is also further expanding the battery chemistry alternatives in its global portfolio by complementing the established nanophosphate product family.

Energy Storage Journal • Winter 2014 • 9

people NEWS

Sunpower’s Butterfield joins Stem as CCO

Stem, the Californian energy storage system supplier, appointed Karen But-

terfield in August as chief commercial officer.

Butterfield has more than 20 years’ experience in the solar power, energy efficiency and utility industries. For the past six years she worked at SunPower Corporation as a director of federal programs and for the past two years as managing director of the firm’s national and federal ac-

sPower expands board with ex-CAISO and SunEdison executives Renewable energy developer Sustainable Power Group has expanded the company’s board and also the senior management team with new appointments.

In September sPower promoted chief financial officer Chip Everest to the new role of president and appointed Bob Foster to its board of directors. Everest is seeking to Other recent board appointments include Jigar Shah, who founded solar services company SunEdison.

Everest will lead projects both in the US and abroad, following sPower’s recent merger with Silverado Power, which increases the company’s portfolio of operating assets to 130 solar projects and a pipeline of more than 1GW. Foster resigned from the California Independent System Operator (CAISO) to join sPower’s board of directors. ISO board members are prohibited by state and federal policy from being affiliated with market participants due to potential conflict of interest.

As an ISO board member, Foster played a key role in establishing California’s adoption of renewables, which included CAISO’s implementation of new

rules for giving clean energy sources equal footing in the market and more efficient grid planning for renewable energy transmission. sPower’s business includes acquiring solar assets in any stage of development as well as buying existing operating solar projects in the US. The company recently expanded into Europe through a partnership with UK solar developer Camborne. Both sPower and Silverado are backed by Fir Tree Partners, a global investment fund.

In 2003 Shah founded solar services firm SunEdison, to adapt and commercialize power purchase agreements for the PV industry. “sPower is an interesting company as it analyses and assesses which stalled renewable energy projects can be developed to completion. This is the only company that buys these half-finished projects. Estimates show that the amount of abandoned solar projects that could be bought up and fully developed could add several GWs of new solar capacity by 2016,” he says.

Shah is also a lead investor at Clean Feet Investors, which includes investments in Stem, an energy storage developer in the US.

10 • Energy Storage Journal • Winter 2014

count team of sales, analytical and business development staff. That team sold to Fortune 500 companies and federal government agencies.

Before that, she worked for Powerlight as director of energy efficiency and Honeywell Utility Solutions as director for sales in the west of the US. Before that she spent 10 years at DMC

Energy, rising to become a regional sales manager.

Stem provides software platforms that combine big data, predictive analytics and energy storage to reduce electricity costs for businesses.

The company’s investors include Angeleno Group, Iberdrola (Inversiones Financieras Perseo) and GE Ventures.

Californian utility veteran joins Aquion’s board of directors Tom McDaniel has been appointed to the board of directors of Aquion Energy, a maker of aqueous hybrid ion batteries and energy storage systems. Aquion is targeting distributed grid-connected and off-grid markets.

McDaniel spent 37 years, including working as chief financial officer and treasurer, at Edison International, which manages $48 billion in assets within subsidiaries that include public utility Southern California Edison and Edison Mission Group, an independent power producer that develops and operates fossil fuel and renewable generation projects in the US. Most recently McDaniel was a director and chairman of the board at Tendril Networks, which supplies smart grid and energy management software services. He is also a director at high output solar panel maker Sunpower Corporation.

ViZn Energy Systems appoints two new vice presidents David Mintzer and Del Allison joined energy storage developer ViZn Energy Systems in September. Mintzer joins the company as vice president of business development and Allison as vice president of sales.

ViZn, produces zinc redox flow batteries for large and grid-scale applications, including replacing gas peaker plants. Recently the company announced that it is ramping up its production lines to meet growing demand for its batteries.

Mintzer was previously vice president of sales at ET Solar and in the past has held jobs in business development, sales and marketing at SolarBridge Technologies and JDSU. Previous companies he has worked for include Newport and Physical Optics Corporation.

Allison, has worked at solar and semiconductor firms, most recently SolarBridge Technologies as well as Achronix Semiconductor and PureEnergy Solutions.

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ENERGY STORAGE FOR THE GRID According to a recent study by the UK’s National Grid, most electrochemical energy storage systems don’t pay for themselves over their lifetime. So why all the interest? Sara Verbruggen reports.

Unpicking the true cost of batteries on the grid It may seems a basic question — but it’s a good one all the same. (And arguably has more relevance than ever. ) Is an energy storage system value for money, particularly one that uses advanced batteries such as lithium ion?

In the past 18 months — from January 2013 to September 2014 — out of an estimated 363MW of grid storage projects being built around the world lithium ion batteries are supplying 169MW of this, according to Navigant Research. This is equivalent to a market share of 46%, followed by sodium sulphur batteries with 35%.

But, according to the National Grid, the UK’s transmission system operator (TSO), an electrochemical energy storage system based on either of these

battery technologies does not pay for itself over its lifetime, when used to supply an ancillary grid service.

The grid operator conducted a case study, published in its 2014 future energy scenarios report, to investigate the potential for electricity storage to become a viable, cost competitive tool, by taking four different grid storage technologies; lithium ion batteries, sodium sulphur batteries, pumped hydro and compressed air energy storage (CAES).

All the technologies are relatively mature and they are all deployed in the UK, mainly in trials. Lifetimes of 15 years for sodium sulphur and lithium ion batteries, 60 years for pumped hydro and 40 years for both above- and

In their 15 year lifetimes neither sodium sulphur or lithium ion batteries recover their costs from providing either reserve service. For lithium ion batteries, the cost reduction for fast reserve and for STOR would have to be in excess of 99% while for sodium sulphur cost the reduction would have to be 85% for STOR and 58% for fast reserve.

NaS battery: comparison of total costs against revenue over 15-year lifetime 225 200 175 Millions (£)

150

below-ground CAES were assumed.

The analysis investigated the number of years that it would take to recover the cost of these electricity storage technologies through revenue from individual reserve services alone — either short term operating reserve (STOR) of say 3MW or fast reserve, 50MW — and the decrease in total plant costs that would be necessary in order to recover costs.

For fast reserve, which emphasises the value of the fast response times of electricity storage, CAES was the only technology expected to recover costs within the asset’s lifetime for both small and large capacity cases.

For pumped hydro, only the small capacity asset recovers its cost within its lifetime.

In their 15 year lifetimes neither sodium sulphur or lithium ion batteries recover their costs from providing either reserve service. For lithium ion batteries cost reduction for fast reserve and for STOR would have to be in excess of 99% while for sodium sulphur cost reduction would have to be 85% for STOR and 58% for fast reserve.

The cost of lithium ion batteries, which make up about half of the cost of an energy storage system, is already falling and more investment in largescale manufacturing will keep driving down costs, by around 30% many are predicting.

But, it is not enough.

Batteries for other purposes

125 100 75 50 25 0 Small Capacity

Large Capacity STOR

Small Large Capacity Capacity Fast Reserve

Total Cost Over Lifetime Revenue Over Lifetime

NaS battery: comparison of total costs against revenue over 15-year lifetime

Source:UK Future Energy Scenarios 2014

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The other way to make expensive battery storage value for money is to exploit the technology’s ability to be flexible, in other words devise ways and means for a block of batteries on the grid to provide as many different services and functions as possible, some of which generate revenues or which reduce costs in other ways, such as saving money on network upgrades.

There is a lot of information from

Energy Storage Journal • Winter 2014 • 11

ENERGY STORAGE FOR THE GRID Li-ion battery: comparison of total costs against revenue over 15-year lifetime Li-ion battery: comparison of total costs against revenue over 15-year lifetime 400 400 350 350 300 Millions Millions (£) (£)

storage pilots, around the world, about how well battery storage systems on the grid perform in terms of different tasks or services, but comparatively little on business cases for these types of assets. (See chart for conventional and once proven successful calculations.)

A 6MW/10MWh lithium battery storage system in the town of Leighton Buzzard, about 70km outside of London, is trying to prove the value of storage over a 10 year period.

Primarily the battery system, operated by distribution network operator (DNO) UK Power Networks, will defer conventional network reinforcements. Like many urban areas outside of big cities like London, Leighton Buzzard’s energy demand among the local homes, services and businesses are rising, albeit gradually and steadily.

12 • Energy Storage Journal • Winter 2014

250 200 200 150 150 100 100 50 50 0 Small Large Capacity Capacity Small Large Capacity STORCapacity STOR

0

Small Large Capacity Capacity Small Large Fast Reserve Capacity Capacity

Total Cost Over Lifetime Total Cost Revenue Over Lifetime Over Lifetime Revenue Over Lifetime

Fast Reserve

Li-ion battery: comparison of total costs against revenue over 15-year lifetime • Source:UK Future Energy Scenarios 2014 PHES: comparison of total costs against revenue over 60-year lifetime PHES: comparison of total costs against revenue over 60-year lifetime 3,500 3,500 3,000

Costing projects

3,000 2,500 Millions Millions (£) (£)

Before the storage project began, there were plans for the construction of a 20km cable to ensure the network could handle local peak demand in the coming winters. Works would have had to have started about 18 months from now. The cost of doing the cable work is about £6 million ($10 million), though the analysis used by the DNO is based on net present value pricing — what it would be if works had begun in 2016 — so this cost is calculated at £5.1 million.

Again, based on net value pricing, the energy storage project cost is £16.8 million. Over two thirds of the funding has come from Ofgem through its Low Carbon Network Fund scheme.

The project is a first of its kind. If the system were to be built as a real, commercial grid investment, in 18 months from now, with all the necessary software and other development work completed and without the various associated research and dissemination aspects UK Power Networks estimates the project cost to be £11.5 million.

However the analysis also factors in further cost reductions of £3 million related to technology that are expected to occur between doing the installation in 2014, versus carrying out the installation in at the latest point in time when intervention would be needed.

Still, building the storage system solely for works deferral is a more costly alternative to building a 20km cable.

To help pay for itself the asset has to be able to generate revenues from grid services. Over the course of a typical year, in the winter months more of

300 250

2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0

Small Large Capacity Capacity Small Large Capacity STORCapacity STOR

Small Large Capacity Capacity Small Large Fast Reserve Capacity Capacity

Total Cost Over Lifetime Total Cost Revenue Over Lifetime Over Lifetime Revenue Over Lifetime

Fast Reserve

PHES: comparison of total costs against revenue over 60-year lifetime

Source:UK Future Energy Scenarios 2014

the battery bank’s capacity is used for peak shaving. However, during other parts of the year more of the batteries’ capacity is freed up for providing grid services.

These are primarily frequency control demand management, fast response and STOR. UK Power Networks has compared costs of doing these different services and also fast reserve only, where revenues are expected to be higher, in the region of £3.6 million for the 10 year period.

For providing the mix of services equally the revenues are calculated at £2 million. The risk of providing one type of service is the likelihood of missing contracts. Part of the project is to understand how the batteries have to be operated to be able to move between supplying these different services.

Estimates of the revenues are conservative and they may well be higher over the next decade. Over the course of the project, which ends in 2016, it is expected that the value of different services will change, which can give

a more accurate sense of what they will be over the 10 year period. These changes will be reflected in progress reports published every six months, with the next one due in December.

If the system can be used to play a part in supporting transmission system-related activities such as helping to manage frequency stability with voltage control, further system cost savings in the region of £2.5 million are also possible.

The system can also provide other services, collectively known as tolling, where the energy supplier in the project, Smartest Energy, provides UK Power Networks, the storage system operator, with an operating profile over a time period and the storage asset follows the profile for a fixed fee.

The tolling package can include, for instance, arbitrage and triad – demand — charges by the National Grid to customers. These are not as significant as the revenues from ancillary grid services so are not included in the analysis but further show how storage systems can have multiple revenue

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ENERGY STORAGE FOR THE GRID

Conventional and once proven successful cost assessments • Source:UK Future Energy Scenarios 2014

streams and customers or beneficiaries of the services they provide.

UK Power Networks’ project manager Nick Heyward, is careful to avoid making any big proclamations at this stage in the project about how much the system can save and believes there is still scope for cost reduction by the energy storage industry.

How to extract value

According to Andrew Jones, at the project’s contractor S&C Electric, the National Grid’s analysis, while not inaccurate, fails to acknowledge the full potential of battery storage systems, or acknowledge that prices for market services fluctuate and change and that the cost of battery storage is coming down.

Depending on the demand requirements of Leighton Buzzard, by 2017 a decision will be made on whether to extend the storage system. If lithium ion technology was to be selected, battery costs will likely be a third of what they were when the system was procured. He says: “A year ago,

lithium ion cost £1100 per kWh, today, the cost is £600 per kWh and by 2017 they could be £400 per kWh. These batteries also come with a performance guarantee of 20 years. The technology is more proven so the industry can provide more assurances in this respect and that means that system payback terms are longer.”

There are also intangible benefits to consider too. Storage increases the options available to utilities. “Any potential intervention in the network depends on how quickly demand evolves locally and we’ll know by 2017 if more storage is required for covering that peak or if conventional works are needed. We have that option,” says Heyward.

Also, if the storage project had not have happened and the only option was to install a 20km cable, this would have crossed many boundaries requiring several years of planning and involving various different departments and agencies even before construction. In comparison storage systems can be developed and installed in less

time and entail less disruption.

But, to extract maximum value from storage the different business cases and revenue streams have to be considered. “A very simplistic analogy is a timeshare. One person builds a holiday home that they only intend to use for the summer months and another person builds a holiday home that they only want to use over Christmas.

This is an expensive way to go about it, when building one property and having a timeshare agreement would halve the cost.”

The Leighton Buzzard battery bank is a first, because it is putting to rigorous test the often cited claims that batteries on the grid are flexible and provide multiple benefits and services.

“As well as utilities in the UK, we’ve had interest and visits from all over the world, from utilities in Australia, Japan and Europe.

“Lately, the enquiries suggest more concrete plans at some of these are underway because we are being asked about things like how to approach planning,” says Heyward.

Device

Cost reduction required for STOR

Cost reduction required for Fast Reserve

NaS Li-ion PHES CAES below ground CAES above ground

80%–85% >99% 15%–17% 67%–71% 51%–53%

52%–58% >99% 0%–41% No reduction required No reduction required

In order to recover costs during the lifespan of each technology, assuming revenue and cost of electricity remains fixed, this table shows the required reductions in total plant costs.

Source:UK Future Energy Scenarios 2014

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Energy Storage Journal • Winter 2014 • 13

NEWS

Potential for lead as study shows cost of lithium ion batteries unlikely to fall below $300/kWh Carnegie Mellon University researchers revealed in October that the cost savings associated with manufacturing a high volume of batteries for electric vehicles may be nearly exhausted.

The implication for other battery chemistries is that if the mass production of lithium ion batteries needed for EVs cannot achieve the cost recductions that automotive manufacturers seek then a similar picture might emerge for grid storage.

Mass production lowers cost, say the researchers — but only up to a point. Moreover, government subsidies have only disguised the reality behind the production prices.

“Electric vehicle batteries are expensive,”

says Jeremy Michalek, a professor of engineering and public policy and lead researcher. “Federal and state governments have been subsidizing and mandating electric vehicle sales for years with the idea that increasing production volume will reduce costs and make these vehicles viable for mainstream consumers.

“But we found that battery economies of scale are exhausted quickly, at around MWh200-MWh300 of annual production.

Past this point, higher volume alone won’t do much to cut cost.”

The research findings, if true, have huge implications for the entire energy storage industry.

Imergy cuts costs of vanadium flow battery power to $300/kWh Imergy Power Systems, the US flow battery firm, has introduced the ESP30 series, a new generation of vanadium flow batteries that it claims lowers their cost from the “industry benchmark of $500 per kWh to under $300 per kWh. The increases the performance and flexibility of energy storage systems for utilities, renewable energy projects, microgrids, and commercial and industrial customers.

The ESP30 series has a power capability of up to 50kW and can store up to 200 kWh of electricity.

It is the first battery from Imergy to use secondary sources of vanadium like mining slag, fly ash, and other environmental waste.

Customer deliveries of the ESP30 will begin in November in the US and India for microgrid applications.

“This new model represents an exponential step forward in vanadium flow battery technology,” says Bill Watkins, chief executive of Imergy Power Systems. “The additional power capability and capacity of the new ESP30 series makes this battery one of the lowest cost storage options for solar arrays, wind turbines, and behind-the-meter grid applications.

“In addition, the minimum 20-year cycle life of the electrolyte and the residual value of the vanadium deliver a phenomenal value for the customer.”

Lead prices to fall near term with strengthening probable in 2015 Lead fundamentals, which remain bullish in the medium term thanks to its key industrial uses, are set to continue to improve. In the short term, however, the market has returned to a supply surplus and is expected to end the year flat following its inability to hold price gains, according to Lead Analysis and Forecast for Q4, a report produced by Basemetals.com It outpaced fundamentals, following speculation of a supply squeeze next year when several large zinc/lead mines reach the end of their productive lives. With

14 • Energy Storage Journal • Winter 20144

lower mine production growth expected next year and organic growth likely to continue to fuel consumption, the lead market is seen moving into a deficit of around 130,000 tonnes in 2015.

“Global demand has continued to fall this year, down 58,000 tonnes on the first seven months of the year, according to the World Bureau of Metal Statistics.

This is an interesting trend — with the major economies returning to strength, we would have expected lead demand to rise.” This may prove prohibitive in the medium term to lead acid battery makers.

Advanced lead-carbon Axion Power wins solar storage and frequency reg contract Axion Power International, the US developer of advanced lead-carbon PbC batteries, was designated at the end of October as the supplier of energy storage and frequency regulation for a solar farm that in Pennsylvania in the US. Axion Power PbC PowerCube technology has already been admitted to connect with the 13-state PJM power grid, and brings that certification to the Coatesville Solar Initiative project.

Phase I & II of the multi-phased project consists of two 2.4MW DC solar facilities, generating approximately kWh6.3 million from the 48 acre site which CSI has contractually agreed to sell to the Coatesville Area School District through a 25-year solar power purchase agreement According to CSI, when completed, the MW9.1 solar farm will be the largest solar park facility in Pennsylvania.

Axion chief executive David DiGiacinto said: “The Coatesville Solar Initiative is a major milestone in industry acceptance. A solar farm that will generate more than 9MW of electricity is an important step for the renewable energy industry in Pennsylvania. Axion has spent nearly a decade developing PbC batteries and technology, and we have 13 patents protecting our batteries.”

Meanwhile, Axion’s PbC batteries are en route to finding better acceptance with their use in road haulage vehicles where the potential savings in fuel are predicted to be huge.

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NEWS

Days of large scale electricity generation to end in a decade UBS, the multinational banking giant, reckons that a tipping point in energy storage and generation could arrive as early as 2020. At this point large-scale, centralized power stations could start to become a thing of the past.

The bank’s analysts, in a report to their professional investors, say they expect photovoltaic technologies, cheaper energy storage and the rise in electric vehicles to signal the end of power stations with the transition likely to be complete within 20 years.

“Solar is at the edge of being a competitive power generation technology,” said the report.

“The biggest drawback has been its intermittency. This is where batteries and electric vehicles come into play. Battery costs have declined rapidly, and we expect a further decline of more than 50% by 2020.”

Centralized power stations, the briefing said, are too big and inflexible to continue to service the power needs of future generations. The authors of the report instead suggest that households and businesses will increasingly find it cheaper and easier to generate and store their own.

The report said: “By 2025, everybody will

be able to produce and store power. And it will be green and cost-competitive, ie, not more expensive or even cheaper than buying power from utilities.”

The report urged UBS’ financial clients “to join the revolution”, identifying solar as the technology that will be the most disruptive to the status quo.

The combination of cheaper energy storage — irrespective of the chemistry used to store that energy — caused by greater PV efficiencies as well as mass produced electric vehicles suggest that a financial return on a home solar PV system could be as little as six years.

It suggested too that this return on investment could be made without the need for government subsidies.

Separately, a recent report by the International Energy Agency predicts that worldwide renewable power generation will exceed that from gas and be twice that of nuclear by 2016. It will make up almost a quarter of the global power mix by 2018.

Developing countries, with China at the forefront, are expected to account for twothirds of the global increase in renewable power generation by 2018.

Green Charge Networks signs battery supply deal with Samsung Samsung SDI will supply Green Charge Networks with up to 25MWh-worth of lithium ion batteries over the next two years.

The contract, which the firms signed in September, guarantees Green Charge has adequate supply of batteries as it seeks to expand its leading position in the growing market for intelligent energy storage.

The company says its order book has doubled in recent months, in the wake of securing in excess of $50 million from investors to fund its business of installing no-money-down energy storage systems for commercial and industrial end-users across retail, hospitality, schools and municipalities.

Green Charge Networks has been qualifying Samsung SDI’s batteries for more than a year in its Greenstation energy storage systems. chief executive Vic Shao says: “We’ve gotten through the R&D phase, and finally have a cookie cutter approach and process that can be scaled and that, in turn, needs partners with scale.”

Green Charge Networks is one of a growing number of energy storage providers, including Germany’s Younicos and Green-

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smith, in Maryland, using Samsung SDI’s batteries.

For Green Charge Networks, Samsung SDI’s batteries are supported with a 10 year warranty. “This means a great deal to a company like ours, which does not have a large balance sheet but Samsung does,” says Shao.

He believes that aligning with established industrial manufacturers and partners can give his company credibility with investors, customers and various other stakeholders, in a market that is fast attracting high-tech start-ups from Silicon Valley.

For 14 years Samsung SDI has been producing lithium ion batteries, in significant cumulative quantities, for consumer electronics, transport and stationary storage markets. Recent projects include supplying 2MW of batteries to Italy’s national transmission grid operator Terna, with partner Younicos.

In October 2015 China’s largest automotive lithium ion battery factory, in Shaanxi province, will come online, financed with a $600 million investment from Samsung SDI. The plant will supply over 40,000 EVs annually.

Ergon Energy orders battery storage from S&C Electric S&C Electric is to supply Ergon Energy with 20 lithium ion battery storage systems for the network in Queensland, Australia, following a deal announced in October.

Ergon Energy, which manages the network in the state of Queensland, will install the grid utility support systems (GUSS), together amounting to 2MWh of energy capacity, in 2015. The GUSS units will use lithium ion batteries, battery management systems and enclosures from Saft.

S&C has been working with Ergon on the project close to two years. In 2013 Ergon piloted prototypes of the system in the far north Queensland region.

The systems, each 100kWh in size, will improve the quality and reliability of electricity supply to rural customers on constrained single wire high voltage distribution voltage lines, called single wire earth return (SWER).

The batteries will be installed wherever there are long SWER lines suffering power quality problems, managing peak demand, and will be connected via a dedicated transformer.

Each unit is 5m long by 1.8m wide and is 2m tall.

Ergon wants to install hundreds of battery storage systems on its SWER network in coming years, which could reduce the cost of upgrading this part of the network by more than 35%.

Traditional network upgrades to reduce constraint on SWER lines can cost more than A$2 million (€1.4 million).

Energy Storage Journal • Winter 2014 • 15

NEWS

ABB, BYD join forces Power and automation equipment supplier ABB, announced in September, a collaboration with Chinese battery maker BYD. The global tie-up will see Switzerland-headquartered ABB combine its products and technology for grid storage, EV charging and integrated marine systems, with BYD’s expertise in battery technology.

Grid-connected energy storage, microgrids, solar power and marine are the main applications the partnership will focus on, which builds on earlier cooperation in the field of EVs. Earlier this year ABB launched its EV fast chargers in China for the Denza model, which has been developed by BYD’s joint venture with car OEM Daimler.

In recent years ABB has made a number of strategic acquisitions, including Australian flywheel firm Powercorp and global inverter supplier Power-One, to help position itself in new markets such as microgrid and energy storage.

The company is going after microgrid projects in the range of several kilowatts to several megawatts, in the Americas and Asia as well as specific opportunities in Africa and other parts of the world where access to electricity is still a challenge, according to ABB’s CTO Claes Rytoft.

“We are looking at various market segments including islands, for example the Mediterranean and Caribbean, residential, remote energy-hungry industries such

as mining. Places like Africa or India offer a large potential in terms of off-grid projects while grid-connected applications are developing in North America, such as campuses,” he says.

During the company’s capital markets day presentation in London in September ABB said it would also invest more in expanding its services business and this includes remote services for microgrids.

Rytoft says, “We view energy storage as a strong enabler for microgrids and renewable energy motivating our partnership with BYD. Energy storage, including, but not only limited to batteries, is often required to offer grid stability to off-grid systems while increasing the amount of renewables.”

SMA and German TSOs partner on balancing power, solar PV A new project in Germany, PV-Regel, led by inverter maker SMA, will investigate how PV systems, large and small, can provide balancing power to keep the grid stable.

The €3 million ($4 million) project, which began in October, will run for nearly three years. The other partners are energy firm Gewi and the Institute for High Voltage Technology and Electrical Energy Systems, within the Technical University of Braunschweig.

Germany’s four German transmission system operators, Amprion, Tennet, TransnetBW and 50Hertz, are also taking part.

Because the market for balancing power is dependent on centralized production structures size is required to take part. PV-Regel will research balancing power using eventually thousands of individual pooled residential PV systems, as well as systems for large solar power plants.

The inverter is the central element in providing balancing power, but other components, including communication technology, pooling/aggregation, as well as storage, will also be investigated.

SMA says the findings will develop further offerings for the market.

Grid management functions and system services delivered by solar installations already include reactive power supply in order to maintain grid frequency or compensate local reactive power consumption.

As decentralized power capacity on the grid grows, new functions will be added to enable the solar installations to secure grid stability, such as coordinated reactive power supply, targeted use of active and reactive power for frequency and voltage maintenance, as well as blackstart capability after grid failure.

New Vyon materials safeguard from battery explosions Porvair Filtration Group has developed hydrophobic Vyon flame arrestor vents to its product range for use by battery manufacturers to safeguard them from potential explosions in lead acid batteries.

Vyon sintered porous plastic materials offer excellent chemical compatibility, exceptional strength and are resistant to most acids, said a company official. The new super hydrophobic material means that it will not wet out, preventing gas venting. Versatile, strong, and efficient, it will also reduce the likelihood of acid spillage, Vyon says.

Porvair’s battery vents have been used to release excess gas from lead acid batteries during operating cycles and prevent flame ingress into the battery. The creation of a flow path, by which gases released through the valve element can escape from the battery, prevent propagation of any potential flames.

Porvair, which has supplied the process industry with filtration equipment for over 25 years, manufactures in both the US and the UK and has a network of sales offices and distribution channels throughout the world.

Andalay Solar partners Highpower for energy storage Andalay Solar, a manufacturer of integrated solar power systems, announced a collaboration with Highpower International, a manufacturer, of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries,

16 • Energy Storage Journal • Winter 20144

to launch a pilot project that will provide energy storage systems for Andalay Solar customers.

Highpower’s energy storage system has six 2.4KWh lithium-ion battery modules and an output inverter that

allows for expandability. For the hybrid system, when combined with Andalay’s integrated solar system, energy will be generated both by the solar system as well as by the utility grid network.

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NEWS

EPRI tests integration of plug-in vehicles for utilities’ power needs

Eight international car manufacturing firms and 15 US utilities took part in the first demonstration of an open software platform in October, to allow the batteries in plug-in electric vehicles to respond to the grid’s supply and demand needs.

The test, which was held in California, is a part of a project, led by the Electric Power Research Institute (EPRI) and Sumitomo Electric Industries, to develop a central software platform that will allow PEVs to collectively respond to requests from utilities to help manage the high demand on power grids at peak times.

This demonstration represents a major milestone toward implementing a common interface communications architecture that meets the needs of utilities and equipment manufacturers while simultaneously benefiting electric vehicle owners and electricity users, says Dan Bowermaster, manager of EPRI’s Electric Transportation Program.

Seven different plug-in vehicles — a Ford Focus Electric, a GM Cadillac ELR, a BMW i3, a Mercedes-Benz Smart ED, a Toyota Prius Plug-In, a Honda Fit EV and a Chrysler RAM PHEV — took part in the demo,

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which lasted one hour, to show the cars’ ability to accept a grid signal from a single utility for a demand response exercise. Each car simultaneously took a signal from the Sacramento Municipal Utility District, to stop and then resume charging.

The vehicles at the demonstration reflect the range of communications technologies that can be used to connect electric cars with the smart grid, such as wired communications through the charging plug and telematics/wireless communications through a cellular modem in the vehicle.

The OEM central server architecture has been designed to accommodate the different communications, to allow for the widest participation between vehicles and the grid.

The ability to integrate charging with the nextgeneration grid is a key challenge we need to meet, says Doug Kim, director of Advanced Technology at Southern California Edison, which was one of the project’s utility participants.

The adoption of standardized interfaces could provide maximum ease and flexibility for PEV owners.

Some vehicles required additional software controls for communication, but the hope is, if the pilot is successful, these controls will be built in to future models.

The secret sauce to the OEM central server is that it is able to act as a single gateway interface to both the wired and wireless connections to the vehicles. Some of the demo vehicles are in production today, some are near-production prototypes, says Ford’s Dave McCreadie who is leading the car maker’s collaboration in the project.

The successful rollout of the EPRI’s open software EV-to-grid platform depends on consumers seeing the benefit financially.

Many of our PEV customers are environmentally conscious, so the idea of being able to support the grid in a way that will create less waste will be a selling point to some, but others may need a different incentive. “Our first challenge is to continue to expand the use of PEVs — we are on a good path with more than 250,000 being driven in the US,” says McCreadie.

The project was launched in mid-2014. The car makers are: BMW, Chrysler, Ford, General Motors, Honda Mercedes-Benz, Mitsubishi and Toyota. The utilities were Austin Energy, CenterPoint Energy, Commonwealth Edison, Con Edison, CPS Energy, DTE Energy, Duke Energy, Manitoba Hydro, Northeast Utilities, Pacific Gas & Electric, PJM Interconnection, Sacramento Municipal, San Diego Gas & Electric, Southern Company, Southern California Edison, and the Tennessee Valley Authority.

Scaling up the demonstration will require new elements to be considered that are not part of the initial technical proof-of-concept shown this October. They include geographic diversity of vehicles and the utilities that serve these areas, as not all utilities have the communications capability to interface with the OEM central server.

When this is rolled out to electric car customers, there will need to be systems in place for billing, or settlements, and exchange of information. Data privacy and security will also be of importance.

For Ford, the next steps

are testing the programme to ensure it is robust and expand the rollout with willing plug-in car owners, while adding more functionality and capability to the basic platform architecture.

In 2015 other use cases that will potentially be added include real-time pricing, renewable energy signals, aggregation and facility energy management system integration.

The EPRI-led programme, at this stage, is only for the automakers and utilities that have agreed to take part, though all PEV automakers can join. Vehicles from manufacturers that are not participating in the OEM central server project may still have the ability to interact with the smart grid, depending on their communication method and the utility territory they are in.

Some forms of smart charging can be accomplished through special charging stations.

The process for managing PEV charging will be transparent to the vehicle owner.

Vehicle owners maintain ultimate control and would have the option to participate in a demand response and load management programme managed either by the utility or by a third party, or opt out altogether.

In the next development phase, the EPRI team will be integrating the PEV communications platform with residential, fleet, and commercial facility energy management systems. This will enable testing of its ability to manage local control scenarios such as demand management for commercial and industrial consumers.

Additionally, it will enable interface communications for charging stations and commercial demand response facilitators.

Energy Storage Journal • Winter 2014 • 19

POINT OF VIEW Terry Murphy explains how a new generation of expanders has made it possible to create batteries that allow a high degree of charge acceptance while at a partial state of charge — a game changer in the way that lead acid batteries will be deployed in the coming years.

Lead acid to lead the way to the promised land of energy storage for the grid Terry Murphy, chief executive of the Hammond Group, has a long association with the lead acid battery business — his background in the industry goes back to his college days when he worked at the Hammond Group, packing 50lb bags of lead oxide, during the summers to pay for tuition.

His first major job after graduation was working on the space shuttle main engines which brought him into indirect contact with lead batteries — but not as most of us at ELBC would recognize them. It was lead telluride — which used as a thermo-electric couple converts temperature differences into voltage, a system recently launched on the Mars Curiosity Rover, which is rolling on Mars today.

But if his first professional connections with lead and energy storage verge on the arcane, that’s not the case any longer. In October last year Murphy took over as president of the Hammond Group — a company that is very much at the cutting edge of the lead acid battery business.

What does prove fascinating, however, are the parallels Murphy makes between his far-off days with Rocketdyne a Californian company that built the propulsion and power systems for NASA — he spent 25+ years there — and the modern lead acid battery community.

NASA forged a technology that eventually changed the way that we look at space. Similarly too, advances in lead battery design, will change the world’s energy storage picture completely, he believes.

“We’re facing a new frontier and only just glimpsing the potential of advanced lead acid batteries,” he says. “I can think of two areas that are going to change in the coming years — en20 • Energy Storage Journal • Winter 2014

ergy storage at the grid level and the automotive sector. “A perfect example of this is the introduction of 48V lead acid batteries and a new generation of stop-start cars for all needs and climates could emerge with lead as the standard.”

Hammond itself is in the process of repurposing one of its own facilities outside Chicago which will add some 50,000 square feet dedicated to R&D. Murphy believes that its research in expanders — he calls the arrival of its K2 product as a “complete gamechanger” — is just one step along a much more complex path for the firm.

“We’re going beyond highly engineered expanders,” he says. “Traditional expanders used to have three components to them but now they have six or more. But we’re looking at better grid metals, greater varieties of additives, new lead alloys, additive manufacturing techniques and new battery geometries.”

The ability to choose battery types will become increasingly evident.

“Five years ago, if you wanted a battery, it was very much a commoditized product,” he says. “Nowadays, we’re ambitiously looking for an 80% increase in performance for 20% of the

“Five years ago, if you wanted a battery, it was very much a commoditized product. Nowadays, we’re ambitiously looking for an 80% increase in performance for 20% of the cost of a lithium ion battery. www.energystoragejournal.com

POINT OF VIEW cost of a lithium ion battery.

“Products such as our K2 expander, for example, opens up a new world of business of offering tailored solutions which, as we did years ago, looked at producing the best for the whole system and not just one part of it.”

Murphy believes that the lead acid battery industry is about to see a revolution in the products that it can offer and he believes that grid storage, which has highly specific needs beyond simple energy storage, such as load leveling or frequency regulation, will be a major beneficiary of the energy revolution that renewables will provide.

The latest IEA figures show, if hydro, is included that almost one electron in five is a green one and the trend is growing exponentially.

“The grids of the future are going to be based on renewable energy and our next generation of lead acid batteries will underpin it. UPS for telecom cell towers, peak shaving to reduce demand charges, electric fork lifts, e-bikes. The list goes on and choosing the right expander formulations — we’ve already generated some 100 different ones — means we can create batteries that allow a high degree of charge acceptance while at a partial

“The grids of the future are going to be based on renewable energy and our next generation of lead acid batteries will underpin it” state of charge. “That’s a game change for lead acid batteries.

“And most particularly at a price that is far lower than that of lithium or other battery chemistries.”

Like many in the lead acid community, Murphy is puzzled by the continued fascination with lithium as its rival but is hopeful that once end users understand the new chemistry they will being to re-evaluate the situation.

“When I worked for Boeing Rocketdyne Energy Systems part of my remit was to look across the whole organization and see how could leverage aerospace into a cleaner and greener fashion.

“One underlying principle was a simple one — working out the total cost of ownership.

“This situation can’t last forever. I believe we’re already seeing a turnaround in automotive companies’ perceptions of non-lead batteries. We should soon be seeing that in greater research and development work, particularly in partial state of charge

MAY 12-14, 2015

which is where the greatest benefits can be found.

“Most importantly we can do so at a competitive price point. We are able, for example, to offer our K2 range of expanders at a range of prices — some of the carbon additives that go into the expander mix are very expensive — but battery manufacturers can tell us what they want the battery to do and we can work out some kind of middle ground in terms of balancing the cost with the performance.”

Part of the key to the future, Murphy believes is some kind of competitive/ collaborative mix as an industry standard.

“For the space shuttle to move ahead in the early years, we needed the whole aerospace industry — internationally and commercially — to participate. The challenges were too great for NASA alone.

“We’re in a similar situation with pioneering the next generation of lead acid batteries — and that’s why we belong to an organization like ALABC.”

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22 • Energy Storage Journal • Winter 2014

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COVER STORY: UTILITIES’ LAST STAND

The coming revolution in the way energy will be delivered threatens the earnings streams of today’s utilities — but also throws up some exciting partnerships and new business models.

Sara Verbruggen reports.

The first casualties of the renewable energy revolution The renewable energy revolution is just round the corner — and it’s time for power utilities to get worried. We may have heard this all before but when the banking community starts to speak with (almost) a single voice that’s when we need to listen.

Irrespective of our opinions of the capabilities of bankers in Wall Street, Zurich or London, they are a hardheaded community. Their job is to be more interested in a return for their money than financing an energy revolution about to happen.

But the hard reality, they say, is that once-fanciful opinions of a green revolution in energy distribution have rapidly solidified into the nuts and bolts of the world’s financial system.

According to UBS, the international investment bank, centralized power distribution, for example, could be redundant as early as 2025 in Europe.

Many of the huge power plants that straddle the continent will be mothballed. Many will simply be scrapped.

And all this is just a decade away.

The bank urged its financial clients — the professional investors — “to join the revolution”, identifying solar

26 • Energy Storage Journal • Winter 2014

as the technology that will be the most disruptive to the status quo. The combination of cheaper energy storage, irrespective of the chemistry used to store that energy caused by greater PV efficiencies as well as mass produced electric vehicles suggest that a return on a home solar PV system could be made within six years.

Growth in the demand for electric cars, solar generation and batteries will, in turn, drive distributed generation — and ensure that power generation is no longer the exclusive domain of utility owned centralized units.

The report said: “By 2025, everybody will be able to produce and store power. And it will be green and costcompetitive … even cheaper than buying power from utilities.”

Another banking giant — HSBC — predicts conventional generators will lose out at the expense of battery storage. The unstoppable growth in renewables has helped to drive this revolution.

This August the International Energy Agency said renewables now produce 22% of the world’s electricity, followed by record levels of investment in 2013,

which exceeded $250 billion, in wind, solar and other green energy technologies. The IEA expects this trend to continue on an exponential curve.

In the US, which is served by a patchwork of under-invested electricity grids supplying power to the country’s 50 states, the seams are popping, especially as renewables are added in increasing amounts.

Renewables gaining ground

Many regulators and operators are addressing the challenge by changing policies to accommodate more flexible technologies such as energy storage that can complement solar PV, which is popular, but also intermittent. In other states, meanwhile, rolling back net metering policies or introducing charges for installing solar panels is favoured.

“Energy storage is gaining momentum because natural gas is a more costly and complicated way of managing the grid’s supply and demand,” says Jigar Shah, chief executive of Jigar Shah Consulting and a manager at Clean Feet Investors.

Usually power plants, typically running off natural gas or even diesel, have

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COVER STORY: UTILITIES’ LAST STAND to ramp up and down to supply, for a few hours a day, the need for energy at its highest, known as peak demand.

Energy storage is proving a more efficient and nimbler alternative to this.

In addition to supplying electricity to end-users and customers the grid also has to maintain stability, constantly matching supply with demand. Grid operators do this in the form of ancillary services, which they contract out to the participants in their wholesale electricity markets.

For short term regulation, a power generator can use its own generation, or buy it from another supplier under a contract, or from the market itself, for example.

America’s largest transmission grid operator, the PJM Interconnection, has provided transparent pricing signals for frequency regulation in the ancillary services market provided by storage, triggering a level of demand for this type of technology that did not previously exist.

“Electricity is a commodity. Commodities rot unless stored properly, and electricity rots the fastest because it has to move or it is lost,” says Shah. “Distributed generation has created the challenges that are besetting the grid today, but it is storage functioning as a tool to

balance supply and demand which is where the real value proposition is.”

The electric grid is built on the premise that energy has to be consumed immediately it is generated and energy storage challenges this.

So how to capture value from these systems, which straddle the distinction between generation and supply?

Intermittency not an issue

The intermittency of wind or solar is not the problem, however, says Shah: “It is not the responsibility of wind and solar plant developers and operators to have storage installed next to these plants. It is the grid’s responsibility and those that manage it – the utilities – that provide stability and balance out the variability.”

There are numerous companies that are commercializing energy storage on the grid network. One of the biggest is AES Energy Storage, a division of independent power producer AES. In terms of installed MWs of batteries the company is a market leader with 174MW operational and counting.

The company’s storage projects include a 64MW resource in West Virginia’s Laurel Mountain area that has been bidding into PJM’s frequency regulation market for the past three years.

THE INEVITABILITY OF RENEWABLES Dirk Spiers, director at ATC New Technologies, in Oklahoma, believes distributed generation based on clean resources and energy storage, will become a reality sooner rather than later — and there will be little that utilities can do but to accept it.

“Renewables are close to being as cost competitive as the retail price of fossil fuel-produced electricity,” he says.

“Once this happens, there is no going back. This will favour distributed generation because the initial subsidies will have done their job — bringing down the cost of solar PV technology.”

Through its main business of refurbishing ex-EV batteries, ATC New Technologies aims to bring down the cost of lithium ion batteries for stationary storage.

While consumer electronics is still the largest market for lithium ion batteries, the automotive industry has been responsible for pushing the technology further in terms of safety and longevity.

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Building on experience gathered from life cycle management and preventative monitoring of high voltage rechargeable battery packs for vehicle OEMs, the company is now turning its attention to energy storage opportunities.

The company is working with Oakridge National Laboratory on an algorithmic software programme that enables a solar and storage system to send predictable amounts of electricity to the utility, based on weather forecasts.

“Say you have a solar panel array on a commercial roof connected up to a battery, generating electricity and this output suddenly spikes or dips because a cloud passes over,” says Spiers. “The system charges up and tells the utility how much energy it will send to the grid in the next 15 minutes, flattening out any curve in supply making renewable generation predictable, which utilities like. They do not like unpredictability.”

“Distributed generation has created the challenges that are besetting the grid today, but it is storage functioning as a tool to balance supply and demand which is where the real value proposition is” — Jigar Shah, Clean Feet Investors More recently the company has built 40MW at Dayton Power and Light’s Tait electricity generating station in Ohio, which is owned by parent company AES. “The advanced storage systems AES operates in the PJM market have saved more than $20 million while providing improved operational performance,” says John Zahurancik, chief executive of the firm.

To give an estimate of the size of this potential market for energy storage, the Energy Information Agency estimates that 30,000MW of new combustion turbines will be added in the US over the next decade. These new power plants are mainly for system reliability and flexible capacity, not for energy production. “Energy storage can provide an effective alternative to building these critical, but low utilization plants,” says Zahurancik.

Like many firms at the coalface of the fast-growing energy storage industry, AES does not make the lithium ion batteries used in its storage systems but focuses on the software controls and system architecture side of things, in the form of the company’s Advancion platform.

Zahurancik says the company is continuing to see a growing need for fast, flexible, and reliable power capacity, which, in some cases, is focused on

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COVER STORY: UTILITIES’ LAST STAND “Energy storage can provide an effective alternative to building these critical, but low utilization plants” — John Zahurancik, AES Energy Storage critical operating reserves that ensure the power system remains in balance and can manage any type of rapid change, such as a transmission line loss or a fast change in generation output.

In other cases, storage is needed for local reliability, to assist in peaking and over-generation mitigation. “In each case utilities and system operators are focusing on core requirements for procuring energy storage, but are then also benefiting from additional performance capabilities,” says Zahurancik.

AES Energy Storage has a clearly defined market opportunity that it is attacking and is also expanding across the Atlantic, showing that natural gas is an expensive way to manage the grid’s supply and demand in Europe where prices for this type of fuel are higher.

A gas fired peaker costs, on average, $1 million for each MW. AES Energy Storage claims it is competitive and can provide an installed system for the same, with a 4MWh discharge capability. In addition battery systems can be installed and operational in much less time than it takes to build a new gas turbine peaking plant.

AES Energy Storage has the advantage of having a parent that owns power generation assets, a strong balance sheet, and a substantial project pipeline to confer it with the clout to drive down costs of its system’s hardware components, including batteries.

The company has spoken in favourable terms of lithium ion technology and is more likely to prioritize sourcing these types of batteries for its storage systems, with EV brand Tesla investing in their manufacture.

Zahurancik says: “AES and Tesla have similar convictions about the prominent role lithium ion batteries will play on the grid now and well into the future.”

Energy storage proliferation

Aside from building MW capacities of batteries as substitutes for new investment in peaking plants, the market is looking even more dynamic where various energy storage players are supplying smaller individual storage installations that benefit commercial end-users but also can be called upon to provide grid services.

Solar Grid Storage was set up by a team of solar industry veterans, who have worked at companies that include Sunpower, Sun Edison and Solarcity.

Tom Leyden, chief executive of the company, says: “Like solar plants, storage assets can be amortized over time using the PPA — power purchasing agreement — financing model that was adapted for solar over a decade ago.”

Solar Grid Storage’s initial projects are all earning revenues from bidding into the PJM Interconnection’s frequency regulation services market. The company’s core product is an energy

Solar Grid: “Storage is a new piece of the jigsaw puzzle and it is important to have first mover advantage”

28 • Energy Storage Journal • Winter 2014

storage system, called Powerfactor, which includes racks of batteries and all of the other typical hardware components, arranged in a container.

The owner of the PV system benefits by paying less for the overall cost of the solar installation, since the cost of the inverter, transformer and other balance of system components is part of Powerfactor.

The system is available in two sizes, either as Powerfactor250 or Powerfactor500. The inverter supplies AC power to the building but its excess capacity is used by Solar Grid Storage, via the connection to the battery, to provide grid balancing services.

The company is beginning to see different business propositions emerge, though the various benefits have to be identified and added up almost on an individual project basis. “Like the solar industry 12 years ago, storage is a new asset class so there is some embedded friction among potential customers as well as developers and investors. But with each project we are expanding on the potential and showing how it can work,” says Leyden.

Solar Grid Storage works with project partners that develop solar installations, knowing these companies have to differentiate themselves to remain competitive. “Storage is a new piece of the jigsaw puzzle and it is important to have first mover advantage,” he says.

Life beyond the grid

Storms that swept the US east coast have put storage in the mind of business and industry, because if the electricity grid is down, solar PV installations do not work either. “This is something that many end-users were not aware of. Solar and storage does insure them against being without grid electricity by providing backup as a type of service,” says Leyden.

The company sources components and hardware that are best priced, available and are high quality. However, lithium ion is the technology of choice for batteries. The legwork has been on the integration side, ensuring that each individual component is optimized to work as part of a system.

PJM Interconnection pays well for frequency regulation, compared to payments for the similar service under other grid operators. The company’s goal is to create a platform that is flexible enough for different services or business cases to be stacked up so that the asset maximizes revenue streams.

The systems can be retroactively adjusted, because as installations of

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COVER STORY: UTILITIES’ LAST STAND Aggregating storage to provide grid services Stem, a US start up firm (and which, like Solar Grid Storage, is funded

by Clean Feet Investors) delivers electricity bill savings to commercial and industrial customers using energy storage systems and integration of advanced software, without any upfront costs.

Electricity bills are lowered by reducing peak loads, through predicting the customer’s energy usage patterns and deploying stored energy at precise times, with no changes to the customer’s business operations.

Stem has customers in the hotel business including Extended Stay America, which is installing Stem’s lithium ion battery-based smart storage systems in 68 of its California hotels, to take advantage of the state’s incentives for customer-side storage.

Stem is taking part in a project that will allow its separate storage installations to provide grid services, through aggregating them as one resource. The grid operator is the California Independent System Operator (CAISO).

Host customers for the energy storage devices used in the pilot include InterContinental San Francisco and InterContinental Mark Hopkins hotels. The customers receive financial incentives for opting into CAISO’s grid optimization programmes, administrated by Olivine, a registered CAISO market participant.

“The way that this model works is that the part of the storage that is shared by the customer is paid for by the customer. The share that is used by the grid is paid for by the operator, or utility,” says Shah.

The project allows Stem to show how its storage systems can achieve their primary objective of ensuring that customers do not incur demand charges, while benefitting utilities by providing grid services.

In this instance the pilot programme, IRM2 —Intermittent Renewable Management Pilot Powerfactor increase in number more services can be provided through aggregating these different assets.

“We see the market as analogous to slar several years ago in terms of how to monetize an asset by looking at all

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Phase 2 — run by the utility Pacific Gas & Electric is focused on integrating demand-side resources into the CAISO market, although the initial phase is limited to the day ahead market.

Participants must aggregate a minimum of 100kW of storage resource for curtailment within a single CAISO-defined region and all participants must be distribution served by PG&E. “It’s an important project as it is integrating the value proposition between customers and utilities.

Storage will benefit utilities as well as customers that want to avoid paying high demand charges,” says Shah.

Powertrees is also targeting revenues from CAISO markets by aggregating the energy storage units that the company is rolling out as part of its solar, EV charging and storage systems.

One of the start-up’s latest projects is 20MW of frequency regulation in the state of Illinois, for the PJM Interconnection. In terms of power, the system could be one of the largest to be announced in 2014. The customer is an IPP. Although energy storage systems consist of hardware, including batteries and inverters, it is the software and system architecture that enables these devices to be sited at the source of an issue or challenge and take advantage of the cumulative aspects of the technology.

“This is not about tying them to a single network but requires making each system individually controllable, able to communicate with each other as well as the grid,” says Greensmith’s chief executive John Jung. The firm has moved from small sized systems in hundreds of kilowatts in size to the tens of megawatts.

“Utilities are already well versed in managing and controlling different assets on the network, be it distribution feeders, substations and so on, it is the job of technology the possible ways money can be made or saved through the Powerfactor’s installation, to then get to the return on investment. But with solar and storage, what makes it so promising and exciting is that there are potentially so many

providers in the energy storage industry to make it easy for utilities and power companies to manage this network of assets, which is evolving as more storage is connected up within it,” says Jung.

“There has been a lot of talk recently about the future of utilities but the story of their demise has been exaggerated. What is clearly changing is that the grid’s regulated incumbents will be joined by new private participants, which hCW has been enabled by renewables, solar in particular,” he says.

Many of these new participants are from the C&I segment, and are motivated to adopt solar in order to reduce their exposure to peak charges, and are underpinned by new companies that are offering solar as a service, where the endcustomer does not have to pay any money upfront but effectively pays a lower electricity bill to the provider of the system. “This is pushing the boundary and the limit of economic and regulatory models,” says Jung.

In California some utilities are starting to treat the technology as a resource, an asset on the network, as opposed to an expensive sticking plaster.

Chameleon-like, energy storage has the potential to function in many different ways. This is an advantage as over the lifetime of the system new services can be added. For a 6MWh storage project Greensmith is deploying with a southern Californian utility, half of it is being installed in the area of a district and business community.

Situated there is a medical lab run by Quest Diagnostics, which is hugely reliant on good quality power at all times. “So the utility has taken the decision to beef up the distribution system nearby with storage, which can also provide some additional benefits such as back up services. The utility is not being resistive to change, it is proactively trying to see how it can benefit its customers and also provide services,” says Jung. more things to monetize with this type of system,” says Leyden, referring to energy market arbitrage further down the line as just one example.

Because the US has lacked a true top-down federal approach to oversee-

Energy Storage Journal • Winter 2014 • 29

COVER STORY: UTILITIES’ LAST STAND ing the entire country’s electricity grid network, Leyden sees this as an opportunity. It fosters creativity in a way that plays to the strengths of energy storage. The company has been talking with utilities in terms of how it might be beneficial for them in future to own some of these assets outright or to buy into services from them.

While Solar Grid Storage is focused on the US now, Leyden likes Australia, China and India as potential markets where the combination of high solar irradiation, grids that underserve customers and high energy costs could make Powerfactor a compelling proposition.

Leyden is further encouraged by the solar industry. “We’re seeing many of the vertically integrated manufacturers focused on storage now and how it can fit with their businesses.”

Challenging the status quo

Shah says: “Traditionally only utilities supplied electricity. There was no one else who could address issues affecting or relating to the supply of this resource, so when utilities spoke everyone listened. But distributed generation has made such fools out of utilities.”

Stacey Reineccius has spent the last few years contributing to policy meetings concerning energy storage in the

“Like the solar industry 12 years ago, storage is a new asset class so there is some embedded friction among potential customers as well as developers and investors.

But with each project we are expanding on the potential and showing how it can work” — Tom Leyden, Solar Grid Storage

state of California has his company Powertree Services, in San Francisco, which is rolling out EV charging infrastructure for multiple tenant residences, targeting building owners that want to add value to these types of properties.

The systems are also connected with solar PV and storage, providing tenants with lower electricity bills. “Utilities tend to work on a three to five year planning cycle so quite often it can take one, or two of these for storage to be completely digested,” says Reineccius.

“Because energy storage tends to cut across different areas, you are often contending with more than one department in these organizations, so there is a silo mentality on the part of utilities towards energy storage that has to be overcome.”

From their perspective utilities are charged with building and maintaining very expensive assets and are the gatekeepers of our energy supply. They are heavily regulated. Such organizations and institutions do not tend to foster entrepreneurs and those types that are attracted to solving problems. At best utilities are conservative. At worst they are an impediment to progress.

“It has taken a long time to get where the industry is today,” says Leyden.

“This industry favours those brave

Plug and play — the way forward Solar Grid Storage has developed a containerized energy storage system, called Powerfactor, including a solar inverter, that can be connected up to solar PV arrays, reducing the solar system owner’s installation costs and providing critical back-up services in case of power outages.

The system’s inverter supplies AC power to the building where the solar PV system is installed and also connects Solar Grid Storage’s battery to the grid, generating revenues from providing grid services.

The company — which was set up by executives with previous experience at major league solar firms, including Sun Edison, Sunpower and Solarcity — works with a few key solar developer partners, one of which is Advanced Solar Products in New Jersey.

One of the latest projects underway is at a school in New Jersey, comprising a 400kW solar PV array and the Powerfactor system, which incorporates a 500kW inverter and a 250kWh battery. New Jersey Resources, a gas utility in the state, will own the solar power purchase agreement, while Clean Feet Investors, an investor in Solar Grid Storage, will own the Powerfactor500 system.

Solar Grid Storage will operate the system for Clean Feet, including bidding into the PJM Interconnection’s frequency regulation market, and will also provide inverter services for the utility.

Solar Grid Storage has also completed four operational projects, all of which are earning revenues

30 • Energy Storage Journal • Winter 2014

for the company through bidding into the PJM. In one project with Penn State University, which owns the solar PV system that Powerfactor is connected to, the company operates the Powerfactor system and shares frequency regulation revenues with the university.

In the second project the Powerfactor is connected to a solar PV system installed by Standard Solar in Maryland, which is part of a microgrid for a commercial customer that provides backup capability as a service for the customer.

The other two projects, both in New Jersey, were developed in conjunction with Advanced Solar Products. Solar Grid Storage uses the excess inverter capacity for frequency regulation services, reducing the capital costs as the installer saves money on the simplified installation and does not pay for an inverter or associated equipment, such as transformer and switch gear, or maintenance of the inverter.

The end-user, WP Properties, benefits by getting a better price from Advanced Solar Products.

According to Tom Leyden, CEO of Solar Grid Storage, the installation of Powerfactor adds no additional time to the overall project development. “Instead of assembling all the components as is normally done, the contractor simply pours a pad, brings conduit to it, and lets us know when to deliver the plug-and-play Powerfactor container to the site where we place it on the pad.

Connections to the Powerfactor are made by the contractor’s electrician.”

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COVER STORY: UTILITIES’ LAST STAND Making it all add up: THE AGGREGATION PROPOSITION Aggregating storage resources is an often-discussed turn of phrase in the industry that refers to how providers can achieve the best possible returns from energy storage. Different projects are taking different approaches.

To make storage more attractive and overcome barriers to adoption some energy storage providers, including Stem and Solarcity absorb the upfront costs of these systems, while their target customers, typically commercial businesses that want to avoid incurring peak demand electricity charges, benefit from reduced energy bills without having to pay for the storage system outright.

But when several of these units are harnessed together they can also act as a single resource providing grid services to utilities and operators.

Aggregation works because collectively each individual unit only has to be tapped for a small amount of power so its capacity to be called upon for grid services does not conflict with the system’s primary function John of providing electricity for theJung commercial customer during periods of peak demand.

One of the first projects to aggregate batteries in such a way, to make money from providing grid services, has been running at the University of Delaware and involves electric vehicles.

Several EV batteries are linked up meet the minimum threshold of 100kW to act as resource for bidding into the PJM Interconnection for providing frequency regulation services. The cars have been fitted with two-way chargers and specially developed software that aggregates the EV batteries into a single power plant.

John Jung, chief executive of energy storage start-up Greensmith, says that thinking of energy storage simply as enough to devise a service or a business model that uses storage and you keep pushing your project because the utilities you are dealing with have to work within pre-existing rules,” says Reineccius.

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Thinking of energy storage simply as batteries-in-a-box misses the point — John Jung, Greensmith batteries-in-a-box misses the point.

“They should be viewed as distributed computers that are programmable and inherently scalable so they act as a versatile grid appliance that can behave as both a generation and a network asset.” When configured this way, individual storage systems can be aggregated but can also maximise their ability to act as a flexible resource for the grid.

Greensmith’s system architecture has been designed to enable aggregation and scalability.

This makes it possible to distribute energy storage across the network, in multiple units, for different applications, even using different battery technologies and capacities.

Each individual system is managed and communicates with each other and can also be dynamically controlled as an entire fleet, where several separate units can be tapped into as one resource for a specific grid service or application.

Greensmith’s customers include in excess of 10 leading utilities and power developers. The California has been instrumental, however, in creating a market for energy storage with policies on the retail side of energy storage procurement as well as the utility side with the mandate and in other areas, he acknowledges.

company has made headway in California, where it works closely with one leading southern Californian public utility in particular.

For the utility, Greensmith is about halfway through a 6MWh project, which is really made up of four 1MWh systems each wrapped with the company’s processor technology, the GEMS 4 platform, so that each acts like a node on the network.

One advantage is the customer can add more storage capacity if need be, or if there are other stress points on the network that need addressing, it is possible to ‘unplug’ and physically relocate energy storage units and drop them back into the network, at another location, allowing them to continually operate even if they are redistributed.

The company’s technology is also designed to be reprogrammable so that so that a system originally specified and used for one purpose can be reprogrammed for a different application.

This benefit emerged from an earlier pilot that Greensmith did with the Electric Power Research Institute (EPRI) and one of its utility partners. When the pilot finished, the utility said it needed an energy storage system for a carport and a PV smoothing application, so after confirming sizing and recalibrating the somewhat used batteries Greensmith took the existing system and reprogrammed it so it could be deployed at the utility’s headquarters.

“As long as the health and safety of the system is carefully managed then the ability of reprogramming, also in combination with redistribution — dropping the storage systems into another part of the network — maximises the benefits and values over the system’s lifetime,” says Jung.

The shutdown of the San Onofre reactors in the state by Southern California Edison has also forced the issue as storage is one of several resources that will fill the demand gap left by the closure of 2.2GW of nuclear generation.

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THE EUROPEAN GRID COMES OF AGE

Turning theory into reality.

That’s the next step for Europe where future grid developments have been characterized by energy storage pilots rather than bankable investments.

But, the technology’s full commercial potential is starting to appear.

Grid storage moves to the fore in Europe as momentum for change gathers Snatching defeat from the jaws of victory. That was the way one energy commentator described moves by the German parliament this June to cut subsidies on renewable energy tariffs.

Yet, just a month before, headlines across Europe blazoned the news that renewable energy had — for a brief afternoon in May — provided three quarters of Germany’s electrical supply.

The push-pull in Germany’s approach to balancing the introduction of PV and wind power into the grid and its cost is just part of a wider debate that is running across Europe.

It’s now less about integrating renewables into the grid — May’s re-

cord levels in Germany, earlier in the year, show that this can be achieved — the focus is now shifting to its cost and energy storage on an industrial scale.

The transition to a smarter, more flexible, grid, increasingly dominated by wind and solar generation, is a balancing act, it requires scaling back of existing generation capacity, as more renewables are added.

And this is where energy storage — at least in theory — should bridge the gap.

But as with the German government’s desire to cut subsidies — and so reduce the price of electricity to its citizens — energy storage has to

Greensmith has now qualified 12 battery types to integrate with its software platform which span different lithium batteries, including those from Samsung SDI, as well as alternative chemistries such as zinc bromide flow and aqueous ion 32 • Energy Storage Journal • Winter 2014

be commercially viable if it’s to move from theory to fact.

Putting huge amounts of energy into expensive industrial-scale batteries has to be made cost effective.

According to the UK’s Department of Energy and Climate Change there are over 250 energy storage projects in operation in Europe, with nearly €1billion ($136 million) of EU funding.

Battery banks are cropping up like mushrooms on all parts of the high, medium and low voltage networks.

But, in most cases, storage is being used to tackle one specific issue or problem on the grid.

In Italy, for example, where Terna is procuring 75MW of batteries, the transmission system operator (TSO) is investing in the technology to address the most immediate challenges, identified in separate grid defence and development plans presented to the regulator.

In Germany, the state-funded bank, KfW, has been running a subsidy

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THE EUROPEAN GRID COMES OF AGE scheme since 2013 to incentivize new solar PV installations and also storage, at the domestic and small-scale commercial level.

Other countries, such as the UK and Spain, are also commissioning storage pilots on the grid. The size may not be huge — the UK has just 12MW of energy storage projects of at least 1MW in size — that are either operational or are in planning.

Drivers in Europe

Olivier Vallée, an analyst from Parisheadquartered cleantech finance firm Natureo Finance, which has been tracking over 120 grid-scale energy storage projects — 500KWh or larger — worldwide, says that in Europe, renewable energy integration has been the main driver.

In the US it’s another story — its older, less well-interconnected grid has meant that frequency regulation has been the focus. More recently, in Europe there is a shift to frequency regulation, while the US is increasingly focused on renewables integration, according to Vallée.

Storage investments will need to do different things and have several income streams if these assets are to be commercially viable without subsidy.

In Europe, most demonstrators and pilots have focused on testing the various functions of grid-integrated batteries.

One example is a 1MW lithium ion battery that has been connected to the low and medium voltage grid in the city of Dietikon in Switzerland since March 2012.

The plant, operated by Swiss utility EKZ, has been designed to carry out frequency regulation, peak shaving, voltage regulation and uninterruptible power supply.

Commerciality concerns

Energy storage projects that aim from the outset to demonstrate real commercial business cases are fewer in number. However, this is changing. US-headquartered independent power producer AES Corporation announced plans in April to build a 100MW lithium ion battery bank in Northern Ireland, where the company already operates power stations.

The Kilroot storage facility will be used to integrate more wind into the local grid, reducing the need to curtail this form of green energy so the amount of traditional, dispatchable power reserves usually needed to compensate for the spiky unpredictable

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flows of wind-generated power can be gradually cut back.

Both the north and the south of Ireland plan to have 40% of the island’s electricity consumption met by renewables by 2020. Today the percentage is already high compared to many grids in Europe and grid operators Eirgrid and System Operator Northern Ireland (SONI) are forced to address challenges that larger systems have yet to encounter.

Companies such as Younicos and Greensmith are challenging the traditional utility approach to storage, which has tended to view the technology as a sticking plaster on the network

RISING STARS OF STORAGE

If emerging industries have rising stars, then in the grid-scale energy storage industry, these are software start-ups Younicos, based in Berlin, and Maryland-headquartered Greensmith.

These companies are often described as battery-agnostic, in the sense that their business depends on their energy management system software platforms being compatible with different types of chemistries.

As an example of an integrator, Younicos’ technology occupies the point between the direct current source — the batteries — and the grid, which is alternative current.

The software ensures that the batteries do what they should be doing at any given time while optimizing their performance.

Companies such as Younicos and Greensmith are challenging the traditional utility approach to storage, which has tended to view the technology as a sticking plaster on the network.

“Younicos software is the best in the market, it knows how

Samsung’s cells work, how to get the best from each one in the system, in accordance with what the system is programmed to do, bridging the energy storage system and the grid itself,” says Frank Baumann, Samsung SDI Europe’s sales director for energy storage.

In addition to lithium ion Younicos uses two other main chemistries, vanadium redox flow and sodium sulphide, though in future alternative storage technologies are not ruled out as the market becomes more established.

Greensmith has qualified 12 battery types to integrate with its software platform which span different lithium batteries, including those from Samsung SDI, as well as alternative chemistries like zinc bromide flow and aqueous ion.

According to John Jung, chief executive of Greensmith, the company makes regular site visits to the factories of its battery suppliers to carry out checks on cells as well as battery management systems as part of the company’s rigorous qualification process.

Energy Storage Journal • Winter 2014 • 33

THE EUROPEAN GRID COMES OF AGE AES’ investment shows that in certain cases large-scale storage on the grid does not need to be subsidized.

The IPP already has 100MW of batteries connected to the grid in West Virginia and Ohio for the TSO PJM Interconnection, which act as efficient alternatives to peaking plants providing frequency regulation, an ancillary service in the wholesale power market.

In Northern Ireland AES’ Kilroot project is coinciding with changes to the grid and grid codes, where new renewable energy capacity will have to provide frequency regulation services, so AES could potentially supply this service to wind power generators in future Andrew Jones, managing director at S&C Electric Europe, believes

Engineers installing lithium ion batteries in a 5MW (5MWh) energy storage system in Schwerin for German electricity producer Wemag, which Younicos is supplying as a turnkey installation.

The same installation for Wemag during construction. The project has been supported with €1.3 million from the Federal Ministry for the Environment.

Trying to predict the fortunes of an emerging industry is a fool’s game. But what is becoming clear is that the highest rewards may be reserved for those with their eye on global opportunities in grid storage 34 • Energy Storage Journal • Winter 2014

there will be a growth in the number of companies that set up IPP arrangements for storage and some of the first companies that will deploy the technology will be renewables developers.

Because of the network unbundling that came with the privatization of Europe’s electricity markets in the late 1990s, distribution and generation are separate and current rules prevent network operators from owning storage, which can be both distribution or generation assets.

In the UK, for instance, historically storage was deemed to compete with generation so it is generally classed as such an asset.

In the case of a 6MW (10MWh) storage project in the UK, which S&C Electric Europe is building for the distribution system operator (DSO) UK Power Networks, at a primary substation in Leighton Buzzard on the outskirts of London, the plant has to sell energy into the market for the investment to generate revenues.

This requires a supply licence, so Smartest Energy, which is the UK’s leading buyer of energy produced by independent and renewable energy generators, is the licensed supplier. It is the first energy storage project, globally, to test what value can be achieved on a commercial and the findings could inform market design changes.

“The challenge is we have a free market and storage is at the mercy of the market in terms of how profitable it can be, whereas government or municipal-owned utilities are finding it easier to install storage as they see the whole benefit and not the broken value chain as we are dealing with it,” says Jones.

This is the case in Italy, where the TSO, Terna, is in the middle of procuring its 75MW of storage (see following feature).

Out of this NGK, in Japan, is providing sodium sulphur batteries for all 35MW of Terna’s energy-intensive storage, which will be connected to high voltage lines to reduce congestion and open up the grid to absorb more wind-generated electricity, instead of shedding hundreds of GWhs through curtailment.

The remaining 40MW for powerintensive applications will be installed on the islands of Sicily and Sardinia, to provide quick bursts of power to overcome loss of inertia in these small grids. The 40MW will be installed in two phases, the first as part of a storage lab to pilot the various battery and storage technologies, which in-

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THE EUROPEAN GRID COMES OF AGE

LEAD ACID TECHNOLOGY FOR RENEWABLES INTEGRATION Globally, the renewable energy industry is recognizing that grid integration is one of the main constraints on the continued growth of wind and solar PV energy in the long term.

The lead acid battery industry is helping to address this challenge, while opening up new markets for the technology.

One recent example is GNB Industrial Power, a subsidiary of Exide Technologies, which has been working with German solar developer Belectric on an energy storage system for integrating renewables into the grid.

The energy storage system, with a capacity of nearly 2MWh, is being trialled in Alt Daber in Brandenburg. The project is an example of a customerfocused application for energy storage, according to Martin Sinz, director of product management, advanced applications and renewable energy markets at GNB Industrial Power.

The company developed the battery to meet Belectric’s requirements, to achieve a long service life, low cycle costs and high performance. The battery uses a new type of charging and reactivation process that can increase the life of lead-acid batteries in stationary applications.

This has been achieved by refining the electrodes, says

clude lithium ion and sodium nickel chloride chemistries.

The remaining 24MW, installed in the second phase, will be deployed in these two types of batteries on the islands. Terna will operate all 75MW of the storage assets.

This is different to what is taking place in California where the regulator’s storage target 1.3GW by 2020 obliges the state’s large public utilities to procure services from suppliers, as well as operate their own assets. The California Public Utilities Commission’s mandate was crafted in such a way as to help establish a market where different business models, in-

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Sinz who adds that the battery’s performance is not down to the addition of carbon.

The storage system, which Belectric refers to as an energy buffer unit (EBU), has been installed at an existing solar power plant in Alt Daber and supplies about 550 homes with electricity overnight.

Belectric supplies the EBU as part of a turnkey hybrid power plant that incorporates solar PV, diesel, gas or hydropower generation, batteries, a special converter and other components to provide round the clock power supply for off-grid as well as for integration of renewables into the regulated energy market to meet the same requirements as conventional power plants do, as the batteries can handle higher variations in load.

Ecoult’s advanced lead acid battery technology, has been gathering data from several demonstration projects. These include an ongoing project with

cluding third party ownership, can potentially thrive.

The role of integrator

Terna’s approach, which is also happening across Europe in other storage pilots, reflects how utilities have traditionally done things. According to Jones: “Utilities are comfortable with going out and buying the transformers, cables and other components to build grid assets, and take on the risk.”

But even though batteries have occasionally been used on the grid, energy storage is proving to be a different beast. This is why companies such as S&C Electric, ABB and Siemens, all

the Public Service Company of New Mexico to smooth solar into the grid. The system consists of a 0.5MW battery using Ecoult’s UltraBattery and a 0.25MW (0.99MWh) peak shifting battery using other advanced lead acid batteries, with both types of cells made by Ecoult’s parent company East Penn Manufacturing.

In Australia Ecoult has provided and integrated a MWscale storage system using its UltraBattery technology to smooth wind power from a wind farm in New South Wales. The company has also supplied a grid scale energy storage system to provide 3MW of frequency regulation for the PJM Interconnection, the largest regional transmission operator in the US. In the US, in Vermont, Enersys has been running a demonstrator of its battery storage system aimed at showing utilities that large lead acid battery storage installations are stable, safe and reliable.

The OptiGrid can be used for a range of applications, including renewables integration, peak shaving, time shifting and arbitrage. The storage unit is connected to a factory belonging to Dynapower, which makes inverters and is a partner of Enersys.

The valve regulated lead acid battery bank provides power for the facility in times of high demand so that Dynapower does not have to shut down production or pay high charges for peak time electricity consumption.

with decades of experience of supplying power infrastructure components for grids are jostling with each other to do the integration.

These types of companies have the track records and the balance sheets to take on the risk of multi-million euro projects and are also familiar to utilities.

ABB, which is supplying Italian DSO Enel Distribuzione with a 2MW energy storage system on Sicily, has historically done energy storage on a projectby-project basis. “That was until 2009 when renewables really began to take off and stimulus funding became available in Europe, and also the US, to fi-

Energy Storage Journal • Winter 2014 • 35

THE EUROPEAN GRID COMES OF AGE “We don’t want to only provide energy storage but provide the intelligence needed to manage these technologies, to optimize their functioning within the regulatory framework” nance pilots and projects,” says Stephen Clifford, who is in charge of global marketing and business development within ABB’s smart grids business.

The company then decided to formalize its energy storage activities and the 2MW project with Swiss utility EKZ, completed in 2012, was one of the first one of these. “Although the system was developed by EKZ as a pilot, this is a commercial system from us. We’ve also done some projects in the US,” says Clifford.

ABB supplies both turnkey energy storage systems, such as for EKZ and Enel Distribuzione, as well as power conversion system equipment to customers.

Similarly, for AEG Power Solutions grid-scale energy storage presents a two-fold opportunity. The company is a supplier of hardware components such as power conversion system equipment but is also increasingly focused on becoming an integrator of energy storage systems.

To date, AEG Power Solutions has provided a turnkey battery storage system for an off-grid project in Mali, in Africa. Orders for the company’s storage converter, Protect.SC, for use in large battery energy storage systems are also increasing, it says.

One of these is for a vanadium redox flow battery installation in northern Germany, with Vanadis Power, where the 1MWh storage plant banks locally generated wind power. The other project is in Spain in a storage system using lead acid batteries.

The energy storage systems will mainly be used for frequency regulation, peak load shifting and other current management functions.

Typically integrators buy batteries, often lithium ion, from manufacturers, which include companies such as LG Chem, Samsung SDI and Saft.

The acquisition trail

However, as with any disruptive technology, the energy storage industry is attracting players from other industries as momentum gathers pace.

Earlier this year, Japanese technology company NEC leapfrogged to the top in providing grid-scale storage, through a $100 million acquisition

36 • Energy Storage Journal • Winter 2014

— from Wanxiang Group — of A123 Energy Solutions, the non-automotive lithium ion battery and system integration division of A123.

The company has installed more than 110MW of its lithium ion storage systems around the world. The new subsidiary, NEC Energy Solutions, will continue to supply energy storage using A123 Systems’ nanophosphate lithium ion cells and provide support for existing installations.

In addition, NEC’s own lithium ion technology will also be available for use in the new company’s grid-scale storage projects.

“Full system integration, by taking the lead on projects, as in providing turnkey project services, is key. We are not only a battery provider. As the energy storage market develops and the company increases its customer base, designing systems based on the customer’s needs will be important for success,” says Ciro Scognamiglio, NEC business analyst.

The value chain

But for some other companies, their strategy is dependent on not moving too far up the value chain. Samsung SDI, for the foreseeable future anyway, is interested in supplying battery systems for different storage markets and not doing the integration, preferring to work with companies such as S&C Electric.

Italian industrial battery maker Fiamm, which helped develop sodium nickel chloride — the so-called ‘salt’ — batteries originally for telecoms customers as an alternative to lead acid, has won tenders with utilities, including Terna, to supply large-scale on-grid as well as off-grid storage projects.

“With energy storage we are moving from supplying a battery to a system, but we don’t want to escalate up the value chain. We want to stay out of the way of our customers,” says Nicola Cosciani, chief executive of Fiamm Energy Storage Solutions, in reference to the energy management system portion of an energy storage installation.

Some power conversion system suppliers, like S&C provide the energy management system, as does NEC.

“What is very important is the management of the technology. We don’t want to only provide energy storage but provide the intelligence needed to manage these technologies, to optimize their functioning within the regulatory framework,” says Scognamiglio.

In the case of Terna, the TSO is doing the energy management system side, integrating the various storage installations into its grid system. The energy management system, which is based on software controls, instructs — and coordinates — the battery system in its operation, based upon the requirements of the grid and other loads, such as renewable energy plants, that are also connected.

One company specializing in energy management system is software startup Younicos, headquartered in Berlin.

In north-east Germany Younicos supplied a 5MW (5MWh) energy storage system in Schwerin for the green electricity producer Wemag. The company delivered the battery installation as a turnkey project, which uses lithium ion batteries from Samsung SDI. The plant was connected to the grid in August.

From pilot to profit

The battery array can store or release up to 5MW to stabilize the grid in West Mecklenburg, where there are lots of wind turbines, to provide the equivalent power of a conventional 50MW fossil fuel fired turbine, creating further grid capacity for electricity generated by renewables.

Even though the project is a pilot, funded with a €1.3 million from Germany’s environment ministry, the unit will compete on the primary control market and generate a profit. To do this requires a pre-qualification by the grid operator at 50 Hertz transmission.

Younicos’ background is in renewables and the company found from early work on small island grids that adding some storage — even just a few minutes of it — will enable 60% of an island’s electricity to come from renewables such as wind and solar, whereas without some form of storage this amount is around 15% before the island grid becomes unstable.

The company investigated and tested different energy storage technologies, including various battery chemistries, flywheels and supercapacitors, before settling on lithium ion as the best for short-term storage requirements, typically in the minutes or hours, on a daily basis.

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THE EUROPEAN GRID COMES OF AGE Philip Hiersemenzel, a Younicos official, says: “Back in 2006 there was not that much available information on lithium ion batteries for stationary storage as the biggest market was consumer electronics.

“For stationary storage, because lithium ion is expensive, the batteries have to be able to operate for a long time before needing replacing. Younicos found that Samsung SDI had some of the best cells on the market and contacted the company.”

The last few years have been spent on developing the company’s software to be able to find the battery’s sweetspot.

“How you treat batteries makes a big difference to their lifetimes,” says Hiersemenzel.

For UK Power Networks’ energy storage project on the Leighton Buzzard primary substation, S&C Electric Europe is lead supplier, with Samsung SDI supplying lithium ion batteries.

However, it is Younicos’ software technology that will react to price signals and optimize the performance of Samsung’s batteries.

The software also guarantees availability, charging and discharging as required and maximizes lifetime by maintaining the batteries at their optimum state-of-charge, to ensure a long lifetime, thus helping to bring down the asset’s overall operational expenditure (OpEx) costs.

“S&C has its own software for managing batteries for grid-scale stationary storage applications, but as the Leighton Buzzard project has to prove multiple business cases Younicos is one of a few start-ups, focused on software, which was able to deliver a platform that can make batteries carry out such a multiplicity of services and functions.

“This reflects the complexity of the full extent of what is being asked of the battery bank in this particular project,” says Jones.

But Younicos has ambitions to be more than a software provider to the industry. The company’s project with Wemag is important to show the company also acts as integrator, which seems to be the most dynamic portion of the grid-scale energy storage industry at present.

Acquiring the assets and staff of Xtreme Power in May, which filed for bankruptcy this year, will help Younicos get a foot in the door of the market stateside.

“Xtreme can be thought of as a US cousin of Younicos. Historically both

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The Kilroot power station in Northern Ireland, owned by AES Corporation, is also the proposed location for a 100MW lithium ion storage plant that AES will build and operate to integrate more wind into the local grid.

“The US market is very promising, as it is potentially very big — even in terms of frequency response demand and California mandates alone. It will grow rapidly and we are now in a good position,” he says.

Supply chain in a state of flux

Jones at S&C Electric Europe believes there will be growth in the companies that set up IPP arrangements for storage. Some of the first companies to deploy the technology will be renewables developers companies considered battery manufacturing as part of their energy storage business,” says Hiersemenzel. The German company is in the process of merging each business’ different technologies and will be picking up with Xtreme Power’s utility and power customers, which include companies such as Duke Energy and GE.

Trying to predict the fortunes of an emerging industry is a fool’s game.

But what is becoming clear is that the highest rewards may be reserved for those with their eye on global opportunities in grid storage, as illustrated by acquisitions by NEC and Younicos, and AES’ big battery project in Northern Ireland.

Terna, too, is getting in on the action with plans to spin off a company that will provide services based on the TSO’s accumulated experience of how energy storage can exist as grid assets, especially in terms of ensuring a functioning grid as penetration of intermittent renewables increases.

To date, Terna’s procurement programme makes Italy one of the largest markets for energy storage, in the near-term, and this has attracted the interest of many grid operators from around the world, particularly from California, South Korea, Japan, Australia, Switzerland, Hawaii, Chile, Spain and the UK. Even though such a company would be a competitor to the likes of S&C and ABB, according to Jones, it would play well in the industry. “As part of one of the leading TSOs it would, therefore, help make energy storage more credible and that is what this industry needs going forward,” he says.

Energy Storage Journal • Winter 2014 • 37

PROFILE: THE ITALIAN GRID Italy’s utilities are increasingly turning to energy storage as a way of managing the regional challenges of a grid where renewable supply is at one of the end of the country while demand is at the other.

Energy storage offers way to unify renewable power gap in Italy’s north-south divide Two countries united by a common language.

It’s an odd phrase. But one that defines modern day Italy. To the north, an energetic industrialized centre for manufacturing. Think Milan, Turin.

But in the more rural south, a less developed pace prevails.

In terms of the grid: in the north it’s a sophisticated, extensively interconnected network. But further south in the agricultural central and southern parts of the long, narrow country, the grid is far less well developed.

The trouble is that it’s in the south where the growth of renewables has been strongest — particularly for wind power in provinces such as Puglia.

The result is that the high voltage cables and connections, which serve as the transmission grid’s backbone, are under strain. Getting wind power from the south, where demand is low, up to the north, has been a headache for Terna, the country’s transmission network operator.

“2010 was a crunch point for Terna.

Congestion was a massive problem, with 500GWh of wind curtailed in that year,” says Anna Carolina Tortora, head of innovation and storage at Terna Plus, a subsidiary of the transmission system operator (TSO).

To introduce flexibility into this system for the region, Terna is procuring 35MW of energy-intensive batteries, under its 2011 Grid Development plan. This will avoid the loss of hundreds of GWh of wind energy, providing economic savings as generators have to be paid for energy produced even if it cannot go into the grid.

Under its 2012 Grid Safety and Defence plan, Europe’s largest TSO and the sixth largest in the world, is buying 40MW of power-intensive energy storage, which is being installed on the islands of Sicily and Sardinia, to com-

38 • Energy Storage Journal • Winter 2014

pensate for the loss of inertia in these smaller mainland-connected grids and provide services such as frequency regulation.

Terna’s investment in 75MW of energy storage, which is in the region of €300 million ($400 million), is in response to government-level intervention, as opposed to a change in market mechanisms, which has occurred in the wholesale power markets in the US. In the US TSOs, such as PJM Interconnection, pay more for fast response storage to provide some frequency regulation, an ancillary grid service.

However, both Terna as well as distribution system operators, are able to achieve a 2% additional return on storage over and above the current 6% for network assets, reflecting the cost and risk associated with these types of technology investments.

Terna is obliged to provide the regulator, Autorità per l’energia elettrica il

gas e il sistema idrico (Italy’s gas and energy authority), with performance data and analysis every six months and on an annual basis.

The TSO will also be assessing each installation’s performance based on how the energy storage systems operate in the grid, delivering various services, in terms of speed of response, life cycle and other criteria.

Battery technologies and suppliers

Japan’s NGK, announced in 2013, is supplying 35MW (252MWh) of sodium sulphur batteries to reduce local congestion on Italy’s high voltage grid, as well as increase primary, and also tertiary, reserves and provide voltage support.

By the end of this year, the batteries will be installed and operational on two 150kV lines, in three separate locations in the region of Campania, in southern Italy; 12MW in Beneven-

These projects in Italy, though pilots, are important — they’ll enable utilities and the regulator to see how storage provides different functions and potential ancillary services, such as frequency regulation, which could generate revenues in future A 2MW (2MWh) energy storage system, supplied by NEC, which will be installed at Enel Distribuzione’s Chiaravalle primary substation in Calabria.

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PROFILE: THE ITALIAN GRID to province, 12MW in Flumeri and 10.8MW in Scampitella, which are both in Avellino province.

For its 40MW of power-intensive demands, Terna has, so far, chosen lithium ion as well as sodium nickel chloride batteries from various suppliers.

Saft is supplying 2MW (2MWh) of lithium ion, Samsung 2MW (2MWh), in a consortium that includes energy storage software controls provider Younicos, BYD 2MW (2MWh), Toshiba 2MW (2MWh) and LG Chem 1 MW (0.5MWh), with Siemens building the energy storage system. Fiamm is supplying 2.4MW (8.3MWh) and GE 1MW (2MWh) of sodium nickel chloride batteries.

The batteries are being installed on Codrongianos, in Sassari province on Sardinia and in Ciminna and Casuzze, both in Palermo on Sicily, in two phases.

NGK was selected by Terna, based on its global installations which amounted to some 200MW, reflecting the company’s experience and references.

In comparison, at the time, technologies such as lithium ion had a much smaller installed base, mainly in pilots and demonstrations.

“These companies were chosen as part of a worldwide tender, based on whether the technical specifications were high enough to meet with our demands,” says Tortora.

“But, as part of requirements set out by the economic development ministry and the energy and gas authority, Terna must test out different technologies, to reduce the single supplier risk and gain experience by gathering knowledge on the state-of-the-art electrochemical storage.”

Terna is in the process of procuring the remaining 28MW of energy storage for its power-intensive needs. In its tenders the TSO specified a maximum of 4MW of flow batteries as well as lithium supercapacitors. How-

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ever, most of the storage under Terna’s Grid Safety and Defence plan will be lithium ion, followed by sodium nickel chloride batteries.

Calculating ROI

Because different end services are potentially possible with batteries the whole process of calculating the return on investment is complex, based on the battery’s energy capacity, speed of response, efficiency, its ability to perform as primary or secondary reserve and so on.

For wind curtailment, specifically, the return on investment is proving elusive to calculate. “There are many different variables that can affect this ultimate outcome, such as battery capacity, grid developments and factoring in works deferral and so on,” says Tortora.

Terna is modelling return on investment with the regulator and also McKinsey.

The nearest comparison on investment returns might be solar PV technology. “PV is not as complicated as energy storage, as it only generates energy,” she says. “However, PV panels have been very expensive and policy measures and subsidies have helped bring down the cost by stimulating market demand. Batteries are capitalintensive. But, like PV, their operational costs may not be as high as with other technologies.”

According to the Italian National Renewable Action Plan (NREAP) by 2020 some 8GW of PV will have to be installed. At the end of 2013 PV generation produced over 17GW. “This amount of renewables — more than double set by our targets — means

STORAGE IN THE PIPELINE As a partner in the EU-funded Grid 4EU project, Enel Distribuzione will also be installing an energy storage system, approximately 1MWh, in Forlì-Cesena, in the Emilia Romagna region. The demonstrator will increase the medium voltage network’s hosting capacity for distributed energy resources, by introducing active control and demand response of generators on the medium voltage network. The existing grid is designed for power flowing in one direction.

The connection of lots of distributed energy resources to the grid can affect power quality, create imbalances between load and generation and can lead to grid congestion as well.

Forlì-Cesena is a rural area, but with a high penetration of renewable energy production, including about 40MW of capacity split over some 24 producers, but power consumption is also low. The whole Grid 4EU project runs until January 2016. Companies working with Enel on the demonstrator include Siemens as well as Cisco.

Acea Distribuzione a local DSO that operates the distribution network in Rome is also commissioning two small storage systems, both lithium ion battery based, from NEC. These installations are at secondary substation in the capital city, one inside, which interfaces with the grid at low voltage and the other

outdoor, which interfaces with the grid at medium voltage.

The main functionality of the LV 90kWh system is for backup, to reduce or avoid electric outages, depending on the length of interruptions, to the end user when damage on the medium voltage cable, where the secondary substation is connected, occurs.

The system discharges the battery to avoid outages or to reduce, or downgrade, longer interruptions.

In Italy, as with some other countries in Europe, utilities face financial penalties if outages are too frequent or too long, the point being to reduce interruptions and power cuts.

The main functionality of the other medium voltage 45kWh storage system, outside, is for renewables integration. The batteries will stabilise electricity fed onto the grid by a nearby PV power plant to increase hosting capacity and improve overall power quality.

Energy Storage Journal • Winter 2014 • 39

PROFILE: THE ITALIAN GRID TROUBLE ON THE HORIZON Italy proceeding with plans — first revealed by news agencies in June — of cutting subsidies for solar power producers looks set to alienate grid investors and, amid a tangle of possible court battles, causing a political storm.

This is in reaction to an initiative by prime minister Matteo Renzi who is trying cut power bills by 10% to households and small businesses.

The moves could potentially save up to €400 million.

the country’s FiT by 8% for PV plants bigger than 200kW or a tariff reduction of between 17% and 25% against a four-year payment extension. PV plants 900kW or smaller will see a slightly lower FiT reduction. Lawmakers also added an option that redistributes the incentives without extending the 20year payment period.

The government says its solar industry has enjoyed one of Europe’s most generous incentive schemes. This, it says, has been paid for by consumers’ electric bills.

Despite the prospective cut, overall Italian consumers will cost taxpayers as much as €200 billion over the next 20 years, says one media commentator.

“Italy’s PV market took off at the end of 2010 when new rules sent ANIE Rinnovabili, the country’s production subsidies up from €750 renewables association, is million in 2010 to €3.8 billion in 2011 considering possible actions against and €6.7 billion in 2013,” said the the feed-in tariff (FIT) cuts imposed commentator. “In the past five years, on existing photovoltaic installations. over €50 billion has gone into Italy’s The European Photovoltaic renewable energy industry. Italy has Industry Association has also around 17GW of solar capacity.” criticized the Italian government’s A potential headache for the move, arguing that the new law government is litigation. In 2013 will destabilize the once-flourishing Spain tried to do the same with Italian PV market. renewable tariffs. The result In August the Italian parliament was a wave of multi-billion euro approved legislation that reduces compensation claims by investors. new flexibility is needed to ensure the electricity market functions and without resorting to measures such as curtailment,” says Ciro Scognamilio, a business analyst in NEC’s smart energy solution division, within the company’s Europe and Middle East and Africa business.

Italy has become one of Europe’s leading test-beds for energy storage, with both the TSO and various distribution system operators (DSOs), procuring batteries to test the various possible functions of the technology on different portions of the overall transmission and distribution network.

Storage on the distribution network Enel Distribuzione, which operates the majority of the Italian electricity distribution network, is also installing storage, in addition to rolling out smart meters and trialling other smart grid technologies.

In April, the NEC commissioned a 2MW (2MWh) energy storage system, installed at the DSO’s Chiaravalle primary substation in Calabria, a south-

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ern region in the ‘toe’ of Italy’s boot.

The batteries are being used by Enel Distribuzione to test a potential new dispatching service for DSOs with the national grid. “The system will be used to control the flow of electricity from Enel’s substations, using electricity demand forecasts, which are sent to Terna, though during the trial the TSO’s role will be simulated by computer software,” says Donata Susca, head of networks development at Enel Distribuzione.

The system does this by storing surplus energy produced by renewable energy generators, releasing stored energy when the sun is not shining or the wind is not blowing. The batteries will enable local consumption of stored surplus energy. Rapid variations in capacity due to sudden wind gusts or clouds will be softened. This energy storage system will reduce the variability of energy transmitting between the distribution and transmission portions of the grid in areas such as Chiaravalle, where there is a large

“After the first year of operation we should have all the elements to evaluate performance over all the four seasons, which are critical for renewable energy plants. The first operational results should already be available by the end of 2014” installed base of renewables.

Due to the increase in distributed generation, in particular PV power plants, many primary substations are seeing a reverse flow from medium voltage to high voltage lines, causing a high variability in the energy exchange profile at the primary substation.

“This means several issues, for instance the increase of prices on the ancillary services market,” says Scognamilio.

Performance evaluation

The Chiaravalle storage system will test a range of functionalities and services, including peak shaving, power balancing, power quality, voltage regulation and frequency regulation.

“After the first year of operation we should have all the elements to evaluate performance over all the four seasons, which are critical for renewable energy plants. The first operational results should be available by the end of 2014,” says Susca.

The NEC project was awarded as part of a larger tender for batteries by Enel Distribuzione. SAET is supplying a 2MW system for Campi Salentina, in Puglia, and ABB is supplying a 2MW of batteries on the Contrada Dirillo distribution substation in Ragusa, on Sicily. The plant will use lithium ion batteries made by Italian battery maker FAAM. The main aims of Enel Distribuzione’s Chiaravelle and Contrada Dirillo projects are similar, to optimize renewable generation from solar and wind sources as well as soften the intermittent and unstable generation profile inherent in wind and solar, harmonizing flows of renewable energy into the grid.

Enel Distribuzione’s existing energy storage installations include a 0.7MW (0.5MWh) lithium ion battery storage plant in Isernia, in the south-east region of Molise. The system, built

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PROFILE: THE ITALIAN GRID

by Siemens, has been running since 2011. The batteries combine generation from distributed energy resources with reliable and safe management of the system.

The project is part of Enel’s wider use of smart grid technologies connected to the Carpinone substation in Molise.

These include devices for estimating electricity generated from renewable resources, sensors for monitoring grid volumes, interaction with electricity generators to provide advanced regulation of input flows, recharging stations for electric vehicles, and equipment installed in homes to allow roughly

8,000 households, which are connected to the Carpinone substation, to monitor their consumption.

These projects in Italy, though pilots, are important because they will enable utilities and also the regulator to be able to see how storage provides different functions and potential ancillary services, such as frequency regulation, which could generate future revenues.

Existing regulatory frameworks in Europe do not play to the different advantages of energy storage — the technology can be both a distribution and a generation asset — making it

predominately demonstration projects. However, installations should rapidly grow to more than 6GW in 2017.

STORAGE BY NUMBERS

Exact numbers vary on the number of energy storage projects around the world, but in October 2013 the US Department of Energy’s (DOE) international energy storage database had surpassed 420 documented gridconnected energy storage projects worldwide.

Edison Electric Institute said last year that it had identified 150 transmission projects valued at $51.1 billion that are planned for the US by 2023. Some 76% of these support the integration of renewables. Edison expects transmission investment in 201415 to remain significantly ahead of where it was in 2011.

Natureo Finance is tracking over 120 large-scale grid-tied energy storage projects globally that are 500kWh or above.

The EU has funded almost €1 billion for energy storage projects on the continent, while Germany’s government-led selfconsumption subsidy for storage linked to solar PV could be worth an estimated €80 million a year.

Market forecasts vary too. A report by HIS, published earlier in the year, forecasts the grid-

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challenging to gauge the real economic value, or return on investment of storage.

For example, an accurate energy exchange profile, which Enel Distribuzione’s energy storage system will provide to the TSO, could potentially incentivize utilities to invest in storage as the only way to ensure power forecasts accurately match real-time generation. In anticipation of changes to regulatory frameworks the Italian DSO has identified 44 other potential storage installations totalling between 60-80MW (more than 100MWh), for installation by the end of 2015.

connected energy storage market to exceed 40GW globally by 2022 and another long-term forecast by Navigant projects revenues from the global utility-scale storage market to exceed $2.5 billion by 2023, from an industry worth $164 million in 2014.

Drivers include advances in electrochemistry that are enabling grid management through batteries, which until recent years would have been inconceivable due to safety, cost, durability and efficiency concerns.

According to IHS’ prediction, between 2012 and 2017 the US will be the largest region for grid-connected energy storage, accounting for 43% of installations during that time. The analyst estimates that only 340MW of systems were installed between 2012 and 2013, and these are

Regional demand In the US grid-connected storage installations are driven by pay for performance rates for provision of frequency regulation services. In the commercial market, the drivers for storage in the US include high demand charges. Storage procurement targets in a growing number of states, led by California, will drive grid-scale storage in the next few years.

Other global regions that are beginning to see significant deployment of grid-connected energy storage, include Germany and Italy, in Europe, while in Japan, increasing penetration of renewables, especially solar photovoltaics as well as growing peak demand are creating ripe conditions for storage.

Technology trends Natureo Finance has found that for power-based storage technologies there was strong subsidized growth in 2011, followed by a pause in 2012 and weakness in 2013. Over this period sodium sulphur and flywheels waned while lithium ion began to strongly emerge, with a focus on flow battery technologies too.

In terms of technology trends for energy-based storage technologies sodium sulphur has largest installed base by far. But, in recent years this technology has seen little growth, creating opportunities for alternatives like lithium ion and flow batteries.

Energy Storage Journal • Winter 2014 • 41

forthcoming events minds in business, academia, and government to advance cutting-edge technologies that could fundamentally change the way we generate, use and store energy.

Contact www.arpae-summit.com

Energy Storage India 2014 New Delhi December 4,5 The structural realignment of the energy infrastructure in India is the focus of the Second Energy Storage India Conference & Expo. While the main interest will be on the establishment of technologically and economically viable energy storage and microgrid technologies, the conference and expo will systematically present a selection of practical applications and pioneering solutions while illustrating the necessary political conditions.

The day before the start of the expo, interested visitors and exhibitors can take part in preparatory workshops of the conference.

The conference will be hosted at the Kempinski Ambience Hotel.

After China, India is the most populated nation in the world, with a total population of almost 1.3 billion.

Providing access to reliable power and power quality for all is a major challenge.

In the Smart Grid Vision and Roadmap, India’s ministry of power has set a goal of electrification of all

Renewable Energy World Conference & Expo North America Orlando, Florida, US December 9-11 Renewable Energy World Conference & Expo North America acts as a platform for information exchange, networking opportunities and new business development covering all sectors in renewable energy. The event will take place in the west halls of the Orange County Convention Center, in Orlando, Florida.

In December 2014, Renewable Energy World Conference & Expo North America will once again be co-located with Power Generation Week.

households with minimum 8 hour of power availability. This will require providing electricity to over 400 million people currently not connected to the grid.

While developments are still in their infancy, the market has tremendous potential.

Last year, India assumed a pioneering role in the deployment of advanced energy storage systems, particularly for decentralized applications with over $300 million spent on lithium ion battery systems for telecom towers.

Apart from the 600,000 telecom towers, India is also planning to install 26 million solar powered water pumps in coming decade.

Over the next two years, the government will install the first pilot grid scale energy storage plants, and plans for a major implementation of this technology are to be completed by 2022

NAATBatt 2015 Annual Meeting & Conference,

Contact Sachin Patil Messe Düsseldorf India Pvt E-mail: PatilS@md-india.com Tel: +91 11 2690 1655 Mob: +91-9717179615

The 32nd International Battery Seminar & Exhibition

representatives, investors to technology and engineering experts, the SPG USA congress tackles real issues to effect real progress in the industry.

The speaker line-up includes: Camilo Patrignani, CEO, Greenwood Energy, Edgar Arvizu, head of power markets & Strategy, Gestamp Solar. Dora Nakafuji, Director of Renewable Energy Planning, Hawaiian Electric, Rex Stepp, leader, Renewable Energy Programme, Arizona Public Service, Wayne Mays, director of engineering, Iberdrola Renewables, JC Shore, CEO, Circular Energy, Nick Addivinola, corporate development & M&A, SunEdison, Nader Jandaghi, director C&I, EDF Renewable Energy and Maxwell Dworkin, senior director solution development, SunEdison

Phoenix, Arizona, USA February 16-18 The National Alliance for Advanced Technology Batteries (NAATBatt) Meeting & Conference is the premier business development event in North America for professionals working in the electrochemical energy storage supply chain This also includes the Energy Storage Innovation Summit. At the summit, 20 emerging companies jury-selected by a committee of NAATBatt member firms make flash presentations to the meeting about new, market-ready technologies that are available to industry for immediate licence or acquisition.

Contact Rayna Handelman Tel: +1 312 588 0477

Fort Lauderdale, Florida, USA March 9-12 In its 32nd year, this seminar is the leader in providing key industry speakers to discuss the state of the art of worldwide energy storage technology developments for portable, automotive and stationary power applications.

Contact Tel: +1 561 367 0193 Tel: info@powersources.net

ICLB 2015: 13th International Conference on Lithium Batteries Miami, USA March 9-10 The ICLB 2015: XIII International Conference on Lithium Batteries aims to bring together leading academic scientists, researchers and research scholars to exchange and share their experiences and research results about all aspects of lithium batteries.

Contact Tel: +1-918 831 9160

Contact james.brown@greenpowerconferences.com Tel: +1 971 238 0700

SPG USA ’15 (Solar Power Generation USA Congress)

ARPA-E Energy Innovation Summit

San Diego, California, USA February 4-5

Washington DC, US February 9-11

8th Energy Storage World Forum

Assembling the who’s who of the solar industry from policy makers to utility

The ARPA-E Energy Innovation Summit brings together the very best

Rome, Italy April 27-30

42 • Energy Storage Journal • Winter 2014

Contact www.waset.org/conference/2015/03/miami/ ICLB

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forthcoming events Contact Singapore + 65 6243 0050 London: +44 20 8090 1613 USA: +1 978 263 9931

NY-BEST Annual Meeting and Conference

Energy Storage, Europe/9th International Renewable Energy Storage Conference (IRES 2015) Düsseldorf, Germany • March 9-11

Troy, New York, US March 11-12 NY-BEST was created in 2010 to position the state of New York as a global leader in energy storage technology, including applications in transportation, grid storage, and power electronics. The consortium has more than 130 members. .

Contact www.ny-best.org

Battcon 2015: The International Stationary Battery Conference Orlando, Florida, USA May 12-14 The goal of Battcon is to meet the specific needs and interests of end-users.

Presentations by users and manufacturers address everyday battery applications, technical advances, and industry concerns.

Papers and panels address manufacturing, maintenance, and testing issues and are of particular interest to data centre, power, telecom, and UPS industry personnel.

• Experience industry-specific education and networking.

• Attend an optional battery seminar to learn of the latest advancements.

• Listen to presentations and panel discussions given by the leading authorities in the field.

• Visit the vendors you’ve been wanting to see.

• Participate in breakout workshops specifically geared for industry segments.

Contact Tel: +1 954 623 6660 Fax: +1 954 623 6671 jennifer.stryker@alber.com

2015 Australian Energy Storage Conference and Exhibition Sydney, Australia June 3-4 Changes in the clean energy industry and the growing importance of NSW to the market have prompted Exhibitions & Trade Fairs (ETF) to bring the event to Sydney.

The event will focus on the energy storage industry at all levels – for utilities, energy businesses, building management and the emerging electric vehicle markets.

We are pleased to confirm our ongo-

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Messe Düsseldorf

In 2015 the International Renewable Energy Storage Conference (IRES) will take place for the first time in cooperation with Messe Düsseldorf and OTTI. Running in Düsseldorf for the first time, IRES 2015 is being held as a concurrent event with ENERGY STORAGE EUROPE (Conference & Expo) and the 4th Conference Power-to-Gas Conference (OTTI). A related trade show will feature some 100 exhibitors.

Because of the enormous successes of past IRES conferences EUROSOLAR and the World Council for Renewable Energy (WCRE) will continue the IRES series in 2015.

The series of IRES conferences has emerged as the leading forum for the discussion of the pressing problems with renewable energy storage by ing association with the California Energy Storage Alliance (CESA), which is a group committed to advancing the role of energy storage through policy, education, and research. Although Australia shares many traits with California, we are being left behind by technology, so there are many things we can learn from California’s experiences and the progress and knowledge of the CESA. Contact www.australianenergystorage.com.au/conference/

16th Asian Battery Conference (16ABC) and Exhibition Bangkok, Thailand.

September 8-11 Over the years, the conference content and its drivers have changed over the years, from a very technical and scientific format to one that now also addresses the commercial and socio economic aspects of a growing, developing industry.

At the time of the first ABC, back in

drawing together one of the largest gatherings of scientific and economic experts worldwide.

As of 2015 the participants can choose from even more extensive options.

The three conferences and the exhibition will take place March 9-11 in the professional surroundings of Messe Düsseldorf (Trade Fair Dusseldorf), Germany. Combining their events, the organizers, thereby, will establish the most important energy storage meeting worldwide.

Contact Marius Baune, Team Energy Storage Tel: +49 228 362 373 Fax: +49 228 361 279 info@eurosolar.org 1988, the world lead tonnage consumed was 5.5 million tonnes with 65% entering the battery market, today we consume over 11 million tonnes with 85% being converted to batteries. The range and types of batteries we now produce have also changed during this period with VRLA a standard product and designs for stop–start vehicles becoming commonplace.

Now the challenge is for lead acid batteries to take on the challenge of the grid which will increasingly need to gather yet larger amounts of renewable energy in the years to come. A special stream of the conference will be dedicated to this.

Contact General/registration Lucy Cote e. events@conferenceworks.com.au Tel: +61 3 9870 2611 Sponsorship/exhibition Mark Richardson Cell: + 61 412 160 133 e. mark@conferenceworks.com.au

Energy Storage Journal • Winter 2014 • 43

HEROES OF THE GRID: MERZ

Towards the end of the 19th century, the fledgling British electrical industry developed in leaps and bounds, But the result was a mess.

A unified and national system was needed. Enter Charles Merz, an electrical genius, The architect of the National Grid

Charles Merz: King of the grid Chaos. That’s about the only way to describe the fledgling British electrical industry at the turn of the 20th century. The sector may have advanced in leaps and bounds but the result had been a spectacular mass of inefficient and uncoordinated power stations.

Many had been built to use direct current only, restricting their size.

Meanwhile the AC stations were operating at different voltages and frequencies.

Linking them all up had become virtually impossible.

But one man — Charles Hesterman Merz — solved the problem. He devised the concept of a single transmission system in the form of a national grid and pioneered the use of highvoltage three-phase AC power distribution, earning himself the title “The Grid King”.

Merz was born in Gateshead in October 1874, the eldest child of John Theodore Merz, a chemist, industrialist, philosopher and devout Christian (Quaker).

In 1889, when Charles was 15, his father, co-founded the Newcastleupon-Tyne Electric Supply Company (NESCo).

NESCo was established with the initial objective to supply electricity, as its prospectus read, for “4,500 10 candle-power lamps, of which 3,000 could be alight at one time.”

NESCo’s first step toward achieving this goal was to build its first power station, at Pandon Dene in the city’s east end. NESCo was one of two electricity companies that were founded in the Newcastle area that year. The other, Newcastle and District Electric Lighting Company (DisCo), was established around the same time. A line

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was drawn down the city’s Grainger Street, with NESCo supplying the area to the east and DisCo that to the west.

The young Merz was bright, first learning Latin and Greek at home before continuing these studies at

school. His mother’s religious connections — she was the daughter of a well known Quaker — meant that from 1888 Charles’s secondary education was at Bootham School, an independent Quaker boarding school 80

Energy Storage Journal • Winter 2014 • 45

HEROES OF THE GRID: MERZ miles south in York. The practical side of Quakerism which in addition to its spiritual side aims to improve human existence was to permeate Merz’s thinking his entire life. He went on to study at the Durham College of Physical Science, Newcastle upon Tyne.

In August 1892, aged 18, Merz went to work as an apprentice at NESCo’s Pandon Dene generating station.

He was a quick and apt learner and within a couple of years his education was to broaden (and his travels were to begin).

First, he became a pupil at Robey & Company, an engineering firm in Lincoln before going yet further south to work at Bankside station, owned by the City of London Electric Lighting Company. Here Merz oversaw contracts for the British Thomson-Houston Company, an electrical equipment manufacturer, where his father was, at that time, a director.

Merz, now just 23, was appointed manager and engineer to operate the Croydon Electric Lighting Station and from there he went to the offices of the BTH Company, on Cannon Street in the heart of UK capital working with the Central London Electric Railway.

Merz continued working rail and tramway electrification, becoming the first secretary and chief engineer of the Cork Electric Tramways and Lighting Company, in Ireland which was at that time part of the UK.

Meeting with McLellan

This was to prove a pivotal moment in his life.

Here he met and worked with William McLellan, a former assistant with Siemens Brothers: the two were to become friends for most of their lives, as well as being colleagues and kindred spirits.

For Merz, still in his late 20s. it was a time to consolidate. And also to branch out — with a suitable partner — and McLellan was just that, With a wealth of experience under their belts, Merz and McLellan set themselves up as a firm of electrical consultants in Gosforth, close to Newcastle-upon-Tyne and Merz’s family.

In 1900 Merz & McLellan was appointed by Walker and Wallsend Union Gas to organize and structure a power station at Neptune Bank on the river Tyne near Newcastle. The team included an electrical engineer called Bernard Price who was later to play an important role in Merz’s later work.

46 • Energy Storage Journal • Winter 2014

Functionality rather than form was the guiding principle in the design of early power stations

To ensure the station was as efficient as possible, international comparisons were needed, so in the spring of 1901, Merz, and his brother Norbert, boarded the White Star Liner Majestic — then the world’s largest ship — and crossed the Atlantic for a two-month investigative tour of North America.

In a letter to McLellan he wrote “I shall put any notes I make of technical visits in my epistles to you & shall not keep a copy, so in case there are any names I want to have after — you might keep.”

During his trip Merz visited 11 cities in the US and Canada. He observed that the Boston Electric Light Company’s generating station was “quite the finest station I have seen which has been running for any time”, and he described its boilers, furnaces, generators and motors, and especially its buildings.

He was equally impressed by the economical running of the Boston company’s stations as well as by systems of charging, where he confessed he was rather taken with a tariff structure “by which we would drop the price suddenly instead of gradually on the maximum demand principle … it was not fair, but it might lead people to take care to burn over two hours.”

Moreover, in England they should “adopt some means by which to ed-

ucate people to use electricity more liberally like here.” In every US hotel room he had stayed in, “not only were the American lamps four times brighter, there were more than twice as many of them”.

The trip, and in particular the visit to Boston, was instrumental in helping to set up the Neptune power plant but — more importantly — was to help shape the thinking that would underpin the development of the National Grid later on.

New York and beyond

Of his visit to the New York Shipbuilding Company’s works, Merz wrote that they were “perhaps the most interesting works I have seen while over here — quite modern …”

He was impressed by many specialist tools developed for specific tasks, and concluded that “I did not expect to find such fine ship-building works … there is no doubt however about the superiority of the works.”

However, in one important area he was not converted by his American experience, concluding “that threephase distribution is really right in spite of the universal adoption of direct current in the larger towns here.”

What he saw on his tour influenced Merz. Neptune Bank, for example, became the first power station in the

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HEROES OF THE GRID: MERZ

The modern lighting station — part of the plant at Carville Station, Newcastle-upon-Tyne Electric Supply Co

world to provide electricity for purposes other than domestic and street lighting. It was also the first in the world to generate electricity using three-phase electrical power distribution at a voltage of 5,500 volts.

At the station’s official opening in June 1901, Lord Kelvin proclaimed: “We have seen at work what many have not seen before — a system realized in which a central station generates power by steam engines and delivers electricity to consumers at distances varying, I think, from a quarter of a mile to over three and a half miles... A larger station is in prospect, larger work is contemplated.

This admirable but comparatively small station at Neptune Bank makes a splendid beginning...

“What I am seeing today is the dream of my life realized. I do not know the limits of electricity, but it will go beyond anything we can conceive of today.”

His mother later wrote: “It went off without a hitch — Charles conducted Lord K and Sir Andrew Noble around — the latter said afterwards he was much impressed.”

The Neptune station had an initial generating capacity of 2,800 kW, which was increased to 3,000 kW a year after the station opened, with the introduction of two 1,500 kW Parsons turbo alternators, the largest built at that time. Soon after, NESCo laid high-tension cables from the power station to substations in Newcastle upon Tyne. The company also changed the system of supply that it

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previously used, from 2,000V single phase alternating current (which had been used to distribute power from the Pandon Dene Power Station), to three phase current at 5,500V. NESCo was the first statutory authority to supply electricity in such a way.

A new era emerges

The scientific journal, The Electrician, congratulated NESCo in June 1901, stating that “not merely electric power supply on Tyneside was formally inaugurated last Tuesday, but the era of electric power utilization all over the kingdom.”

From there, Merz & McLellan scarcely looked back — they quickly established two offices, one in Newcastle upon Tyne and the other in Westminster close to the Houses of Parliament in London. Merz was appointed adviser to Charles Coffin, manager of General Electric Co, then the biggest electrical concern in the world.

Commissioned by NESCo, in 1904 Merz designed the Carville power station, also on the Tyne. Fitted with the latest steam turbine generating equip-

ment, Carville quickly superseded Neptune Bank and was recognized as the first large generating station of the modern type, cementing Merz’s engineering reputation. Power Station Design, a paper Merz wrote with McLellan and presented at the Institution of Electrical Engineers, was published in its journal. It explained his principles of design to achieve economy of production and reliability of supply but also identified the need for further development.

Some of the paper’s contents flew in the face of popular thinking: “Since the early days of the distribution of electrical energy any amount of attention has been directed to the Power Station as compared with the Distribution System which is hardly warranted by its importance from either an engineering or a commercial standpoint,” the piece noted.

Merz recognized that in Britain, where industries were concentrated in certain areas that public electricity supply needed to be a cheaper and more reliable alternative to private electricity. Interconnecting several power stations by high voltage would make this possible, reducing the number of power stations compared with independent operation, while improving reliability and allowing the most economical stations to supply the most electricity.

However, Merz also saw the challenge in doing this, as under faulty conditions, such an interconnection would cause major damage unless the faulty transmission or component could be isolated automatically and quickly. With Bernard Price, Merz invented balanced protection, which later led to many developments in system protection technology.

Achieving system protection enabled Merz to develop a new transmission system for NESCo to supply electricity much more cheaply. Much later on, in 1916, Merz described the principle of an interconnected system with its many advantages in an Institution of Electrical Engineers discussion concerning electricity supply for Great Britain.

“Since the early days of the distribution of electrical energy, any amount of attention has been directed to the Power Station as compared with the Distribution System which is hardly warranted by its importance from either an engineering or commercial standpoint.”

Energy Storage Journal • Winter 2014 • 47

HEROES OF THE GRID: MERZ Merz understood too that the lack of standardization across the utility business was a massive block to efficiency and developing the power grids of the future. In 1905 Merz tried to influence parliament to unify the various voltages and frequencies in the country’s electricity supply industry.

During the protracted proceedings of the Administrative County of London Electric Power Bill in 1904–1905, when he was only 30, Merz was called upon as an expert witness. After passing all committee stages, however, the bill failed through lack of parliamentary time.

It was not until World War I that parliament began to take this idea seriously, appointing Merz head of a parliamentary committee. Later, in 1916 Merz explained how the UK could take advantage of its small size, creating a dense distribution grid to feed its industries efficiently. His findings led to the Williamson Report of 1918, the basis of the Electricity Supply Bill of 1919 and a first step towards an integrated electricity system.

Further travels

During his whole career Merz continued to travel abroad, promoting power supply and railway electrification. Even when his work was at some of its busiest, for example, in 1903, Merz went to Germany to inspect steam turbines.

In 1907, he travelled to Australia, via Vancouver. Following a visit to Melbourne, he laid down the basis of legislation and organization adopted for the control of the power industry in the state of Victoria. In 1909 he visited South America where he reported on the adoption of electric traction in Buenos Aires.

On returning to Britain, Merz worked on the Home Secretary’s Departmental Committee to investigate the working of the existing special rules for the use of electricity in mines. In 1912 in India, Merz presented plans for rolling stock and electric infrastructure for Bombay-Poona/Igatpuri/Vasai and Madras Tambaram routes. He was also appointed adviser to Commonwealth Edison Co of Chicago. These and other visits helped to ensure that Britain retained a large share of overseas electrical developments and contracts.

Merz married in June 1918 and his wife, Stella Alice Pauline Byrne de Satur bore two children, Pauline Barbara and Robert de Satur.

During the First World War, Merz chaired the subcommittee on electric-

48 • Energy Storage Journal • Winter 2014

work around this time included the publication of the South African Railways Report on the Introduction of Electric Traction by Merz & McLellan.

The National Grid

ity power supply. With many of their staff enlisted, Merz & McLellan had to make do with a skeleton crew.

Their contracts included the design and building of mobile power stations for the battlefield.

In 1918, Sir Eric Geddes created the Department of Experiment and Research at the Admiralty to pursue advances in anti-submarine warfare.

Merz, who was always very much of a polymath, was appointed director and under his guidance the new department organized links between the Admiralty, leading scientists, engineers and British manufacturing. McLellan was appointed electrical engineering assistant to the director of dockyards and repairs at the Admiralty.

In 1919 prime minister David Lloyd George and Sir Eric Geddes enrolled Merz to help in the vast duties of demobilization. The same year he advised upon the design of a new power station at Barking in London. Other

Merz had become convinced that Britain needed a new electricity supply system that would be more economic and efficient. And this perhaps was the greatest achievement in his long and successful career.

In 1925 he appeared before the Electricity Commissioners (the Weir committee) to present a technical report where he outlined the concept, economic feasibility, and practicality of an efficient national transmission system.

The passing of the Electricity (Supply) Act in 1926 led to the Central Electricity Board standardizing the nation’s electricity supply and establishing the first synchronized AC grid, running at 132 kilovolts and 50 Hertz.

It started operating as the National Grid in 1938.

With the outbreak of war in September 1939, the 65-year-old Merz, placed his experience at the service of the Ministry of Supply.

But his career and life — and that of his children and staff — came to an abrupt end. On the night of October 14, 1940, Merz, his two children, with their longstanding maid and chauffeur, were killed by an enemy bomb at his home, 15 Melbury Road in Kensington, London. The house was gutted. Only his wife Stella escaped, though injured. She was to survive him by some 30 years.

RECOGNITION Merz was vice president of the Institution of Electrical Engineers from 1912 to 1915. He greatly valued the bestowal of the Faraday medal by the institution in 1931, the honorary degree of DSc (1932) from Durham University, and the vice-presidency of the Royal Institution.

In June 1955 at Aberdeen dockyards Stella Merz launched a steel collier naming it the Charles H Merz.

In 1965, then prime minister Harold Wilson officially opened Merz Court at the School of Electrical and Electronic Engineering at the University of Newcastle upon Tyne.

In 1970 Stella gave money to the University of Cambridge for promoting teaching, study and research in electrical engineering to form a fund to be called the Charles Hesterman Merz Fund Award.

In April 2013, Merz and McLellan were honoured by a commemorative plaque at 54 High Street, Gosforth where they both lived.

It reads “Pioneers in electrical power systems, founding partners of Merz and McLellan and responsible for conceiving what became the UK National Grid. Lived here until 1913.”

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