Here’s the recap of Smart Grid Rule #4:  You know you have a Smart Grid when your utility offers you a fair, market-based price for any electricity you agree to sell to them.       

Storage is the topic of this week’s blog.  Energy storage is defined in the Smart Grid Dictionary as “Banking electricity in batteries or other storage devices for transmission and distribution at a future point in time.  Storage can take electrochemical or non-electrochemical forms.  Energy storage is used for grid stabilization, grid operational support (frequency regulation services, contingency reserves, voltage support, and black start), power quality and reliability, load shifting, and compensating for the variability of renewable energy sources.  Energy storage is a key component of the Smart Grid.”   

As this definition notes, energy storage traditionally served an important role in power quality and bridging, ensuring continuity of power and service.  We are also accustomed to seeing batteries (plus generators) for specific applications, such as back-up power for telecommunications and networking gear, computer centers, and hospitals.  Those UPS (Uninterruptible Power Supply) devices that you see in offices are another source of battery power. 

Energy storage is undergoing a tremendous expansion into new venues, such as our homes and garages, and new applications for balancing energy generated through intermittent renewables like solar and wind energy.  Indeed, many experts consider it a vital component to most renewable energy sources to ensure that there is sufficient electricity to meet demand.  While solar energy is available during the day at times of peak demand, it is affected by weather patterns that could reduce or preclude electricity production.  Wind is most reliably available at night, producing electricity during off-peak hours.  Utility-scale energy storage allows all of these energy sources to be harvested and used when needed.  This is time-shifted generation, and it really changes the game for renewables.   Time-shifted generation is based on the premise that you charge your batteries when that power source is available, and discharge that stored electricity into the grid when it is needed.    

This premise presents an interesting challenge to utilities and public utility commissions in the USA.  Their calculations for setting appropriate tariffs are based on definitions of traditional generation, transmission, and distribution assets.   These assets traditionally only serve one functional purpose as their names indicate.  But energy storage can be treated as a generating asset when it is contributing electricity to the grid, and as a consumption point when it is recharging.  Thus, energy storage doesn’t easily fall into the existing rate cases.  The Federal Energy Regulatory Commission (FERC) is considering if they should develop a policy about storage to provide guidance to utilities and regulatory agencies.    

One of the biggest concerns is competition and cost recoveries involved in classification of assets.  Aside from utilities, investors also have concerns about the viability of investments they could make in energy storage.  A favorable or unfavorable regulatory climate, or one that is a 50 state patchwork of different asset treatments could have serious implications for the scope and pace of successful Smart Grid deployments. 

The push for distributed generation moves the issue outside of the traditional utility footprint too. Distributed generation means distributed energy storage too, and some of it will be located at what was once just the point of consumption.   And then, of course, some of it will be on wheels too, in electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). 

And finally, there are discussions about energy storage from the carbon credits perspective – is it “clean energy” when it is discharging into the grid even if its source was a dirty fossil fuel?  Or does the source of its original charge determine its “green-ness”? 

Energy storage has tremendous benefits to a Smart Grid, but it does require serious study to classify it properly for asset, emissions, investment, and regulatory purposes.  Without agreed definitions, confusion will inject delay and detours on the path to a cleaner and more secure energy future.

Smart Grid Rule #5:  You know you have a Smart Grid when energy storage is nationally defined as a specific asset class, with guidance about cost recovery and carbon emissions treatments.