Here are the 2 biggest challenges to the future of energy storage
<p>Energy storage looks bright, but current solutions are far from plug-and-play. Here's why.</p>
The recent Energy Storage North America (ESNA) conference in San Jose, Calif., can be summed up in one word: optimism. The sanguine outlooks on market opportunities and trends were unanimous. Several vendors can't manufacture their equipment fast enough to meet demand.
California is making the market for energy storage. The ninth largest economy in the world recognized energy storage systems as important technologies in electricity value chains with last year's passage of AB 2514. The California Public Utilities Commision's Decision 13-10-040 (PDF) set the regulatory expectations about utility-interconnected and behind-the-meter energy storage. States such as California view energy storage as a critical tool to firm up intermittent forms of renewable generation.
State policies in the Northeast encourage energy storage systems to deliver resiliency for grids and critical infrastructure. Of course, it's a credible argument that Tesla is making a market for energy storage with its gigafactory in Nevada. The company plans to build 50 GWh in annual battery storage starting in 2017. These combined influences are driving the growth of new storage technologies, services and financing mechanisms.
The comparisons to solar trajectory trends are well known. Energy storage technologies are expected to rapidly decrease in price in response to increased economies of scale and expertise. Deployment numbers forecast fast growth — particularly in behind-the-meter solutions that focus on reducing electricity costs due to high demand charges.
But the energy storage ecosystem has to overcome two challenges that could have negative impacts on adoption rates.
1. Profusion leads to confusion
First, energy storage technologies are diverse. There are chemical and non-chemical categories of storage. Many subcategories are based on different elements such as lithium, zinc, sodium or iron; and non-chemical storage ranges from pumped hydro to compressed air to flywheels.
There is significant variety in number of charges, stability in different environmental conditions, and form factors. You can select an energy storage solution to ensure that your mission-critical devices or operations are not disrupted by power outages — a resiliency function. Storage can help maintain stable grid operations, a reliability function. Storage can reduce electricity use at peak time periods or avoid those demand charges mentioned above — a cost-savings function.
[Learn more about distributed energy systems at VERGE SF 2014, Oct. 27-30.]
The market places very different values on the potential uses for energy storage by function. There's a lot of confusion that needs to be addressed with education to ensure buyers are making sound decisions that meet and exceed their expectations.
2. Secrets slow adoption
The second challenge is that early stage energy storage technologies and services usually are proprietary and customized engineering solutions. Deployments may include features that aren't supported on a commercial scale, or may not exist in the future. All of these qualities increase the balance of system costs that go beyond the storage equipment purchases. There is no equivalent to a USB standard for physical connections of different energy storage solutions to the grid.
The Byzantine variety of permitting processes and fees is a problem that bedevils the solar industry too, but it's a brand new learning curve for the energy storage system integrators and installers. In essence, there's too much complexity in the entire design, development and deployment process for energy storage systems, and it's an area that's ripe for innovation.
Time to roll up our sleeves
The good news is that vendors are working collaboratively to solve some of these problems. A new industry initiative called the Modular Energy Storage Architecture standard initiative can help promote more of a plug-and-play environment. It would be interesting to see similar collaborative efforts between utilities to standardize on interconnection processes. Likewise, the irrationalities of municipal permitting processes should be replaced with national standards — just as we use the NEC (National Electrical Code) to define the safe design and installation of electrical systems in a uniform way across the USA.
The energy storage ecosystem has to rapidly mature, or suffer self-inflicted pain evident in inflexible, non-scalable and proprietary solutions slowed down with non-standard processes. These challenges could reduce overall investment paybacks for grid scale and behind the meter deployments. Industry optimism must be tempered with pragmatism to create the right technology and policy frameworks that enable continued success to this important segment of smart grid solutions.