For too long, the rhetoric around what storage can do for the grid vastly outweighed the actual doing. This year, the industry closed that gap more than ever before.
Exceedingly few batteries actually live up to the vision of “storing clean power for when the sun isn’t shining.” Batteries perform miniscule adjustments to grid frequency, or lower businesses’ electricity consumption during a peak hour, or sit around waiting to provide clean backup power, but try messaging that to voters.
This year, finally, big renewables projects with batteries attached closed deals and even entered operations. A few states that wanted to incubate storage industries of their own proved that sharp policy really can create new markets in relatively short periods of time.
Big regulated utilities with no prior interest in batteries decided they’d like to own them in copious amounts. All the headlines made it possible to forget that the scientific pioneers of lithium-ion batteries won the Nobel freakin' Prize this fall.
That said, the U.S. storage market will triple next year and double again the year after that. All this excitement is still just a little snack before the main course. But, like some well-marinated olives or a tin of anchovies, little snacks can pack a lot of flavor.
Here are the tastiest stories that emerged in 2019, in no particular order.
Massive utility procurements
California leads the nation in putting batteries to work for a decarbonizing grid. But try convincing any other state with an argument that starts with “Well, California says…”
Storage advocates no longer need to, because utilities in numerous states are acquiring unprecedented portfolios of grid batteries.
The year started with AES completing the largest solar-plus-storage facility in the world for the Kauai Island Utility Cooperative. It serves clean power at night more cheaply than using incumbent fossil fuels. Also that month, the Hawaiian Electrical Company awarded contracts for 1,048 megawatt-hours of storage across three islands, pushing prices even lower. The utility asked for more later in the year.
In February, Arizona Public Service unveiled plans to pair just about all its solar farms with 850 megawatts of storage in the next five years. That’s in a state that has not matched California in passing climate-oriented policies; Arizona's dry, sunny terrain makes solar and batteries cheaper than gas plants, plain and simple.
Soon after that, Florida Power & Light decided it wanted to build a 409-megawatt/900-megawatt-hour behemoth to shift solar power into the evening and replace older gas plants. Again, no aggressive climate or clean energy agenda to speak of, just a lot of sun. In a state similarly endowed with sunshine, Nevada Energy contracted a "hulkingly big" set of projects totaling 1,200 megawatts of solar paired with 590 megawatts of storage.
And formidable renewables developer NextEra signed not one but two deals for triple-threat plants that combine solar, wind and energy storage. The first one goes to Portland General Electric, and then an even bigger one will serve a rural electric cooperative in Oklahoma.
This concept uses the complementary nature of daytime solar power and nighttime wind, assisted by a battery, to deliver something closer to baseload power. This could become a model for jurisdictions driving toward high rates of clean energy and looking to replace fossil capacity without spending too much.
Storage comes to the South
The Southeastern states have lagged behind on several grid trends: market deregulation, renewable portfolio standards, wind farms and energy storage, to name a few. But now they’re catching up on the battery front.
Utilities in Alabama, Arkansas, Tennessee and Georgia have started asking for energy storage proposals. Duke Energy pledged to spend $500 million to install lots of batteries across the Carolinas and already has several small systems operating.
After stakeholders pushed Georgia Power to adopt a more ambitious clean energy plan, the utility declared itself an upcoming “leader in the Southeast in battery energy storage,” based on its desire to build and own 80 megawatts. Virginia’s Dominion Energy had a similar idea, but smaller: It plans to build 16 megawatts of storage pilot projects and study them for five years.
Heady stuff, if you forget that 409-megawatt colossus Florida Power & Light is building, casually crushing all its regional peers.
Regulated utilities earn guaranteed profit for building stuff. If questionably necessary gas plants start to raise eyebrows at the regulatory commission, energy storage instead bestows a warm glow of modernity. And helps reliability and affordability and all of that, naturally.
FERC's defense of Order 841
The Federal Energy Regulatory Commission upheld its famous Order 841, which told the competitive wholesale power markets it governs that they had to let energy storage participate. Some of those groups challenged the decision, and in May FERC ruled on the rehearing, insisting that individual storage systems should be able to compete, said Jason Burwen, vice president for policy at the Energy Storage Association.
"The rehearing order in particular...was really powerful, because FERC gave a very robust defense of competition and ensuring that [distributed] storage has a means to participate in wholesale markets," Burwen said.
That "foundation-setting" outcome means batteries large and small will be able to participate in the grid, enhancing competition and serving FERC's mission of guaranteeing just and reasonable rates, Burwen added. But FERC and grid operators are still hashing out problems to fix in their compliance plans, which phase in over the coming years.
Still in the works: FERC split off the topic of aggregated storage into a separate proceeding, which has not yet concluded.
Aggressive state policy works
Storage activity really got moving in Massachusetts and New York this year after both states used policy to encourage batteries as a component of their clean grid overhauls.
New York combines demand-side pulls, like Governor Andrew Cuomo’s target for 3,000 megawatts installed by 2030, with policy support to help storage get to market. The latter includes a new bridge incentive designed to cover the value of storage that cannot be monetized under today’s market rules, as well as a slew of R&D and early deployment programs.
Massachusetts also has a target: 200 megawatt-hours procured by 2020. The state boosts storage with an adder to its SMART incentive for solar and funded a stable of demonstration programs. And it's enacting a Clean Peak Standard to push more carbon-free power into the hours of highest demand, which tend to use the dirtiest fuel mix.
Both states decided that the ability to store and discharge power would be valuable in a highly renewable grid, and they put together some quick-and-dirty tools to get the ball rolling. These policies won’t be around forever, nor are they intended to be. But they’re already bringing jobs, economic activity and a more modern grid.
Big money keeps buying in
A few years ago, the European utilities began to gobble up U.S. storage startups. This year, oil and gas giants bought their way in.
Shell acquired sonnen, the residential storage company that carries a price premium in the U.S. but reached mass-market status in its home market of Germany. In December, BP upped its stake in solar and storage developer Lightsource to 50 percent.
In a different vein, private equity firm Energy Capital Partners bought Convergent, the large industrial storage developer responsible for the largest behind-the-meter batteries in North America. The deal showed that infrastructure investors can find value in storage as a long-term asset to own; apparently, not everyone needs to become a software platform company.
Storage replacing gas plants
Regulators eventually sided with grassroots opposition to a beachfront gas plant proposed by NRG in Oxnard, California. This year, utility Southern California Edison wrapped up its replacement, announcing a 195-megawatt energy storage portfolio that includes a massive 100-megawatt plant.
Glendale’s municipal utility backed off a $500 million gas plant it had long desired to build and instead proposed a bunch of batteries backed by some Wärtsilä engines.
Oakland’s new community-choice aggregator brokered a deal to literally swap out a jet-fuel-burning peaker in the city for a battery. And New York regulators approved an application to demolish 16 old combustion turbines at the Ravenswood power plant and replace them with battery peakers.
These victories hardly scratch the surface of U.S. gas capacity; utilities continue to push to add more, even if it requires fuzzy demand projections or overtly deceitful tactics.
But these cases do prove that, even at this early stage of the storage industry’s development, it can outcompete new gas plants and supplant old ones. What will storage be able to do after a few more years of cost declines?
Safety top of mind after Arizona explosion
The U.S. had a solid string of years with no grid battery fires, which relegated safety discussions to the “important but not hugely interesting” file. That all changed when a fire and explosion rocked an APS battery in April. The utility knows storage, as does the supplier, Fluence, so this failure couldn’t be dismissed as the result of naivete or inexperience as with the spate of battery fires in South Korea.
The cause of the fire has not yet been published, but the event reverberated through the industry. Some companies pitched alternatives to lithium-ion chemistries that promise lower fire risk. Others emphasized how much effort they put into keeping their lithium-ion systems safe. Photos of the Arizona fire have popped up as cautionary evidence in local permitting hearings.
New York City has taken the strongest stance on battery fire safety. Large batteries there have included ventilation to get rid of explosive gases that are known to build up when lithium-ion cells burn, as well as pipes to allow remote flooding of containers, in order to avoid exposing firefighters to danger. These tools have not permeated standard industry practice beyond New York; with or without them, developers will have to work harder to assuage safety concerns going forward.
Breakout year for residential
Residential storage reached more customers than ever before, setting two quarterly installation records. A few years ago, homeowners installed a couple hundred batteries per quarter; now they’re doing more than 6,000.
As the market swells, so too have the ranks of suppliers. Tesla and LG Chem maintain their volume lead, trailed by the more expensive sonnen. But this year Panasonic launched a branded home storage system, as did SunPower, and home-generator giant Generac bought a power electronics company and moved into the home storage market. Even a retired Marine colonel joined the fray to supply what he thought was lacking from the existing field.
Then, when the fall rolled around, home battery providers got a massive assist from PG&E. The utility cut off power to millions of people to avoid starting new and potentially deadly fires. Its execution in October was sufficiently chaotic and bewildering that homeowners in arid zones of Northern California began scrambling for any way to avoid replicating the experience for the decade PG&E says it needs to fix things up.
To close out the year, California regulators proposed allocating $613 million from the flagship storage incentive to support families in the fire zones, specifically low income, medical needs and people facing frequent loss of power. Home batteries have never been more relevant, but there's still plenty of room to improve on the actual delivery of backup power.
Aggregated batteries score initial wins
Companies aspiring to aggregate home batteries into grid assets closed deals this year that proved there's at least some demand for the service.
Sunrun won capacity contracts for its home battery fleet in ISO New England territory and in solicitations by the cities of Oakland and Glendale to secure clean capacity in place of fossil power. Then it won a deal to contribute power to Oahu, Hawaii's effort to decarbonize the grid.
Sonnen followed through on its promise to equip entire housing developments with batteries for backup power and grid services. It installed systems in the 600-unit Soleil Lofts project, south of Salt Lake City, using an innovative deal structure and support from the local utility to make the project viable.
Vermont utility Green Mountain Power has actually been operating a network of home batteries that it owns. It used this to save customers nearly $1 million by reducing consumption during the regional grid's annual peak hour. And during a Halloween storm, the program helped keep 1,100 customers online during a major outage.
Also this year, New England experienced an outburst of "bring your own device" programs, which pay customers to make their home batteries available for utility dispatch. This creates a means to lower the cost for consumers by monetizing the grid value of their equipment.
Look for a big fourth quarter for residential and strong momentum into the new year.
Pathway emerges for long-duration storage
This year saw a parade of states joining Hawaii and California in pledging to eliminate fossil fuels from their grids. Maine, Nevada, New Mexico and New York, plus Puerto Rico and Washington, D.C., joined the fight.
Initially, these commitments boost renewables adoption, but they also create eventual markets for long-duration storage above and beyond the shorter-duration lithium-ion installations most common today.
Long-duration technologies, which actually do "power the grid when the sun isn't shining," will almost certainly prove necessary to fulfill these obligations. The industry has struggled to commercialize technologies for many hours, if not days or weeks, of storage. And until now there hadn't been any good places to sell it.
"It is not theoretical; it is very real and practical that when the whole energy paradigm in New York state is fundamentally shifting over the next 10, 20, 40 years, it will require things like long-duration storage," said Bryan Berry, who oversees the R&D program at the New York State Energy Research and Development Authority. The logic applies elsewhere, too.
Not coincidentally, this was a banner year for investment in unusual long-duration startups. Perhaps 2020 will be the year they start building at scale.