This weekend is the second anniversary of a landmark ruling issued by the California Public Utilities Commission directing the three major California investor-owned utilities to procure 1,325 megawatts of energy storage by 2020.
In the lead-up to the release of CPUC’s energy storage decision (D.13-10-040), a culmination of several years of groundwork by the CPUC staff and commissioners, as well as many people, organizations, and institutions beyond the CPUC, there were concerns about whether the initiative might be too radical, expensive and risky. However, one observation can already be made: after just two years, the extent of the dramatic developments in the energy storage landscape is breathtaking, far exceeding even the wildest expectations of the regulators (author included) who played a role in developing the CPUC’s storage initiative.
Once again, Silicon Valley has been a driving force behind a major technology transformation, this time in energy storage. What seemed radical at the time the CPUC ruling was issued now appears to be yesterday’s news. Already, the cost of some storage technologies has dropped below the levels projected in CPUC’s study of energy storage cost-effectiveness for 2020.
Back then, not a single solar company was active in the storage space. Now, 70 percent of industry stakeholders deemed energy storage to be the most important technology for solar energy’s future growth, according to a poll conducted among attendees last month at Solar Power International, the largest solar trade show in North America. Also, most major solar players and independent power producers (even those traditionally focused on gas) are now busy developing an energy storage strategy.
Back then, there were just a few small storage projects on the ground, mostly pilots. In contrast, a recently released ESA/GTM Research study estimates that 41 megawatts of storage projects were installed in just the second quarter of this year, with the total by the end of the year expected to be more than 5 times that -- 220 megawatts. Moreover, some consultant studies are projecting new installed storage capacity to grow strongly to over 10 gigawatts in 10 years' time -- and that amount is just for the renewables integration application.
In the recent past, storage as a substitute for a gas peaker plant was just a conceptual use case in the CPUC’s study. Now, a major California utility is seeking authorization to build an actual storage peaker sized at 100 megawatts. And earlier this month, a $17 billion power producer was willing to make the stunning assertion that "Post-2020, there may never be another [gas] peaker built in the United States -- very likely you'll be just building energy storage instead."
For some time, Greentech Media has been fond of referring to energy storage as the ever-elusive “holy grail.” [Editor's note: I've recently banned the term.] It is true that the industry still has a long way to travel before the immense potential for transforming the power grid can be realized. But as with solar, there is no turning back at this point -- and we will get there.
One still encounters skeptics who offer up the usual contrarian arguments: renewables and energy storage are not reliable, too expensive, not cost-effective (and require subsidies). It really is time to let go of these points. Already there are applications, such as replacement of diesel, an expensive, dirty fuel supplying much power around the world, where the solar-plus-storage combination provides an effective, reliable solution that makes economic sense today -- without subsidies.
Where gas and coal are the primary power sources, it should be apparent by now that the continued “low” prices of fossil fuels, which still enjoy huge hidden subsidies, have been a major market and policy failure: large profits going to producers at the expense of even larger hidden costs being passed on to society. The mountains of data we have now should be enough for us to reasonably agree that continuing to burn fossil fuel and transferring enormous amounts of CO2 from billion-year-old underground deposits to the atmosphere is, as Elon Musk has said, the “dumbest experiment in history, by far.”
As the CPUC has observed, energy storage is critical to expanding the deployment of renewable energy and electrifying transportation, both prerequisites in transitioning away from reliance on fossil fuels, and thereby reducing emissions. It is urgent that we work with the tools we have now to rapidly build an alternative, clean energy future -- and of course continue to innovate and drive costs way down.
This will happen as volumes ramp up and competition heats up, as has been proven any number of times in history with a new technology.
Aloke Gupta is currently at Imergy Power Systems, a provider of energy storage solutions based on vanadium-redox flow technology. Prior to this role, he was at the CPUC, helping to develop regulatory policies for emerging grid technologies including energy storage, smart grid, and demand-side management.