Storage was once a product, but like software, it is now increasingly sold as a service.
AES Energy Storage, a subsidiary of energy giant AES, today announced it has begun to commercially operate a power storage farm. In a nutshell, the facility is a bank of batteries that can rapidly provide power to utilities to balance loads for a fee. The facility -- located in Johnson City, New York -- provides 8 megawatts of storage now and will grow to 20 megawatts in 2011.
AES says the battery-for-hire park is the first to be classified as a power generator by FERC, but the storage-as-service concept actually began in 2009 and 2010. Beacon Power, the Tyngsboro, Mass.-based maker of flywheels, has a three-megawatt flywheel farm in New England and started work on a 20-megawatt farm in upstate New York in early 2010.
Beacon originally planned to sell its flywheels as pieces of equipment to utilities to help fine-tune power output from power plants. Utilities, however, didn't want to risk capital on building their own storage facilities so the company shifted to services. Grid balancing and other so-called interconnect services could rise to $1 billion in a few years as more renewable parks get built, CEO William Capp told us last hear.
"Utilities don't want to make a big bet yet," he said then. "We are acting as a utility in the state of New York."
Meanwhile, Megawatt Storage Farms, co-founded by industry vet Ed Cazalet, wants one day to provide similar sorts of storage services in California. And Xtreme Power, which wants to commercialize a dry-cell battery initially developed in the early '90s by Corning, British Aerospace and Ford Aerospace, is working in conjunction with wind andsolardevelopers to make storage an integral part of solar or wind parks. The company this week won a fourth contract to build a storage facility in Hawaii.
In some ways, classifying storage as a service rather than a product is an accounting trick. But a similar accounting trick -- that of selling residential solar panels under lease contracts -- has caused startups like SolarCity and Sungevity to explode.