Smart grid startup GridPoint Inc. got into the utility power storage business Tuesday, announcing that utility Xcel Energy had chosen its software to manage a wind power battery storage project.

Arlington, Va.-based GridPoint will control the flow of power between an 11-megawatt wind farm in Luverne, Minn. and NGK Insulators' 1-megawatt, sodium-sulfur battery that is capable of holding 7.2 megawatt-hours of energy, the companies announced. The battery storage project is expected to be complete in January 2009.

While GridPoint has managed some small-scale storage for distributed energy generated at homes or businesses, Tuesday's announcement was a first for GridPoint in the management of utility-scale power storage, Corsell said.

But with the need to store intermittent power from wind turbines and other renewable energy sources expected to grow rapidly, it likely won't be the last, he added.

"I believe the utility-scale energy storage model has huge potential, especially in connection with wind farm development," Corsell told Greentech Media at the Greentech Innovations: End-to-End Electricity conference in New York.

That's because wind turbines only generate power when the wind blows, meaning they need backup, or "firming" power that's today usually provided by peaking natural gas-fired power plants, he said.

"Energy storage has the potential to eliminate the need for that firming resource," Corsell said. He wouldn't disclose how much GridPoint would be paid for the deal.

Beyond reducing the need for firming power, batteries can allow wind power to be stored when prices for power are cheap and sold at peak-price times in the afternoons - a key part of what GridPoint's software will allow Xcel to do, Corsell said.

GridPoint's software platform will also be tracking the battery system's performance for the University of Minnesota, the National Renewable Energy Laboratory and the Great Plains Institute.

The power will come from a wind farm owned by Minwind Energy LLC. S&C Electric Company will install the battery and components from Japan's NKG.

Sodium-sulfur batteries, which store power efficiently but require very high temperatures to operate, are among a number of energy storage solutions being offered by startups and established companies alike. Other technologies include flow batteries, solid oxide fuel cells, thermal mass technologies, compressed air and others (see Batteries for the Grid, Q&A: MegaWatt Storage Targets Utilities and Startup ES&P to Store Electricity in the Air).

Lux Research predicted in May that bulk energy storage for utilities could hit $50 billion if only 10 percent of installed wind power plants adopted it. But because utilities are slow to adopt new technologies, Lux said the market would likely be limited to only $600 million by 2012.

Minneapolis-based Xcel first announced its plans for the wind power battery system in February, but it isn't the first to look to batteries to smooth out the delivery of wind power (see Batteries for the Grid).

In September 2007, American Electric Power (NYSE: AEP) said it was installing 6 megawatts of NGK's batteries to support its wind operations and also said it planned to install "at least" 25 megawatts by 2010, according to a report from research firm Frost & Sullivan.

Northern California utility Pacific Gas and Electric also has plans to install a 5-megawatt sodium-sulfur battery for backup purposes by 2009.

And Tokyo Electric Power Co., which partnered with NGK to develop its batteries, had two 6-megawatt storage systems operating in Japan by 2001.

GridPoint, founded in 2003, has raised more than $200 million as it has moved from making products that monitor energy use for residential and commercial clients to creating its SmartGrid Platform, aimed at giving utilities the technology to manage the flow and storage of power at a moment's notice.

Other companies in the fast-growing business of making the grid smarter include hardware makers like Trilliant, Silver Spring Networks, EnerNoc, GainSpan, SmartSynch, Tendril and Greenbox, to name a few (see Acquisitions in Smart Grid: Get Used to It).

GridPoint raised $120 million in September and bought Seattle-based V2Green, a company that makes technology to allow plug-in vehicles to communicate with and provide power back to utilities (see GridPoint Gets $120M, Buys V2Green).

GridPoint previously had raised roughly $102 million before that in four rounds of funding, with investors including Goldman Sachs Group and Susquehanna Private Equity Investments, New Enterprise Associates, Perella Weinberg Partners, Robeco and the Quercus Trust.

In May, GridPoint was chosen by Xcel Energy to participate in the utility's  $100 million SmartGridCity initiative in Boulder, Colo., aimed at deploying an array of smart grid technologies.