New York, New York, it's a helluva town. Unless you want to install some energy storage.
I spent this week digging into the city's and state's accomplishments so far vis-a-vis storage, which on paper looks like a perfect fit for the state's goal of a cleaner, more efficiently utilized grid (full story here).
Nearly four years in, New York REV has produced fewer megawatts of storage than Arizona Public Service did with two projects in the past 10 months. That's just to name one of the many other jurisdictions that's accomplished more with storage even in the absence of an overarching grid revision effort.
When I asked some of REV's architects what they saw as the top accomplishments for storage so far, the list ran pretty thin.
There have been demos, but that's nothing to brag about when so many other jurisdictions have moved on to real at-scale deployments. And the New York utilities, for whatever reason, have been so slow to act on storage pilots that the Public Service Commission explicitly chastised them about it in March and demanded each complete two projects by the end of 2018.
There are non-wires alternative projects, where a utility pays for DERs instead of a big infrastructure upgrade, and earns money on the savings. Some of those projects have included storage, but it's an indirect way to monetize this type of asset.
And then there's a solar-plus-storage tariff coming out of the proceeding to replace net metering. This would give storage revenue through a value stack (environmental, capacity, locational, etc.), but only when paired with solar. That hasn't gone into effect yet, because the utilities came back with divergent ideas about how to implement it and the PSC told them to take three months more to figure out the details.
Holistically revising the entire electrical system takes time and painstaking effort. But there seems to be some selectivity in the administration's approach.
The governor went all in on renewables, and backed up the promises with a mandate. But despite assertions that storage will play a role in REV, the administration has been hesitant to commit to anything concrete for this technology.
Storage developers say they just need some certainty that storage will be able to earn revenue in the state. That could come from a mandate, or long-term capacity contracts, or a locational value tariff for storage on the distribution grid. Those are all doable, but the multi-stakeholder, system-of-systems revision is taking a while to get there, and the industry is getting tired of delays.
Don't forget capacity
New York's predicament reflects a broader challenge in grid decarbonization: too much emphasis on clean energy at the expense of clean capacity.
New York is achieving a remarkable thing with its clean energy procurements. But so far, it's pairing those with an increasing reliance on fossil fuels for peak capacity. In New York City, that includes keeping combustion turbines from the mid-20th century running, even as they spew unsuppressed air pollution into minority-dominant neighborhoods and communities.
Hitting 50 percent renewable energy over the course of a year does not address this problem. Without policy safeguards, the rise of intermittent renewables makes fast-ramping gas plants all the more valuable. In the absence of market rules that allow storage to compete, that's really the only option (hydro can help, but only in select geographies).
Peak power already drives a disproportionate amount of the cost of the electric system, and it keeps growing. Cost-effective and clean peak power thus avoids creating new fossil fuel infrastructure that will be around for decades, and helps crack down on creeping grid costs and inefficient utilization.
Storage for peak capacity is not necessarily clean, of course. It's only as clean as the power put into it.
As the share of renewables on the grid increases, though, it becomes cleaner, and it's possible to hook it up specifically to solar or wind if that's considered valuable. Setting aside greenhouse gas pollution, battery peakers are clearly a win for local air quality, as they can store power generated far away and deliver it in a city without emitting particulate matter or NOx.
It's easy to brand 100 percent renewables, or 50 percent. It's harder to explain the mechanics of how a grid delivers power at peak times, and why that power ends up being dirtier and more expensive. Ultimately, both clean energy and clean capacity will be needed for a low-carbon grid, and it would be good to start talking about them as twin pillars of decarbonization.
Alevo rides again
In one case of the diverse stumbling blocks hindering storage in New York, the state contracted out a major storage road map to a consultant, which turned out to be Alevo Analytics. Alevo, as we know, went bankrupt shortly thereafter.
I learned that that's not the end of the line for the company, though. The analytics unit built up a brisk business of its own, separate from the battery development that formed the company's core business. Now the analysts have reconstituted, evidently under the name Acelerex.
A very bare-bones website under that name lists a series of grid analysis services, including energy storage studies, transmission and distribution planning and regulatory analysis. It says nothing about who's involved or where they're based, just to contact firstname.lastname@example.org with inquiries.
Fun with finance
New storage financing options come few and far between, but we've had two in recent weeks.
JLM secured $25 million in project financing to support its Phazr product for C&I customers. That's the compact battery that snaps onto the rack underneath each solar module, like a microinverter but for storage.
The funding came together with the coordination of GoldenSet Capital Partners and CohnReznick Capital, and will be available to customers as "energy as a service and standard loan options for a monthly payment that is substantially lower than the savings provided by the system," according to a statement. JLM expects the financing will be fully committed by Q3 of 2018.
It's telling that the money will go to C&I in particular, even though the Phazr makes sense in residential settings as well. To get financiers to offer up their cash, it's crucial to have an actual business case to show that the customer will be more, rather than less, likely to pay it back after installing the storage.
That's not possible for residential storage serving a resilience function: The customer pays a lot of money and gets no monetizable return for it. But it can work for a commercial customer facing pricey demand charges or trying to cut operational expenses for energy, provided the customer saves more than they spend on the storage each month.
Earlier this month, Generate Capital also financed a six-site deployment of Sharp's SmartStorage PV+storage product for the Santa Rita Union School District in Salinas, California. The installations will provide renewable energy, savings on utility bills, backup and microgrid capabilities for resiliency and educational opportunities for the students.
Sharp helps obtain financing by offering a 10-year demand-reduction guarantee as part of its asset management guarantee. That defrays the risk for financiers that the customer won't be able to pay off the asset. Generate even managed to find tax equity to fund the project, which is rare for this space.
That's a wind-win
There's a new development in the curtailment containment literature. Paul Denholm and colleague Trieu Mai at the National Renewable Energy Laboratory have a study out on how much storage is needed to reduce curtailments in a 55 percent renewable grid. Some points of note:
- Curtailments spike for solar power at smaller penetrations than wind. A solar-only portfolio hits 25 percent curtailment by the time it supplies 40 percent of grid energy; wind doesn't hit that level of curtailment until it makes up 53 percent of generation.
- The renewable resource mix to minimize curtailment (on a Texas-like grid with 55 percent renewable energy) is 38 percent wind and 17 percent PV, a 2.2 to 1 ratio.
- The study suggests it's possible to make a dent in curtailments without ridiculously long-duration storage. In fact, there are diminishing returns after 8 hours: "Across all the mixes of wind and solar resources analyzed, at least half of the potential avoided-curtailment benefits are realized with 8 hours of storage, and the first 4 hours provide the largest benefit."
- It'll be a while before curtailments make up more than a couple of percentage points of renewable generation. That means the storage industry will have ample time to reduce costs and improve its value proposition for avoiding curtailments in a high-renewables grid.
Storage in the Senate
Longtime storage advocate Sen. Martin Heinrich teamed up with Sen. Al Franken to introduce the Advancing Grid Storage Act this week.
This bill would authorize $50 million per year of dedicated funding for energy storage systems within the Advanced Research Projects Agency-Energy. That could be helpful for funding security as the White House tries to slash funding for the agency. It would also create a $500 million competitive grant program to fund up to half of storage project costs and a $500 million technical assistance program to streamline storage development.
These are big numbers, and storage hasn't gotten much love from Congress so far. That said, the hurricane season has put grid resilience top of mind, and the Trump administration has flagged storage among its infrastructure wish list projects, so the case for this bill may be more compelling than it would have been just a few years ago.