by Julian Spector
February 23, 2018

We're not even two months into 2018 and a slew of eye-catching storage projects have been blowing up my phone.

Now that I'm back from a firsthand examination of Mexico's solar resource, I'll take this week to recap the greatest hits of storage from the last few weeks, with an eye toward grid-scale projects that are breaking new ground and testing new business models.

Interestingly, none of these projects are from California. Storage innovation and implementation has been getting more geographically diverse, moving beyond that one key market.

This list is also a far cry from a few years ago, when a big month in storage news might mean a megawatt-strong pilot or a breathless white paper describing "great potential." Things are in motion, and it's getting hard to keep up. Time for a roundup. 

Massachusetts muni magic continues

Municipal utilities hold a special spot in the energy storage ecosystem. Their flat hierarchies and local shareholders make it easy to fast-track storage procurement compared to the lengthier bureaucratic processes at their investor-owned brethren.

This trend has been particularly pronounced in Massachusetts, with early projects popping up in Sterling and Holyoke. That drum beat continued last week with a new Greensmith-supplied project going into Sterling, and this week with an announcement that IHI will build a 2-megawatt/4-megawatt-hour system at a substation owned by Braintree's municipal utility.

The system will reduce the transmission costs for the utility to meet system peaks (akin to a demand charge for the small utility network), but it's also linking up to a solar system by Borrego Solar to store clean power for use at peak times.

This is part of the barrage of grant money Massachusetts awarded in December, so it's framed as a demonstration. Many munis are interested in demonstrating the same thing. Indeed, this seems to be the short term growth model for storage in the Bay State.

Grid services and wind in Germany

Enel Green Power is moving into Germany, developing a 22-megawatt battery system with wind company Enertrag and tapping Leclanché as the engineering, procurement and construction (EPC) contractor.

The project will initially serve the frequency response market, known as the primary control reserve market in Germany. In 2017, battery storage systems served almost one-third of the roughly 600-megawatt PCR market.

This could be a valuable early market for German grid storage, but it's risky to rely too much on it. Frequency regulation markets can easily get oversaturated, dragging down the revenue developers can attain, and small rule changes can have outsized effects. (See the boom and bust cycle of PJM, the beachhead market for storage in the U.S.)

But this project has a longer-term play: taking surplus power from Enertrag's wind farms to avoid curtailment. My last installment of Storage Plus detailed the difficulty in pairing storage with wind economically; this would be a case where local grid conditions make it more viable. It's unclear exactly when this use will begin, or how it is contracted.

Also notable: The developers will phase in the battery as its segments come together. They expect 2 megawatts to be operational in April, scaling up to 22 megawatts by the end of 2018. That lets part of the plant start working and generating revenue while the rest is being constructed, a benefit of modular system design.

Nothing but the peak

Arizona Public Service inked a deal with First Solar to provide solar power only during the summer peak hours between 3 p.m. and 8 p.m. I reported the full details here, but the key takeaway is that it is now economical for solar paired with storage to beat out gas plants for delivering peak power.

That's a big development, especially in a state that has no policy drivers sweetening the deal for storage. The economics are specific to the desert climate with abundant solar power, so we shouldn't expect this model popping up everywhere, but those requirements still leave ample room for growth.

This is also a big battery: 50 megawatts, close to 3 hours of duration. And the announcement proves that First Solar wasn't just talking about getting into storage; it's got at least one real deal to take care of.

It's what Thomas Edison would have wanted

Speaking of big players in adjacent industries, GE doubled down on its storage activity.

The company rolled out a partnership with British developer Arenko that starts with a 41-megawatt project. That's GE's largest so far, and puts the industrial giant firmly in the storage big leagues, among the likes of Fluence, Tesla, Greensmith and soon-to-be First Solar.

That's not the only news from GE. The company confirmed to me that it's re-engineered its approach to storage, situating it as a standalone unit within the flagship Power division. That's the latest of several iterations, including an ill-fated manufacturing play and a stint as part of the commercial energy services unit Current.

GE stands apart from its fellow storage developers in that the company still makes a lot of money from gas generation, so it's framing storage as a tool that plays well with the incumbents. Most other large developers explicitly want to chase gas off the grid for peak capacity service; even storage folks at AES, which does plenty of gas elsewhere in its corporate structure, affirm this mission. 

We'll see if GE's more incrementalist approach resonates with the market. After all, most large storage buyers are utilities, which have a vested interest in a slow and orderly energy transition. Then again, securing a deal typically has more to do with a company's price structure and long-term trustworthiness than its broader philosophy of market change.

Making waves in Texas

It's hard to develop storage in Texas. It's classified as a generation asset, so wires utilities can't own it for distribution deferral, and there aren't many other ways to make it pencil out.

Greensmith and E.On found a way, though. They recently turned on the Texas Waves project, which combines two 9.9-megawatt short-duration batteries. They're hooked up to two E.On wind farms and provide ancillary services. The companies said the batteries saw action during a January cold snap, enhancing grid reliability during the event for ERCOT.

Texas has enough wind capacity that the economic case for avoiding wind curtailment with storage will make sense there before it does elsewhere. E.On has the balance sheet to test those waters early. Watch for whether it follows up with a bigger battery, or bides its time to let the market develop.

Baja batteries

Storage came up numerous times at Solar Summit Mexico, but the discussion stayed speculative due to a lack of existing projects.

That will change soon, because the first battery storage project is moving forward in Baja Sur. The lower tip of the Baja peninsula operates almost like an island grid because it's so far from the mainland.

Hector Olea of Gauss Energía is developing the 10-megawatt system in La Paz alongside a 30-megawatt solar farm. He knows the territory, because he built Mexico's first merchant PV in the region back in 2013. It got knocked out by a hurricane the following year and came back online in 2016.

Don't expect a bustling storage market to emerge in Mexico too soon. The government is still refining its energy policy with respect to storage, and there aren't many clear market signals calling for it. The early use cases will look like Baja Sur: isolated spots on the grid with a growing share of PV production that needs somewhere to go.