Energy storage companies have banked, either implicitly or explicitly, on a "try it, you'll like it" argument. Their approach: If only utilities would give this technology a shot, they'd see it's not very hard to deploy, and it can help in ways they haven't yet imagined.
That approach is beginning to pay off. The clear message from last week's Energy Storage North America conference in San Diego was that a growing cadre of top-tier utilities are hooked on storage.
The love-in started with Southern California Edison President Ronald Nichols, who delivered the opening address Tuesday night. SCE ranks among the highest-earning electrical utilities in the country.
Five years ago, Nichols didn't think his company would soon ramp up to 450 megawatts of contracted energy storage, including 160 megawatts behind the meter, he said.
"I think we’re on a different planet now, because that is where we are," he said. "I don't think there were many utility executives who would have been up here extolling the virtue of energy storage."
SCE's first venture into energy storage -- an 8-megawatt project in the Tehachapi Wind Resource Area, took eight years from conception to its completion in 2014. This year, the utility's Mira Loma project with Tesla was completed in four months.
"I didn't think we could do it, and I was really, really pleased to be proven wrong on that," Nichols said.
Now that the company has gotten hooked on its initial storage applications, it's looking to expand into new areas. SCE recently debuted hybrid electric-gas plants, which aim to extend the operating life of gas plants by letting storage handle quick-ramping applications. Nichols said more of those are under consideration.
SCE is also looking at adding storage to the century-old Big Creek hydroelectric plant, which was the utility's first major generator. Within a few years, SCE has gone from a storage neophyte to an eager consumer.
The hometown utility at the conference, San Diego Gas & Electric, has followed a similar trajectory. After early forays, like the Borrego Springs microgrid, this utility started sprinting with storage in the aftermath of the Aliso Canyon gas leak and now claims the title of world's largest lithium-ion battery.
For that project, AES Energy Storage packed 30 megawatts of battery capacity into 24 shipping containers lined up barracks-style on a paved equipment yard next to a substation. CAISO governs the batteries to ensure capacity on the grid. The state of charge thus far typically hovers around 50 percent, allowing for charging or discharging as needed.
SDG&E takes pride in this system and was happy to show it off to visitors last week. In April, the company contracted for another 83.5 megawatts of storage, including a 40-megawatt system from AES.
During the conference, Arizona Public Service revealed it had expanded on its recent storage demonstration project by contracting (also with AES) for a transmission deferral project where the storage solution cost less than half of the conventional wires upgrade alternative.
That's not to say these utilities' experiences are wholly generalizable. The California utilities, after all, have a legal obligation to procure storage following the state's mandate. They and APS have to balance a grid with increasingly high levels of solar penetration, a challenge for which storage technology is exceptionally well suited. That confluence of regulatory and market drivers is still rare among U.S. utilities.
Then again, the California mandate says nothing about sending utility executives out to conferences to praise the role of energy storage in a decarbonizing grid. Energy storage is attaining a degree of admiration among certain utilities that exceeds the bounds of regulatory compliance.
Storage is coming to the 'other California'
We haven't covered much of Mexico's storage market in these pages, but that's because there hasn't been a Mexican energy storage market. That's expected to change.
I sat down with Mexico's top energy regulators at ESNA and learned that they're very interested in integrating storage into the regulatory regime. The country recently deregulated its electrical grid, opening up opportunities for private and foreign investment in a system that had been run for decades by a single state-owned monopoly.
The commissioners are studying California's foray into storage as they sort out how to weave storage into the existing regulatory framework. One project is already moving ahead in the transmission planning process: a 20-megawatt storage plant to go into the southern end of Baja California.
That area, famous for its beaches, has been ramping up solar capacity. Any expansion of the transmission grid to accommodate the new generation, though, would require running cables some 2,000 kilometers up the peninsula to Tijuana, making for an extremely expensive endeavor. The local storage is being developed to avoid that pricey alternative.
The emissaries were keen to pitch Mexico as a great place to do business. Once the regulatory processes get figured out, proximity to the burgeoning storage industry in California could be a major advantage. Californians have to travel halfway around the world to break into Australia's storage market, but Mexico can be accessed within minutes from downtown San Diego.
King of the storage hill
That massive Escondido battery system marks the sixth time AES has claimed the title for largest lithium-ion battery in the world, said John Zahurancik, president of AES Energy Storage.
That record is under threat from Tesla, which has promised South Australia a 100-megawatt system by the end of the year. Delivering that massive shipment on top of scaling Model 3 production to 20,000 units a month simultaneously will be a feat.
If Tesla does pull it off, AES has a trick up its sleeve. The company's 100-megawatt storage system in Alamitos, planned to begin operation in 2021, is actually permitted for 300 megawatts.
"We’re ready to build 200 more any time you need them," Zahurancik said in his keynote.
Another sign of the times: Back when AES was getting started with storage in 2007, it was hard to get battery vendors to take the effort seriously, Zahurancik said. Electric vehicles were just around the corner, and batteries for the grid just weren't really a thing yet.
It's hard to blame those naysayers: Grid storage at the time cost $6,000 to $7,000 per kilowatt-hour, Zahurancik said. AES dug up some business cases that worked even with those economics, and the slow growth of the EV sector worked to bring down the cost of battery cells. Instead of diverting supplies from grid storage, the EV boom has become one of its strongest drivers.
About those cells filling up Tesla's 100 megawatts...
Tesla's bottleneck from ramping Model 3 production at the same time as building the world's biggest battery has prompted action.
The company will fill those Australian batteries with cells made by Samsung SDI, rather than the Panasonic cells being produced at Tesla's own Gigafactory, Elon Musk revealed on a conference call with bondholders that was reported by Electrek.
The South Australia project calls for 129 megawatt-hours; the combined stationary storage capacity deployed last quarter only hit 97 megawatt-hours. Throw a bunch of Model 3s in the mix, and that ramp evidently became a bit too steep.
This move shows that Tesla is willing to pull from other (top-tier) sources to meet its obligations. It does raise questions about cost, though: If the Gigafactory is Tesla's ticket to cheaper battery pack costs, what happens to the margins when the company goes out and buys from someone else?
Building the world's biggest battery on top of a historic electric-vehicle production sprint will be hard, even for Tesla. Then again, the company won the South Australia contract in part thanks to Musk's expertly timed Twitter intervention into that state's grid reform conversation. If he had waited until the Model 3 was out the door at scale, the opportunity might have passed.