by Julian Spector
April 24, 2017

In the latest installment of Storage+, your intrepid energy storage reporter recounts insights and observations from the Energy Storage Association's annual conference. If you have intel you think should be included here, let me know at [email protected].

The storage industry convened in Denver last week for the Energy Storage Association's yearly conference. I feel justified in calling the atmosphere ebullient.

I’ve been to more storage industry gatherings in the past year than weddings, sporting events and Kanye West concerts put together, and I’ve seen a marked increase in the level of excitement. The buzz stems in part from the recently completed Aliso Canyon procurements, where the industry demonstrated it could step up in a moment of grid crisis and deliver solutions at a pace that would be unthinkable for any other utility deployment.

The implicit message behind the recurring Aliso Canyon references in most every keynote or panel at the ESA conference was: “We’ve made it; our service isn’t theoretical any more.”

The commissioning of those units in Southern California could be the watershed moment we look back on when storage really takes off.

It’s a bit early to say. We need to see how well the grid performs during peak events this summer. And it remains a highly irregular effort, driven by emergency circumstances. Based on conversations I've had, it sounds like the utilities involved won’t be planning to replicate that sprint unless they absolutely have to.

But that performance continues to lift spirits and change the nature of the industry’s goals. Policy discussions previously focused on developing standalone storage tax credits. Now more people are arguing for a shift in focus.

“Keep it away from being a tax-advantaged business,” said Michael O'Sullivan, senior vice president for development at NextEra Energy Resources, in his opening plenary appearance. He warned against going down a path “where we all start spending a lot of time in Washington, D.C. asking for something.”

The conference program largely focused on how storage companies can offer compelling deals to utilities, and what policies and regulations need to change to allow for a fuller accounting of storage’s value.

Strategen consultant Lon Huber’s “Clean Peak Standard” made an appearance. That policy would require that a certain share of peak capacity come from clean sources as part of a renewable portfolio standard, thereby signaling the value of storage to dispatch it.

Attorney Sky Stanfield delivered a new storage policy roadmap from the Interstate Renewable Energy Council. The report is intended to streamline state policymaking by identifying common pain points on storage’s path to market, such as:

  • Classification and ownership: How restructured markets can allow wires-only utilities to own and rate-base storage without jeopardizing competitiveness.
  • Planning: How to ensure utilities properly consider storage alongside more traditional grid assets for integrated resource and distribution planning.
  • Grid access: How to tweak existing interconnection procedures to more efficiently hook up storage on the grid.
  • Value stream: How states can monetize the full range of services energy storage can perform, aka “The Value Stack.”

If you have an interest in state-level advocacy for market-enabling storage policies, put this report on your reading list.

Incidentally, at the panel where Sky and Lon appeared, the audience was polled on whether they had ever contacted an elected representative to talk about energy storage; 78 percent said they had not.

A pivot from ITC advocacy would alter the nature of the request to legislators in a potentially profitable way. Instead of “Give us this money and we’ll grow as an industry,” the conversation becomes, “Change this arcane rule you probably don’t care or know about, and we’ll bring you jobs and tax revenue.” 

Brain gain

Back in the early days of wind, it was quite challenging to convince staff to move to that line of work, said NextEra's O'Sullivan. People didn’t want to bet their careers on a new technology that they didn’t think was sufficiently proven.

The same happened with solar. But, in the early growth days of the storage market, he’s seeing a very different trend.

“We do not have to put a gun to the proverbial head to get someone to work in our storage group,” he said. Instead, the best and brightest from a whole range of ages are asking to work there.

“The human capital…want to be in this sector and want to make a difference,” O'Sullivan said. “As long as that continues, that’s a great indicator, just as the opposite is true.”

Bright news from Sunrun

Residential solar leader Sunrun has sold more than 1,000 units of its BrightBox solar-plus-storage product, said Vice President for Public Policy Alex McDonough in a panel session. That's notable for several reasons.

By GTM Research's count, the industry installed 907 grid-connected residential storage systems in 2016. That means Sunrun alone has outperformed the residential market from last year -- I can only conclude the company saw a marked uptake in the first few months of 2017. 

The company also accomplished this while selling in only two states, Hawaii and California (with more to come). 

Residential storage remains a tiny portion of the overall storage market, but if BrightBox interest continues to grow and other companies see similar attention, this market could be considerably hotter this year than last.

Where are they now?

At the electric distribution industry’s massive DistribuTech show in January, Tesla produced a glossy booth and meeting room adorned by high-definition images of its major projects.

In Denver, though, the storage industry leader for media coverage did not appear on the expo floor, although we did see a main stage speaking role for adopted son (actually, cousin) Lyndon Rive.

Tesla has no need to introduce itself to its fellow battery vendors. But this remains a small industry, and the tone of the Denver event was overwhelmingly collegial, like the reunion of a baseball team that got a lot further in the season than expected.

We don’t know Tesla’s exact reasons for sitting it out, but that spirit of community seems to have proven an insufficient draw.

Many pretty pennies for Primus

Flow-battery maker Primus Power, which pares down the design to a single tank and cuts out the separator, closed a recent $32 million funding round including from the auspiciously named Hong Kong firm Success Dragon.

The new edition of Primus' Energy Pod extended its duration to 5 hours and streamlined the soft costs of delivery and commissioning. It can ship in a standard container format, be installed by a forklift, and use any inverter or energy management system.

Even with these improvements, the technology still has to contend with the unexpectedly swift drop in lithium-ion pricing. Katie Fehrenbacher profiled the challenge facing lithium-ion alternatives here -- they have to cut prices without the economies of scale that the incumbent technology enjoys, while convincing people to trust a new upstart with a limited balance sheet. 

That said, lithium-ion has some essential drawbacks that the alternatives can fix, once they get commercialization and bankability locked down.

SDG&E still hungry

Just months after rolling out 37.5 megawatts from AES Energy Storage for Aliso Canyon, San Diego Gas and Electric announced another volley of 4-hour-duration projects totaling 83.5 megawatts

This includes a new 40-megawatt facility from AES, which will likely take the trophy from its Escondido project for largest lithium-ion installation in the world. There's also 30 megawatts from Renewable Energy Systems, and a few smaller systems. One will be built and owned by Enel Green Power, which recently acquired American energy storage specialist Demand Energy

If approved by regulators, this procurement puts the utility well on its way to completing the 165 megawatts of storage required by the state.