CA’s Battery Cluster Has Moment in the Sun

July 9, 2014 By Craig R. Horne, Ph.D.

Craig R. Horne, Ph.D.

Batteries are having a big moment.

The reason: a couple of major trends are reshaping the way we use our available energy resources. Their impact on our electrical power grid is driving energy storage to the top of innovators’ minds.

The first big trend: we are moving away from fossil fuels for power generation. The cost of rebuilding our retiring fossil fuel fleet continues to rise and fuel prices remain highly volatile while the cost of renewables continues to fall. The transformation is not going to happen overnight, but it is in progress and inevitable.

And if we’re going to ramp up the share of energy generated by renewable sources like wind and solar, we need to be able to store large amounts of energy during the sunny and windy parts of the day so we can use that energy after the sun sets or the wind fades. Long-duration, grid-scale energy storage is the key to scaling up renewable power.

The other big trend: our society and our economy are increasingly reliant on the electrical grid. The rise of cloud computing, digitization of information, and computer controls means we need a rock-solid electrical grid to keep power flowing. Everything from airports to hospitals to stock markets depends on high-quality power sustained over several hours. Voltage sags and power spikes caused by either too much or too little generation disrupt electronic devices, and can even trip up the grid.

Energy storage is the essential buffer—decoupling the generation of electricity from its consumption—that allows the whole grid as well as our society to run smoothly and reliably. And energy storage on this scale, megawatts of power capacity capable of sustained delivery for several hours, means a new generation of cutting-edge batteries born and bred for utility applications.

Companies see a turning point

Dozens of energy storage companies are working to turn concepts into products, and all of us in the business know that we are at an inflection point. After years of ramping up, we are turning the corner from lab work to commercialization as programs like the US Department of Energy’s ARRA Storage Demonstration Program begin to bear fruit.

Over the next 18 to 24 months, more than a billion dollars’ worth of long-duration, grid-scale energy storage will be going under contract in North America alone. Battery businesses have the potential to revolutionize how utilities, factories, homes and farms make and use energy.

California emerging as battery central

When growing a business, especially in a fast-changing industry, it helps to be part of a cluster of like-minded innovators. It helps to be part of an ecosystem overflowing with ideas, talent, suppliers, and customers. So if you’re an app developer, it’s advantageous to be in Silicon Valley. If you’re a hedge fund, New York beckons. And if you’re an energy storage company, it’s hard to do better than California.

California is home one of the world’s largest energy storage clusters. There are some 80 businesses in the San Francisco Bay Area alone, from small start-ups to outposts of well-known multinational corporations. These companies are working on batteries not just for the grid, but also for vehicles and consumer electronics.

Why California? One reason is that the state’s pioneering energy policies have served as a magnet, attracting companies and capital, and helping drive innovation that will insulate Californians from the increasing price volatility and damaging environmental health impacts of fossil fuels. For example:

  • AB 32, California’s pioneering climate change law, established a cap and trade program for greenhouse gas emissions and set reduction requirements for all energy sectors: transportation, buildings and the grid,
  • California’s Renewable Portfolio Standard requires the state obtains at least 33% of its electrical energy from renewable power generators.
  • California’s Once Through Cooling (OTC) policy liberates over 15 billion gallons of its precious water every day from the harmful impacts of being used to cool nuclear and fossil fuel plants.
  • AB 2514 mandates that utilities first define and then procure the amount of energy storage required to ensure a reliable and cost-effective grid.
  • California’s Self Generation Incentive Program (SGIP), recently extended through 2019, annually provides up to $83M of incentives for customer-sited distributed clean generation technologies such as energy storage.

These policies deliver a clear signal: California is in the market for clean and renewable energy technologies for the long term. It’s a good place to grow an energy storage business.

Further facilitating California’s energy storage ecosystem is CalCharge, a new public-private partnership that calls itself a “center of gravity” in energy storage. CalCharge connects businesses large and small together with universities, governments, and national laboratories. Its goal is to accelerate the development, commercialization, and adoption of new energy storage technologies, not just for the grid but also for transportation and electronics. Start-ups and multinationals alike gain entrée to national labs’ experts and facilities. Innovators have a community—a place to go to talk with others engaged in similar work. That can make a real difference to a start-up.

Here in North America, only about two percent of the electricity delivered to end users has gone through storage. In Europe and Japan, that number is 10 to 15 percent. The smart money says the United States is headed toward more energy storage solutions. That’s real opportunity.

For leadership in this emerging space, look to California. It’s our moment, and we’re ready to shine.

Craig R. Horne, Ph.D., is chief strategy officer and co-founder of EnerVault, a company that designs and manufactures long-duration, grid-scale energy storage systems.. EnerVault dedicated the world’s largest iron-chromium redox flow battery system at an almond grower’s orchard in Turlock, California, last month. The demonstration project is funded in part by the U.S. Department of Energy. EnerVault is working toward safe, reliable, cost effective, scalable energy storage for grid operators, utilities, and renewable generation owners.

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