As noted in last Friday’s post, one of the technological gaps that must be filled to increase the percentage of energy supplied by renewable sources is the need for grid-level energy storage.  The 2007 Energy Independence and Security Act, combined with the 2009 American Reinvestment and Recovery Act (ARRA), makes billions of dollars available for development of new and improved energy storage systems.  This infusion of funding to promote grid reliability provides an important opportunity for the electric power industry to build energy storage into the national grid design.  As utilities, investors, and policymakers assess the best way to do so, however, they will be choosing among a broad suite of potential technologies looking to exploit that opportunity.  In a constantly changing technological environment, making the right choice will be no simple task.  Some of the major types of grid-level energy storage technologies currently in play include:

• Pumped Hydro Storage (PHS): PHS is the most mature and widely utilized energy storage technology in the world, with over 90GW of PHS in use worldwide. PHS generally consists of two reservoirs—an upper and lower—connected by a reversible turbine. During times of low demand, water is pumped from the lower reservoir to the upper; that flow is reversed during times of high demand. Because of the significant capital costs, long construction times, and highly site-specific nature of PHS, little additional construction of these facilities is expected, though using lagoons or other tidal resources to power PHS is an emerging field of research.
• Compressed Air Energy Storage (CAES): In a CAES system, off peak power is used to pump air into an underground storage formation, such as an abandoned mine or a salt cavern. That compressed air is used to turn gas turbines during peak power periods. CAES is the second most commercially mature technology after PHS; two plants—both with over 100MW of capacity—have been constructed, and a number of other projects are planned, including the Iowa Stored Energy Park (ISEP), which will use wind energy in concert with CAES, creating a 268MW/13,000MWh power plant, which will also provide 50 hours of energy storage.
• Thermal Energy Storage: Thermal storage is generally used in concert with concentrated solar power facilities, and involves the circulation of a heat-transfer fluid-generally molten salt, though other advanced fluids are under development-to produce steam during periods when the sun is unavailable to the plant. Examples include the thermal energy storage system storage systems constructed as part of the Solar Two Facility in Southern California, and the massive Andasol solar power plant in Southern Spain.
• Advanced Material Batteries: Advanced material batteries use materials like molten sodium or lithium to store energy. Currently, sodium-sulfur (NaS) and lithium-ion based batteries are the primary designs for these technologies. Currently, sodium-sulfur (NaS) batteries have more fully penetrated the market, as significant numbers have been installed in Japan (where the batteries are produced), including a 34MW battery-currently the largest in the world. Advances in lithium-ion batteries have mostly been directed towards applications in electric cars, but with recent advances in nanotechnology, these batteries are finding use at the utility scale as well.
• Flow batteries: Also known as redox flow-cell batteries or regenerative fuel cells, flow batteries store electricity through a reaction between two different electrolyte solutions. Because the capacity of these batteries is largely dependant on the volume of electrolytic liquid available, these batteries are highly scalable, giving them the potential to compete with bulk storage in terms of charge and capacity. Current battery designs exist around zinc-bromide, sodium-bromide/sodium polysulfide and vanadium solutions. Fewer flow batteries have been installed than the previously mentioned technologies—currently the largest in the U.S. is a 250kW/2MWh plant in Utah.
• Flywheel Energy Storage (FES): FES is another mechanical storage technology, where energy is stored in a rapidly spinning cylinder. When that outside source of energy is unavailable, the rotor for the flywheel acts as a generator. Flywheels are easily moved and have no environmentally reactive components , but have limited storage capacity and a short discharge period, limiting their applicability. The technology is just entering commercial viability: in September 2008, Beacon Power produced the first flywheel storage system for use on a utility scale.
• Superconducting Magnetic Energy Storage (SMES): SMES uses the magnetic field produced by cryogenically cooled superconductors to store energy. By utilizing superconductors, SMES maximizes efficiency (very little energy is lost in the storage process, and there is no conversion between the form the energy is stored in and its usable form—electricity). Like flywheels, however, an SMES system discharges its energy quite quickly, and therefore is useful mostly for short term applications.

The current diversity of storage technologies under active commercial development creates both an opportunity and a dilemma for policymakers and market participants.  The opportunity is that because each technology offers different technical, financial, and political pros and cons, project developers have a broad selection of alternatives to choose from in pinpointing the ideal storage technology to fit the technical, financial, and political constraints facing a project.  The dilemma, in turn, is that given the relative scarcity of long-term performance information for many of these emerging technologies, and the uncertainty regarding whether and when federal policymakers will provide future incentives similar to those provided in the ARRA, policymakers granting funds and the project developers and investors requesting funds will want to get it right the first time.

For further information about this topic, please contact Akin Gump.