Revenue Streams Are Key to Cost-Effective Energy Storage
Definitions could make or break the energy storage market, allowing it to capture multiple revenue streams and reduce costs. A panel at the New York Energy Week Roundtable on Storage on June 19 at the Urban Future Lab in New York City explored these crucial choices.
Definitions Shape the Future of Storage
“Can we define [storage] as multiple things?” said Chelle Izzi, Constellation Energy’s director of storage commercialization. “That might be the best solution for building out the storage business.”
“At every conference, two hours are spent defining energy storage,” said Jae Choi, product and application manager for FIAMM. Choi explained that the definition that usually comes out of that exercise is a version of, “a storage system is any device that helps with energy efficiency and helps decrease peak demand.”
Even this definition has its issues, however. Taken to its logical extension, it could mean that something as mundane as a water heater counts as energy storage technology.
Affordability Is Essential for Expansion
One good way to make energy storage affordable is to allow it to capture multiple revenue streams, representing all of the functions it serves. These include load shifting, peak shaving, frequency regulation, and improving grid resiliency, among others.
“Multiple revenue streams are needed because new [energy storage] technology has high initial costs,” said Brian Beck, vice president of sales at American Vanadium.
Hence, it is essential to value energy storage for all of its benefits. “We want to get multiple revenue streams for providing different services and get paid for all of the things [energy storage] does,” said moderator John Cerveny, director of resource development for the New York Battery and Energy Storage Technology Consortium (NY-BEST).
Participating in these varied revenue streams, however, “implies having multiple ways to control the energy storage,” said Bob Currie, CTO and co-founder of Smarter Grid Solutions.
Advanced controls can enable storage technology to act as curtailable load for demand response as well as frequency regulation, for example. Grid operators offer clear compensation for these types of services.
But when storage also helps shore up grid resiliency, how should this more nebulous service be rewarded? In cases like this, Choi said, “there is no good way to evaluate these value drivers.”
These are the types of questions that will need to be answered as energy storage plays a growing role on the electric grid.
New York Could Benefit from Lower-Cost Storage
Bringing down the cost of energy storage is especially salient in New York. In “Power Trends 2014: Evolution of the Grid,” a report released in June, the New York Independent System Operator (NYISO) details how energy consumption in the region is flat or slightly decreasing. At the same time, peak loads are increasing. In fact, in the six month period from July 2013 through January 2014, New York set two new peak records.
The state therefore needs to think seriously about ways to reduce peak loads. Cerveny said that if Indian Point Nuclear Plant is closed, the state will need to find a way to further decease summer demand by 100 MW.
This steep mandate could be met through energy efficiency, demand response, and/or energy storage. But currently, it costs $2,100 per kW to address this issue using battery storage and $2,600 per kW to provide thermal storage. For energy storage to play a role in replacing power plants in New York, the cost needs to come down.
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