Managing the electricity grid is a game of balancing energy supply and demand, and at the moment we're not particularly good at it. To ensure reliability, grid operators have to keep redundant capacity for emergencies (called "peaker plants"). And customers are punished for using power when other people want it. That's why we have higher prices during peak periods.
In the future, things will be different. People will have their own energy storage and back-up. They'll charge up batteries when the price is low, or when they have excess power from their solar panels or other generations systems. The utility will be able to call on that distributed storage so it doesn't need to buy it at peak times. That should generate lower costs for everyone and reduce pollution, because back-up power plants are the most polluting plants out there.
The first storage systems are likely to be in big buildings, like the large-scale batteries Advanced Microgrid Solutions is installing in California. The startup has a contract with Southern California Edison (SCE) to build 50 megawatts of storage in big buildings that will act as back-up to the utility.
"We're building resiliency into the grid building-by-building," says AMS's CEO Susan Kennedy. "The battery response and software built into it will allow it to switch back and forth from grid power to onsite storage seamlessly and quickly without the occupants experiencing any loss in quality."
When prices are low—say, during the night—the building system banks energy in a large lithium-ion system. During peak periods, it will switch to the battery to cut costs and save the utility from having to provide expensive power. Kennedy compares the concept to a hybrid-electric car that switches to a battery when it's going slowly or at a standstill.
"It's a more efficient user of gasoline because it uses the battery as an alternative energy source when you're at a slow pace or you come to a stop," she says. "A building can do the same thing if you build in storage to support the building load."
Kennedy is a former chief of staff to California governor Arnold Schwarzenegger. Jackie Pfannenstiel, a former assistant secretary of the navy in the Obama administration, is a co-founder. California has a legal mandate to buy more than a 1,000 MW of energy storage by 2020, making it an instant leader in the emerging energy storage market.
The challenge for AMS is that large-scale batteries are extremely heavy. One module that provides power for two hours weighs more than eight tons. To install such a system on a downtown rooftop means reinforcing the frame of the building itself. "The installation costs are high for some of these [projects]. But in industrial areas it's not. They can spare a parking space or two," Kennedy says.
AMS plans to aggregate the storage capacity of several buildings together and offer the combined resource to SCE. It plans to start operating at the beginning of 2017.
Kennedy imagines that, one day, buildings will become energy storage facilities, in the process cutting their own costs and providing wider grid stability. AMS makes money by selling the resource to a utility, just like a peaker plant does now. It sounds like a good arrangement.