Power struggle begins over building battery for power grid
Federal push for storage development meets opposition from state regulators
WASHINGTON – The power sector has long viewed batteries as the answer to the challenges of the modern electric grid — from intermittent wind and solar resources to power surges to demand spikes — but efforts by the federal government to speed their development have run into fierce opposition from states and utilities reluctant to cede control over the emerging technology.
The stakes are high, not just for the future of batteries and other energy storage, but also for the power grid itself. The outcome could slow the development of smaller-scale batteries for homes and businesses, potentially hindering a budding industry and creating a series of technological dead zones around the county.
“It will change the math to where you see distributed storage being developed,” said Jason Burwen, vice president of policy at the Energy Storage Association, a trade group. “For the battery industry, [FERC’s rule] is providing a path to market and a revenue stream.”
At issue is a decision last year by the Federal Energy Regulatory Commission to require grid operators to adjust their power market rules to encourage individual customers to invest in energy storage, much as favorable rules helped accelerate the spread of wind and solar energy.
States, however, balked at the requirement, questioning FERC’s authority over the distribution level power grid and asking to the exempted the federal rule. FERC denied the request last month, but now, a coalition of
state power regulators, municipal utilities and rural power cooperatives are plotting their next legal move, setting up a possible challenge in the D.C. Circuit Court of Appeals.
“Not all states are prepared to move forward,” said Jennifer Murphy, general counsel at the National Association of Regulatory Utility Commissioners, which represent state utility commissions. “They need more time to figure out the operational and reliability issues.”
Batteries storing large amounts of electricity have long been believed to be something of a holy grail, a technology capable transforming the the very nature of the power grid from large, centralized power plants that operate at capacity only part of the time to a more flexible network of renewable and distributed sources whose power could be stored and released as needed Such a system could lower costs for customers, for example, by avoiding the need to build, maintain and bring on expensive, outdated natural natural gas plants — known as a peakers — for short periods of high demand.
“We must build the grid to meet the peak demand, about 40 percent greater than the average demand. This means we are building 40 percent more infrastructure than we need,” George Crabtree, director of the Department of Energy’s Joint Center for Energy Storage Research testified at a recent Senate hearing. “If storage were cheap enough, we can imagine a fully modern energy generation system running continuously at its most efficient level.”
A jolt to development
Battery technology remains in its early stages, still too expensive and lacking the ability to discharge electricity over the long periods.
FERC’s requirement would spur the development of close to 50,000 megawatts of energy storage – about 4 percent of current grid capacity - according to the consulting firm Brattle Group. That would create economies of scale that could lower battery costs, improve performance and lead to their wider use, proponents say.
“The costs of these units have continued to come down, and there’s state policies already in place to encourage more of this,” Burwen said.
For some state regulators and utilities, however, the problem is not overseeing and integrating large grid-scale batteries — in which utilities are already beginning to invest — but potentially millions of smaller systems used by businesses and homeowners to store power from rooftop solar systems and sell it into the grid . While that might be more efficient than the current system of transporting electricity hundreds of miles from a relatively small number of centralized power plants, it also presents a radical shake up to the power sector requiring a monumental overhaul of existing rules governing the grid to avoid blackouts and price spikes.
“Someone needs to be the air traffic controller,” said Casey Herman, an energy analyst with the accounting and consulting firm Price water house Coopers. “State regulators feel like they need latitude. FERC is charged with paving the way for interstate operation.”
Even as state and federal regulators scrap for control, batteries are steadily becoming a more regular presence on the grid through pilot projects across the country. On the Texas grid, for example almost 90 megawatts of batteries had already been installed as of December, with more than 2,000 megawatts in the planning stages, according to the grid manager, the Electric Reliability Council of Texas,
ERCOT is exempted from FERC’s authority over power markets, the result of its power lines not crossing state lines. But officials there are nonetheless watching how the rule plays out on other power grids, “to help inform its own future processes related to the integration of electric storage resources,” ERCOT said in a recent press release.