Advanced Energy Perspectives

This week we saw energy storage in the headlines as the market continues its meteoric growth. From news of another record-breaking quarter for storage, to utility partnerships, to updated battery technology, this week’s news round up is the opposite of Storage Wars.

Readers of Advanced Energy Perspectives know the market for energy storage is growing, and fast. As noted in last year’s Market Report, energy storage is transitioning from a large infrastructure market of pumped hydro and underground compressed air projects – which it still is, in much of the world – to a technology-driven market, with rising scale and falling prices. And it is taking off: global revenue from Energy Storage multiplied five-fold, from $462 million in 2014 to $2.1 billion in 2015, and in the U.S. more than ten-fold, from $58 million to $734 million. (See graph below.)

As we know, the electric power grid is undergoing a shift from a traditional, centralized electricity system powered by conventional resources to a distributed, diverse system. The advanced energy technologies driving this shift give consumers more choices, improve reliability, and drive down costs for everyone. As this transition occurs, the rules governing electricity markets need to keep up. To fully realize the benefits advanced energy has to offer, we need electricity markets that treat all resources equally, and properly assign value to each of services they provide. Ensuring that markets are fair, transparent, and technology-neutral begins with the governance structures of the seven major grid operators in the United States.  

A new paper, Regional Energy Markets: Do Inconsistent Governance Structures Impede U.S. Market Success?, commissioned by AEE member E4TheFuture, outlines how each Regional Transmission Organization (RTO) and Independent System Operator (ISO) operates and how advanced energy companies are able – or not able – to participate in this governance. The focus of the report is the variability between these state and regional entities, which E4TheFuture concludes “make[s] achieving a truly consistent and well-functioning energy market on a national level almost impossible.” But it also shows that the way these grid managers are governed stands in the way of some advanced energy technologies being able to compete on a level playing field with traditional generation and transmission technologies.

This summer, the House Energy & Commerce Committee wrote a letter to the Federal Energy Regulatory Commission (FERC) seeking the agency’s input on the challenges facing our electric grid and the organized wholesale electricity markets which FERC regulates. Driven by a number of factors, including environmental regulations, changing consumer expectations, and booming growth in advanced energy technologies, the grid is undergoing rapid changes, the letter notes. In light of these changes, the Committee wants to explore questions about whether the organized competitive electricity markets established in the 1990s have delivered on promises to lower costs, maintain reliability, and spur innovation and whether Congress should amend the underlying law, the Federal Power Act. A formal hearing will take place tomorrow.

Organized markets are the best way to facilitate competition and drive down electricity prices, but, as they exist now, the markets overseen by FERC are far from perfect. AEE hopes members of Congress will use the hearing as an opportunity to highlight ways these markets can be improved. AEE is working with the R Street Institute - a think tank whose motto is “free markets, real solutions” - to help Congress see how these markets work and how they can be improved to take advantage of the benefits advanced energy provides.

California has taken another big step toward its advanced energy future, as the legislature approved the state’s next target for greenhouse gas reductions – 40% by 2030. Not to take credit, but that action took place just two weeks after an AEE delegation, with representatives of 26 member companies, visited 40 legislative offices urging lawmakers to set the 2030 target and extend the cap-and-trade allowance system to get there – though extending cap-and-trade will have to wait until next year.

The lobby day on August 10 was the action component of AEE’s two-day stand in Sacramento, followed as it was by our fourth annual Pathway to 2050 conference. Pathway provided a full day for issues like SB 350 implementation, cap-and-trade, corporate renewables procurement, CPUC reform, California ISO regional expansion, and vehicle electrification to get chewed over by industry leaders, legislators, regulators, and the media. The purpose of these discussions is to clarify policy pathways to an advanced energy economy that the industry can get behind.

“When businesses get behind a policy, change happens,” said board member Kevin Self of Schneider Electric, kicking off the conference. “AEE is that business voice of advanced energy.”

This post is one in a series featuring the complete slate of advanced energy technologies outlined in the report This Is Advanced Energy. 

Image courtesy of Nel Hydrogen.

Hydrogen is a gaseous fuel that is used mainly in industry. U.S. hydrogen production in is approximately 10.5 million kg/day,
primarily for petroleum refining, ammonia production, and methanol production. Hydrogen is also being developed as a fuel for both light-duty and heavy-duty vehicles and as an option for energy storage on the electricity grid. The most common hydrogen production pathway is steam-methane reforming (SMR), in which natural gas is reformed with steam over a catalyst at high temperatures (about 700- 1000°C) to produce a synthesis gas composed mainly of hydrogen (H2) and carbon monoxide (CO). The CO is then converted to additional H2 by the water-gas shift reaction. After removing CO2 and water and polishing the gas to remove residual CO, the high-purity hydrogen is ready for compression or liquefaction. A less common option is water electrolysis, which uses electricity to operate an electrochemical cell, or electrolyzer, in which water is split
into pure hydrogen and oxygen. Water electrolysis is a proven technology that has been around commercially for decades and is now attractive in combination with renewably generated power. Hydrogen can also be made from other fossil fuels or biomass, starting with gasification or partial oxidation. The subsequent steps are then similar to SMR, although these pathways are not in widespread commercial use. Other, more novel approaches are also in development, including the use of specialized microorganisms that produce hydrogen via metabolic pathways.