California, which has paved the way for many green initiatives, looks to energy storage. California’s green initiatives have paved the way for solar and wind energies to take root; now that renewables have move towards a mandated one-third of the state’s energy supply by 2020, they have turned to the development of stable storage.
“We can’t just rely on sunlight,” Governor Jerry Brown told the Intersolar conference in San Francisco last month. “We’ve got to bottle the sun.”
With the power generated by the sun and wind being sporadic and somewhat unpredictable, capturing the electricity would smooth out the energy generated as well as distribution throughout the grid.
The push by the State has fired up a technology race that has attracted venture capitalists like Peter Thiel and Vinod Khosla, large-scale battery makers like LG Chem, and establishment forces such as General Electric and Microsoft Corporation founder Bill Gates.
California has set an aggressive target wanting to store as much as 1.3 gigawatts by 2020. A capacity that would be equivalent to a traditional power plant powering more than one million homes.
Steven Minnihan, an analyst for Lux Research, said California’s proposal is the first legislation that will have an immediate and lasting impact on the grid storage market. Minnihan estimates that installations will soar to some $10.4 billion by 2017 from just $200 million last year.
In light of new technology and innovation, it is difficult to say what the end price tag will be for such massive storage facilities; especially when compared to more established technology like traditional gas plants.
“The ratepayers would be on the hook,” said Farzad Ghazzagh. Ghazzagh is analyzing the proposal for the Division of Ratepayer Advocates, an arm of the California Public Utilities Commission. While his analysis is incomplete, Ghazzagh has seen estimates of $1 billion to $3 billion to install so much storage into the California infrastructure.
The Electric Power Research Institute found in a report for California’s grid regulators this summer that the storage’s cost would be worth the price tag. It would mean that the storage facilities would avoid the need to build power plants or transmission centers to meet peak demand, something that only lasts a few hours a day throughout the summer.
Just like the solar industry when it began, the storage industry may have a similar growing curve. While the initial price of installing PV panels to a house started at about $2.50 per watt (of installed peak capacity), the cost has dropped to around $0.20 per watt today. Again, the upfront cost may seem steep, but the long term benefits in this emerging field will have far reaching benefits.
In the wake of Hurricane Sandy and other large scale natural disasters, which saw power grids going down for millions of Americans, the possibility of micro grids fed by high capacity storage facilities are very appealing.
Many investors see this as the next major technology and have been investing more heavily the past 5 years than the previous 5 years. Many of the same companies that have invested in mobile device markets are shifting to the emerging storage markets. Now with California’s push to get this technology up, running, and integrated, there is more excitement for emerging companies to break into a field that has largely been dominated by large corporations.
The actual impact of California’s initiative will most likely be felt between 2020 and 2030, Minnihan said, and he expects the move will inspire efforts by other states for similar integration. Investors and other states are going to be watching what happens as California looks to energy storage and its emerging infrastructure development.
By: Iam Bloom