Long a leader in the push to reduce vehicle emissions and switch to renewable energy, California marks another milestone this week.

The last of three battery energy-storage sites will come online in Southern California, providing storage and buffering for unpredictable renewable energy.

Together, the three sites add up to capacity equal to fully 15 percent of all battery storage installed last year—on the planet.

While California had passed an energy-storage mandate, development didn’t kick into high gear until the huge leak in a natural-gas storage facility in Aliso Canyon that was detected in October 2015.

That months-long leak was an environmental disaster, releasing greenhouse-gas emissions equivalent to the annual total from 1.7 million road vehicles. It also cut off fuel supplies to local power plants. 

That led regulators and utilities to look for more flexible ways to deliver electricity and boost the role of renewable sources—including large-scale wind and solar installations far from urban centers—to reduce the risk of winter blackouts.

As a recent article in Bloomberg describes, the three battery storage sites are fully “grid-scale,” far larger than mere pilot or experimental programs.

Each of the three was built by a separate company, and all three were completed in the remarkably short time of six months.

AES used Samsung lithium-ion cells in the energy storage array it built for San Diego Gas & Electric (SDG&E) in Escondido, California, about 30 miles from San Diego.

Billed as the largest installation of its kind in the world, that 120-megawatt-hour site can deliver 30 megawatts, or enough to power about 20,000 homes for four hours.

Tesla, meanwhile, has completed an 80-Mwh array of its commercial-scale storage batteries for Southern California Edison near Chino, California, capable of delivering 20 Mw.

The third battery-storage site was built in Pomona, California, by Altagas Ltd. Opened in December, its 80-Mwh capacity can deliver 20 Mw for four hours.

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The U.S. firm Tesla and South Korea’s LG Chem are tipped to dominate the U.S. battery storage market, which is expected to be worth as much as $50 billion by 2020.

Analysts at investment bank Morgan Stanley suggest Tesla and LG Chem are best positioned to take big market shares in a market that it predicts will grow faster than most others expect.

Morgan Stanley says the “addressable” battery storage market in the US is 85 GWh, or around $30 billion. But if regulators come on board and allow it to compete in deregulated power markets, then that forecast is nearly doubled to 140 GWh or more than $50 billion.

The analysts predict that Tesla and LG Chem are likely to snaffle 30% of this market each, although it doesn’t rule out that either party could gather a 50% share. In the former, it depends on the success of its Gigafactory. For the latter, it would require its own U.S. manufacturing base.

The US market, however, will be just a fraction of the global market – which the Morgan Stanley analysts expect will be 7 to 8 times bigger. China alone is expected to have double the market size of the U.S. in battery storage.

This report – Energy Storage: An Underappreciated Disruptor – says the US market will be focused mainly at the utility level, where power companies and developers will see value in providing grid stability such as ancillary services, and to meet peak demand and supply variations.

In regional grids such as California, with a heavy reliance on storage, this is likely to make mattes difficult for gas generators, who are unlikely to be able to compete on cost or flexibility. In some markets, such as the PJIM, battery storage is already accounting for most of the grid stability market.

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Energy management: Eos Energy Storage (“Eos”) – pioneer of the safe, ultra- low cost Znyth® battery – has announced a manufacturing and assembly partnership with Environment One Corporation (“E/One”), a diversified high-technology company focused on producing protection and performance optimization systems for electric utilities. Through this partnership, E/One will assume responsibility for manufacturing Eos’ flagship energy storage solution, the Eos Aurora®.

From its facility in Niskayuna, New York, E/One is manufacturing and integrating Eos batteries into an outdoor-rated, plug-and-play DC module known as the Energy Stack. Under the manufacturing and supply agreement, E/One will be able to meet growing global demand for Eos’ novel energy storage solution with the use of 100 percent domestic manufacturing capacity and labor. The expansion and new operations resulting from the Eos partnership and support from Empire State Development, New York’s chief economic development agency, will enable E/One to create a larger number of new jobs in New York State’s Capital Region.

“New York is on the fast track to becoming one of the nation’s key hubs for high-tech innovation and E/One’s exciting plans to expand in the Capital Region continues this momentum,” said Governor Andrew Cuomo. “This smart investment will help create jobs and foster innovation in this vital manufacturing sector and continue to grow this region’s economy.”

The Eos Energy Stack is a ready-to-install building block that is aggregated to create the Eos Aurora® 1000│4000, a 1MWI4MWh DC battery system being sold today at a price of $160 per usable kWh, which includes enclosure, environmental management and battery management system. This industry-leading energy storage system allows utilities to reduce costs associated with peak demand, optimize grid infrastructure and more reliably integrate renewable energy.

“Eos has the potential to be the leading energy storage system supplier to the global electric utility industry for decades,” said Eric LaCoppola, E/One’s president. “As a fabricator with over 40 years of experience in manufacturing complex products for electric utilities, E/One enables Eos to compete cost effectively and with aggressively growing volumes in this dynamic space.”

Following a close collaboration to develop Eos prototypes, E/One began producing Eos’ patented Znyth battery at the manufacturer’s upstate New York facility in June 2016. The first commercially available Energy Stacks started rolling off E/One’s production line at the beginning of 2017. E/One is moving production to a dedicated new facility for Eos batteries mid-2017, with total production on course to hit a volume of 400MWh per year.

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As president Trump’s administration prepare to levy tax cut reforms, other Congressional lawmakers are taking a different tack. 

Several bills that would bolster energy storage are waiting in the wings this congressional season, signaling the growing significance of the resource. 

“At this stage there are a lot of moving parts, but we expect multiple pieces of legislation related to storage and taxes to be introduced,” Matt Roberts, executive director of the Energy Storage Association said.

Chief among those bills could be one that failed to make it through the last congressional session, but will likely be re-introduced in the current session.

Sen. Martin Heinrich (D-NM) said he plans to re-introduce legislation in the current congressional session that would provide an investment tax credit for energy storage. He first introduced the tax credit in 2016, but it failed to pass out of committee. 

The Energy Storage Tax Incentive and Deployment Act, which Heinrich’s office said will be introduced “in the near future,” would provide the same investment tax credit (ITC) for commercial energy storage installations as is currently available for solar energy in section 48 of the Internal Revenue Service code.

All forms of storage technology, from flywheels and batteries to pumped hydro and thermal energy, would qualify for the credit as long as they have at least 5 kWh of capacity. Qualifying projects could be consumer-owned, grid-connected, or off-grid.

The proposed legislation, co-sponsored with Dean Heller (R-NV), would also extend the ITC to residential applications of at least 3 kWh, but would apply only to battery storage systems.

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While Tesla captures more headlines, German residential storage company Sonnen currently leads in global product deployments.

Today, Sonnen has more than 15,000 battery installations around the world, the vast majority of which are located Germany. But the company also has a growing U.S.-based business, with monthly unit sales now in the three digits — just one year after the company’s U.S. market launch.

GTM sat down with CEO Christopher Ostermann and Blake Richetta, vice president of North American sales, to discuss Sonnen’s competitive advantages in the home battery arena and how the company plans to grow in the months ahead. Watch below via Facebook Live.

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Federal regulators continue to explore how electric storage can participate in wholesale markets, and have directed the Midcontinent ISO to file tariff changes. The commission denied IPL’s petition on two of three points, also declining to find the grid operator’s tariff unjust and unreasonable with respect to the current dispatch protocols for regulation service.

But FERC did say the tariff “unnecessarily restricts competition” by preventing storage from providing all the services that they are technically capable of providing. The order calls in the grid operator to explore the participation of all forms of storage, “regardless of the technology, in all MISO markets that they are technically capable of participating in, taking into account their unique physical and operational characteristics.”

IPL filed its complaint in October, complaining the MISO tariff was unjust in how it treated storage, in particular
the utility’s grid-scale lithium ion Harding Street Station Battery Energy Storage System. The 20 MW, 20 MWh project went into service in May, but the company has complained that while the batteries are valuable, there is no regulatory path for IPL to get paid.

You can read more of Utility Dive’s coverage about the project, and how IPL is seeking to revise storage tariffs, here. The utility knew the grid rules were not favorable for battery storage back in 2009 when it began developing plans for the project, but it was hopeful that those issues would be addressed.

“We thought we would be able to tweak the regulations, but that didn’t happen,” Lin Franks, senior strategist for RTO, FERC and compliance Initiatives at IPL, told Utility Dive at the time. 

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There are many reasons batteries are appearing across the electrical grid—their price is falling, they may save utilities more than they cost, and they can support solar and wind by capturing peaks in production and saving it for troughs.

But their progress has been slowed by a web of regulations at every level, two grid experts said in Chicago last week.

“We have examples in New York where there are projects ready to go and they can’t get a permit from the Fire Department,” said Richard Kauffman, New York state’s energy czar. “Or there are building-permit related issues. It really raises the cost, the soft cost, a lot.”

In other places, there’s no incentive to store energy when it’s cheap, and sell it when it’s expensive, because it costs the same amount all the time. “There’s not time-of-use pricing in many places, so there’s no financial incentive to shift load,” he said.

Battery manufacturers like Tesla Motors, Panasonic, AES and LG report steady growth. Tesla, AES and Altagas cut the ribbons this week on massive new projects in California. But these companies see far more potential than they have realized. The market, as Tesla’s Elon Musk said, is “staggeringly gigantic.”

It shouldn’t come as a surprise that disruptive technologies like storage get stuck in a legacy system, said Susan Tierney, a former assistant secretary of energy.

“We think of what we’re talking about as energy policy,” Tierney said. “It’s tax policy, it’s land-use policy, it’s fire code—all of these things shape the way that things can be changed. You actually have to solve the inertia in the system on all those engineering, legal, political, financial (levels). All of those things have to fit to make the kind of changes we have.”

The Energy Policy Institute at Chicago invited Tierney and Kauffman to discuss opportunities and obstacles facing cities as they strive for their own clean energy goals, regardless of federal support.

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The impact Elon Musk and Tesla (NASDAQ:TSLA) will have on the energy industry may be larger in the power storage segment than anywhere else. Sure, his company is a leader in electric vehicles and residential solar, but in the worlds of automakers and solar energy more broadly, Tesla is a very small player. 

Energy storage is another matter: Tesla has been more aggressive in that space, and could take a leadership position very quickly. And its product could very well upend the electricity market as we know it.

Energy storage saves natural gas from itself

The future of energy can be seen in the emergency energy storage system built in Southern California after the Aliso Canyon natural gas storage field’s massive leak late in 2015. Because of that blowout, which released close to 100,000 metric tons of methane into the atmosphere, operations at the facility were curtailed, and there was a chance the region wouldn’t have enough natural gas to meet its energy needs at peak times in the summer, leading to brownouts or blackouts. 

Most of the time, the issues at the facility weren’t a big deal relative to California’s power supply, because there was still enough energy overall to meet demand. But there was the potential for a disparity during evening hours, when people get home and turn on their lights, that demand could exceed supply. And that was a concern for the grid operators. 

Their solution was to install a large array of batteries that could store energy when it was abundant and easily deploy it to the grid when needed. Sempra Energy‘s (NYSE:SRE) San Diego Gas & Electric contracted with Tesla, Greensmith Energy, and AES Energy Storage to build 70 MW of energy storage with 280 MWh of capacity to offset the Aliso Canyon outage. Just six months after the request for proposal went out, the projects were complete. 

Energy storage added an incredible amount of value to Southern California’s grid, and it did so in very little time. And proving out these capabilities will allow more energy storage growth in the future. 

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