Electricity storage for smart grids needs government push

Reuters

Electricity storage, a Holy Grail of the power industry, is years from being widely deployed because of market and regulatory barriers, said an executive of S&C Electric, whose projects include enabling homes to use solar power at night.


The United Kingdom aims to create smart grid network linking data between energy producers, suppliers and consumers to increase efficiency, cut costs for homes and businesses and help meet its climate targets to cut carbon dioxide emissions. A smart grid network has the potential to transform the way electricity is generated, distributed and consumed, particularly low-carbon energy.


With effective storage linked to smart grids, power suppliers can better manage electricity generated from wind and solar to make it available on windless or cloudy days, and electric car users can charge up during off-peak times.


"Everybody talks about storage as being the Holy Grail of what we need but governments until recently have been ignoring it completely," said Andrew Jones, managing director of S&C Electric Company Europe, a unit whose employee-owned U.S. parent in Chicago has been operating since the early 1900s.


The United States, Germany and Japan have been earlier starters in developing storage technology, with varying projects of different sizes under way.


In Germany, for instance, Siemens is developing large-scale electrolysers, where power is passed through water and split into oxygen and hydrogen, as part of efforts to produce storage capacity. Hydrogen, which can be contained and transported without any carbon emissions, can be used to generate power and heat, fuel cars or go into natural gas pipelines as an extra ingredient. Other storage types include pumped hydroelectric, electrochemical storage through batteries and hot-water storage for heating systems.


In Britain, S&C Electric has won several contracts to provide grid technology for solar panels and wind farms, including one of the largest onshore wind projects. It also has a pilot project that enables homes to use solar power at night. The combination of storage with renewable energy would remove peak demand, which could result in consumers paying less for their energy, Jones said.


Though some technology exists, the storage market, particularly in Britain, is held back because of high development costs as well as a lack of government subsidies and policies such as those to back renewable energy and electric cars, Jones said.


Britain could pump $21 billion into its economy and create up to 10,000 jobs by upgrading its power distribution network with smart grid technology, an Ernst & Young report said last month. But the government and power industry has yet to throw their weight behind electricity storage, Jones said.


"The government has clearly got to indicate to the market that storage is part of the smart grid puzzle,” says Jones. "Some of the manufacturers still need an incentive to bring costs down. And venture capitalists take a (cautious) view of the market because they are not sure where it will go."


In June or July, the government will publish its initial analysis on the barriers to storage development, as part of its review of different approaches to help balance the electricity system as it decarbonizes energy use. The government has made plans for every household and business to be fitted with a smart meter, a system to allow them to monitor their energy demand, by 2019.


And a $812 million fund, which started in 2010 and is monitored by energy regulator Ofgem, supports projects sponsored by the distribution network operators to try out new smart grid technology, operating and commercial arrangements.


Jones said part of the problem was that power generators, distributers, transmission firms and suppliers have distinct functions, which individually makes it difficult for them to justify a return of investment on storage.


"So in the UK we say there is a broken value chain which is being created by Ofgem to create competition but maybe it is actually being a detriment at the moment to the competition rules," said Jones.


Jones said Ofgem understands the problem and is reviewing the best way to move forward. One possible option is a type of feed-in tariff for storage development, he said.


"If the government does say there is a (storage) market and gives incentives to get the costs down, then I think you'll see a large amount of storage being deployed over the next couple of years," said Jones.


(Editing by Anthony Barker)

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