Project Merit: Energy Storage


AES (Arlington, VA.) whose AES Energy Storage subsidiary has a solid early lead in the emerging business of using advanced batteries to provide energy and grid services to electric utilities. Formed in 2007 when the grid-scale energy storage business was little more than a gleam in the eyes of energy engineers and investors, AES Energy Storage had commissioned more than 76 MW of lithium-ion battery energy storage systems by the end of 2011.

AES Energy Storage's first projects were four pilots of between 1 MW and 2 MW that were commissioned in 2008. Projects commissioned since have been in the 8 MW to 32 MW range, targeted primarily to providing operating reserves with high power, short duration storage of 15 to 20 minutes. By the end of the year, the company was bidding on much larger projects including 100 MW/400 MWh for El Paso Electric and 400 MW/1600 MWh for the Long Island Power Authority.

By taking aim at projects of that size, AES underscores its assessment that a single large-capacity energy storage system can provide multiple values to electric utilities and load-serving entities-peak energy; reserve capacity, frequency regulation and other ancillary services; load-following; congestion management; T&D deferral and others-and receive appropriate compensation for this bundle of services in a single power purchase agreement (PPA).

AES Energy Storage is also pioneering grid electricity storage in northern Chile, where grid operators in the electrically isolated region have dealt with reliability challenges by requiring generators to hold back spinning reserve capacity, for which they're compensated but typically at rates below energy prices. AES' Chilean subsidiary Gener, which already operated fossil, hydro and biomass units, obtained government approval for first a 12 MW and then a 20 MW storage facility. Now, Gener's generation plants in Northern Chile can use all their capacity for energy sales, while its battery systems provide spinning reserves revenues. AES Energy Storage calls this service "capacity release for generators."

Xtreme Power (Kyle, Texas) for going live with its 15 MW/10 MWh battery energy storage system in March 2011 at First Wind's 30 MW Kahuku Wind Project on Oahu, the first large-scale integration of wind power and storage in the United States and perhaps globally.

Xtreme's Dynamic Power Resource (DPR), a dry cell battery system that incorporates proprietary formulas of copper, lead, tellurium and other alloys, smoothes the wind farm's power output by charging or discharging up to 1 MW per minute, according to the company.

Xtreme was also selected by Duke Energy to install a 36 MW/24 MWh battery system at Duke's 153 MW wind farm in Notrees, Texas. Energy storage is seen as a key enabling technology for greater integration of variable generation resources such as solar and wind power, as well as providing other benefits such as non-polluting frequency regulation and relieving transmission and distribution constraints.

Eagle Crest Energy (Santa Monica, Calif.) for sheer perserverance and patience in pursuit of a good idea: using abandoned quarries in Riverside County to build the 1300 MW Eagle Mountain pumped storage hydropower (PSH) facility. First investigated in the early 1990s by Eagle Crest

principals, the Eagle Mountain PSH project went through preliminary design in 2004 and was formally proposed to FERC in 2006. It is now considered by PSH industry observers to be the second furthest along in the FERC permitting queue behind Sacramento Municipal Utility District's 400 MW Iowa Hill PSH project on the Upper American River.


As a closed-loop system that is not connected to any natural water bodies, Eagle Mountain will have a lighter impact on habitat and natural resources than open-loop PSH systems. But given its use of 2,200 acres of federal and private land, the project went through extensive analysis to identify and manage impacts on wildlife habitat, recreation, aesthetics and the aquifer that will be tapped to supply the system's stock of working water.

Eagle Crest Energy is devoted solely to this project. While the outfit expects to receive its permit in the first half of 2012, it will need some firm energy deals before obtaining the necessary project financing. The basic components of value of the proposed PSH system are power capacity and arbitraging peak and offpeak prices. It would also facilitate integration of variable wind and solar power in Southern California by providing frequency regulation and load following services.