Elon Musk Challengers Jostle to Solve Riddle of Energy Storage

Tesla Motors Inc. Chief Executive Officer Elon Musk
Elon Musk, co-founder and chief executive officer of Tesla Motors Inc. Photographer: Tim Rue/Bloomberg

There’s a crowded field of companies jostling Elon Musk for the most innovative breakthrough solution to his challenge to “fundamentally change the way the world uses energy.”

While the chairman of Tesla Motors Inc. re-purposes the lithium-ion batteries that power his cars for use in homes and businesses, others are working on more radical approaches to the riddle of energy storage -- using everything from vats of molten salt to rooftop tanks filled with ice.

Meeting the need for energy on demand is not just a way to cut your power bill, it’s also vital to expanded use of solar and wind, intermittent resources that require backup. Traditionally electricity has had to be used when it’s created.

“We’re at the very beginning of this quickly developing market,” said Mike Hopkins, chief executive officer of Ice Energy Holdings Inc., a Santa Barbara, California-based company that’s pioneering a storage method using rooftop ice. “If there’s really going to be continued progress on the integration of renewables, it’s absolutely essential that energy storage steps up.”

His company’s refrigerator-sized Ice Bear units are installed on the roofs of commercial buildings and connected to air conditioning systems. They freeze water at night when power rates are low, and provide cooling during the day. When they’re switched on, the building’s electricity consumption is reduced, freeing up capacity for the local utility.

Ice Storage

Ice Energy is one of five companies that signed deals with Edison International’s Southern California Edison in November to provide a total of 261 megawatts of storage capacity.

The utility will use the storage to help meet a statewide goal of getting half of its electricity from renewable sources by 2030.

Two years ago, California regulators asked the state’s three biggest utilities to add 1.33 gigawatts of energy-storage capacity by 2020 -- about 20 percent more than currently exists in the world, excluding pumped hydropower systems.

Ice Energy will install 1,800 Ice Bears across the region, adding about 25.6 megawatts of storage capacity for Edison.

“Storage has a big role to play in our market,” said Colin Cushnie, the utility’s vice president for energy procurement and management. “We were pleasantly surprised that energy storage was more cost-competitive that we thought.”

Existing batteries “suck,” Musk said Thursday at the rollout of his equipment for homes, businesses and utilities. “They’re expensive, they’re unreliable.”

California Standards

If the storage breakthrough is coming, it seems obvious it would happen in California, which has long led the U.S. in supporting alternative energy. The state has the most demanding fuel-efficiency standards for cars, as well as incentives that have made it the biggest market for solar power in the U.S.

California “is often a lab” for the rest of the country, said Brian Warshay, an analyst at Bloomberg New Energy Finance. It will “continue to be so on the storage front.”

Older methods of trying to store power have existed for decades, including pumped hydropower facilities in which water is sent to higher elevation reservoirs and released through lower turbines to produce electricity when demand is high.

Another storage effort that’s getting revived interest is compressed air. Dresser Rand Group Inc., which built one of the world’s two operating commercial systems using the technology, is working on projects in Texas that would force air underground into caverns until it’s released and heated to power a turbine.

Molten Salt

Spain’s Abengoa SA is developing a solar-thermal project in California that will incorporate power storage. Arrays of mirrors will focus sunlight on a central tower, where a boiler will drive a turbine to produce electricity. Vats of molten salt will retain some of that heat so the plant will run after sundown.

Batteries have been used on for years a smaller level to balance grid needs. With added renewables on the system, batteries have been getting bigger to help utilities handle the influx of intermittent resources. They make up the bulk of Southern California Edison’s storage agreements.

AES Corp. is planning a 100-megawatt battery array in Long Beach, California, that will be one of the biggest in the world. The batteries will function much like a peaking natural gas plant, standing by until demand spikes and then immediately dumping more electricity onto the grid, said Praveen Kathpal, a vice president with the Arlington, Virginia-based company’s AES Energy Storage unit.

‘New Scale’

AES will receive a flat monthly fee for the system to be available, plus a variable amount depending on how much energy is used.

“It represents a new scale at which energy storage resources are being contemplated,” said Kathpal. “A hundred megawatts is the tip of the iceberg.”

All the storage projects will reshape the ways electricity must be produced and delivered, Edison’s Cushnie said. Storing power for later is more efficient and reduces the need for new power plants.

“People are still figuring out the business models,” said BNEF’s Warshay. “They can see the business models, but they can’t believe they will make money.”

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