Energy Storage – an Audacious Push
California on Frontline of Utility Evolution
The utility industry has long known that advanced storage technology is the Rosetta Stone for significant improvement in the overall integration rates of renewable energy. Full assimilation of wind, solar and other forms of renewable energy has always been limited by the simple realities that the wind doesn’t always blow and the sun doesn’t always shine. As such, they were unpredictable and created challenges for grid operators. But, it is one thing to know about a Rosetta Stone and it is an entirely different thing to bet on its arrival by a specific date.
When the California Public Utilities Commission passed its mandate for investor owned utilities to add 1.3 gigawatts of storage by 2020, the entire industry took notice. In addition to being a BHAG – Big, Hairy, Audacious Goal – this mandate points to where we should be thinking. That is, storage technology is advancing and, if we want to properly leverage it, we should aim ahead of where we are today and hold ourselves accountable for progress – however uncomfortable that may be in the traditionally risk-averse utility industry.
We have seen this practice leveraged many times before across other industries. Amazon and Google are perhaps the best examples. Their business strategies regularly incorporate technologies that are in their infancy, or perhaps not yet invented. Google is refining driverless cars and Amazon is exploring drone-based delivery. Certainly we can look at advancements in storage technology as a reasonable bet for our industry and proceed accordingly.
This bet, however, is not without its risks. We tend to think of technology advancements within the framework of Moore’s Law, which holds that the number of transistors in an integrated circuit will double every two years and will have a similar effect on processing power. Because that has been the guiding rule in technology advancements over the past 50 years, it is little wonder that we are conditioned to think that way. Importantly, though, advancements in power storage technology do not follow Moore’s Law. In fact, they are not related, as Dr. Fred Schlachter explained in a paper published through the National Academy of Sciences.
Because advances in power storage do not follow a predictable trajectory, the risks associated with this bet can be significant. Power grid reliability is sacrosanct for both utilities and the public. Achieving renewable and storage mandates at the expense of reliability would be a failure in policy, an expensive burden for utilities and an annoyance to customers. As an industry, we must achieve meaningful progress without compromising reliability.
Betting on advancements in technology has become the new normal for utilities. The traditional operating practices of yesteryear have lost favor with regulators, customers and even utilities, who are keen to keep pace with changing regulatory and customer expectations, while simultaneously meeting their normal performance expectations related to safety, reliability, customer service and financial performance. Embracing the new normal is a fairly tall order, and requires significant changes to conventional utility operating practices.