U.S. Vitality Storage in 2021: Notes from a Mature Business – Vitality Storage Information

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The US energy storage industry remained “remarkably resilient,” to say the least, during what most of us found a difficult year. Andy Colthorpe, Editor of Energy-Storage.news, speaks to Jeff Bishop, CEO of Key Capture Energy, and Alan Grosse, COO of FlexGen – two companies that grew their energy storage businesses in 2020 – to learn the lessons can be drawn and why the economy prevails.

For so many reasons, 2020 will be a year to remember for a long time, but not fondly remembered. It will be difficult to forget the pandemic that took so much away from all of us, and on either side of the political fence you are on – or even if you don't take any side at all – the world seems to be a very divided place be. And that's before we even think about the climate crisis.

However, it was a year of clear progress for the US energy storage industry, which continues to lead the world in adopting batteries for the utility grid and renewables. The research company Wood Mackenzie Power & Renewables found that 467 MW / 764 MWh energy storage systems were used in all market segments in the USA in the third quarter of 2020. This was more than double the previous highest deployment quarter, and Wood Mackenzie, director of energy storage analysis, Dan Finn-Foley, described the industry as “remarkably resilient” to the effects of coronavirus lockdowns.

All of this despite the supply chain slowdown reported earlier in the year, allowing for delays due to officials staying at home and difficulties in accessing locations and customer properties. In an interview for Energy-Storage.news at the end of November
Kelly Speakes-Backman, CEO of the US Energy Storage Association (ESA), said 2021 will be “an important year for energy storage” and that the industry will continue to grow faster – with at least 3.6 GW of storage expected will go online.

The prospect of working with the new administration of Biden-Harris to campaign climate and environmental concerns is also to be welcomed, Speakes-Backman said. In the meantime, great progress has been made at the state level, and the ESA Executive Director pointed out in her interview that Arizona, Maryland, Nevada and Virginia are among the states that are taking a step forward and one in terms of energy storage policy Take leadership, along with the commonly discussed likes of California and Hawaii.

For this article, speak to Jeff Bishop, CEO at developer Key Capture Energy (KCE), and Alan Grosse, chief operating officer (COO) at installation service and technology provider FlexGen – two contrasting companies that made 2020 a pretty good energy year to do storagewise – we hear how they approach the industry and its diverse business models; Which regional markets in the US work best and why? Which technologies and partner companies they rely on to get their jobs done and the future of energy storage as an enabler for renewable energies and a cleaner grid, as well as a competitive alternative to existing grid infrastructure options.

Expect everything to flow

Jeff Bishop, CEO of Key Capture Energy, says 2020 was a year when “everything was expected to be in flux,” which for someone in an industry as nascent and disruptive as it is Energy storage, maybe a more familiar feeling than for many others. However, KCE's plan to have more than 1GW projects operational by the end of 2023 remains on track, Bishop says, and 2021 will be “an exciting year.”

“We knew that storage would be very difficult in this industry. Each project offers a unique mix of technical, commercial, regulatory, and development issues that the wind and sun didn't have when those industries moved up and down, ”says Bishop.

The way KCE has stacked the development of energy storage projects is by looking at the energy landscape and trying to “figure out what the grid will need in five to ten years,” says Bishop.

“There are opportunities that certain technologies allow over others, and we approach energy as if we were a thermally independent power producer (IPP). So: If you were a natural gas company 10 years ago, what basics would you need and what core competencies do you need in a company? “

The answer, says Bishop, is strong project development teams, engineering, procurement and construction (EPC) teams or partners, market development workers who watch day-to-day operations, combined with a commercial structure that allows KCE to recover its capital expenditures (CapEx) in order to to expand the pipeline of outstanding projects again.

“That's how we dealt with the industry. Since we have no tax equity, we don't need the same structures that a wind or solar company would need, or the 20-year contracts. Instead, we can go to the market and, for example, conclude contracts with a term of four to ten years that cover a debt service so that we can burden these projects with project debts and then create projects that do this are above our cost capital. “

Typically, KCE will operate in US Regional Broadcasting Organization (RTO) states and regions where it expects a market to be in two to five years but not today.

“We start small and run 10 or 20 megawatt projects first to find out all the known unknowns in a particular market. And as soon as we have familiarized ourselves with the revenues, the market structure, the regulatory environment and the trading structures, we will expand the projects with a size of 50 to 200 megawatts. “

Key Capture Energy's KCE NY 1 project in New York State, on which the developer worked with NEC. Image: Key Capture Energy.

Opportunities through competitive advantages

According to COO Alan Grosse, Flexgen's path into the grid-scale energy storage market was completely different, if only because the company actually started manufacturing microgrids, including several projects for the US military. The possibility for batteries really appeared on the horizon of FlexGen from around 2014 due to the reduction in device costs. Previously, the cost of battery storage was “prohibitively high,” says Grosse, and most of FlexGen's projects were megawatt-scale microgrids with ultracapacitors that “only had enough storage space to provide full power for around 30 seconds.”

However, as of 2018, FlexGen made its way to Texas as well, focusing on one-hour battery storage systems that make economic sense to trade energy and grid services in the state's ERCOT (Electricity Reliability Council of Texas) market. The “lion's share” – or even the Li-Ion portion – of what the company delivered this year as a technology and project service provider was hour-long batteries in Texas and elsewhere.

“The perspective is one in which, wherever the market offers an opportunity, you obviously want to play there. And so we see a number of these ancillary services markets in Texas in particular, ”says Grosse to a lesser extent along with energy arbitrage and trading. FlexGen's next year is also expected to be busy – Alan Grosse says the company “will likely buy just over 1.1 GWh of energy storage for delivery by the first half of 2022”. FlexGen has done some international projects but is mainly focused on the US.

“Within the US market, where we obviously play the most, Texas, California and our largest markets in the order in which we see quoting activity, where we build systems and where we see market opportunities, then the Northeast US Massachusetts to some extent, and some of the Independent System Operator Zones (ISO) in New York. These are the areas we see and if I had to take a fifth I would say, of all things, Indiana. “

Big mention Indiana, he says, because of the exit from coal. FlexGen is not a declared, climate protection agenda-oriented company with a mission, but Grosse says that the profitability of renewable energies plus storage is a “slam dunk” while states, utilities – and hopefully also the federal government – decarbonise again and become clean energy policy and goals.

While the coal shutdowns also mean more natural gas can be brought on line in many locations, FlexGen's COO argues that a recently completed project by the company in Indiana embodies how energy storage can also be combined with natural gas for efficiency and Increase reliability and ultimately a transition to decarbonization.

FlexGen added 12 MW / 5.4 MWh lithium-ion batteries to a natural gas plant for an Indiana utility that can black start the turbines. Previously this has only been done with diesel engines, which are dirtier, louder, less reliable, require frequent maintenance, and have fuel costs. This customer is making a Request for Proposals (RFP) for several gigawatts of solar and has a number of coal-fired power plants idle.

“Our black start project is located in an 800 MW coal power plant. They're closing the coal-fired power plant and putting the battery in to make their gas turbines more reliable because they're in the process of building a massive, massive solar and battery footprint – solar plus storage. “

Cover photo: One of several FlexGen projects the company has undertaken to stabilize power supplies to communities in Houston, Texas. Each is roughly 10 MW / 11 MWh.

The publisher of Energy-Storage.news, Solar Media, is hosting the 2021 edition of the annual energy storage summit in a new, exciting format from February 23rd to 24th and March 2nd to 3rd, 2021. More information is available on the website.

This is the first excerpt from an article that appears in full in the latest edition of our quarterly journal PV Tech Power (Vol.25) in ‘Storage & Smart Power', the special section contributed by the Energy-Storage team. News. Visit the PV Tech Store to download the entire article as a single paper, or to subscribe to or download the entire 89-page book.

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