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25 September 2002

Energy storage seen curing power market ills

Energy storage technologies has become the "sixth dimension" of the electric power market and could have positive impact on the U.S. economy of up to $175 billion over the next 15 years, according to a just released study.

According to the report from St. Louis-based Pearl Street Inc., energy storage technologies can fix a major problem facing today's electricity market: the fact that it operates on a "just in time" basis, and unlike other successful markets, it has no storage component.

"Energy storage ensures power quality; facilitates the integration of renewable generation assets into the grid; raises the productivity of existing generation, transmission, and distribution assets; and increases the efficiency and security of the power generation market," said Jason Makansi, president of Pearl Street, a market intelligence firm specializing in the electric industry value chain.

By supplying power when and where needed and by integrating the five existing electricity value chain segments — fuel, generation, transmission and marketing, distribution, and energy services — into a far more flexible framework, energy storage has become the "sixth dimension" of the electric power market, he said.

Titled "Energy Storage: The Sixth Dimension of the Electricity Value Chain," the study describes leading storage technologies, including pumped hydroelectric; compressed air energy storage; regenerative fuel cells/flow batteries; sodium/sulfur and lead acid batteries; superconducting magnetic energy storage; and flywheels, thermal, and hydrogen systems. It also includes market insights from industry thinkers, suggested market applications including ancillary services and their impact on existing industry participants, a review of state and regional business opportunities, and forecasts of the impact on the U.S. economy.

"The U.S. electric power industry is suffering a crisis of uncertainty," Pearl Street noted. "The regulatory framework is incomplete, obvious market leaders have fallen, and the winning business models are still not defined. Although we may not know where we are going, the industry is changing, and the impending transformation of the transmission component will have far-reaching effects."

As the electric power market continues to try and convert from an industry governed by rigid command-and-control regulations to one where the competitive pressures will guide the development of new products and services, this lack of a flexible storage component will be telling, the market research firm predicted.

"As exemplified by the success of the natural gas industry, electricity markets will need to develop a vibrant storage component in order to successfully operate efficiently, whether in a regulated or a deregulated market. Stored power will act as a 'shock absorber' for the system; the incremental impact of introducing these facilities into the market will accumulate and ripple throughout the market, providing systemwide benefits," Pearl Street said.

"Energy storage is poised to play a pivotal role in this new power market. Energy storage systems are enabling technologies; their goal is to enhance and extend the operating capabilities of other assets on the grid. Although electricity cannot be [cheaply] stored directly, it can be easily stored in other forms and converted back to electricity when needed."

According to Pearl Street's analysis, storage technologies can provide more efficient energy management, bridging power, and increased power quality and reliability.

"As energy demand continues to grow, storage assets will also be able to 'pre-position' electricity past congestion points, allowing the deferral of hard-to-locate transmission assets. By decoupling the production and consumption of electricity, lower costs can be accompanied by improved stability, reliability, and security of the grid," the research firm contended.