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Monday, March 21, 2011

Subsidizing Electricity Storage

One of the unique characteristics of the electricity grid is that it epitomizes the concept of just in time delivery.  The amount of electricity generated must exactly equal the amount consumed moment to moment.  Basically, whenever a light switch is turned on a generator somewhere has to increase its generation – ramp up – to provide the needed power.  That’s why we have all these fancy control rooms with computerized map boards like the one shown below.

That’s also why the prospect of non-dispatchable variable generators like wind and solar make system operators nervous.  Sudden shifts in the wind or moving clouds can cause rapid and unanticipated changes in generation which in turn requires other dispatchable generators to be available to increase or decrease their production to balance the changes blowing in the wind.  As the amount of variable generation increases, the potential magnitude of the balancing challenge increases with it.

One potential solution to this is to develop some kind of advance storage mechanism that can store excess generation and then release it when it is needed.  On one level there is nothing new here.  Some would argue that fast response gas turbines perform a storage function – storing ancient sunlight in the form of natural gas and releasing the energy in the form of electricity when needed.  Pumped storage hydroelectric facilities serve the same purpose – pumping surplus electricity up hill and then having it flow through turbines when needed to generate power.  Other technologies, like compressed air energy storage, can serve the same purpose.  But are they enough?  

Some advanced storage advocates argue that these battery or flywheel-based technologies are the answer because they can respond quickly and be built most anywhere.  Like photovoltaic panels, however, they need special treatment and subsidies to prime the pump and make them cost-effective.  Storage advocates have been successful in getting the California legislature to pass a low (AB 2514) requiring the CPUC to “Consider the Adoption of Procurement Targets for Viable and Cost-Effective Energy Storage Systems,” which has resulted in a rulemaking (R.10-12-007) to do just that.  Advocates claim that the fast turn around rates which allow for fast ramping overcome the energy limitations of these devices and somehow provide an improvement over gas turbines and available regulation resources that are currently used.  Others suggest a blatant attempt to get special treatment and subsidies for a “climatically correct” technology that would otherwise not be competitive.  The reasoned approach would be to identify renewable resource integration needs, specify ancillary services products to meet those needs, and then let the market decide which technologies do the best job of meeting the needs.  If fast ramping is needed and these new technologies are the best way to provide the service, there will be a demand without special carve outs or subsidies.

1 comment:

  1. A subsidy is an attempt to adjust what is regarded as an imperfect market such that a perceived unmet need can be met. The converse of a subsidy might be a tax of some sort that helps address a cost that is not covered in the normal market price. Markets are usually imperfect because human decision-making only takes into account some, but not all factors, that ought to be considered. Therefore, a subsidy can have a place. Whether, when, and how much is the question.