More Charge for Grid Storage August 2, 2010

by Richard T. Stuebi

While battery technology has been the subject of intensive focus for vehicular applications since the emergence of hybrid electric vehicles over the past few years, much less attention has been paid to batteries for the electric grid.

Although energy storage for the power grid offers great promise to augment the smart grid, facilitate more application of intermittent solar and wind generation and improve power quality, the costs of such technologies have generally been prohibitive relative to the economic benefits that they enable. Accordingly, grid storage has been relegated to a relatively small niche in the cleantech community.

That may be about to change.

In July’s issue of Intelligent Utility, Kate Rowland wrote an article entitled “No More Foot Dragging for Energy Storage?”, which begins with the following grabber: “Grid storage. You’re going to be hearing those words with increasing frequence in the weeks and months to come.”

In part, this is because Senators Jeff Bingaman (D-NM), Ron Wyden (D-OR), and Jeanne Shaheen (D-NH) in mid-July introduced the Storage Technology of Renewable and Green Energy Act of 2010 (S.3617), or more pithily known as the STORAGE Act.

The gist of the STORAGE Act is to make available $1.5 billion in tax credits to storage projects connected to the U.S. power grid, with each utility-based project eligible for a 20% investment tax credit (capped at $30 million) and each customer-sited project (with minimum 80% “round-trip” efficiency, “energy out” vs. “energy in”) eligible for a 30% ITC (capped at $1 million).

In her article, Rowland interviews David Nemtzow of Ice Energy, a developer of thermal energy storage units. Nemtzow was optimistic about the effectiveness of this policy approach, noting that “tax credits are a time-honored and pretty successful way to stimulate investment,” using the wind, solar and energy efficiency industries as examples.

It will be interesting to see if the STORAGE Act passes in something like its current form. If it does, it could well signal the breakout of a new frontier in the cleantech space. If not, like so many things in the cleantech realm, grid storage may be an idea whose time has not yet quite come.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.