Renewable energy, though extraordinarily reliable, cost-effective, and important to the future, is inherently intermittent. Storing and transmitting solar and wind power is the key to scaling the clean energy movement and effecting real changes in the amount of greenhouse gas emissions the world produces.

The smart grid energy storage sector is expected to grow to $50 billion by 2020, with an annual compound growth rate of 8%, according to a recent report from Lux Research. In 2013, renewable energy accounted for only 10% of total US energy usage and 13% of electricity generation, according to the US Energy and Information Administration.

But as renewable energy generation rises, transmission and storage advancements will be necessary. Curtailment, the act of spilling renewable energy because there’s more than enough, is one issue to tackle. By changing grid transmission lines in 2010, Texas saw the curtailment in their grid drop from 9% to 4% in 2012, according to a report by the National Renewable Energy Laboratory.

The tipping point with energy storage depends on the grid and the technology used, said Sam Jaffe, an analyst at Navigant Research. Some places in the world that have extremely high penetration rates of renewable energy don’t have major problems with wasted renewables. Denmark sends its extra wind power to Sweden and Norway, while importing hydro power from those two countries when the wind isn’t blowing. Denmark’s wind penetration is now at almost 40%.

“That’s because they are interconnected to other grids that have a lot of flexibility to offtake renewable energy,” he said.

Sun and wind are resources that are free and available. At what point do we charge for the services to install, store, and transmit clean energy, and who should be in control of deciding that? These are the questions people in the technology industry are beginning to ask as the clean energy sector evolves.

“It’s starting to happen right now, and it’s going to grow and accelerate in the coming years,” said Ulrik Grape, VP of sales and marketing for SEEO, an energy storage company. “It’s already starting to make its impact as a solution, and it’s critical to the spread of more renewables and clean energy. Energy storage batteries are a vital component.”

The state of smart grid storage

Bill Watkins is the CEO of Imergy Power, an energy storage company that builds flow batteries from recycled vanadium, an element found mining slag, oil field sludge, fly ash, and other environmental waste.

A functional, reliable battery enables a lot of things to happen in alternative storage, Watkins said. With Imergy Power’s battery, the company is creating a well-rounded environmentally friendly product.

“Alternative energy is this green thing, and this is a very green battery. It’s all recyclable, and vanadium is common,” Watkins said.

Having a residential battery enables renewable energy power to work 24 hours a day. As long as it fits in the house or building, it will work. Then, instead of losing energy or sending it back to the utility companies, residents can save money by running the battery when rates are high, and charging when the rates are low. It changes the game quite dramatically, Watkins said, as far as how energy is deployed and distributed.

“Once you open up [the] ability for commercial people and consumers to buy it, it changes the dynamics and it changes the cost opportunity,” Watkins said.

“Are large utilities using solar? Sure, but we don’t want people to have to buy free sun energy from a utility. [We want to] give people the ability to put their own energy in their own home and run it for the rest of [their] life,” he added.

The Imergy Power technology is still in its early phases, and the team is testing the product around the world. The company said it will be able to lower the cost of its batteries from $500 a kilowatt hour, which is an industry benchmark, to under $300 per kilowatt hour.

Vanadium flow is only one of many types of energy storage experiments. It’s effective for storing energy for multiple hours in a row, although there are also emerging technologies such as like zinc-based batteries, sodium-aqueous batteries, and liquid-metal batteries, built by companies that are fighting for a place in the industry as well.

And then of course, there are lithium-ion batteries, which are mostly good for short durations of energy storage.

SEEO has developed rechargeable lithium batteries for both vehicle and residential storage. The company is primarily focused on the commercial space, and is working on their own pilot projects currently.

“One of the tricks here is there are multiple solutions that can be integrated into the grid, so it’s about finding the right space for different technologies,” Grape said. That is where IT genius comes in — for the many solutions and innovations that will be created, a lot of “smart” technology will need to be managed.

A smart future

“The industry is moving ahead due to market needs, but regulatory coordination and creation of standards for interoperability could always be better,” said Richelle Elberg, senior analyst for Navigant Research. “The business model for regulated utilities is getting squeezed from all sides, but regulatory support is uncoordinated and inconsistent in many regions and between the 50 U.S. states. Nevertheless, industry is driving forward, creating market based solutions.”

Navigant Research released a report recently about the state of smart grid technology, and foresees a growth of the industry to reach $11.1 billion by 2023.

A huge smart grid is being promoted by the Department of Energy, but it will take at least a decade, Hennessy said. To the team at Imergy Power, micro grids are the way to go. Private providers, individuals, companies, or governments can harness, utilize, and/or sell their energy to people. It won’t be an easy road, though, as the utility providers are already losing power.

“Utilities will fight that forever because they are trying to control it,” Watkins said.

To build a future for smart grid storage, utility providers will be required to completely transform their business model. Right now, Hennessy said, the utility industry serves top to bottom, differing only by what type of service needed (i.e. industrial, commercial, residential) But with renewable energy, it adds a generation at the bottom, as individuals are generating solar and wind power.

“Instead of power flowing from the top, we now have power being generated by the end user, and flowing the other way,” Hennessy said. “The moment you have that, you need a smart grid.”

Smart grid storage is now in its early commercial phases, after many years of experimenting with a variety of technologies. California and New York are the leaders in smart grid energy storage. Last year California set an energy storage target of 1.3GW by 2020. Grid-scale energy storage has been in the works for New York this year, to help reduce the load after the closure of power plants.

Tesla Motors plans to sell 500,000 electric vehicles a year by 2020, and there are already more than a dozen electric vehicle models out there today. Elon Musk also just announced an infinite mile warranty for the Model S, showcasing his commitment to long-term development of the technology. We’re getting closer to standardization of electric vehicle charging stations, which is one of the factors holding that industry back right now.

Energy transmission is the bottleneck for these cost-effective clean energy plans. The existing grid was built to connect everyone to stationary fossil fuel plants that produce the energy that people need in real time and do very little storage. But, that same grid won’t work as well with renewables because of their intermittent nature and the fact that you can’t produce them as quickly to meet spikes in demand. You have to be able to store it and transmit it.

This month, however, there was some progress. The U.S. Court of Appeals for the D.C. Circuit upheld Federal Energy Regulatory Commission’s 2011 mandate, saying that there will be changes in the way utilities and lawmakers consider transmission, helping to open more pathways for renewables. It comes not long after the EPA proposed regulations for power plant carbon dioxide emissions.

There’s quite a bit to overcome, but as solar panel prices drastically fall and electric vehicles drop in price, the market is ripe for growth. It’s now the time for technological innovation, business model disruption, and environmentally conscious decisions.

“The whole world is waiting for low-cost batteries,” Watkins said.

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