At a windy mountain pass on the edge of the Mojave Desert, North Americas most potent collection of batteries used for storing unused power is humming its way toward an electricity revolution.
Southern California Edison, a utility that serves about 14 million people, has amassed more than 600,000 lithium-ion battery cells -- enough to power 2,000 Chevrolet Volts -- at a substation in Tehachapi, California. The $54 million, two-year test project aims to collect power generated from the areas 5,000 wind turbines and store it for future use.
Cost-effective storage for wind and solar energy is the industrys Holy Grail, Morgan Stanley says. Thats because times of high output during sunny days or windy nights dont always match up with peak demand. While batteries are currently too expensive for large-scale use, improving technology is cutting costs, which means storage systems could replace some plants and avoid the need for new ones, as well as cut demand for oil, according to UBS AG and Citigroup Inc.
Were at the infancy of this, Ron Nichols, the senior vice president of regulatory affairs for Rosemead, California-based SCE, said in a telephone interview Oct. 1. The technology is important. I dont know if its a game-changer yet, but it has the potential to be, particularly if it gets implemented more deeply and the costs come down.
In the next seven or eight years, the price of batteries used for storage may fall by about half, to $230 a kilowatt hour of generating capacity, said Sofia Savvantidou, an analyst at Citigroup in London. Policy makers are setting more targets for renewable energy and demand is increasing from companies including electric-car maker Tesla Motors Inc., she said.
Electric-car battery prices already have fallen by 50 percent since 2010 to about $500 per kilowatt hour, and by drawing on auto-battery technology, battery makers may also be able to supply storage batteries at a lower price, Citigroup said in a Sept. 25 report. Tesla Chairman Elon Musk said in July that battery packs for electric cars will drop to $100 in the next 10 years. The Tehachapi batteries are supplied by LG Chem Ltd. and are the same type used in General Motors Volt.
The Southern California Edison project is part of a push for more wind and solar power in the state, among the sunniest in the U.S. A third of Californias electricity must come from renewable sources by 2020, and mandates also require that the three biggest investor-owned utilities store 1,325 megawatts by 2024. California already has more than 12,000 wind turbines, the most of any state, according to the American Wind Energy Association.
Most electricity in the U.S. is produced at the same time it is consumed, and suppliers bring plants on and offline depending on demand. Coal and nuclear plants provide much of the base load, accounting for a combined 58 percent of domestic output last year, government data show. Peak-load plants, usually fueled by natural gas, which accounted for 27 percent of U.S. output, are more flexible. They run when demand surges, often on hot days when consumers run air conditioners.
Only about 4.1 percent of U.S. power came from wind turbines last year, and less than 1 percent was generated by solar panels, both of which are more erratic than fossil fuels. Most of the rest was supplied by hydro-electric dams, geothermal steam and petroleum.
California already produces more solar energy than it can consume during certain hours in the spring, when its sunny but still too cool for air conditioners, SCEs Nichols said. Excess generation may reach 10,000 to 15,000 megawatts by 2020, when the state meets its renewable targets, so batteries will be needed to avoid wasting energy, he said. The Tehachapi facility can store 32 megawatt-hours of energy, making it North Americas largest lithium-ion battery project by output, the company says.
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