To borrow a phrase from “Monty Python and the Holy Grail”, we are not dead yet. The media has picked up on the A123 Systems Chapter 11 filing and has extrapolated it to mean that somehow energy storage is another failed Department of Energy (DOE) technology. In fact, the industry feels fine.
First, A123 is not dead; they are restructuring and continue operations. They also have 90 megawatts of energy storage up and running worldwide with a number of other projects in process. Roland Berger just released a report on the projected market for lithium ion batteries and the top five players included the likes of LG, Panasonic, Sanyo-and A123 Systems. Recognizing this opportunity, a number of suitors have lined up in a bidding war for A123, which the bankruptcy judge called “the popular girl at the dance.” Not exactly demise.
Second, other big players have entered this market with gusto. GE just invested $70 million in a battery plant in upstate New York. CEO Jeff Immelt sees this as a billion dollar industry for his company. That doesn’t sound like a capricious investment in a failed technology. Other industry players include ABB, NextEra, AES, FirstEnergy, AEP and many more. These are real companies seeing a real business case for storage.
Third, let’s take a closer look at the investment by DOE through the Recovery Act. The program received $185 million for energy storage projects. With the interest from industry, DOE was able to leverage $585 of private funds to build 544 megawatts of advanced energy storage. This figure doesn’t count the hundreds of millions in commercially financed storage projects that leveraged DOE research. Doesn’t sound like a bad return on the taxpayer dollar.
Finally, let’s think about why DOE has long-invested, and why big players are now interested, in this market. Energy storage is crucial. Our electric grid is increasingly adding disruptive technologies that diversify our resource mix but also add complexity to a system in need of stability. These technologies have the capability to make the grid more reliable, more flexible, more efficient, cleaner, and less expensive to operate.
There are currently 350 megawatts of advanced energy storage in the ground or under construction in the United States, with utilities like Duke Energy, Xcel, Southern California Edison, Public Service of New Mexico-as well as developers, municipalities, and manufacturers. One developer alone has over 500 megawatts in near term development. Other than a small amount in Alaska, none of this existed until a few years ago.
With policy leadership to level the playing field, energy storage really can change the future of the growth and operation of our electric grid for the better, and all the while creating jobs here in the United States. Don’t confuse growing pains with last gasps; these guys are not dead yet.
Katherine Hamilton is a founder of 38 North Solutions LLC and a member of the Breaking Energy Editorial Advisory Board.