Industry Ready to Invest in Energy Storage

Potential savings for businesses and consumers are worth billions of dollars.

By Jim Ostroff, Associate Editor, The Kiplinger Letter

June 4, 2009

It won’t just be production of green power that’ll transform the energy industry over the next decade and longer. A slew of promising technology developments on the horizon will help spark it to life nationwide, providing benefits to energy users and enticing public and private investment.

Energy storage is the next high tech frontier. Though it doesn't have the glitz of rooftop solar power plants or the visual impact of legions of wind turbines churning lazily in the breeze, electricity storage is essential if the U.S. is to get 20% of its power from renewables by the 2020s, up from the less than 5% it gets currently.

"Storage enables renewable power to be used on the [electric power] grid more cost effectively, since wind and solar are variable and not always available when most needed, or they produce more electricity than can be used," says Richard Baxter, a senior vice president with Ardour Capital Investments, an investment firm that focuses on energy technology. Bottling up juice until it's most in demand also helps reduce the need for new transmission lines, whose costs eventually are borne by all electricity users, says Baxter.

Industry is beating a path to energy storage's door. Among the most promising technologies are flow batteries -- in effect, reverse fuel cells that can store unused wind and solar electricity for use later when it is needed. This should prove a boon to wind farms, in particular, since wind-made power is often most plentiful at night, when gusts scour the prairies and Midwest farm belt and when daily power usage is at a low point. Commercial-size batteries are in the works at A123Systems, ZBB Energy Corp., Altair Nanotechnologies, Ener1 and Premium Power Corp.

They'll see competition from lower tech alternatives, such as giant conventional lead-acid batteries from Exide Technologies and Ultralife Corp. Plus there’ll be a sodium-sulfur version from Japan’s NGK Insulators. A system that stores compressed air meets much the same need. At night, when demand is typically low, wind-made electricity runs pumps that compress air into underground caverns. In daytime, released air turns turbines to make electricity. In McIntosh, Ala., a system from Energy Storage and Power turns out 110 megawatts for Alabama Electric Cooperative.

Over the next 20 years, the energy storage business will grow 10-fold. Its sales total around $50 billion today, but the lion's share of this is accounted for by batteries for automobiles and portable devices ranging from laptops to flashlights.

Technology also will help American consumers and businesses temper their growing appetite for electricity. New semiconductors deployed in smart circuits in everything from steam irons to iPods will yield huge energy savings. U.S. power use in 2030 is likely to run about 425 billion kilowatt-hours less than today, despite gains in population and economic output. Accumulated savings over 20 years will be around $1.2 trillion.

There will also be energy savings from harvesting waste heat. Within five years or so, heat exchangers will routinely sop up warmth spewed by industrial operations, blowing cool airstreams that cut the need for air-conditioning. Smaller versions tied to car exhaust systems will perform the same function, reducing the load on engines and saving on fuel use.

Plug-in electric autos will get a boost from a new generation of thermoelectric devices to convert engine heat into electricity, allowing the use of smaller rechargeable batteries.

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