CalCharge's Danny Kennedy (left) and Alex Luce (right). Image: CalCharge, composite by Andy Colthorpe.
California’s CalCharge is a partnership between public and private sector, aiming to accelerate the adoption of energy storage in the state. The group says it will learn from the successes – and mistakes – of PV’s early years and drawing in disparate stakeholders from utilities to start-ups and universities.
The initiative grew out of the California Clean Energy Fund (CalCEF) and is led by CalCEF’s managing director Danny Kennedy, who serves as president of the energy storage group. The Australia-born former chief of US residential PV installer Sungevity has a colourful background in eco-activism and joined CalCharge’s recently appointed programme director, Alex Luce, to speak with Energy Storage News.
So what does CalCharge do?
Danny Kennedy: CalCEF is an independent non-profit that has been in existence for 12 years, to advance clean energy and using various mechanisms to support entrepreneurs, including investing in them directly. CalCharge grew out of that about three years ago and it’s pretty unique, I think.
It’s a very special collaboration between public sector players like the national labs here in California and universities, most of which are public, with corporates, large and small. So we have VW and Bosch and Toyota, [and more than a dozen] start-ups on energy storage collaborating on R&D and doing all sorts of work to make sure that energy storage in different segments and categories happens sooner rather than later.
I just don’t know that there’s anything like it in terms of the range of stakeholders working together and pulling in one direction in what I call a sandbox – kind of like a creative space for them to do what they need to do to make their products better and ready for market. We also have a big collaborative between electrical contractors called the National Electrical Contractors’ Association and the IBW, the union for electrical workers, so they’re part of some of these programmes.
Alex, you were appointed programme manager in December. What drew you in to this space?
Alex Luce: I guess I’m a scientist, an engineer by training. I did my PhD work in solar cell technology and I realised that it wasn’t just a technology problem. In many cases the technology is already sound, there are innovations with both business model and financial model that need to happen. You need to have a strong and healthy business environment, figure out the economics and the policy supporting that. What CalCharge does is sit in the middle and work across those sectors.
Storage is moving fast in California, the duo says, including rapid uptake through the state's AB2514 mandate for utilities. Image: Southern California Edison / Scott Dreger.
You mentioned corporate members of CalCharge, including Volkswagen, which is at the centre of the ongoing emissions scandal. What’s to say these entities are genuinely investing some faith in clean energy and not just paying lip service to doing the right thing?
DK: Fair question, I think, and it’s similar to how I’ve viewed working with utilities at Sungevity, where we had an arrangement with [Germany headquartered utility] E.On and things like that.
I think the reality of many of these large institutions is not all or nothing, or black and white. There are parts of these large organisations with diverse cultures; with different interests in departments and such that are more or less inclined to this work. I think we find working with the allies and the coalition of the willing amongst them can advance the cause.
…I wish that the solar industry had had something like a CalCharge sandbox for the collaboration with utilities a decade ago. We would have advanced faster and further if we’d had that, just as storage now has at least some part of VW and other large entities, which may be somewhat…torn about this internally, but there are elements that really want to see electric vehicles happen and are working hard on that.
I guess it’s just like working with those that we’ve got rather than waiting for the perfect [situation]…seems to be the best way to progress, a similar strategy to what we just saw happen in Paris [at COP21] in some ways. Rather than trying to get everyone together on exactly the same page, get the commitments where you can and then ratchet them up.
AL: These large corporates, they’re not just writing a cheque, they’re actually working with some of the National Labs, sending scientists and researchers out to Berkeley to work with the scientists there and the world class expertise at Berkeley lab to work on technology development for advanced batteries. So it’s not just a cheque in the mail from these guys.
In terms of really getting things moving, we see exciting technologies all the time, but sometimes the regulatory and policy space, or other factors like finance, present barriers. Does CalCharge have any responsibilities in that direction?
DK: Partly because CalCharge is a subsidiary of CalCEF, where our specialty has historically been more technology and finance, we’re not the lead on policy developments and don’t need to be because there are groups like CESA and the ESA nationally and others that do the policy advocacy work.
Where we do play is helping policy wonks understand the technology needs and status of development, commercialisation cycles and so on. I would also note that one of the key areas of innovation is not the technology and not so much policy – although that’s going to be key too.
Things like finance innovation; just as solar really got boosted by the solar leasing construct, the legal contract and finance model, so too financial innovations are the things that are going to make storage go quickly. All the same reasons will apply: the fact that there’s a high capex to these things and if you can amortise the cost of them through time they’re more likely to be adopted, I think that’s something to look out for and if that’s what’s needed, a finance construct, then we’ll help bring that to bear.
AL: Being in the state of California which we like to think leads the rest of the US in terms of pushing forward clean energy, they’re doing quite a bit in terms of having a very supportive policy environment that’s really creating a market.
We have the strongest renewable portfolio standard in the country – California is trying to hit 50% [renewable] electricity by 2030. On the storage side there is a mandate (AB2514) to get 1325MW of energy storage online by 2020 and the utilities right now are just absolutely flooded by applications.
So California is really trying to push out energy storage and kind of leading the US states, they will be looking at what works here and what doesn’t work, a bit of a living laboratory.
How far away are we from seeing those financial innovations in energy storage of the type that transformed the US solar industry?
DK: We’re already seeing them nascently [sic] – companies like Advanced Microgrid and Stem in California, others around the world are using those models and getting them right and I think they’ll take off pretty quickly…
AL: I think the entire industry has seen what financial innovations have done and enabled for the solar sector and I think people get it to an extent that they didn’t even five years ago, so I think it’s a lot easier case to make for storage. But at the same time it’s still in a bit of a rough draft for storage.
[Even where] markets are a little artificial, such as [California’s energy storage mandate] AB2514, it’s kind of a standard learning curve. The more you use it the more the price is going to come down and the more you get finance guys involved, you get to the next big stage which is having more wide-scale bankability for storage on the whole.
Kennedy and Luce on...
- Utilities and storage:
Danny Kennedy: "They’re working on this and getting involved because they’ve learned the lesson from PV that ignoring it doesn’t mean it’ll go away."
- How CalCharge’s home state is leading the frontline of energy storage in the US:
Alex Luce: "California is really trying to push out energy storage and kind of leading the US states, they will be looking at what works here and what doesn’t work, a bit of a living laboratory."
- On explaining the value of energy storage to non-industry folk:
AL: "Danny has a great quote, we don’t really speak in terms of kilowatt hours for example, we really try and convey the message of what we’re doing and the value of storage in a way you could communicate to your neighbour or anyone off the street, what this stuff is and why it’s important."
- Whether the rest of the US will require mandates such as California’s AB2514 to create markets for energy storage:
AL: "If there were mandates they would happen faster but I think the economics will dictate that they do this and utilities will get involved in storage because there’s more opportunity for utility benefit there, or they see that there’s more benefit if utility generation gets replaced by distributed generation (DG) and storage that the utilities hope they can own or have a piece of."
- On developing new business models for storage such as aggregation:
DK: "…Being permitted to pursue business models like aggregating a dozen PV-plus-storage solutions on homes to create a supplier of electricity, things like that, aren’t yet really commonly allowed because the grid regulations and the whole concept of managing electricity has never really previously contemplated storing this stuff. To regulators, electricity is always a flow, it’s not a resource. So we need to get the rules rewritten.”
California is home to Tesla and is often a 'first mover' in US clean energy - but CalCharge hopes successful deployment there will be quickly followed by other regions. Image: Tesla, crop by Andy Colthorpe.