Last week the US Energy Storage Association (ESA) hosted its annual conference and exhibition in Dallas, Texas. Andy Colthorpe spoke to Jim McDowall of battery and energy storage system provider Saft, which won the show’s Outstanding Acheivement Award. McDowall is a business development manager with the company, with extensive experience in the energy storage industry.
Jim, congratulations, Saft won the Brad Roberts Outstanding Acheivement award (named in honour of the late Brad Roberts, ESA’s former executive director who passed away in 2013). How was the show for you in general?
I don’t know how well I can judge the conference, because I spent most of it in customer and project partner meetings! That indicates where energy storage has come from, because I’ve been going to the annual meetings of ESA since the year 2000. The commercial aspects of energy storage have taken off to the point where I’m just too busy with customer meetings to be able to go into those conference sessions. So that’s a good thing!
When I started getting involved in the meetings there were about 60 people. About 50 to 55 were manufacturers and developers of technologies sort of preaching to each other and there were a few people from the DoE (Department of Energy) or the national labs, or consultants and maybe one or two utility people there, and that was it. Last year ESA had over 600 people, this year it’s over a thousand — so you can see how it’s taking off.
How has it progressed in recent times and does it reflect your experiences of the wider market?
We’ve seen a real transition in the business from utilities doing demonstrations to developers doing commercial projects and selling storage services or needing storage to get value from their renewable energy projects, or even just to connect their renewable energy projects.
But I gather utilities too haven’t slowed down either?
Right. Some utilities are buying storage and others are buying storage services much as they would do a power purchase agreement (PPA) for solar or wind power. That’s how a lot of California procurements are moving on.
Clearly that’s one of the challenges to any emerging industry, reaching commercialisation. Especially with the large scale of some of the projects involved in energy storage, financing needs to be found from somewhere. What’s your take on that as someone who presumably acts as a conduit from the technical to the commercial side?
I can give you an example from a couple of projects in Puerto Rico that we’ve been involved with. There, they have a grid interconnection standard for renewables, this is to control the ramp rate and to do frequency response, so they need energy storage to provide those functions. They can’t interconnect without it, so the income from the PV facility is entirely dependent on the compliance of the energy storage system or the ability of the storage system to maintain the compliance of the facility to these grid interconnection standards.
We’ve had to go through some pretty stringent due diligence, independent engineer’s review, people hired by the bankers to vet what we’re doing, how we’re sizing the battery, how we develop and test the systems. We’ve been through the ringer on some of these things to answer all the questions. Then the independent engineer tells the lender more or less what the risk is, from their point of view.
There are lenders who want to get involved. It’s a little bit more difficult with Puerto Rico now (major utility PREPA is facing some financial difficulties – AC).
And along with island regions like Puerto Rico or Hawaii where the need for storage is quite pronounced, what are some of the other markets that interest Saft?
Certainly the island thing is continuing, there's the French islands, a project on La Reunion, one on the Canary Islands.
As the costs of storage come down, we're also starting to see - and this is where a lot of the California procurements are going - we're seeing storage as a replacement for peaking generation. So instead of these big power plants that take forever to permit and to build and only run 10 times a year, you can have a storage unit that provides the same functionality as peaker plants for those 10 times a year. On other days it can do maybe regulation service or spinning reserve, something else that's useful to the grid, rather than [having] a power plant just sitting there doing nothing.
Several high profile commentators have focused on the fact that as well as there being multiple use cases for storage and a battery, many systems can be used for more than one application at a time…
Yes, and that makes it a little complex when it comes to how you offer storage services to a utility under those circumstances. If you've got a PV facility, you just charge by the kilowatt-hour for everything the facility puts out and that's how the PPA is structured.
Now what people are getting into is something called tolling agreements, where you pay so much per month, for the use of the facility and the person making the offer for the facility says you can have this depth of discharge so many hundred times a year, so much throughput average per year, maximum of this much, maybe on 50 days out of the year and if you go outside the boundaries of this usage, you've got to pay extra.
The storage manufacturer has to offer a warranty so that the developer can finance the system. And that's what we're doing in Puerto Rico also to minimise risks for the banks. We have to offer a full corrective maintenance warranty and also a performance warranty so that if there's a 20 or 25 year PPA for the facility we have to back that up for that whole period with full guarantees.
Now we can replace the cells halfway through but we still have to have that certainty for the banks for that whole period, and that's a challenge.