Utilities Tech Outlook Weekly Brief
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Albert Phan, Principal program manager, Pepco HoldingsIf you pay attention to the news these days, you are likely aware we are riding the wave of a colossal energy transition that promises an energy future that is cleaner, smarter, and more equitable. A cornerstone of this transition is the transformation of the electricity grid itself.
Modern society is increasingly relying on the grid with every new electric vehicle purchased, every new solar panel installed on a home, and every progressively frequent storm that rolls through. As reliance on the grid intensifies, so too does the pressure on the grid to perform. This new future demands an energy grid that is significantly more flexible, coordinated, and resilient than the grid that Thomas Edison knew. One technology that can help utilities meet this need is energy storage, a type of distributed energy technology that enables utilities and customers to store and release energy when most needed. More specifically, this includes energy storage at the distribution grid level as a newer innovation, as opposed to technologies like pumped storage hydropower that have existed at the bulk power system level for decades.
History tells us the most transformative and innovative technologies tend to be those that unlock new capabilities, creating divergent new markets that can build upon themselves. In many ways, energy storage promises to do just this. Some of these new capabilities include:
• Control over when power should be flowing depending on the conditions and needs of the wider system.
• Backup power for customers and communities in the event of natural disasters.
• Active customer participation in wholesale power markets and the operation of the grid.
As battery prices continue to decline and the commercial market matures, energy storage may find itself increasingly augmenting the grid alongside traditional infrastructure at a fraction of the cost to customers. How can we not be excited for this opportunity?
Atlantic City Electric, Delmarva Power and Pepco are part of the Exelon family of companies and power more than two million homes and businesses across the Mid-Atlantic. Although we no longer generate energy nor own power plants, we serve a crucial role as a connector, enabling at scale technologies like energy storage to improve the way we deliver safe, reliable electricity. However, like someone trying to play the guitar for the first time, we know that realizing energy storage's full potential will take a lot of learning and practice—both by us and across the energy industry.
To that end, we have launched several initiatives to explore energy storage and develop the muscle memory we need to pave the way for this future. In Maryland, Pepco, Delmarva Power and our sister Exelon utility, BGE, are driving six pilot projects to test innovative business models that leverage the unique ability of energy storage to deliver multiple benefits within a single project. Key to driving affordability for our customers, our goal is to optimize each project's multiple applications together and generate the maximum value possible—a grid modernization concept often called value stacking. In the District of Columbia, Pepco is deploying two battery energy storage projects to defer more traditional, capital-intensive infrastructure investments with the ultimate goal of saving customers’ money. In New Jersey, Atlantic City Electric’s Beach Haven battery energy storage project will help prevent a forecasted substation overload, driven by growing electricity demand. Finally, across all our jurisdictions, we are evolving our distribution system planning process to start incorporating non-wires solutions, which can include energy storage and other solutions like energy efficiency, into our toolbox.
"Key to driving affordability for our customers, our goal is to optimize each project's multiple applications together and generate the maximum value possible."
Despite the tremendous progress and effort we have made, we know there are still challenges we must overcome. As with any good investment, each energy storage project must deliver enough benefits at a reasonable enough cost for the project to be worth it. Lithium-ion batteries, the current dominant choice for energy storage, still remain too expensive in many situations. However, advances in consumer electronics, electric vehicle adoption, and the ever-powerful experience curve have begun to drive down costs over the last several years. With safety always being our number one priority, we recognize another important challenge is safeguarding from fire safety risks, mainly afflicting lithium-ion batteries. Fortunately, battery fires are relatively rare events, and continued industry innovations in practices, standards, and technologies are helping to make them even rarer still.
Lastly, integrating storage projects into enterprise IT systems has proven a significant challenge. From figuring out data architectures that enable secure access by third parties to enabling utility control centers to seamlessly coordinate fleets of batteries, IT integration is a pain point realized by many utilities. As we gain deployment experience through real projects, we will learn how to solve many of these issues. A final silver lining that may streamline IT integration woes is the recent commercial introduction of distributed energy resource management systems, or DERMS. With DERMS, we will have a purpose-built control system to coordinate fleets of energy storage systems and other distributed energy resources alongside the rest of the grid. This will be a crucial capability for utilities as distributed energy penetration ramps up across the grid.
Creating the future will always be challenging, but we cannot risk being stagnant given the urgency of the energy transition. Energy storage provides us with a powerful tool to realize this future and create a grid that is cleaner, smarter, and more equitable. With the initiatives we have started and those still to come, our electric utilities are transforming the way we deliver safe, reliable, and affordable energy to power a cleaner and brighter future for our customers and communities.
