A
Big Test for Big Batteries
By
DIANE CARDWELL and CLIFFORD KRAUSS
JAN.
14, 2017 ESCONDIDO, Calif. —
In
Southern California in the fall of 2015, a giant natural gas leak not only
caused one of the worst environmental disasters in the nation’s history, it also
knocked out a critical fuel source for regional power plants. Energy regulators
needed a quick fix. But rather than sticking with gas, they turned to a
technology more closely associated with flashlights: batteries. They freed up
the utilities to start installing batteries — and lots of them.
It
is a solution that’s audacious and risky. The idea is that the batteries can
store electricity during daylight hours (when the state’s many solar panels are
flooding the grid with power), then release it as demand peaks (early evening,
when people get home). In effect, the rechargeable batteries are like an on-demand
power plant, and, in theory, able to replace an actual plant. Utilities have
been studying batteries nationwide. But none have moved ahead with the gusto of
those in Southern California.
This
idea has far-reaching potential. But the challenge of storing electricity has
vexed engineers, researchers, policy makers and entrepreneurs for centuries.
Even as countless technologies have raced ahead, batteries haven’t yet
fulfilled their promise. And the most powerful new designs come with their own
risks, such as fire or explosion if poorly made or maintained. It’s the same
problem that forced Samsung to recall 2.5 million Galaxy Note 7 smartphones in
September because of fire risk.
After
racing for months, engineers here in California have brought three energy-storage
sites close to completion to begin serving the Southern California electric
grid within the next month. They are made up of thousands of oversize versions
of the lithium-ion batteries now widely used in smartphones, laptop computers
and other digital devices. One of the installations, at a San Diego Gas &
Electric operations center surrounded by industrial parks in Escondido, Calif.,
30 miles north of San Diego, will be the largest of its kind in the world,
developers say. It represents the most crucial test yet of an energy-storage
technology that many experts see as fundamental to a clean-energy future.
Here,
about 130 miles southeast of Aliso Canyon, the site of the immense gas leak in
2015 — the global-warming equivalent of operating about 1.7 million cars over
the course of a year — 19,000 battery modules the size of a kitchen drawer are
being wired together in racks. They will operate out of two dozen beige, 640
square-foot trailers. Made by Samsung, the batteries are meant to store
enough energy to serve as a backup in cases of fuel shortages. They are also
designed to absorb low-cost energy, particularly solar power, during the day
and feed it back to the grid after dusk. They in effect can fill in for the
decades-old gas-fired plants that might lack the fuel to fully operate
because of the disastrous leak.
“California
is giving batteries the opportunity to show what they can do,” said Andrés
Gluski, chief executive of AES, which is installing the storage systems. AES is
installing a smaller array for the electric utility in El Cajon, a suburb east
of San Diego. And separately Tesla, the company perhaps better known for its
electric cars, is building an array for a different utility on the grid,
Southern California Edison, near Chino, Calif.
The
stakes are high for both energy storage companies. If their projects struggle
or fail, it could jeopardize not only the stability of Southern California’s
grid but also interest in the technology over all. After a smaller, but
pioneering battery project at a wind farm on Oahu in Hawaii went up in flames
in 2012, investment in battery storage all but dried up for a few years.
That installation, which used 12,000 lead-acid batteries to help even out
fluctuations in the power flow, caught fire three times in its first 18 months
of operation. The storage developer, Xtreme, eventually went bankrupt.
The
wind farm turned to a different technology to smooth its output. Keeping a
close eye on the Southern California battery efforts is Susan Kennedy, who helped
shepherd California’s energy policy for more than a decade as a state utility
regulator and high-level operative for two governors — Gray Davis, a Democrat,
and Arnold Schwarzenegger, a Republican. She now runs an energy storage startup,
one not involved in the battery-building response to the Aliso Canyon gas
leak.
“The
moment one fails,” Ms. Kennedy said of the big bet on batteries, “they won’t
build any more.” As soon as AES’s chief executive, Mr. Gluski, learned last
June that San Diego Gas & Electric had awarded AES the big battery
contract, he leapt out of his chair and interrupted a meeting in his board room
at the company’s headquarters in Alexandria, Va. As employees watched in
astonishment, he barreled down two flights of stairs, grabbed a mallet and,
with a ceremonial flourish, banged a gong that one of his executives kept on
hand for big news.
Mr.
Gluski had not had much occasion to celebrate since he had taken the AES reins
five years earlier. The company was struggling with debt and trying to coax
profits from far-flung fossil-fuel projects around the developing world that
are buffeted by instability in politics, currency and commodity prices.
His
first steps included an austerity program in which he gave up many of his own
executive perks: No more country-club membership. No more corporate Audi A8,
with driver. But the more far-reaching part of his plan would be AES’s battery
division, which was then fledgling. The unit had roots in two midlevel
executives who had been speculating about a Jetsons-like future over beers.
Those
two men, John Zahurancik, a science fiction fan, and Chris Shelton, a former
physics teacher, had started talking about batteries a decade ago, before
electric cars became fashionable or even feasible.
In
2006, Mr. Shelton had come across a professor’s paper that predicted a future
dominated by electric cars that, when parked, could be connected to the power
grid so their batteries could act as storage devices to help balance
electricity demand.
He
and Mr. Zahurancik bounced the idea off some AES colleagues, who said it was at
least theoretically feasible. So the two continued their bull sessions but
decided that stationary battery arrays may make more sense than relying on
electric cars. At the time, lithium-based batteries, the standard in consumer
products, were widely in use in the transportation and power tool industries,
but no one had paired them with the technology necessary to serve the power
grid.
Earlier
grid-scale experiments with lead-acid and other types of batteries worked
only for a year or two before conking out. A different technology, “flow
batteries,” which use chemicals dissolved in liquids in tanks, were considered
even more experimental. But lithium packs more energy per weight than other
metals, offering the promise of greater energy density and longevity. The trick
would be to figure out how to harness all that power, which creates heat, while
avoiding the fires such batteries have caused in any number of vehicles and
gadgets, including Teslas, HP computers, hover-boards and, most recently, Samsung
Galaxy Note 7s.
The
two hit upon a design and persuaded executives to begin a pilot project in
2008. That eventually led to the first commercial lithium-ion battery on a
grid. Mr. Zahurancik, who owns the gong, is now president of AES Energy
Storage. Mr. Shelton is now the company’s vice president and chief technology
officer. AES does not actually make its batteries but buys them, along with
other equipment, from manufacturers like Samsung, LG Chem and Panasonic. It
designs and assembles the arrays, stacking the boxy batteries into racks inside
locker-like containers.
In
Escondido, where local radio stations still carry public service announcements
about the natural-gas shortage, the AES battery packs are being installed at a
critical spot on the regional electrical grid: the place where the giant wires
from power plants and wind and solar arrays connect to the network of local
wires. The batteries are intended to relieve the pressure on the system.
Mainly, they will serve as a kind of sponge, soaking up excess or low-cost
solar energy during the day and then squeezing it back into the grid in the
evening, when demand surges as the sun sets.
There
is enough capacity in the containers full of batteries to power about 20,000
homes for four hours. The idea is that they help the utility lessen its
dependence on the type of natural gas plants known as “peakers,”
which can turn on and off quickly to meet sudden peaks of demand but are
generally used only for short periods and at great expense. And peakers, by
burning fossil fuel, are also at odds with California’s green-energy goals.
The project is also being watched closely by advocates for renewable energy.
The reason: If utility-scale battery installations work as designed, they
would help wind or solar generators to act more like conventional power plants by
working steadily even when the sun isn’t shining or the wind isn’t blowing.
“Energy
storage is really the tool to do renewables integration for a utility
infrastructure company like us,” said Josh Gerber, advanced technology
integration manager of SDG&E, as workers smoothed the thigh-high concrete
pads that support the containers at the Escondido site. “Without it, you have
more risk that the variability of renewables is going to cause reliability
problems.”
Under
the contract, AES is responsible for making sure the batteries perform for 10
years, after which SDG&E will take over. One potential downside is that if
the batteries are fully charged and discharged each day, they could degrade
more quickly. The executives involved expressed confidence in the design and
reliability, despite Samsung’s recent smartphone problems.
Not
only are these batteries a different configuration than the smartphone units,
executives said, but the larger footprint allows for the inclusion of
sophisticated monitoring as well as industrial safety and cooling and
ventilation equipment. The project, along with the smaller array AES has
installed in El Cajon, could provide the proof-of-concept leap Mr. Gluski has
been striving for.
AES
has a deal for an even bigger, $1 billion project in Long Beach with Southern
California Edison that is not part of the Aliso Canyon remediation effort; it
is projected to go online by the end of 2020. The electric company plans to use
batteries to replace part of its aging gas plant along the San Gabriel River.
Long
term, Mr. Gluski plans to shift the company’s power-generation portfolio —
still heavily based on coal and natural gas — toward more renewable energy. He
sees the storage systems as vital components in turning solar and wind energy
into a dominant power source in the parts of Latin America, Asia and Africa
where AES is active.
Whatever
progress it has made, AES still has its share of problems, with $20 billion in
debt and a stock price less than one-fifth the value that it had at the start
of the century. It faces wary, if not outright skeptical, treatment by Wall
Street utility analysts and energy experts, who say the technology AES is
peddling on such a large scale in California remains untested and financially
risky.
“The
problem comes if there is a hiccup with the battery storage business in
California,” said Charles Fishman, a utilities analyst at Morningstar. “You
don’t have the deep-pocket parent that can push money to it and keep it out of
trouble.” Despite all the battery activity in California, executives around the
utility industry remain cautious.
“The
reason we don’t have widespread batteries on our system is because it is not
cost-effective for us,” said Alice Jackson, vice president for strategic
revenue initiatives at Xcel, a giant electricity and gas utility serving eight
Western and Midwestern states. Xcel has been testing batteries about as long as
AES, but almost exclusively in small pilots. “It’s fair to say we don’t have
long-range experience with this technology to say that it is perfect, or a
nirvana,” Ms. Jackson said. “It’s something we’ll observe as California goes
through its experience.”
California’s
latest experiment with batteries is but the latest bout in the state’s long
struggle to match its energy needs with its environmental sensibilities. In the
early 2000s, after market deregulation and Enron’s notorious manipulation of
gas supplies led to blackouts and financial instability among the power
companies, state officials decided to lessen reliance on natural gas by
encouraging the development of wind and solar. Under Mr. Schwarzenegger, who
was governor until 2011, officials pushed through a raft of overlapping
regulations that created a boom in renewables, especially solar. But that
upended the traditional patterns of supply and demand, making the overall
energy system technically and economically difficult to manage.
Batteries
were the logical solution. But the technology wasn’t fully developed and was
still too expensive. In order for companies to make the necessary investments,
they needed a signal that there would be a big enough market for their products.
So in 2010, the state approved one of the first energy-storage mandates,
ultimately requiring utilities to install some form of storage equipment in
their territories. That set off a flurry of new investment and innovation and,
after the sudden closure of the San Onofre nuclear plant on the coast in
northwest San Diego County in 2012 when a steam generator tube sprung a leak,
new contracts for battery installations.
But
the Aliso Canyon accident, which began on Oct. 23, 2015, when the Southern
California Gas Company first detected the leak, put that process on fast-forward.
The noxious-smelling gas and intermittent oily mist that spewed forth over
almost four months traveled into the surrounding neighborhoods on the strong
winds that sweep down from the Santa Susana Mountains. At the same time, it
forced the battery strategy into its most high-profile test yet. Now it’s show-time,
and the pressure to succeed is high all around.
For
AES, it could signify an important step for a long-troubled conventional-energy
relic that is seeking to revitalize itself as a powerhouse in battery storage
and other advanced technologies. For clean-energy advocates — including
residents of the Porter Ranch section of Los Angeles, so picture-perfect that
Steven Spielberg chose it as the setting for the 1982 movie “E.T.,” but where
many still complain of the rashes, headaches and other debilitating symptoms
that drove thousands from their homes during the leak — it could be a powerful
weapon in the fight to keep the gas depot closed.
But
the pressure may be highest for the Southern California utilities, their
reputations still blackened by waves of forced electricity cuts that followed
the Enron debacle. No one wants to contemplate a repeat of that chapter, when
blackouts affected factories and even some hospitals. “When the power goes out,
people die,” said Ms. Kennedy, the former state official. “Failure is not an
option here on any level.”
