In Chandler, Ariz., Salt River Project (SRP)—a nonprofit water and energy utility—is kicking off a new endeavor that will deliver power to about 1,000 homes in the Phoenix metropolitan area. But plans don’t involve a natural gas plant or even solar or wind turbine installations. In a sign of the decentralization of the nation’s power grid, this project centers on battery-based energy storage.

Per a 20-year power purchase agreement between SRP and The AES Corporation, a 10 MW four-hour-duration energy storage system will inject power into the grid during peak demand periods. Fluence is supplying the Advancion battery storage system, which will be charged by an SRP distribution substation, and is taking the lead on deploying and maintaining the system. Mortenson is the EPC contractor responsible for the balance-of-plant portion of the project.

SRP is using the initiative to learn more about grid-scale battery storage so it will be better prepared to implement this technology at a larger scale in the future. The project commenced in May and is scheduled for completion by year’s end.

“The system will dispatch flexible capacity in similar fashion to a natural gas peaking plant, but with several key advantages: faster response, always on, no direct emissions, minimal environmental impacts, and it can be permitted, sited and built far faster and in a smaller footprint than a comparable gas asset,” says Ray Hohenstein, Fluence’s market applications director. “In addition to the small amount of time it will be called on to serve peak demand, it will provide critical grid services throughout the year, as well as absorb excess solar generation from SRP’s network.”

In a nutshell, energy storage enables the seamless integration of other technologies into the electric grid. Systems are fuel neutral: Regardless of whether electricity is generated from oil, gas, wind, geothermal, etc., they can make the grid more efficient by charging at times of over-supply and discharging at times of high demand.

Energy storage can provide blackstart capabilities so electricity can instantly be restored after a major outage, though it’s more common for it to be used in short-duration applications to manage minute-by-minute mismatches between electricity supply and demand. Additionally, transmission and distribution utilities are starting to deploy storage solutions as a cost-effective way to address load growth and network congestion (e.g., instead of upgrading power lines or substations in rural areas).

“We’ve seen a solidification of a mature power market where solar and wind were the second and third most installed types of generation in 2017. If there is a market shift occurring, it’s the increasing number of projects that are being paired with energy storage,” says Nicole Geneau, Mortenson’s strategy and market development director. “There is an increasing trend toward ‘prosumers’—a combination of producer and consumer within the same end user on the electricity system. Customers want to control their energy destinies, particularly large corporations that have made carbon reduction or renewable energy commitments.”

Hohenstein agrees. “The future is arriving a lot faster than many expected. The key themes we hear over and over are clean, flexible and distributed, and energy storage will continue to unlock all three fronts,” he says. “It can be deployed all over the grid, from large centralized storage to smaller installations behind a customer’s meter—enabling the grid to be managed on the outer edges, where reliability challenges are often the greatest.”

Exponential Growth

The cost of lithium-ion battery storage has declined by more than 80 percent in the past eight years—from $1,275 per kilowatt hour for battery cells prior to 2010 to less than $275 per kilowatt hour for cells in 2018. Demand for electric vehicles is largely responsible for the price drop.

“The same basic cell used by the hundreds in electric vehicles is used by the thousands in utility-scale battery energy storage systems,” says Frank Jakob, energy storage technology manager for Black & Veatch’s power business. “As innovation and economies of manufacturing continue, a 10 percent per year price decline is forecast for the next five years.”

As individual applications for battery energy storage systems are combined (called stacking), greater revenues offset costs at a faster pace. “This means more installations take place: in buildings, at substations, and combined with both renewable generators and conventional fuel-based generators,” Jakob says.

According to IHS, the global energy storage market is growing exponentially to an annual installation size of more than 40 GW by 2022 (from a base of only 0.34 GW installed in 2012 and 2013). And Bloomberg’s New Energy Outlook states the global energy storage market will increase to more than 300 gigawatt hours by 2030 (compared to 5 gigawatt hours in 2016).

The Energy Storage Association (ESA) reports energy storage systems currently comprise approximately 2 percent of U.S. generation capacity, and systems are in operation or under development in nearly every state. Oregon has a mandate of a minimum of 10 MW hours, and up to 1 percent of peak load, by 2020. California’s target is 1.325 GW by 2020, while Massachusetts’ goal is 200 MW hours in the next two years. New Jersey’s target is 600 MW by 2021 and New York’s goal is 1,500 MW by 2025.

“States like Nevada are embracing this same vision, as are utilities like Duke Energy and Florida Power & Light, through integrated resource planning commitments,” says ESA CEO Kelly Speakes-Backman. “Moreover, regulators in states such as New Mexico, Arizona, Washington and Michigan are moving toward requiring consideration of energy storage resources in long-term planning processes.”

LG&E and KU Energy LLC—which provides electric and natural gas service to nearly 1.3 million customers throughout Kentucky and Southwest Virginia—jointly operates a research and demonstration facility with the University of Kentucky Center for Applied Energy Research and the Electric Power Research Institute. There, personnel collect and evaluate data related to energy storage operation, maintenance and potential use for quality improvements, integration with intermittent solar generation and supporting emergency needs.

“The power industry must be strategic, fluid, highly efficient and extremely proactive to meet the ever-changing demands of the business,” says Joe Clements, director of power generation commercial operations for LG&E and KU Energy LLC. “Customers need reliable, low-cost energy, but they also require real-time communication, creative solutions to issues and innovative products and services, such as intelligent meters, electric charging stations and energy storage.”

Construction Opportunities

Energy storage resources offer a multitude of construction-related opportunities, combining both civil construction and electrical installation work. “The ideal construction partner will have experience in both, plus skilled personnel and detailed installation plans,” says Bernd Grebenstein, a project manager for Fluence. “Impeccable safety records are required.”

According to Black & Veatch, specific tasks in this niche market include site preparation and foundation work; loading battery modules into racks located within the containers; placing bi-directional inverters, switchgear and transformers adjacent to each container; commissioning the equipment; and connecting it with the adjacent facility or transmission/distribution grid.

“Storage can be incorporated into construction plans as a means by which to optimize other design features, such as a combined heat and power installation,” Speakes-Backman adds, noting that construction timelines will need to account for the interconnection queue and processes required by the local distribution utility.

For contractors, all these opportunities require building internal expertise about available and emerging technologies that are driving innovation in the power sector.

“We are seeking out partnerships with other state-of-the-art companies and organizations that share Mortenson’s values and approach to business, as well as complement our capabilities,” Geneau says. “We’re constantly evaluating new business models and areas of the value chain where we can deliver exceptional performance for our customers.”

Microgrids also are part of the conversation as the centralized power system continues to transform into a more distributed utility model. Distributed generators, batteries or renewable resources can power microgrids, whose main benefit is the ability to disconnect from the traditional grid and operate autonomously during a crisis or if a community wants to be more energy independent.

“In five to 10 years, we will definitely see the metamorphosis of the distributed utility model with significant penetration of distributed energy resources,” says Ajay N. Kasarabada, Black & Veatch’s manager of distributed energy services projects. “The key to the growth of microgrids is the business case that will allow distributed energy resources to be part of a microgrid system.”

According to Mortenson, resiliency in the face of emergency situations, such as Hurricane Sandy and the 2017 Atlanta airport outage, has caused people to rethink the need for distributed, ‘islandable’ power solutions.

“Technology improvement and successful pilots during the last several years have enabled us to reach a tipping point to scale up the implementation of microgrids,” Geneau says.

There’s considerable activity in the higher education, health care, airport and government sectors, and the private sector is catching up.

“In our highly digitized world, the need for constant ‘blinkless’ power is increasingly important to business continuity, and the cost of even a minor hiccup in power quality and reliability can be significant,” Geneau says.