September 12, 2008
By making a $20 million investment in energy storage, Public Service Enterprise Group hopes to breathe new life into green energy. The New Jersey-based utility has entered into a joint venture with a key inventor of the technology. It will market the compressed air energy storage tools needed to generate power when demand is highest.
Energy storage could advance the cause of wind and solar power, which are often criticized as they are intermittent fuels. That would give utilities, power marketers and large commercial or industrial customers the flexibility of how they respond to shortages, price spikes or brownouts. Utilities, for instance, must precisely measure their load generation with the demands of their end users. Without adequate generation capacity, all wholesale buyers of electricity would be subject to the whims of the market.
"We believe this technology is an important component of a broad effort to combat climate change, an effort that must include increased conservation, expanded renewable energy and new clean central power," says Stephen Byrd, president and CEO of PSEG Energy Holdings.
Two major compressed air energy storage plants exist worldwide: an Alabama plant, which was built in 1991 and which is 110 megawatts and a German facility, which was constructed in the late 1970s and which is 290 megawatts. Over the next 5-10 years, experts say that the technology has the potential to get a firm foothold in the market.
Palo Alto, Calif.-based EPRI has estimated that more than 75 percent of the U.S. has geological characteristics that will accommodate underground compressed air energy storage. Those reservoirs will allow utilities to use off-peak electricity to compress air and store it in airtight underground caverns. In urban areas where space is at a premium or where bedrock makes deep drilling cost prohibitive, developers say that ground level pipelines can be used instead.
When the air is released from storage, it is heated in combustors by natural gas and sent through expanders to power a generator to create electricity. Nearly two-thirds of the natural gas in a conventional power plant is consumed by the natural gas turbine because the gas is used to drive the machine's compressor. In contrast, a compressed-air storage plant uses low-cost heated compressed air to produce off-peak electricity, conserving some natural gas.
In the case of PSEG, it has formed a joint venture with Michael Nakhamkin, who created the compressed air site in Alabama that can fill a cavern with enough energy to generate 110 megawatts for 26 hours. The venture, called Energy Storage & Power, would try to extend those benefits to other power providers by using standardized parts.
"The technology has evolved to the point where it can be critical to helping this nation meet its growing energy needs while helping decrease carbon emissions from the electricity sector," says Nakhamkin.
Strong Fundamentals
To be sure, compressed air energy storage has its pitfalls. The disadvantage is that energy is lost when it is "pumped" into the cavern and then re-extracted as compressed air. Some estimates say that it could be as high as 80 percent. That, in effect, means that the selling price must accommodate that shortcoming, which may drive up rates for consumers.
Also, building storage can be pricey, which might make some prospective projects infeasible. But with gas prices estimated to be as high as $14 per million BTU, an investment in underground storage could pay for itself over time.
Costs could also be defrayed if compressed air energy storage replaced expensive "peaking" units that provide power during the hottest summer days or the coldest winter nights. Air is stored in the form of compressed air energy during off peak hours and then released during the periods of highest demand, which will also lower the prices that consumers pay for power. At the same time, compressed air energy storage units can reduce the stress on base load plants that would otherwise have to ramp up and down.
The Iowa Association of Municipal Utilities believes in the cause. It has selected a reservoir near Des Moines to build a 300-megawatt plant that is comprised of a 100 megawatt wind farm and a 200 megawatt compressed air energy storage facility. Most distributors will continue to use coal-fired steam generating power plants to serve their "base-load" needs but will use energy from the new facility to meet intermediate needs. It is anticipated this electricity will be available to utilities and their customers in 2011.
"We see strong market potential for compressed air energy storage in the traditional power industry as well as for the growing renewable energy industry," says Roy Daniel, chief executive of the PSEG-led venture, Energy Storage & Power. "Energy storage is the missing piece of the puzzle for a green, affordable and reliable electric grid for the 21st century."
If the technology becomes cost effective and wins wider market acceptance, it would cause the energy paradigm to shift. By storing wind and solar energy and discharging the air when it is needed, suppliers could reduce their need for fossil fuels and give utilities a powerful tool in their quest to meet their expected future energy needs.
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