For the past two years, no major energy policy issue has been resolved in Washington. Instead, Congress held investigations into various energy programs. Some hoped the investigations would embarrass President Obama, but they ended in having no impact on the election results. 

President Obama won a decisive victory against Republican Mitt Romney. Some may interpret this as a positive sign for “clean” energy sources like renewables. This also may be seen as a setback for many in the coal and oil industries who campaigned vigorously for Romney, but failed to deliver key states like Ohio and Pennsylvania. 

A divided Congress, with Democrats retaining control of the Senate and Republicans holding onto the House might suggest that partisan gridlock will continue. That remains to be seen.

The most immediate, pressing issue is how the Obama Administration and a divided Congress will deal with pending cuts in the federal budget due to take effect within the next two months. If no political deal can be reached, then sweeping cuts will affect all government agencies, something that might have economic consequences for the US economy.

Among other things, the Department of Energy would have fewer funds available to spend on technology research and development programs, including those for advanced batteries for plug-in and electric vehicles.  An eight per cent across-the-board cut is projected. The betting, however, is that some sort of deal will be reached to avoid the government falling from a “fiscal cliff.” 

The question will then become what the Obama Administration and Congress will do about a broad range of energy policy issues ranging from clean air and energy efficiency, to offshore oil drilling, natural gas fracturing, trade policies, etc.
The energy storage industry – especially lead-acid – has an important stake in the coming energy policy debate. Lead-acid actually is in a good position, perhaps stronger than many might otherwise expect in at least one issue, US electric power reliability. This merits the following observations.

Lawmakers will spend time on the power reliability issue, especially following recent storms that blacked out large areas on the eastern US. Studies have shown that the reliability of the US grid does not measure up to standards seen in other countries, especially Western Europe. Below is a graphic illustration from one study:

Within the past few years, the debate over electricity policy centered on whether or not the US federal government should preempt the authority of individual states to regulate electricity transactions. That effort failed after states reminded everyone that the commerce clause of the US constitution can’t be used every time something goes wrong. The issue now is whether the federal government should have enough resources to work with states by giving them information and more project financing assistance.

It is a commonly held view that state regulators, who have the authority to regulate prices that electricity consumers pay at the retail level, are “risk averse,” meaning they don’t want to authorize rate increases for anything without sufficient confidence that it will work. The debate over electricity now will turn on the degree to which the federal government should assist states having knowledge and confidence about emerging technologies to help the electric power grid. Here is a list of some of those technologies that will be discussed in Congress:

• Energy storage, which would help utilities manage the efficient flow of electricity from generators to distribution outlets.
• Distributed generation, whether new generation is located closer to load centers.
• Advanced metering and other “micro-grid” technologies, which would enable utilities to better manage power and more quickly locate and respond to power outages.

The US Department of Energy already is spending money for R&D in these areas, but the amount that DOE spends on programs for electric power reliability and grid energy storage is small in comparison to other DOE programs. As a result, the possibility exists that the budget for these grid and energy storage programs can be increased. In fact, this is likely to be a key recommendation of the DOE’s Electricity Advisory Committee, which is finalizing a new report for release next year.

The committee’s energy storage subcommittee is expected to make the following recommendations:

1. Congress should increase the DOE energy storage budget for further R&D in batteries, compressed air, flywheels, etc. In addition to the debate over increasing DOE’s R&D budget, Congress will debate whether a new investment tax credit targeted for energy storage should be enacted.
   
2. DOE also should continue developing protocols to rate the performance of emerging storage technologies. (The first of several reports is expected to be issued within the next two weeks.)
3. The Federal Energy Regulatory Commission (FERC) should continue developing new wholesale rate structures to grant market rate treatment for grid energy storage.
   
4. DOE should maintain and enhance its online information programs for consumers and state ratemaking commissions, such as “ES-Select.” These programs not only describe various storage technologies, they help consumers select the best storage device by measuring storage capabilities against consumer requirements.

Where does the US federal energy storage R&D effort stand in comparison to other countries? Better than one might expect. According to data from the US DOE energy storage program (http://www.energystorageexchange.org/), the US government is supporting more grid storage R&D projects than any other country. (These are government-sponsored, grid-synchronized projects, not off-grid projects.)

Of the 62 federally-supported grid energy storage projects sponsored by US DOE, the number of projects using advanced lead-acid battery technology compares very favorably with other chemistries and technologies. Below is a breakdown of US DOE grid storage R&D projects:

Of the 11 lead-acid projects, eight involve Xtreme Power, one is being developed by Tres Amigas, and two have already been put into service by Ecoult/East Penn, each using the UltraBattery.

The energy storage market can be viewed in two segments, grid storage and off-grid storage.

Grid Storage
Most policymakers in the U.S. are expected to continue their focus on the first segment, storage connected to the grid. For many years, energy storage has been best supplied by hydroelectric pumped storage facilities because of their favorable economics and fast response capabilities. Other forms of energy storage, such as batteries, flywheels, compressed air, etc., have not been considered economically attractive.

This perception, however, is beginning to change. First, the need for uninterruptable power is growing. Second, the growth of power from intermittent resources such as wind and solar is requiring utilities to consider greater use of energy storage. Third, technological advances are resulting in non-hydro energy storage facilities becoming more economically attractive.

However, whether lead-acid and other energy storage technologies establish a strong presence in the grid storage industry depends not only on the quality of the products, but on whether local ratemaking authorities will have sufficient confidence that they can work.

If that confidence is lacking, then consumers over time may begin migrating toward a strategy of serving their own electricity needs away from local grid-connected utilities. It is the “off-grid” scenario that will then emerge as a key market.

Off-Grid Storage
The success of addressing energy storage policy issues at both federal and state levels will play a key role in whether “off-grid” storage segment will emerge. If a growing number of consumers lacks confidence that their local franchised utilities are providing electricity in the most economically effective manner and they see an affordable practical alternative becoming available, then they will begin taking steps to make their own “onsite” electricity supply arrangements. These steps could include modular energy supply technologies (such as wind and solar) that would include energy storage devices. In many cases, consumers will prevail upon local ratemaking authorities to institute feed-in tariffs to facilitate the financing of such installations by requiring local utilities to purchase excess power produced by such “onsite” facilities.  (The US Department of Defense is actively pursuing this strategy.)

Non-Grid Storage
This reflects a market in areas of the world where no electricity exists and where power from wind and solar units can provide needed power with the use of storage to “smooth” the flower of power from such sources. The areas of the world where use of non-grid storage could increase dramatically are those where little or no grid exists, such as Africa and Asia.
Within the next few years, the lead-acid industry will pay close attention to these market segments and be ready to respond to market openings as they emerge.