Storage — Why The Time Is Now

Energize Ventures
May 4, 2018

2018 has already seen a record breaking number of announcements retiring old, uneconomic coal plants across the United States. As we look to the future there is demand for cheaper, cleaner, more efficient and more flexible generation. Utilities, regulators, and policymakers are looking for modern technologies and solutions to meet the demands of today’s electric system.

Recently the question around battery storage’s readiness has focused more on the market opportunity (is there a market?) and value (how will companies will get paid?). Across the country at both the state and federal level policymakers are moving forward with regulations to both open new markets and value storage for the variety of different services it can provide.

At Energize Ventures we think the confluence of the reduction in cost, recent favorable policy changes and the need for grid flexibility positions battery storage to scale quickly. We are excited about this opportunity and are actively looking for investment opportunities in the battery storage space, particularly digital controls, not materials — send us deals!

Over the past couple years the cost of storage systems have come down significantly and are predicted to continue to decline at an average rate of 8% annually through 2022 according to a Greentech Media research report. This reduction in cost is opening up new opportunities for utilities.

Earlier this year utilities in both Colorado and Arizona received bids for storage plus solar projects that beat out natural gas to supply new power to the grid. These projects are cheaper, cleaner and more flexible than traditional generation and are the first real glimpse into what lies ahead for storage.

In addition to (or because of) the reduction in the cost of storage systems, policymakers are passing new laws and regulations that open new markets and opportunities. A number of states have already passed an Energy Storage Mandate to accelerate the growth and adoption of storage solutions. Additionally, the Arizona Corporation Commission instituted a nine-month moratorium on new large natural gas plants, forcing the utilities to consider storage and clean energy projects first.

On a national level, the Federal Energy Regulatory Commission (FERC) recently approved an order requiring grid operators to consider storage as an alternative the same way they would consider other generation locally. This will finally put storage on a level playing field, opening new opportunities and unlocking revenue previously unavailable to storage.

With the retirement of older generation (baseload) and the increase of renewable generation (variable resources) grid flexibility (battery storage) will play an important role in meeting future electricity demand. As grid operators move away from baseload generation they will be installing new technologies to help meet demand more accurately. The flexibility that batteries enable will ensure grid operators can closely follow demand and quickly manage generation up and down as needed. Battery storage is one of the key components to enabling this new and more flexible future.

At Energize we think battery storage is a key technology to help make energy more affordable, reliable and secure. With costs coming down, new favorable policies and regulations and the need for flexibility on the grid we are bullish on storage and look forward to making investments in the space.