Batteries Will Do To Energy What Cellphones Did To Telecom: Advanced Microgrid & Tesla

Cheap battery storage will prove as disruptive to the energy industry as the cellphone has been to telecommunications, executives from two California startups—Tesla Energy and Advanced Microgrid Solutions—said today at the National Clean Energy Summit in Las Vegas.
"I would bet that there's not a single person in this entire audience who does not have a cellphone in their pocket," said Susan Kennedy, CEO of Advanced Microgrid Solutions and former chief of staff for California Gov. Arnold Schwarzenegger.
"Battery technology is now about to do the same thing to the energy industry that it did to the telecommunications industry."
The energy industry is poised for disruption, Kennedy said, because it was built without battery storage in mind.
"If you think about it, the entire grid from the ground up was designed around the concept that energy cannot be stored. And so the whole grid is going to change dramatically because of one thing: battery storage."
Advanced Microgrid may be the biggest customer for Tesla Motors CEO Elon Musk, who rattled the energy industry this spring with his announcement of Tesla Energy and its utility-scale battery, the Powerpack, which set a new low price for storage, low enough that storage may save more money in some markets than the batteries cost.
At the National Clean Energy Summit today, Tesla Vice President Diarmuid O'Connell shared the stage with Jamie Evans, a managing director at Panasonic, which is partnering with Tesla to make batteries at its giant robotic Gigafactory in Nevada.
"The fact that a company as venerable as Panasonic is investing in a major way in a project like the Gigafactory is a testament to how the capital markets and the incumbency are going to react," O'Connell said. "I think that if we're not at the tipping point, we're approaching it, where it makes much more sense to deploy a Tesla Powerpack or energy storage solution rather than building that peaker plant or rather than turning on that dirty coal-driven stationary asset."
Some observers predicted the Powerpack would prevent the construction of new power plants, but in August Musk went a step further, arguing that battery storage at utility scale could close half the world's existing power plants just by modulating peaks and troughs in demand.
On Monday, Kennedy detailed how that could also work at the grid edge. Advanced Microgrid creates systems that allow buildings to operate as hybrids, much like the Toyota Prius:
"We have 26 buildings that we're turning into a fleet of hybrid electric buildings," she said, detailing a project in Orange County, part of a suite of projects with SunEdison and Southern California Edison.
"Out of that 26 buildings, there will be 10MW of firm dispatchable capacity, so that when the utility gives us a dispatch order, we will flip those buildings to batteries within minutes, and 10MW of load will drop from the grid—firm, dispatchable, exactly like a 10MW peaker plant."
But much cheaper.
Such projects spare utilities the cost of building peaker plants to handle peak demand, and Kennedy emphasized that this system will be just as reliable:
"We're creating demand response products that the utility can count on as firmly as they count on a peaker plant."
She described as a failure the usual notion of demand response: compensating consumers for reduced energy use at peak hours.
"Demand Response has failed. It's not a grid resource. It's a very expensive social program. With batteries and advanced software technology, you now have the ability to turn every kilowatt of capacity behind the meter into firm dispatchable resource for the utility, and that will be the cleanest, most cost effective grid resource in the future," she said.
"It's a brand new way for the utility to see demand response."
Appearing on the last panel at the summit before the keynote speech by President Obama, Kennedy extolled even more what she described as unprecedented benefits of energy storage to consumers.
"The smart grid is going to be automated, intelligent and consumer centric," Kennedy said. "With energy storage today it allows the consumer to take some control over when they use their electricity, how much it costs them, what they do with that. It also transforms the building load itself, the consumer's demand, into a grid resource that can be harnessed."
In June, Advanced Microgrid announced plans to purchase 5,000 Tesla Powerpack batteries, worth an estimated $125 million.