New Energy Economy: Storage Challenges and the Need for More Localized Operations

A baking sun sends dry heat through the wind-swept plains of Colorado. The tall-grass prairie bends and ripples. The topsoil cracks, aching for rain. Wind turbines on the horizon lop and chug as they whirl. Soybean leaves lift to the sun; tumbleweeds bounce past. The solar farm near the county road is 1,000 mirrors reflecting an infinitely blue sky.

Parts of Colorado are like this: Idyllic, rural, sparsely populated. Wind plows from the west, on summer afternoons before the rain, in the winter like a scouring pad. The sun is insistent: “300 days of sunlight” is no exaggeration: Coloradans are proud of that fact. That means there’s a lot of energy to be produced. It also means thousands of people per year visit the state and never leave. Growing cities and suburbs, crowded highways, infrastructure strains: They’re the result, emblematic of Colorado’s growing pains. 

It’s an objectively good thing that generally happy people live here, and established corporations and new entrepreneurs alike have faith in Colorado to make a go of it; but this hustle and bustle requires a lot of energy and the means to produce it. 

Fortunately, Coloradans tend to be resourceful, embracing what we like to call the new energy economy, a combination of coal, shale gas, solar and wind – driven by data and infused with new technologies and ideas.

While each resource has its place, each has its limitations. For solar and wind, they are pretty obvious: The sun goes down and the wind stops blowing. In wind and solar electricity generation, we have great technologies (improving every day), but without stable, long-term storage, solar and wind will invariably remain relatively small players in the energy world. 

So, what’s the fix? 

More-effective ion-based batteries are one. Small ones for homes that can push power back to the electricity grid or save it for later, larger ones for industry. Wind and solar industry groups profess that batteries are getting cheaper and more powerful, and that by 2050 wind and solar – due to battery improvements alone – could approach 50 percent of the resource base for electricity generation in the U.S.

The growth in popularity of electric vehicles provides another avenue for energy storage. Presently, most car batteries can accept a charge but can’t redeliver electricity to the grid. Companies are exploring Vehicle-to-Grid (V2G) and Vehicle-to-Home (V2H) technologies that do just that. In addition, car batteries that have become too frail to power a car can find second lives as stationary energy storage.

Other storage options exist, too: Molten salt (used to capture focused solar energy, create intense heat, boil water and drive turbines), compressed air (squeezed radically by wind or solar power, then released later to create energy), “ice energy” (essentially temperature, rather than chemical batteries), pumped storage (for hydro plants); numerous others: all are focused on keeping the energy that’s captured. 

The development of “smart” grids also affects the amount of storage needed and how it is used. 

Indeed, storage is an integral aspect of smart grids, which permit energy companies to analyze and predict energy demand in real time and adapt accordingly and efficiently. Utilities can manage the distribution of electricity and draw on storage to assure stable delivery of power despite variable demand and generation. Because renewable energy generation is fickle, smart grids coupled with storage provide more opportunities to incorporate renewable energy into the mix.

Fortunately, Colorado has been and continues to be outspoken about and transformative in the future of energy. For example, the state has implemented some of the most thoughtful and comprehensive shale-gas regulations in the country. The Colorado Oil and Gas Conservation Commission, industry and citizens have worked, often together, sometimes at odds, to forge a balance: Embracing gas development and production while remaining protective of the Colorado lifestyle (clean air, clean water, in touch with the environment). The friction shaping that balance has helped spawn a mighty economy and thriving communities. 

With similar vision, the state tackled the solar- and wind-energy storage problem by passing legislation that granted electricity users the right to store energy without rate discrimination or burdensome barriers to connecting to the grid. Utilities in some states have tried to hamper such measures, in part because they reduce utilities’ grid control. Xcel Energy, Colorado’s largest utility, at one time proposed different rates for users with storage systems. Now the company is officially neutral on the law, which helped it pass.  

Colorado understands that simple solutions like integrating storage into the mix in this official way could lower costs and push technology and policy innovations.  This is the progressive thinking that will continue to grow the new energy economy, which is good for all Coloradans and an example for everyone else.

Andrew Lillie is a partner and member of Hogan Lovells’ energy and resources team.