They say that nothing is free, but I may have come across the exception. In West Texas and Illinois, electric customers are being paid to use electricity. With the growth of wind energy in areas like Texas, Iowa and Minnesota, electric companies are occasionally producing more energy—especially during off-peak hours—than they can use. Why not store it you ask? Because there are not yet any good ways to store energy; a quest since electricity was created.
According to expert Terry Boston, who is the CEO of PJM, a company that manages the electricity grid in 13 mid-Atlantic states and Washington, the oversupply of electricity has forced prices into the negative range. The result: some customers are paid to use electricity.
Why should readers at Gas 2.0 even care about this problem, or rather this opportunity? Well my friends, it’s because plug-in electric vehicles (PHEVs, BEVs, EREVs, etc.) can take advantage of the extra electricity during off hours. The first upside is that you may get paid to charge your plug-in. Nice! The second advantage is that much of the electricity generated at night is from wind. Say bye-bye to coal, a thorn in the side of the electric vehicle industry.
So how exactly does this work? Let’s turn to GreenBiz.com for some help: Wind turbine owners collect a production tax credit of 2.1 cents per kilowatt hour when they are producing electricity. Needless to say, they don’t want to shut down the turbines so they’d rather pay customers a “fee” that is less than the subsidy to consumer power. In other words, even if they are paying customers to use the wind power, they are still making money. This is an example of passing along a subsidy to help lower energy costs for consumers.
But for all of you subsidy haters, you’ll get a little vindication as Boston explains that this program is not sustainable over long-periods of time. However, until our government decides to rid itself of ALL subsidies (including coal, oil, renewable energy, agriculture, etc.) our other option is to finally create an economically feasible way to store energy.
Towards these ends, Boston has been cultivating a technology called Compressed Air Energy Storage (CAES). Along with the energy start-up company Energy Storage & Power, the city has their eye on developing a next-generation compressed air storage plant for the price tag of $250 million. Expensive but less costly than traditional gas plants. The technology works in that primarily using wind energy, compressed air is pumped into an underground reservoir during off-peak hours and then released during peak hours providing electricity. The proposed plant would provide an output capacity of 300 mega-watts, similar to a mid-sized power plant producing electricity for 10 hours. Company sources estimate that it will take five years to complete the project.
The CAES technology is being designed to serve two functions: help match supply and demand on the electricity grid and serve as a go-between for producers and users. Ultimately, though, it enables the storage of alternative energy such as solar or wind, until it is needed during peak times.
Energy Storage & Power also says that compressed air energy storage costs far less and lasts far longer than the alternatives, including batteries, pumped hydro, flywheels, magnetic storage or supercapacitors. In addition, there is the possibility that the batteries in the PHEVs could also become a source of storage. In essence, making the car owners day traders of electricity. The trader would store the electricity in his PHEV battery at night and then sell it back during daytime peak hours. Of course, this sort of thing would require a smart grid, but we’re well on our way towards that at this point.
Speaking of day trading, here is another option: wind generation forecasting. Weather Services International (WSI) in conjunction with Genescape have launched WindCast IQ, the first wind generation forecasting service designed for energy traders. The increase in wind power in some areas has caused congestion and price volatility.
According to WSI, the solution is WindCastIQ, which gives clients highly accurate hourly forecasts for up to 7 days of wind generation at the ISO-level, regional and wind farm level. The first two products will cover the Midwest (MISO) and Texas (ERCOT) the regions with the highest wind power generation and impact on power markets. To my knowledge there is no solar forecasting system but it may be a good idea.
“Wind power is an important source of clean energy and getting accurate wind generation forecasts is a growing challenge for all market participants,” said Ira Scharf, General Manager of WSI’s Energy and Risk Division. “The combination of WSI’s highly skilled wind power forecasting teamed with Enva’s expert understanding of the power grid creates an ideal pairing of forces to give energy traders and wind farm operators a true market edge.”
Although I’m not sure about what the best technologies are to create a smart grid and incorporate alternative energy into the mix, it’s good to know that companies are well down the path to providing some solid solutions.