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article imageBarron's — How batteries will change the electrical grid

By Karen Graham     Jun 11, 2018 in Business
Bigger, better batteries are speeding up change in the U.S. electricity sector and could help power a rally in Xcel Energy Inc., American Electric Power Co. Inc. and other utility and renewable energy stocks, Barron’s reported.
After years of steep cost declines as the technologies were being perfected, wind and solar installations, quite often paired with storage batteries are increasingly replacing coal-fired and gas-fired power plants across the country.
And according to Barron's, this disruptive change is not only benefiting battery-makers but consumers and some utility companies, as well.
Barron's cites Sterling, a small town in central Massachusetts with a population of about 8,000 people. The town is unique because it is the country’s per capita energy-storage leader. Inside a shipping container near a power substation in town are twin rows of what look like post office boxes packed with lithium-ion batteries that together can hold two megawatts of power.
Sterling is one of a few dozen Massachusetts towns that operate their own power companies rather tha...
Sterling is one of a few dozen Massachusetts towns that operate their own power companies rather than rely on investor-owned utilities.
Marcbela (Marc N. Belanger)
Last year, the nation installed half a gigawatt of energy storage—equal to 250 Sterlings. These heavy-duty batteries help to power small towns when wind and solar supplies ebb. The Barron's report cited the Energy Storage Association (ESA), a Washington, D.C., industry group,
They predict the U.S. will install over 35 megawatts of battery storage through 2025 or equal to 17,000 Sterlings - at a savings of more than $4 billion in annual operating costs.
“With the U.S. energy storage market demonstrating a continued upward growth trajectory in the first quarter of 2018, the industry is moving closer to its vision of 35 GW of new energy storage installations by 2025,” said Kelly Speakes-Backman, CEO of ESA. “The growing list of states and markets ready to take action and remove barriers to cost-effective energy storage deployment promises the remainder of 2018 will yield similarly positive results.”
Stephen Byrd, a utility analyst for Morgan Stanley also finds the ESA report credible. He sees the U.S. storage market eventually being worth at least $20 billion, and $35 billion under more bullish assumptions.
The Comanche Generating Station  located just east of Pueblo  Colorado. The plant is owned by Xcel E...
The Comanche Generating Station, located just east of Pueblo, Colorado. The plant is owned by Xcel Energy. Its three units are coal-fired.
Jeffrey Beall (CC BY 3.0)
Utility sector also benefiting from battery storage
Minneapolis-based Xcel Energy Inc. draws about 23 percent of its power from renewables at the present time and anticipates increasing this to 45 percent by 2027. And just last week, Xcel announced the closing of two coal-fired power plants in Colorado.
Ben Fowke, president, chairman, and CEO of Xcel Energy added that with the retirement of the coal-fired power plants, Xcel would be adding over 1.8 GW of renewables - solar and wind, along with 275 megawatts of battery storage, and 383 megawatts of existing natural gas assets.
American Electric (AEP) is reducing its reliance on coal for power while hanging onto gas generation. But it is ramping up its renewables portfolio with wind and solar that includes its proposed $4.5 billion Wind Catcher wind farm project in Oklahoma, potentially the largest wind farm in the nation.
Wind Catcher Energy Connection is a $4.5 billion infrastructure investment that will bring Oklahoma ...
Wind Catcher Energy Connection is a $4.5 billion infrastructure investment that will bring Oklahoma wind power to more than 1.1 million energy customers in the South Central U.S.
Wind Catcher Energy Connection
The 2,000-megawatt facility will generate power from 800 state-of-the-art GE 2.5 megawatt turbines. Construction began in 2016, and operations are expected to begin in mid-2020. Besides the $4.5 billion investment in Wind Catcher, AEP plans on investing $18.2 billion in capital during 2018-20, with 72 percent allocated to its transmission and distribution operations. The company also plans to invest $1.8 billion in new renewable generation during the same period.
The paper also said NextEra Energy Inc. of Juno Beach, Florida, was combining 100 megawatts of solar capacity with 30 megawatts of battery storage at a project in Arizona.
It will be interesting to see how investors respond to the Barron's report. However, with a number of the nation's largest utilities already opting to close coal-fired facilities over the next several years, renewables are looking even more promising.
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