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S. HRG. 111–335 

GRID-SCALE ENERGY STORAGE 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

TO

RECEIVE TESTIMONY ON THE ROLE OF GRID-SCALE ENERGY STORAGE 

IN MEETING OUR ENERGY AND CLIMATE GOALS 

DECEMBER 10, 2009 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Huber, Kenneth, Senior Technology and Education Principal, PJM Interconnection ............................................................................................................. 42 

Koonin, Steven, Under Secretary for Science, Department of Energy ................ 5 

Mainzer, Elliot, Executive Vice President for Corporate Strategy, Bonneville 

Power Administration .......................................................................................... 49 

Masiello, Ralph D., Senior Vice President, Energy Systems Consulting, 

KEMA, Inc. ........................................................................................................... 30 

McGrath, Robert, Deputy Laboratory Director, Science and Technology, National Renewable Energy Laboratory, Golden, CO ........................................... 37 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 2 

Udall, Hon. Mark, U.S. Senator From Colorado ................................................... 4 

Wellinghoff, Jon, Chairman, Federal Energy Regulatory Commission ............... 13 

Wyden, Hon. Ron, U.S. Senator From Oregon ...................................................... 3 

APPENDIXES 

APPENDIX I 

Responses to additional questions .......................................................................... 63 

APPENDIX II 

Additional material submitted for the record ........................................................ 91 

(1) 

GRID-SCALE ENERGY STORAGE 

THURSDAY, DECEMBER 10, 2009 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 10:01 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. OK. Why don’t we go ahead and get started? 

Thank you all for being here. We have had several hearings in 

this committee on the topic of energy storage, but those hearings 

were primarily focused on energy storage technologies for the 

transportation sector. 

This morning, we are turning our attention to the role of energy 

storage for the grid. Let me just initially indicate there has been 

a lot of interest here in the committee on it. Senator Wyden has 

urged that we have this hearing. Senator Udall has urged that we 

have this hearing. I appreciate them and Senator Corker all being 

here. I know Senator Murkowski is on her way as well and will be 

here shortly. 

We are told that grid-scale energy storage technologies have the 

potential to transform our grid, enabling energy to be delivered exactly when it is needed, regardless of when it was produced, and 

providing a new toolbox of capabilities for managing the grid. 

These capabilities will allow us to run our grid more efficiently and 

reliably and provide better power to customers. 

They will allow us to maximize the capacity of our existing generation and transmission and distribution assets, reducing the need 

to build more, and we are also learning that energy storage technologies will be instrumental in achieving large amounts of renewable generation on the grid by acting as shock absorber for fluctuations in power and providing firm dispatchable energy. 

The Recovery Act that was passed by Congress only 10 months 

ago has been instrumental in jumpstarting the development of 

these grid-scale energy storage technologies. The Department of 

Energy’s Office of Electricity last week announced funding for 16 

utility-scale energy storage demonstration projects aimed at proving out the technical feasibility benefits and business case for these 

technologies. 

My own State is participating in two of those demonstration 

grants to demonstrate the use of flow batteries for firming up re-
2 

newable power. I also know that the Department of Energy is pursuing several breakthrough grid storage projects through ARPA-E 

and through the Office of Science. 

These efforts are positioning our country as a world leader in 

grid-scale energy storage research and development, ensuring that 

the capabilities of these technologies are used to our best advantage and swiftly deployed on the grid where it makes sense to do 

so and where it will help us to meet our clean energy goals, but 

will also ensure that we remain leaders in this area. 

So I look forward to hearing from our witnesses. We have two 

distinguished panels today—first, a panel of Government officials 

who can tell us the state of policy and action in the executive 

branch and then a second panel of experts as well. 

Let me defer to Senator Murkowski for any comments she has. 

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Good morning. Welcome to our witnesses, and I appreciate the 

opportunity this morning to continue our series of very informative 

discussions. The topic this morning, grid-scale energy storage has 

the potential to transform the way that we generate and receive 

electricity. 

Energy storage capability has already changed the way that we 

live. If you look at those of us around here with our BlackBerrys 

and our cell phones. I think we recognize how frustrating it is 

when we forget to charge it up, and make sure that we have it 

functioning at full capacity every day. But it is easy to forget that 

it wasn’t too long ago that we actually had pay phones here in the 

Dirksen building. My kids don’t even know what a pay phone is. 

For about a half a century now, our Nation’s power delivery system has operated by carefully balancing in real time generation 

and load, and we have been using the just-in-time delivery system 

for immediate generation and delivery. That is all about to change. 

It has to, because we are changing the way that we use the grid. 

As we seek to lower our emissions, we have an ever-increasing 

amount of renewables and distributed generation that are coming 

online. We are also moving toward the electrification of our transportation sector. Integrating variable resources like wind and solar 

has challenged our grid operators by often producing too much energy when it is not needed or not enough energy when it is needed. 

We need to make our grid smarter and change how we manage and 

control the delivery of electric power. 

Cost-effective grid-scale energy storage is part of the solution to 

these energy challenges. Energy storage can firm up intermittent 

renewable energy sources and promises to improve the efficiency, 

the reliability, as well as the security of delivering energy. 

Just as we need a diverse energy supply, we need a wide array 

of energy storage technologies, everything from pumped hydro, 

flywheels, and batteries to compressed air energy storage. Even 

plug-in vehicles can play an important role in shifting load to offpeak hours. 

Coming from Alaska, I can certainly appreciate that pumped 

hydro has been the energy storage workhorse, providing the most 
3 

storage capacity that can deliver power during peak demands. It 

often doesn’t get the credit that it deserves. Today, in addition to 

learning about the emerging technologies, I would like to hear a little bit more about increased opportunities for this effective and 

proven resource. 

As you note, Mr. Chairman, we have got an impressive panel of 

witnesses today. I welcome you, Chairman Wellinghoff, and Dr. 

Koonin, back to the committee and look forward to the testimony 

that we will hear. I again look forward to helping establish the 

path forward on the development of policies that will support the 

development, the deployment, and the regulation of grid-scale energy storage systems. 

Thank you. 

The CHAIRMAN. I know there is a lot of interest here by members. Let me just allow each member to make any statement they 

would like to at this point. 

Senator Wyden, did you want to make a statement? 

STATEMENT OF HON. RON WYDEN, U.S. SENATOR 

FROM OREGON 

Senator WYDEN. I did, Mr. Chairman. Thank you for your 

thoughtfulness. I know we have got witnesses we want to go on to. 

I think this is an extraordinarily important topic because I don’t 

think the people of this country, nor those of us in public office recognize that we are wasting so much of our treasure trove, this extraordinary array of renewable energy resources. We want to have 

carbon-free wind turbines and solar cells and, in my part of the 

country, wave and tidal energy. Yet we fritter away so much of this 

extraordinary resource because we have not set in place, as Senator Murkowski notes, the full array of storage technologies that 

would allow us to capture the full potential of these renewable resources. 

There is something pretty bizarre, even by the standards of the 

Beltway, of throwing away the economic value, for example, of renewable energy because the wind is blowing or the tide is changing 

at 3 in the morning when demand is low. 

So what we have got to do is figure out a way to not devalue, 

for example, the full potential of renewable energy, which is what 

you do because we can’t sell it when prices are highest. We 

shouldn’t end up spending more integrating it with nonstorage 

technologies, which is what Senator Murkowski talked about, and 

I think we can do this in a bipartisan way. 

Earlier this year, Senator Menendez, Senator Collins, and I introduced legislation—S. 1091, the Storage Act—to provide tax incentives to deploy storage energy technologies. I note we have got 

a number of colleagues from both the Energy and Finance Committees. Senator Shaheen, Senator Dorgan, Senator Kerry, recently 

Congressman Thompson from California recently introduced the 

legislation. I think we can move forward in the storage area in a 

bipartisan way. 

Our bill provides a 20 percent investment tax credit for grid-connected energy storage systems. It is technology neutral so that all 

of the various technologies—pumped hydro, compressed air, batteries, flywheels, and new technologies—all of them would have a 
4 

chance to compete in an open marketplace. The bill provides incentives for businesses and homeowners to install their own energy 

storage systems to store renewable or off-peak energy, including 

plug-in vehicles. 

So I think the point is, as we move forward, and I believe this 

can be done in a bipartisan way to build a clean energy economy, 

let us make sure we do it in a way that is smart and not wasteful. 

A key part of that equation is what you and Senator Murkowski 

are examining today, and I very much appreciate your holding the 

hearing. 

The CHAIRMAN. Very good. 

Senator Corker, did you have any comments you would like to 

make? 

Senator CORKER. I think you know the answer to that. I look forward to hearing from the witnesses. 

Thank you. 

The CHAIRMAN. All right. Senator Udall, how about you? 

STATEMENT OF HON. MARK UDALL, U.S. SENATOR 

FROM COLORADO 

Senator UDALL. Thank you, Mr. Chairman. 

If I might, I have a longer statement I would like to ask unanimous consent to include in the record. 

The CHAIRMAN. We will do that. 

Senator UDALL. Let me make a few brief comments. I want to 

thank you and the ranking member for holding this hearing. 

I would like to associate myself with Senator Wyden’s remarks. 

I know that these topics can seem dry. But to use a phrase that 

has been in the parlance this year, this could very well be a gamechanger. 

In the 2009 National Electricity Delivery Forum here in DC, participants were asked what will be the most transformative technology for the electricity industry. The answer, the most frequent 

answer was energy storage technologies, including plug-in hybrids. 

It wasn’t an integrated smart grid, as important as that is, or 

transmission superhighways. 

I am glad that the chairman of the FERC is here because I want 

to hear his thoughts on regulatory issues. I have come to understand that the technologies are almost more advanced than the regulatory questions that we have to answer, that there are a lot of 

disincentives in the systems right now to using storage technologies. 

Then I am also pleased to see the Under Secretary here, and I 

am keen to hear about the Recovery Act storage projects and where 

we stand with those. 

But again, Mr. Chairman and Ranking Member Murkowski, 

thank you for holding this important hearing. 

[The prepared statement of Senator Mark Udall follows:] 

PREPARED STATEMENT OF HON. MARK UDALL, U.S. SENATOR FROM COLORADO

Thank you Mr. Chairman. I appreciate your agreeing to hold this hearing and of 

course all the hard work of your staff. I requested it to draw attention to what the 

federal government is doing to advance storage technologies as well as what regulatory changes might be appropriate for storage facilities on the electrical grid. 
5 

I recognize that these topics may seem dry, but what we are talking about today 

is potentially game-changing. If we find a way to store the power generated from 

the sun and the wind, really all energy resources, then we can transform the energy 

industry forever. 

At the 2009 National Electricity Delivery Forum here in DC earlier this year, participants were asked, ‘‘What will be the most transformative technology for the electricity industry?’’ The most frequent response was ‘‘Energy storage technologies, including plug-in hybrids.’’ It scored higher than every other technology, including ‘‘An 

integrated Smart Grid’’ and ‘‘Transmission superhighways.’’ 

Energy storage can address problems that are already occurring that impact our 

economy and security. Power interruptions cost the United States economy roughly 

$80 billion per year. And these power outages do not have to last long. Two-thirds 

of those losses came from interruptions lasting less than five minutes. Storage can 

help reduce those outages, increase our economic productivity, and save consumers 

and businesses money. 

I am glad that Chairman Wellinghoff is here to talk with us about regulatory 

issues related to energy storage. I am especially interested to hear his thoughts on 

how best to structure cost recovery for storage projects to account for all the benefits 

that storage provides to the electrical grid. 

I am also pleased to see Undersecretary Koonin here to talk about what the Department of Energy is doing to advance energy storage technology, including the recently announced Recovery Act funding for storage projects. Getting those initial 

projects built and operating will provide extremely valuable experience for future investments. 

It just seems to me that energy storage is poised to help us no matter what our 

energy supply mix is going forward—wind, solar, nuclear, natural gas, or coal with 

carbon capture and sequestration. Whether it is making the electrical grid more reliable, deferring new line construction, or reducing transmission and distribution congestion—energy storage has a role to play. Or maybe the goal is reducing carbon 

emissions, meeting peak demand, or integrating greater amounts of renewable energy—energy storage can help us face those challenges as well. 

I look forward to today’s testimony to hear ways of partnering together to solve 

these challenges. I also look forward to hearing ideas of how to effectively bring energy storage technologies to the marketplace. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Shaheen. 

Senator SHAHEEN. Thank you, Mr. Chairman. I will reserve my 

comments for the questioning period. 

The CHAIRMAN. Very good. 

Let me introduce the first panel. It is Dr. Steven Koonin, who is 

the Under Secretary for Science in the Department of Energy. 

Thank you for being here. 

The Honorable Jon Wellinghoff, who is chairman of the Federal 

Energy Regulatory Commission. Thank you for being here. 

Dr. Koonin, did you want to start and take 6 or 8 minutes, whatever time you need to make the points you think we need to understand? Then I am sure we will have questions. 

STATEMENT OF STEVEN KOONIN, UNDER SECRETARY FOR 

SCIENCE, DEPARTMENT OF ENERGY 

Mr. KOONIN. Sure. Thank you. 

Chairman Bingaman, Ranking Member Murkowski, members of 

the committee, I appreciate the opportunity to discuss grid-scale 

electric storage with you this morning. 

Electricity is the cleanest and most convenient form of energy 

available for residential and commercial use. For that reason, it 

continues to grow significantly relative to other forms of energy in 

those sectors. Challenges in generating and using electricity stem 

from the great variation of demand during the day, which can double from early morning to late afternoon. 
6 

Since flowing electricity is perishable in that unused current cannot easily be stored for later use, generators must successively be 

turned on during the day as demand increases and then idled 

again in the evening. Grid assets are, thus, idle roughly half the 

time, and the system must be designed for a rarely achieved peak 

demand. 

Indeed, our power system operates at only about 40 percent of 

its capacity. Yet it continues to require additional resources as demand grows. 

A broader deployment of energy storage technologies well integrated into the grid would smooth the daily load cycle and allow 

our current infrastructure to be used much more efficiently. Storage on shorter timescales could provide for frequency regulation, 

peak shaving, and regional balancing. Reduced losses, improved 

power quality, increased capacity factors, and deferred capital investment would all result. 

Grid-scale storage would enable a more complete exportation of 

the intermittent wind and solar generation that we aspire to increase. The optimal grid-scale energy storage technology would be 

rapidly charged and discharged with small losses of energy, durable over many cycles, physically compact, and significantly less expensive than the generation capacity that it supplements. 

Unfortunately, we are not yet close to that ideal in part because 

of fundamental physical obstacles. The simplest and most common 

grid-scale storage technology is to raise or lower water. The challenge for such pumped hydro systems is that gravity is pretty feeble. 

Raising 1 cubic foot of water by a typical 300 feet stores less than 

1/100 of a kilowatt hour. So, to do this at scale, you need a suitable 

topography, and you also need a lot of water. 

Another possibility is underground storage of compressed air for 

which appropriate geology probably exists in much of the Nation. 

Although this technology has been demonstrated for decades, 1 

cubic foot of air at a typical 150 atmospheres still stores only 2/10 

of a kilowatt hour of energy. So, again, you need a lot of air. 

A cubic foot of batteries can store 100 times more energy than 

that in its electrons and ions, although at roughly 100 times the 

cost currently. 

All of these technologies should be compared to the 1 kilowatt 

hour of chemical energy contained in a cubic foot of natural gas, 

which costs just a penny and weighs essentially nothing. Of course, 

that chemical energy in the gas is extracted irreversibly and with 

a carbon footprint. 

So despite the challenges and current high cost, storage technologies can be of value in managing the grid. So what do we need 

to do in order to realize more effectively the potential for storage 

in managing the grid? 

First, because utilities are appropriately cautious, we need to 

better demonstrate the potential of existing technologies. Department of Energy demonstrations under the Recovery Act are boosting such activities 50-fold and encompassing the complete range of 

technologies and scales from a single battery project in Pennsylvania to a 300-megawatt compressed air project in California. 
7 

These projects will provide much more operational experience 

and define best practices, and these will facilitate greater storage 

deployment efforts nationwide. They will also help us better quantify the economic dimension of the storage issue. 

Second, we should be pursuing basic research to enable the next 

generation of storage solutions. Material science to synthesize and 

understand novel nanoscale materials tailored to specific electrochemical properties is the highest priority here. An out-of-the-box 

aspiration would be the reversible storage of electrical energy in 

chemical bonds. 

You know, right now, we can use electrical energy to electrolyze 

water and produce hydrogen, compress and store that hydrogen, 

and then convert that hydrogen back into electricity using a fuel 

cell, for example. However, it is terribly inefficient currently and 

consequently uneconomic. 

Research to do that electricity to chemistry back to electricity 

transformation would be truly game-changing. Such work would 

lead to low-cost storage devices with higher energy densities, cycle 

lifetimes, and reliabilities. 

Then, finally, we need a deeper and more integrated systemsbased understanding of grid structure and dynamics. Storage, demand management, peaking generation, real-time analytics, and 

real-time grid control are all tools that can be deployed to create 

a better grid. Understanding the synergies among them and their 

optimal deployment through data collection, analysis, and deployment is a task that we are only beginning to attend to through programs underway in the Department of Energy. 

You know, as a theoretical physicist, I have been looking carefully for the last months for a theory of the grid, a simple, synthetic 

framework that you can use to get your arms around the concept, 

and I am sad to say I haven’t yet found it. So, I look forward to 

helping perhaps stimulate programs to develop that so we can better understand how to integrate storage peaking generation, transmission grid management, demand management into a much more 

efficient system than we have currently. 

With that, thanks for your attention. 

[The prepared statement of Mr. Koonin follows:] 

PREPARED STATEMENT OF STEVEN KOONIN, UNDER SECRETARY FOR SCIENCE, 

DEPARTMENT OF ENERGY

Thank you, Chairman Bingaman and members of the Committee, for this opportunity to testify before you on grid-scale energy storage and its role in achieving 

U.S. energy and climate goals. 

Enhancing our national energy storage capability is an important tool to improve 

electric grid reliability and resiliency. Adequate deployment of storage technologies 

can materially reduce power fluctuations, enhance system flexibility, and enable 

greater integration of variable generation renewable energy resources such as wind 

and solar power. Each of these is critical for achieving the Nation’s clean energy 

goals. Energy storage can also help stabilize the price spikes that occur during times 

of peak demand, and can delay or potentially avoid the need to construct capital intensive facilities and infrastructure that use conventional fuels and produce greenhouse gases. 

The core function of energy storage is to bridge the gap that exists between the 

characteristics of the generation and load technologies within our electrical system. 

While some have identified this gap as a challenge inherent only to variable generation renewable energy technologies such as wind and solar, gaps and mismatches 

in characteristics exist throughout the grid that stress our infrastructure; these 

areas would benefit from the system flexibility that could be introduced with deploy-
8 

1Potential energy is calculated to the theoretical limit and does not include efficiency losses 

from conversion between energy states. The theoretical potential energy for an acre foot of water 

is 1.02 kilowatt-hours per foot of elevation increase. 2 Castelvecchi, D. (2007). Spinning into control. Science News, vol. 171, pp. 312-313. 

3Project list available at http://www.energy.gov/news2009/documents2009/ 

SGlDemolProjectlListl11.24.09.pdf. 4 Center for Electrical Energy Storage Center for Electrocatalysis, Transport Phenomena and 

Materials for Innovative Energy Storage Energy Materials Center at Cornell Northeastern 

Chemical Energy Storage Center Center for Science of Precision Multifunctional Nanostructures 

for Electrical Energy Storage Heterogeneous Functional Materials Center 5 High-Amperage Energy Storage Device-Energy Storage for the Neighborhood Planar Na-beta 

Batteries for Renewable Integration and Grid Applications Low Cost, High Energy and Power 

Density, Nanotube-Enhanced Ultracapacitors Metal-Air Ionic Liquid (MAIL) Batteries Silicone 

Coated Nanofiber Paper as a Lithium-Ion Anode High Energy Density Lithium Batteries 

ment of grid scale energy storage technologies. Power quality disturbances resulting 

from voltage and frequency fluctuation are but one indication of the stresses that 

exist in today’s grid that could be ameliorated by increased energy storage. However, the functional requirements of energy storage for power conditioning are necessarily different than the functional requirements of energy storage for load shifting or variable generation firming, and it is therefore no surprise that different applications require different storage technologies. 

It is important to recognize that despite the large number of existing energy storage technologies, there are only a limited number of known fundamental phenomena that can be exploited to store energy; currently these phenomena include 

gravity, electron movement and storage, mechanical conversion, chemical manipulation of materials, and thermal storage. The conversion process between energy 

states that enables storage also defines the characteristics of each storage technology, as well as the applications for which the technology is best suited. Gravity 

storage via pumped water, where each acre foot of water pumped contains more 

than 1 kilowatt-hour of potential energy for each foot of elevation increase1, has the 

potential to store great amounts of energy and is well suited for large energy applications such as load leveling. Yet the requirement that water be moved limits the 

short time response capability of the technology. Conversely, mechanical kinetic energy storage via flywheels is particularly well suited to the short term requirements 

of power conditioning; and while flywheel systems can achieve very high energy densities2, the physical constraints on flywheel size limit energy storage for extended 

activities such as peak shifting. Given the variety of conversion processes involved, 

it is critical that energy storage technologies be matched to potential applications. 

The power requirements for energy storage range from of a few watts for personal 

electronics, up to 100 kilowatts for hybrid vehicles, tens of megawatts for ships, and 

hundreds of megawatts for electric utility applications. The duration requirements 

for these same applications covers a similarly broad range, from sub-second for 

power quality and voltage regulation to hours or even a day when peak shaving and 

load leveling. Among the most important requirements for stationary utility storage, 

which ranges from half a megawatt to hundreds of megawatts, are storage technologies that are low-cost and have a high cycle life, meaning a large number of 

charge and discharge cycles. High reliability, efficiency, environmental acceptability, 

and safety are also important. Unlike requirements for electric vehicles where energy density for conventional fuels is held as the benchmark against which storage 

technologies are compared, energy density and footprint are less important for utility storage. 

Grid-scale energy storage received a significant boost through the American Recovery and Reinvestment Act. On Nov. 24, 2009, the Department announced it 

would award grants totaling $185 million to 16 energy storage demonstration 

projects3. This investment will substantially accelerate the development and deployment of utility-scale storage technologies, enhancing their market readiness in the 

U.S. 

The Department of Energy’s Office of Electricity Delivery and Energy Reliability 

has the lead within the Department for energy storage research, development, analysis, and demonstrations associated with the electric grid. The program works with 

numerous utilities to ensure that projects reflect the industry’s needs, and close collaboration with the states has resulted in many jointly funded demonstration 

projects. In addition, the Office of Science selected six Energy Frontier Research 

Centers in the area of energy storage4 to perform fundamental research relevant to 

battery technology. The Advanced Research Projects Agency-Energy (ARPA-E) has 

also selected six energy storage projects5 as part of its first solicitation for breakthrough technologies. In fact, one project in the first ARPA-E tranche that has cap-
9 

6 Hamachi-LaCommare, Eto. Understanding the Cost of Power Interruptions to U.S. Electricity Customers. Lawrence Berkeley National Laboratory (2004). 7Makarov, Ma, Lu, and Nguyen. PNNL Report #17632: Assessing the Value of Regulation Resources Based on Their Time Response Characteristics, Pacific Northwest National Laboratory 

(June 2008) Fioravanti and Enslin. KEMA Report #BPCC.0003.001: Emissions Comparison for 

a 20MW Flywheel-based Frequency Regulation Plant (2007) 8 $43 million conditional commitment for a loan guarantee to Beacon Power (http:// 

www.lgprogram.energy.gov/press/070209.pdf) 

tured people’s imagination is a storage technology, the liquid metal battery, so it 

is possible that storage is an area where truly creative thinking is possible. 

GRID RELIABILITY AND FREQUENCY REGULATION

Reliability and power quality have become a necessity for the modern digital society because digital equipment is extremely vulnerable to short outages and even 

small voltage fluctuations. Studies have shown that momentary outages, lasting less 

than 5 minutes, cost the U.S. some $52 billion annually6. Energy storage with high 

frequency characteristics and response rate enables seamless continuity of power 

supply for a range of customers. One system of valve regulated lead-acid batteries, 

that was developed with Department of Energy funding, can protect energy intensive and highly sensitive facilities like microchip plants with 10 megawatts or more 

for 30 seconds, after which a back-up diesel generator can provide the necessary 

power. Similar systems are widely used for high tech manufacturing, financial institutions, and server farms. On a larger scale, a single 27 megawatt nickel cadmium 

battery safeguards the transmission line from Anchorage to Fairbanks by giving 

voltage support, preventing outages, and providing reactive power locally. 

The need for frequency regulation arises because generation and demand are almost always out of synch. The resultant grid system is one which regional operators 

are required to balance by adjusting the frequency. Current management involves 

sending periodic signals that allow participating fossil fuel generators to increase or 

decrease production and reset the frequency. Fast storage performs this function 

considerably better. Studies have shown that regulating frequency by battery or 

flywheel storage is at least twice as effective and has a 70 percent reduced carbon 

footprint compared to use of fossil fuel generation7. Technical feasibility was shown 

by flywheel demonstrations funded by the Department jointly with state agencies 

in California and New York. Currently there are six 1 megawatt demonstration 

units operating on the grid, and through the Loan Guarantee Program the Department has entered into a conditional commitment for the development and deployment of a twenty megawatt flywheel energy storage facility in New York8. Meanwhile, under the guidance of the Federal Energy Regulatory Commission grid operators are developing new control signals, tariffs, and market rules to allow frequency 

regulation by fast storage to be deployed in a cost effective manner. With increased 

deployment of variable generation renewable energy assets, the need for frequency 

regulation on the grid will increase considerably. 

ASSET UTILIZATION AND RENEWABLE INTEGRATION

It is well known that generation, transmission, and distribution are not efficiently 

utilized. Assets such as substations and transmission lines have to be sized for peak 

demand with ample capacity to spare for a hot day. One quarter of a facility’s capacity is devoted to maintaining service during a 5 percent peak period. The goal of 

energy storage is to supply this peak load from energy stored during periods of least 

demand, thereby allowing for more complete and cost effective utilization of grid assets. 

In particular, substation load can easily outgrow the original unit target size. Instead of an immediate and costly upgrade, installation of energy storage can be 

more economical and flexible, and is therefore finding favor with utilities. The first 

application in the U.S. was sponsored by the Department of Energy and American 

Electric Power in 2006 at a substation in West Virginia. The substation had been 

reaching its capacity limit and an upgrade was needed quickly to handle the overload during peak periods. Instead, energy storage was installed, so that energy is 

stored at night when the substation is not stressed and electricity is less expensive, 

and then released over a 6-hour period during peak load times. The system, using 

a sodium sulfur battery, has performed well and installation of storage will defer 

substation upgrades by 5 to 6 years. Seven more megawatts have since been deployed in similar installations at several utilities. Other utilities are planning to test 

flow batteries or lead-carbon batteries in efforts to defer substation upgrades. 

While energy storage is important for reliability and efficiency of the grid, it is 

expected to become increasingly important for complementing and buffering increas-
10 

9 Bullough, Gatzen, Jakiel, Koller, Nowi, and Zunft. Advanced Adiabatic Compressed Air Energy Storage for the Integration of Wind Energy. EWEC 2004, London UK. 10 22% of generation capacity in Japan was attributed to renewable energy technologies during 

2007, including hydropower (source: World Energy Outlook 2009, IEA). 

ing amounts of variable generation. Variability of wind and solar generation comes 

in three different time scales. Short term fluctuations of seconds or minutes are 

similar to the fluctuations created by load variability, and these fluctuations can be 

handled effectively by fast storage facilities placed on the grid for frequency regulation. Ramping over the course of hours—as sometimes occurs with wind generation—is an important issue for utilities, and energy storage can be used to address 

this challenge. With energy storage equivalent to a one hour reserve, the number 

of gas turbines required for ramp control could be reduced, thereby improving the 

economics of wind energy generation. 

Another challenge results from the wind patterns that occur in areas where 

strong nighttime winds are common. Because night load is small when compared 

to daytime load, in such a scenario renewable resources can have a larger share of 

the generation mix during the night than during the day, resulting in periods when 

the value of continued generation of wind energy is challenged. In West Texas, for 

example, over nine hundred 15 minute intervals of negative pricing occurred during 

one month in 2008, and a number of wind developers in the area are beginning to 

realize that energy storage might lead to economic advantages and better utilization 

of wind energy. 

Although interest is increasing, the United States has only a few megawatt-sized 

demonstrations of storage for the integration of renewable resources. In Japan, by 

contrast, a 34 megawatt/7 hour sodium-sulfur storage facility has been constructed 

in conjunction with a 51 megawatt wind farm. All excess night time generation is 

absorbed by the battery, resulting in completely dispatchable wind power during the 

day. While Japan encourages construction of energy storage associated directly with 

wind development, storage in the United States is viewed as a grid requirement 

which might be placed anywhere within a region. One hundred megawatt battery 

farms have been proposed domestically, but none has yet been constructed. An alternative approach which has been suggested is the introduction of community energy 

storage. Relatively small storage units of some 25 kilowatts would serve a cluster 

of 4-to-5 residences to provide emergency backup or to serve as a platform for installed photovoltaics. Individual units would also be aggregated into a centrally 

dispatchable fleet. This would provide the utility with a sizable resource for 

ramping, spinning or stand-by reserve, or other ancillary services. 

For yet larger amounts of energy, compressed air energy storage (CAES) can be 

used. For this technology, air is compressed off peak and stored in salt domes, man 

made caverns, or deep aquifers. When extra energy is required during peak periods, 

air is released and fed directly into natural gas combustion turbines, eliminating the 

need for a compressor. While the current technology does not eliminate the need for 

fuel, it increases the efficiency of the turbines substantially, thereby reducing the 

carbon intensity of the generated electricity. There is also ongoing research into the 

use of adiabatic CAES technology, which does not require combustion of fossil fuels 

as the stored energy is converted back into electricity9. There are two CAES units 

in existence—one in Germany (290 megawatts) and one in Alabama (110 

megawatts), and both facilities use salt domes formed by solution mining. CAES 

units could be used to take advantage of day-night power pricing arbitrage or as 

spinning reserve. Most proposed new plants intend to charge entirely with available 

wind energy, resulting in a very favorable carbon footprint. Besides producing electricity during peak periods, the plants can also provide system flexibility by absorbing excess energy whenever a wind increase occurs. This would eliminate the need 

for fossil fuel standby peaking plants. 

Currently the best form of energy storage to handle really large quantities of energy is pumped hydro. Using reversible turbines, water is pumped into an upper 

reservoir during periods of inexpensive night power and released during periods of 

peak load to generate electricity. Some 20 gigawatts of pumped storage hydro plants 

are in use by utilities in the United States, which amounts to about 2.5 percent of 

the total U.S. electrical capacity. Europe has about 32 gigawatts of pumped hydro, 

or 10 percent of capacity, and Japan has as much as 15 percent which results in 

a very resilient grid capable of absorbing substantial amounts of renewable energy10. 

An impressive 440 megawatt pumped storage hydro plant in Missouri is scheduled for completion in 2010, and an additional 15 gigawatts of pumped hydro are 

either planned or in the permitting stage in the United States. Further new con-
11 

11Project list available at http://www.energy.gov/news2009/documents2009/ 

SGlDemolProjectlListl11.24.09.pdf 

struction is hampered, however, by environmental concerns, the current price of cement and steel, and a very lengthy permitting process extending over many years. 

GRID-SCALE ENERGY STORAGE DEMONSTRATIONS UNDER THE AMERICAN RECOVERY AND

REINVESTMENT ACT

The American Recovery and Reinvestment Act of 2009 provided unprecedented 

opportunity to accelerate the deployment of grid scale energy storage. On November 

24, 2009, Secretary Chu announced the selection of 16 energy storage demonstration 

projects in conjunction with selection of Smart Grid demonstration projects11. The 

selected energy storage projects ranged over the entire spectrum of grid applications 

and will enhance grid reliability and efficiency, enable community energy storage 

options, and allow for greater use of renewable energy resources. Technologies include advanced batteries, flywheels, and compressed air energy storage. The selected awards total $185 million in Recovery Act funding but represent a total 

project value of $770 million based on substantial recipient cost sharing of between 

50 to 80 percent of total project cost. The awards fall into five areas: 

• Peak Reduction and Wind Farm Integration—three projects were selected with 

a federal cost of $61 million. The selected projects are intended to demonstrate 

the potential for battery storage to improve asset utilization, allowing better use 

of night time wind energy and grid integration of intermittent resources, thus 

increasing their share of the generation mix. These demonstrations in California and Texas will fund battery facilities in the 8 to 25 megawatt scale, a 

magnitude larger than current installations. 

• Frequency Regulation Services for Stabilization of the Power Load—one project 

was selected for an award of $24 million. Electricity generation and load are 

never exactly synchronized. To balance them, regional system operators slightly 

shift the load frequency, by either increasing or decreasing power production. 

Using fast storage devices for these adjustments is twice as effective as using 

fossil fuel plants. A 20 megawatt flywheel system to be located in Illinois is ten 

times larger than existing demonstration units. 

• Distributed Energy/Community Storage—five projects were selected totaling 

$20 million, which will allow utilities to experiment with smaller scale storage. 

Distributed energy storage strengthens and buffers the grid and allows utilities 

to deal effectively with load fluctuations or renewable generation. Utilities can 

use storage to provide peaking power during periods of high demand. The selected projects include a 3 megawatt installation in Pennsylvania to provide up 

to four hours of peak shaving, backup storage for a photovoltaic system in New 

Mexico, and aggregation of smaller systems into a community energy storage 

effort in Michigan. 

• Compressed Air Energy Storage (CAES)—two projects for grants totaling $54 

million have been selected. A 150 megawatt CAES facility will be constructed 

in New York State using an existing salt cavern. The plant will have sufficient 

storage to allow full operation in support of the transmission system and market needs and support some 3,800 megawatts of wind planned in the area. A 

second CAES project will be sited in California. The 300 megawatt plant, using 

a saline porous rock formation, is situated next to a transmission line receiving 

power from an expected 4,000 megawatts of new wind. Together, the two new 

plants will double the world’s CAES capacity and provide invaluable experience 

for developing a fleet of such plants throughout the U.S. 

• Promising, emerging technologies—five projects were selected for grants totaling $25 million. These new storage technologies are in their initial stage of development. Funding is intended to bring them to the prototype stage and ready 

for the market place. Among the projects are a Lithium-Ion battery with nanostructured polymer electrolyte, an iron-chromium based flow battery, and an 

isothermal compressed air technology that needs no extra fuel. 

Successful implementation of these Recovery Act projects will depend not only on 

the diligence of the utilities and entrepreneurs involved, but also on the readiness 

of public utility commissions and regional system operators to accept the new technologies. As the new projects develop, they will be carefully monitored and fully integrated into the existing energy storage program at the Department of Energy. Results will provide a basis for analytical studies and economic modeling on the role 

of storage in a more sustainable electric grid. 
12 

12 Electric Advisory Committee report—Bottling Electricity: Storage as a Strategic Tool for 

Managing Variability and Capacity Concerns in the Modern Grid—December 2008. (http:// 

www.oe.energy.gov/DocumentsandMedia/final-energy-storagel12-16-08.pdf) 

BARRIERS TO DEPLOYMENT

Technological barriers to improved energy storage systems range from gaps in 

fundamental knowledge to operational limitations in current technology. The Department of Energy’s Office of Science has the lead for fundamental research to develop new concepts and approaches for energy storage necessary to meet the longterm needs of our nation. Significant advances in our understanding of basic physical and chemical properties of electrical energy storage are needed, and recent developments in nanoscience are opening promising scientific avenues that require 

further exploration. Fundamental research provides continually developing insights 

which enable the pursuit of new energy storage technologies to address the operational weaknesses of today’s technologies, including: rate of system charge and discharge, safety hazards from over-charging or discharging, environmental hazards 

from toxic materials, and short lifetimes. 

Widespread deployment of energy storage systems is impeded by the lack of uniform standards identifying operational parameters across applications. These and 

other issues, including additional regulatory and market barriers, have been identified previously12. The final barrier to deployment is economics. Current costs are too high to allow 

reasonable rates of return for investors in most applications, which can range from 

$1500/kW to $4500/kW depending on the technology. Although systems are beginning to enter the market at $2200-$2500/kW for high value applications, additional 

cost reduction is necessary to increase penetration; cost targets are application specific. Some cost reduction will be achieved through economies of scale as production 

numbers increase, but much will have to come from improved systems. Novel materials and components for energy storage applications, from batteries to flywheels, 

must be developed to enable long system lifetimes while using low cost base materials and inexpensive manufacturing processes. 

CONCLUSIONS

Energy storage offers a diverse portfolio of technologies for a wide spectrum of applications. It allows us to optimize operation of the grid to make the most of our 

resources. Energy storage can: 

• Provide power quality and reliability; • Provide voltage and frequency regulation; • Smooth integration of variable generation renewable energy technologies into 

the grid; • Allow better asset utilization for generation and transmission; 

• Provide relief to customers and utilities during peak load periods; and 

• Provide spinning reserve and energy management to make renewable energy 

technologies more dispatchable. 

Our basic research is leading fundamental scientific advances needed for leadership in developing the next generation energy storage technologies, and advances 

in energy storage are an international interest. Besides the U.S., the European 

Union, Canada, Australia, and Japan have sizable storage efforts. China recently 

initiated a substantial storage program focused on flow batteries. 

Other emerging technologies have the potential of enhancing or augmenting storage. Smart grid concepts, for example, could link storage to demand response and 

enable aggregation of distributed storage. Plug-in hybrids and, perhaps 

eventuallybattery electric vehicles, add a whole new dimension by linking transportation to energy management. Utilities are increasingly becoming involved in energy 

storage, and states like California and New York continue to work with the Department in funding new projects. Recovery Act funding is supporting frequency regulation and wind integration projects on a commercial scale. The investment community is becoming interested in providing venture capital for companies developing 

new technologies and in funding ambitious large scale projects. Industry appears 

poised to move from single megawatt scale applications to utility grade projects in 

the hundreds of megawatts. The eventual goal is to make energy storage ubiquitous 

and thus to contribute to the development of a greener and more resilient grid. 

This concludes my statement. Thank you for the opportunity to testify, and I look 

forward to answering any questions you and your colleagues may have. 

The CHAIRMAN. Thank you very much. 
13 

Chairman Wellinghoff, go right ahead. 

STATEMENT OF JON WELLINGHOFF, CHAIRMAN, FEDERAL 

ENERGY REGULATORY COMMISSION 

Mr. WELLINGHOFF. Thank you, Chairman Bingaman, Ranking 

Member Murkowski, and members of the committee. I appreciate 

the opportunity to speak here today. 

My testimony addresses regulatory and technical issues related 

to the integration of energy storage into the electricity grid. Mr. 

Chairman, I would request that my full testimony be entered into 

the record, and I will summarize it here. 

The CHAIRMAN. It will, and the full testimony of all witnesses 

will be included in the record. 

Mr. WELLINGHOFF. Thank you. 

The proliferation and adoption of renewable energy standards 

promise the Nation greater fuel diversity and lower emissions. But 

those goals cannot be achieved unless we also can ensure that new 

energy resources are integrated into the transmission system in a 

manner consistent with the reliable operation of the grid. 

Integrating large amounts of new locationally dispersed energy 

resources will require system operators to alter traditional assumptions and balance load and resources in a way that accounts for the 

variable nature for renewable energy resources such as wind and 

solar. Storage can provide energy when these renewable resources 

cannot do so directly. Storage can do this by providing what is 

called regulation service, which is an essential service that supports the reliable operation of the grid. 

The need for regulation service can dramatically increase the 

amount of variable renewable resources, and relevant to our discussion here today, it has been demonstrated that distributed resources, such as storage, providing regulation services are faster, 

generally cheaper, and have lower carbon footprint than the traditional power plant provided ancillary regulation services. 

To date, the most used bulk electricity storage technology has 

been pumped hydro electric technology. But other storage technologies, such as the closed-loop pumped storage, flywheels, and 

grid-scale batteries, could provide substantial value to the electric 

grid. Even the batteries onboard electric vehicles or hybrid plug-in 

electric vehicles can provide regulation service to the grid and 

serve as mobile distributed storage. 

With storage technologies at various stages of development, the 

commission already has had several opportunities to address gridscale storage. For example, the commission recently accepted a proposal by the New York Independent System Operator, NYISO, to 

integrate energy storage devices into its day-ahead and real-time 

regulation services markets. 

In the Midwest ISO market, FERC currently is considering the 

proposal to better accommodate stored energy resources. 

In New England, in the New England ISO, they have recently 

sought to extend a pilot project that pays new storage technologies 

for regulation service based upon the speed of its response. 

In the mid-Atlantic ISO, PJM, it has allowed a storage device, 

which includes battery power from three electric cars, to enter into 
14 

the frequency regulation market with no tariff or technical manual 

revisions. 

In California, the California Independent System Operator has 

identified storage as one technology solution to facilitate renewable 

integration. 

But I don’t think we should stop there. We at FERC should look 

at industry-wide methods to remove regulatory barriers to the 

adoption of storage technology. In October, I provided Congress 

with the commission’s strategic plan for fiscal years 2009 through 

2014, which it reflects my intention to pursue market reforms that 

will allow renewable resources to compete in jurisdictional markets. 

There are two main elements of this effort. First, the unique 

characteristics of storage technologies could require different market bidding parameters and telemetry requirements for providing 

energy and ancillary services than those established based on characteristics of traditional generators. Furthermore, the potential integration and synergies of renewable resources, storage, and demand response resources call for new ways to operate the electric 

system to take advantage of these resources for cost-effective, reliable, cleaner, and more efficiently produced electricity. 

But some transmission tariffs may not yet allow storage technologies to either enter wholesale markets in a manner comparable 

to generation or be used as a substitute or complement to transmission investment. 

Second, a key element of comparable tariff treatment is compensation. Some storage technologies appear to be able to provide 

near instantaneous response to regulation signals in a manner that 

is also more accurate than conventional resources, such as combustion turbine generators. 

Most existing tariffs or markets do not compensate resources for 

superior speed or accuracy of regulation response. But such payments may be appropriate as system operators gain experience 

with the capabilities of storage technologies. 

In conclusion, at FERC, our challenge as regulators is to remove 

barriers that impede the vast potential of energy storage to support 

our national energy goals. FERC can strive to ensure that regulatory barriers are removed, and compensation and tariff treatment 

are appropriately gauged to match the value of the services the 

storage can provide. 

Thank you. I would be happy to answer any questions. 

[The prepared statement of Mr. Wellinghoff follows:] 

PREPARED STATEMENT OF JON WELLINGHOFF, CHAIRMAN, FEDERAL ENERGY

REGULATORY COMMISSION

I. INTRODUCTION

Chairman Bingaman, Ranking Member Murkowski, and members of the Committee, thank you for the opportunity to speak here today. My name is Jon 

Wellinghoff, and I am the Chairman of the Federal Energy Regulatory Commission 

(FERC or Commission). My testimony addresses regulatory and technical issues related to the integration of energy storage into the electricity grid. I will begin my 

testimony by briefly describing the need for energy storage technology and then discuss some of the technical and regulatory issues that arise when integrating storage 

into the grid. I will conclude by discussing FERC’s role in removing barriers to the 

development of grid-scale storage. 
15 

1See, e.g., http://www.beaconpower.com/files/PNNL—Report—Assessing—Value—Regulation— 

Resources—June%202008.pdf at 26 (‘‘Experiments also showed that an average 1 MW of 

flywheel regulation capacity can substitute for about 2 MW of the traditional regulation mix . 

. .’’). 

With the proliferation and adoption of renewable energy standards, the nation is 

showing itself increasingly committed to achieving climate change goals and a future in which clean, affordable, sustainable, and reliable energy is the everyday 

norm. Thirty states have adopted policies requiring fuel diversity and encouraging 

a move to lower-emissions energy sources, and Congress is considering a national 

renewable energy portfolio standard. 

But greater fuel diversity and lower emissions cannot be achieved unless we ensure that the new energy resources are integrated into the transmission system in 

a manner consistent with reliable operation of the grid. With these concerns in 

mind, we at the Federal Energy Regulatory Commission are exploring our statutory 

authority to find ways to ensure that the reliable integration of these new energy 

resources reflects consumer decisions in the marketplace for electricity and meets 

policy goals. 

One critical strategy for integrating new energy resources involves matching load 

and resource variations through the intelligent deployment of demand response and 

other distributed resources such as energy storage. 

II. USE OF STORAGE

For the most part, electricity must be produced just in time to be consumed. Energy storage offers the ability to ‘‘warehouse’’ electrons for consumption later or to 

balance the variability of some renewable resources. It alters the traditional assumption of a linear electrical network, which assumes that centralized generators 

send electrons through transmission and distribution systems to instantaneously 

match need. 

Integrating large amounts of new, locationally-dispersed energy resources into the 

grid will require system operators to alter traditional assumptions and balance load 

and resources in a way that accounts for the variable nature of renewable energy 

resources such as wind and solar power. Storage of renewable power can provide 

energy when these renewable resources cannot do so directly. For example, storage 

can be charged or filled off-peak by renewable energy and later provide a source of 

power during peak demand periods or periods when the sun or wind is not available, either through direct injection of energy into the grid or by enabling demand 

response. 

And storage can do more than just balance the variable nature of solar and wind 

resources. The Energy Advisory Committee on Storage, convened by the Energy Policy Act of 2005, found that storage can: improve grid optimization for bulk power 

production via energy arbitrage; defer the need for investments in transmission and 

distribution infrastructure to meet peak loads; provide backup power to buildings; 

and provide ancillary services directly to the grid or market operators. My testimony 

will focus on the ability of storage to provide ancillary services, since that is the 

function most frequently addressed by FERC, and the function that may be of the 

most value to the integration of variable resources such as wind and solar. 

Ancillary services help support the reliable operation of the grid. One such ancillary service is regulation service, which resources like storage can efficiently provide. Regulation service is the micro load-following service that increases generation 

supply when demand or load increases, and decreases supply when demand decreases. Regulation must be provided constantly, and it is one of the most expensive 

services on the grid. 

Ancillary services like regulation service are essential to keep the system balanced and prevent it from cascading into a blackout. The need for regulation services can dramatically increase as the amount of variable renewable resources is increased. And it turns out that local storage is among the best means to ensure we 

can reliably integrate renewable energy resources into the grid. 

Regulation service is usually provided by combustion turbine gas-fired generators. 

But while such generators can generally follow the minute-by-minute variations in 

load to keep the system in overall balance, the frequency excursions that are the 

subject of Regulation service actually occur on even shorter time intervals. Indeed, 

it has been demonstrated that distributed resources such as storage are more efficient than central station fast response natural gas fired generators at matching 

load variations and providing ancillary services needed to ensure grid reliability.1

They are faster, generally cheaper, and have a lower carbon footprint than the traditional power-plant-provided ancillary service. 
16 

III. STORAGE TECHNOLOGIES

To date, the most used bulk electricity storage technology has been pumped storage hydroelectric technology. Presently, there are 24 pumped storage projects 

around the nation with an installed capacity of over 19,500 MW. But new storage 

technologies are under development, and in some cases being deployed, that could 

provide substantial value to the electric grid. Building on experience with existing 

technology, closed-loop pumped storage uses two reservoirs that are ‘‘closed’’ to natural aquatic ecosystems. Other than initial filling and occasional topping off to offset 

evaporation or leakage losses, no natural river or stream would be used. This allows 

operational flexibility not available with a traditional pumped storage hydropower 

system, which uses natural rivers and reservoirs and must regulate flow to avoid 

harming local ecosystems. Currently, the Commission has issued preliminary permits for pumped storage—both traditional and closed-loop—totaling over 27,000 

MW of capacity. Over one-quarter of this capacity is closed-loop. 

A newer technology for providing storage for the electric grid is the flywheel, 

which works by accelerating a cylindrical assembly called a rotor (or flywheel) to 

a very high speed with low friction components, and maintaining the energy in the 

system as rotational energy. The energy is converted back by slowing down the 

flywheel. Flywheels have been successfully piloted in the U.S., and their speed is 

particularly useful for regulation service. For example, for the past year, ISO-NE 

has been conducting a pilot program to test how alternative technologies such as 

flywheels are able to provide regulation service. 

Another promising storage technology is the grid-scale battery, which works like 

a giant consumer electronics battery. The battery takes energy in, and then with 

some small conversion losses, releases it later. Batteries for MW-scale storage have 

had successful pilots domestically for several applications. Like flywheels, batteries 

can respond more quickly and accurately than traditional generators to signals to 

increase or decrease the injection of energy into the grid when load changes. They 

can respond for short or long (multi-hour) periods of time, depending on the size and 

the controls of the battery. They can thus provide a variety of ancillary services or 

serve to defer the need for alternative transmission or distribution line investments. 

The batteries onboard electric vehicles likewise can provide services to the grid. 

For purposes of this discussion, an electric vehicle is one that requires periodic recharging of its propulsion battery from the electric grid. It may or may not also be 

a ‘‘hybrid,’’ additionally capable of re-charging with a fuel-driven generator or by 

other mechanical means. 

In the future, electric vehicles can provide ancillary services, like regulation service, to the grid and serve as mobile distributed storage. The evolving nature of electric vehicles’ role and their market penetration curve create a unique set of challenges for integrating electric vehicles into electric markets as a grid service provider. 

Although you may not think that a single electric vehicle could be providing an 

important ancillary service to the grid, researchers at the University of Delaware 

proved just that with a car that they parked outside of FERC headquarters that was 

providing regulation service to the PJM grid. More to the point here, the same researchers believe that, using this technology, parked electric cars connected and aggregated in large numbers in places like parking garages could be made available 

as energy storage to support grid operations, including balancing the variability of 

renewable resources such as wind and solar. 

Each of these storage technologies—closed-loop pump storage, flywheels, batteries, 

and electric vehicles—are at various stages of development. Flywheels and chemical 

batteries have recently achieved technology maturity, and are well on the road to 

full scale implementation both here and abroad. Unlike flywheels and batteries, 

electric vehicles will not be commercially available for another year or two. Though 

there are several thousand electric vehicles on the road in the U.S. and abroad 

today, mass commercialization is expected to begin in 2010, and the U.S. has set 

a goal of having at least 1 million on the road by 2015. 

IV. TARIFF ACTIVITIES ALREADY UNDERWAY

With storage technologies at various stages of deployment, the Commission already has had several opportunities to address grid-scale storage in regions operated by regional transmission organization or independent system operators, or 

RTOs and ISOs. 

The Commission recently accepted a proposal by the New York Independent System Operator (NYISO) to integrate energy storage devices into its day-ahead and 

real-time regulation service markets. (127 FERC § 61,135). There we recognized 

that energy storage devices can help integrate wind resources, and that their inte-
17 

gration in the regulation service market should help NYISO meet or exceed NERC 

control performance criteria. The Commission specifically pointed to the very fast 

response times of storage resources as a benefit to NYISO. 

FERC currently is considering a proposal to better accommodate stored energy resources in the Midwest ISO markets. The Midwest ISO tariff revisions would allow 

short-term energy storage devices to enter, in a limited fashion, the frequency regulation market. 

In the Northeast, ISO New England (ISO-NE) has recently sought to extend a 

pilot project for testing the ability of different storage technologies to participate in 

the regulation market. The pilot pays storage based on the speed of its response. 

In the Mid-Atlantic, PJM Interconnection (PJM) has allowed a storage device to 

enter into the frequency regulation market with no tariff or technical manual revisions. AES installed a 1 MW battery at PJM headquarters to provide frequency regulation. PJM bundles that battery with the batteries of three electric cars, each of 

which purchase electricity at retail rates. The batteries then sell into the frequency 

regulation market. PJM has stated that it expects larger batteries to be able to 

enter other ancillary service markets or energy markets without significant tariff revisions. 

Other areas of the country are examining the potential of demand response and 

other distributed resources to reliably integrate renewable energy resources into the 

grid. For example, this summer, the CAISO issued a white paper that identified 

storage as one technology solution to facilitate renewable integration. 

V. FERC EFFORTS

Beyond the case-specific applications just described, we at FERC are already looking at methods to remove regulatory barriers to the adoption of storage technology. 

In October, I provided Congress with the Commission’s Strategic Plan for FY2009- 

2014 and committed to take additional steps to address possible barriers to development of renewable resources, including the implementation of tools like storage to 

support reliable integration of renewable resources. And earlier this year, the Commission adopted a policy statement on the smart grid, which included storage as a 

key functionality of the smart grid. It is the Commission’s expectation that this policy statement, which seeks greater interoperability and functionality of smart grid 

technologies through the adoption of standards, will help accelerate the development 

and promulgation of newer storage technologies. 

And FERC will continue to monitor the development of storage technologies to ensure that they receive tariff treatment comparable to other resources and receive 

compensation commensurate with the value of the services they provide to wholesale markets and the grid. 

Regarding compensation, some storage technologies appear able to provide a nearly instantaneous response to regulation signals, in a manner that is also more accurate than conventional resources. These two characteristics can reduce the size, and 

hence overall expense, of the regulation market. Most existing tariffs or markets do 

not compensate resources for superior speed or accuracy of regulation response, but 

such payment may be appropriate in the future as system operators gain experience 

with the capabilities of storage technologies. In the meantime however, the unique 

characteristics of storage technologies could require different market bidding parameters and telemetry requirements for providing energy and ancillary services than 

those established based on the characteristics of traditional generators. Furthermore, the potential interaction and synergies of renewable resources, storage and 

demand response resources call for new ways to operate the electric system to take 

advantage of these resources for cost-effective, reliable, cleaner and more efficiently 

produced electricity. This would ensure that consumers have access to the lowest 

cost resources needed to provide electricity service. 

As for transmission tariffs, some tariffs may not yet allow storage technologies to 

enter wholesale markets in a manner comparable to generation or to use storage 

as a substitute, or complement, to transmission investment. FERC will monitor 

these developments and, when appropriate, ensure best practices for development 

and use of storage for all of its various purposes. 

VI. CONCLUSION

In conclusion, at FERC, our challenge as regulators is to remove barriers that impede the vast potential of energy storage to support our national energy goals. With 

the appropriate compensation and tariff treatment, storage resources will have the 

opportunity to proliferate. While energy storage offers ample benefits just in improving grid operation and efficiency, it can also make integration of renewable energy 

resources not only reliable, but efficient and cost-effective as well. Fully opening 
18 

wholesale electric markets to resources like storage will make it easier to meet renewable energy standards by efficiently matching renewable energy resources and 

demand resources with distributed storage resources to smooth variations in resource output. In this way, these resources can complement each other to ensure 

a stable and reliable grid. FERC can strive to ensure that regulatory barriers are 

removed and compensation and tariff treatment are appropriately gauged to match 

the value of the services that storage provides. 

The CHAIRMAN. Thank you both very much. 

Let me start with a few questions. Dr. Koonin, I should understand this subject better to be asking questions about it. But at any 

rate, I remember a couple of years ago getting a briefing at Los Alamos National Laboratory on the issue of the research, basic research they were doing on the subject of capacitors and the belief 

that at least the folks briefing me had that capacitors have substantial capability to help us with storage issues in the future. 

I don’t know if you have a view on that subject, if that is something you are trying to support, that type of research in the department? 

Mr. KOONIN. We are supporting work on super and ultra capacitors. Capacitors are, in many ways, complementary to batteries. 

Like batteries, you can move the energy in and out very quickly, 

capacitors even more quickly than batteries. So, they are useful for 

delivering energy in a short time, a surge, if you like. 

Their drawback is that we currently can’t store very much energy in them. So, in vehicles, for example, they are fine for boosting 

power when you need it, but not for long-term power storage and 

quite complementary to batteries. 

The CHAIRMAN. OK. Let me ask an obvious question. You indicated that by virtue of the funding that you have in the Recovery 

Act, you have been able to increase the expenditures of the Department of Energy on storage by 50 times. What happens now that 

the Recovery Act is going to be over with? 

I mean, is this something that we can maintain a focus on and 

maintain funding for, this kind of research and development in this 

area, or does this fall back to a second-tier pursuit? 

Mr. KOONIN. You know, the array of projects that we have lined 

up right now, and hopefully will begin delivering on soon, I think 

nicely spans an array of technologies and applications, and we need 

to get experience in operating these, deploying them, understanding how to use them. They need to be well instrumented so 

that we collect appropriate data to inform our path going forward. 

Then it really becomes a question of can we have gotten far 

enough down the road so that it becomes attractive for a utility to 

pick it up, and we move toward full-scale commercial deployment? 

So I am a bit agnostic at the moment as to how much more demonstration we need to do. I would like to see how this first round 

goes. 

The CHAIRMAN. OK. I know the subject of our hearing is gridscale energy storage, but one of the issues that we have dealt with 

now for many years is the whole issue of centralized generation 

versus distributed generation. It would seem to me that there is an 

obvious analogy between centralized storage and distributed storage. I don’t know either you, Chairman Wellinghoff, or Dr. Koonin, 

if you have thought through which of these focuses makes the most 

sense? 
19 

Mr. WELLINGHOFF. Mr. Chairman, if I may? I think we certainly 

need to look at the economics of both. When you teed up this hearing as grid-scale storage, I tell you that I gave it a very broad definition. I believe that distributed storage can be grid-scale in the 

sense that things like plug-in hybrid and plug-in electric vehicles 

I think can significantly contribute to storage on the grid, as well 

as other technologies. 

There are companies out there, for example, right now that are 

doing significant ice storage that can be used to shave peaks and 

effectively store energy from off-peak times and use that cooling to 

cool our homes and businesses in the Southwest and other areas 

of the country. 

But that doesn’t mean that we should ignore in any way larger 

centralized storage. Like pumped hydro, as Senator Murkowski indicated, is a very not only viable, but very proven storage technology that is here today. Although we need to understand, again, 

relative economics and look at relative costs and benefits. 

For example, one statistic I heard the other day is that there is 

more storage available in all the electric hot water heaters in the 

United States than there is pumped hydro storage currently. So I 

thought that was a pretty interesting statistic. 

So, again, it is a matter of looking at cost benefits and relative 

economics and determining what are the most viable things to start 

with. 

The CHAIRMAN. Dr. Koonin, did you have a comment on that? 

Mr. KOONIN. Yes, I do. You know, there are sometimes unanticipated systems issues that are well worth being aware of, and let 

me just take the plug-in hybrid example that looks so attractive as 

we try to merge transportation and power. 

I would just add a couple of cautions that we probably need to 

think through as we go down that road. One is what is the impact 

of the grid ebb and flow into the battery in terms of its battery performance and lifetime beyond what you would get in an ordinary 

drive cycle? 

The second is if we are talking battery vehicles, we shouldn’t 

leave the battery vehicles high and dry. If you drain my battery 

during the afternoon to manage the peak, I may have a hard time 

getting home late in the afternoon. 

Then, finally, if the net effect of integration of PHEVs into the 

grid is to turn liquid fuel into electricity for the grid, that would 

be, I think, quite foolish because we have, in fact, worked very 

hard to get oil out of the power sector over the last 30 years. 

So, these are all interesting systems management issues that we 

need to be thinking about as we look to distributed storage, for example, and PHEVs. 

The CHAIRMAN. Thank you very much. 

Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Dr. Koonin, I have been expressing concern about our reliance as 

a Nation on other countries, particularly China, with regards to the 

rare earth minerals and recognizing that it is these rare earth minerals that we need for purposes of our battery technologies, for the 

magnets that are used in the electric motors. 
20 

Are there alternatives that currently exist to utilizing the rare 

earth minerals for batteries and for the permanent magnets? 

Mr. KOONIN. Yes. So the rare earths—I agree that we don’t want 

to become addicted to imported rare earths in the same way that 

we have for oil. For the batteries, the rare earths are not an issue. 

Some of the precious metals or transition metals are an issue, but 

not for the rare earths. The rare earths—— 

Senator MURKOWSKI. An issue for the batteries is—— 

Mr. KOONIN. The transition metals are. But the rare earths are 

not. The rare earths are an issue for electric motor technologies. 

There, you know, I have a great faith both in supply curves and 

in technology to help us around that problem. There are resources 

for rare earths in the U.S. They are not quite as economically attractive as what we have in China, but with sufficient impetus, we 

could be tapping into those resources. 

Second, the technology may be able to come into help with the 

rare earths. We don’t need necessarily, for example, bulk rare earth 

materials, but we might be able to get by with just surface coatings 

on our—— 

Senator MURKOWSKI. So we are looking to these alternatives 

to—— 

Mr. KOONIN. We are starting to look very seriously at those. 

Senator MURKOWSKI. Let me ask you, Commissioner Wellinghoff, 

you have mentioned that it is important to remove the regulatory 

barriers. Whether it is regulatory barriers or just regulatory uncertainty, how much does this hinder the development of energy storage technologies? How big of a contributing factor is that to what 

we are dealing with right now? 

Mr. WELLINGHOFF. Certainly to the extent that these technologies want to scale and start into commercial operation, they 

are going to want to know that there is a revenue stream to support them. So, for example, flywheel storage technology is currently 

being paid under a tariff in New York, which is a good thing. 

Ultimately, they have some certainty that they know they can 

provide regulation service into the New York grid and get a sufficient revenue stream to support a business model. In the PJM 

area, right now battery technology is getting paid to support the 

grid, and again, they know under a tariff they have a revenue 

stream to do that. 

So what we are trying to do is encourage the ISOs and RTOs 

that are under our jurisdiction to formulate these tariffs that will 

compensate storage technologies in a way that they can develop a 

business model that can be sustainable that ultimately can grow 

that business. I think it is very important to have that regulatory 

certainty to make sure that those industries will grow. 

Senator MURKOWSKI. When we were having the discussion here 

in the committee with our energy bill and the discussion about renewable electricity standard, you came before us and testified in 

support of a 25 percent RES. I understand that the FERC is underway with a study that looks to determine exactly how effective the 

grid is in its ability to integrate renewable resources. Can you give 

me any update or status on that study and what we might expect? 
21 

You have spoken to this in the past, but do we know at this point 

in time what percentage of renewables we believe that the grid, as 

it exists today, can reasonably accommodate? 

Mr. WELLINGHOFF. I don’t think we have that number. I can’t 

give you an update, per se, from our study. I hope that our results 

will be out in March or April. 

I will tell you that I got a briefing yesterday, however, on a very 

interesting study that is funded by DOE through NREL called 

EWITS that did look at a 20 percent renewable level in the grid 

and looked at how that would be accommodated. They seemed to 

believe that it could be accommodated. 

We would like to validate that with the study that we are doing 

at FERC looking at regulation and frequency response in the grid 

and how that may be balanced. But these are things that I think 

we need to look at. 

I had an opportunity to speak to a number of European legislators this last weekend, and they are looking at levels of renewables 

in their grid of 15 to 20 percent or more and are managing it currently in places like Spain, where they actually—at times of the 

day actually have over 50 percent of their total load supplied by 

wind energy. 

So we need to learn from these examples. But storage is going 

to play a very critical role there because, ultimately, the storage 

will be necessary to balance out the variations that we see if we 

are going to be meeting these higher levels of 20, 25 percent and 

more. 

The CHAIRMAN. Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman. 

Thank you both. 

Dr. Koonin, I want to make sure I understand what you were 

saying to Chairman Bingaman because your answer, I will tell you, 

troubles me. He asked you what is going to happen next, and you 

essentially said our position is wait and see. 

I mean, wait and see is not the kind of activist strategy that I 

think this country needs to tap the full potential for these energy 

storage technologies. I don’t see this as primarily a question of just 

spending money. I am certainly not advocating going out and 

spending money on dubious ideas. But I do want to see a game 

plan for tapping the full potential. 

If what happens now is your agency, in effect, waits to see what 

happens, as I think you were saying to Chairman Bingaman, we 

could be waiting around for years and years and have a lot of footdragging when we really want a research game plan and activist 

strategy for tapping the full potential. 

I don’t think you would do that in the physics area, which I know 

you know lots about as well. So let me give you a chance to go at 

this area once again in terms of how we are actually going to get 

the kind of activist research plan that the country needs. 

Mr. KOONIN. So what I have come to understand about energy 

after 5 or 6 years’ worth of experience is that what we really need 

are well-chosen, consistent policies that move aggressively toward 

the goals that we are after. In science, you always look to assess 

what you have learned in order to let you move confidently and 

quickly to the next steps. 
22 

So I think we need to balance. I agree that there is an urgency, 

but we also need to make sure that we are making the right steps, 

the right technology choices, making the technology accessible for 

the utilities in the sense of giving them confidence to deploy. 

I would hope that the round that we have got underway will do 

that and let us see what happens. I understand the urgency, but 

at the same time, we must learn from what we are doing. 

Senator WYDEN. I am all for learning. It is just I see a lot of 

‘‘wait and see’’ here, and what I want is something that is much 

more aggressive because I think waiting and seeing is a prescription in this town for a lot more delay, and I don’t think the country 

can afford it. 

Can you get us a document that describes what your research 

blueprint is and incorporates your ideas about trying to evaluate 

these projects? When could we see that? 

Mr. KOONIN. I would be happy to get that for you. We can certainly do that as quickly as we can. I would be happy to get—— 

Senator WYDEN. Months? Is that in 60 days? 

Mr. KOONIN. Yes. We can do that. 

Senator WYDEN. Great. OK. Your research blueprint for tapping 

the full potential of storage technology, and that is very helpful. 

Mr. KOONIN. Very good. 

Senator WYDEN. One question for you, Mr. Wellinghoff. You essentially described the agency getting into it, in effect, when others 

bring it to you, these independent—the ISOs. We looked at the 

strategic plan, which essentially describes FERC’s priorities, and 

energy storage is not mentioned in the strategic plan. Can you all 

go back and amend the strategic plan and lay out for us what the 

priorities would be for the agency? 

Mr. WELLINGHOFF. We would be happy to go through the strategic plan and probably point out for you aspects of it that relate 

to storage that may not specifically say the word ‘‘storage.’’ But certainly to the extent that we are, in that strategic plan, I think very 

clear about trying to integrate resources on the demand side into 

markets, storage is a big part of that, in my mind. 

So it wasn’t any intent to leave out storage from that strategic 

plan. It was subsumed by things like demand-side resources, which 

would include storage, energy efficiency, demand response, 

photovoltaics, distributed generation. All those things we need to 

figure out how to better integrate into the grid, how to make sure 

that they are paid their economic value for being integrated in the 

grid, and it was all intended as part of our strategic plan. 

Senator WYDEN. Then have staff fill us in on the parts of the document that show us that this is going to be a major priority for the 

agency because that is what I—— 

Mr. WELLINGHOFF. We will do that. We will give you a response 

that shows that. 

Senator WYDEN. We will look forward to working with both of 

you. 

Thank you, Mr. Chairman. 

Mr. WELLINGHOFF. Be happy to do that, Senator. 

The CHAIRMAN. Thank you. 

Senator Corker. 
23 

Senator CORKER. Mr. Chairman, thank you. Thank you for this 

hearing and the testimony of our witnesses. 

My hometown community benefits right now from hydro storage, 

and I look forward to the day in the future when the batteries that 

are inside vehicles, which also are being produced in Tennessee, I 

might add, are used as storage at night. Base load power being 

used at night, lesser expensive, whether it is nuclear or other, nuclear power ultimately powering vehicles and, at the same time, 

during the day using that storage to lessen the load on the grid. 

That is an exciting development that I hope happens, and I appreciate my colleagues pursuing that. 

I do want to ask Chairman Wellinghoff about a related grid 

issue. I offered an amendment during our energy debate that wanted to make sure that when we make these allocations of the cost 

of the grid, that people that are actually having to pay for that receive a benefit, and it did not go beyond that. 

The original bill did not define benefits from the standpoint of allocation. I offered an amendment that passed—Senator Wyden and 

others supported it, it was bipartisan—that made sure we were 

talking about reliability and economic benefits, which doesn’t really 

move beyond existing policy as it relates to the grid. 

In the event we do want to shift costs for the grid to people who 

are not receiving a benefit, it seems to me that those of us in Congress should decide that and not FERC. I know there has been 

comments about the fact that, well, something happening some 

other place because it is environmentally good benefits mankind. 

So everybody should pay for it. But I think all of us are wanting 

to make sure that our constituents are paying for the power that 

they are receiving. 

I am not anti-renewable and very excited about many of the developments that are taking place in our country. I know Governors 

from Senator Shaheen’s area and Governors from Senator Wyden’s 

area were very concerned that the bill that was before us didn’t 

have those defined elements, and therefore, I added it in, which, 

again, is just current practice. 

I wanted to ask the chairman, since you have had some choice 

comments about that in other settings, I wondered if you had some 

concern about your ability to implement current policy as it relates 

to that? 

Mr. WELLINGHOFF. We have concern about the issue of precisely 

quantifying benefits because we have to be sure that—and I certainly agree with you that with respect to allocation of costs and 

transmission that we should, in fact, do that in a way that somehow fairly spreads the benefits and costs. 

Senator CORKER. You mean fairly allocate when you say 

‘‘spread?’’ 

Mr. WELLINGHOFF. Yes. 

Senator CORKER. That word concerns me. I assume you mean 

making sure that those who are receiving benefit pay for it. Is that 

what you are saying? 

Mr. WELLINGHOFF. Yes, I am. 

Senator CORKER. OK. 

Mr. WELLINGHOFF. However, my concern, I guess, is precisely 

quantifying it, in that your problem is you can have benefits today 
24 

for one set of customers or one set of transmission customers or 

rate payers and those benefits will change next year because the 

nature of the grid will change. So the problem is it is a moving target. If we are required to precisely quantify it, at one point in time, 

we are going to be wrong. 

So that is my main concern, I think, Senator, with your—— 

Senator CORKER. I thought you would say that, and I wanted you 

to know my amendment did not require you to be precise. As a 

matter of fact, it was current—the 7th Circuit had a ruling recently—— 

Mr. WELLINGHOFF. Right. 

Senator CORKER [continuing]. That said you had, and they said 

we do not suggest the commission has to calculate benefits to the 

last penny. You seemed to like that because your response was that 

it leaves the door open for you to be able to analyze who benefits 

from that. Nothing about our amendment said it had to be precise. 

As a matter of fact, I would say it is very much in keeping with 

the 7th Circuit ruling that you seem to support. So I just want to 

say that your responses to the 7th Circuit seemed to indicate you 

felt like you could, to a reasonable degree, determine whether people were benefiting from certain grid expenditures or not. Is that 

true? 

Mr. WELLINGHOFF. Yes. That is correct. I did not read your 

amendment to be necessarily consistent with the 7th Circuit, and 

if you are indicating that it is, that is, I think, something that the 

7th Circuit decision does provide us that flexibility, I think, because it does very specifically say that quantification of benefits 

does not have to be precise. It gives quite a range in that 7th Circuit decision. 

Senator CORKER. I think what we would like to do, and the reason I am bringing this up—I know it is something that Senator 

Bingaman and I and others will be working on at some point before 

it goes to the floor. I think our concern is that having some grid 

going to some remote area in North Dakota, which is going to have 

no benefit for anybody up here, that we end up, our constituents 

end up paying for that. I think that is what we are trying to keep 

from happening. 

Mr. WELLINGHOFF. Certainly. 

Senator CORKER. What I would love to do is work with you to see 

if there is a way that we might end up with some language that 

would keep it that way. I don’t want folks in Tennessee paying for 

some transmission grid to some mesa someplace that has no benefit. 

I will say in closing. I know my time is up, and the chairman 

is always generous. There have been comments made by associates 

and folks who have been concerned about this amendment that we 

should know that, look, this benefits all of mankind, and everybody 

should pay for this. 

I don’t think that is an appropriate way of looking at reliability 

and economic benefit, and I just hope that you can work with us 

to form more closely if our amendment is not—if you can’t work 

with that, I don’t know why you couldn’t because the 7th Circuit 

ruling that you applauded just said the same thing. 
25 

But I would love to work with you and Chairman Bingaman and 

others who might want to work on this to ensure that we don’t 

spread these costs around to mankind, but that people actually are 

receiving a benefit pay for it. 

Mr. WELLINGHOFF. Senator, I would be happy to do that. Thank 

you very much. 

Senator CORKER. Great. Thank you. 

The CHAIRMAN. Senator Udall. 

Senator UDALL. Thank you, Mr. Chairman. 

Welcome again. Let me start, Chairman Wellinghoff, with you 

and build some specificity into the line of questioning that Senator 

Corker just directed your way. 

Cost structures for storage activities—are there any other cost 

structures that you think should be considered that would provide 

storage facilities with compensation for all or at least several of the 

different values they add to the grid? 

Mr. WELLINGHOFF. Senator Udall, primarily in my testimony, I 

was referring to cost compensation in organized wholesale markets. 

There certainly needs to be some type of cost structures that would 

primarily be in the purview of State regulatory commissions in 

those areas where we don’t have organized wholesale markets with 

respect to those utilities in those jurisdictions incorporating storage 

into their operations. 

So that would be something that individual utilities and State 

commissions would have to work through as to how to recover costs 

for those storage investments, whether it be through expensing or 

rate basing those costs. But it would, again, primarily be within 

the purview of the State jurisdictions. 

Senator UDALL. Thank you for that insight. 

I wanted to pursue this line of questioning. As I understand, 

interruptions to our power systems cost us about $80 billion annually. They don’t have to last for a very long time. Two-thirds of the 

losses come from interruptions that are less than 5 minutes. That 

is astounding to me, and this seems to be a real opportunity for 

storage because storage can help reduce those outages, increases 

productivity, and saves consumers money because those replacement electrons are very, very expensive. 

Could each of you talk about the source of those outages and to 

what extent storage could help alleviate them? Let me start with 

you, Chairman. 

Mr. WELLINGHOFF. My understanding is that the large majority 

of those outages—and I don’t have a specific percentage figure, but 

it is probably much higher than 50 percent. It may be as high as 

80 percent of those outages are at the distribution level. 

So to the extent that we can incorporate in storage and other distributed resources at the distribution level—distributed generation, 

photovoltaics, et cetera—and certainly storage, we can probably reduce substantially the amount of those outages. But again, those 

are going to be primarily within the purview of State commissions 

to work with State utilities at the distribution level to build up 

those systems, make those grids at the distribution level smarter 

and also more responsive with incorporating storage. 

Mr. KOONIN. I am not enough of an expert to comment on the 

source of the grid outages, but I can just note that extreme distrib-
26 

uted storage at the household level, for example, at current battery 

costs seems quite feasible. At $500 a kilowatt hour for batteries, as 

we have with lithium ion batteries, for example, you could easily 

store 10 kilowatt hours in a house and use that to handle outages 

as long as 10 or 20 hours. 

So I think uninterruptible power supply seems perfectively feasible if outages became a significant problem. 

Senator UDALL. Would you foresee a future where utilities, other 

power providers would help consumers actually put those batteries 

onsite because of the advantage you just referred to? 

Mr. KOONIN. I think if outages became a significant problem, you 

could imagine broad programs to do that. Again, the plug-in hybrid 

battery, say, of order of 17 kilowatt hours or so, 10 kilowatt hours, 

would be such a device that you could use in an emergency when 

the outage occurred. 

Senator UDALL. Chairman Wellinghoff, let me turn back to you 

in the remaining time I have. In my initial remarks, I mentioned 

I had been surprised in some of the briefings that I have held to 

find that although that—and I should clarify what I said earlier, 

technology still has a long ways to go, that some of the challenges 

in the regulatory space are almost equal to those in the technological space. 

Is there anything else FERC can do? More hearings or reports 

to help us identify these regulatory barriers and identify solutions 

along with them? 

Mr. WELLINGHOFF. We do have the opportunity to hold technical 

conferences, which we do periodically. We have had a number of 

them and would continue to do so. We are continually looking at 

what we need to do in these organized wholesale markets to 

change tariffs and to change rules, market rules in ways that will 

provide a level playing field for these kinds of technologies because, 

traditionally, these markets have been set up for central generation. 

What we want to do is ensure that those markets give equal consideration to and, in fact, higher consideration to more valuable 

services like storage. So one thing is certainly holding the technical 

conference, which we have done in the past, with respect to storage 

specifically. But we want to continue to do this and want to continue to do everything we can to help integrate storage into the 

grid. 

Senator UDALL. I would urge you to do so. I wonder if there 

wouldn’t be a day where we, as we now today talk about generation, transmission, and distribution, GTD, that ‘‘S’’ for ‘‘storage’’ 

would not be on a level playing field as we consider the opportunity 

there. Or whether it would be generation-storage, distribution-storage, transmission-storage as how we think about them and then 

how we manage and how we—— 

Mr. WELLINGHOFF. The storage does have a role to play in all of 

those aspects. 

Senator UDALL. In all of those. 

Mr. WELLINGHOFF. That is true. 

Senator UDALL. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Shaheen. 
27 

Senator SHAHEEN. Thank you, Mr. Chairman. Thank you for 

holding this hearing. 

My view is that as we think about our energy future, one of the 

areas that has not gotten as much attention as it should is the area 

of energy efficiency, and obviously, storage is a big part of that. If 

we look at what is the fastest, cheapest way to deal with our energy future, it is obviously energy efficiency and conservation and 

energy storage, as you all point out. 

I think this is a question for you, Mr. Koonin. Can you tell us 

how—what other countries are doing in the development of energy 

storage technologies and how we currently rank compared to other 

countries in this area? 

Mr. KOONIN. We are, I think, certainly the leader in storage concepts among the nations. You see a large deployment in other countries of pumped hydro, but if you look at some of the more advanced concepts, this country is significantly ahead. The Recovery 

Act, which I referred to before, the funding has helped significantly 

in mounting those demonstrations. For example, in compressed air 

storage, the projects that we have defined will double the world’s 

capacity and experience in compressed air storage. 

China, one naturally looks to these days as a sense of what the 

rest of the world is doing. They have a $100 million storage effort 

that is focused on both research and deployment, largely on flow 

batteries, and there is a potential there, I think, for an interesting 

collaboration with the Chinese on that technology. 

Other countries not so active in the advanced concepts. So we 

are, with the stimulus money, significantly ahead of other folks. 

Senator SHAHEEN. What about Europe? You didn’t mention Europe. 

Mr. KOONIN. A lot of pumped hydro in Europe right now. Some 

experience with flow batteries and other technologies, but I think 

we are pushing harder than the Europeans. 

Senator SHAHEEN. You talked about the jumpstart that the Recovery Act has given to some of those initiatives. Is there more that 

we ought to be doing? I appreciated the exchange with Senator 

Wyden because I think having a plan is always the beginning of 

anything that we ought to be doing. 

But are there other things that we should do as a Congress and 

as an administration to incentivize these new technologies and encourage their development? 

Mr. KOONIN. Again, I would distinguish between research and 

deployment. I think deployment is, in the end, where it happens, 

and that very much depends upon how Congress sets the playing 

field or the incentives that we were talking about. 

You could imagine—I will invent. I know little about regulation. 

But you could imagine an extra credit for putting energy that has 

been stored for some period of time into the grid rather than simply giving tax credits for the capital. Again, you would have to define that carefully to make sure you got the results you wanted. 

But you could imagine something like that. 

On the research side, I would like to see more invested in the 

basic material science. So much of what we need to do in energy 

not only for electrical storage, but many other things has got to do 

with materials, our ability to characterize, synthesize, predict the 
28 

properties of materials has grown greatly. There are so many materials to explore out there. I would like to see us doing more of that 

as well. 

Senator SHAHEEN. Thank you. 

Apropos your mentioning regulations, Chairman Wellinghoff, as 

we are thinking about a new grid and upgrading the Nation’s grid, 

one of the concerns that I have had, and I think many of us in the 

Northeast have had, is that we are looking at the potential for 

building a new grid or upgrading our current grid in a way that 

could bring us solar and wind energy from the West and that that 

will have a negative impact on the potential perhaps to develop 

some of those resources, new energy resources in the Northeast— 

offshore wind, other issues. 

What should we be thinking about as we are thinking about upgrading our grid? Also, how do we look at the potential for distributed energy, and does it make sense, if that is our future, to develop a whole new transmission grid that is not going to address 

that? 

Mr. WELLINGHOFF. Senator, I think we ultimately need to look 

again at sort of like what I was talking to Senator Corker about 

costs and benefits. Certainly, there may be substantial benefits to 

the local economy by developing distributed resources and developing local renewable resources, and I think the States and the regions certainly should take that as a priority. 

But ultimately, what is going to get developed is where the capital flows. So I think the markets are ultimately going to decide between and among the various resource options. So what we need 

to do is make sure that we get the markets right, that we incorporate into the markets things like the price of carbon and other 

things that will ensure that, as those markets are structured, they 

can produce the policies, both the State and the national policies 

that we need to achieve our goals. 

Senator SHAHEEN. Could I follow up on this, Mr. Chairman? 

I appreciate that. On the other hand, the fact that the Government invested significantly in the Tennessee Valley Authority probably has a lot to do with the fact that Senator Corker is concerned 

about maintaining their low energy prices. The fact that we don’t 

have a similar project in the Northeast means that we have some 

of the highest energy prices in the country. 

So, Government regulatory policy is obviously going to have a 

major impact on what happens in those markets. 

Mr. WELLINGHOFF. Right. 

Senator SHAHEEN [continuing]. If what we do is to have a Government policy that says we are going to build a new transmission 

grid that is going to ignore storage or ignore distributed generation 

or ignore where those potential renewable energy sources are coming from, doesn’t that put in place the potential to create a market 

that is going to have a different impact than if we did something 

different with our Government policy? 

Mr. WELLINGHOFF. That is why I think we need to look at it from 

an analysis of cost and benefits. I saw a study yesterday from the 

National Renewable Energy Lab called EWITS that was an eastern 

interconnect-wide study looking at 20 percent wind, four different 

scenarios. 
29 

One scenario was to take most of the wind out of the Midwest 

and deliver it to the Northeast. The other scenario was to take a 

lot of offshore wind and deliver it to the Northeast. The cheapest 

scenario was to take the Midwest wind and deliver it to the Northeast. 

So, again, I mean, people in the States need to decide do they 

want lower rates for their consumers, or do they want more local 

development of renewable resources? I don’t think these decisions 

will be ones that will be made by the Federal Government because, 

right now, ultimately investments in transmission are made by the 

private sector. 

So the private sector is the one who, through the markets, is 

going to decide what are the most appropriate investments to 

make. I don’t know of anyone right now who is suggesting that 

there should be massive amounts of Federal money going into build 

transmission lines throughout the country. The money, as I understand it, will be coming from the private sector, and the markets 

will drive where that money goes. 

Senator SHAHEEN. Thank you. My time is up. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

We have a second panel of expert witnesses which I would go 

ahead to unless—Senator Udall, did you have another question? 

Senator UDALL. Mr. Chairman, if I might? No, I would like to get 

to the second panel, but I would like to submit a question for the 

record to Chairman Wellinghoff that focuses on independent system operators and regional transmission organizations. If I could 

do that? 

The CHAIRMAN. That would be fine. Sure. 

Senator UDALL. Thank you. 

The CHAIRMAN. Thank you both very much for your testimony. 

It has been very informative, and we appreciate it. 

Let me call the second panel forward. The second panel, let me 

introduce three of the members, and then Senator Udall wanted to 

make one of the introductions on this panel. 

Dr. Ralph Masiello, who is senior vice president for energy systems consulting with KEMA, Inc., in Chalfont, Pennsylvania. 

Mr. Kenneth Huber, who is senior technology and education 

principal with PJM Interconnection in Valley Forge, Pennsylvania. 

Mr. Elliot Mainzer, who is executive vice president with corporate strategy in Bonneville Power Administration in Portland, 

Oregon. 

Thank you all for being here. Dr. McGrath—I believe, Senator 

Udall, you wish to make an introduction of Dr. McGrath? 

Senator UDALL. I do. Thank you, Mr. Chairman. 

I am pleased to introduce Dr. McGrath of the National Renewable Energy Laboratory in my home State, located in Golden, Colorado. It is NREL. That is a real treasure, and I have always appreciated both the hard work they do and the Department of Energy’s 

support of their work. 

My understanding is that Dr. McGrath, here under the auspices 

of NREL, will expand upon an intriguing aspect of energy storage 

technologies, the role that they can play in facilitating the integration of renewable energy into the electric grid. 
30 

Thank you, Dr. McGrath, for making the long trip here to Washington, DC. 

Thank you, Mr. Chairman, for bringing everybody on this panel 

here. 

The CHAIRMAN. Thank you all for being here, and why don’t we 

just start with you, Dr. Masiello? Is that the right pronunciation? 

Mr. MASIELLO. That is fine. Yes, sir. 

The CHAIRMAN. Go ahead and tell me the right—why don’t you 

tell us the right pronunciation, and we will try to—— 

Mr. MASIELLO. Masiello is exactly correct. 

The CHAIRMAN. Masiello. 

Mr. MASIELLO. Yes, thank you. 

The CHAIRMAN. Masiello. OK, thank you for being here, and 

please go right ahead. If each of you could take 5 or 6 minutes and 

give us the main points we need to understand, we will include 

your full statements in the record. 

STATEMENT OF RALPH D. MASIELLO, SENIOR VICE 

PRESIDENT, ENERGY SYSTEMS CONSULTING, KEMA, INC 

Dr. MASIELLO. Good. Mr. Chairman, Senator Murkowski, Senator 

Udall, thanks very much for the opportunity to contribute today. I 

hope I can shed some light. 

Rather than repeat the comments of the commissioner and the 

Under Secretary, let me offer a few data points and then some 

thoughts on policy. 

We are concluding a study for the California Energy Commission 

and the California ISO on the question of what happens at 20 and 

30 percent renewables and how can storage be used? Confirming 

comments we heard earlier, 20 percent is manageable with today’s 

engineering apparently, although the amount of ancillary services, 

meaning regulation, reserves, and so on, that would have to be procured by the market operator could double or triple with attendant 

impact, of course, on costs and emissions. 

Thirty percent becomes much less manageable due to the characteristics of when the solar energy disappears in the late afternoon 

and when the wind energy picks up. Storage is maybe twice as effective as conventional generation at mitigating this. In fact, we 

concluded that a fast battery is two to three times as effective as 

a combustion turbine for purposes of regulation and ramping. 

A second kind of highly technical point about a high renewable 

penetration that is, I think, just on the radar screen, most renewables are inverter based, meaning the power is produced by the 

wind mill. It goes through power electronics and an AC-to-DC-toAC conversion as opposed to conventional generation that has a rotating AC generator. 

At high renewables, 30 percent annual target could mean 50 percent at a given moment. The amount of rotating inertia in the system and the Governor response, the autonomous response of the 

generators to system frequency is down by half. If that statement 

held true, we lost half the inertia, it would mean that the transient 

stability planning that is done for the transmission grid in the 

interconnection has to be done over, and the stability is decreased. 

I bring it up because fast storage offers the potential to use 

power electronics to perform a synthetic form of inertia and Gov-
31 

ernor response and neatly avoid this problem. Of course, if the storage is used in conjunction with renewables, it is almost a free benefit from an infrastructure standpoint. 

An alternative to managing renewables’ variability and ramping, 

of course, is demand response. Smart grid certainly offers us the 

opportunity for increased demand response, consumer price response. I would like to suggest, however, that 30 percent demand 

response at 6 p.m. will not prove popular, and storage is a good 

way to avoid this. 

Coming to the subject of distribution reliability, American Electric Power Corporation has a brilliant concept and, in fact, will be 

doing a DOE demonstration project called Community Storage. The 

really clever thing in their concept is to take used batteries out of 

electric vehicles as these become available, reconfigure them, and 

deploy them at distribution transformers, protecting the reliability 

of a small cluster of homes. They believe that with this, they can 

dramatically improve distribution reliability. 

Finally, storage offers the opportunity to reduce emissions and 

provide benefits instead of backup power generation. Brad Roberts, 

the chairman of the Energy Storage Association, who is here today, 

would tell you that in their data center business, they are starting 

to deploy large batteries as backup power for 50-and 90-megawatt 

data centers. This avoids the need to store diesel, to run generation, avoids the emissions, and the batteries can be used for peak 

shaving. 

If I might, I would like to throw out a couple of additional policy 

points for consideration. The efficiency of the storage system, how 

much energy is lost charging the battery and discharging, or whatever other storage medium is there, is very important, especially 

when you look at daily use with renewables or ancillary services. 

Efficiency of 70 percent in a storage system sounds good, but that 

means 30 percent of the renewables are lost and end up as heat 

in the storage system. 

So if incentives over time or DOE research could be directed to 

improve the efficiency, this could be something to think about. 

Second, we frequently get asked by manufacturers and developers to test storage technologies in our labs. There are IEC and 

IEEE standards for batteries, for instance, but these are aimed at 

laptop computers, power electronics, power tools. Standards don’t 

exist yet for the physical performance of grid-scale connected storage. This will become important down the road if utilities are to 

procure it, to be able to specify it and know that their specifications 

have been complied with. 

Another policy issue that will be in the way of deployment of 

storage, there are not accepted planning methodologies that utilities can use to determine how much to put where. Absent that, regulators can’t approve the investments as being prudent, whether it 

is transmission or distribution. 

If we had a date, say, by 2011, where we could say new transmissions proposed should demonstrate that the use of storage was 

considered in the design and the economics of the transmission, 

this would stimulate awareness, interest. It would stimulate the 

small software companies that support that capability for utilities 

to develop the capability. 
32 

So those are my comments. Thank you again for the opportunity. 

[The prepared statement of Mr. Masiello follows:] 

PREPARED STATEMENT OF RALPH D. MASIELLO, SENIOR VICE PRESIDENT, ENERGY

SYSTEMS CONSULTING, KEMA, INC. 

Chairman Bingaman, Senator Murkowski, and members of the Committee, thank 

you for the opportunity to participate in today’s hearing on the role of grid-scale energy storage in meeting energy and climate goals. My name is Ralph Masiello. I am 

senior vice president of energy systems consulting at KEMA and I am responsible 

for innovation management within the company. I have been engaged in a number 

of energy storage related activities while at KEMA including serving on the U.S. 

Department of Energy ‘‘Energy Advisory Committee’’ and the Smart Grid and Storage subcommittees. 

KEMA is an independent, global provider of business and technical consulting, 

operational support, measurement and inspection, and testing and certification for 

the energy and utility industry. We have over 1,400 professionals worldwide with 

600 in the United States. KEMA, Inc. serves energy clients throughout the Americas 

and Caribbean. We have offices in 13 states, including Arizona, Michigan, North 

Carolina, and Oregon, and operate the only independent high voltage power apparatus testing lab in the United States. 

KEMA has been actively engaged in projects across the energy storage value 

chain, ranging from technology development and evaluation to the advancement of 

large-scale storage applications. KEMA has worked to expand understanding of energy storage capabilities by developing analytic tools needed to plan for its use. We 

have been performing storage consulting and testing activities for manufacturers, 

developers, utilities, and the U.S. Army and the U.S. Navy via NATO for some time. 

While we are generally true believers in the many benefits that storage can bring 

to the electric power industry, we have no vested interest in any particular technologies or solutions. 

Today, I will provide a brief overview of what storage is and how it relates to the 

electricity industry, including potential benefits of storage and current barriers. 

First, I will discuss storage’s role in the electricity system. Then, I will provide an 

overview of storage technologies and applications. Finally, I will briefly discuss policy issues to consider regarding storage. 

ENERGY AND STORAGE—WHAT IT IS AND WHERE WE ARE

At the turn of the 20th century, early electric power developers used batteries as 

part of the electricity generation and delivery infrastructure. However, batteries 

were quickly surpassed by other generation, transmission, and distribution technologies. For the past 100 years, electricity has been the only major commodity that 

is not stored anywhere in the value chain. As such, the electricity industry has been 

operating under a just-in-time delivery system, where power is produced on demand 

as energy consumers need it and where all that is produced is delivered. To maintain operations, grid operators must balance generation to match load in real-time. 

The lack of storage in the electricity industry has led to relatively low capacity 

utilization throughout the production and delivery of electricity—capacity is built 

and maintained to support peak needs with adequate reserves against contingencies. Overall utilization may be as low as 30% for some parts of the system. In 

the case of production, peaking resources are often the most expensive and their use 

just a few hours a year leads to very high spot prices of electric power in the wholesale markets. Were we able to store electricity effectively, this expensive model of 

planning and operation could be much more efficient. 

In addition to improving system efficiency, storage could help address grid management challenges stemming from the integration of variable resources. Unlike traditional fuelbased generation, many renewable resources are variable over time and 

are not easily controlled. With relatively small amounts of variable generation, load 

has been the main source of variability. However, as renewable penetration increases, grid operators will need to account for larger variability in supply. The current system has a certain degree of flexibility which it uses to balance demand and 

supply in real-time. Additional sources would help the system absorb increasing 

amounts of renewables. Storage, in particular, is one potential source of flexibility 

that acts as a bridge, buffer, and reliability component. 
33 

STORAGE FUTURE: CHANGING THE GAME

Renewables Resources 

The industry is beginning to conclude that some increase in the use of ancillary 

services will be necessary to integrate renewable resources. Pacific Northwest National Labs, KEMA, and others have conducted studies on the impact of high levels 

of renewables on system operations and the results more or less agree on this point. 

While ancillary services traditionally have been provided by fossil-based generation, 

new sources are beginning to contribute. According to the results of a recent KEMA 

study with the California Independent System Operator (CAISO), a fast battery is 

two to three times as effective as a combustion turbine at providing regulation and 

ramping services. In addition, even where traditional generation sources are used 

for ancillary services, storage appears to be beneficial. Virtual power plants which 

integrate storage and production could supply ancillary services more efficiently. 

This enables a plant to supply regulation or reserves even while running near peak 

output. 

Smart grid also offers ways to manage the demand side of the equation—whether 

by demand response programs controlled by the grid operator or via dynamic pricing 

schemes that induce consumer behavioral change or both. Though they are valuable 

resources, it is likely that demand response and dynamic pricing will not suffice at 

certain renewable penetration levels. 

Storage can offer additional benefits for renewable generation beyond integration. 

With storage, producers of renewable energy could time-shift production from periods of low demand to higher demand when it is more valuable to the producer. Also, 

storage allows remote (and often renewable) resources to escape curtailments due 

to transmission congestion with the attendant cost exposure. Financially, the benefits of storage may be considerable in such applications. Today, storage is already 

proving itself economical for some of these applications in market environments, to 

the extent that the markets are correctly valuing the services. It is therefore likely 

to be economic in regulated environments as well. Nevertheless, due to high upfront 

costs, the challenge of investing in storage can compound existing challenges for renewable investment. 

Storage and Emissions 

Overall, the potential of storage to improve system efficiency and to facilitate renewables integration means that it can significantly reduce emissions as compared 

to ancillary provision from fossil generation. As noted earlier, storage’s ability to 

quickly absorb the variable output of renewable generation makes it a strong integration tool for renewables. By any means, storage is able to provide a service—storing and dispatching energy—with fewer emissions than any comparable generation 

device. Examples of these savings are seen in the one of the more prominent applications of storage today, frequency regulation. A study by KEMA has shown that 

when replacing traditional fossil-fuel generation, storage technologies such as 

flywheels and fast-response storage systems can greatly reduce carbon dioxide emissions compared to the incumbent technologies. 

Storage could feasibly reduce emissions associated with backup generation as 

well. KEMA recently performed a study for the California Energy Commission in 

which it was determined that 3,800 MW of backup generation, if replaced by battery 

storage, would result in reduction of the annual emissions attributable to backup 

generation of as much as 40%. Here, emissions associated with the backup generation of non-residential customers outweigh those associated with the grid-based 

portfolio powering replacement batteries. 

While it is becoming clear that storage can offer reductions in emissions associated with the electricity system, further research is needed to better define potential 

reductions across the host of storage applications. Such reductions are likely to be 

specific to the region and the storage technology, as emissions associated with storage depend on the portfolio of generation used to power it and on the efficiency of 

the technology. 

STORAGE TECHNOLOGIES AND APPLICATIONS

Storage Characteristics 

Many electric storage technologies are available today and more are forthcoming. 

Advanced lead-acid batteries, large format Lithium Ion, and grid-scale Sodium Sulfur batteries are all commercially available. There are many more emerging battery 

technologies from numerous established and start-up manufacturers around the 

country. DOE has awarded R&D Energy Frontier Research Centers funding and 

smart grid demonstration funding to a number of these. 
34 

No single storage technology fits every application and technologies have varying 

capabilities. However, advancements in storage technology are resulting in characteristics that increase the applicability of storage as a whole. These include: 

• Fast Response: For regulation and some other ancillary services as well as 

transmission reliability applications, the storage device must be able to respond 

to control signals and change its charge / discharge power level near instantaneously; some technologies easily support this. • Cycle durability: Some technologies can provide multi-thousand range cycles, allowing them to be used for longer periods of time in applications that require 

frequent use. • Duration: In some applications, storage devices must be able to sustain full 

charging or discharging power levels for 2 to 6 hours. Shifting the diurnal production cycles of wind production typically requires durations in this range, for 

instance. • Transportability: Where devices are somewhat mobile, the range of possible applications increases and re-use becomes more feasible. Substation batteries used 

for reliability and peak load management can be moved once station capacity 

expansion is justified and re-used at another substation, for instance. • Scalability: The ability of a technology to maintain its characteristics regardless 

of size makes designing its use more flexible. 

As storage technology evolves, storage will likely have many applications. Each 

technology will likely have its own niche depending on which combination of the 

above characteristics define the device. Performance and cost ultimately determine 

which type of storage is right for which applications. 

Application Areas for Advanced Electricity Storage 

In addition to the generation-related applications of storage noted above, electricity storage can provide value at the transmission, distribution, and end-use levels of the electricity system. Currently, developers and utilities are aggressively pursuing storage for ancillary services provision, localized transmission reliability, and 

community or utility-side backup reliability as well as more traditional backup 

power applications. 

Distribution 

In many parts of the United States, distribution reliability is such that consumers 

can expect to be without power an hour or more each year—this significantly lags 

behind other countries, including Japan and most of Europe. It is more than an inconvenience for someone working at home and leads to consumers acquiring backup 

generators. Storage, however, is a tool that could help improve reliability. In particular, at the substation, storage can provide local ride-through if sub-transmission 

failures limit service to the station. Substation-based storage could also provide contingency coverage in the event of transformer failures at peak load. This allows deferral of transformer upgrade or replacement and avoids load curtailment. 

On the feeder, storage can provide the same benefit at either primary or secondary voltage—providing power to customers that would be without service as a 

result of a feeder outage. This can be a tremendous benefit, given that distribution 

feeder outages are the greatest source of power outages. System average interruption duration index (SAIDI) can be reduced dramatically by community energy storage system. Storage out on the feeder can also be a way to temporally provide extra 

capacity during load roll-over to alternate feeder configurations—a way of enhancing 

reliability or deferring expansion. 

The Community Storage concept as envisioned by AEP, a national electricity generator and transmission system owner, would re-use electric vehicle batteries (or 

other technologies) to provide one or two hours of service to homes clustered around 

each distribution transformer. This potentially has favorable impacts on the cost of 

ownership of electric vehicles and is of interest to the automotive community as 

well. 

Transmission 

Congestion relief, stability enhancement and capital deferral are some of the benefits storage can offer the transmission system. Storage can relieve congestion by 

timeshifting the energy in location as well—taking production off peak and storing 

it near the load center—downstream of the congestion point instead of at the generator. In market environments, congestion costs are applied in principle to the entire 

load in the congested zones or nodes. In this case, the benefit of storage can be leveraged several times the value of the direct megawatt shifted. 

When the peak load in the congested area exceeds the production available plus 

the production transmitted in, storage can serve as a way to meet peak load and 
35 

thus can be a means to defer transmission expansion. (Generation expansion in 

many congested areas is impractical for siting reasons as congestion points typically 

occur in dense, urban areas). 

The congestion problem will usually show up first as a contingency limit, not a 

direct lack of transmission capacity. Storage is a way to mitigate these contingency 

limits, with the fast storage picking up the load before the generation can be started. Furthermore, it is especially cost effective, as it avoids having to build transmission to provide redundancy, and it provides emission benefits, as it allows the 

use of downstream, uneconomic resources only after a contingency has occurred. 

Finally, in some specialized problem areas, where stability concerns impose transfer limits that are more restrictive than the inherent transmission capacity limits, 

fast storage can be used as a stability enhancement device to relieve these stability 

constraints. The value of this in a particular instance is potentially very great and 

this application is worthy of serious engineering analysis and study. 

End User 

When storage is a more economical way to provide ancillaries, it reduces costs for 

everyone in the market. If enough storage is present to affect the clearing price, it 

reduces the price for all suppliers of the particular product. Similarly, by time-shifting lower cost generation to peak periods, it reduces the need for expensive peaking 

generation and reduces peak power prices. When storage reduces congestion this is 

inherently a market benefit. 

The ability of storage to perform in certain applications is not limited to utilityscale devices. Generally, electricity storage is unique in the ease with which the 

technologies can be scaled. Whether the device is packaged as a kilowatt-scale application or a megawatt-scale application, the performance characteristics of the device 

can stay the same. For example, the same batteries that are being used in utilityscale megawatt devices are being used in today’s electric vehicles. 

POLICY ISSUES AND ACTIONS FOR CONSIDERATION

Beyond the technical and economic hurdles that a new technology in a new application has to overcome, there are a number of storage-specific policy issues worth 

considering. As storage becomes more versatile and commercially available, fitting 

storage into the existing policy framework becomes more challenging. For example, 

how best to classify storage, as a regulated or unregulated asset, is a primary concern as the classification can determine how to allocate costs and benefits. In addition, state utility commissions have to determine appropriate depreciation schedules 

and prudent expenditures for regulated distribution assets. The difficulty lies in the 

fact that a single device can serve multiple functions, and may at times play the 

roles of a regulated asset and an unregulated one. 

Classifying the Type of Application 

As noted above, storage can be used for many applications throughout the value 

chain—from generation to transmission and distribution to end-use. As such, a single storage asset can play the roles of what are currently distinct regulated and unregulated assets. Specifying the rules of engagement, in part to allocate costs and 

revenues, must therefore account for function as well as ownership. The example 

below discusses a case where transmission-based storage can serve multiple purposes. 

Example: Transmission Storage—Multiple Services 

When storage is used for transmission congestion relief by shifting energy in both 

time (off peak to peak) and location (remote to congested zone near the load), the 

storage increases the energy’s value by both displacements. In essence, storage sets 

the marginal energy clearing price. If the storage is financed and operated as a 

purely merchant asset then the pricing, revenue sources, and cost allocations are 

clear. In this case, the primary regulatory concern would be whether the storage has 

undue pricing power or market concentration and must be subject to the same treatment as a ‘‘reliability must run’’ (RMR) unit. 

If the storage asset is proposed as a transmission asset with a regulatory rate of 

return to the transmission owner then the question of the allocation of the profits 

from time and location shifting are very real. In effect it is allowing the transmission owner a share of the congestion rents that the storage device can garner. 

This is familiar ground to the industry; the new wrinkle here is that the storage 

device could also easily access ancillary markets as well as congestion. Storage deployed to relieve congestion is almost a perfect merchant transmission asset. There 

are no questions of loop flows or free rider usage. If the congestion relief economi-
36 

cally justifies storage then the best regulatory role might be to provide some level 

of incentives or guarantees rather than to construct it as a regulatory asset. 

However, the conundrum is that the most advantageous solution overall may be 

a level of storage deployment that reduces congestion costs to the level needed to 

justify the storage investment and no more. Whether market entrants will deploy 

the last increments of storage against diminishing returns is always unclear. If storage capital costs are on a decreasing curve it could be expected that new entrants 

might drive out existing facilities as is normal with high technology assets. That argues that merchant investors will want faster economic depreciation recovery rather 

than standards imposed by regulators. What is clear is that large-scale storage offers the first real opportunity for a kind of merchant transmission in a way that 

is environmentally and economically benign—and that we need the right regulatory 

and market solutions to facilitate it and not create a new form of regulated monopoly. 

Some have argued that time shifting or locational storage uses more environmentally unfriendly resources; it is also as likely that storage fills in for intermittent renewable supplies. An interesting study would examine these empirical tradeoffs. Because gridscale storage will involve utility interconnection requests and technical requirements, these aspects have to be monitored carefully—and may prohibit 

the co-existence of regulatory and merchant assets in the same congestion zone. Another interesting corollary is the value of additional transmission when new renewable generation resources in addition to storage are sited. Does storage compete directly with transmission or is it the combination of renewables and storage that may 

obviate transmission benefits? Have we skirted the issue of benefits allocations 

through transmission upgrades or merely postponed it? 

Is there an Industry Precedent? 

The gas transmission industry offers one precedent which would not necessarily 

be attractive to today’s merchant storage entrepreneurs. The storage asset is a regulated asset which earns a regulated rate of return based on a tariff for gas stored. 

The energy shipper/trader that contracts to use the storage pays a reservation fee 

and a storage fee based on usage with penalties for over or under scheduling; the 

time arbitrage gains on the stored gas are the profit or loss for the shipper/trader. 

This model neatly separates the questions raised by asset classification raised 

above. However, in this model it is not clear what the electricity industry economics 

would be for the storage investor. And as noted, the merchant electric storage operators today would find this discouraging. 

One aspect of the natural gas industry which bears examination relative to electricity storage is the use of storage as part of transportation to meet just in time 

delivery needs. Independent marketers have more efficiently used both storage and 

pipeline capacity to deliver fuel to generators. Storage operators and transmission 

purchases can be bundled with energy to provide load. For the gas industry, this 

has contributed to price volatility as weather or outages have put pressure on local 

gas prices. 

Other Barriers 

The biggest challenge that faces adoption and deployment of storage is lack of 

routine methodologies about how to incorporate storage into system planning and 

operations. At the transmission level, this is largely within FERC’s purview. At the 

distribution level, it is a matter for the states, of course. 

NIST is developing standards for the interconnection of storage with the grid and 

its smart grid interoperability. KEMA assisted the ISO RTO Council in preparing 

the draft wholesale standards for storage this fall. Beyond these standards, we need 

standards developed for the description of storage in terms of efficiency, performance, life cycles, and the like. Manufacturers are asking us to test their new products in our laboratories in Pennsylvania and in Europe; most storage testing standards have been developed for electronic devices, back up power, and the like—and 

not for grid connected storage. 

Tools to incentivize storage devices must be considered carefully. An Investment 

Tax Credit for storage, for example, likely has limited incentive for merchant developers and start ups as they cannot exploit these themselves because they have little 

or no income to offset. Rather, they arrange sale-leaseback with financial institutions that can utilize the tax credits. The number of financial institutions interested 

in these arrangements, however, is somewhat reduced right now. Loan guarantees 

might be a more effective tool for such markets. 

Careful consideration of how to allocate the emissions benefits of storage is also 

important. Right now, when a regulated utility’s storage investment leads to emission improvements, the credit will flow to the power production sector. Attribution 
37 

of reliability improvements is also complicated, but would serve to help spur 

reliabilityrelated storage investments. 

CONCLUSION

The electricity grid is in the midst of historic transformation—modernizing its 

technologies and changing its generation mix to include a larger percentage of renewable resources. In the meantime, KEMA has observed that advanced electricity 

storage technologies have drawn attention from utilities, developers, governmental 

agencies, and consumers across the globe. Additional factors, such as the rapid 

growth in renewable generation investments and the increasing penetration of electric vehicles and plug-in hybrid electric vehicles, have increased the need for information that can help individuals navigate the wave of attention being placed on 

storage to address grid-related changes. 

In the long-term, the implications of widespread, mass deployment of electricity 

storage across the power system are profound. It holds promise of dramatically increasing capacity utilizations of the generation and transmission and distribution 

system—essentially enabling a deferral of capital spending. Storage also can help 

significantly improve reliability, especially at the distribution level. 

KEMA is heavily involved in expanding the understanding and capabilities of 

storage technologies by grid simulation. Through our studies on the business of storage and electrical vehicle integration in the grid, our knowledge of storage technology and its potential, our testing facilities for small-scale storage systems like 

batteries, our Flexible Power Grid Laboratory for grid integration of storage systems, and our knowledge of safety, environmental and customer aspects—we have 

been involved in formulating the key questions around the economy and efficacy of 

storage, and in developing the analytical and economic tools necessary to plan for 

its use. The level of industry interest in electricity storage is increasing very rapidly, 

and the policy sector is taking up the need for and design of incentive and regulatory structures for storage development. 

Thank you for the opportunity to present electricity storage. I appreciate the Committee’s interest in this topic and I look forward to answering your questions. 

The CHAIRMAN. Thank you very much for your testimony. 

Mr. McGrath. 

STATEMENT OF ROBERT MCGRATH, DEPUTY LABORATORY DIRECTOR, SCIENCE AND TECHNOLOGY, NATIONAL RENEWABLE ENERGY LABORATORY, GOLDEN, CO 

Mr. MCGRATH. Senator Bingaman, Senator Murkowski, Senator 

Udall, thank you for the opportunity to discuss how grid-scale energy storage can help achieve U.S. energy and climate goals by enabling extensive and cost-effective deployment of large amounts of 

renewable electricity generation. 

I am fortunate to serve as the Deputy Laboratory Director for the 

National Renewable Energy Laboratory, the Department of Energy’s primary laboratory for research and development on renewable 

energy and energy efficiency technologies. Addressing today’s topic, 

earlier this year, the IEEE, in its national energy policy recommendations, emphatically stated that if wind and solar are to 

reach their full potential to contribute to the Nation’s power requirements, the technology for large-scale energy storage must be 

developed and deployed. 

For our electric grid, utility-scale storage not only can help increase penetration of renewable energy from variable sources, such 

as wind and solar, it can also enable renewable technologies to replace fossil-fueled base power loads, enhance the stability, reliability, and power quality of the electric grid, and optimize the performance of an electric modernized infrastructure. 

At my laboratory, NREL, our researchers led for the Department 

of Energy a definitive examination of the potential for wind generation. Entitled ‘‘Twenty Percent Wind Energy by 2030,’’ that study 
38 

showed that with ample grid capacity, wind penetration to 20 percent of U.S. electrical generation is feasible even without additional 

large-scale storage. 

This study was addressing I think Senator Wyden’s concern 

around a wait and see attitude. The study was aimed specifically 

at trying to understand what can we do immediately to advance 

wind energy penetration into the grid? 

NREL analysts have also examined the impact of solar 

photovoltaics at high penetration. Those studies found that photovoltaic-generated electricity become increasingly difficult to manage 

beyond 20 percent penetration without substantial changes in the 

grid, including storage. Consequently, as higher penetrations of 

wind and solar find their way onto the grid, the availability of costeffective energy storage systems become more and more important. 

From a grid planning and operational perspective, renewable 

generation, transmission, and storage are inextricably intertwined. 

Given that complex coupling, as Dr. Koonin mentioned, we need 

improved analysis tools and forward-thinking policies to optimize 

investments needed to modernize and expand the electric grid. 

These tools would serve as assets for utilities, energy planners, and 

policymakers, helping them with decisions on how much, when, 

and in what mix grid-scale energy storage technologies should be 

deployed. 

As wind power becomes more ubiquitous, it is likely, as we have 

heard earlier this morning, that the first storage technologies to be 

expanded will be compressed air and pumped hydro. Nonetheless, 

continued research and development efforts to improve flow batteries, superconductors, thermal storage, and hydrogen storage will 

make those options more cost competitive as well. 

There are opportunities for improved science in nanostructured 

materials, proton exchange membranes, and chemistries to develop 

longer lived, higher capacity, and lower cost electrochemical batteries. 

NREL and others are also looking at harnessing renewable electricity generation to meet the Nation’s massive transportation 

needs. By combining an electric vehicle fleet with storage-backed 

renewable electricity, we can potentially tap the vast resources of 

wind and solar to support low-carbon, if not carbon-free, transportation. 

Today, R&D efforts around energy storage are limited. Pacific 

Northwest Laboratories, Sandia National Laboratories, Oak Ridge 

Laboratories, and others are supporting DOE’s current storage program. At my laboratory, NREL, our new Energy Systems Integration Facility, scheduled for completion in 2012, will be dedicated 

exclusively to addressing the integration of renewable energy 

sources with distribution, storage, energy efficiency, and transportation. 

In summary, starting from a very modest space of only 4 percent 

renewable generation, the current electricity system can absorb 

much greater quantities of renewable power without large new energy storage. However, research and development is needed now if 

we are to have cost-effective storage solutions that aid at optimizing deployment of renewable sources required for a clean and 

secure energy future. 
39 

1 U.S. Environmental Protection Agency (2009) http://www.epa.gov/climatechange/emissions/ 

downloads09/GHG2007entirelreport-508.pdf 2 IEEE-USA Policy Statement, Jan, 2009 www.IEEEUSA.ORG/POLICY/ENERGYPLAN 

Thank you for this opportunity to address the committee this 

morning. 

[The prepared statement of Mr. McGrath follows:] 

PREPARED STATEMENT OF ROBERT MCGRATH, DEPUTY LABORATORY DIRECTOR, SCIENCE AND TECHNOLOGY, NATIONAL RENEWABLE ENERGY LABORATORY, GOLDEN, CO 

Mr. Chairman, members of the Committee, thank you for this opportunity to discuss the role that energy storage can play in meeting our nation’s future energy 

needs, and in reducing carbon emissions through greatly expanded use of clean, domestic renewable energy resources. I am Robert McGrath, deputy director of the National Renewable Energy Laboratory (NREL), the Department of Energy’s primary 

laboratory for research and development of renewable energy and energy efficiency 

technologies. 

At NREL, our mission is clear. We provide research, development and support deployment to enhance our nation’s energy security and reduce greenhouse gas emissions, through large-scale production of electrical power from renewable sources, 

through utilization of biofuels to replace fossil-based transportation fuels, and 

through improved energy efficiency in building, transportation and industrial processes. Currently, electricity generation accounts for approximately 40% of U.S. primary 

energy resource consumption. According to the U.S. Environmental Protection Agency, electrical generation also produces about one-third (34.2%) of our nation’s CO2 

emissions, roughly 2.5 billion metric tons per year (2,445 MMTons/yr)1. Consequently, increasing generation from renewable sources is essential if we are 

to effectively mitigate climate change. Importantly too, the innovation and job creation associated with development, manufacturing, installation and operation of advanced solar, wind and other renewable energy sources are vital to our nation’s 

global competitiveness and continued economic vitality. 

My testimony today will focus on how grid-scale energy storage can help achieve 

U.S. energy and climate goals by enabling extensive and cost-effective deployment 

of large amounts of renewable electricity generation. 

Within our present grid, electricity is for the most part generated and then instantly consumed. This has been a result of the economies of scale for coal and nuclear central power stations. But as we move toward a clean, low-carbon energy future, that will change. The National Energy Policy Recommendations published by 

IEEE earlier this year state that if distributed and variable ‘‘sources of electrical 

power, such as wind and solar, are to reach their full potential to contribute to the 

nation’s power requirements, technologies for large scale energy storage must be developed and deployed.’’2

The theoretical potential of renewable power from wind and solar resources is 

vast—estimated to be more than 600 terrawatts of power available from wind and 

solar alone, worldwide. That compares with today’s maximum worldwide estimated 

demand of about 12.5 terrawatts. While plentiful, renewable resources vary by time 

and by region. Fully accessing those resources will require a more adaptive, flexible 

distribution system. A more adaptive grid will in turn require improved transmission and storage systems. 

STORAGE TECHNOLOGIES CAN PROVIDE MANY BENEFITS

Large-scale energy storage technologies will have many benefits, including: 

• Facilitating large scale penetration of renewable energy from variable sources 

such as wind or solar; 

• Enabling renewable energy technologies to replace fossil fueled base-load power 

sources; 

• Enhancing the stability, reliability and power quality of the electric grid; 

• Optimizing the performance of a modernized electric infrastructure. 

While the promise of energy storage is well recognized, there are many technology 

and policy challenges which must be solved. Technologies, such as zinc-bromine, 

lead-sulfide, sodium-sulfide, lithium-ion, nickel-cadmium batteries and high-energydensity super capacitors, are being developed for grid-scale storage. Additional research and development is essential, however, to lower costs and to increase their 
40 

3 20% Wind Energy by 2030, Increasing Wind Energy’s Contribution to U.S. Electricity Supply, DOE/GO-102008-2578, Dec 2008 4Denholm, P., and R. M. Margolis. (2007) ‘‘Evaluating the Limits of Solar Photovoltaics (PV) 

in Electric Power Systems Utilizing Energy Storage and Other Enabling Technologies’’. Energy 

Policy. 35, 4424-4433 5Sioshansi, R. and P. Denholm (2009) ‘‘The Value of Concentrating Solar Power and Thermal 

Energy Storage.’’ NREL/TP-6A2-45833 

durability, power density and energy efficiency. Detailed technology assessments 

and associated system integration analysis tools are needed to assist utilities, energy planners and policy makers as they decide how much, when, and in what mix, 

grid-scale energy storage technologies will be deployed. 

Even when the advantages of storage technology are clearly evident, utilities may 

not be willing to make needed investments in energy storage systems unless the 

complex economic and operational interrelationships between new renewable energy 

generation, grid improvement, and an array of other considerations, are understood 

as well. The 2008 Electricity Advisory Committee (EAC) report on energy storage 

called for a robust national program for research, development of cost-effective, efficient, large-scale energy storage technologies, along with greatly improved analysis 

for optimizing generation, storage, transmission and grid management. 

At my laboratory, NREL, researchers are supporting the Department of Energy’s 

Offices of Energy Efficiency and Renewable Energy, and Electricity Delivery and 

Energy Reliability in assessing the potential for, and projected costs of a broad spectrum of renewable energy electricity generation options. Recently, our specialists led 

for the Department of Energy one of the most definitive examinations of the potential for wind power generation ever produced for the United States. This report, entitled 20% Wind Energy by 20303, showed that with ample grid capacity for transmitting power from regions of high quality wind to load centers on the coasts, wind 

penetration to 20% of U.S. electrical capacity is possible within the next two decades 

without the necessity of large-scale storage. 

The new transmission lines that are needed to take advantage of available wind 

resources can be cost effective when considered purely from the standpoint of construction and operation. Siting, regulatory and legal issues, however, can pose costly 

delays and uncertainty for even the most well planned new transmission projects. 

The lesson is that new renewable generation, transmission and storage are inextricably intertwined, and we will require clear analysis and forward-thinking policies to ensure we reap the full benefits of our abundant renewable resources. 

Wind is the largest and fastest growing sector of the U.S. renewable energy generation market. Nonetheless, non-hydro renewable generation represents less than 

4 percent of the total U.S. generation capacity, or just over 31 GW. To achieve 20 

percent wind penetration by 2030 consequently requires more than a ten-fold increase in wind production, to more than 300 GW. (Studies suggest wind development to that level will require an investment approximately 2 percent higher than 

would occur without the wind power build out.) This will require annual installation 

of 16 GW of new wind turbines each year for the next two decades. By comparison, 

new wind turbine installations reached a record level during 2008 of 8 GW. 

NREL researchers find that additional deployment of wind generation can be aggressively pursued in the near-term even without accompanying deployment of energy storage. However, as higher and higher penetrations of wind and solar find 

their way onto the grid, cost-effective energy storage systems may become more and 

more imperative. 

NREL analysts have also examined the impact of solar photovoltaics (PV) at high 

penetration.4 These studies found that photovoltaic-generated electricity becomes increasingly difficult to utilize beyond 20% penetration without substantial changes 

to the grid, such as incorporation of storage to enable temporal shifts in utilization 

of PV produced energy during periods of lower solar output. It should be noted, too, 

that the thermal working fluid inherent within concentrating solar power (CSP) can 

effectively facilitate thermal storage, which can add four to six hours of sustained 

generation capacity5, and thus make CSP a more cost-effective technology. 

Taken together, the emerging analytical consensus provides confidence that renewable energy can expand well beyond the niche role it has played to date, and 

is capable of providing at least 20 percent, and perhaps much more, of nation’s electricity needs. 

As wind and solar capacities continue to expand, the periods of time during which 

renewable generation exceeds the instantaneous consumption will become more 

prevalent—especially within regional and localized markets. At that point, the value 

of storage rises, because storage allows renewable resources to be captured when 

they are available, and shifted temporally to meet peak demands. 
41 

6Denholm, P., and W. Short. (2006) ‘‘An Evaluation of Utility System Impacts and Benefits 

of Optimally Dispatched Plug-In Hybrid Electric Vehicles’’ NREL/TP-620-40293. 7Parks, K, P. Denholm, and T. Markel (2007) ‘‘Costs and Emissions Associated with Plug-In 

Hybrid Electric Vehicle Charging in the Xcel Energy Colorado Service Territory’’ NREL/TP-640- 

41410. 8Letendre, Steven, P. Denholm, and P. Lilienthal. (2006) ‘‘Electric and Plug-In Hybrid Cars’’ 

New Load, or New Resource?’’ Public Utilities Fortnightly. 28-37. 9Short, Walter, and P. Denholm. (2006) ‘‘A Preliminary Assessment of Plug-In Hybrid Electric 

Vehicles on Wind Energy Markets’’ NREL/TP-620-39729. 

ENERGY STORAGE TECHNOLOGIES ARE VARIED, SOLUTIONS ARE COMPLEX

Additional, detailed studies, conducted using sophisticated analytical models, are 

needed to address the question of how our nation can best develop the full benefits 

of renewable energy, and in particular, how energy storage can support that development. For example, at present, the U.S. electrical system operates with about 21 

GW of energy storage, provided almost exclusively via pumped hydro. This represents only about 2 percent of the total 1,000 GW U.S. electricity generation capacity. 

As wind and solar power become more ubiquitous, it is likely that the first storage 

technologies to be expanded will be compressed air energy storage, since this technology may be geographically distributed, and where regionally feasible, some expansion of pumped hydro storage. 

Continued research and development efforts to improve flow batteries, super capacitors, thermal storage and hydrogen storage, will make these options more cost 

competitive, and thereby give utilities greater flexibility to improve the stability, reliability, flexibility and power quality of the electrical grid. Although it may be some 

time before renewable energy options are deployed to the extent where utility-scale 

energy storage is unavoidable, a significant research and development program 

must be ongoing if we are to have cost-effective storage solutions when they are 

truly needed. 

Given the broad array of storage technology options available, it is difficult to 

briefly summarize the development state and potential of each. It is clear, however, 

that additional research and development is needed to yield storage technologies 

with the improved performance and lower costs we will require. For example, new 

sciences for nano-structured materials, membranes and chemistries are needed for 

development of longer-lived, higher capacity, and lower cost electrochemical batteries, for new electrolytes and electrodes for higher voltage, greater capacity and 

lower cost capacitors, and for new power electronic devices supporting effective integration of storage devices into the electric grid. Even more mature technologies will 

benefit substantially from additional R&D. For example, advanced engineering on 

water and air turbines may improve efficiencies in pumped hydro and compressed 

air storage systems, and stronger materials and reduced friction in bearings will result in longer life and lower cost flywheels. 

Another promising area of research and development at the utility scale uses hydrogen as an energy storage medium. At NREL’s National Wind Technology Center, 

we have teamed with Xcel Energy, the nation’s largest wind power utility, in a 

wind-to-hydrogen demonstration project, in which wind turbines are used to power 

hydrogen producing electrolyzers. The hydrogen can then be stored for later use in 

electricity generation, or as energy for hydrogen powered vehicles. 

This brings us to another area of tremendous challenge and opportunity: harnessing renewable electricity generation, transmission and storage to meet the nation’s massive transportation needs. Electrically powered vehicles have great potential to reduce our dependence on imported fossil fuels. By combining an electrical 

vehicle fleet with storage-backed renewable electricity, we can potentially tap the 

vast resources of wind and solar to support low-carbon, or carbon-free, transportation. Studies at NREL confirm that integration of plug-in hybrid electric vehicles 

(PHEVs) into the grid can not only reduce dependence on petroleum and stabilize 

carbon emissions 6 7, but can also be used to provide grid services8, while further 

enabling renewable technologies.9

Advanced battery technology is paving the way for gas-saving hybrids and the 

next generation of plug-in hybrid cars and trucks. As Dr. Koonin has mentioned, 

DOE is wisely investing in advanced technology development and manufacturing of 

batteries for transportation as well as for grid-level storage, exploring a broad array 

of promising options. Continued investments in development and demonstration 

projects for grid-scale energy storage, and for integration of the nation’s vehicles, 

buildings, and electricity grid are important for achieving our national goals for a 

clean and secure energy future. 
42 

CURRENT R&D STATUS

With very limited resources, DOE is doing a good job of leveraging efforts of state, 

federal and international organizations in order to keep storage development moving 

forward. Several national laboratories are investing internal R&D funds in forwardlooking energy storage solutions such as nanomaterials for batteries. Partnerships 

among the national labs are leveraging capabilities and resources to accelerate the 

development of energy storage solutions. For example, Pacific Northwest National 

Lab (PNNL) and Sandia National Labs (SNL) are combining grid operations and 

controls expertise with materials and systems integration talents in support of 

DOE’s energy storage program, and NREL and SNL have a newly established partnership in high performance computing that will be applied to energy storage technology development and system integration analysis. 

While significant work is underway, NREL will be able more aggressively and 

comprehensively address storage research and development through the new capabilities of its Energy Systems Integration Facility (ESIF). The ESIF will be a 

180,000-square-foot laboratory dedicated to solving issues related to the integration 

of renewable energy and energy efficiency technologies deployed at scale. Anchored 

by a 400 teraflop high-performance computer, the ESIF will enable complex systems 

R&D that fully integrates the most advanced simulation, data analysis, engineering, 

and evaluation techniques to accelerate the integration of new energy technologies 

generally, and the broad deployment of storage technologies specifically. Using the 

ESIF’s modeling and simulation capacity, new materials will be explored more rapidly, and existing materials can be improved for performance and cost. The high performance computer will also enable highly focused simulations of complex electric 

systems to optimize the deployment of new generation technologies that are coupled 

with storage to ensure the most cost-effective approach and to determine approaches 

that will maintain and even enhance the reliability of the electricity system. Having 

these fully interactive simulation, testing, and evaluation facilities in one laboratory 

will move grid integration and storage forward on the fastest path possible. 

From the national perspective, ongoing research is critically needed in two broad 

areas. First, research and development is needed for storage materials and techniques, including: new storage materials for electrochemical storage; new mechanical energy storage techniques; increased energy densities in storage media; increased cycling/lifetimes; all to greatly reduce costs. Second, research is needed on 

the integration of storage into the grid: grid simulations and optimizations to explore what types of storage are needed, where they should interconnect in the system, and how to operate storage assets; development of new power electronics for 

integrating storage; and, development of new communications and control technologies for charging and discharging storage in an optimal fashion (smart grid 

technologies for storage). 

CONCLUSION

The current electricity system can absorb much greater quantities of renewable 

generation than are currently deployed without significant increases in the deployment of storage technologies. As penetration levels increase in the future, storage 

will play a key enabling role for penetrations of variable generation in excess of 30 

percent. Currently, storage technologies do not exist that can be cost-effectively deployed in the diversity of applications that are anticipated. To prepare for the time 

when is needed at scale, we must increase our research and development efforts in 

the near term. 

Our nation will be served if recommendations from this year’s IEEE-USA Policy 

Position Statement are implemented. According to IEEE, the U.S. will need significant and sustained research to develop affordable energy storage technologies to effectively move renewable energy onto the electric system. The IEEE statement 

urged Congress to fully fund the energy storage R&D program authorized in the Energy Independence and Security Act of 2007. 

Thank you for the opportunity to address the Committee on this important topic. 

The CHAIRMAN. Thank you very much. 

Mr. Huber, please go ahead. 

STATEMENT OF KENNETH HUBER, SENIOR TECHNOLOGY AND 

EDUCATION PRINCIPAL, PJM INTERCONNECTION 

Mr. HUBER. Good morning. Thank you, Chairman Bingaman and 

Ranking Member Murkowski. 
43 

PJM is honored to be invited to this important hearing on energy 

storage this morning. Thank you. 

We certainly have been pursuing—PJM, that is—the opportunities on everything from pumped storage, compressed air, battery 

systems, flywheels, ice making, even use of refrigeration systems in 

homes as opportunities for storage. All these are viable opportunities that we are pursuing and attempting to demo. 

But I am going to take my time this morning and hone in on the 

opportunities of plug-in vehicles and how it pertains to grid storage 

capabilities that really look exciting to us. 

When 1 million vehicles are deployed in the United States, hopefully, in 5 years or less, 18 percent of those, if we do it by population, will end up in the PJM territory. That means a distribution 

of storage capabilities extending from Illinois to New Jersey, down 

into Tennessee and North Carolina, including District of Columbia. 

The PJM territory will have 180,000 vehicles that are distributed 

energy sources for us to tap into. 

The ability to aggregate those resources and have them act the 

same as stationary battery systems is underway already. 

Aggregators like General Motors, OnStar, regular aggregators, 

convergers, et cetera, are all pursuing how to do this. In fact, I will 

talk a little bit of an example where we are doing that today. 

Almost more interesting than residential use of plug-in vehicles 

is fleet use. If you think about a local delivery vehicle and what 

it is doing today and its runs of stop/start, very low mileage per 

gallon usage, idling constantly. If you were to electrify those local 

delivery fleets, and we are pursuing opportunities and discussions 

with several of those, what you are talking about is a fleet with 

pretty regular routes that run the system the same way every day, 

return almost always to the same location, that allows the infrastructure for those fleets to be put in place and allows a capability 

for two-way communications and control back into the grid that 

really provides a reliable capability for storage when it is needed. 

Now I will talk about smart charging incentive, both for the residential and for the fleet vehicles. The ability to deliver price signals, to deliver information about renewables, to deliver information about reliability of the grid to aggregators and then on to vehicles is really where we are working hard to obtain. 

I was just with General Motors yesterday in Detroit talking 

about this smart charging capability. We really do believe that if 

you give the right information to the individual, they will be 

incented to respond to those. You know, people respond to the incentives they are given. The charging will happen at the times that 

is needed, and it will result in good usage of the automobile and 

good usage for the grid. 

Let me flip over and talk about one other area of storage that 

is very important to us, which is frequency regulation. The ability 

to keep the frequency at 60 hertz at all times is an important operation within the PJM facility. 

In 2007, PJM joined a consortium—the University of Delaware; 

Pepco Holdings, Pepco Electricity here in Washington; California 

converter company AC Propulsion; and a couple others—and produced a vehicle that has been operating to the PJM regulation signal since October 2007. For 2 years, we have experienced what it 
44 

means for a vehicle to not only charge and discharge on a 4-second 

signal sent to it, and we are seeing and gathering that data. 

That vehicle has been operating to the market, but not in the 

market. It is too small. It is only 18 kilowatts. A very good occurrence happened over the course of 2008. AES, the generation company, brought into the PJM territory 1 megawatt of batteries, very, 

very similar to automotive batteries in their structure, and it entered the market in November 2008 and has been continuously in 

the PJM market since May 2009. 

So 24 hours a day, 7 days a week, we are getting 1 megawatt 

of battery power responding to our 4-second regulation signal. The 

celebration that we are sort of having right now is that we have 

taken that vehicle, that MAGICC—Mid-Atlantic Grid Interactive 

Car Consortium—vehicle and its two sister vehicles and have now 

integrated them and aggregated with the batteries of the AES stationary system. So we now have 1.054 megawatts of energy in the 

regulation system. 

So the batteries in the stationary system are being paid somewhere between $700 to $900 a day for just responding to our signal, and each of the three vehicles is now getting paid about $10 

a day for doing the exact same thing. Just demonstrating the fact 

that the batteries can be distributed. They happen to be in Delaware, and the stationary battery system happens to be in Pennsylvania. 

So a really exciting experiment of what we can do as we start 

seeing these vehicles become prevalent throughout our system. I 

will just end and talk about the one policy area. Certainly—I will 

talk about two. 

The ability to standardize the communications, the two-way communications and the control from the RTO/ISO through the utility 

or the aggregator into the consumer is certainly important. There 

is very good activities being directed by DOE and done by NIST, 

National Institute of Standards and Technology, today that are addressing that. 

The automotive companies are there. The utilities are there. It 

is a very good forum. We need to make that all happen so that we 

have the communications and the robustness that we need. 

We need to work together, the automotive companies and the 

utilities, to develop the smart charging capability that—I mean, everyone talks about everyone is going to go home at 5 and plug their 

vehicles in. The automobiles are smart. The system is smart. There 

is no reason for that to happen with the right incentives in place. 

Thank you very much for your time. 

[The prepared statement of Mr. Huber follows:] 

PREPARED STATEMENT OF KENNETH HUBER, SENIOR TECHNOLOGY AND EDUCATION

PRINCIPAL, PJM INTERCONNECTION

EXECUTIVE SUMMARY

In the attached testimony, Kenneth Huber, Senior Technology and Education 

Principal at PJM Interconnection (PJM) details the activities presently underway 

within PJM’s 13-state footprint regarding the potential of plug-in hybrid electric vehicles (PHEVs) serving as an energy storage resource. PJM is the Federal Energy 

Regulatory Commission (FERC) approved Regional Transmission Organization 

(RTO) serving all or parts of the states of Illinois, Michigan, Indiana, Ohio, Kentucky, Tennessee, West Virginia, North Carolina, Virginia, Maryland, Delaware, 
45 

Pennsylvania and New Jersey as well as the District of Columbia. PJM operates the 

bulk power grid in this region, plans transmission expansion and operates the largest competitive wholesale electricity market in the world. 

The batteries within PHEVs carry with them the promise of serving as a new and 

highly effective, distributed energy storage resource. If done right, plug-in hybrid vehicles can enhance the efficiency of the grid by shifting load to off-peak nighttime 

hours — the very time when certain renewable resources, such as wind power, are 

most available. On the other hand, if customers plug in their cars at 6 p.m. and 

there are no economic incentives or communication and control technology to drive 

different customer behavior, then the nation could be worse off both in terms of efficient grid operation and in controlling emissions from fossil generation. 

Mr. Huber details PJM’s participation in three projects demonstrating and evaluating use of PHEVs for grid storage— the University of Delaware’s Mid-Atlantic 

Grid Interactive Car Consortium (MAGICC), The Ohio State University’s 

SMART@CAR initiative and the North Carolina State Freedom Engineering Research Center. The first MAGICC plug-in electric vehicle has been responding in 

real-time to the PJM regulation signal since October 2007 and has provided a 

wealth of data on the use and value of vehicle-to-grid operation. This month, AES, 

PJM and the University of Delaware will be aggregating three 18 KW vehicles with 

a 1 MW stationary battery trailer. This is the first demonstration of vehicleto-grid 

plug-in electric vehicles actively participating in any regulation market and providing a cash return to the vehicle owners. The three vehicles will be earning between $7-10 each for the 18-20 hours they are plugged in and contributing to the 

regulation storage needs of the grid. The batteries in plug-in electric vehicles become a source of regulation service that is more distributed and therefore provide 

the same, and in some cases, superior regulation service to what is today provide 

by central station generation. 

Mr. Huber concludes his testimony by outlining some of the policy challenges associated with wide scale deployment of PHEVs. These include: (1) ensuring coordination between the transportation and electric industries on vehicle design and development; (2) addressing ownership rights associated with infrastructure and the 

sale of electricity to PHEVs; (3) ensuring seamless ‘‘roaming’’ and ability of backoffice billing and settlement systems to match cars with electric customers; and (4) 

the role of enforcement of interoperability protocols being developed through the National Institute of Standards and Technology (NIST) process. Mr. Huber suggests 

that continued Committee oversight and focus on these issues will help to underscore the national and international policy benefits of ‘‘smart’’ plug-in hybrid electric 

vehicle technology. 

TESTIMONY OF KENNETH HUBER, SENIOR TECHNOLOGY AND EDUCATION PRINCIPAL

On behalf of PJM Interconnection, L.L.C. (PJM), I want to thank the Committee 

for the opportunity to participate in this important discussion of the role of gridscale energy storage in meeting the energy and climate goals of the United States. 

My name is Kenneth Huber and I am Senior Technology & Education Principal at 

PJM. My goal today is to discuss the reliability and economic value of grid-scale 

storage both for today’s grid operation and for forecasting future grid operations. I 

will also discuss the value of storage as it relates to the anticipated emergence of 

renewable energy resources. 

PJM is a Regional Transmission Organization (RTO) and one of the seven Independent System Operators (ISOs) and RTOs located throughout the country. PJM 

is responsible for the reliability of the bulk power grid in a 13-state region which 

encompasses over 51 million Americans. PJM operates the bulk power grid in this 

region, plans transmission expansion and operates the largest competitive wholesale 

electricity market in the world. Over two thirds of the nation is served by RTOs 

and ISOs. As an independent entity, we are dedicated to ensuring open access to 

the grid and embracing many new and sometimes competing technologies. PJM was 

privileged recently to be a recipient of one of the Department of Energy’s Smart 

Grid grants — a grant for the installation of phasor measurement units to enhance 

the overall visibility of grid conditions on a minute-byminute basis and to improve 

the overall efficiency of the grid operations. 

To keep the lights on, PJM must perform the real-time balancing of the electrical 

grid — every second of every minute of every day, PJM matches electricity demand 

with the ‘least-cost group’ of electricity generation and demand response resources. 

The dispatch of over 1,200 generators on our system must be undertaken with recognition of the physical constraints of the electric transmission system and the need 

to ensure adequate reserves available to keep the lights on in the event of a sudden 

loss of generation or transmission. This challenging balancing of the grid is com-
46 

1The term PHEV used in this testimony refers to different types of plug in electric vehicles 

including plug-in hybrid vehicles, extended range electric vehicles and battery extended vehicles. 

plicated by the unique physics of electricity. Electricity is not like oil which can be 

refined and stored easily for long periods until the time it is needed. Electricity 

must be generated at the near moment that it is required. I will discuss how grid 

storage, with a particular focus on plug-in electric vehicles, can and is being used 

to assist in this system balancing requirement. I will also highlight the specific activities PJM is undertaking to jump start the deployment of ‘‘smart’’ plug-in hybrid 

vehicles in our footprint, as well as, briefly address some of the policy challenges 

that will affect further deployment of plug in hybrid electric vehicles. 

THE STATE OF THE GRID TODAY

Contrary to the beliefs of some, the bulk power grid already is very interactive 

and ‘‘smart’’. Today, we have more sophisticated operations and market-based tools 

to manage flows on the grid than ever before. These tools include our state estimator which monitors and reports on the state of the system every two minutes. 

They include our ability to redispatch generation to proactively clear congestion before reliability is threatened by overloads on a given transmission line or set of 

lines. In short, we have been able to utilize technology to help manage power flow 

more efficiently than in years past. 

NEW OPPORTUNITIES—A SMARTER GRID

Although the bulk power grid can be considered ‘‘smart’’ today, emerging technologies and enhanced communication will put in place an even more robust grid. 

Advanced technology will open a new frontier for the grid in many ways. A grid that 

is based on smart grid technology, when coupled with electrification of transportation and the delivery of more real-time information, will provide new opportunities 

to better manage the grid and control both for price and environmental 

externalities. PJM is actively working on the agreement of and the eventual creation of the capabilities and role of the RTO/ISOs that will deliver that smarter 

grid. We are accomplishing this goal through active participation in the National Institute of Standards and Technology (NIST) Smart Grid Interoperability Panel, the 

North American Electric Reliability Council (NERC) Smart Grid Standards Task 

Force and the North American Energy Standards Board (NAESB) Smart Grid 

Standards Task Force. I have been focusing my participation in the NIST Priority 

Action Plans for Storage and Electric Transportation and am a voting member of 

the Society of Automotive Engineers (SAE) standards process. 

GRID STORAGE—A KEY ELEMENT OF A SMARTER GRID

PJM Interconnection supports projects of all types to expand the electricity storage capability of the electric grid. More storage capacity will be needed to deal with 

the forecasted major expansion of intermittent renewable energy sources and their 

potential impact on system reliability. 

One of the challenges facing grid operators like PJM is the inability to ‘‘store’’ 

electricity for use at times of high demand or when certain generation may be operationally or environmentally constrained. However, new technologies are being developed and tested that offer the promise of more widespread storage options for 

grid operators and utilities. These technologies will become even more important as 

intermittent renewable energy sources play a greater role in the nation’s electricity 

supply. 

Today, additional options for storing electricity are emerging and are being tested. 

These technologies—such things as battery arrays, flywheels, compressed air energy 

storage and even PHEVs1—may give grid operators additional flexibility in their efforts to ensure the reliability of the electric system. After outlining the general storage needs of the grid, I will be concentrating the bulk of my testimony on the grid 

storage applications afforded by PHEVs. 

There are a number of reasons why additional storage capacity is needed on the 

grid. The dramatic expected increase in the penetration of renewable generation resources is the primary driver. These sources typically are intermittent—their production isn’t available all the time, for example, when the wind isn’t blowing or the 

sun isn’t shining—and their output may not be available at times of peak demand 

when it is needed most. 

In recent years, the nameplate capacity value of wind generation projects entering 

the PJM interconnection queues has steeply increased. There are currently 3,300 

MW of nameplate wind capacity in operation, 1,500 MW under construction and ap-
47 

2 ‘‘How To Improve The Efficiency Of The World’s Biggest Machine—While Solving A Few 

Other Problems Along The Way,’’ Jon Wellinghoff, Commissioner, Federal Energy Regulatory 

Commission, May 7, 2007. 

proximately 42,000 MW nameplate capacity of wind generation in the interconnection queue in PJM. 

Taking full advantage of renewable sources while dealing with the reliability challenges of the sources’ power fluctuations will require a significant increase in storage on the grid. 

Although the PJM system is one of the nation’s largest and thus able to absorb 

a greater degree of intermittency than smaller systems, the lack of sufficient storage 

already is causing issues for PJM. In some areas, abundant wind production in the 

off-peak (night-time) hours has forced electricity prices into the negative range. During low load periods, storage will become critical to prevent curtailment of this wind 

generation. Figure 5 is illustrative of a common occurrence in PJM in which the 

wind output is rapidly declining just at the time (5:00 a.m. in this example) when 

the grid load is beginning its morning period of rapid load increase. Negative prices 

for wholesale electricity frequently result from these conditions. In this example the 

Locational Marginal Price of electricity in Chicago fell to minus $8. On this day at 

this hour, in order to maintain the system’s load to generation balance, a storage 

facility would have been paid to store energy. From a PHEV perspective, the vehicle 

owner would be paid to charge their car during that hour. 

Given the states’ requirements for renewable energy and economic incentives for 

the development of renewable projects, the expected expansion of renewable power 

will magnify this situation, along with the challenges for grid operators to maintain 

reliability during such periods of fluctuations in the output of these power sources. 

NEW BATTERY AND VEHICLE GRID STORAGE TECHNOLOGIES

Battery storage.—A one-megawatt (MW) array of lithium-ion batteries began offering regulation service in the PJM market in May of this year. The batteries, 

housed in a trailer on the PJM campus, are owned by AES Energy Services LLC, 

a subsidiary of The AES Corp., a PJM member. The facility can help PJM quickly 

balance variations in load to regulate frequency as an alternative to adjusting the 

output of fossil-fuel generators; it is capable of changing its output in less than one 

second. In response to PJM requests to balance the grid, the battery unit can supply 

power into the grid by discharging its batteries or store excess electricity from the 

grid to charge its batteries. Thirty four MWs of battery storage have been put in 

the PJM generation queues for 2010. 

PHEVs.—The dual use of PHEV batteries to support both transportation (when 

the vehicle is being driven) and the grid (when the vehicle is parked and plugged 

in) is particularly attractive. Most vehicles are driven only several hours per day 

and are plugged in and available to provide grid support for the remaining time in 

the day. Fleet vehicles, while driven 8-12 hours per day, are typically returned to 

the same location and available for grid services the remaining 12-16 hours of the 

day. 

Off-peak electricity from the grid could charge PHEVs, shifting load to the nighttime hours. In addition, PHEVs also could provide regulation services to the grid 

whenever parked. 

Regulation service, provided today principally by central station generators, 

matches generation and load and adjusts generation output to maintain the desired 

60 Hz frequency. Regulation service corrects for short-term changes in electricity 

use that might affect the stability of the power system. Regulation is needed 

throughout the day and night to ensure system frequency despite constant fluctuation in demand and generation. Grid operators must continuously match the generation of power to the consumption. Regulation requires a generating facility that can 

ramp power up or down under real time control of the grid operator. 

PJM is part of three initiatives — the University of Delaware’s Mid-Atlantic Grid 

Interactive Car Consortium (MAGICC), The Ohio State University’s SMART@CAR 

initiative and the North Carolina State Freedom Engineering Research Center— 

each of which is analyzing, demonstrating and evaluating use of PHEVs for grid 

storage. The MAGICC vehicle has been responding to the PJM regulation signal 

since October 2007 and has been evaluating the vehicle-to-grid (V2G) approach, 

which enables PHEVs to discharge their stored power to the grid based on regulation signals from PJM. This month AES, PJM and the University of Delaware will 

be aggregating three 18 KW vehicles with the 1 MW stationary battery trailer (Figure 6). This is the first realization of the ‘cash-back’ vehicle2 as the three vehicles 
48 

will be actively participating in the PJM regulation market and earning between 

$7—$10 each for the 18-20 hours they are plugged in and contributing to the regulation storage needs of the grid. The annual payment for each of these vehicles will 

be in the order of $2,500 to $3,500. 

Of particular interest is the opportunity for automotive fleets to become an early 

adopter of PHEVs and showcase the direct economic and environmental value for 

both transportation and grid support. Local delivery fleets suffer from low fuel mileage, idle a large percentage of their time and are economically impacted by any increase in price of gasoline. As PHEVs, these fleet vehicles would charge at night 

with inexpensive electric, be available for regulation services and market revenues 

and would deliver green transportation while serving our neighborhoods. 

Plug-in hybrid vehicles represent an exciting new opportunity to provide both ancillary services to the grid and utilize the power system assets more efficiently. If 

done right, plug-in hybrid vehicles can enhance the efficiency of the grid by shifting 

load to off-peak nighttime hours. On the other hand, if everyone plugs in their car 

at 5 p.m. and there are no economic incentives or communication and control technology to drive different customer behavior, a much higher peak load would have 

to be supported by high cost generation. 

Figure 9 shows the minimal impact of 180,000 PHEVs (1,000,000 vehicles times 

the 18% of the nation’s population that resides in the PJM territory). It also illustrates the potential for supporting 25 million PHEVs if the charging is done at off 

peak times. 

The auto industry and the electric industry also must work together to make the 

future PHEVs deliver on their potential to reduce oil imports, to reduce carbon dioxide and to reduce the cost of transportation. The automobile manufactures, the local 

utilities, the RTO/ISOs and the Electric Power Research Institute (EPRI) are meeting regularly to discuss and work through the needs of our industries and of the 

end-use consumer to provide reliable, clean and economic transportation and electricity use. 

A mixture of all of these storage technologies will help grid operators and utilities 

address the impact of a large-scale addition of renewable energy sources to the electricity system, including the intermittent nature of renewables, the off-peak timing 

of much wind energy output and the potential impact on the loading levels of baseload coal and nuclear plants. 

POLICY CHALLENGES

While today we are seeing aftermarket conversions of plug-in hybrid electric vehicles (e.g. the BMW Mini) production vehicles from original equipment manufacturers will begin with the deployment of plug in hybrid electric vehicles in 2010, such 

as the Chevrolet Volt. As I mentioned previously, to truly realize the full benefit 

of PHEVs rather than simply swapping one set of increased emissions for another, 

we will need to ensure that there is smart charging of the vehicle with two way 

communications available between the vehicle and the grid. The customer remains 

in control. However, through appropriate price and control signals, parked plug-in 

hybrid electric vehicle, can provide a source of distributed generation that can better 

help us to manage the grid than we can today with large central station generators 

distant from the loads. And by using price signals to incent vehicle owners to charge 

their cars in off-peak times, we can avoid creating a whole new set of system peaks 

at the very time we are seeking to reduce carbon emissions and otherwise smooth 

out fluctuations in peak demand. 

To achieve this vision, we will need to address a number of policy issues, some 

of which are well on their way to resolution and others which are only first being 

identified. Let me outline a few for the Committee’s consideration: 

Cooperation and coordination between the electric and transportation industries—These industries have traditionally not had to adjust their product to 

meet the needs of the other. However, both industries have now recognized the 

need to collaborate on infrastructure requirements, data exchange and ensuring 

a positive, holistic experience for the PHEV customer. The industries are working together in many forums, including the Society of Automotive Engineers 

standards activities, the EPRI PHEV collaboration programs and many local deployment projects. To truly realize the benefits of PHEVs, these collaborations 

will need to result in agreements on the minimal information that must be exchanged, the ownership of the data and how usage and revenue will be measured and verified. 

Infrastructure Deployment—As part of the deployment of the smart grid, we 

will need to tackle issues such as who owns the infrastructure down to the outlet and what constitutes a permissible vs. impermissible sale for resale of elec-
49 

3Walmart is a service mark of Wal-Mart Stores, Inc 

tricity. For example, would the outlets deployed at a Walmart sm 3 parking lot 

be owned by Walmart, a separate aggregator or the local utility? Would 

Walmart serve as the intermediary between the utility and the customer and 

aggregate the purchase of electricity to vehicles on its lots during the day. For 

residential uses, can a landlord of an apartment building insist that he or she 

own the infrastructure? Does a customer have a ‘‘right’’ to connect in order to 

charge their battery (so long as they are financially in good standing with the 

electric company) just as customers have a right to electric service under state 

law today? The industry is beginning to consider these regulatory and policy 

issues. Let me give an example of a working system today; AES has aggregated 

its 1 MW stationary battery system with the three 18 KW plug-in electric vehicles in the University of Delaware. The total energy of 1.054 MW participates 

in the PJM Regulation Market. AES allocates approximately 5% of the PJM 

market payment to the University of Delaware and AES is allocated 95%. The 

University vehicles are plugged in at home and at the university and the net 

usage of the vehicle is measured on standard utility meters and usage payments 

are made to the local utility (Delmarva Power and Light). A retail net metering 

tariff completes the picture allowing the customer to participate in the service 

he or she is providing to the grid. 

To tackle these questions more broadly, we will all need to look at the typical 

utility tariff in a new light and determine what is the best legal relationship 

that is fair to the utility, the vehicle owner and the owner of the garage or parking lot itself. 

Roaming—Although the plethora of different electricity rates by geography is 

often cited as an impediment to properly linking mobile cars to customer accounts, I do believe that technology development from the transportation and 

telecommunication industries has provided us clear guidance in this area. 

Today, states still have a variety of different toll rates on their highways just 

as different cellular companies have different rates and plans. The advent of the 

E-Z Pass demonstrates that these different state and utility requirements can 

be harmonized and a system of billing and collection can be managed for vehicles. We will need the ‘‘smart’’ grid to be able to identify vehicles and their location and match them to utility customers. We will further need to develop new 

inter-utility billing and settlement systems to manage this mobile fleet. But, at 

least from a technology viewpoint, the path forward on this issue has already 

been demonstrated. 

Need for Comprehensive Interoperability Standards — The Smart Grid Interoperability Panel work of the NIST with cooperation of the automotive companies, utilities and the RTO/ISO is actively addressing and coordinating this 

need in the NIST Electric Transportation Priority Action Plan. Of critical importance is the need for deployment that conforms to the NIST interoperability 

agreements and for appropriate enforcement at the state and federal level. 

Need to Retain Policy Focus — The future of PHEVs as an energy storage 

resource is highly dependent on close coordination between the electricity and 

transportation industries — two industries that have had limited interaction in 

the past. Moreover, the infrastructure needed to be deployed potentially spans 

the traditional jurisdictional reach of both federal and state regulators and policymakers. As a result, continued Congressional oversight on this issue and the 

progress being made would be helpful to underscore the importance of PHEV 

deployment to meet national (and even international) policy goals We at PJM 

look forward to working with this Committee and the Congress as a whole as 

we move forward in this important area. 

[All figures have been retained in committee files.] 

The CHAIRMAN. Thank you very much. 

Mr. Mainzer. 

STATEMENT OF ELLIOT MAINZER, EXECUTIVE VICE PRESIDENT FOR CORPORATE STRATEGY, BONNEVILLE POWER 

ADMINISTRATION 

Mr. MAINZER. Thank you, Chairman Bingaman, Ranking Member Murkowski. I really appreciate the opportunity to be here this 

morning. 
50 

My comments today are focused on the role that storage technologies could play in the context of a set of initiatives we are undertaking to improve our ability to integrate variable renewable 

generation into the Federal Columbia River Power System. 

As of this morning, we now have 2,500 megawatts of wind energy 

connected to our system, having seen another 200 megawatts come 

online just this past week. We are planning for 3,000 megawatts 

by the end of 2010 and as much as 6,000 megawatts by 2013. Figure 2 of my written testimony portrays this rapid pace of growth. 

Like our colleagues at PJM, as we integrate this variable supply 

of renewable energy, we must maintain system reliability. When 

actual wind generation varies from scheduled generation, we must 

dispatch or curtail other generation in very short time to maintain 

system balance. 

With 2,500 megawatts of wind, we have seen swings of more 

than 1,000 megawatts in less than an hour on our system, and 

there is limited correlation between wind generation and system 

demand, often leading to surpluses of wind generation during offpeak periods. Figure 3 in my written testimony illustrates the type 

of variability we are seeing on our system. 

To date, we have been able to use our existing hydro assets to 

manage the variable output of the wind on our system, but we do 

not expect to be able to integrate all of the expected wind generation without making some infrastructure investments as well as 

commercial and operational changes. 

As a result, we are working on three categories of actions to increase the amount of wind that could be interconnected to the BPA 

system. These include, first of all, constructing additional transmission capacity; second, developing mechanisms to stretch the balancing capacity of our existing hydro assets as far as possible; and 

third, exploring the development of new resources to provide generating capacity and flexibility. 

With respect to transmission, BPA has proposed three new transmission projects that will facilitate collectively 1,800 megawatts of 

new wind generation. We have begun the environmental review 

process for those three projects. With additional borrowing authority provided by the American Recovery and Reinvestment Act, we 

are ahead of schedule on the construction of a fourth line that will 

support 575 megawatts of additional wind generation. 

These transmission projects resulted from the completion of our 

2008 network open season process. The network open season allowed us to efficiently process our queue of transmission service requests and set priorities for financing and building transmission 

projects. This was a significant development because it addressed 

planning and financing barriers that impede transmission construction for renewable energy development across the Nation. 

It also allowed us to confirm the most efficient use of our existing 

transmission system before proposing new construction. On the reliability and operations front, BPA has established a wind integration team that is working with the wind community on a set of initiatives designed to increase the amount of wind generation that 

can be supported from the existing capacity of the Federal hydro 

system. 
51 

These initiatives include developing new operating protocols to 

manage extreme wind variability, investing in new wind forecasting applications, developing new scheduling practices to manage generation imbalances, and enabling customers to seek sources 

of wind integration services from other suppliers besides BPA. 

More broadly, we are collaborating with other balancing authorities in the western interconnection to pool resources and increase 

the availability of cost effective balancing services. These types of 

collaborative activities are an essential part of an effective renewable integration strategy for the Western United States. 

Ultimately, although we do intend to wring all of the efficiencies 

that can be wrung from the existing system, it is likely that the 

region will need to add additional capacity and flexibility resources 

to assist with the management of variable generation. To prepare 

for that day, we have begun to explore storage options. We are 

working with the Pacific Northwest National Laboratory on their 

study of various storage technologies, including pumped storage, 

compressed air, batteries, and flywheels. 

We are looking forward to seeing the results of this analysis and 

giving further consideration to such variables as cost, sustained capacity, location, and lead times that will impact the economic viability of these technologies in the Pacific Northwest. Given the hydroelectric profile of our generating resources, we are placing particular emphasis on pumped storage. Pumped storage has potential 

to provide a variety of grid support services and to shape the variable output of wind and other renewable resources into firm blocks 

of power with energy and capacity value. 

BPA is working with our partners at the Bureau of Reclamation 

and Army Corps of Engineers to explore the potential for additional 

pumped storage in the Pacific Northwest. We expect to have an initial evaluation complete in mid 2010. 

Mr. Chairman and Ranking Member Murkowski, I appreciate 

the opportunity to be here with you today and relate our experience 

in leveraging the capabilities of the Federal Columbia River Power 

System in support of new renewable electric generation. I am 

happy to respond to any questions. 

Thank you. 

[The prepared statement of Mr. Mainzer follows:] 

PREPARED STATEMENT OF ELLIOT MAINZER, EXECUTIVE VICE PRESIDENT FOR

CORPORATE STRATEGY, BONNEVILLE POWER ADMINISTRATION

Thank you, Mr. Chairman. My name is Elliot Mainzer and I am the Executive 

Vice President for Corporate Strategy for the Bonneville Power Administration 

(BPA). I am pleased to be here today to describe the significance of BPA’s efforts 

to facilitate wind energy into the Western transmission system and the role storage 

technologies could play as one tool in the suite of initiatives we are developing to 

improve our ability to integrate variable renewable generation into our grid. 

BACKGROUND

BPA, established in 1937 by an Act of Congress, is a power marketing agency 

within the Department of Energy. Our headquarters are in the Pacific Northwest, 

where we operate about three-quarters of the high voltage transmission system and 

market the power from 31 federal dams in the Columbia River Basin as well as the 

output of one nuclear plant. We supply about 40 percent of the Northwest’s electricity, selling at wholesale and at cost. 

Our service area covers Washington, Oregon, Idaho, western Montana, and small 

parts of eastern Montana, California, Nevada, Utah, and Wyoming. BPA is a self- 
52 

* Figures 1–3 have been retained in committee files. 

financed agency that recovers its full costs and repayment obligations from power 

and transmission rates. Our power customers include Northwest cooperatives, municipalities, public utility districts, federal agencies, investor-owned utilities, directservice industries, port districts, irrigation districts, and tribal utilities. 

We sell transmission and related services to more than 200 utilities, power generators (including wind generators), and power marketers. Pursuant to our open access tariff, BPA provides transmission services to all customer utilities, power generators and marketers under the same rates, terms, and conditions that it applies 

to its own Power Services business line for use of transmission services. 

RENEWABLES DEVELOPMENT IN THE PACIFIC NORTHWEST

BPA is maintaining a remarkable pace of connecting new renewable wind generation to its transmission system. All but one of the states in our service territory 

have enacted renewable electric generation standards for their retail utilities. These 

requirements, coupled with those of other Western states, have brought developers 

to our area looking for opportunities to develop and sell new renewable generation. 

They come to us for transmission services because of the capacity of our existing 

transmission system and the proximity of reasonably good sites for wind generation. 

To date we have almost 2,300 megawatts of wind generation connected to our system. 

Figure 1* shows the three categories of actions we are working on to expand wind 

power interconnection to the BPA system: 1) constructing additional transmission 

capacity; 2) developing the means to provide additional balancing services for reliability from existing system assets, and; 3) exploring the development of new resources that provide capacity and flexibility. 

TRANSMISSION

The large amount of new wind generation in our region, combined with increases 

in electricity demand due to a growing population and changing patterns of seasonal 

energy use, has led BPA to propose three new transmission projects that will collectively facilitate about 1,800 megawatts of new wind generation. We have begun the 

environmental review process for those projects. With additional borrowing authority provided by the American Recovery and Reinvestment Act of 2009 (ARRA), we 

are ahead of schedule on the construction of a fourth line—the McNary to John Day 

500-kilovolt transmission line that will support 575 megawatts of additional wind 

generation. 

Our proposals for these projects, and the decision to begin construction on the 

McNary to John Day project, resulted from the completion of our first-in-the-nation 

2008 Network Open Season. The Network Open Season is a new commercial approach to manage transmission requests and set priorities for financing and building transmission projects. BPA’s first Network Open Season resulted in 6,410 

megawatts of transmission service requests with financial commitments by the customers who asked for the service. Three-quarters of the requested service capacity 

were for wind generation. Because we were able to clarify commitments to take 

transmission service, we were able to accommodate more than 20 percent of the requests with existing capacity. We were also able to offer a new Conditional Firm 

service to provide still more transmission service from the existing capacity of the 

system. These approaches are significant because they resolved planning and financing barriers that impeded transmission planning for renewable energy development 

across the Nation. They also allowed us to confirm the most efficient use of our existing system to serve new renewable generation before proposing new construction. 

We are completing our second Network Open Season and will continue to conduct 

the process annually. 

RELIABILITY

The pace of wind development and its concentration in our balancing authority, 

as shown in Figure 2, was initially surprising to us. Only five years ago, the Northwest Power and Conservation Council (Council), the four-state entity responsible for 

long-range energy resource planning in our region, projected that the region could 

support 6,000 megawatts of wind development by 2025. In response, BPA and the 

Council convened the Northwest Wind Integration Forum, a regional steering committee and technical work group, to evaluate wind integration issues and develop 

a Wind Integration Action Plan. The Plan emphasized that wind energy is a renewable resource that can lower the fuel consumption and environmental emissions of 
53 

other resources, but that wind energy cannot provide reliable electric service on its 

own. The Plan said that wind generation, with its natural variability and uncertainty, increases the need for flexible resources or dispatchable loads to maintain 

utility system reliability. 

Almost five years after the Council’s projection, we now expect we could be asked 

to connect 6,000 megawatts to our system alone and as soon as within the next four 

years. Much of that development remains concentrated in areas of Washington and 

Oregon east of the Columbia River Gorge. We have among the highest penetration 

in the country of wind generation relative to peak load on our system. 

The substantial amount of wind on our system has given us significant insight 

into the challenges of maintaining reliability with a large amount of variable generating resource. The nature of wind generation is, of course, that it increases and 

decreases depending on the weather. On our system that can mean swings of more 

than 1,000 megawatts in less than an hour. We have also found that there is limited 

correlation between wind generation and system demand, often leading to surpluses 

of wind generation during off-peak periods. When the wind generation is concentrated as geographically as it is in the Pacific Northwest, it intensifies the magnitudes of its peaks, valleys and ramps, as Figure 3 illustrates. Electric power systems must perfectly balance generation and load in real time. We must dispatch or 

curtail other generation in very short time frames when actual wind generation varies from scheduled generation. This type of balancing is necessary to maintain electric system reliability. 

Balancing variable generation using the flexibility of the existing hydro system 

has been a major focus for us. To date, we have been able to use our existing hydro 

assets to manage the variable output of the wind on our system. In essence, we are 

able to operate the hydroelectric system as a giant storage battery for the variable 

output of the wind while simultaneously meeting regional power demands consistent 

with our obligations to protect, mitigate, and enhance fish and wildlife. However, 

the system has its limits if reliability is to be maintained. 

The greater the amount of hydro capacity we must maintain to support the growing wind resource, the more significant are the cost implications for our public 

power customers, and the greater are the reliability implications for the transmission system. The cost issues stem from the changes in system operations we 

must make in order to ensure we have sufficient reserve capacity to meet demand 

if the wind generation forecasted by the wind operators does not closely match actual generation. Until last year, the costs of carrying such reserves were paid by 

our public power customers. Because the amount of reserve capacity needed to support the burgeoning wind resource also grew, the cost to our public power customers 

also increased. This concern was exacerbated by the fact that approximately 80 percent of the wind interconnected to our system is sold for delivery to utilities outside 

of our balancing authority. Consequently, the cost of balancing wind generation is 

a concern for our public power customers who do not use the resource, yet were covering the cost of integrating it. In 2008, BPA began to charge the wind generators 

a portion of the cost of holding the reserves needed to manage the variability of the 

wind generation. When a revised wind integration rate was first proposed for 2009, 

it represented a significant increase in the cost of integrating wind for the wind developers. This was primarily due to the fact that we now had more wind on the system and it was creating additional costs. In response, BPA and the wind developers 

held many discussions that resulted in several new initiatives designed to maintain 

the reliability of the transmission system, yet at a lower cost to the wind generators 

and their customers. 

Establishing a rate for wind integration also sent a price signal for the cost of 

wind integration services that is encouraging wind operators to more efficiently use 

those services. This stretches the capability of the existing system, allowing more 

wind to interconnect to our system. 

The decisions in this last rate case have already bought us time relative to the 

need to secure new generating resources for balancing services. In addition, we are 

exploring additional strategies to increase the amount of wind we can reliably integrate into the system. We have agreed with the wind community on a set of initiatives we expect will allow still more wind to connect to our system without building 

new balancing resources. The initiatives we agreed to pursue hold promise to secure 

additional breathing room by allowing us to wring more efficiencies from operational 

improvements, and from collaboration with the wind generators and our neighboring 

transmission systems. 

These initiatives encompass developing new operating protocols for our system, 

working with our partners in the Western Interconnection to pool resources and increase the availability of balancing services, and working with our customers to improve the accuracy of wind forecasting to allow a larger amount of wind generation 
54 

to be supported from the existing reserve capacity of the hydrosystem. We think 

these initiatives can make a significant dent in the amount of balancing reserves 

needed to support a tripling of the wind generation supported by our system, allowing more wind to be connected to our system, and limiting the costs to the wind 

generators and their utility customers. 

OPERATING PROTOCOLS AND IMPROVED FORECASTING INITIATIVES

BPA has established an internal Wind Integration Team (WIT) to implement new 

operational and forecasting tools. Earlier this year, BPA met with its stakeholders, 

including wind developers, to determine which of the WIT initiatives are of the 

highest priority to the region. BPA reached agreement on pursuing several highvalue initiatives with an estimated cost for completion of up to $15 million over two 

years. The accelerated initiatives include: 

Wind Forecasting: In October 2009, BPA completed installing 14 new wind 

measurement sites. We will share the new wind measurement data in real-time 

with all interested parties. We expect to develop a complete wind forecasting 

system by March 2010. By September 2010, we will give BPA dispatchers displays of real-time wind generation and next-hour wind forecasts so dispatchers 

can better anticipate changes in wind output and adjust generation to make 

more efficient use of combined wind, hydro, and other available resources. 

Dynamic Transfer Limits Study and Pilot Project: We are working with our 

neighboring transmission systems to develop new methods to determine the 

transmission available to allow one of our utilities to remotely control and manage a power plant in another utility’s transmission system. This is known as 

dynamic transfer, and such capability would allow us to serve more variable 

generation than the hydro system could otherwise support. We expect this study 

to be completed by mid-February 2010. Shortly thereafter, we will launch a test 

of such capability on a set of Pacific Northwest transmission interconnections 

to gain experience in the operational technology. 

Wind Generators’ Self-Supply of Reserves: BPA is also planning to use the results of the Dynamic Transfer Limits Study to allow wind projects to purchase 

balancing reserves from suppliers other than BPA. This enables wind projects 

to manage their own costs in acquiring balancing services. BPA, the receiving 

utility and the appropriate wind project all must install significant control and 

communications equipment to make this work. By October 2010, BPA will 

launch the first pilot project for self-supply of generation imbalance reserves. 

Intra-Hour Scheduling: Our current transmission scheduling is based on 60 

minute delivery schedules. We are developing tools to allow power schedules to 

change at the half-hour as well as the hour to let customers sell power from 

fast changes in wind output. This would help reduce reserve requirements and 

maintain the transmission system’s reliability. Last week, we initiated a pilot 

project to test such practices. 

OPERATING PROTOCOLS

In the power and transmission rate cases for Fiscal Years 2010 and 2011, we 

worked with wind developers on an operating protocol that allows us to maintain 

lower levels of reserves while at the same time protecting system reliability. This 

protocol defines procedures that go into place when we are close to depleting our 

reserves because of the gap between actual wind generation and what was scheduled. We began implementing the protocol this fall and, in return, the customers’ 

rate for balancing services is lower by nearly a half than we originally proposed. 

Essentially, the wind customers accepted more risk in return for a lower rate. They 

have also responded by investing in improving the accuracy of their scheduling. We 

appreciate the effort they made to help us reach these outcomes. 

SMART GRID

We are also a partner in two significant regional smart grid efforts that have recently won funding from the Department of Energy. The first is the $53 million 

Western Electricity Coordinating Council (WECC) project that will test a large-scale 

synchrophasor measurement system with smart grid functions. The benefits would 

include increased transfer capability, better congestion management, and improved 

efficiency and lower costs for supporting variable renewable generation. The second 

is the Pacific Northwest Smart Grid Demonstration Project led by the Battelle Memorial Institute. That project received $89 million in ARRA funds from the Department of Energy. It spans five states and includes 12 utilities. The objectives of this 

demonstration project include validation of new smart grid technologies and busi-
55 

nesses, quantifying smart grid costs and benefits, improving transmission system 

resiliency, and advancing interoperability standards and cyber security requirements for smart grid devices and systems. Both initiatives have the potential to significantly improve the regional transmission system’s ability to facilitate variable renewable energy generation. 

ADDING NEW CAPACITY

Ultimately, though we will wring all the efficiencies that can be wrung from the 

existing system, it is quite likely that the region will need to add additional resources to provide balancing services for variable renewable resources. To prepare 

for that day, we have begun to explore storage options. From a broad perspective, 

we are working with the Pacific Northwest National Laboratory on their study of 

various storage options including pumped storage, compressed air storage, batteries, 

and flywheels. 

At the same time, we are placing a particular emphasis on evaluating pumped 

storage. Given the hydroelectric profile of our generating resources, pumped storage 

appears to be particularly attractive to our region. Secretary of Energy Steven Chu 

emphasized this in his response to a letter written earlier this year by the four Pacific Northwest Governors, saying, ‘‘Pumped storage has unique potential in the Pacific Northwest where a higher percentage of wind generation has already been integrated into the region’s transmission system than anywhere else in the Nation.’’ 

Pumped storage facilities have been in commercial operation for decades. The 

technology was originally conceived as a means of using low value surplus energy 

generated during nighttime hours to store water that could then be used to generate 

more valuable energy during heavy load hours. Systems that rely on large centralized coal and nuclear generation anticipated the need for pumped storage much earlier than hydro-oriented systems. This was because thermal generation was difficult 

to reduce during periods of low demand and to ramp up quickly to meet the next 

peak demand. In the WECC area—encompassing 14 Western states plus Alberta 

and British Columbia, Canada—the thermal dominated systems are located primarily in California and the inland Southwest. That’s why the large, existing 

pumped storage plants in WECC are located in those regions. 

The only existing pumped storage facility in the Pacific Northwest is in the state 

of Washington at Banks Lake, which is part of the Federal Columbia River Power 

System’s (FCRPS) Grand Coulee complex. Its operation is largely dedicated to 

pumping water from Lake Roosevelt into Banks Lake to meet Bureau of Reclamation irrigation obligations. With the large recent penetration of variable renewable 

resources such as wind in the WECC area, pumped storage has the potential to be 

an additional resource that could be used to manage the variable output of wind 

projects and other renewable resources. BPA is currently exploring the potential for 

pumped storage in the Pacific Northwest, and expects to have its initial evaluation 

completed in mid-2010. 

CONCLUSION

Mr. Chairman, I appreciate the opportunity to be here with you today and relate 

our experience in leveraging the reserve capabilities of the Columbia River power 

system in support of new renewable electric generation. We, our customers, wind 

developers, and our partner systems in the Western Interconnection have been on 

a steep learning curve. We will stay focused on the suite of measures I have described and continue our role in meeting the region’s demand for new carbon-free 

resources. I am happy to respond to any questions from the Committee. 

The CHAIRMAN. Thank you all very much. Thanks for the valuable testimony. 

Let me start. Mr. Huber, I had breakfast with some folks this 

morning who were concerned—these are folks in the automobile industry, and they were saying that one of the challenges that we 

face in trying to move to plug-in hybrids is the lack of standardization and just the physical making available of the power to power 

the vehicles, I guess. 

They were saying not only is there variation between communities and between States. There is also variation from building to 

building within communities. Now I don’t know if this standardization of communications that you referred to with NIST doing, are 
56 

they trying to address that type of a concrete issue as well as the 

other types of standards that are needed to get to a smart grid? 

Mr. HUBER. Mr. Chairman, there are many issues on the standards front, and some of them are being addressed by the Society 

of Automotive Engineers. That is the actual plug that is acceptable 

such that you can have public charging types of things. 

The actual communications between the vehicle and its connection point is another standard that is being addressed by the Society of Automotive Engineers. NIST and EPRI and others are working together to do the communications capability to bring the information from the grid to the vehicle. So there is an awful lot of activity there. 

There is a lot of concerns by the automotive companies, and my 

own perspective would be that the first generation of vehicles are 

not going to be as smart as what we would really like. But we are 

working closely with them, and I believe the evolution of those vehicles, when they start to become predominant, will be there. 

The CHAIRMAN. OK. I think, Mr. Masiello, you were talking 

about the need for planning methodologies for the use of storage 

in meeting our energy needs, I guess. It would seem that as the 

demand, as the peak demand for a utility continued to rise, a logical thing to do to meet the additional peak requirement—a logical 

thing would be to make a judgment. Should we meet that additional peak requirement through additional generation or meet 

that additional peak requirement through storage of some kind? 

As I am understanding you, you are saying that is not happening 

now, that kind of judgment is not made, or is it just that the options available for storage of power are insufficient to make that 

a real question? 

Dr. MASIELLO. What I was trying to say is that the utility planning engineers who are doing the design of distribution circuits or 

new transmission lines or capacity increases in substations rely on 

well-established methodologies. They use software tools, proven, 

available from a handful of suppliers, and the regulatory commissions are accustomed to seeing the results of those studies. 

Today, innovative utilities will start to look at storage as a solution. For instance, in west Texas, AEP put a 6–megawatt battery 

in a substation to solve a transmission reliability problem, and it 

was much more economical than putting in a redundant transmission line. 

So the innovators are able to do it. But it is a very conservative 

industry, and utilities that don’t have the engineering staff to solve 

the problems when they can’t purchase the tools, say, will move 

more slowly. 

The CHAIRMAN. So what was your suggestion as to how we get 

these planning methodologies developed? 

Mr. MASIELLO. My suggestion was that, for instance, FERC could 

identify a point in time and say that as of, hypothetically, 2011 

proposed new transmission projects, the plans for them should 

demonstrate that storage was considered as an alternative. Not 

necessarily approved or justified, but just that it was considered. 

I think that alone would trigger a lot of awareness and learning. 

The CHAIRMAN. OK. 

Senator Murkowski. 
57 

Senator MURKOWSKI. To continue, Mr. Masiello, you mentioned 

the issue of efficiency within storage and that is an area that we 

can really be looking to. I think you said about 70 percent efficiencies, but then you are losing 30. Are there any emerging technologies that we have either talked about here today or that are 

available that are more promising in terms of their level of efficiencies than others? 

I know we don’t want to be picking winners and losers, but I am 

curious to know where we might see some gains. 

Mr. MASIELLO. Certainly. The advanced lithium ion technologies 

are well over 90 percent. The battery that Mr. Huber described in 

the PJM parking lot is one such. For regulation service in particular, high efficiency is very desirable. 

A storage system that is purely backup power that is only 

charged and discharged once or twice a year has a completely different problem, which is you don’t want it to lose energy through 

self-discharge the way a car battery can. So the answer I think is 

there are technologies with different characteristics, and we are 

still learning which ones are best suited for which application. 

Senator MURKOWSKI. Mr. Huber, you and the chairman were 

talking about standardization. Just in terms of necessary infrastructure to accommodate the integration of plug-in vehicles, where 

there is the charging stations, the electric metering, what do we 

really need in terms of meeting the infrastructure requirements to 

fully integrate? I know that is loosely defined, but how do we integrate the plug-in vehicles into the system. How much do we need 

in terms of investment infusion? 

Mr. HUBER. Yes. A lot of that infrastructure is in place today. 

The communications capability with the utility is in place. There 

are well-defined standards. We have to find the acceptance from all 

the players, the RTOs and ISOs, the utilities, and the vehicles, to 

actually adopt those standards. 

The wireless communications to the vehicle is there to allow the 

communications. The charging infrastructure, the vehicles initially 

and even throughout are going to be primarily charged at home. So 

one of the infrastructure issues is for level one charging, 120 volts, 

to be able to plug in is pretty straightforward. 

When they go to level two charging, where I need 240 volts in 

my garage or I need it where it is made available, that is going to 

be one of the early challenges from an infrastructure point of view. 

Senator MURKOWSKI. You mentioned the fleet vehicles and how 

we deal with that. 

Mr. HUBER. Yes, very attractive because if I am fleet owner, I 

can construct the infrastructure in my facility, have it optimized to 

my actual devices and the communications, have direct communications, even private communications back into the grid. So that is 

a very attractive alternative. 

Senator MURKOWSKI. In my opening comments, I mentioned specifically my interest in the pumped hydro and recognized that it 

has been the workhorse for utility-scale energy storage. But we recognize that suitable locations for pumped hydro are considered limited. 
58 

Mr. Masiello, when was the last survey that we have had insofar 

as the potential sites for locating new pumped hydro? Do we have 

anything current out there that identifies? 

Mr. MASIELLO. I believe so, but I think Dr. McGrath probably is 

better equipped to answer that. 

Senator MURKOWSKI. OK. We will punt to you, Dr. McGrath. 

Mr. MCGRATH. Yes, our laboratory is concentrating on identifying the resource base. More specifically, we tend to concentrate 

on non-hydro renewables. But as we heard earlier this morning, 

what is needed is an integrated simulation and model that can help 

us assess all of these capacities that are out there. These—— 

Senator MURKOWSKI. Do we have that model currently? 

Mr. MCGRATH. I don’t have the answer to your specific question 

around where are the resources for pumped hydro. In many respects, they are largely in place, as we heard from our friends at 

Bonneville Power. Many of the existing operations have some of 

that capacity in place. I believe the number is 21 gigawatts total 

of storage that is available currently across the country. 

Senator MURKOWSKI. I assume we can add pumped storage stations to the existing hydro facilities. Is that correct, Mr. Mainzer? 

Mr. MAINZER. We are certainly looking at that. We have an existing pumped storage facility at the Grand Coulee complex known as 

Bank’s Lake. It is about 315 megawatts of capacity, and part of our 

assessment is to see if it would be possible to expand the capacity 

of that facility. So we are going to be getting a good look at that 

between now and the middle of next year. 

More broadly, we are looking at the broader footprint of the Columbia River Power System to see if there are some other potential 

sites for pumped storage. 

Senator MURKOWSKI. A follow-up questions because you prompted this, Dr. McGrath. At NREL, you have indicated that you are 

not really focused on the hydro side. Does the NREL model include 

the availability to add pumped hydro or the advanced battery technology? 

Mr. MCGRATH. Absolutely, Senator. One of the things that we 

have done is to establish partnerships, very specific and detailed 

partnerships with, for example, the Idaho National Laboratory, 

that has responsibility for—specifically for commercial nuclear 

power, for the National Energy Technology Laboratory and their 

responsibility for fossil. So we are trying to work with our sister 

laboratories and with researchers around the country to pull together a comprehensive plan. 

Within our Energy Systems Integration Facility, as I mentioned, 

we have advice coming from all of those different groups, looking 

to bring forward a collective system of energy information. I will 

use the word ‘‘Google’’ because we are, in fact, talking with them 

around putting together an energy information system that will 

allow planners and policymakers and technologists to access what 

are the potentials, where are the resources, how do we get at them, 

what is the state of the development of technology for their utilization? 

As Dr. Koonin mentioned this morning, what would help us tremendously is that overarching model of this rather complicated 

system and all the variables and options that come forward. So, we 
59 

are looking forward to developing those models further in cooperation with experts from all areas. 

Senator MURKOWSKI. Thank you. My time has expired, Mr. 

Chairman. 

The CHAIRMAN. Senator Udall. 

Senator UDALL. Thank you, Mr. Chairman. 

Welcome to the panel. Dr. Masiello, thank you for your important 

testimony. Thank you also for taking some time to further educate 

me. I thought in your testimony, toward the end, there was a nugget of insight that really presents the opportunity that we have in 

front of us where you pointed out that the long-term implications 

of widespread mass deployment of storage across our power systems are profound. 

It holds the promise of dramatically increasing capacity utilizations of the generation, transmission, and distribution system and 

essentially enabling a deferral of capital spending, which could go 

to other uses that our society identifies. It also, I think, would result in an ideal setting where consumer prices would remain 

steady, perhaps even you would see benefits there to the consumer. 

So, in that spirit, I wanted to ask you about your testimony. You 

talked about loan guarantees would be a more effective tool than 

a tax credit. Do you envision such a loan guarantee program as 

supporting all types of storage, and could you expand? 

Mr. MASIELLO. I offered that thought because merchant developers, whether it is wind or storage, usually can’t make direct use 

of a tax credit. The practice was that they would do a sale leaseback or some other arrangement with, say, Citicorp who would 

then take advantage of the tax credit, and the developer would get 

that reflected somehow in the financing. 

But the number of financial institutions in a position to take advantage of a tax credit has decreased, and consequently, developers 

can’t create the same kind of financial packages to finance a wind 

farm or concentrating solar plant. So I was simply saying there 

may be other financial mechanisms, loan guarantees being one. 

I am a power engineer more than a financial engineer. So I am 

not sure I can get too much beyond that. 

Senator UDALL. Thank you for that thought. 

Mr. McGrath, you mentioned that for renewable energy to really 

reach its full potential you have to have technologies for large energy storage developed and deployed. Can you expand a little bit 

on what NREL is working on to help us understand what type of 

technologies would be necessary and then how you would integrate 

those into the grid? 

Mr. MCGRATH. As has been mentioned earlier, there are a variety of technologies ranging from flywheels to flow batteries and to 

larger systems such as pumped hydro and compressed air storage. 

We are working with a number of groups, the Electrical Power Research Institution among them, to look at these various technologies. 

On the planning and policy side, the question also does come up 

again around where is the best place to deploy such storage? Is it 

large-scale storage at the point of origin of the power? For example, 

adjacent to the large-scale wind farm. If you put the stored energy 
60 

there, then you potentially can confront congestion on the distribution system. 

Alternatively, the power or energy can be distributed and stored 

at the substation level or even at the community and residential 

level. So, there are tradeoffs both with cost and efficiency and system integration issues that come into play in all of those areas. 

Again, we are working with experts in all areas, trying to coordinate that type of analysis and planning. 

Senator UDALL. So, at this point, you are exploring both the idea 

of a centralized storage approach and a decentralized storage approach. I understand you are currently working on a report that 

would touch on these issues. Is that correct? 

Mr. MCGRATH. We have been tasked by the Department of Energy to have a look at the renewable energy futures study, which 

asks us to try to envision what large-scale deployment of renewable 

resources would look like at the scale of 50 or even 80 percent of 

our electric generation capacity. The question is what does such a 

State look like? What are the key elements of such a State? 

Of course, storage is a high priority and necessary part of such 

a situation. But we are excited about conducting that work this 

year and next. 

Senator UDALL. I am, too. I look forward to receiving a copy of 

it when you complete it. 

Mr. Huber, if I could turn to you, you say that 34 megawatts of 

battery storage has been put into the PJM generation queue for 

2010. Do you anticipate more storage after 2010? If so, how much? 

What do you expect the effect of that would be on the price of regulation services? 

Mr. HUBER. Excellent, Senator. Actually, I anticipate more in 

2010. Those are the initial two battery organizations who have 

come to us. One is lithium ion. The other is zinc air. We have been 

talking to many battery manufacturers who are looking at our regulation signal. We have got a test signal for them to look at. 

So I believe there will be more coming in 2010. Some of the DOE 

grants actually had requested 100 megawatts of battery storage in 

the PJM territory that were not successful in the grant proposal. 

I foresee—I am not a good forecaster—hundreds in the next—I 

would say 500, 700 megawatts of battery in the PJM system is not 

unreasonable to expect. We are a huge system, probably at 90,000 

megawatts today as our peak for a day like today. 

There was another part of your question, and I—— 

Senator UDALL. The effect on the price of regulation services. 

Mr. HUBER. Very interesting because certainly the automotive 

companies are looking at this well. What happens when we exhaust 

this? Because it is a very lucrative market today, and it is a very 

attractive market to enter into first. 

I believe the transition will happen from that type of immediate 

regulation service to extended services, either early morning compensation for loss of wind or throughout the day compensation. 

Using these batteries for storage in the evening and discharge during the peak periods will be the evolution of this technology over 

time. 

Senator UDALL. Dr. Masiello is nodding vigorously along with 

you in agreement. 
61 

Thank you again to this panel. This has been a very important 

hearing. I want to again thank the chairman and the ranking 

member for taking the time to convene us all and explore this real 

opportunity in front of us. 

Thank you. 

The CHAIRMAN. Thank you. 

Senator Shaheen. 

Senator SHAHEEN. Yes, I will echo Senator Udall’s comments and 

everyone’s here, really, on the panel. Thank you all very much for 

being here. 

Given the interconnection between renewables that we are trying 

to incentivize and get deployed and energy storage, should we find 

a way to link promotion and deployment of energy storage to the 

incentives that we are trying to provide for renewables? I will just 

throw that out for any and all of you if you have a view of it? 

Mr. MCGRATH. I will begin. But, yes, I think they are linked, and 

I think your question was around linking the incentives. Correct? 

Senator SHAHEEN. Right. 

Mr. MCGRATH. So, I would have to defer to some of my more 

skilled regulatory and financial colleagues. But certainly, I think 

our studies indicate that you can only get so far. Twenty percent 

wind may be a little beyond that, and then we are going to need 

storage. 

It is a bit of a—right now, we are using natural gas and gas-fired 

generators effectively as our backup storage. That has some advantages and disadvantages, one of them being carbon footprint. The 

other one being, as we heard from Senator Wyden this morning, 

there is a lot of wind blowing out there. Let us not let it get away. 

So if we are to capture it and save it for appropriate peak-hour 

use, obviously, we are going to need storage. Clearly, our policies 

need to incentivize that and help make it affordable, and then 

issues around who pays for what portion of it, of course, need to 

be thought through carefully. 

So we need both technology development, sound and clear policy, 

and then real careful analysis tools that help us guide how both of 

those are developed. 

Senator SHAHEEN. I don’t know if—this is a follow-up to you. But 

as we are thinking about that, particularly the cost piece and how 

that is shared, are there examples—for all of you who are in the 

market now, are there examples that you can look to and say this 

is the way it is working that we think is working very well? 

Mr. MASIELLO. There is a model to look at in the natural gas industry where gas storage resources, whether it is in the physical 

pipeline or in an actual cavern, say, are an asset that is operated 

by the storage owner. The merchant side—the gas producers, the 

gas traders—pay a fee for the use of the storage. But they retain 

the equity ownership of the gas. 

That model could apply, for instance, if a regulated transmission 

company had storage on the grid which was a regulated asset, regulated cost recovery, and the merchant side of the power equation, 

the generators and the traders, made use of that on a fee basis. Because right now, there is a lack of clarity in policy and regulatory 

treatment in the deregulated electric power markets over that 

problem. 
62 

The regulated wires company is taking delivery of the electricity 

at night when it is cheap and redelivering it to consumers during 

the day when it is expensive. That arbitrage profit in today’s world 

should be on the merchant side. 

That lack of clarity is another hurdle, shall we say, to moving 

forward, and I believe FERC is taking it up and plans to resolve 

it. 

Senator SHAHEEN. Just to be clear, the example that you are 

talking about, the cost is on the rate base for the ultimate endusers of the power? 

Mr. MASIELLO. That is really a good question. If it is a rate-based 

asset, then the transmission utility is charging a rate per megawatt hour on the grid, and that is ultimately borne by the consumer. If it is not a rate-based asset, then a merchant operator of 

storage is trying to make money on it, and the generator or the 

trader would mark up the cost of the wholesale energy, which is, 

again, passed to the consumer. So it is different mechanisms. 

Senator SHAHEEN. Thank you. My time is up. 

The CHAIRMAN. I did not have additional questions. Did you have 

anything else you wanted to ask ofthis panel? 

Senator SHAHEEN. Actually, if I could just follow up on one other 

issue that you raised earlier? 

The CHAIRMAN. Go ahead. 

Senator SHAHEEN. You talked about, Dr. Masiello again, that 

FERC—that one example you used was requiring FERC to consider 

storage before approving new generation. In that kind of a consideration, are there other things that ought to be looked at other 

than just the cost? So, as we are thinking about generation, we 

look at environmental impacts, lots of other things. What else, as 

we are thinking about storage—— 

Mr. MASIELLO. Yes, I actually should have been more clear. I was 

saying in the context of transmission planning, I believe that the 

generation developers will be pretty aggressive at looking at it if 

they think they can make money. The difficulty is when it is a 

transmission or a distribution asset, and the regulatory approval 

process is today unable to make an informed decision. So that is 

what I was saying. It would be one mechanism to spur it along. 

Senator SHAHEEN. Great. Thank you for the clarification. 

Did anybody else want to add to that? 

[No response.] 

Senator SHAHEEN. OK, thanks very much. 

The CHAIRMAN. Thank you all very much. 

This has been useful testimony, and I think it has been a good 

hearing. 

Thank you very much. That will conclude our hearing. 

[Whereupon, at 11:57 a.m., the hearing was adjourned.] 
(63) 

APPENDIXES 

APPENDIX I 

Responses to Additional Questions 

RESPONSES OF STEVEN E. KOONIN TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Under Secretary Koonin, where does the US stand compared to China/ 

Japan/Korea in developing grid scale energy storage technologies? It is my understanding that these countries are now investing heavily in this area, leveraging 

their significant expertise and capacity in the vehicle battery sector. 

a. How much are we spending on grid-scale energy storage research, development and demonstration compared to those nations? 

b. What we need to do maintain our leadership in this area? 

Answer. (a). The Departmental approach to energy storage spans the full RD&D 

chain, from basic research through technology demonstration projects. The Office of 

Electricity Delivery and Energy Reliability (OE) is the focal point for development 

and demonstration of grid-scale energy storage technologies within the Department 

of Energy. Funding for OE’s energy storage program was $3.5 million in Fiscal Year 

(FY) 2009 and $14 million in FY 2010. In addition, under the American Recovery 

and Reinvestment (Recovery Act), the Department awarded $185 million for grid 

storage demonstration projects, and $30 million to date for Advanced Research 

Projects Agency-Energy’s (ARPA-E) advanced battery research. Further, while not 

specifically investing in grid-level applications, the Office of Science is supporting 

basic research by funding a host of projects including six Energy Frontier Research 

Centers that are directly related to energy storage, and the Office of Energy Efficiency and Renewable Energy funded $39 million of research in 2009 to move the 

state of the art for vehicular electrochemical batteries. 

Private industry and several States are also actively investing in the development 

of new grid-level storage technologies; the investment community is becoming interested in providing venture capital for companies developing new technologies and 

in funding ambitious large scale projects; and utilities are increasingly considering 

storage demonstration projects. 

The Chinese government is investing approximately $100 million in energy storage research annually. Chinese researchers are investigating sodium sulfur batteries and several flow battery systems. In addition, the Chinese Academy of Science 

just announced development of a 650 amp-hour sodium sulfur battery by the Shanghai Ceramic Institute. 

The Japanese government mandates that new wind developments can be built 

only with appropriate energy storage capability installed. However Japan provides 

one-third of the cost of a new storage facility to the owner. Research is carried out 

by Japanese industry on sodium sulfur batteries, flow batteries, and lead carbon 

batteries. 

Answer. (b). Key performance characteristics such as cost, durability, energy density, and power must be improved if the U.S. is to maintain leadership in grid energy storage technology. These improvements will be enabled by continued Departmental efforts ranging from basic research to demonstration projects for promising 

storage technologies. In addition to these technology advances, significant improvements are necessary in the analytic tools data and parameters used to characterize 

storage technologies in modeling the grid. 

In deregulated energy markets, where generation, transmission, and distribution 

assets can be owned and operated by different groups, the economic and operational 

value of individual storage technologies must be fully characterized for each applica-
64 

tion. Without such detailed understanding, and until these benefits can be fully 

modeled and incorporated into economic and operational planning tools for the grid, 

deployment rates for grid scale storage will not reach potential. 

Question 2. Under Secretary Koonin, concerning the DOE Energy Storage Demonstration Grants, how soon can we expect the Department to obligate funds to the 

award winners so that these projects can proceed? 

Answer. Selections of Recovery Act demonstration projects were announced by 

Secretary Chu on November 25, 2009. Grants are expected to be awarded by the 

second quarter of FY 2010. 

Question 3. Under Secretary Koonin, some of the commercial software that grid 

planners use today grew out of previous DOE-funded research. What is DOE doing 

to help develop grid planning software that takes account of energy storage and renewable energy? What are the national labs doing to support transmission planning 

models and software? How much funding is going towards this work now, and how 

does this compare to past funding levels? 

Answer. The Department’s Energy Storage Program in the Office of Electricity 

Delivery and Energy Reliability will fund a new project beginning in FY 2010 to develop energy storage modules for commercial grid planning software. A second 

project will utilize existing grid modeling software at a national laboratory to analyze the applicability of storage in specific sections of the transmission grid, such 

as the Bonneville Power Authority system. These efforts are funded at a level of 

$650,000 in FY 2010; FY 2009 funding for these type of activities was $50,000. In 

addition, through Recovery Act funding the Department recently announced grants 

totaling $60 million for interconnection-level infrastructure planning; the planning 

effort, which will make use of national laboratory support, will incorporate energy 

storage as one of a range of technological options. The Department’s Office of Energy Efficiency and Renewable Energy has begun a study to evaluate the barriers 

and opportunities associated with significantly increasing the integration of multiple 

sources of renewable electricity into the electric grid. The study, planned to be completed in 2010, will evaluate and quantify the need for energy storage in scenarios 

with very high penetration of renewable energy generation. 

Question 4. What data does the Federal government collect on grid-scale energy 

storage? Does it fit into the data collection forms used by the EIA and the FERC? 

If not, what work is underway to add energy storage to these data collection forms? 

Answer. The U.S. Energy Information Administration (EIA) currently collects 

some limited electricity storage data. Additional collection of storage data is planned 

for EIA’s updated electricity surveys that are scheduled for deployment starting in 

January 2011. 

Electricity storage data are currently collected by EIA for pumped hydroelectric 

and compressed air energy storage (CAES). The most recent annual net summer capacity data (2007) show that the United States has 21,886 megawatts (MW) of hydroelectric pumped storage capacity. Operational data for 2008 show pumped hydro 

generated 25.3 million megawatt-hours (MIMI) and required 29.6 million MWh for 

pumping. 

EIA’s proposed revisions to electricity surveys were in the public-comment phase 

in the fall of 2009 (see the October 15, 2009, Federal Register Notice at http:// 

www.eia.doe.govicneaf/e1ectricity/page/fednotice/electl2011.html ); the comment period closed on January 15, 2010. Storage-related proposals include: 

• storage associated with dispersed and distributed generation data (by fuel type 

categories); and 

• capacity and generation for flywheel, thermal, and battery technologies that 

supply electricity to the grid and have at least 1 MW of capacity. 

The Federal Energy Regulatory Commission (FERC) also addresses energy storage in its data collection. The FERC ‘‘Annual Report of Major Electric Utilities, Licensees and Others’’ and ‘‘Annual Report of Nonmajor Public Utilities and Licensees’’ contain financial and operational data for pumped storage. This information includes plant identities, depreciation and amortization charges, generation data, construction year, operational year, and other specifics. Balance sheet information (i.e., 

electric plant in service and additions) is also available for ‘‘storage battery equipment.’’ EIA defers to FERC for additional information on its energy storage data activities. 

Question 5. How are DOE and FERC working together to develop and deploy gridscale energy storage technologies? 

Answer. Department of Energy (DOE) develops energy storage technologies. The 

Federal Energy Regulatory Commission (FERC) regulates interstate transmission 

and sale of electricity. FERC has been proactive in evaluating the potential for energy storage, devising market mechanisms appropriate for energy storage tech-
65 

nologies, and directing Regional Transmission Organizations to provide a level playing field for the application of storage technologies. In response, the New York Independent System Operator (NYISO) requested FERC approval for new storage-oriented market rules, which FERC approved in May 2009, and a 20 megawatt 

flywheel system in NYSIO has been issued a conditional comittrnent under DOE’s 

Title XVII loan guarantee program. In addition, in FY 2010, the DOE Wind Program is supporting the FERC Office of Energy Policy with a full-time expert from 

the National Renewable Energy Laboratory who provides renewable grid integration 

and transmission technical and analytical expertise. 

FERC and DOE are aware of activities in each other’s programs. Successful introduction of energy storage technologies into the grid depends on the success of efforts 

by both organizations. 

RESPONSES OF STEVEN E. KOONIN TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1a. Many of the battery technologies and the magnets used in electric 

motors utilize rare earth minerals, much of which are currently imported from 

China. 

If so, does the government have a role in researching alternatives to the use of 

rare earth minerals in batteries and magnets? 

Answer. Rare earth materials are not a major issue for battery technology (although transition metal availability is important for batteries). However, for electric 

motor technologies, availability of rare earth materials is a significant issue. There 

are some options that can help minimize the impact of rare earth minerals’ availability. One option is induction motor technology, which can be practical for certain 

applications but tends to be less efficient. Improving the efficiency of induction 

motor technology is one area of research underway in the Department’s Vehicle 

Technologies Program. 

Even for traditional motor technology the need for rare earth materials can be 

minimized, or perhaps even eliminated, through research and development (R&D). 

Because alternative magnet compositions that do not have rare earth materials are 

typically not strong enough to be practical, the Department has initiated R&D to 

both minimize rare earth content and improve the performance of non-rare earth 

magnets (the subject of a recent ARPA-E project grant). 

Additional research has been initiated by the Department and others, including 

the Department of Defense, and studies have been conducted by the U.S. Geological 

Survey and the National Academies in this area. 

Question 1b. Given the importance of rare earth minerals for energy storage applications, do we have sufficient knowledge of the availability of rare earth mineral 

deposits in the U.S.? 

Answer. There is a reasonable knowledge of U.S. rare earth mineral resources 

through the U.S. Geological Survey. Undeveloped deposits in the U.S. and across 

the world have been identified (although these are typically not as favorable as the 

Chinese deposits). One excellent U.S. deposit is the Molycorp site in Mountain Pass, 

California, near the Nevada border. This site was active until a few years ago and 

is attempting to restart mining operations. The Department is collaborating with 

Molycorp through work at Ames National Laboratory. This work is aimed at improving the performance of rare earth magnets, as well as minimizing the processing 

required to produce magnets which is a major cost factor. 

Question 2. In your testimony, you reference a situation in West Texas during one 

month in 2008 where wind generation resulted in over nine hundred 15 minute intervals of negative pricing. ‘‘Negative pricing’’ essentially means that you have more 

generation than demand since, and is supposed to serve as a signal not to produce 

electricity at that time. However, I understand that in Texas, wind generators will 

continue to offer their energy at negative prices in order to get the federal Production Tax Credit and the value of a state Renewable Energy Credit. Additionally, due 

to transmission constraints, wind developers can be paid to remove their production 

from the grid. Please comment on this situation. 

Answer. Negative pricing in energy markets sends a variety of signals to market 

participants and is an artifact of transmission constraints within a system. Even 

during periods of negative pricing, positive pricing exists beyond the transmission 

constrained wind energy areas, thereby indicating a demand opportunity for energy 

exists. The transmission system operator within Texas, the Electric Reliability 

Council of Texas (ERCOT), is currently working though its Competitive Renewable 

Energy Zone process to upgrade the transmission system in West Texas and increase the transfer capacity for wind energy. These upgrades are expected to greatly 

reduce occurrences of negative pricing in the region. There is also considerable in-
66 

terest in energy storage in the area, including a 20 megawatt demonstration project 

recently selected for an American Recovery and Reinvestment Act award. 

Question 3. Compressed air energy systems are considered an energy storage 

mechanism because electrical energy is used to compress air that is stored in a pressurized reservoir. Given the fact that compressed air energy systems require some 

method to use the compressed air to make electricity, should these systems be classified as a generation technology or a transmission and distribution technology? 

Answer. Compressed Air Energy Storage (CABS) systems differ from other energy 

storage technologies in that many use natural gas to heat the compressed air prior 

to generating electricity. This is similar to a generator except that, in effect, twothirds of the electricity generated by a CAES system was stored at an earlier time 

through physical compression of air. Additionally, while the most common current 

implementations of CAES systems use both compressed air and natural gas synergistically, the compression and storage of air is a significant and necessary aspect 

of system function while combustion is not. Furthermore, new forms of CABS currently under development will require little-to-no natural gas in order to transition 

the stored energy from compressed air back to electricity. 

Grid scale energy storage is neither a generation asset nor a transmission and 

distribution (T&D) asset, but is in a category of its own. Categorizing storage either 

as a generation or T&D asset limits the possible uses of energy storage. In some 

areas, classifying storage as a generation asset would prevent transmission or distribution utilities from owning storage and obtaining the benefits storage can provide. 

Question 4. You testified that several types of rechargeable batteries are being 

tested and installed in pilot projects by the utility industry. What is the typical useful life of rechargeable batteries as compared to other forms of grid-scale energy 

storage? How does the per-kilowatt cost of a battery compare to existing pumped 

storage systems and compressed air energy storage systems? 

Answer. The expected life of rechargeable batteries varies and depends on the 

type: sodium sulfur batteries have an expected lifetime of 20 years; lead acid battery 

systems typically need cell replacement every 4 to 6 years, depending on the application; and flow batteries and lithium-based batteries have minimum expected lifetimes of 10 years or greater. Ongoing research is exploring a new class of lead carbon batteries with greatly increased lifetime as well. The current cost of sodium sulfur systems is approximately $2500 per kilowatt (kW), Flow batteries (an emerging 

technology) range from $800 to $4,000 per kW; pumped hydro systems cost approximately $200 to $800 per kW depending on size and terrain; and CABS are estimated to cost $800 to $1000 per kW. However, these storage technologies have different storage periods, and many of these cost figures are estimates only since the 

technologies are not yet fully commercial. 

RESPONSES OF STEVEN E. KOONIN TO QUESTIONS FROM SENATOR WYDEN

Question 1. As we discussed in the hearing, energy storage technologies have 

many promising applications—from enabling deployment of large amounts of intermittent renewables, to helping meeting peak demand, to more effectively managing 

the electric grid, to deployment in hybrid and plug-in vehicles. As noted in your testimony, no less than four separate offices within the Department are engaged in 

some form of research and demonstration efforts involving storage technologies. You 

committed to provide a road map—an overall strategy—for how the Department is 

going to pursue the development of storage technologies. I expect this road map to 

cover research, development, and demonstration projects of energy storage technologies, including integration technologies, over the next few years. I also expect 

the road map to address the full range of potential storage technologies and applications, not just those technologies that are not currently in the DOE’s portfolio. You 

committed to providing this plan within 60 days, admittedly an ambitious schedule. 

Please confirm your commitment on behalf of the Department to provide this plan. 

Answer. The Office of Electricity Delivery and Energy Reliability (OE) is working 

with the Offices of Science, Advanced Research Projects Agency-Energy, and Energy 

Efficiency and Renewable Energy to develop a strategy for supporting research, development, and deployment of grid storage technologies, in response to this request. 

The Department expects to provide the strategy to the Committee within 60 days. 

Question 2. Your written testimony of the issues surrounding energy storage was 

fairly complete, touching on the important issues. However, there were some noticeable gaps in some of the technologies and applications, particularly fuel cells, hydrogen, and on-premises storage. 

Answer. The Department’s recent analysis concluded that additional research and 

development will be required to make hydrogen economically competitive as an en-
67 

ergy storage medium. The study compared the life cycle costs of energy storage technologies including: pumped hydro, compressed air energy storage (CAES), nickelcadmium batteries, sodium-sulfur batteries, vanadium flow batteries, and hydrogen 

combustion turbines. The report can be found at www.osti.gov/servlets/pur1/968186- 

wRSj x1/. 

Current hydrogen and fuel cell R&D efforts focus on reducing the cost and increasing the performance and durability of both water electrolyzers and fuel cells. 

With success in these efforts, hydrogen as an energy storage technology could be 

competitive with batteries but may not be competitive with the largest scale systems 

that use CAES or pumped hydro. 

Question 3. The DOE’s hydrogen program was recently restored after originally 

being cut earlier this year. Please describe the relationship between the hydrogen 

program and the energy storage program. What will the Department be doing in 

the future to integrate them? How much emphasis will the Department be placing 

on fuel cell technology, both for generating hydrogen as stored energy and for generating electricity for power? Will the Department look at the potential for transporting hydrogen through pipelines as an alternative to building electric transmission lines? 

Answer. The hydrogen and energy storage programs continue to coordinate related activities. To evaluate the feasibility of hydrogen for energy storage, the Department’s hydrogen program is operating a small scale water electrolyzer with hydrogen storage and electricity generation at the National Renewable Energy Laboratory in collaboration with Xcel Energy. The Department’s Hydrogen and Fuel Cell 

Technologies Program is also identifying regions where hydrogen and fuel cells may 

be a viable option for energy storage or combined heat and power for distributed 

generation due to high electricity costs and available power from renewable energy 

sources. These activities will help guide research and development for hydrogen 

technologies while providing useful information on the challenges of using hydrogen 

as grid energy storage. To address hydrogen infrastructure and transmission issues 

the Department is evaluating a number of options, including hydrogen delivery 

through pipelines as a potential long-term approach. 

Question 4. Your written testimony discussed grid-connected distributed energy 

storage. However, other than a passing mention of electric vehicles, you did not 

mention any research or development activities related to on-premises storage; i.e., 

on the customer side of the meter. There are many opportunities for innovative solutions, including ice-storage systems running at night instead of air-conditioning 

compressors running during peak times of the day. End-users who install solar panels or small wind turbines may benefit from on-site storage for the same reasons 

that utilities do for intermittent renewables. What will be the DOE’s program for 

extending energy-storage research and development into systems that might be on 

customers’ premises? 

Answer. The economic cost points for on-premises energy storage of distributed 

generation would likely be significantly less than those for advanced electric vehicle 

applications. Suitable technological solutions could come from the current candidates for vehicle batteries, large scale utility battery systems, or a new breakthrough technology. The Department’s programs are exploring options, including onpremises active and passive thermal energy storage systems. As these programs 

progress, the Department will use the results to develop specific initiatives that address the challenging requirements of distributed storage. Active and passive solutions such as running ice-storage systems at night instead of air-conditioning during 

the day or using a building’s mass for thermal storage have the potential to reduce 

building energy use and result in lower peak electricity demand. Pacific Northwest 

National Laboratory’s work on Efficient Low-Lift Baseload Cooling Equipment offers 

increased energy saving by cooling a building at night and using the building mass 

for theiinal storage. 

Question 5. In his testimony, the Deputy Director of NREL—Bob McGrath—stated 

that electrical energy produced by wind up ‘‘to 20% of U.S. capacity’’ can be integrated into the grid without the need for storage, which was based on an NREL 

study. By repeating this statement, which is also prominently used by the American 

Wind Energy Association (AWEA), DOE gives the impression that the grid does not 

yet need energy storage. Yet Bonneville Power Administration has already experienced operational problems at current levels of wind generation, and wind farms in 

Texas are paying customers to buy the electricity they produce at certain times during the night because there is inadequate demand at that time. 

Answer. DOE’s 20% Wind Energy by 2030 report is based on an analysis scenario 

that assumes power system operators utilize a broad suite of other available, typically less capital-intensive, sources of system flexibility to accommodate wind energy’s added variability. These sources of flexibility can include the use of larger bal-
68 

ancing authorities, the use of sub-hourly energy scheduling, and the addition of new 

gas-fired generation. In addition, pumped hydro is used by many utilities, providing 

2.5 percent of the Nation’s generation capacity. There is also considerable interest 

in Compressed Air Energy Storage, including two demonstration projects totaling 

450 megawatts recently selected for American Recovery and Reinvestment Act 

awards. In addition, a growing need for frequency regulation can be cost effectively 

met by fast storage. 

System operators, such as the Bonneville Power Administration, are currently 

evaluating how to best incorporate system flexibility options into their operations. 

As more of these operational changes are implemented, higher levels of wind energy 

and other variable energy sources can be integrated at lowest cost. Storage technologies are also under consideration as an option for augmenting integration capability beyond that available from operational changes. Under certain circumstances, 

the addition of storage may be required to balance the variability associated with 

wind generation. 

Question 6. Furthermore, the NREL study did not address combinations of 

inteimittent technologies; e.g., is storage needed if wind is 15%, but solar rises to 

10%? The ‘‘Eastern Wind Integration and Transmission Study’’ suffers from the 

same lack of breadth; again, we do not know if there are better solutions that use 

storage technologies unless they are actually included in these sorts of Department 

sponsored studies. What steps will DOE take to ensure that storage technologies be 

considered in future work on the electrical infrastructure? 

Answer. The analysis tools and datasets necessary to perform integrated reliability studies incorporating multiple variable generation technologies are continually being developed and improved. Only recently have these tools achieved a level 

of maturity which allows for the creation of meaningful results, and studies that are 

still being completed will include evaluation of multiple variable generation and energy storage technology options. For example, DOE’s Western Wind and Solar Integration Study will evaluate energy penetrations of up to 30 percent wind energy and 

five percent solar energy. This study will include analysis of the energy storage capabilities of concentrating solar power systems and existing and planned pumped 

hydroelectric storage. Another study currently underway is the Renewable Energy 

Futures Study, which will analyze the barriers and opportunities associated with 

significantly increasing the integration of multiple sources of renewable electricity 

into the electric grid. The study, planned to be completed in 2010, will evaluate and 

quantify the need for energy storage in scenarios with very high penetration of renewable energy generation. Finally, the Department also seeks to support interconnection-wide transmission planning that will include analysis of energy storage 

opportunities. Through evaluation of the energy storage deployment projects funded 

through the Recovery Act, knowledge of grid-scale storage technologies and associated characteristics will improve thereby enhancing the value of current and future 

integrated technology analyses. 

RESPONSES OF ELLIOT MAINZER TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Of the 2,300 MW of wind now connected to BPA’s system, what is the 

actual percentage of electricity that is produced from that nameplate capacity? 

Answer. Actual generation compared to plant nameplate capacity averaged 28 

percent in the twelve months ending November 2009. Also, as of January 12, 2010, 

with the recent addition of three more interconnections totaling nearly 400 

megawatts, we now support a total of 2,680 megawatts of wind capacity. 

Question 2. In order to deal with the variable nature of wind energy, BPA is now 

using its hydroelectric system as a giant storage battery. Is there a limit to the 

amount of wind energy that you can accommodate given its intermittency while also 

maintaining the reliability of your electricity transmission? How can pumped storage assist BPA? 

Answer. There will be a limit to the amount of hydroelectric system flexibility 

BPA can use to balance variable resources. BPA has been able to utilize the capability of our hydroelectric system to accommodate wind generation increases through 

the implementation of the initiatives I described in our testimony and as the wind 

industry responds to new operating protocols and improves their scheduling accuracy. With all of these improvements, we estimate that using our hydrosystem alone 

we can reliably integrate approximately 4,000 megawatts of wind generation capacity. We expect that amount to continue to increase as we succeed in implementing 

our priority wind integration initiatives. 

Pumped storage offers potential value when we have exhausted the operational 

protocols that we can implement and need additional storage capacity to support a 
69 

higher level of variable generation. As I mentioned in my testimony, BPA is studying the feasibility of pumped storage in the Columbia River Power System, and we 

expect to have more information in mid-2010. 

Question 3. Of course maintaining an additional reserve capacity to support the 

wind resources now in the BPA system has resulted in increased costs for consumers. To address these costs, BPA has imposed a wind integration rate on wind 

generators that was not without controversy. I understand that BPA believes this 

price signal for wind integration costs has encouraged wind operators to operate 

more efficiently. Please elaborate on the amount of the increased costs and the wind 

generators’ response. 

Answer. BPA believes that the efforts we undertook in the last rate case did in 

fact motivate wind operators to improve their scheduling accuracy, which resulted 

in lower costs to BPA and a lower rate to the wind generators. Our cost of providing 

generating reserves to support variable wind generation is the primary driver for 

the wind integration rate. When we conducted the rate case for fiscal years 2010 

and 2011, we noted that those costs are significantly affected by the wind plants’ 

scheduling accuracy. The closer actual generation matches schedules, the smaller 

the amount of generation reserves we need to maintain relative to the amount of 

wind generation connected to our system. Our initial rate case proposal for the wind 

rate was $2.72 per kilowatt/month. We worked with the wind industry on measures 

to improve scheduling accuracies, and they accepted more risk that their generation 

could be curtailed at certain times if their schedules were not sufficiently accurate. 

Our final rate of $1.29 per kilowatt/month—less than half of our initially proposed 

rate—was significantly influenced by these agreements that allowed us to reduce 

the amount of reserves required for wind generation. 

RESPONSE OF ELLIOT MAINZER TO QUESTION FROM SENATOR WYDEN

Question 1. BPA’s Strategic Objectives include the statement, ‘‘Climate change 

concerns also are driving major new investments in renewables, energy efficiency, 

smart grid, new large-scale storage and the electrification of transportation.’’ As 

noted in your testimony, pumped hydro storage is also being considered as part of 

BPA’s wind integration efforts. However, there are many other types of storage technologies, such as compressed air, fly wheels, and batteries that are being developed 

to store and manage grid-connected energy systems. What are BPA’s specific plans 

for examining and deploying energy storage technologies for both grid management 

and to help bring more renewable energy into the grid? Please provide copies of the 

applicable plans and planning documents. 

Answer. BPA is examining energy storage options through a set of evaluations 

that will be conducted through mid-2010. The Pacific Northwest National Laboratory (PNNL) conducted a nationwide evaluation of storage technologies to accommodate large amounts of variable renewable generation. This evaluation included a variety of storage technologies. BPA has asked PNNL to use this information for an 

evaluation of the application of a broad array of storage technologies, including 

pumped hydro and compressed air, to the characteristics of the Pacific Northwest. 

With this information, BPA will complete a study of the potential for pumped storage in the Pacific Northwest as one option. These studies will consider power system 

requirements for capacity and ramp rates for the various storage technologies. BPA 

will share this analysis with you upon its completion. 

BPA’s draft Resource Program forecasts what resources it may need to meet its 

power supply obligations in the next ten years. The draft Resource Program concludes BPA should be able to meet its near term requirements through energy conservation and that longer term requirements depend on a number of uncertainties, 

one of which is, the amount of additional load its preference customers ask it to supply under the terms of the Regional Dialogue. The draft Resource Program identifies 

BPA’s need to provide balancing services for wind and energy in Heavy Load Hours 

as being the largest and most likely power need after conservation. 

The draft Resource Program identifies pumped storage as a unique opportunity 

to meet those needs, and points to the evaluations described above as needed to assess this potential. The draft Resource Program also discusses how BPA’s wind integration activities provide more efficient use of BPA’s existing capacity reserves before it needs to develop new generating capacity resources to support variable renewable generation. We have attached a copy of the draft Resource Program. The 

draft BPA Resources Program Plan can be found at: http://www.bpa.gov/power/P/ 

ResourceProgram/documents/2009-0930lDraftResourceProgram.pdf. 
70 

RESPONSES OF JON WELLINGHOFF TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Chairman Wellinghoff, in your testimony, you discussed the need for 

considering energy storage in transmission planning. S.1462 includes energy storage 

as an alternative that must be considered in transmission planning. Is this sufficient? What other legislative language may be necessary? 

Answer. As you note, I believe that it is appropriate to consider energy storage 

as part of the transmission planning process. The requirement in S.1462 that energy 

storage must be considered as an alternative in transmission planning is sufficient 

for this purpose and is an important reinforcement of the Commission’s actions. 

The Commission took an important step to promote such consideration in February 2007, when it issued Order No. 890. In Order No. 890, the Commission required all transmission providers to develop a regional transmission planning process that satisfies nine principles, one of which is comparability. To reflect that principle, the Commission required transmission providers to outline in their tariffs how 

they will treat comparably in the transmission planning process all resources, including nontraditional resources that could impact the need for transmission expansion. 

I would also note that the Strategic Plan that I provided to Congress this fall 

states that as transmission providers refine their transmission planning processes, 

the Commission will assess best practices, including the potential for collaborative 

decision making, and adopt reforms as necessary to its transmission planning process requirements. Toward that end, Commission Staff this fall completed a series 

of conferences held around the country to review how well the transmission planning requirements of Order No. 890 are meeting the needs of our Nation, and to 

collect input as to how the Commission can improve upon the regional transmission 

planning processes. 

The Commission is now in the process of reviewing comments that were submitted in response to questions that Commission Staff posed as a follow-up to the 

conferences held this fall. Among many other issues, commenters discussed the relationship between the regional transmission planning processes that must satisfy the 

principles established in Order No. 890 and the integrated resource planning processes through which load-serving entities in some states, and often their retail regulators, identify appropriate investments to meet consumers’ long-term resource 

needs. That issue may be particularly relevant for energy storage, which has some 

characteristics that resemble generation and some characteristics that resemble 

transmission. In addition, because energy storage often interconnects at relatively 

low voltages, considering these resources in the transmission planning process often 

requires information about the portion of the electric system for which disputes are 

most likely to arise as to classification as transmission or distribution facilities. 

Question 2. Chairman Wellinghoff, how is energy storage currently addressed in 

transmission and generation planning processes? What planning, analysis, and modeling tools do we need to develop to be able to determine where to best site storage 

technologies? 

Answer. As discussed above in my response to your first question, the Commission 

in Order No. 890 required transmission providers to treat comparably in the transmission planning process all resources, including non-traditional resources that 

could impact the need for transmission expansion. More specifically, energy storage 

technologies are considered by transmission and generation planners as part of the 

portfolio of potential solutions to manage costs, assure resource adequacy to serve 

load, and maintain the reliability of the grid. Energy storage technologies also may 

be attractive to independent developers in light of their potential to provide profits 

through the differences in energy prices between off-peak and peak periods. In addition, there is a close relationship between the development and implementation of 

energy storage and our Nation’s ability to harness the potential of our renewable 

energy resources. 

Planners and developers regularly use power flow studies (or load flow studies) 

to determine the limitations of the grid when interconnecting new customer loads 

and generation sources and when anticipating growth in demand from existing customers. For a power system to accept the new load and/or generation, it must be 

deemed reliable and therefore resilient enough to withstand pre-defined events. 

Power flow studies are used to determine whether transmission overloads would result if these events occurred and whether system improvements such as new transmission are needed to achieve the desired performance. 

Planning studies traditionally have focused on peak load conditions to ensure that 

there would be adequate generation and transmission capacity to meet the maximum forecasted demand. However, the development and deployment of significant 

levels of renewable energy resources requires a new focus on the capability of the 
71 

grid to accept variable generation when it is being produced. For some types of renewable energy resources and in some areas, that production is likely to be greater 

during periods of relatively low demand; energy storage can play an important role 

in addressing that issue. In addition, the development and implementation of improved forecasting tools could assist system operators in reliably and efficiently utilizing renewable energy resources in conjunction with dispatching and replacing 

stored energy. 

Question 3. Chairman Wellinghoff, what kinds of system information-sharing and 

collaboration must exist, to ensure that storage and distributed renewable generation (two sides of the same coin) can be effectively dispatched such that the bulk 

power grid is managed most reliably and efficiently? What role must interoperability 

and cybersecurity standards play, to ensure this becomes a reality? How do transmission system operators need to change their practices and software to accommodate efficient dispatch of energy storage? 

Answer. I agree that there is a close relationship between the development and 

implementation of energy storage and our Nation’s ability to harness the potential 

of our renewable energy resources. As I stated in my December 10, 2009 testimony 

to this Committee, energy storage can make integration of renewable energy resources not only reliable, but also efficient and cost-effective. 

Illustrating this point, I noted in my December 10, 2009 testimony that some energy storage technologies appear able to provide a nearly instantaneous response to 

regulation signals, in a manner that is also more accurate than traditional resources. These characteristics could reduce the size and overall expense of the regulation market. Most existing tariffs or markets do not compensate resources for superior speed or accuracy of regulation response, but such payment may be appropriate in the future as system operators gain experience with the capabilities of 

storage technologies. In the meantime, the unique characteristics of energy storage 

technologies could warrant different market rules for providing energy and ancillary 

services than those established based on the characteristics of traditional resources. 

I also agree that increased information sharing and collaboration are important 

to ensuring that renewable energy and energy storage resources are incorporated 

into the electric system and dispatched in a reliable and efficient manner. For example, modeling for the type of power flow studies that I noted above in response to 

your second question will need to include these resources and will require information sharing. Energy management system equipment and software may need to be 

revised to properl y model energy storage facilities, such as to indicate time to respond to dispatch signals, time-to-depletion, or time remaining until full storage. 

Another example of information sharing and collaboration stems from the distributed nature and relatively small scale of many energy storage resources. To ensure 

their reliable and efficient use, such resources may need to be aggregated and remotely dispatched and verified. These needs could be met through two-way communications between the energy storage resource and the local balancing authority’s 

control center (where generation and load are balanced) to monitor the availability 

of the resource and to issue commands for the resource to generate or store electricity. 

It is noteworthy that the combination of dispersed locations and two-way communications presents both physical and cyber security issues. For example, it is essential to ensure that communications with the local balancing authority’s control center are secured to prevent the use of those communications as an entry point to 

evade the control center’s cyber security protection measures. The mandatory and 

enforceable cyber security standards applicable to the electric industry are the Critical Infrastructure Protection (CIP) reliability standards developed by the North 

American Electric Reliability Corporation (NERC) and eight Regional Entities, subject to the Commission’s oversight. However, these standards apply to only the bulk 

power system, thereby excluding facilities, including some energy storage and distributed generation resources, which are interconnected to the distribution system. 

Moreover, the Commission has directed that NERC make major modifications to the 

CIP reliability standards, and until such time as those revisions are completed, the 

standards are inadequate to assure protection of the bulk power system. 

Separate from the NERC process for developing mandatory and enforceable reliability standards, the Energy Independence and Security Act of 2007 (EISA) directs 

the National Institute of Standards and Technology (Institute) to coordinate the development of a framework to achieve interoperability of smart grid devices and systems. The EISA also directs the Commission, once it is satisfied that the Institute’s 

work has led to ‘‘sufficient consensus’’ on interoperability standards, to institute a 

rulemaking proceeding to adopt such standards and protocols as may be necessary 

to ensure smart grid functionality and interoperability in interstate transmission of 

electric power and regional and wholesale electric markets. It is unclear at this time 
72 

to what extent the standards that result from the Institute’s process will address 

the cyber security or physical security of distributed smart grid devices and systems. 

In July 2009, the Commission issued a Smart Grid Policy Statement that discussed its above-noted responsibility pursuant to EISA. Among other steps, the 

Smart Grid Policy Statement identified the development of cyber security standards 

as a key priority in protecting the grid and identified electric storage as a key 

functionality of the smart grid, stating that standards related to storage should be 

treated as a priority in the Institute’s process. The Smart Grid Policy Statement 

also noted that EISA does not make any standards mandatory and does not give 

the Commission authority to enforce any such standards. Although the Commission 

will not itself develop or enforce these standards, the Commission continues to encourage the Institute and standards development organizations (SDOs) participating 

in the Institute’s process to ensure that the reliability and security, both cyber and 

physical, of the bulk power system is a priority in their standard development work. 

Question 4. Chairman Wellinghoff, how are DOE and FERC working together to 

develop and deploy grid-scale energy storage technologies? 

Answer. DOE and the Commission play different but complementary roles on this 

issue. As Under Secretary Koonin described at this Committee’s December 10, 2009 

hearing, DOE is directly supporting research and development and pilot projects for 

energy storage and related technologies. The Commission’s role, meanwhile, involves 

in part ensuring appropriate treatment of and compensation for energy storage resources that participate in Commission-jurisdictional markets. 

Such roles are among those recognized in the Memorandum of Understanding 

(MOU) that DOE and the Commission entered in December 2009 with respect to 

the Resource Assessment and Interconnection Planning project funded by the American Recovery and Reinvestment Act of 2009. The MOU observes that energy storage and other non-traditional resources will play an increasing role in meeting the 

energy needs of consumers. The MOU also states that the long-term transmission 

plans to be developed through the Resource Assessment and Interconnection Planning project should achieve and balance several objectives, while maintaining reliability. Those objectives include considering all available technologies, including energy storage technologies, to the extent that they may become commercially viable 

and economic. 

Additionally, as I noted above in response to your third question, the Commission 

has identified electric storage as a key functionality of the smart grid. The Commission is working with DOE and other federal agencies, as well as state regulators 

and many other interested entities, on smart grid issues, including standards development. 

Question 5. Chairman Wellinghoff, what data does the Federal government collect 

on gridscale energy storage? Does it fit into the data collection forms used by the 

FERC? Ifnot, what work is underway to add energy storage to these data collection 

forms? 

Answer. The Energy Information Administration Form No. 860 collects energy 

storage data on pumped storage and compressed air energy systems for all electricity producers. In addition, the Commission collects pumped storage generating 

plant statistics for individual companies in the FERC Form No.1, Annual Report. 

This data includes certain statistical and historical information about the property 

and its operation during a given year. Apart from pumped storage, however, the 

FERC Form No.1 generally collects cost accounting information on a company-wide 

basis and does not break down such data by type of technology. Moreover, companies authorized to sell at market-based rates, rather than at cost-based rates, generally are not required to file the FERC Form No.1. The Commission does require 

all public utility sellers to file Electric Quarterly Reports including all wholesale 

power sales. While not broken out separately, this information could include sales 

from storage. 

The Commission has begun a review of barriers that may inhibit participation by 

energy storage resources in Commission-jurisdictional markets. As that review progresses and as the role of storage in wholesale electric markets expands, the Commission will also consider whether developing additional reporting requirements is 

appropriate. 

RESPONSES OF JON WELLINGHOFF TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1a. In your testimony you indicated that FERC has issued preliminary 

permits for an additional 27,000 MW of pumped storage capacity. 

How many preliminary permits for pumped storage systems has FERC issued in 

the past year? 
73 

Answer. During calendar year 2009, the Commission issued 17 preliminary permits for pumped storage projects that would have a total installed capacity of 16,411 

megawatts (MW). 

Question 1b. What percentage of preliminary permits in the past has resulted in 

actual license applications for pumped storage systems? 

Answer. In the past three years, the Commission has issued 36 preliminary permits for pumped storage projects. To date, one permittee, Eagle Crest Energy Company Inc., has filed a license application, for the L300-MW Eagle Mountain Pumped 

Storage Project No. 13123. to be located in Riverside County, California. In addition, 

five permittees for pumped storage projects, having a proposed total installed capacity of 3,732 MW, have begun preparing license applications by filing notices of intent to do so, along with preliminary application documents that contain all currently-available project information. 

Question 1c. What is the typical time period for licensing a pumped storage system? For how long is a pumped storage system license valid? 

Answer. The time period for licensing a pumped storage project is largely site-specific and may vary widely depending upon the configuration of the project, whether 

closed loop (i.e., using off-stream and/or underground upper and lower reservoirs) 

or conventional (i.e., using a new upper reservoir and an existing lower reservoir 

that is located on a river). The relative potential for impacts on environmental resources will weigh heavily on the process length. Under existing licensing procedures, it is possible that an appropriately-sited pumped storage project having minimal potential for environmental impacts could be licensed in 1.5 years or less from 

the filing of an acceptable license application. The process would likely be longer if 

the project had the potential to cause significant adverse effects on cultural resources or environmental resources including, but not limited to, endangered species 

or their habitats, or water quality. Also, delays in receiving authorizations from 

other Federal or state agencies (pursuant to, for example, the Clean Water Act or 

the Endangered Species Act) might delay a final Commission licensing action. 

The Federal Power Act authorizes the Commission to issue original licenses for 

a period not to exceed 50 years. Original pumped storage project licenses have typically been issued for a 50-year term. 

Question 1d. How many of the existing pumped storage facilities have been relicensed by FERC? What is the typical time period for re-licensing? 

Answer. To date, the Commission has relicensed three pumped storage projects. 

The time period for relicensing those projects has averaged 2.6 years from the filing 

of the application to the issuance of the license. 

Question 2. Much of the new pumped storage development proposals are for offriver, closed-loop systems that are low impact. Currently, these projects must navigate the federal licensing process, which can take several years. With the immediate 

needs we have for energy storage, what can FERC do to achieve a more efficient 

licensing timeframe for these types of pumped storage projects? 

Answer. As discussed above in my response to your Question 1 (c), proposed 

pumped storage projects using off-river, closed-loop systems that are low impact 

likely could be processed in 1.5 years or less from application filing. Where consensus can be reached with Federal and state agencies and other stakeholders that 

project impacts will be minor, the Commission may be able to waive various procedural regulations and thus reduce the length of the licensing process. 

Question 3. In your testimony, you reference a situation in West Texas during one 

month in 2008 where wind generation resulted in over nine hundred 15 minute intervals of negative pricing. ‘‘Negative pricing’’ essentially means that you have more 

generation than demand since, and is supposed to serve as a signal not to produce 

electricity at that time. However, I understand that in Texas, wind generators will 

continue to offer their energy at negative prices in order to get the federal Production Tax Credit and the value of a state Renewable Energy Credit. Additionally, due 

to transmission constraints, wind developers can be paid to remove their production 

from the grid. Please comment on this situation. 

Answer. A negative price need not signal only that electricity production should 

be reduced. It could also signal that using more electricity during such periods 

would be appropriate. Energy storage could be particularly valuable in responding 

to such a signal, in that energy could be retained for use at a time when demand 

would otherwise outstrip supply or would require use of higher-cost generation. 

Much as one application of demand response involves ‘‘load shifting,’’ this application of energy storage resources could be viewed as ‘‘generation shifting.’’ 

I would note that wind generation is not the only potential contributor to negative 

pncmg. Certain base-load generators that must operate at a more or less steady 

state around the clock (i.e., they have inflexible dispatch characteristics) may have 

a strong incentive to continue generating even when there is not enough load to bal-
74 

ance their output. Thus, they also may contribute to the incidence of negative pricing. 

Question 4. Compressed air energy systems are considered an energy storage 

mechanism because electrical energy is used to compress air that is stored in a pressurized reservoir. Given the fact that compressed air energy systems require some 

method to use the compressed air to make electricity, should these systems be classified as a generation technology or a transmission and distribution technology? 

Answer. Traditional generation, transmission, and distribution resources are associated with well understood functions and methods of rate recovery. At a high level, 

generators are used to produce electricity, transmission lines move that electricity 

to the distribution grid, and distribution lines move that electricity to end-use consumers. 

Energy storage technologies, by contrast, have some characteristics that resemble 

generation and some characteristics that resemble transmission. For example, like 

a generator, an energy storage resource may be able to act as a power marketer, 

arbitraging differences in peak and off-peak energy prices or selling ancillary services. The same energy storage resource also may be able to support transmission 

service, such as by supporting voltage on a transmission line, in which case it might 

be categorized as transmission, much as some static VAR compensators and capacitor banks already are. In addition, energy storage resources may be used as a substitute, temporary or otherwise, for traditional resources in some circumstances. For 

example, where peak period transmission congestion might prevent the importation 

of sufficient power to serve peak load, but where there is available off-peak transmission capacity that could be used to charge an energy storage resource, that energy storage resource could be used to maintain uninterrupted electric service until 

additional transmission or generation assets could be installed. 

Thus, energy storage resources, including those that involve energy conversion 

steps like compressed air energy systems and hydro pumped storage, can perform 

different functions on the grid. In light of these characteristics, the Commission has 

not yet made a generally applicable classification of compressed air energy systems, 

nor has the Commission determined whether such a generally applicable classification would be appropriate. 

RESPONSES OF JON WELLINGHOFF TO QUESTIONS FROM SENATOR SHAHEEN

Question 1. As we think about policies to support the development of new transmission lines to connect location-constrained resources, such as wind and solar resources, how should energy storage be considered? 

Answer. I believe that effective transmission planning is an important step in the 

development of new transmission lines designed primarily to connect location-constrained resources such as generators of wind and solar energy. I also believe that 

it is appropriate to consider energy storage as part of the transmission planning 

process. 

In February 2007, the Commission issued Order No. 890, which marked an important step to promote consideration of energy storage in the transmission planning 

process. In Order No. 890, the Commission required all transmission providers to 

develop a regional transmission planning process that satisfies nine principles, one 

of which is comparability. To reflect that principle, the Commission required transmission providers to outline in their tariffs how they will treat comparably in the 

transmission planning process all resources, including non-traditional resources that 

could impact the need for transmission expansion. Such an impact might arise, for 

example, where it is practical to use energy storage resources as a substitute, temporary or otherwise, for new transmission facilities. 

I would also note that the Strategic Plan that I provided to Congress this fall 

states that as transmission providers refine their transmission planning processes, 

the Commission will assess best practices, including the potential for collaborative 

decision making, and adopt reforms as necessary to its transmission planning process requirements. Toward that end, Commission Staff this fall completed a series 

of conferences held around the country to review how well the transmission planning requirements of Order No. 890 are meeting the needs of our Nation, and to 

collect input as to how the Commission can improve upon the regional transmission 

planning processes. The Commission is now in the process of reviewing comments 

that were submitted in response to questions that Commission Staff posed as a follow-up to the conferences held this fall. 

Question 2. One of the proposals put forward to connect these resources with new 

transmission lines is to spread out or ‘‘regionalize’’ the costs of these new transmission investments. 
75 

Question 3. If we regionalize the cost of new high voltage transmission lines for 

renewables as a part of transmission rates without storage, we could end up with 

a big transmission line with a relatively low capacity factor because of the intermittent nature of many renewable resources. When a lower overall cost option might 

be to have storage near the intermittent generation, like a wind farm, and a smaller 

transmission line with a higher capacity factor and higher utilization rate. 

Question 4. As Congress considers policies to connect our renewable resources to 

the grid, how can we achieve that objective in a cost-effective manner? How should 

energy storage technologies be incentivized under broader transmission and renewable policies? 

Answer. I agree that decisions related to development of new transmission lines 

should be made based on meeting energy needs in a cost-effective way. Toward this 

end, it is important to promote effective transmission planning, as discussed above 

in my response to your first question. It is also important to carefully consider a 

proposed project’s costs and benefits. As you know, cost allocation is often a threshold consideration in the development of transmission facilities. For example, there 

are often significant costs associated with building the transmission facilities needed 

to deliver power from remote renewable energy resources. If the resource developer 

or the host utility is compelled to bear all of the cost of such transmission facilities, 

regardless of benefits to others, then it is less likely that the associated renewable 

energy resources will be developed. A closely related point is that the Commission 

must and, I believe, does ensure that costs of new transmission lines are allocated 

fairly to the appropriate entities that benefit from the projects. 

With regard to incentivizing energy storage technologies, I would note first that 

some such technologies appear able to provide a nearly instantaneous response to 

regulation signals, in a manner that is also more accurate than traditional resources. These characteristics could reduce the size and overall expense of the regulation market. Most existing tariffs or markets do not compensate resources for superior speed or accuracy of regulation response, but such payment may be appropriate in the future as system operators gain experience with the capabilities of 

storage technologies. In the meantime, the unique characteristics of energy storage 

technologies could warrant different market rules for providing energy and ancillary 

services than those established based on the characteristics of traditional resources. 

I would also note that in section 1223 of the Energy Policy Act of 2005 (EP Act 

2005), Congress identified ‘‘energy storage devices’’ as an ‘‘advanced transmission 

technology’’ and also stated that in carrying out the Federal Power Act (FPA), the 

Commission shall ‘‘encourage, as appropriate’’ the deployment of advanced transmission technologies. The Commission has recognized that Congress envisioned a 

connection between section 1223 and section 1241 of EP Act 2005, which added section 219 to the FPA and directed the Commission to establish, by rule, incentivebased rate treatments to promote capital investment in transmission infrastructure. 

The Commission subsequently issued Order No. 679, which set forth the criteria by 

which a public utility may obtain transmission rate incentives pursuant to FP A section 219. The Commission has carefully considered applications for such incentives 

filed by energy storage developers and will continue to do so. 

Question 5. As you may know, an amendment pertaining to cost allocation was 

adopted during consideration of the transmission title of the S. 1462, American 

Clean Energy Leadership Act. The provision reads: 

Sec. 121 (i)—COST ALLOCATION 

. ‘(B) may permit allocation ofcosts for high-priority national transmission 

projects to load-serving entities within all or a part ofa region, except that 

costs shall not be allocated to a region, or subregion, unless the costs are reasonably proportionate to measurable economic and reliability benefits; ’’ 

If approved, how would this policy affect, if any, New England’s existing cost allocation methodology for reliability-based and participant-funded transmission infrastructure improvements? As you know, the methodology, established in 2004, provides for regional cost support of regionally planned transmission upgrades that provide region-wide benefits. I am interested in how the cost allocation language in S. 

1462 may affect New England’s existing policies for transmission improvements necessary for reliability purposes. 

Answer. In my view, the first clause of the language that you quoted from S.1462 

includes an important clarification to the Commission’s authority in the area of 

transmission cost allocation. It is critically important that the Commission continue 

to have the flexibility to approve cost allocation methods that meet local and regional needs in a manner that provides just and reasonable rates for consumers as 

well as nondiscriminatory access to the transmission system. It is also appropriate 
76 

that Congress clarify that the Commission has authority to allocate transmission 

costs to all loadserving entities within an interconnection or part of an interconnection where it is appropriate to do so. Of course, as I noted above in response to your 

previous question, the Commission would need to ensure, as it does today, that the 

costs are allocated fairly to the appropriate entities. 

However, I am very concerned about another aspect of the language that you 

quoted from S.1462. Legislation should avoid unduly restrictive language on cost allocation, particularly language that could be read as imposing a requirement to calculate the precise monetary benefits expected to accrue from a new transmission facility. It is possible that ISO New England’s existing cost allocation method would 

be found inconsistent with the restrictive language in S.1462 that requires a showing that ‘‘costs are reasonably proportionate to measurable economic and reliability 

benefits.’’ 

Question 6. As you may know, thermal energy storage—that is the thermal momentum of buildings, both heating and cooling, can mimic the same characteristics 

of electric energy storage technology—like pumped storage, air compression, 

flywheels or battery technologies. 

Do you consider thermal storage technologies, such as offpeak cooling with thermal energy storage, as an electricity storage technology like pumped storage, air 

compression, flywheel and battery technologies? Ifnot, why not? 

Answer. I generally agree that thermal energy storage can be classified as an energy storage technology. It is noteworthy that there are a variety of thermal energy 

storage technologies and applications, which can be located on different parts of the 

electric system. For example, some large concentrating solar thermal electricity generation plants can be designed to include on-site thermal storage capability for excess heat to permit electricity generation to continue after the sun has set. Another 

form of thermal storage can involve controlled cooling at large refrigeration plants 

that serve industrial, commercial, or residential cooling loads. Yet another technology involves smaller distributed thermal energy storage for shifting cooling loads 

from peak to offpeak periods. Each of these technologies could constitute an ‘‘energy 

storage device’’ and thus could also be considered as possible ‘‘advanced transmission technologies’’ as defined in section 1223 of EPAct 2005. 

Question 7. Considering that 40% of the summer peak demand in New England 

consists of air conditioning and cooling loads, what can we do to promote offpeak 

cooling with thermal energy storage, such as ice energy, to avoid paying more for 

transmission and generation capacity that is only used a few hours per year? 

Answer. Because thermal energy storage for cooling requires the storage to be located at the cooling location, support for distributed thermal storage or possibly 

some type of district cooling (e.g., large thermal ponds at the neighborhood level) 

may have particular promise. In both cases, this equipment would likely be located 

at the retail end of the electric grid. Given that location, in circumstances where 

a developer of a distributed thermal storage technology chooses to work with an 

electric utility to encourage consumers to adopt that technology, retail regulators 

could promote that use of distributed thermal storage by permitting the utility to 

recover the cost of such investments in bundled retail rates. Where a developer of 

a distributed thermal storage technology does not choose to work with an electric 

utility, changes in retail rate design or other policies such as tax credits could make 

investments in such technologies more attractive to prospective users. In addition, 

to the extent that a developer of a distributed thermal storage technology does not 

choose to work with an electric utility, it may be possible to develop tariffs for 

wholesale markets under which users could receive compensation for the demand 

reductions they achieve by deploying such technologies. I would be supportive of exploring such mechanisms. 

Question 8. Anyone who has spent time studying renewable energy sources and 

how they work knows that having grid-scale energy storage assets will be crucial 

to the effectiveness and extent of renewable integration into our electrical power 

system. When you want power from a generator that burns fossil fuels, you turn 

it on. Solar panels and windmills, however, require sun to shine and wind to blow 

to generate power. Since that might not happen at exactly the moment that power 

is needed, the capability to store the energy and use it at a later time, whether it’s 

10 seconds or 10 hours later, is crucial. 

Question 9. As we increase the amount of renewable on the grid, how much energy storage and what type of storage, will be required to meet our goals? I say 

what type of storage, because I understand there are two types of challenges to 

making the renewable generation system work effectively. One relates to balancing 

the supply and demand of power on the grid at any moment, called regulation. Regulation requires energy storage that can absorb and inject energy into the grid very 

quickly. The other relates to what’s called diurnal storage—storing energy when the 
77 

wind blows, for example, and using it when the wind dies down but demand for electricity stays high. 

Question 10. How much of each type of storage do we need to make our renewables, both current and planned, work most effectively? 

Question 11. Is there a clear ratio that we need to achieve between storage and 

renewable resources? 

Answer. I agree that there is a close relationship between the development and 

implementation of energy storage and our Nation’s ability to harness the potential 

of our renewable energy resources. As I stated in my December 10, 2009 testimony 

to this Committee, energy storage can make integration of renewable energy resources not only reliable, but also efficient and cost-effective. 

I would note that I have directed Commission Staff to conduct a study to determine the appropriate metrics for use in assessing the reliability impact of integrating large amounts of variable renewable energy into the grid. That study, which 

is being undertaken by Lawrence Berkeley National Laboratory and overseen by 

Commission Staff, is due to be completed in the spring of 201O. When the study 

is complete, it will help to inform policy makers about the current limitations of the 

grid, and to identify what investments will be necessary to reliably accommodate 

continued growth of renewable energy resources. 

However, generalizing about either the amount or type of storage needed to integrate renewable energy most effectively into the electric system is difficult given the 

variances in renewable generation types (e.g., solar as compared to wind) and the 

varying capacity factors of each resource depending on location and other characteristics (e.g., on-shore wind as compared to off-shore wind). The Commission also has 

not identified a ratio as to the amount of energy storage needed per amount of a 

particular type of renewable energy. In addition, I would note that other non-traditional resources, such as demand response, also can contribute to the reliable, efficient, and cost-effective integration of renewable energy resources. 

Question 12. Is energy storage keeping up with renewables deployment, or do we 

have to ramp up the rate at which energy storage is made available to keep pace 

with our plans and goals for integration of renewables? 

Answer. The recent expansion of our Nation’s reliance on renewable energy resources has progressed more quickly than deployment of energy storage. Several factors have helped to accommodate this expansion, such as pre-existing flexibility in 

the system and, in some regions, greater use of demand response in coordination 

with variable renewable energy resources. With pre-existing system flexibility diminishing, however, and for the reasons discussed above in response to several of 

your previous questions, I believe that there are substantial potential benefits to increasing the pace of deployment for energy storage resources. The lag in development of energy storage resources is also one of the primary reasons why, as noted 

in my response to your previous question, I directed Commission Staff to conduct 

a study to determine the appropriate metrics for use in assessing the reliability impact of integrating large amounts of variable renewable energy into the grid. I am 

hopeful that the results of that study will provide information to assist in assessing 

what investments in energy storage and other types of resources will be necessary 

to reliably accommodate continued growth of renewable energy resources. 

Question 13. Do we need to find a way to link the promotion and deployment of 

energy storage to the incentives we provide for renewables? It seems that renew 

abIes and energy storage are complementary components of a single system. 

Answer. Yes. It would be ideal if we could associate sufficient energy storage with 

each new megawatt of variable renewable energy resource developed to ensure the 

consistent capacity factor necessary to deliver the energy when and where needed. 

However, we should not lose sight of the fact that energy storage is not the only 

mechanism to accomplish this task. For example, transmission can provide for delivery of energy from diverse and non-coincident renewable energy resources and, 

therefore, also should be linked to that complementary single system. Thus, the aim 

should be to develop a market incentive system supported by federal policy that encourages the appropriate development of renewable energy resources, supports storage and other appropriate resources for balancing and delivering those renewable 

energy resources when needed, and a transmission system that enables that delivery from any of the renewable energy resource, a non-coincident alternative resource, or storage. 

Question 14. FERC Order 890 mandates that all independent system operators 

open their markets to non-generation resources to provide grid ancillary services, 

such as grid regulation. Electricity storage has been cited as one technology that can 

provide some of these services, with one company already using a flywheel energy 

storage system to provide grid regulation in Massachusetts, by which I mean the 

process of balancing the power injected into the grid with the level of power con-
78 

sumed at any given moment. I understand from the experience of this company, 

Beacon Power, that the extent of compliance with Order 890 varies greatly among 

the ISOs. Some ISOs have moved relatively quickly to adjust their tariffs and control technologies to meet this new technology, whereas others have been more resistant to FERC’s mandate. 

Question 15. Do you agree with this characterization? 

Question 16. What is the FERC doing to enforce compliance with Order 890? 

Answer. In Order No. 890, the Commission modified most ancillary services 

schedules of the pro forma Open Access Transmission Tariff to indicate that those 

ancillary services may be provided by generating units as well as non-generation resources, such as demand resources, where appropriate. The Commission also stated 

that sales of those ancillary services by load resources should be permitted where 

appropriate on a comparable basis to service provided by generation resources. 

I agree with the characterization in your question to the extent that it recognizes 

that various regional transmission organizations (RTO) and independent system operators (ISO) are at different stages of developing appropriate tariff mechanisms for 

energy storage resources to provide ancillary services. All of the RTOs and ISOs 

that operate energy and ancillary services markets are working with their stakeholders to determine how non-generation resources, including energy storage resources, can provide ancillary services in those markets. As I described in my December lO, 2009 testimony to this Committee, some of the RTOs and ISOs have also 

made or proposed specific tariff changes, while others have established pilot programs. Achieving compliance with major initiatives such as Order No. 890 often involves an iterative process, rather than a single compliance filing. 

I would also note that the Strategic Plan that I provided to Congress this fall sets 

as a long-term performance goal that all resources technically capable of providing 

ancillary services wil1 have the opportunity to provide those services. Toward that 

end, the Commission will consider instituting formal proceedings that may address 

the modification or creation of ancillary services. as well as the removal of additional barriers that may exist to any resource capable of providing an ancillary service from having the opportunity to do so. 

RESPONSES OF JON WELLINGHOFF TO QUESTIONS FROM SENATOR UDALL

Question 1. Chairman Wellinghoff, how would you assess the changes that Independent System Operators and Regional Transmission Organizations have made in 

recent years to allow storage to compete in their markets? Would you judge that 

they have made significant progress? What do you think is still left to do? 

Answer. Various regional transmission organizations (RTO) and independent system operators (ISO) are at different stages of developing appropriate tariff mechanisms for energy storage resources to provide ancillary services. All of the RTOs and 

ISOs that operate energy and ancillary services markets are working with their 

stakeholders to determine how non-generation resources, including energy storage 

resources, can provide ancillary services in those markets. As I described in my December 10, 2009 testimony to this Committee, some of the RTOs and ISOs have also 

made or proposed specific tariff changes, while others have established pilot programs. 

I believe that these actions taken by the RTOs and ISOs constitute significant 

progress. Nonetheless, I would note that the Strategic Plan that I provided to Congress this fall sets as a long-term performance goal that all resources technically 

capable of providing ancillary services will have the opportunity to provide those 

services. Toward that end, the Commission will consider instituting formal proceedings that may address the modification or creation of ancillary services, as well 

as the removal of additional barriers that may exist to any resource capable of providing an ancillary service from having the opportunity to do so. 

I also stated in my December 10, 2009 testimony that some energy storage technologies appear able to provide a nearly instantaneous response to regulation signals, in a manner that is also more accurate than traditional resources. These characteristics could reduce the size and overall expense of the regulation market. Most 

existing tariffs or markets do not compensate resources for superior speed or accuracy of regulation response, but such payment may be appropriate in the future as 

system operators gain experience with the capabilities of storage technologies. In 

the meantime, the unique characteristics of energy storage technologies could warrant different market rules for providing energy and ancillary services than those 

established based on the characteristics of traditional resources. 

Question 2. Chairman Wellinghoff, what is your view on how rate recovery should 

be done for storage projects that are built to defer the need for new investments 

in transmission infrastructure or to relieve transmission congestion? 
79 

Answer. Energy storage technologies have some characteristics that resemble generation and some characteristics that resemble transmission. For example, like a 

generator, an energy storage resource may be able to act as a power marketer, 

arbitraging differences in peak and off-peak energy prices or selling ancillary services. The same energy storage resource also may be able to support transmission 

service, such as by supporting voltage on a transmission line, in which case it might 

be categorized as transmission, much as some static VAR compensators and capacitor banks already are. In addition, energy storage resources may be used as a substitute, temporary or otherwise, for traditional resources in some circumstances. For 

example, where peak period transmission congestion might prevent the importation 

of sufficient power to serve peak load, but where there is available off-peak transmission capacity that could be used to charge an energy storage resource, that energy storage resource could be used to maintain unintelTupted electric service until 

additional transmission or generation assets could be installed. In light of these 

characteristics, the Commission has not yet made a generally applicable classification of energy storage resources for purposes of cost recovery, nor has the Commission determined whether such a generally applicable classification would be appropriate. 

RESPONSES OF JON WELLINGHOFF TO QUESTIONS FROM SENATOR STABENOW

Question 1. I appreciate the opportunity to hear more about the potential for energy storage technology usage in our energy grid. 

Continuing to pursue energy storage technologies like those mentioned in your 

testimony will help make our grid more efficient, connect renewable technologies to 

our systems, and ultimately lead to less greenhouse gas emissions and more jobs 

for our workers. 

I would like to point out a connection between grid energy storage issues to another interest important to my state of Michigan—advanced batteries for vehicles. 

Advanced electric vehicles provide two benefits for the electricity grid. First, vehicle battery technology can improve store energy for the grid. Second, those vehicles 

can communicate with the grid and use more energy at low demand periods when 

energy is cheaper or more renewables are available. 

I was proud to help provide funding for advanced batteries in the Recovery Act 

which provided nearly $2.3 billion for advanced battery manufacturing. :Many companies and universities in Michigan, such as A123 systems and the University of 

Michigan, have used this funding to make Michigan and the United States a leader 

in advanced battery technology development. A123 is also working with our Michigan utility, Detroit Edison, to demonstrate its battery technology for grid storage. 

Certainly energy storage technology and cost will depend on both the vehicle and 

electrical industries. Please provide examples of the need for government R&D efforts and these two industries to continue to work together to develop the next generation of advanced batteries required by both industries. 

Answer. I agree that both the electric and vehicle industries will benefit from the 

development of advanced batteries that can enhance the operation of electric transportation, as will consumers who purchase electric vehicles. I also agree that to fully 

realize such benefits, government support for research and development in this area 

is appropriate, and cooperation between the electric and vehicle industries is essential. 

As you know, there are many examples of technologies that originally emerged 

from research and development that was conducted with Federal government support. Indeed, much of today’ s existing battery technology for electric vehicles could 

be placed in that category, although to date much subsequent development and commercialization of that technology has occurred outside of the United States. I believe 

that continuing the Nation’s commitment to research and development in this area 

offers the promise of further technology breakthroughs. 

One illustration of the need for cooperation between the electric and vehicle industries is related to the potential for the batteries in electric vehicles to provide services to the grid. As I stated in my December 10, 2009 testimony to this Committee, 

researchers at the University of Delaware have demonstrated that electric vehicles 

can provide regulation service. In fact, P1M Interconnection (P1M) is currently paying electric vehicles to do so. P1M aggregates a 1 megawatt battery that a utility 

installed at P1M headquarters with the batteries of three electric cars associated 

with the University of Delaware’s research. The batteries then sell into P1M’s regulation market. 

The University of Delaware researchers believe that, using this technology, 

parked electric vehicles connected and aggregated in large numbers in places like 

parking garages could be made available as energy storage to support grid oper-
80 

ations. Achieving that larger-scale potential will involve increased cooperation between the electric and vehicle industries, such that electric vehicles are equipped 

with appropriate vehicle-to-grid (V2G) technology that allows the necessary two-way 

communication and bidirectional controlled flow between the vehicle and the grid. 

Question 2. How critical are auto technologies to the electrical industry and infrastructure as we strive to use energy more efficiently and tap into more renewable 

sources? 

Answer. I believe that energy storage resources have great potential to complement our Nation’s efforts to reliably incorporate into the grid increased output 

from variable renewable energy resources. With increasing commercial availability, 

electric vehicles could become a widespread energy storage resource and contribute 

to reaching that goal. For example, as I noted above in response to your first question, electric vehicles can provide ancillary services, like regulation service, to the 

grid and thus assist system operators in balancing the variability of many renewable energy resources. 

Question 3. In addition, are there any regulatory or statutory barriers that would 

make FERC’s efforts to integrate this kind of technology more effective? 

Answer. As I stated in my December 10 testimony, the Commission recognizes 

and is taking steps to address the challenge of removing regulatory barriers that 

impede the vast potential of energy storage to support our national energy goals. 

For example, the Strategic Plan that I provided to Congress this fall sets as a 

long-term performance goal that all resources technically capable of providing ancillary services will have the opportunity to provide those services. Toward that end, 

the Commission will consider instituting formal proceedings that may address the 

modification or creation of ancillary services, as well as the removal of additional 

barriers that may exist to any resource capable of providing an ancillary service 

from having the opportunity to do so. 

More specifically, I would note that most existing tariffs or markets do not compensate resources for superior speed or accuracy of regulation response. Such payment may be appropriate in the future as system operators gain experience with 

the capabilities of storage technologies. In the meantime, the unique characteristics 

of energy storage technologies, including electric vehicles, could warrant different 

market rules for providing energy and ancillary services than those established 

based on the characteristics of traditional resources. The Commission is working toward removal of such barriers to market participation by energy storage resources. 

Question 4. Does FERC require any additional authority to advance energy storage technology and use? 

Answer. PJM’s compensation of electric vehicles for providing regulation service 

demonstrates that it is possible under existing authority to integrate electric vehicles into Commission-jurisdictional markets. Removing the types of barriers described in my response to your previous question will create additional opportunities 

for market participation by electric vehicles and other energy storage resources. 

It also should be noted that retail regulatory authorities have an important opportunity to directly support the widespread adoption of energy storage technologies, 

including electric vehicles. To date, states have led the way in pushing for increased 

reliance on our Nation’s still largely untapped renewable energy resources, and in 

light of the potential for energy storage to complement those often variable resources, retail regulators may come to see benefits of supporting storage development through retail rate recovery. The Commission will look for ways to work with 

the states to ensure that innovative retail rates do not raise concerns for the operation of Commission jurisdictional wholesale markets. 

RESPONSES OF RALPH D. MASIELLO TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Dr. Masiello, in your testimony you discussed the need for considering 

energy storage in transmission planning. S.1462 includes energy storage as an alternative that must be considered in transmission planning. Is this sufficient? What 

other legislative language may be necessary? 

Answer. Storage on the distribution system offers new capabilities that can affect 

the need for transmission capacity expansion. This poses the challenge that transmission planning would have to include some consideration of how storage at the 

distribution level can be a transmission resource. Given that many renewable resources are developed as ‘‘distributed generation’’ on the distribution system, this 

will become an increasingly important consideration. Ideally, transmission planning 

would have to show quantitative evaluation of energy storage as an alternative in 

transmission planning, including its impacts on reliability and congestion. 
81 

I cannot speak as an expert as to how best to implement the requirement via legislation or regulation. It may be that requiring how to demonstrate consideration 

of energy storage is something FERC would do via a regulatory process. However, 

FERC oversight today generally does not extend to distribution systems though we 

now have the potential for transmission assets on the distribution system to be a 

factor in transmission planning. 

Question 2. Dr. Masiello, how is energy storage currently addressed in transmission and generation planning processes? What planning, analysis, and modeling 

tools do we need to develop to be able to determine where to best site storage technologies? 

Answer. Storage is already considered in generation planning processes today 

where known storage alternatives to generation such as pumped hydroelectric storage are viable resources. Generally speaking, however, storage is not a routine consideration today in transmission planning either from a reliability perspective or a 

transmission congestion perspective. Storage is beginning to be considered in the 

context of renewable generation that is subject to transmission congestion, as in the 

case of remote wind farms. 

To allow for storage to be routinely considered in system planning, the industry 

needs to have standard models for storage systems which can be parameterized to 

represent different technologies and sizes. This is the case today with generation 

systems and with transmission apparatus—there are formal standards from the Institute of Electrical and Electronics Engineers (IEEE) for models of different equipment classes that are identified as suitable for particular planning purposes such 

as transient stability, load flow, and other analyses. These standard models allow 

for the exchange of planning data as well as a degree of compatibility across different software applications from different vendors. One key step, therefore, is the 

development of similar standards for storage systems so that they may be consistently represented in the various planning models and tools. Because many storage 

technologies are novel and somewhat developmental, and because the life expectancy of storage systems as a function of their usage is central to the economic analysis of different applications, considerable work is required to develop methodologies 

for characterizing and modeling storage system life cycles as well as validating 

those characterizations over time. 

A key inherent benefit of storage systems is in the ability to shift energy delivery 

in time; that is to deliver energy at a time later than when it is generated. In general, transmission studies today analyze a ‘‘shapshot’’ of the system at a moment 

in time (usually assumed to be at peak loading) as opposed to analyzing conditions 

over a period of time. Determining the optimal size of a storage system requires that 

the transmission planning analysis look at system performance over a time period 

during which the storage system is optimally used. Thus, new methodologies for optimization and simulation are required and these must be incorporated into transmission planning tools. Storage inherently transforms the ‘‘economic dispatch’’ problem—how to best allocate generation at a given moment in time—to a ‘‘unit commitment’’ problem—how to best allocate resources over time. As such, it will require 

that transmission planning must also consider these time dynamics. 

Question 3. Dr. Masiello, what kinds of system information-sharing and collaboration must exist, to ensure that storage and distributed renewable generation (two 

sides of the same coin) can be effectively dispatched such that the bulk power grid 

is managed most reliably and efficiently? What role must interoperability and cybersecurity standards play, to ensure this becomes a reality? How do transmission system operators need to change their practices and software to accommodate efficient 

dispatch of energy storage? 

Answer. The ISO RTO Council of North American Independent System Operators 

is developing proposed business process, data model, and interoperability standards 

for storage and distributed generation as inputs to the National Institute of Standards and Technology (NIST) Smart Grid interoperability standards process. These 

will include proposals for what information must be exchanged and with what periodicity for different reliability, dispatching, and control purposes at the wholesale or 

transmission level. These proposed standards will be reviewed by the appropriate 

teams and working groups within the NIST standards framework, and will have to 

be compatible and compliant with the broader set of NIST interoperability standards, including cyber security provisions. 

The key issues for distributed resources and renewable resources are: forecasting, 

visibility or monitoring, and control. At low levels of penetration inaccurate forecasts 

of renewable production and a lack of direct visibility are manageable. At high levels of penetration (i.e., over 20%), the system operators will require more accurate 

forecasts of production and real time visibility of actual production of both grid connected and distributed resources. Controlling renewable resources requires the 
82 

means to avoid unanticipated and sudden fall offs in production. This implies that 

a grid operator might require renewable resources to ‘‘ramp down’’ or be curtailed 

in anticipation of near-term weather changes. Alternatively, storage as a local resource or as a grid service could help resolve sudden drops in renewable generation. 

The variable nature of renewable resources will add more uncertainty to the daily 

and hourly scheduling processes. Grid operators will have to adapt to this via 

changed protocols for scheduling reserves and perhaps ‘‘ramping’’ capability in the 

system. 

The algorithms used by market operators or by vertically integrated utilities to 

optimally schedule day-ahead, hour-ahead, and real-time generation will all have to 

be able to consider and optimize the ability of storage to shift energy demand and 

production in time. In general, this is a difficult problem which is addressed today 

only in specific cases of hydro thermal scheduling that have incorporated models of 

particular pumped hydroelectric facilities. Even in these cases, because existing 

pumped hydroelectric storage is not controllable when pumping, the solutions are 

not at the level of sophistication that will be required in the presence of high renewable production and large amounts of available and distributed storage. 

RESPONSES OF RALPH D. MASIELLO TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. In your written testimony, you indicated that demand response and 

dynamic pricing cannot be maintained at certain renewable penetration levels. The 

energy bill passed by this Committee would require up to 15% of the electricity supply from renewable sources or energy efficiency by 2021. Is this percentage practically achievable if the energy storage technologies are not deployed on a large 

scale given the intermittency of the renewable sources? Will development and deployment of energy storage technologies proceed at a pace sufficient to match the 

need for meeting a federal renewable mandate? 

Answer. To clarify this point, my intention was to say that managing the production characteristics and variability of renewable resources when they are over 20% 

of the portfolio may be difficult with demand response and dynamic pricing alone, 

as it is not clear what level of demand control the public might accept. (This is a 

personal opinion of mine). In conjunction with demand response and dynamic pricing, storage offers another resource for mitigating the intermittent behavior of renewables. 

For storage development to proceed as rapidly as mandated renewable development, the technology must be proven and either the economics must be attractive 

(such as with the time arbitrage of energy for the renewable developer or storage 

developer). Today, there is no easy way for a storage developer to anticipate what 

the time arbitrage of energy prices will be under high renewable levels if demand 

response or dynamic pricing is the key determinant in setting marginal prices— 

there is not sufficient data to understand what consumer price levels for demand 

response will need to be to achieve high levels of demand control. The tradeoffs between high levels of renewables, demand response or dynamic pricing, and storage 

are not well understood economically. Studies are needed to identify the various 

tradeoffs and begin to assess the quantitative economics. 

Question 2a. Pumped hydro has been the workhorse for utility-scale energy storage and provides 21 gigaWatts (GW) of electrical capacity. However, suitable locations for pumped hydro are considered limited. 

Of the nearly 80,000 dams in the U.S., how many have hydroelectric generating 

capabilities? 

Answer. Though KEMA has expertise in hydroelectric generation, the national 

labs appear to have developed national assessments of hydropower potential in the 

U.S. In particular, Idaho National Laboratories (INL) has completed a series of reports over the past decade to assess hydropower potential in the U.S. and have developed tools for modeling the potential and the economics of a given site. Dr. 

McGrath of (NREL) may also be able to provide better information on national inventories. However, it appears that according to the Army Corp of Engineers, 2,400 

of the nearly 80,000 dams in the U.S. have hydroelectric generating capabilities. 

Question 2b. If so, how much additional capacity could be obtained in doing so? 

Answer. The 2003 INL report identified potential conventional hydropower capacity additions of 30,000 MW by developing feasible sites to full potential. Other analyses may differ, especially in the weighting factors used to assess issues such as environmental and land use factors. This estimate includes run-of-the-river hydropower as well as other hydropower sources not typically conducive to pumped storage. As such, these studies do not explicitly identify potential hydroelectric pumped 

storage project potentials. 
83 

Other sources identify significant numbers of projects in the permitting stage for 

the construction of above-ground and cavern-based pumped storage—as much as 

31,000 MW of pumped storage capacity. Whether these projects will pass federal, 

state, and local environmental, land use, and eminent domain reviews and processes 

and proceed to construction is difficult to assess, as is predicting the timeline for 

such approvals. 

Pumped storage can be the most economically attractive large scale storage technology (00’s to 000’s of MWh) if the siting provides sufficient elevation difference between low and high reservoirs and sufficient acreage for large amounts of storage. 

Efficiencies can be as high as 80% overall if elevation differences are great enough 

and if the reservoirs do not lose water to leakage into the water table or to evaporation. Unfortunately, most existing hydroelectric generation facilities are not suitable for pumped storage applications due to lack of a sizable reservoir below the 

dam. One notable exception to this is at Niagra Falls where a very large pumped 

storage facility has been proposed. There are obvious environmental and public factors that come into play in such a location. 

RESPONSES OF ROBERT MCGRATH TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Dr. McGrath, what planning, analysis, and modeling tools do we need 

to develop to be able to determine where to site storage technologies that may be 

able to defer or negate the need for distribution and transmission upgrades or even 

the need for new generation/transmission/distribution? 

Answer. Analysis is required at multiple scales to quantify the need for energy 

storage and to develop the appropriate decision-making tools sufficient to balance 

trade-offs among new transmission, generation, load management (e.g. SmartGrid) 

and energy storage. Because energy storage can be considered by utilities and grid 

operators as either a central (large) or distributed source of dispatchable generation, 

modeling and simulation will need to cover a range of scales from single renewable 

energy sources to regional zones and the entire grid. Analysis is needed to understand the options under a number of potential scenarios at regional and national 

scale, to determine the scale(s) and timeframe(s) required for energy storage technology development and deployment, and provide the necessary information for 

market assessments. The need for a more holistic national-scale study is made all 

the more acute by the proliferation of renewable portfolio standards at the state 

level. 

For scenarios that look at increasing the use of Variable-Resource Renewable Energy (VRRE) options such as wind and solar, significant improvements are needed 

to quantitatively describe the actual electric grid and power flows to incorporate the 

complexities of storage and transmission technology options for planning scenarios. 

These improved analysis tools are needed to address a variety of problems ranging 

from long-term planning for capacity expansion decisions, to hourly decisions supporting least-cost system operation, and finally to sub-hourly decisions affecting 

emissions, reliability, ramping and reserve considerations. 

DOE has funded the development of significant electric grid modeling and analysis capabilities at national laboratories, e.g. ORNL, PNNL, SNL, LANL, and 

LBNL, mainly to address questions related to overall grid reliability and homeland 

security. NREL has developed collaborations with these national laboratories to specifically apply their data and analytic capability to studies of renewable energy penetration into the electric grid for multiple regions and scales. 

A number of efforts are underway to assess the interrelationship of storage and 

transmission and generation, but no significant large-scale studies have been completed. The bulk of the work to date has been to demonstrate that renewable energy 

can be integrated into the electric grid. Little work has been targeted to date at developing optimal solutions. Additional efforts should be directed at large-scale, detailed models, using large datasets. These models can then be used to draft broad 

potential scenarios, and reveal the proper balance of storage and transmission upgrades. 

As an example of work specific to renewable energy integration, NREL has developed the Regional Energy Deployment Systems (ReEDS) model for the long-term capacity expansion modeling at the national level. This model includes in considerable 

detail Variable-Resource Renewable Energy options (VRREs), along with more simplified analytical descriptions of storage and transmission. NREL is in the process 

of improving how transmission is represented in the ReEDS model, to better represent actual power flows. Detailed descriptions of distribution and storage considerations, however, remain outside the present scope of the model. Additional investments are required, supporting work at NREL and other sites, to develop, validate 
84 

and integrate detailed descriptions of storage, transmission and distribution into 

models such as ReEDS in order to support long-term grid planning and associated 

national policy formation. 

For least-cost system operation throughout a year at the individual utility, regional reliability entity, or ISO/RTO level, there are a number of existing commercially-available optimal power flow models that address renewables and generation/ 

transmission/storage tradeoffs, with varying degrees of accuracy. Providing these 

models with valid hourly renewable resource data, obtained from actual operation 

over multiple years, is an ongoing challenge now being addressed by NREL. Approximating these detailed hourly model results in the capacity expansion models 

described in the preceding paragraph is another crucial ongoing modeling effort. 

Modeling at the sub-hourly level for system reliability, carbon and local air emissions, ramping, and reserves, in a system with large amounts of VRREs, will be critical as we look to the future—though limited funding has kept such effort in its infancy. Finally, it is important to recall that the authority for generation, transmission and distribution approval is largely in the purview of state government. 

Question 2. Dr. McGrath, some of the commercial software that grid planners use 

today grew out of previous DOE-funded research. What is DOE doing to help develop grid planning software that takes account of energy storage and renewable energy? What are the national labs doing to support transmission planning models 

and software? How much funding is going towards this work now, and how does this 

compare to past funding levels? 

Answer. Energy storage will be an important element in the extremely complex 

process of integrating large quantities of renewable energy into the electric grid. As 

pointed out by Undersecretary Koonin, a national grid-scale energy storage RD&D 

program aimed at developing and implementing cost-effective, energy-efficient, 

large-scale energy storage technologies will require a serious commitment to grid optimization analysis, as well as to energy storage technology development. 

In the area of grid analysis, the DOE Office of Electricity funds several national 

laboratories, including NREL, PNNL, ORNL, LBNL and ANL as well as universities 

to advance tools, develop methods, and perform specific studies. For example, ORNL 

and PNNL have developed extensive visualization capabilities in collaboration with 

utilities. Los Alamos and Sandia have developed extensive physics-based models of 

the existing national electric grid that include real-time power generation and flows 

to predict the impacts of disruptions, either natural or man-made, on the electric 

grid. This model was developed initially through DOE-OE, then through the Department of Homeland Security’s National Infrastructure Simulation and Analysis Center (NISAC). DOE-EERE is supporting data development and looking at needed advancements to accurately capture the characteristics and effects of variable renewable energy sources. 

NREL has specifically been engaged in grid analysis for renewable energy integration and has developed collaborations with a number of national laboratories and 

companies to apply their models and data to studies of renewable energy penetration into the electric grid for multiple regions and scales. In the Western Wind and 

Solar Integration Study (WWSIS), NREL is working with GE and its GE-MAPS 

software to examine the potential synergies between pumped hydro storage and 

VRREs. In another effort, the Renewable Electricity Futures Study, NREL is working with ABB to use and improve their GridView model for assessing the role of 

transmission and storage under high renewable penetration scenarios. In a third effort, the Western Renewable Energy Zone (WREZ) initiative, NREL provided highly 

detailed VRRE data maps, then worked with western states, Canadian provinces, 

and Mexico (which encompass the western grid interconnection), for assessing renewable resource potential, and transmission requirements necessary to deliver 

these resources to load centers. 

Recently, NREL has been collaborating with Los Alamos National Laboratory 

through funding from the DOE-EERE wind program to incorporate models and data 

from LANL’s large DHS-funded NISAC. These models use power flows on the existing grid and will allow for detailed ‘‘what-if’’ analysis as to when, where, and how 

best to enhance the grid for maximum integration of renewable energy. 

NREL has been working with Western Electricity Coordinating Council (WECC) 

to create a support partnership with national laboratories that will draw upon prior 

work and existing capabilities across the national lab complex. WECC was notified 

by DOE on Dec. 18 that it has been selected for an award to research options for 

alternative electricity supplies and associated transmission requirements, in an integrated approach to the western grid that could involve several laboratories in addition to NREL. The goal of this effort would be to create a tool that would allow for 

‘‘what if’’ assessments for the effective integration of renewable energy into the existing and future electric grid. A total of about $80 million in Recovery Act funding 
85 

is to be obligated by DOE toward this and other projects also selected in December. 

Through ARRA funding, DOE has additionally funded a number of relevant solicitations, including studies on high penetration of solar energy and two large blocks of 

grants on SmartGrid at the distribution level. 

To realize the goal of high penetration of renewable energy and enable utility 

companies to meet their goals, understand their options (including integration, storage, or new transmission capacity), and assess the impacts and economics of future 

scenarios over multiple timescales, additional investment is needed both for applying current models to renewable energy integration scenarios (in multiple regions 

and at the national level), and for developing more quantitative models and processing large complex datasets. Akin to the emerging partnership NREL has helped 

facilitate between WECC and National Laboratories, DOE and its National Laboratories can play a particularly important role in objective planning over longer timeframes (i.e., greater than 10 years) in integrating among planning groups across regions. DOE and its National Laboratories can also assist by making available, in 

a non-regulatory environment, the massive amounts of data and information that 

will be generated from large renewable energy installations, from the SmartGrid 

and from utilities in general. Decision-making tools would also be valuable for analysis of future government investment and policy options. 

RESPONSES OF ROBERT MCGRATH TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. In your testimony you state that ‘‘To achieve 20 percent wind penetration by 2030 consequently requires more than a ten-fold increase in wind production, to more than 300 GW.’’ 

a. For this additional 300GW of actual electricity that would need to be produced, 

what would be the total name plate capacity? Do you have cost estimates for the 

production of this much electricity from wind? 

b. What is the projected cost of the additional transmission and distribution assets 

for utilizing this much wind power? 

Answer. Based on analysis conducted for the DOE 20 Percent Wind Energy by 

2030 report, 300 GW of wind nameplate generation capacity would provide 20 percent (1200 TWh annually) of the projected US electricity demand in 2030. Total system cost (including capital investment for conventional and wind generation technology, fuel costs, operation and maintenance cost, and transmission expansion 

costs) for a scenario encompassing 300 GW of wind capacity was compared to the 

total system cost for a scenario with essentially no additional wind capacity. It was 

found that the 20 Percent Wind Scenario requires higher initial capital costs, yet 

offers lower ongoing energy costs for operations, maintenance and fuel. Overall, a 

20 Percent Wind Scenario was estimated to cost about 2% more than a scenario that 

did not include new wind capacity. 

The proposed transmission expansion associated with the addition of 300 GW of 

wind capacity is estimated at $20 billion in net present value (NPV). The actual grid 

investment required could involve additional costs for permitting delays, construction of grid extensions to remote areas with wind resources, and investments in advanced grid controls, as well as training to enable regional load balancing of wind 

resources. This estimate is similar to a conceptual transmission plan that provides 

for 19,000 miles of new 765 kV transmission line at an NPV cost of $26 billion. Distribution asset cost was not included in this analysis. As electric demand grows in 

the future, distribution assets will also require upgrading, regardless of the central 

generation technology that supplies the electricity. 

Question 2. In your testimony you state that the current electricity system can 

absorb much greater quantities of renewable generation than are currently deployed 

without significant increases in storage technologies. But, given the experiences in 

West Texas in which excess wind generation in off-peak hours resulted in negative 

pricing is it prudent to pursue broader deployment of renewable technologies when 

the electricity produced cannot or is not stored? Should wind generators produce 

electricity only in order to get the federal production tax credit? 

Answer. Short-term negative prices in West Texas are a result of excess generation from an area where transmission to load in East Texas is currently inadequate. 

The Electric Reliability Council of Texas recognized the problem, and in anticipation 

of further wind generation deployment to meet the state-mandated Renewable Portfolio Standard, conceived and is implementing what is known as the Competitive 

Renewable Energy Zone process. The Texas CREZ proactively identifies renewable 

resource areas, then plans and builds long-lead time transmission in advance of 

short-lead time specific renewable generation projects. 
86 

The DOE 20 Percent Wind report states that there are no fundamental technical 

barriers to the integration of 20 percent wind energy into the nation’s electrical system. However, there needs to be a continuing evolution of transmission planning 

and system operation policy and market development if this is to be economically 

achieved. CREZ is a good example of the non-traditional, creative thinking that will 

be necessary to economically integrate large amounts of variable renewable power 

onto the grid. Storage is another, albeit relatively high-cost, option to bring more 

flexibility to grid operations. In a future that may progress beyond 20-30 percent 

variable renewable generation, storage may play an increasingly important role— 

particularly if storage technology costs can be reduced and efficiency increased. 

In all cases today, negative pricing and curtailment are not common or widespread issues. Continued transmission expansion, electricity market practice revision and perhaps broader use of storage and other grid flexibility technology options 

in the future, are issues that NREL continues to analyze as part of our work to anticipate an expansion of renewable power’s role. For example, NREL and Oak Ridge 

National Laboratory researchers have shown that market practice revisions that 

permit cooperation among larger balancing areas within an interconnection (and 

even between interconnections) can help mitigate the changing output of large numbers of variable generators. 

With regard to your final question, production of electricity with the sole purpose 

of receiving tax credits is not in the national interest. Isolated occurrences like the 

negative pricing that occurred in West Texas, points out the need to diligently determine the most economic ways to integrate increasing amounts of renewable electricity onto the grid. NREL will continue to be a resource to the DOE and to the 

public interest in this ongoing endeavor. 

Moreover, the broader deployment of renewables should be directed at satisfying 

multiple policy goals, including energy security, environmental protection and climate change mitigation, as well as economic prosperity and job creation. 

Question 3. Pumped hydropower storage is an existing and readily deployable 

large-scale energy storage technology. Currently, the U.S. has over 20,000 MW of 

pumped storage capacity with dozens of new projects under consideration, particularly in the West. Yet pumped storage is often overlooked in the discussion of energy 

storage options for this country. Please discuss the role you believe pumped storage 

can play as we look to increase and integrate intermittent renewable resources, such 

as wind and solar, as well as provide other grid services. 

Answer. Pumped Storage can be an economic technology that is currently available. Future expansion of this technology may be limited by geography, but advanced concepts now under development may make pumped hydro attractive across 

more regions of the country. Pumped hydro may be able to play an extremely important role in integration of variable renewables. In Colorado, Xcel Energy has examined the value of more frequent cycling of an existing pumped hydro plant to take 

advantage of increased wind deployment, and found integration costs can be decreased by approximately one-third at penetration of 10 percent wind. 

NREL is currently completing a Western Wind and Solar Integration Study examining integration issues across the Western electric grid. The production cost simulation modeling being performed by GE shows that for high-penetration scenarios 

(up to 30 percent wind and 5 percent solar), the existing pumped hydro fleet can 

play an important role in economic renewables integration. Pumped hydro appears 

to be an underappreciated technology and a potentially valuable resource toward 

meeting grid ancillary services and contingency and operational reserve needs. 

Question 4. What kind of work is NREL undertaking on hydropower in general 

and pumped storage in particular? 

Answer. NREL has no current research underway with respect to conventional 

hydropower and pumped storage facilities, each of which uses impoundments such 

as dams. Other organizations such as the Electric Power Research Institute have 

projects underway to develop and test more ‘‘fish-friendly’’ and efficient turbines to 

help mitigate environmental impact from conventional facilities. NREL is, however, 

using its unique and long-standing expertise in wind energy to help meet the research and development needs of a new class of renewable energy technologies— 

wave, tidal, river current and ocean thermal energy conversion. These technologies 

are not related to conventional hydropower technologies. Many of these technologies 

more resemble wind turbines and are often thus referred to as marine hydrokinetic 

energy converters because they convert the kinetic energy of moving water or the 

thermal energy of hot water into electrical energy. 

NREL has been funded by DOE through a competitive solicitation to perform 

R&D to accelerate the development and deployment of these marine and 

hydrokinetic technologies by providing industry with the support it needs to model 

machine dynamic performance, increase device efficiency and capacity factors, and 
87 

reduce capital costs. This is expected to increase investment and regulatory confidence in this emerging field and hasten the deployment by 2015 of what will be 

the first commercial marine hydrokinetic energy technologies in the U.S. 

Regarding continued development and deployment of pumped hydro storage, in 

the many regions where this option is geographically and ecologically feasible, 

pumped hydro will continue to be a desirable approach—even as costs are reduced 

for other storage technologies such as batteries. Consequently, continued research 

and development efforts are needed on advanced engineering of water turbines to 

improve efficiencies, methods and technologies to lower excavation and construction 

costs, and on continued resource assessment to determine when and where additional pumped hydro storage represents the most cost effective and reliable addition 

to local electricity generation, storage and delivery systems. Clearly, mountainous 

regions with ample precipitation, such as the Rocky Mountain and Pacific Rim 

States represent regions well suited for potential deployment of additional pumped 

hydro storage. 

RESPONSE OF KENNETH HUBER TO QUESTION FROM SENATOR BINGAMAN

Question 1. Mr. Huber, in your testimony you state that 34 megawatts of battery 

storage have been put in the PJM generation queues for 2010. Given that storage 

has inherently different capabilities and characteristics than generation resources, 

can the generation queue process appropriately and expeditiously accommodate energy storage technologies (especially since storage technologies rely on a two-way 

flow of energy) or does storage need its own process? 

Answer. PJM’s current interconnection process accommodates both generation 

technologies and storage technologies. To date, one battery and four flywheel storage 

systems have gone through this interconnection process. The one battery storage 

system, a 1 MW system, has been interconnected with the PJM grid. Recently, two 

battery systems (one 20 MW and one 14 MW) have entered into the PJM generation 

queues and are being evaluated by PJM to determine their impact, if any, on the 

transmission grid. 

The PJM System Planning interconnection process is a three-phase process utilizing network studies to test for a proposed project’s impact on the grid in meeting 

reliability standards promulgated by the North American Electric Reliability Corporation (NERC) and approved by the Federal Energy Regulatory Commission 

(FERC). Phase one, the Feasibility Study, consists of analyses of deliverability and 

short circuit reliability. PJM’s FERC-approved tariff allows, as a guideline, that this 

phase be completed within three months of the end of the queue in which the 

project is submitted. For storage system requests below 10 MW, this would likely 

be the conclusion of the analyses, thus providing the developer with critical information on system impacts and costs, which it can consider in deciding whether to proceed with entering into a formal interconnection agreement. Larger and more complex systems would proceed to phase two, the Impact Study. Here the analyses are 

expanded to include stability and multiple contingency studies; with guidelines for 

completion in 150 days (30 days for signatures on an agreement to proceed and 120 

days for analyses). There is a third phase, the Facilities Study, that would likely 

not be required for storage systems unless significant network upgrades are identified during the Impact Study phase. In short, although there is no separate expedited process for storage analyses and an interconnection agreement can be completed within a half-year of the close of the queue in which the application is received. 

PJM does not believe that establishing a separate interconnection queue for energy storage would be beneficial to the development of innovative cost-effective solutions that benefit the grid and consumers. Specifically, a common queue allows for 

all resource solutions to be considered without artificially ‘‘choosing’’ one technology 

solution over the other. As directed by FERC, PJM maintains a common queue that 

is available to all resources and options including generation and merchant transmission, as well as energy storage solutions. This reflects the fact that all generators have a two-way flow of energy that must be considered. (In the case of traditional generation technologies, the two-way flow is represented by the energy used 

for auxiliary power and for unit start-up and shutdown). By considering all projects 

in a given queue, the value of each resource can then be recognized through the 

awarding of financial transmission rights to reflect the value, in the form of congestion relief, associated with the particular upgrade in question. A separate queue for 

energy storage would disrupt the analysis of various competing resources that is inherent in the existing queue process and would advance one technology over others 
88 

* Graphic has been retained in committee files. 

without the benefit of analysis of the site-specific facts and circumstances that are 

so important to the location of generation or energy storage devices. 

The generator interconnection process was established by FERC based on the assumption that resources interconnecting to the grid should bear the costs of any grid 

upgrades needed to accommodate their request while maintaining system reliability 

in accordance with NERC standards. The FERC is presently considering whether 

to modify its present cost allocation policies. Proponents of socializing interconnection costs argue that the present system, which is grounded in principles of cost causation, may be an impediment to the development of renewable technologies. On the 

other hand, opponents of broad socialization of such costs argue that ratepayers 

should not bear the costs of facilities and resources that cannot be shown to be beneficial to them. Any changes ordered by FERC to its present cost allocation policies 

could affect whether energy storage resources remain subject to the cost allocation 

policies inherent in the queue process. 

RESPONSE OF KENNETH HUBER TO QUESTION FROM SENATOR MURKOWSKI

Question 1. In your written testimony, you indicated that variable renewable energy sources present a reliability challenge. You also indicate that the lack of storage is already causing concern for PJM. 

a. What is the current percentage of renewable electricity produced in the 

PJM region? 

b. Will development and deployment of energy storage technologies in PJM 

proceed at a pace sufficient to match the need for meeting a federal renewable 

electricity standard or will the utilities in the PJM region utilize more fossilbased backup to renewable energy sources? 

Answer. PJM embraces the growth of renewable generation as it satisfies a number of public policy goals, including existing state renewable portfolio standards 

which already exist in 10 of our 13 states. More than half of the new generation 

in the PJM Interconnection Queue can be categorized as renewable generation, with 

a particular heavy emphasis on wind generation. However, renewable sources such 

as wind and solar are a challenge and concern because of their intermittent nature 

— particularly in a region with the wind and weather patterns that we see in the 

PJM Mid-Atlantic and Midwest footprint. PJM is encouraging the installation of 

storage technologies to make the power generated by renewable resources available 

to consumers during times when it is most needed. 

a. The current total generation capacity in PJM is 165,000 megawatts. Renewables including wind, runof-river hydro, pumped hydro and solid waste currently total 9,419 megawatts or approximately 6% of PJM’s total capacity. 

The 2008 annual energy produced in PJM is 735,244 gigawatt-hours. Renewables including wind, runof-river hydro, pumped hydro and solid waste total 

28,635 gigawatt-hours or approximated 4% of PJM’s total annual energy produced. 

The chart* below shows the amount of megawatt-hours of renewable energy 

by fuel source produced in PJM for each year since tracking began in late 2005. 

The future generation currently being proposed in the PJM generation queues 

is 82,151 megawatts with over 55% being renewable generation. 

b. PJM is aggressively working with energy storage providers and our member companies to facilitate the delivery of energy storage systems in the PJM 

territory. We are actively pursuing and assisting in pilots of storage technologies that include flywheels, various types of battery systems, compressed 

air, large building controls, hot water heaters, plug-in hybrid electric vehicles 

and refrigeration. Renewable generation and energy storage systems are in 

their early adoption phase. The growth and maturity of both will depend on 

technology advances, economics and government policy. Forecasting the pace of 

these many variables is difficult. Current discussions with storage technology 

entrepreneurs, vendors and venture capitalists provide some insight of expected 

future storage systems to be installed in PJM: 1) near-term implementations, 

one to three years out, will likely be battery and flywheel systems with capacity 

amounts in the 500 MW to 700 MW range; 2) mid-term implementations, four 

to six years out, should see compressed air storage systems and the aggregation 

of building and residential energy systems in the 1,000 MW to 1,500 MW range; 

and 3) beyond 6 years PJM anticipates plug-in hybrid electric vehicle storage 

within PJM will be available in significant amounts that could provide an addi-
89 

tional 1,000 MW to 1,500 MW. If the storage systems are not available in the 

volume needed, PJM will utilize both its demand resources, as well as its fossil 

based resources to maintain system reliability. 

(91) 

APPENDIX II 

Additional Material Submitted for the Record 

STATEMENT OF THE COALITION TO ADVANCE RENEWABLE ENERGY THROUGH BULK

ENERGY STORAGE (‘‘CAREBS’’) 

The Coalition to Advance Renewable Energy Through Bulk Energy Storage 

(‘‘CAREBS’’) applauds the Committee on Energy and Natural Resources for its December 10, 2009 hearing on the topic of grid-scale energy storage and appreciates 

the opportunity to provide additional comments for the record. 

CAREBS is a coalition formed to educate legislators, regulators, other policy makers, and the public about the enormous benefits that bulk energy storage—including 

compressed air energy storage (‘‘CAES’’) and pumped storage hydroelectric facilities—can provide in facilitating the development of renewable energy resources and 

increasing the efficiency and reliability of the Nation’s electric grid. As the Department of Energy’s National Energy Technology Laboratory has noted, grid-scale energy storage, which balances large variations in load and generation, is essential if 

the Nation is ‘‘[t]o reap the full benefits of Smart Grid technologies. . . .’’ Specifically, bulk energy storage can: 

• enable greater supplies of renewable energy to be incorporated into the grid, by 

converting these variable resources into firm, dispatchable resources; • enhance grid stability by balancing large variations in load and generations; 

and • increase overall efficiency by optimizing the use of existing and planned transmission infrastructure 

CAREBS commends the Committee for focusing on how best to incent energy storage and strongly supports Senator Wyden’s legislation, S. 1091, which would provide a 20 percent investment tax credit for grid-connected energy storage systems, 

This technology-neutral legislation would have a tremendous impact on accelerating 

the deployment of energy storage. Greater commercialization of bulk energy storage 

also offers the benefit of adding clean jobs to our existing domestic manufacturing 

base, solidifying the U.S. position as a leader in turbine and compressor equipment 

for bulk energy storage facilities. 

CAREBS also concurs with comments made by several Senators that the regulatory challenges may be as significant as any technical challenges to energy storage. Bulk energy storage provides a lower cost solution to reliability problems than 

traditional approaches such as transmission upgrades or the construction of new 

generation. At two of the recent Federal Energy Regulatory Commission (‘‘FERC’’) 

technical conferences, held on September 3, 2009 in Phoenix, Arizona and held on 

September 21, 2009 in Philadelphia, Pennsylvania, CAREBS representatives emphasized the importance of ensuring bulk energy storage solutions are considered 

on equal footing with new-build transmission and other solutions in the transmission planning process. 

Other electricity organizations are recognizing the vital role bulk storage can play 

in our nation’s electricity infrastructure. In its April 2009 report, ‘‘Accommodating 

High Levels of Variable Generation,’’ The North American Electric Reliability Corporation, Princeton, NJ, concluded that ‘‘Additional flexible resources, such as demand response, plug-in electric hybrid vehicles, and storage capacity, e.g. compressed air energy storage (CAES), may help to balance the steep ramps associated 

with variable generation.’’ 

CAREBS is eager to work with the Committee and with regulators to advance the 

deployment of bulk energy storage to advance renewable resources, increase energy 

efficiency, optimize electricity infrastructure, and promote a self-healing energy grid. 

About CAREBS: CAREBS supports policies that will accelerate the development 

and commercial deployment of CAES, pumped storage hydroelectric, and other bulk 

energy storage technologies. CAREBS members include: (1) Norton Energy Storage, 
92 

LLC (‘‘NES’’), which is developing a CAES facility at the site of an abandoned limestone quarry in Norton, Ohio; (2) Magnum Development, LLC (‘‘Magnum’’), which 

is developing a CAES facility in Milford County, Utah, as part of the Western Energy Hub Concept, which also includes a proposed natural gas storage facility; (3) 

Texas CAES, LLC (‘‘Texas CAES’’), which is evaluating several sites for a planned 

CAES facility in Texas; (4) Haddington Ventures, L.L.C., a private equity firm based 

in Houston, Texas that pioneered the development of high-deliverability natural gas 

storage projects and that is currently participating in the development of various 

CAES projects, including those being developed by Magnum and Texas CAES; (5) 

Dresser-Rand Corporation, a corporation based in Houston, Texas that is, among 

other things, a U.S. manufacturer of equipment that is used for CAES; (6) Iowa 

Stored Energy Plant Agency, an Iowa corporation formed by interested members of 

the Iowa Association of Municipal Utilities that is developing a CAES facility in 

Iowa known as the Iowa Stored Energy Park; and (7) HDR/DTA, a consulting firm 

based in Portland, Maine that provides hydropower and related renewable energy 

consulting services to utility, industry and government clients. 

STATEMENT OF THE PENTADYNE POWER CORPORATION

Mr. Chairman and members of the Committee, Pentadyne Power Corporation appreciates your interest in energy storage by recently holding a hearing to discuss 

the role of grid-scale energy storage impact on energy and climate goals. Pentadyne 

Power Corporation encourages the Committee to also consider the role of smaller, 

non-grid energy storage systems in meeting energy and climate goals. We believe 

that smaller, non-grid energy storage systems also play a very important role in 

meeting energy needs. 

Pentadyne Power Corporation would appreciate the opportunity to explain the 

role that smaller flywheels play in the energy storage arena. Our impact can provide 

immediate help to recycling energy for mass transit facilities that have outlasted 

their original life span, but are still counted on to delivery passengers. Many of this 

country’s transit systems have exceeded the capacity of their electric systems and 

flywheels can help keep these systems operating by storing the energy and then 

sending it back into the system when it is needed. 

While grid-scale energy storage plays an important role in a smart grid’s system 

ability to meet energy goals, smaller energy storage systems like flywheel can also 

play a vital role in recycling energy in high electric use industries. 

As mentioned at the hearing, Pentadyne Power Corporation encourages the committee to take an active role discussing and developing policy to promote energy 

storage. As you well know, energy storage is the key to developing the renewable 

energy industry. We encourage the committee to take a comprehensive view of energy storage to prevent a perception in the industry of a ‘‘two-tier pursuit’’. 

As you heard from your panels at the hearing on December 10th, both government and industry officials agree for renewable energy industry to grow and help 

cut green house gas production, a wide variety of energy storage devices need to be 

developed. We would encourage the Committee to active push energy storage policy. 

Start up companies, prevalent in new industry like energy storage, faces many 

hurdles in perfecting our technology and implementing a successful business plan. 

Under today’s financial conditions, we face significant hurdles and would gladly 

come explain to the committee and its staff how those hurdles that prevent clean 

energy from breaking into the market. 

Pentadyne is the world’s leading manufacturer of flywheel energy storage systems. Designed to provide high power output and energy storage in a compact, self 

contained package, Pentadyne’s flywheel products are a long lasting, low maintenance, lightweight, and environmentally sound alternative to lead-acid batteries, capacitors, and steel flywheels. 

The company shipped its first commercial production flywheel in 2004, and has 

sold more than 725 since then. The company also has a multiyear direct supply 

agreement with a Department of Defense contractor for the purchase of more than 

500 Pentadyne flywheel systems. Our flywheels have logged more than 4 million 

hours of reliable fleet operation. Pentadyne was recently named a ‘‘Global Cleantech 

100’’ company by Guardian News and Media and Cleantech Group, LLC. We were 

also named to the 2008 ‘‘Inc. 500’’ list and a Technology Pioneer by the World Economic Forum in 2007. Our flywheels have won numerous awards, including being 

named a 2009 Top-10 Green Product by both BuildingGreen and GreenSource Magazine & Architectural Record. 

That is why we were pleased by the many positive statements made by the two 

federal witnesses at this hearing: 
93 

Dr. Steven E. Koonin, DOE Under Secretary for Science: 

[M]echanical kinetic energy storage via flywheels is particularly well suited to the short term requirements of power conditioning; and while flywheel 

systems can achieve very high energy densities2, the physical constraints on 

flywheel size limit energy storage for extended activities such as peak shifting.’’ 

* * * 

Among the most important requirements for stationary utility storage, 

which ranges from half a megawatt to hundreds of megawatts, are storage 

technologies that are low-cost and have a high cycle life, meaning a large 

number of charge and discharge cycles. High reliability, efficiency, environmental acceptability, and safety are also important. 

Mr. Jon Wellinghoff, Federal Energy Regulatory Commission Chairman: 

[L]ocal storage is among the best means to ensure we can reliably integrate renewable energy resources into the grid . . . Regulation service is 

usually provided by combustion turbine gas-fired generators. But while such 

generators can generally follow the minute-by-minute variations in load to 

keep the system in overall balance, the frequency excursions that are the subject of Regulation service actually occur on even shorter time intervals. Indeed, it has been demonstrated that distributed resources such as storage are 

more efficient than central station fast response natural gas fired generators 

at matching load variations and providing ancillary services needed to ensure grid reliability. They are faster, generally cheaper, and have a lower 

carbon footprint than the traditional power-plant-provided ancillary service. 

* * * 

A newer technology for providing storage for the electric grid is the 

flywheel, which works by accelerating a cylindrical assembly called a rotor 

(or flywheel) to a very high speed with low friction components, and maintaining the energy in the system as rotational energy. The energy is converted back by slowing down the flywheel. Flywheels have been successfully 

piloted in the U.S., and their speed is particularly useful for regulation service. For example, for the past year, ISO-NE has been conducting a pilot program to test how alternative technologies such as flywheels are able to provide regulation service. 

Both Dr. Koonin and Mr. Wellinghoff understand the role that flywheels can play 

in improving the efficiency of America’s electric grids. We believe that significant 

hurdles exist to prefect energy storage and encourage the Committee to take a comprehensive review of the industry. 

STATEMENT OF AUDREY ZIBELMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 

VIRIDITY ENERGY, INC. 

DEMAND RESPONSE AS A STORAGE SOLUTION

My name is Audrey Zibelman. I am the President and Chief Executive Officer of 

Viridity Energy Inc. Prior to founding Viridity in 2009 I was the Chief Operating 

Officer of PJM Interconnection, the largest integrated electric grid in the world. My 

responsibilities at PJM included overseeing operations to insure that the grid remained in physical balance at all times. As such I managed operations involving the 

dispatch of thousands of generating units with different fuel types and different operating characteristics. 

Viridity is a Curtailment Services or Demand Response Provider specializing in 

the integration of customer controllable loads and customer owned generation into 

grid operations. The service we provide transforms a customer’s controllable load 

and owned generation into a virtual power plant which grid operators can rely upon 

and dispatch to maintain the grid in balance. The purpose of my testimony is to 

describe how Demand Response can function as an energy storage resource to be 

used in conjunction with intermittent generating resources such as wind power. The 

use of Demand Response with renewable power and storage capability allows the 

aggregation of many small, distributed resources into a new, powerful component 

of our energy strategy, which can deliver both economic and system stability benefits. 
94 

The principal responsibility of all grid operators is to maintain the physical balance between electric consumption (load or demand) and generation (supply). This 

balance must be maintained continuously and instantaneously. As the Committee 

is aware, energy storage was not feasible in significant amounts until quite recently. 

However, recent advances in technology and communications (generally referred to 

as the Smart Grid) have made storage and Demand Response a viable tool for maintaining the grid in balance. As described below, Demand Response is one of the storage techniques made possible by the Smart Grid. 

Historically, grid operators have maintained balance by use of a protocol known 

as Security Constrained Economic Dispatch. Simply stated, this means that as load 

increased the grid operators would turn on (dispatch) more generating units so as 

to match the load. They would dispatch the least expensive unit available but not 

currently running. Thus, the newly dispatched unit is necessarily more expensive 

than the last unit that was dispatched before the increase in load. This regime of 

simply turning on the next generating unit in the queue is now giving way to a 

more sophisticated, environmentally-sound, consumer-friendly, approach to maintaining the grid in balance. 

A key characteristic of any mechanism used to maintain balance is its ability to 

respond to directions from the grid operator; it must be dispatchable. This means 

that a generating unit must be capable of increasing or decreasing its output upon 

direction by the grid operator to do so. One of the issues associated with wind power 

for example is that it is not dispatchable. The power is available only when the wind 

is blowing, and the output of wind generation cannot be ramped up or down on command, as can generation from other sources such as storage resources or natural 

gas fueled generating units. The ability to be dispatched—to be capable of responding to signals—is an important attribute of a resource. Energy storage and demand 

response resources both have this important attribute. Many customer loads are 

dispatchable. 

Many customers are ready and willing to reduce their consumption of electricity 

upon direction by the grid operator. Thus, increasing output from expensive or dirty 

generating units is not the only means available to grid operators to balance the 

grid. Customers can reduce their load upon a signal from the grid operator either 

by pre-arrangement or in real time. 

Grid operators have traditionally maintained balance by arranging for sufficient 

generation to come on line as needed throughout the day, based upon the next day’s 

forecast load. The supply is committed a day in advance. Generators who are advised that they will be running on the next day stay stand ready to respond to signals from the operator. The advent of the Smart Grid, sophisticated software, and 

telecommunications technology have now made it possible for customers to respond 

in the same way. Customers who are willing to reduce load in exchange for compensation can respond to a signal from the grid to reduce their consumption, or they 

can dispatch their storage resources. This ‘demand response’ can be pre-arranged on 

a day-ahead basis. Similarly, to the extent that demand exceeds the forecasted load, 

increased supply, in the form of storage resources, can be called for by the grid operator in real time. Again, however, those customers who are willing to reduce their 

consumption can also do so in real time, in response to an instruction from the grid 

operator. Storage and demand response can be called upon in tandem to maintain 

the grid in balance. 

A Smart Grid enabled example of energy storage, renewable energy, and demand 

response working in tandem would be the use of Customer-owned solar power to 

charge a customer-owned battery when or where energy loads are low, and the discharge of that energy into the grid when/where the load is high. The discharge of 

the battery would allow the customer to reduce its load served by the grid; that is, 

to engage in demand response, and to provide power to the grid where and when 

it is needed. 

Demand response can be a useful tool aiding in the integration of intermittent 

power sources, such as wind power, onto the grid. For example, fast-response customer load reductions can be called for as wind generation drops. This demand response will match the reduced level of wind generation and thus maintain the grid’s 

balance. Similarly, to the extent reductions in wind power become increasingly predictable with improved remote monitoring, pre-arranged reductions in load can be 

relied upon to maintain the necessary balance. 

Grid balance can be maintained either by increases in generation or by reductions 

in load and grid operators should be generally indifferent as to the source providing 

the balance. However, there are several clear advantages associated with maintaining balance via Demand Response that should be noted. First, Demand Response 

is a less expensive means of maintaining balance than is dispatch of greater quantities of electric generation. This has been demonstrated time and again in the 
95 

* Appendixes A–C have been retained in committee files. 

United States, most dramatically in PJM in August 2006. During that month, the 

dispatch of demand response instead of added generation, reduced the prices paid 

by customers by $650 million. The physical balance of the PJM grid was maintained 

by customers who reduced their consumption in response to a signal from the PJM 

dispatcher. This allowed PJM to avoid having to dispatch more expensive generating 

units. Hence, the savings noted above. Second, there are no green house gas emissions associated with Demand Response, unlike the emissions caused by dispatch 

of fossil-fueled generating units. The dispatch of coal or gas fired generating units 

necessarily results in emissions. The dispatch of demand response—that is, reductions in use by customers when called for by the grid—avoids emissions, much like 

all exercises in energy efficiency and conservation. 

The provision of energy storage and demand response service to the grid by customers requires an investment by those customers. That investment constitutes a 

barrier to the deployment of these technologies. Customers will only make that investment if they can expect a reasonable return on their investment. However, an 

appropriate regulatory regime which provides fair, non-discriminatory compensation 

to customers who are willing to make that investment would constitute a regulatory 

policy that could eliminate the barrier to deployment. At present, the grid rules do 

not provide such compensation to customers willing to make the investment. A 

change in the rules such that customers were compensated for the service they provide through such investments would significantly enhance the level of deployment. 

STATEMENT OF STEPHEN C. BYRD, PRESIDENT AND CEO, ENERGY STORAGE AND

POWER, LLC 

INTRODUCTION

Energy Storage and Power (ES&P) would like to thank the Committee for providing the opportunity to submit testimony describing how grid scale energy storage 

can meet the country’s energy and climate goals, ES&P exclusively markets, designs, licenses and technically supervises the delivery of energy storage and power 

augmentation projects. ES&P’s patented second generation compressed air energy 

storage, or CAES, technology enables the widespread deployment of renewable generation such as wind and solar, stabilizes the transmission grid and is the most cost 

effective storage solution available. ES&P is a joint venture between Public Service 

Enterprise Group, a Fortune 200 company with over a hundred years’ history in the 

power industry and Dr. Michael Nakharnkin, the leading voice worldwide in the 

Compressed Air Energy Storage field for over two decades. 

A number of power companies are pursuing the development of second generation 

CAES plants, most notably Pacific Gas & Electric (PG&E), which is developing a 

300MW CABS plant, and New York State Electric and Gas’s (NYSEG) which is developing a 150MW CAES plant. PG&E and NYSEG were recently awarded $ 25 million and $29.4 million, respectively, in grants from the Department of Energy for 

demonstration projects. These two projects alone are leveraging 73% of the total private capital associated with the 16 energy storage grants recently awarded by the 

Department of Energy. 

ES&P recently won Platts 2009 Sustainable Technology Innovation of the Year 

Award for its second generation CAES technology. For a more detailed overview of 

ES&P, please see Appendix A.* 

EXECUTIVE SUMMARY

Investments in energy storage at this time are absolutely critical. Energy storage 

will increase the usage of renewable generation and reduce greenhousegas emissions, will enhance grid reliability, and reduce overall customer power costs. 

QUESTION 1: WHAT ARE THE PRINCIPAL GOALS OF STORAGE—LEAST COST GENERATION, 

GREENHOUSE GAS REDUCTIONS, OR GRID RELIABILITY?

Grid scale (i.e., large-scale) energy storage accomplishes a wide range of important 

objectives, namely the ability to (i) reduce greenhouse gas emissions, (ii) significantly enhance grid reliability, (iii) reduce the cost of power to customers and iv) 

reduces the need for additional transmission. 
96 

1The Midwest Model Building Subcommittee (a group formed by the Midwest Reliability Organization, one of eight regional entities in North America operating under their delegated authority from regulators in the United States and Canada) assumes that only 20% of nameplate 

wind turbine capacity will be available during peak time periods. 2 Historically, the Midwest ISO has recorded a minimum and maximum output from wind 

power during peak periods equal to approximately 2 percent and 65 percent of wind nameplate 

capacity, respectively. 3 ‘‘Cycling operations can be very damaging to power generation equipment.’’ Stephen Lefton 

and Bill Besuner, Power Plant O&M and Asset Optimization. 4For example, in PJM, the largest Independent System Operator in the U.S., the ancillary 

service known as synchronized reserve (formerly spinning reserves) is defined as capacity (generation or usage reduction) that is available in 10 minutes. 5Dr. Robert Schainker, a Senior Technical Executive at the Electric Power Research Institute 

(EPRI), stated in October 2009 at the EESAT conference in Seattle, Washington that the addition of between 20% and 40% of anticipated future wind capacity in the form of compressed air 

energy storage would result in a reduction in overall customer power costs. 

Firming Renewables and Shifting Their Output to Peak Demand Periods Will Reduce Greenhouse Gas Emissions 

Incorporating energy storage solves the intermittent and unpredictable nature of 

renewable resources such as wind and solar and converts them into firm, 

dispatchable resources. Large scale energy storage enables the electricity generated 

from wind power to be provided when it’s needed (on-peak), not when it’s windy 

(predominantly off-peak)1. Without energy storage, substantial amounts of renewable generation, particularly wind power, will be unused because there will be insufficient demand for the product during off-peak power demand periods, when the majority of wind power is produced. Energy storage will enable renewables to be fully 

utilized, resulting in the displacement of fossil-fueled generation and the reduction 

in greenhouse gas emissions. The economics of a wind farm will improve as a result 

of energy storage, because the stored wind power output would be sold during peak 

demand periods, when powerprices are higher. 

Significantly Enhances Grid Reliability 

Another important goal of energy storage is to enhance grid reliability. This will 

become critically important as intermittent renewable resources such as wind and 

solar become an even larger portion of the power supply mix in the future. Because 

wind variability can be so extreme2, substantial balancing reserves are required in 

the event there’s a rapid drop in wind power output. In addition, existing power 

plants will have to cycle their output up and down to compensate for the changing 

winds; this constant cycling causes maintenance and operational issues for baseload 

power plants3. In addition, the range of options available to grid operators to enhance grid reliability is larger than what’s typically understood. Grid operators require reliability service with response time within minutes, not milliseconds4. CAES 

technology meets grid operators’ ancillary services requirements at a much lower 

cost than batteries. 

Reduces Cost of Power to Customers 

Large scale energy storage will reduce the cost of power to consumers because 

more costly peaking generation will not be utilized during the day.5 Large scale energy storage will shift renewable generation output (that has no variable cost of production) from off-peak periods to peak demand periods, which will in turn avoid the 

need to run very high cost, high emission peaking generation. This role played by 

large scale energy storage is akin to ‘‘peak shaving’’ technologies designed to shift 

demand for power from peak periods to off-peak periods; energy storage is essentially shifting the supply side rather than the demand side. This will result in a 

reduction in system-wide power costs and a resulting reduction in customers’ electricity bills. CAES is particularly effective in this role because its capital cost is an 

order of magnitude cheaper than other storage options such as batteries. Further, 

CAES consistently has a lower overall cost of power than conventional generation 

options, such as coal and natural gas, under a variety of market and commodity 

price scenarios. 

Reduces Need for Additional Transmission 

Large scale energy storage reduces the need for additional transmission and utilizes transmission more efficiently. Because second generation CAES can be built 

and integrated at various junctures in the delivery of electricity, transmission benefits can be realized. For example, a utility customer can build a CAES plant near 

load pockets to minimize the use of both constrained transmission lines and expensive local power resources. Also, a transmission grid operator (or wind farm owner) 

can build a CAES plant near generation to reduce or eliminate transmission conges-
97 

6Dr. Robert Schainkera, Senior Technical Executive at the Electric Power Research Institute 

(EPRI), stated in October 2009 at the EESAT conference in Seattle, Washington that the addition of between 20% and 40% of anticipated future wind capacity in the form of compressed air 

energy storage would result in a reduction in overall customer power costs. 7 ‘‘Massive Electricity Storage,’’ Bernard Lee and David Gushee, June 2008. 

tion and increase efficiency of the grid because energy will be released when wind 

plants are at low output and transmission capacity is available. 

QUESTION 2: HOW CAN ENERGY STORAGE TECHNOLOGIES HELP UTILITIES MEET STATE

RENEWABLE PORTFOLIO STANDARDS (RPS) AND PEAK DEMAND REDUCTION TARGETS?

Energy storage will be critical for states to meet RPS requirements. Energy storage enables renewables to be used as a controllable, on-peak power source, improving renewable project economics and improving grid reliability. Energy storage also 

helps to avoid the usage of high cost, high emissions peaking generation. 

By its very nature, energy storage enables renewables to account for a larger portion of the overall power generated. Energy storage will be critical to enabling states 

to meet their individual RPS and any federally instituted RPS requirements. For 

example, with wind power, storage will enable power produced by wind farms during off-peak periods to be used during peak demand periods; this will result in improved returns for renewable generation and provide an economic signal to build 

further renewable projects. 

Energy storage shifts the generation of power away from high cost, high emissions 

peaking generation and towards more efficient, lower emission renewable power 

sources. In a similar way to demand response technology, large scale storage reduces the need for peaking generation; this ability is often referred to as ‘‘peak shaving.’’ This reduces the cost of power to consumers because more costly peaking generation will not be utilized during the day. 

QUESTION 3: WHAT IS THE TOTAL US POTENTIAL FOR ENERGY STORAGE?

The potential for energy storage in the United States is significant, and its deployment is in thevery early stages. If enough cost-effective storage is built, EPRI has 

indicated that the cost of power to consumers will be reduced.6 Numerous parties 

have already begun making sizeable investments in energy storage. 

Several sources have discussed the potential for large scale energy storage. Estimates of market size vary, but all agree storage is needed. . .and a lot of it. The 

American Institute of Chemical Engineers published a study in 2008 forecasting 

that if wind and solar accounted for 20% of the power generated in the United 

States, 114,000 MW of storage would be required. This represents a $342 billion 

market opportunity according to their calculations.7 Others have more specifically 

defined the sizeable market opportunity for CAES. In a recent presentation, EPRI 

discussed a CAES to wind ratio of 20% to 40% reducing the overall cost of power 

for customers. Assuming the projected installed capacity for 2009 by the American 

Wind Energy Association of approximately 32,500 MW, a 30% CAES to wind ratio, 

9,750 MW of CAES could be built in the United States. Whichever assumption is 

used to estimate the size of the large potential domestic jobs. 

A number of utilities and merchant power generators have already recognized the 

potential for storage and have begun to make substantial investments. For example, 

Pacific Gas & Electric is developing a 300 MW CAES plant (expected cost: $356 million) and New York State Electric & Gas (NYSEG) is developing a 150 MW CAES 

plant (expected cost: $125 million). Both of these projects have received grants from 

the American Recovery and Reinvestment Act of 2009 ($25 million for PG&E and 

$29.6 million for NYSEG). In conjunction with the awards to PG&E and NYSEG, 

the Department of Energy recently made 16 grant awards for a total of $185 million 

to fund ‘‘utility-scale energy storage projects that will enhance the reliability and 

efficiency of the grid, while reducing the need for new electricity plants.’’ 

QUESTION 4: WHAT ARE THE MOST PROMISING TECHNOLOGIES?

There are a number of technologies available for electricity storage. However, 

some are better suited for large scale storage and are more economical. Technology 

like batteries, flywheels and supercapacitors are best suited for small scale storage 

in situations where instantaneous response is required. For large scale energy storage, CAES and pumped hydro are the technologies of choice. 

Of these two alternatives, we believe that CAES holds advantages from the perspectives of cost,time required to deploy and number of suitable locations. Batteries, 

flywheels and supercapacitors are significantly more expensive on a capital cost 

basis and cannot be built at the scale required. Unlike CAES or pumped hydro, 
98 

8The Western sub-region of the Texas power market, known as Western ERCOT, provides an 

excellent example of how 2nd generation CAES can be (1) highly efficient relative to conventional fossil fuel fired generation and (2) enhance the value of renewable generation. As a result 

of substantial wind generation construction in Western ERCOT, wind generation economics 

have deteriorated in the region. Because there is so much wind capacity in Western ERCOT 

and its power is generated mostly at night when demand for power is low, off-peak power prices 

are often negative due to the utilization of the Production Tax Credit for wind. Wind generation 

in Western ERCOT is often being curtailed substantially at night because the volume of generation is greater than demand which obviously wastes a resource with no incremental cost. 2nd 

generation CAES enhances the value of wind generation while producing on-peak power at a 

cost lower than conventional natural gas-fired generation. The variable cost of generation is substantially lower than the most efficient combined cycle generation. In addition, 2nd generation 

CAES has a positive economic impact on wind generation by providing an incremental source 

of demand for the output of the wind generation. To calculate the variable cost of generation, assume a $10 off-peak power price and a $5/ 

mmBtu cost of natural gas. The 2nd generation CAES variable cost of generation would be $26 

per megawatt-hour (($10 off-peak power price x .7 energy ratio) + (3,810 heat rate x $5/mmBtu/ 

1000) + $2/MWh variable operations and maintenance cost). For the most efficient combined 

cycle generation the variable cost of generation would equal $38 per megawatt-hour ((7,000 heat 

rate x $5/mmBtu/1000) + ($3/MWh variable operations and maintenance)). 9 EPRI. 

these technologies are better suited for distributed storage or ancillary services that 

require an instantaneous response. It is rare to have a battery built bigger than 5 

MW, but a CAES plant can be built up to 450 MW. 

Overview of CAES 

CAES stores low cost, off-peak wind energy in the form of compressed air primarily in anunderground reservoir, but it can also be stored in above-ground canisters. During peak hours,the air is released and heated with the exhaust heat from 

a standard natural gas-fired combustionturbine. This heated air is passed through 

expansion turbines to produce electricity. The exhaustair from the expansion turbines is then used to increase the output of the combustion turbine byapproximately 

10% and create ‘‘free green megawatts.’’ The second generation CAES technology 

has a ‘‘heat rate’’ (a measure of energy usage per unit of electricity output) that is 

three times as efficient as that of a coal plant or a combustion turbine when renewable generation is used as its power input. (See Appendix B for a graphical depiction 

and a detailed description of the technology). 

Improvements to the CAES technology ensure that it is adjustable to meet specific 

customer smart grid requirements, utilizes standard, proven components, has a very 

low emissions design, and has significantly lower capital and operating costs than 

other storate technologies, and is a lower cost generator than coal and natural gasfired power plants.8

There are several other characteristics of CAES that make it a straightforward 

technology to deploy on a widespread basis. Suitable geology exists in a large portion (approximately 80%) of the United States.9 The CAES technology is proven and 

it works. 

QUESTION 5: WHAT ARE THE OBSTACLES, TECHNICAL, REGULATORY AND LEGISLATIVE, 

TO COMMERCIAL DEPLOYMENT OF STORAGE TECHNOLOGIES?

There are numerous obstacles currently preventing the wide-scale deployment of 

storage technologies. However, we believe these obstacles can be overcome with coordinated efforts among industry, legislators and regulators. No technical obstacles 

have been identified relating to the construction and operation of CAES plants. Appropriate investment incentives should be instituted for storage. Storage is in the 

very early adoption phase, but further catalysts are needed to move from the demonstration phase to the mass deployment phase. Constrained financing environment 

is still limiting investment in storage. Certain parties have posited that energy storage isn’t necessary as renewable penetration increases, contrary to consensus among 

grid operators and other entities responsible for grid reliability. 

TECHNICAL OBSTACLES

There are no technical obstacles to the widespread deployment of second generation CAES plants. The technology and geology for CAES exists and it works. The 

first generation CAES technology has been in operation since 1991 and has had an 

availability factor above 95%. A variety of parties that have reviewed the second 

generation CAES technology have signed off on all technical specifications and agree 

it’s a significant improvement over first generation CAES. 
99 

10The American Wind Energy Association (AWEA) has stated that‘‘ [w]hile continuing advances in energy storage technology can make it more economically competitive as a provider 

of grid flexibility, it is important to remember that resources like wind energy can already be 

cost-effectively and reliably integrated with the electric grid without energy storage.’’ 11Derived from data from the US Energy Information Administration. 12 Richard Baxter, ‘‘A Call for Back-up: How Energy Storage Could Make a Valuable Contribution to Renewables.’’ 

REGULATORY AND LEGISLATIVE OBSTACLES

There are a number actions that could be taken by regulators and legislators that 

could acceleratethe adoption of storage. The successful deployment of energy storage 

technology requires regulatory and legislative certainty, (including passage of the 

energy and climate bills) and would be aided by the adoption of the Clean Energy 

Deployment Administration.. CAES investments currently receive no federal tax incentives. The institution of an Investment Tax Credit for storage would help spur 

investment. Additionally, energy storage can result in the loss of production tax 

credits otherwise available to certain non-CO2 generators, such as wind generators. 

The tax code needs to be amended to ensure that there is no loss of the Production 

Tax Credit (PTC) for energy stored prior to delivery to grid. 

A FERC technical conference on storage should be held to discuss integrating 

storage in competitive and regulated areas; the benefits of storage to the grid; quantifying energy storage required to maintain grid reliability and reduce system-wide 

power costs; and availability of FERC incentives depending on how storage is classified — whether as a transmission or generation asset, or some combination thereof. 

Industry Obstacles 

A very small number of industry players have said that with 20% wind penetration, storage is not needed.10 We strongly disagree with that assertion. There are 

already issues with integrating wind in many regions, and wind accounted for only 

1.3%11 of the power produced in the United States in 2008. These issues will become 

far more severe and pronounced when wind becomes 20% of the energy mix, as 

some parties have suggested may occur. Based on the problems associated with the 

integration of wind in their respective regions, ERCOT and MISO strongly believe 

energy storage is needed. Terry Boston, CEO of PJM Interconnection, has stated 

that energy storage helps grid operators deal with the intermittency of renewable 

generation sources such as wind and solar. The intermittent nature of wind, with 

resulting negative effects on both grid reliability and the ability to deliver power 

when it is needed, will only be exacerbated as wind’s share of the power generation 

mix continues to increase. Ignoring or downplaying the grid reliability issues caused 

by renewable generation, and the grid reliability benefits offered byenergy storage, 

is contrary to the thinking of transmission system operators, utilities, merchant 

power generators and Members of this Committee. In fact, large scale storage will 

increase the development of wind farms in the long run becauses toragew ill 

significantlye nhancew ind farmeconomics as wind evolves into a dependable power 

resource.12

CONCLUSION

ES&P would like to thank the Committee again for this opportunity. Investments 

in large scale energy storage at this time are absolutely critical. With the proper 

investment incentives in place, energy storage can play a critical role in helping the 

United States meet its renewable portfolio standards, enhance grid reliability, reduce greenhouse gas emissions, save consumers money and create jobs. 

Æ