Special Report: Investing in Energy Storage

Utility-Scale Energy Storage

Most energy experts agree that renewable energy generation is likely to become competitive with fossil fuels by no later than 2017. And that, my friends, is when everything changes.

Now given our general attitudes these days to seek out only that which can benefit us in the near-term, 2017 may seem far off. But think about where we were just seven years ago...

What did your cell phone look like seven years ago? Could it snap pictures, provide you with internet access, or use GPS capabilities? Or what if I told you back in 2005 that a 23-year-old kid would start a social networking site called Facebook and then sell a 1.6 percent stake in the company to Microsoft for $240 million? Would you have believed it?

The point is, a lot can happen over the course of just seven years. Fortunes can be made and technology can advance so fast that, if you blink, you'll miss it. Even the pace at which ideas can be fully developed is astonishing. Heck, back in 2005 I sat down with our publisher, Brian Hicks, over sushi and a few Kirin to discuss launching a new service focused on modern energy. Back in 2004/2005, it was like pulling teeth to get investors interested in modern energy. Yet here we are today, with more than 120,000 readers and a vibrant modern energy industry that, even in times of economic uncertainty, produces billions in revenue.

Modern energy is not just a flash in the pan, as so many had predicted early on. And it will not disappear when oil prices sink. We've already seen proof of that. It's also not going to be inhibited the way it was just a decade ago by inconsistent support from Washington or manufactured barriers to growth.

In fact, because of such an impressive growth over the past few years, there's now a race to develop new technologies and implement new renewable energy portfolio standards in an effort to facilitate future growth.

And when it comes to facilitating this growth, little holds as much potential as energy storage.

Energy, Uninterrupted

The sun will never shine and the wind will never blow 24 hours a day. So with solar and wind, there is a limited opportunity to generate power and send it to the grid. However, with energy storage applications, solar and wind producers have the opportunity to provide power to the grid, even when their respective resources are not available.

With energy storage in place, excess renewable power can be generated during non-peak hours. And during peak demand, that power can then be released. This not only adds further value to solar and wind energy production, but it also helps us decrease our reliance on fossil fuel-based resources that are being depleted at an alarming rate.

That being said, the current development of energy storage isn't solely tied to renewable energy development. In fact, that's just a small part of it. The fact is, utilities need to supply uninterrupted power. And given today's less-than-adequate energy infrastructure, coupled with increasing demand and decreasing fossil fuel resources (aside from natural gas), energy storage solutions are paramount for the utilities. And in their quest to advance and utilize the latest in energy storage technology, the modern energy industry is going to benefit by using this technology to increase the value of its own power generation.

So let's take a look at a few of the storage applications currently available to the utilities, as well as some of the companies that are providing these technologies...

Compressed Air Energy Storage (CAES)

With CAES, off-peak electricity is used to power a motor/generator that drives compressors to force air into an underground storage reservoir. This process typically occurs when utility demands and electricity costs are the lowest. When electric power demand peaks during the day, the process is reversed. The compressed air is returned to the surface, heated by natural gas in combustors, and run through high-pressure expanders to power the motor/generator to produce electricity. 1


  • Heated compressed air used to power turbines is cheaper than using natural gas.

  • Can also help with peak shaving. (Peak shaving involves the reduction of a specified amount of electricity drawn from a utility during a specific peak demand time.)


  • Not the most efficient form of energy storage


Alstom (EPA:ALO)

Dresser Rand (NYSE:DRC)


A flywheel is used in combination with a device that operates either as an electric motor that accelerates the flywheel to store energy or as a generator that produces electricity from the energy stored in the flywheel. The faster the flywheel spins, the more energy it retains. Energy can be drawn off as needed by slowing the flywheel. 2


  • Can quickly charge and discharge

  • Long life spans


  • Can only provide energy for about 15 to 20 seconds

  • Cannot be used in small areas


Active Power (NASDAQ:ACPW)

Pumped Hydropower

Pumped hydro facilities use off-peak electricity to pump water from a lower reservoir into one at a higher elevation. When the water stored in the upper reservoir is released, it's passed through hydraulic turbines to generate electricity. 3


  • The off-peak energy used to pump the water from the lower reservoir can be stored indefinitely as gravitational energy in the upper reservoir.

  • Stores the largest capacity of electricity, and for up to six months

  • Quick response

  • Low operating costs


  • Very high capital costs

  • Limited by geography


Superconductors are essentially materials that have no resistance to the flow of electricity and therefore enhance storage capacity.


  • No moving parts

  • No loss of power

  • Power availability is extremely fast

  • Can transmit more electricity than conventional wires


  • Energy content is short-lived

  • Very expensive


American Superconductor (NASDAQ:AMSC)

Fuel Cells

Fuel cells produce electricity by combining a fuel and an oxidant which react in the presence of an electrolyte.


  • Siting flexibility

  • Durable

  • Low maintenance


  • Very expensive

  • Low efficiency


Ballard Power (NASDAQ:BLDP)


Lead Acid Batteries

The traditional lead acid battery is made up of plates, lead, and lead oxide immersed in a solution consisting of 35% sulfuric acid and 65% water. This solution is called an electrolyte, and it causes a chemical reaction that produces electrons.4


  • Inexpensive

  • Proven technology


  • Limited life span

  • In comparison to newer battery technologies, lead-acid is inefficient

Advanced Batteries

These mostly include Lithium-ion, Lithium polymer, Nickel metal hydride and Sodium sulfur


  • Higher efficiencies and longer life span than lead acid batteries

  • Smaller, and take up less space

  • Less maintenance


  • Large-scale applications have not been proven on a commercial scale

  • Expensive (though costs will fall as production volumes increase)


Enersys (NYSE:ENS)























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