Storage Technology of Renewable and Green Energy Act of 2009

U.S. Senator Ron Wyden (D-Ore.) has proposed legislation to provide tax incentives for energy storage. This is a first - providing energy storage with incentives similar to renewable energy, demand response and energy efficiency.

Press Release:
"In an effort to increase infrastructure supporting renewable fuels, the STORAGE Act provides investment tax credits for energy storage facilities and equipment that temporarily store energy for delivery or use at a later time. Currently tax incentives are only available for the generation of renewable energy, but output from wind, solar, and wave and tidal energy projects literally rises and falls with natural conditions. Storage technologies can help harness the output of renewable energy sources and allow them to be used when they are most needed. The bill encourages innovation by providing tax credits for a broad range of storage technologies, from water reservoirs to flywheels to hydrogen production to batteries when connected to the nation’s electricity transmission and distribution system and when installed in homes, businesses, and factories."

Although mentioning flywheels and hydrogen production, the language of the bill seems to be more oriented to advanced batteries like the VRB-ESS.

For example, the definition of ‘qualified energy storage property’ includes a minimum requirement to store at least 2 megawatt hours of energy, and output 500 kilowatts of electricity for 4 hours. On the face of it, this 4:1 storage v. capacity ratio would seem to rule out a flywheel that only has 15 minutes of storage. However, a flywheel system could provide 4 hours of electricity at 500 kW if the storage was oversized to 8 MWHrs. The conceptual grid-connected flywheel system, like that of Beacon Power, as well as the lithium ion systems, like Altairnano (see anuual shareholders presentation), are planned to provide short pulses of energy for grid stability, not sustained electricity delivery of more than 4 hours. So, a large flywheel/li-ion system could qualify, but it would seem to go against the conceptual definition in the bill. Looks like a loophole that Senator Wyden may want to tighten.

Also, the bill requires the energy storage to store and deliver electricity. For hydrogen production to qualify, a system would have to be designed to use electricity to generate hydrogen - say through electrolysis of water - and then convert the hydrogen to electricity - perhaps through a fuel cell. The problem is that this wastes a tremendous amount of energy. Taking 100 units of electricity through this cycle only returns about 20 - 30 units of delivered power. By comparison, storing electricity in the VRB-ESS is about 75% efficient. This may be another area for Senator Wyden to be more specific. Does he want to incentivize grossly inefficient electric storage systems?

We'll continue to follow this bill and comment.