Pactiv Evergreen (TG:PEG)
Historical Stock Chart

From Jun 2019 to Jun 2024

Here's the dirty little secret about clean energy sources such as wind power: they're often strongest when energy demand is weakest, creating a mismatch of supply and demand.

Help could be on the way, as the Obama administration is planning to dole out up to $60 million to promote a patented technology that stores energy until it is needed. Later this year, the U.S. Department of Energy is expected to announce which companies will receive awards for compressed air energy storage technology, which stores energy in the form of compressed air in underground reservoirs which can be tapped during peak demand.

"It is clear that we need to be ready for a very quick expansion of renewables," said Terry Boston, chief executive of PJM Interconnection LLC, which coordinates electrical transmission in a 13-state region, and who took part in a panel discussion in Washington, D.C., on Tuesday. Boston said while PJM likes renewable energy sources, they pose challenges because they are intermittent and often out of synch with customer demand--wind typically blows hardest at night, rather than in the afternoon, when demand is higher.

Affordable storage should help overcome that problem, said Energy Storage and Power LLC President and Chief Executive Stephen Byrd, who also took part in the panel. ESP, funded with a $20 million investment by utility giant Public Service Enterprise Group Inc. (PEG), has patented a system for storing electricity in compressed air, which it says is much cheaper than battery storage and far more durable.

Batteries are too expensive for overnight power storage, at least at present, agreed Robert Schainker, head of the power delivery and markets group at the non-profit Electric Power Research Institute, based in Palo Alto, Calif., another participant in Tuesday's discussion. He said renewable energy sources and energy storage go hand-in-hand, and expressed hope that the U.S. will move away from short-term investment horizons that have precluded development of renewable power.

The Obama administration's push for renewable technology seems to include an understanding of the need for energy storage, with Energy Secretary Steven Chu raising the issue in a speech--which Boston said makes him "somewhat optimistic" on the technology's prospects.

Byrd said some of ESP's customers have applied for Energy Department grants for compressed air storage. The firm also hopes Congress will support federal loans for renewable energy, create an investment-tax credit for energy storage and modify a tax credit for wind power production to include wind power that is stored rather than used immediately.

Tax credits already have generated so much wind power production in west Texas that prices sometimes plummet to the point that producers will hold back production at night or pay customers to take it.

"That's a real waste," said Boston. He figures the example in Texas may serve as a warning for the rest of the country--and spur development of technology to store electrical power until it's needed, noting that "it is not sustainable to have large negative prices" for electricity.

Utilities and the Obama administration are making a related push to develop so-called "smart grid" technology that will permit utilities to communicate with customers and adjust prices based on demand and time of day. Byrd said storing power generated in low-price periods could help wholesalers and retail customers pay lower prices in peak periods, even after the introduction of "smart grid" technology.

 
  -By Judith Burns, Dow Jones Newswires; 202-862-6692; Judith.Burns@dowjones.com