Constellation buys CPower: More consolidation in DR ahead?

CPower was acquired by Constellation Energy today. Although the terms of the deal are not disclosed, chances are this is a good exit for investors who came in the last round of funding in April 2009. CPower was the smallest of the three main DR providers. The other two much larger players are EnerNoc and Comverge - both are public. Is this acquisition a sign for more consolidation in the DR industry ahead. The two other main players, EnerNoc and Comverge are small-caps with market capitalization of a few hundred million dollars making it an attractive target for the larger IT or Utility Provider company to move in this growing space. I wouldn't be surprised if one of the IT majors get into the action by purchasing one of them. Cisco, Oracle, IBM, Google & Microsoft are all looking to make in-roads in the Smart Grid sector. None of the existing IT folks have particularly strong channels in the utility world. So, in addition to giving them a good entry in a fast growing DR market, the acquisition will also provide a major channel access. Cisco is already making several acquisitions/partnerships in this area (Itron partnership, Archrock acquisition) and count on them to become a major player. Comverge and/or Itron will be a great addition to Cisco's hardware business. EnerNoc is particularly well suited for Oracle or IBM given their DR portfolio as well as their recent entry into the Carbon footprint management software. 

Energy Storage on the Grid

The idea of using energy storage to increase the efficiency of power systems is almost as old as the industry itself. There was a burst of activity in the area of electricity storage in 1880's, especially in Britain that took a significant lead over the United States in this area. The first application of large-scale energy storage in the US occurred in 1929 when pumped hydroelectric power plan was placed in service. Pumped hydro which involves pumping water from lower elevation to a higher elevation and using this to generate electricity at the time of peak demand is still the most widely used storage mechanism for electricity and are used to manage grid frequency and provide reserve generation capacity. Other common forms of bulk storage are -

• Compressed  Air Energy Storage (CAES)
• Batteries
• Sodium Sulphide (NaS)
• Nickel-Cadmium 
• Li-ion (Cobalt Oxide or Phosphate) 
• Vanadium Redox
• Zinc Bromine
• Lead-Acid
• Flywheels
• Superconducting Magnetic Energy 
• Electrochemical Capacitors

The following table shows the breakdown of major bulk storage technologies in the grid presently. 

Storage in the Grid

Storage Type	US (MWs)	Rest of the World (MWs)
Pumped Hydro	22,000	88,000
CAES	110	367
NAS	8	250
NiCad	26	0
Other	10	10

With the advent of Electric Vehicles (EVs), a significant amount of distributed storage is expected to come online in the next few years. Optimal control and management of these EVs offers a significant opportunity to increase the of efficiency of the electric grid.

Storage Model

The key physical attributes that differentiate the various energy storage technologies and therefore determine which applications they are most suited for are -

• Storage Capacity [MWh] - This is the total energy that can be stored in the system. 
• Power Rating [MW] - The maximum power output (or input) capacity. This is the rate of charging (or discharging).
• Efficiency - The ratio of energy discharged by the system to energy input to the system to charge it. Conversion Efficiency refers to the losses experienced when charging the system. Storage Efficiency refers to the 'leakage' losses during the time energy is stored. 
• Reaction Time - The time needed to "turn on" the system and begin charging or discharging or switch between the charging/discharging modes.
• Cost - Cost has many components including fixed cost of installing the battery and the cost to charge or discharge the battery. Energy density is an important factor in determining the cost as it has an influence on the real-estate costs. Note that the cost of discharging the battery may not always be negligible. For example, in a CAES system, natural gas might be needed to run the turbine for converting compressed air into electricity. 

Economic Benefit of Electricity Storage

There are many economic benefits that storage can provide. These include -

1. Load leveling between off-peak and on-peak times
2. Peak Generation
3. Arbitrage
4. Spinning Reserve
5. System Regulation
6. Deferred cost of Transmission and Distribution upgrades
7. Environmental Impacts

Useful Smart Grid Related Resources

• IEEE Smart Grid
• Smart Grid Clearing House
• IEEE Power and Energy Society (PES)
• FERC
• ISO-RTO Council
• AESO (Alberta, Canada)
• CAISO (California)
• ERCOT (Texas)
• IESO (Canada)
• ISONE (New England)
• MISO (Midwest)
• NBSO (New Brunswick, Canada)
• NYISO (New York)
• PJM (Pennsylvania, Jersey, Maryland)
• SPP (Southwest Power Pool)
• WECC
• EPRI