Prop. 7's Hidden Cost & Opportunity: Power Storage

(MoneyWatch)  If approved by the voters in November, California's controversial Proposition 7 would require the state's utilities to purchase 50 percent of their power from renewable resources by 2025. But it's not easy (or cheap) being green. Critics' estimates -- often disputed -- run as high as $11 billion per year in increased electric bills statewide.

How power will be derived from alternates like wind and solar and the costs associated with them have been widely talked about. But one of the lesser-discussed costs is the price of peak-hour power storage. With alternatives like wind and solar, less predictable than mainstream sources, load balancing becomes trickier. According to EcoWorld:

In California the demand peak is around 50 gigawatts, and the off-peak minimum can get as low as 20 gigawatts. The time of peak demand is between 5 p.m. and 10 p.m., when appliances are operating along with flat screen TVs and PCs. During this period, when the sun is down and the wind yields aren't yet at maximum output, at least 25% of California's daily electricity draw is consumed, about 250 gigawatt-hours. It is reasonable to assume most of the renewable energy used to fulfill this demand will have to come from stored wind, and stored solar. So what would it cost to store 100 gigawatt-hours of energy?

Speaking with CEO David MacMillan of Megawatt Storage Farms, Inc., which is developing large scale electricity storage using NAS (sodium-sulphur) batteries, EcoWorld estimates about $350,000 per megawatt hour, or a brisk $35 billion. And "This figure doesn't include transmission upgrades, nor does it include site acquisition and preparation," says EchoWorld, but which also notes that the $35 billion figure should represent "only" 10 percent of the total investment required to make Prop 7 a reality.

At the moment, California utilities are mandated by law to generate at least 20 percent of their electricity from renewable sources by 2010, a deadline some utilities are struggling to meet. Passage of Prop. 7 would only turn the screws tighter.

That's tough for the utilities, but a potential boon for alternative and grid infrastructure suppliers, and storage companies like MacMillan's Megawatt Storage Farms. If you haven't thought of getting into the electricity storage business, now may be the time.

Image by paladinsf via Flickr, CC 2.0