As we written about previously, the Defense Department continues to revamp its energy strategy with a goal of getting 25 percent of its energy from renewable sources by 2025. This should create a demand for energy storage and an opportunity for lithium ion batteries and energy storage, particularly now that the U.S. Army Corps of Engineers has issued a Multiple-Award Task Order (MATOC) Request for Proposal (RFP) for “$7 billion in total contract capacity to procure reliable, locally generated, renewable and alternative energy through power purchase agreements.”
While energy storage is not explicitly included as a required component for bids submitted to the RFP, section C.4.d of the 108-page document includes some very intriguing language:
Wind and Solar renewable energy technologies may be considered variable energy production technologies because energy is not consistently produced to replace base load energy consumption. Geothermal and Biomass are typically considered base loaded energy technologies since they replace electrical energy base load consumption on a continuous basis.
The Contractor shall maintain a system uptime performance that is in the top 25% of the industry in the United States for the technology being implemented given the conditions related to each specific site. For base loaded power providing energy technologies, the Contractor may be required to provide replacement energy at no cost to the Government when the system is not meeting minimum energy production requirements.
And therein lies the opportunity for energy storage.
Since, as the Army RFP notes, generation from renewable energy sources such as wind and solar is unpredictable, it becomes difficult to schedule and manage traditional generation assets to compensate. Fast, flexible and scalable energy storage is proving to be a robust, viable solution for addressing most of the issues associated with variability of renewable energy generation, including by shifting energy in time to “smooth” the output of renewable generation or reduce the peak load on constrained transmission assets.
With significant experience and expertise in proving solutions to both the commercial grid-scale energy storage market as well as the government, A123 is well-positioned to serve as an energy storage partner for any contractor planning to submit bids for the MATOC RFP. We encourage you to contact us to learn how energy storage could help you cash in to this $7 billion opportunity.
Sentiment: Strong Buy