California takes aim at 'ducks' to smooth move to green power

By Braden Reddall

SAN FRANCISCO, Dec 23 (Reuters) - From Daffy to Donald, the animation studios of Southern California have long portrayed ducks as just for laughs, but a graphical incarnation of the bird making the rounds in the state's power sector is being taken very seriously indeed.

California plans to generate a third of its energy from renewable sources by 2020, and regulators use what has become known as a "duck chart" to demonstrate the challenge presented by saddling their grid with increasing amounts of constantly fluctuating solar power.

The chart derives its nickname from its resemblance to the profile of a duck floating on its belly in the water.

Volatility is a dirty word to those charged with ensuring the lights, televisions and air conditioners remain on - no matter what. So the power industry beyond California will observe closely how the state pulls off its goal of achieving one of the world's most ambitious renewable energy targets.

The duck chart tracks power requirements throughout a typical day, with a flat "tail" in the morning giving way to an ever-fattening belly by midday as solar generation peaks and therefore less power from other variable sources is required.

The "neck" then represents the steepening rise in power demand when people get home from work around sunset and solar output drops - presenting grid managers with huge challenges.

Developers of energy storage systems say they have the answer. By setting aside power for later, the duck belly can be flattened and the neck lowered; several startups are trying to cash in on the demand for storage this has created.

"We're seeing a number of companies that are starting to go commercial," said Jon Wellinghoff, a former chairman of the Federal Energy Regulatory Commission. "They're beyond the R&D stages. They're beyond the product development stages."

Wellinghoff, now at law firm Stoel Rives, said in an interview that companies to watch include Eos Energy Storage, liquid-metal battery maker Ambri, and saltwater electrolyte battery developer Aquion.

Others stepping up their game include Stem Inc - a Silicon Valley storage company that this month closed a second funding round for $15 million, with General Electric Co and Iberdrola SA as backers.

Stem says that it has its eyes in particular on California's groundbreaking mandate for 1.3 gigawatts' worth of storage among its utilities, established this summer, which may prove a template for other places if it works.

"In any state, utilities are not known for their dynamism," said Audrey Fogarty of power management and storage firm Xtreme Power. "Setting a target sends a very clear signal."

OMINOUS CURVES

But the state has little time - California's Independent System Operator (Cal ISO) expects the duck belly will start growing fatter by 2015 as more renewable power comes online - implying that the afternoon draw on variable power will be even larger than it already is.

Such dramatic warnings prompted Neil Millar, an executive director at Cal ISO, to insist at the California Energy Summit this month that the chart is not "meant to scare people."

The ominously growing curves of the chart worry regulators and utilities, even if nobody really knows how to tackle it yet.

"I'm not going to talk about it," John Chillemi, head of the West region at power producer NRG Energy, said of the duck chart in a speech last month. "I just needed to tick the box that I included it in my presentation."

Two speakers following him at the Platts California Power and Gas Conference in San Francisco - one from rival AES Corp and the other from First Solar Inc - both acknowledged the chart's underlying importance by explaining that they had not, in fact, included it among their slides.

A division of AES says it is already making money off energy storage systems, which are commonly hailed as at least one solution to the duck-chart problem.

While Lucas Oehlerking of engineering firm Black & Veatch noted that storage costs are coming down, he said one barrier was extracting enough value from them to make them worth it. "Just because a system can perform it, doesn't mean the controllers are there to capture it or the markets are there."

American Vanadium Corp CEO Bill Radvak, whose company mines a metal highly touted for storage systems, said that development of the market would take time, even if all the enthusiasm for storage was driving good sales momentum now.

"Because everybody ignored it until a year ago, the pendulum is swinging - and may overswing."