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By Darrell Delamaide

A new stimulus grant of $100 million from the US Department of Energy that includes support for grid-scale energy storage projects is the latest sign of the growing need to find ways of storing energy from electricity production.

While traditionally storage has focused on balancing peak and off-peak usage, the need has become greater with renewable energy forms like wind and solar because these depend on sources that are only intermittently available.

California last month introduced a bill, backed by newly announced gubernatorial candidate Attorney General Jerry Brown, to set energy storage requirements for utilities starting in 2014. The bill calls for them to have storage capacity equivalent to 2.25% of peak load by then, rising to 5% in 2020.

The proposed California legislation comes as the Storage Technology of Renewable and Green Energy Act of 2009, a bill that would provide tax credits for energy storage, remains stalled in the US Congress.

The new DOE grant, which also includes support for electrical power technology and thermo-devices, comes on top of $165 million in stimulus grants already made to develop energy storage. The new grant specifically focuses on technologies to balance the short-duration variability in renewable generation.

While batteries are the most obvious example of energy storage, compressed air energy storage is also gaining adherents as a potentially much cheaper alternative. Modeled after the most prevalent form of energy storage currently, pumped hydroelectricity, CAES does not store electricity but uses excess production to store resources to produce electricity in peak periods – or when the wind isn’t blowing.

Just as hydro power storage uses periods of excess electricity to pump water to reservoirs where it can be released later to power turbines, CAES pumps compressed air into storage caverns for later release to generate electricity.

An article this week on the Wired Web site quotes a Department of Homeland Security study that says CAES could potentially be the least costly, most reliable and least environmentally harmful form of energy storage.

California utility PG&E (NYSE:PCG) benefited from a DOE stimulus grant of $25 million in November for a 300 megawatt CAES project near Bakersfield.

Last week, startup General Compression said it had collected $17 million in a new round of financing to develop its technology for compressing air without burning natural gas. Duke Energy (NYSE:DUK) was among the investors supplying funds.

While there are two existing CAES facilities in the world, including one in Alabama, questions such as which geological formations will actually work for storage remain to be answered.

Disclosure: No positions

Source: DOE Stimulus Grant Throws Spotlight on Growing Need for Energy Storage