Tuesday, August 4, 2015
Interview with Mike Hopkins, ICE Energy
Santa Barbara-based Ice Energy (www.ice-energy.com) has quietly been working away at developing energy storage systems to help smooth out the demand for energy on the nation's power grid. The company recently landed a major contract from Southern California Edison (SCE) to deploy thousands of the company's "Ice Bear" equipment--enough to store 25.6 megawatts of energy. We caught up with Mike recently to better understand the company's technology, why there's an interest in energy storage by utilities, and more about that deployment.
Can you talk about your technology?
Mike Hopkins: Our technology is a thermal energy storage system, called the Ice Bear, which creates cooling and stores it in the form of ice. The product actually looks quite a lot like a commercial rooftop air conditioner, if you've seen them, which you commonly see on one, two, and three story buildings. That's the box air conditioners you see on big box retailers, college campuses, strip malls, and a wide variety of other buildings. We have a lot in common in terms of those air conditioners and even the technology, but our product is different in an important way. We have thirteen patents associated with the Ice bear. Instead of cooling the air outside, we provide cooling of air inside, like an air conditioner. It has a tank of water, which a copper coil runs through filled with refrigerant.
We operate in two modes. Typically, during the night, we're in so-called ice charge mode, so that our product is cooling the water in the tank to the point of freezing, and therefore creating ice out of that water. Then, during the heat of the day, we go into discharge, or ice melt mode, where we allow that ice we created to melt. That cools the refrigerant going through the ice block, and provides cooling of the buildling, instead of air conditioning doing that job.
Each one of our Ice Bears is connected to an air conditioner, and has the ability to turn that air conditioning off during the heat of the day, and it uses no electricity to provide that building the exact same cooling it would have gotten from the AC during the heat of the day—just from the ice that was created the night before.
These devices are not usually deployed one or two at a time. Typically, it's deployed in the hundreds. Most recently, we were contracted to deliver these in the thousands, deploying a very large fleet of Ice Bears in a utility's service territory and in their grid. These Ice Bear units are all networked and linked into control systems, and communicate with the web, where they can be remotely controlled and monitored by our customer. Our customer is not the building owner or tenant, it's the utility. The utility pays for our fleet of Ice Bears ,and they pay us not just to manufacture them, but to find locations, get the consent of building owners to install them, and then turn over that fleet to the utility. The reason they do that, is we solve the peak demand problem they have on the grid.
Explain what that peak demand problem is for the utilities?
Mike Hopkins: The simplest example, is where part of their grid has become congested so much, because they have too much demand for the infrastructure. Whether that is not enough peak generation, not enough power lines, not enough power during peak hours, or not big enough transmiision lines, or not enough substations, or not big enough feeders, or a combination of all of those, we solve that problem in a much more cost effective way. Plus, we do it in a much greener way, by not adding fossil fuel generation, not adding more peak power, and not having to add wire or dig up streets. We're eliminating the source of the problem, which is the spike in electricity during the heat of the day. With Ice Bears, you get the opposite of a spike, because as it gets really hot, the air conditioning disappears because the Ice Bear is delivering ice.
How efficient, energy-wise, is the process of creating and melting ice?
Mike Hopkins: It has an effective efficiency of great than 100 percent, however,the actual round trip efficiency of the Ice Bear is 85 percent. That's the energy lost in the process of creating and melting ice, which is a 15 percent energy loss. However, because it is so much more efficient to create ice at night, as opposed to trying to create cooling during the day as an air conditioner, there's actually an efficiency gain of about 20 percent. So, you end up getting 105 percent efficiency, due to the efficiency of doing things at night instead of during the day. For a building owner, if they were paying $100 a month for that electricity, and they add the Ice Bear, it would seem as if they were 5 percent less electricity, costing $95 a month.
How is it that utilities are your main customer?
Mike Hopkins: As you know, we've got an energy storage product. Generally speaking, today there is no good example of a market for energy storage at the building level which would justify the investment in that storage. If utility rates neared the actual cost of energy in real time, if people paid the utility rates that neared the real time cost of energy coming through the grid, there would be a great market for energy storage for building owners and homeowners. They'd be highly incentivized to use energy storage to manage that volatility. However, there is no example of any utility where the rates are near the real time cost of energy, or which reflect the volatility of the energy cost. Instead, rates mostly ignore the changes during the day of the cost of energy, or they just give you a directional signal, for example, time-of-use rates. Those time-of-use rates, which are common here in California, recognize the difference between the cost of energy at night versus the day, and in particular during peak periods. But, in most cases, they are just giving you a signal or direction. They try to nudge you to move your electricity usage off of peak period, but the actual cost to the utility of energy is higher. That's why we've focused on the utility. The utility takes a broad view of the storage, not just from the standpoint of a building, but of the whole grid.
If a home or building has energy storage, it is actually providing benefit to the entire grid. When you reduce peak demand with any form of energy storage, you're doing something good not just for the building, but also reducing the grid's peak demand. So if you are a building owner, if you have to pay for that storage, you're only getting part of the value. Until rates reflect the real cost of energy, or until rebates are large enough to compensate building owners for their benefit to the grid, we will focus on the utility market.
You just had a huge rollout of your systems with Southern California Edison. Can you talk about that?
Mike Hopkins: Southern California Edison had a RFO that went out, that mandated energy storage. That actually predated the California State mandate for energy storage, but foreshadowed that move. When the CPUC put a condition on SCE that they need to put in energy storage, we, along with an extremely large number of energy storage companies, all competing for that program. We ended up being a part of a group of four companies who were awarded energy storage contracts. Our award is for 26 megawatts of our Ice Bear product, which translates into about 1800 Ice Bear units. That's actually more Ice Bears than we have manufactured and installed since the beginning of our business in 2003. Our Ice Bear units will begin to be installed starting year, and by 2016, they will start to be turned on, delivering energy storage to Southern California Edison by the middle of next year.
All of those Ice Bears will be installed in an area of substations in Orange County, at two high voltage substations called Santiago and Johanna, and they will provide energy storage services to SCE for 20 years, under contract with SCE. This is a really good example of why we sell to utilities. SCE had those 2 high voltage substations, which are becoming congested. There's an increasing load on them, and they were facing either building an additional substation, or upgrading those substations. Both are very expensive. Instead, by reducing the peak demand on those substations, they don't need to do either of those. It looked so good, they didn't just buy what the CPUC ordered, they're buying five times what was ordered. I think that's really established energy storage as a competitive, reliable resource for utilities. Everyone who competed for this RFO was really put through the wringer. It was a very, very detailed RFP process, and had very significant information requirements, pretty expensive negotiation, and pretty expensive due diligence.
I believe most people believe they were fairly evaluated., but what it really did, is it really leveled the playing field for all resources. They let every type of resource—whether that was generation, energy efficiency, demand response, or energy storage—whatever resource you were, it let you bid into this open RFO. They came up with a means of valuing each of those resources in a way you can compare all of those to each other. I've been in the utility business for most of my career, and I've never participated in something like that before, and never seen anything like that. I think it showed well for energy storage. I think it surprised a lot of people, including myself, that they made such a significant investment in energy storage, way beyond what was required.
Thanks!