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After two years of tinkering with the engineering, David Marcus thinks he has the technology to make wind power a reliable, 24-hour source of energy. His company, General Compression Inc., came out this month with a revamped model of its compressed-air storage system, one that would store energy from wind farms when they produce more power than needed and release energy during times of peak demand or when the wind is not blowing.
“There is not a real mechanism in the marketplace for storage services but there is a mechanism for firm power contracts,” said Marcus, chairman of the Newton company. “Our goal was to start a business that allows wind to be stored for long periods of time and allow it to compete for those (firm) power contracts.”
Generators participating in firm power contracts must make all their electricity available at all times — unlike generators that are paid merely to have power available at certain times. But General Compression saw its fair share of tribulations making the storage units viable and attractive to investors. The company’s original strategy to build its own turbines with storage systems attached proved to be a difficult business case. General Compression was asked by its investors to go underground and hone its technology last summer before it could raise the money needed to commercialize its technology.
The company, which employs about a dozen people, raised $9.9 million in 2007, according to filings.
The struggles and resurgence of General Compression are indicative of an industry that is just now hitting home to energy players after years of sitting on the sidelines of a renewable energy boom.
Several other local companies such as Tyngsborough’s Beacon Power Corp., North Reading’s Premium Power Corp. and Watertown’s A123Systems Inc. stand to gain from changing regulatory rules and the need to integrate large amounts of wind and solar into the nation’s grid.
“The bottom line is, people are starting to realize that storage is going to be a major component of a smart grid. What’s amplifying this is as the amount of renewable energy in the system goes up, the impact on grid operations starts to become more obvious,” said Brad Roberts, executive director of the Electricity Storage Association, an industry trade group.
The wide-reaching technology strategies of local storage firms — A123Systems is focused on batteries, for example, while Beacon Power builds large flywheels — indicates how nascent the industry is and how variable the applications are. Some will be used to regulate frequency on the grid, which can vary widely with renewable sources like wind that don’t generate a constant flow of energy and can also cause some generation sources to operate properly. General Compression’s technology would allow wind to supply a constant flow of energy just like a coal plant.
The challenge for companies is cost.
“It has basically just not been cost-effective,” said John Kluza, an analyst with Cambridge cleantech research firm GTM Research. “Even right now there are tremendous upfront costs.”
To lessen those costs, Beacon Power is looking for $46.7 million in a U.S. Department of Energy grant to build two 20 megawatt projects in New York and has also filed a shelf registration to sell up to $60 million in stock if it does not come through. The company is also pushing for congressional legislation that would make storage units eligible for an investment tax credit available to renewable energy developers.
For General Compression, the new attention and storage design is helping them complete their first round of funding since 2007. The money will go toward a pilot installation in either the Texas panhandle or in Colorado. But Marcus says despite the validation, the proof is in the pilot.
“What I really want is to build projects. That will put a smile on my face,” he said.
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