If you're hoping renewable energy takes a bigger presence in our future energy picture, you may want to pay attention to two unlikely sources for help: batteries and inverters. One of the major drawbacks of solar and wind energy sources is the pesky peaks and valleys of energy they provide. If we could smooth out those peaks and valleys, wind may be a great base load source and solar may be a great peak load source.

As inverters get more specialized for renewables and battery technology improves, we may be seeing a shift in how we look at wind and solar.

The theory for solar in particular goes something like this: Solar power isn't yet competitive as a base load power, but when we compare it with natural-gas-powered peaking plants, it is not only competitive but oftentimes cheaper. But for a utility to rely on solar, the electricity panels needs to be controlled with more precision than they are today.

That's where inverters come in. Inverters are the devices between solar panels and the grid changing the electricity from direct current (DC) power to alternating current (AC) that we can use in our outlets. It is at this point where power regulation would make the most sense for controlling the grid. If the inverter could give some energy storage capacity, we could use solar as a peak power source and avoid gas peaker plants, which are plants used when energy is in high demand.

Taking steps in advanced inverters
Satcon Technology (Nasdaq: SATC) is already working on this with inverters that provide a few minutes of battery storage. If grid storage solutions from battery makers such as A123 Systems (Nasdaq: AONE) and Ener1 (Nasdaq: HEV) prove to be successful, that could easily be expanded.

American Superconductor (Nasdaq: AMSC) is another player to watch with its SolarTie grid interconnection solution built solely for solar plants. The company is a big player in wind as well, and advancing technology for both wind and solar is a top priority for the company.

But the cost is outrageous, isn't it?
Carlos Coe, CEO of power management solutions provider Xtreme Power, thinks this storage could add just $0.005 to $0.02 per kilowatt-hour to the cost of power. That is relatively cheap compared to the gas peaker plants that we should be comparing solar power to. The California Energy Commission says the levelized cost of generation from a simple cycle gas-fired peaker plant is $0.49/kwh. Another slightly dated but very impressive analysis by Lazard gives an estimated levelized cost of energy for gas peakers between $0.23 and $0.34 per kilowatt-hour. Since solar provides power during peak times of the day, it is these costs we should really be comparing solar to, and the comparison becomes pretty favorable. Solar power is now below $0.20/kwh without incentives, so if we add a few cents for power storage, it still compares favorably to gas peakers.

As power plants being built by First Solar (Nasdaq: FSLR) and SunPower (Nasdaq: SPWRA) and generators like NRG Energy (NYSE: NRG) get bigger and more cost-efficient these are solutions we need to develop. First Solar and SunPower have multiple gigawatts of projects in the pipeline, and as they come online the impact on the grid will be more prevalent.

We may be just starting to see innovative solutions coming in the inverter and battery market. As demand for these products increase, I expect to see even more. Satcon and American Superconductor look to be two companies taking steps in the right direction. Now if grid solutions from A123 Systems and Ener1 prove to be successful, we could have a match made in heaven.

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