Tuesday, May 30, 2017

Pumped on Power Storage

A recent article “Smarting Up Electrical Grids” on May 23, 2017, discussed Hydroelectric Pumped Storage and its use as a method to achieve ‘balanced load’ necessary to keep electricity flowing without interruption to our homes.  This old school, low-tech solution is gaining popularity in the modern, ‘smart’ electric grid.  The Federal Energy Regulatory Commission recently issued three new licenses for new pumped storage projects. 
Any time there is a dramatic change in trend, opportunistic investors need to investigate.  Eagle Crest Energy received one of the three new licenses from FERC.  It is a private held company and keeps a low profile...perhaps for good reason.  
The new interest in Hydroelectric Pumped Storage systems is due in part to innovations that are bringing new versatility the technology.  One innovation is the use of wind turbines or solar power to directly drive water pumps.  This could make such systems net neutral in terms of energy use. 

Underground reservoirs have become an option, opening up new location opportunities.  One example is a consortium of government and industry is working on the Prosper-Haniel project in North-Rhine Westphalia, Germany, where the cavities of a coal mine will be used as reservoirs to manage power from wind and solar power sources.  The project was the subject of the March 21st post “German Energy Policies Leave U.S. in (Coal) Dust.”

Eagle Crest Energy is aiming for a similar goal.   The company intends use an abandon iron mine to construct the Eagle Mountain Pumped Storage Project in Southern California.  Kaiser Steel Corporation pulled iron out of Eagle Mountain Mine from 1948 to 1982, leaving behind four open pits.  Two of these pits will be used as the water reservoirs for the pumped storage system. 

Southern California has one of the largest electricity markets in the U.S.  California has set a goal to source at least 50% of its energy from renewable sources by 2030.  This means increased wind and solar power.  Typical of the renewable power sources that will benefit from the pumped storage project is the Desert Sunlight Solar Farm with generating capacity of 550 megawatt hours.  The solar farm is connected to electric grid of Southern California Edison.   The Eagle Mountain project will have capacity to balance 1.3 gigawatts of power from these projects as well as nuclear and conventional fossil fuel power plants that remain connected to the grid.

The project has some opposition in the neighborhood.  The mine has no natural water source other than run-off from adjacent hills.  To fill the reservoir Eagle Crest will have to siphon over nine billion gallons of water from the surrounding area just to get started.  Another 600 million gallons will be needed each year to replace evaporated volume.  To put this in perspective, this about as much water as is used by two 18-hole golf courses each year.  Water is an even more a contentious issue in California than climate change and the adjacent need for renewable energy.
The Eagle Mountain pumped storage project is located adjacent to the Joshua Tree National Monument that straddles the Mojave and Colorado Deserts.  Indeed, Kaiser Steel was able to establish the iron mine by receiving a carve-out from the original land set aside for the national monument in 1936.  What is left now is the hollowed out mine site surrounded mostly by farms that are highly dependent upon water from three underground aquifers.  The magnitude of the water requirement is more than likely going to impact all three water bodies and farmers in the area are vocal critics of the plan. 
Nonetheless, there are now few impediments to the project from a legal standpoint.  Capital resources could be another issue.  Eagle Crest is a private company and appears to hold its ‘financing’ cards close to its collective vest.  Inquisitive investors may eventually get a taste of this company’s aspirations for Hydroelectric Pumped Storage.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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