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The percentage of renewable energy in use in America has grown rapidly over the past few years. Increasingly, wind farms and solar arrays are becoming more common and popping up across the landscape. Renewable energy is a positive development because it cuts down on the use of fossil fuels that contribute to pollution and carbon emissions. However, there has been a major problem tied to renewable energy in addition to the higher cost. It has to be windy or the sun has to be shining to produce it.

Storage Problems

One of the biggest hurdles to the growth of renewable energy is the lack of proper storage. There have been improvements in battery storage systems, but the cost has made it difficult to compete with traditional sources of energy like coal-fired electric plants. Lower costs are needed to scale up renewable energy use, and these lower costs can come from cheaper production, cheaper storage or some combination of the two. Storage capabilities are improving in their efficiency, but it’s believed that storage facilities would need to hold 10 hours of US energy consumption to get to the point where two-thirds of US energy could come from renewable sources.

The Breakthrough

Recently, there has been a breakthrough when it comes to storing energy from renewable sources. Some energy producers like Xcel Energy in Colorado have started to use reverse auctions to lower the cost of energy storage. In a normal auction, bids continue to go up until no one wants to bid a higher price. The reverse auction takes the opposite approach. Energy storage companies bid to win contracts with major energy producers, but in the case of the reverse auction, the lowest bid wins the contract.

This concept could be the innovation the renewable energy industry needs to become competitive with fossil fuels. Traditionally, electricity has been highly regulated, and there has been little competition and little in the way of adjustment due to market forces. By allowing companies to bid, the price of renewable storage should hit a level in which producers and storage companies make money, but at a lower price because of the competition that’s been introduced into the market. For example, the Xcel Energy auction noted above brought a winning bid that beat the previous record low price by 20%. The reverse auction could truly be a breakthrough that leads to higher use of renewable sources of energy in the US.