The Southern California Public Power Authority (SCPPA), which represents 11 municipal utilities, today announced it would undertake what it called the “nation’s first cost-effective, utility-scale distributed energy storage project.” The 53-MW project will use several rooftop ice-storage units from Ice Energy to reduce the state’s peak electrical demand by shifting as much as 64 GWh of on-peak electrical consumption to off-peak periods every year.

Ice Energy’ Ice Bear, which stores energy in 450 gallons of iced water, is designed as an add-on to most rooftop commercial air-conditioning units. Basically, it replaces air conditioning demand at peak times. As Ice Energy estimates, air conditioning energy demand—typically 40% to 50% of a building’s electricity use during peak hours—can be reduced by as much as 95%.

During peak times—from noon to 6 p.m.—the unit replaces the energy-intensive compressor of the air conditioner with ice, frozen during the previous night. The cooling cycle lasts for about six hours. When the temperatures drop at night, or once the ice has fully melted, the Ice Bear transfers the job of cooling back to the building’s AC unit, to provide cooling until the next day.

Ice Energy said in a press conference that its energy storage system—which costs about $2,070 per kW—breaks through the cost-effectiveness and clean energy barriers when compared to traditional gas-fired peaking power plants. It does this by leveraging the higher efficiencies associated with generating and transmitting power off-peak, storing it at thousands of distributed locations, and employing the smart grid to intelligently dispatch the energy during times of peak demand.

The company claims that the system is the industry’s first “lossless” storage solution. “Decoupling daytime air conditioning use from peak energy demand, each Ice Bear distributed energy storage unit reduces an average of 7.2 kW of source equivalent peak demand for a minimum of 6 hours daily, shifting 32 kW-hours of on-peak energy to off-peak hours,” it says on its website.

The energy technology company said it has tested the system with more than 20 utilities but that the agreement with SCPPA, which will entail implementation by SCPPA member utilities throughout Southern California beginning in the first half of 2010, is much larger. Deployment is scheduled over two years.

California regulators have endorsed the project, reportedly hailing it as “critical” to helping the state meet a key objective: To encourage utilities to consider energy efficiency and demand side management solutions before investing in generation resources. “This project includes all of the aspects we look for: managing electrical consumption, improving system efficiency, reducing greenhouse gases, and creating regional jobs for our communities,” California Energy Commission Commissioner Jeffrey Byron said in a statement.

SCPPA members include the municipal utilities of the cities of Anaheim, Azusa, Banning, Burbank, Cerritos, Colton, Glendale, Los Angeles, Pasadena, Riverside, Vernon, and the Imperial Irrigation District.

Sources: SCPPA, Ice Energy