California made history in the fall with the first energy storage mandate, requiring utilities to deploy specific amounts of storage. California has been among the most ambitious states in terms of overall renewable energy mandates with its 33 percent by 2020 goal (I also have heard that the state may well exceed that mandate and hit closer to 40 percent renewables).

In that vein, flow battery maker Primus Power announced it has raised $20 million yesterday. Primus is focused on the grid and helping utilities handle the influx of intermittent power associated with wind and solar power.

While flow batteries typically have lower energy densities than technologies like lithium-ion and require pumps and sensors, their advantages relate to a flexible layout, long life cycles and the ability to provide energy storage for long periods of time. These qualities make them good choices for the electrical grid.

A number of next generation battery startups are now gunning for the market, including Ambri and Aquion Energy. There’s plenty of room, however, for innovation here. The challenge will come from companies like Power-One, which has teamed up with Panasonic to attack utility scale energy storage. The big Asian battery makers have extensive manufacturing capabilities that can drive down price. Startups will need to compete based on innovative battery design and chemistry. Because once the market becomes clear, expect the big players to rush in.