General Electric's Impressive Entry into the Grid Based Energy Storage Business

I've been writing about the rapidly evolving market for manufactured energy storage devices in grid-based applications since last August when I published Grid-based Energy Storage: Birth of a Giant. At the time, only a handful of smaller public companies were working on grid-based storage solutions including Maxwell Technologies (MXWL), Beacon Power (BCON), Altair Nanotechnologies (ALTI), Active Power (ACPW) and Axion Power International (AXPW.OB).

Last November, France's Saft Group (SGPEF.PK) announced a partnership with Switzerland's ABB Group (ABB) to develop and commercialize utility scale solutions. As of Tuesday, General Electric (GE) joined the fray when it announced plans to build a $100 million plant for batteries that it will use in hybrid locomotives and grid-based systems.

The new GE plant will make large format batteries based on a sodium sulfur (NaS) chemistry similar to one developed by Japan's NGK Insulators (NGKIF.PK). The aggregate storage capacity of the batteries produced at the GE plant will be on the order of 900 megawatt hours [MWh] annually. At current prices for comparable products, GE's annual revenue from battery sales should be on the order of $400 million. In connection with the announcement, GE's chairman and CEO Jeff Immelt said, “We believe the advanced battery business could be a $1 billion business over the next decade."

As impressive as the GE announcement is, the more impressive fact is that NaS battery systems like the ones GE plans to manufacture can only serve a small fraction of the broader grid-connected energy storage market. In a July 2008 report on its Solar Energy Grid Integration Systems – Energy Storage (SEGIS-ES) program Sandia National Laboratories described the broader market as follows:

Energy storage devices cover a variety of operating conditions, loosely classified as ‘energy applications’ and ‘power applications’. Energy applications discharge the stored energy relatively slowly and over a long duration (i.e., tens of minutes to hours). Power applications discharge the stored energy quickly (i.e., seconds to minutes) at high rates. Devices designed for energy applications are typically batteries of various chemistries. Power devices include certain types of batteries, flywheels, and ECs. A new type of hybrid device, the lead-carbon asymmetric capacitor, is currently being developed and is showing promise as a device that might be able to serve both energy applications and power applications in one package.

It then presented the following chart to illustrate several battery and capacitor technologies in relation to their respective power and energy capabilities. The niche where GE plans to build a $1 billion business is the yellow oval marked Na/S.
Click to enlarge


After discussing the strengths and weaknesses of the technologies that will compete for a portion of the grid-based storage market, the Sandia report went on to summarize the relative costs of the principal energy storage alternatives. The following table separates the Sandia data into power technologies, short duration energy technologies and long duration energy technologies; orders the contenders based on the average of current and 10-year projected cost data reported by Sandia; and identifies the public companies that are focused on each class of storage technology.

Power	Current Cost ($/kWh)	10-year Projected Cost ($/kWh)
Electrochemical Capacitors Maxwell Technologies (MXWL)	$356/kW	$250/kW
High-speed Flywheels (composite) Beacon Power (BCON)	$1,000	$800
Li-ion Batteries Altair Nanotechnologies (ALTI) Saft Batteries (SGPEF.PK)	$1,333	$780
Short Duration Energy	Current Cost ($/kWh)	10-year Projected Cost ($/kWh)
Flooded Lead-acid Batteries Exide (XIDE) Enersys (ENS) C&D Technologies (CHP)	$150	$150
Valve Regulated Lead-acid Batteries Exide (XIDE) Enersys (ENS) C&D Technologies (CHP)	$200	$200
Low-speed Flywheels (steel) Active Power (ACPW)	$380	$300
Lead-carbon Asymmetric Capacitors Axion Power (AXPW.OB) Furukawa Battery (FBB.DE)	$500	$250
Long Duration Energy	Current Cost ($/kWh)	10-year Projected Cost ($/kWh)
Zn/Br Batteries ZBB Energy (ZBB)	$500	$250/kWh plus $300/kW
Na/S Batteries NGK Insulators (NGKIF.PK) General Electric (GE)	$450	$350

I would be remiss if I failed to note that in addition to its plans to directly engage in NaS battery production, GE also has a substantial stake in A123 Systems which is currently testing a Li-ion based frequency regulation system.

The best single document I've found to give investors a basic technical background in grid-based energy storage systems is Sandia's July 2008 report on its Solar Energy Grid Integration Systems – Energy Storage (SEGIS-ES) program. There are also two recent reports from the DOE that I think are "must reads" for investors that want a deeper understanding of how the Smart Grid will develop. The first report, “Smart Grid: Enabler of the New Energy Economy,” explains how the Smart Grid will use advanced technology to transform the energy production and distribution system. The companion report, “Bottling Electricity: Storage as a Strategic Tool for Managing Variability and Capacity in the Modern Grid,” explains why the evolution of the Smart Grid will depend on cost effective energy storage.

In addition to the government reports that focus principally on technological merit rather than investment value, I've written extensively on the companies that are active in the sector. If you want to better understand the potential of energy storage, a rapidly emerging sector that may "dwarf IT to the tune of two orders of magnitude," the following articles can provide a good start.

Grid-based Energy Storage: Birth of a Giant
Alternative Energy Storage: Lithium, Lead or Both?
Alternative Energy Storage: Cheap Will Beat Cool
America Must Rebuild Domestic Battery Manufacturing Infrastructure
Alternative Energy Storage Needs to Take Baby Steps Before It Can Run
Alternative Energy Storage: It's All About Price vs. Performance
Lead-Carbon: A Game Changer for Alternative Energy Storage
Alternative Energy Storage: Cheap Outperforms Cool

Each of my articles includes extensive links to underlying source documents and many have wonderful commentary from readers who have different opinions that are fervently held and eloquently expressed. I have several dogs in this fight and am far from disinterested. But I believe the upside potential for astute investors who position their portfolios early for the coming of cleantech, the sixth industrial revolution, will be handsome.

Disclosure: Author is a former director and executive officer of Axion Power International (AXPW.OB) and holds a large long position in its stock. He also holds small long positions in Exide (XIDE), Enersys (ENS) Active Power (ACPW) and ZBB Energy (ZBB).

Comments

[Don Harmon:]

Marketquant - I was going to mention the same thing. From what I know of the molten sulphur battery it does operate at high temps. I heard up to 700 degrees F. Another problem with NaS is they have to be put immediately on a charger @ the end of their useful duty cycle because the temp. has to be maintained in order to charge them back up. If you let them cool down overnight, it takes about 6 hours to get them back to SOC where they can then be re-charged.
In other words they need to come off the charger and go into servicve and back on the charger immediately or they get damaged internally.

Maybe GE has some magic new technology that gets around these problems, but they must know what they are doing being that they are General Electric, after all.

www.isea.rwth-aachen.d...

Don Harmon

May 15 11:30 AM

[John Petersen:]

marketquant, AEP's backyard storage plan will ultimately go to the most cost-effective technology that can do the required work. You and I have different opinions about what that technology may prove to be, but neither of us is in a position to declare a winner before the horse race starts.

May 15 12:16 PM

[Don Harmon:]

Here I would agree with John - it's all a matter of scale and cost. For certain applications like AEP's the cost of NaS is about 1/3 the cost of Lithium, and Lithium doesn't scale well for this kind of workload. On the other hand NaS, although it may be cost effective, doesn't scale well for Hybrid Electric Vehicles - plus it has disadvantages in weight, safety, and re-charging capability. So different strokes for different "apps" is what I say!

Don Harmon

May 15 12:50 PM

[John Petersen:]

The other contender you forgot to mention is Axion's asymmetric lead-carbon supercapacitor. This emerging technology expected to be about 1/3 the cost of lithium, scale well for small grid-connected installations and offer comparable cycle life.

seekingalpha.com/artic...

May 15 01:31 PM

[Don Harmon:]

Yes, John, different choices for different "apps" based on cost, life cycle, stationery vs. in motion, weight, safety, re-charge capabilities (normal vs. fast charging), size, re-deployment options, recycling, manufacturer's warranty, energy / power requirements, domestic vs. Asian, serviceability and brand integrity.

Don Harmon

May 15 01:59 PM

[John Petersen:]

Don, I agree wholeheartedly.

May 15 02:22 PM

[safariman:]

Excellent article, John. One of many good ones. I find them helpful and informative.

But I have a question, that to me seems important, that I have not seen addressed. I may have overlooked it. What is the efficiency of the charge and discharge. If I put in 100 KWH, how many KWH will I get out after taking account of losses? How significant is the difference between technologies, and is this an important consideration? What improvements can we hope for in the next few years.

May 15 03:41 PM

[marketquant:]

John,

Dangerous molten sodium has GOT to be the ultimate "not in my backyard" issue when we are *literally* talking about people's backyards! NaS at the sub-station level could pass muster, but the liability in backyards would be unbelievable. People would accept Pb in backyards as well, but how much storage can you get with Pb in a 30" by 38" by 40" enclosure? And how much time would they spend replacing cells once thousands of these are installed? AEP is talking NaS at $440/kWh and Li at $500/kWh (in 5 to 7 years). Anyhow, Li has already won the proposal.

May 15 04:30 PM

[Don Harmon:]

I wouldn't mind that outcome, marketquant, but last I heard AEP had decided on NaS. Where did you hear different? I also share your trepidation with 700 degree molten sulphur batteries in a shed in my backyard! I sure wouldn't want to have a meltdown that close to my house and family.

Don Harmon

May 15 05:20 PM

[Old Wizard:]

John, I wish I was as trusting as you in GE 's engineering and business accumen. Having been a technical person in their employ for over thirty years, I have personally witnessed many failed ventures and technical viascos. Their being the first to go into transisters too early , get out and get back in too late. The leaking micro wave oven door was another and their forcing boards to be built in three sequential manufacturing facilities in which they made multi-million doallar investments and then closed. This for a fixed price billion dollar program that I pesonally ran. I have a bad feeling that this announcement was more political than the result of an analytical, well thought out venture.

May 15 07:29 PM

[John Petersen:]

CORRECTION: I just learned that the battery chemistry GE will manufacture is a sodium metal-chloride (also known as Zebra) chemistry rather than a sodium-sulfur chemistry. It still has high operating temperature requirements (550 degrees F.) but is expected to be cheaper and more flexible than NaS. See:

www.comsol.com/shared/...

safariman, the roundtrip efficiencies on batteries are generally pretty good. Tom Konrad has recently published an article that goes into that issue in greater depth and I'll defer to him:

marketquant and Don Harmon, as I noted above, GE is going to make a sodium metal-chloride (zebra) battery rather than NAS. It will have lower operating temperatures than NAS but still be awful hot for anything smaller than a substation. Five to seven years is a long time and winning an initial testing proposal is far different from winning a market. Time and only time will tell.

Old Wizard, you're in a far better position to make those kinds of technical judgments than I am. The thing that excites me about GE's entry into the storage market as a top tier player is the fact that they're GE and they're positioning themselves in a market that was previously the domain of micro-cap and small-cap companies.

May 16 01:16 AM

[tireman63:]

I remember metallic sodium experiments at room temp in high school many years ago. The idea of molten sodium, some sort of small fire, and a poor unfortunate fireman with a water hose--sure to make the six o'clock news.

May 16 07:48 AM

[John Petersen:]

tireman63, I also remember those experiments, and my mother-in-law the chemistry professor likes to remind me that lithium is only slightly less reactive than sodium. The batteries can avoid problems because they use lithium carbonate rather than metal, but recycling back to pure elemental lithium that can then be used for new batteries will be a real adventure.

Richard, I am also a skeptic when it comes to many of the claims that are floating around in the storage sector, but the fundamental drivers of the cleantech revolution are undeniable and immutable. There is not enough stuff (including energy resources) to go around and unless we want catastrophic global conflict we must minimize waste in all its insidious forms to make more room at the economic table for the 6 billion people who now know how well 500 million of us live. By virtue of the law of large numbers and our profligate past we cannot outspend them. So we either have to make room voluntarily or have it forced on us.

May 16 11:29 AM

[tireman63:]

John,
I was worrying about the molten sodium batteries, not the lithium carbonate variety.

May 16 10:23 PM

[John Petersen:]

tireman63, difficult materials are difficult materials. NaNiCl may present safety issues beyond operating temperatures but there has not been enough discussion to make a call one. The manufacturers apparently think they have that issue under control. My ongoing bug is that in a resource constrained world we cannot rely on products that cannot be recycled to a point where the materials from old batteries can be used to make new batteries.

May 16 11:33 PM

[Don Harmon:]

www.toxco.com/

Don Harmon

May 16 11:38 PM

[Don Harmon:]

Part of the appeal, one of the green credentials of lithium, is its recyclability. Religiously recycled, much of the lithium stashed away in batteries should be able to be recovered, reprocessed and reused.

Given that lithium is so rare, and the market for it is increasing almost daily, you’d think that there would be plans to increase recycling capabilities. The growth of lithium batteries should be equal to the ability to recycle them at their end of life a few years hence. That is, for every new lithium battery that comes off the assembly line, there should also be some planned capability to recycle every one of those. That doesn’t seem to be the case. Instead, battery makers seem to be following the usual market economics practice that waits for another party to fill in a need.

As it is, there is only one company, that I know of, that actually recycles lithium-ion batteries, Toxco Incorporated. (“Tox” must have something to do with “toxic.” ) According to the company website, recycling those batteries is not an easy process.

When spent lithium batteries are received at Toxco’s recycling facility in Trail, British Columbia, Canada they are inventoried and stored in earth-covered concrete bunkers. The first step in the recycling process is to remove residual electricity from larger, more reactive batteries. Then the batteries continue recycling following Toxco’s patented cryogenic process and are cooled to minus 325 degrees F (-198 C). ( Lithium, although normally explosively reactive at room temperature, is rendered relatively inert at this low temperature.) Once frozen, the batteries are then safely sheared/shredded and the materials are separated. Metals from the batteries are collected and sold. The lithium components are separated and converted to lithium carbonate for resale. Hazardous electrolytes are neutralized to form stable compounds and residual plastic casings and miscellaneous components are recovered for appropriate recycling or scrapping. If the batteries contain cobalt this is also recovered for reuse.

Don Harmon

May 16 11:44 PM

[John Petersen:]

Don, thanks for a good explanation of the process. I've been content knowing how it worked in general and that it was neither easy nor cheap, but you've added a lot of detail that I think readers will find valuable.

May 17 03:27 AM

[John Petersen:]

By the way, the DOE's ARRA battery grant allocation includes $25 million for lithium recyclers and they are anticipating 2 grants.

May 17 03:29 AM

[nixeco:]

I am more of a capacitor storage guy myself, but it is impressive what they are doing.

Aug 17 06:07 PM