Grid Based Energy Storage: Notes, Questions and Heresies from Infocast Storage Week

Last week I had the pleasure of participating as a panelist in Infocast’s Storage Week and attending four days of presentations by industry executives, national thought leaders and policymakers. While most of the presentations were too detailed and specific for a blog about energy storage stocks, there were a few high-level discussions that may be interesting to readers and while I'll never qualify as a journalist, I can at least share some of the thoughts I jotted down.

Storage for Integration of Renewables

Two of the most important presentations came from Dr. Imre Gyuk, the DOE's Program Manager for Energy Storage Research, who explained that the unbuffered grid is vulnerable to collapse, noted that power outages cost American business an estimated $79 billion per year in lost productivity, and described grid-based energy storage as "a disruptive technology that will induce a paradigm shift in the utility industry." He further explained that storage has become a national priority as an integral subset of the smart grid program because of the multiple benefit streams it offers utilities in the form of frequency regulation, peak shaving, energy management, and transmission and distribution system upgrade deferral.

In his presentation, Dr. Gyuk specifically asked participants to support S. 1091, the Wyden Bill, which will provide a 20% investment tax credit for grid connected storage facilities that have at least 2 MW of capacity and can deliver 500 kWh for a period of 4 hours; makes utility-owned storage facilities eligible for clean renewable energy bonds; and provides a 30% investment tax credit for residential energy storage equipment. When the new subsidies are coupled with existing provisions that provide investment tax credits for storage system manufacturing facilities; ultra-rapid depreciation on eligible projects; and a short-term program that will offer cash subsidies to renewable energy storage projects in lieu of tax credits, the potential impact is massive.

In his discussion of the challenges associated with integrating intermittent renewables into the power grid, Dr. Gyuk explained that the peak-efficiency hours for both wind and solar do not mesh well with periods of peak demand for electric power. In the case of wind, the peak efficiency is usually at night when customer demand is lowest. In the case of solar, peak efficiency is usually around noon. Since peak demand typically occurs at about 4 P.M., Dr. Gyuk explained that short-term storage to shift power availability from off-peak to peak hours significantly increases both the usefulness of intermittent power sources to utilities and the economic returns to owners of those generating assets.

Community Energy Storage

Another important presentation came from Ali Nourai, AEP's manager of distributed energy resources who provided an overview of AEP's new Community Energy Storage [CES] program. In discussing the CES program, Dr. Nourai explained that the concept is "technology neutral" and emphasized that system reliability and "commodity priced batteries" would be critical drivers. He also noted that if PHEVs and EVs follow their expected development path, the batteries used in CES installations would likely be the same batteries used for automotive applications because widespread adoption in the auto industry would drive battery prices down to a level where they would likely be attractive to utilities. The key factors that Dr. Nourai stressed as critical for the CES program were:

• Improved safety and security;
• Increased customer reliability and value;
• Optimized realization of multiple value streams;
• Simplified integration of distributed power generation;
• Simplified budgeting for smaller neighborhood projects; and
• Simplified purchasing decisions by lower-level personnel.

Since the CES proposal contemplates installing batteries in a standard sized transformer box and assumes that Li-ion batteries will become a dominant technology for PHEVs and EVs, it clearly gives a short-term advantage to Li-ion battery developers who can make products that will fit in a limited volume.

I remain skeptical about whether Li-ion battery technology will ever be robust enough or cheap enough for widespread adoption in the automotive industry and I wouldn't be surprised to see the volume constraints relaxed over time to facilitate the substitution of flow batteries and advanced lead-acid batteries. Seriously, does anyone really care whether the ugly green box hiding behind the shrubs is 3' by 3' instead of 4' by 4'? For the time being, the CES program favors Li-ion technology by imposing size constraints that have nothing to do with performance. It will be interesting to see how the program evolves as the cost and performance profiles for various battery technologies become clearer.

Energy Storage Heretic

On the third day I had an opportunity to play devil's advocate during a presentation by Mark Peters, the Deputy Associate Laboratory Director for the Li-ion battery development program at Argonne National Laboratories. During the question and answer session, I explained that for several months I've been suggesting that the inflection point for Li-ion batteries seems to be when you put a plug on a car because until you get to an all-electric drive train, the weight and volume differences don't justify the additional cost. Mr. Peter's response came as a pleasant surprise to me because he basically said "While there are members of my staff who would probably disagree with you, I tend to personally believe that your assessment is reasonable and the sweet spot for Li-ion batteries arrives when you add a plug."

By the afternoon of the fourth day, I had lapsed into full heretic mode for a panel discussion on the future of vehicle to grid technology. I think it came as a bit of a shock when I said "I don't believe V2G will happen because I don't believe PHEVs and EVs will happen in anything that even remotely resembles current plans." I then laid out the simple case against PHEVs and EVs as follows:

• The principal goal of the smart grid is the minimization of waste in the electric power industry;
• The most wasteful activity I personally engage in is using gasoline to power 4,000 pounds of car and 300 pounds of passengers at highway speed;
• The only activity I can imagine that would be more wasteful is using batteries to power 4,000 pounds of car and 300 pounds of passengers at highway speed;
• While most of the conference participants can afford the $40,000 cost of an eco-bling PHEV or EV, that option is not available to over 90% of the car buying public who need to worry about things like budgets and car payments;
• There are 6 billion people who live in crushing poverty and for the first time in history most of them understand that there is more to life than subsistence farming;
• As the 6 billion become consumers, our biggest challenges will be finding relevant scale solutions to shortages of water, food, energy and virtually every commodity you can imagine;
• Last year 23 million electric bikes and scooters were sold in China and those E2Ws used the same battery capacity that one million American style PHEVs would have required;
• From the perspective of a foreign government planner, providing mobility for a million wasteful Americans is not as important as providing mobility for 23 million locals who have more reasonable demands and aspirations; and
• From the perspective of raw economics, a purchaser who needs a small battery pack can afford to pay a higher price per watt-hour than a purchaser who needs a large battery pack, which will leave PHEVs, EVs and grid-connected applications at the bottom of the food chain rather than at the top.

I wonder if they'll invite me back as a panelist for next year's conference.

Comments

[John Petersen:]

MRTTF, in the oil business we used to say that you could take a roughneck off the rig and put him in a locked room with three bowling balls and within a half hour one would be missing and one would be broken. I've seen thousands of gallons of biodiesel turned to soap because Bubba decided to add "a little extra" reagent while the supervisor's back was turned. There is no such thing as an idiot proof system for a sufficiently talented idiot; which is the reason I keep reminding readers that a PhD in a lab can always make a better battery than a crew of high school graduates in gimme caps.

In my experience, fundamental research is the easy part of the process because the prototypes are always made with extraordinary care by over-qualified people. The much larger challenge is engineering an industrial processes to a point where a factory can produce a consistent product in volume that approaches prototype performance.

Jul 28 01:37 AM

[MRTTF:]

John, I couldn't agree more. In fact, I have known quite a few PhDs that weren't much better than people off the street with no training at all. The fundamental research where I work has always been easier, not as much from people being over qualified, but more because test cell yield is less of a concern early on. In my limited experience so far, moving from prototype to production is a bear.

Jul 28 11:27 AM

[John Petersen:]

MRTTF, that's been the story for every R&D company I've ever worked for. The research goes well and the things they can do in the laboratory are amazing. But trying to get a product out the door at an affordable price is a different story altogether.

Jul 28 01:34 PM

[ari5000:]

I constantly repeat the phrase "quality of earnings" when approaching speculative issues.

For the most part, the phrase is beside the point as a lot of the names discussed in John's articles are profitless. I bought XIDE because I think they have the best consistent earnings -- even though their earnings have still been awfully volatile. I'm seeing some traders getting interested in BCON (following the chatter on Twitter). There will no doubt be some ridiculous spike in 4th tier names soon that will be over and done very fast.

Most of the traders I follow -- have absolutely NO interest in fundamentals. If BCON is up 15% premarket -- they will buy it, no questions asked. I continue to be amazed how little attention is paid to fundamentals. Anyone with a little bit of knowledge and a lot of patience can make a killing buying undervalued stocks.

These have been excellent place to discuss ideas -- a lot of knowledgeable people here. The only thing XIDE needs to find tons of buyers is for it go up another 50%. Traders don't buy cheap stocks. It's against their nature.

Jul 28 03:00 PM

[Jack Lifton:]

A Ford top R&D manager told me today that Ford's continutiy of battery engineering extends from the 1960's when Ford Scientific hand-made sodium sulfur molten-salt batteries for all electric vehicle powertrain storage. I surprised this gentleman when I told him that I worked on that project in 1966 at Ford's "Sci Labs" where even the lowest grade technician was a hands-on experts in wiring and basic electrical circuits. Amazingly Ford has been working on the eelctrification of the personal car for more than 50 years! Compare this please with the rash of new battery developers who are out to show Detroit a thing or two.

Ford's general feeing seems to be that the electrification of personal cars is a project driven today primarily by politics not economics. The company has developed every aspect of its own nickel metal hydride battery cell, pack, and control and cooling system and contracts out the mass production of them to experienced competent qualified companies that specialize in the manufacturing engineering of batteries.

Ford does not believe that the design of lithium -ion batteries is anywhere near ready for prime time mass production, and, John, this is for you, believes that the lead-acid battery system is under-utilized today and has room for large growth in hybrid vehicle powertrains.

Ford thinks that the full hybrid is here to stay; that the plug-in hybrid is a non-starter in the market due to its exteremely limited range and performance; and that a full hybrid with a lead-acid system should be considered as a low price high volume car.

Interestingly enough Ford thinks that the the US DOT is right and that the IC powered small car will account for 90% of all cars made in the world in 2030.

My only concern for anything in 2030 is whether or not I will still be able to get a driver's license for the 74th year in a row.

Jul 28 04:32 PM

[Advill:]

Hi John and everybody:

Finally something is coming from Eestor.....comments?

Regards.

nextbigfuture.com/2009...

Jul 28 10:31 PM

[John Petersen:]

ari5000, I've never felt comfortable predicting short-term stock price movements and generally think in terms of a 12 to 24 month horizon. In the case of micro- and nano-cap stocks like most companies in the storage sector, I've found that peer group comparisons are often more useful.

If you assume that all micro- and nano-cap companies will need to raise substantial cash to continue operations and compare the current market price with the historical cash priced paid by existing stockholders, it's fairly easy to identify the companies that have gotten ahead of themselves and let the market price run to levels that are likely to result in push-back from new investors. So I basically evaluate micro- and nano-cap companies from the perspective of a new private placement investor. If I wouldn't be willing to buy a block of stock at the current price in a private placement, I wouldn't be willing to buy it in the open market either.

Occasionally there's a gift from the gods like Exide that's still trading 70% off from its 12 month high, but those gifts are rare.

Jack, Henry Ford didn't build his business by making the best car, he built it by making an affordable car. The biggest issue storage investors need to come to grips with is the reality that the headline stories rarely deal with mass market products. We may all admire the centerfolds but the fact is they're beyond the reach of most normal men who end up building a life with the girl next door. It's way off topic, but given some of the changes we've lived through over the last 40 years I'm not entirely certain that we won't be working as WalMart greeters for far longer than anyone expects.

Advill, 460 wh/kg is a massive number for a storage device and runs contrary to everything I've read about how supercapacitors work. It also concerns me that all the noise about EEstor seems to be coming from Zenn Motors which is using their minority stake in EEstor to maintain a $170 million market capitalization that's about 10 times book value. I saw the first full sized 6 cell PbC prototype in January 2004 and Axion is just now getting to the point where it can produce a consistent product at a reasonable price. So even if the PR coming out of Zenn is all true, I suspect that we'll be looking at several years of further development work before there's a cost-effective device. I suppose at the end of the day I have to rely on "The too good to be true rule."

Jul 29 01:44 AM

[BrianSJ:]

> Jack, Henry Ford didn't build his business by making the best car,
> he built it by making an affordable car. The biggest issue storage
> investors need to come to grips with is the reality that the headline
> stories rarely deal with mass market products.

Henry Ford also intended the Model T to run on bio-diesel and to have hemp panels (it was to be The Farmers' Car), but certain industrial interests got him to change his mind. It is not obvious how much things have changed in terms of actually delivering renewables.

Jul 29 08:13 AM

[MRTTF:]

>Ford does not believe that the design of lithium -ion batteries is >anywhere near ready for prime time mass production,

Jack, this is a reason that I think Toyota and Honda are getting into the plug-in game at a slower pace than anyone else.

>The biggest issue storage investors need to come to grips with is >the reality that the headline stories rarely deal with mass market >products.

John, I couldn't agree more. Sometimes I love watching the PR machine run with research lab, bench-top results. I always want to know how reproducible and/or scalable things are first...

Jul 29 12:35 PM

[John Petersen:]

MRTTF, my personal favorite are the claims of a 10 to 20 year useful life based on computer simulations and rack tests. As a Li-ion battery research scientist do you have any thoughts you might like to share on that topic?

Jul 29 02:02 PM

[ari5000:]

John,

Very good. You're philosophy on investing reminds me of Buffet.

Jul 29 03:04 PM

[MRTTF:]

John, I would be happy to comment further.

The following comes with the disclaimer that this is from my limited experience (just under 2 years) and is my personal opinion/observation.

I would say that the validity of computer simulations and rack testing are quite valid for certain applications, particularly in niche markets (i.e. military, medical, aerospace, etc). Many of these applications have predetermined performance parameters and environmental constraints. Rack testing, and to a lesser degree, computer modeling can give a very accurate picture of the cell- and pack-level performance of the end product.

Of course, even in these instances, it is hard to claim 10-20 years of usefulness without 10-20 years of data, which is why we do testing for some systems on an on-going basis to give as an accurate picture as possible to the end user, and to further support any predictive life claims.

As for more "real world" applications (i.e. power tools, vehicle applications in any form, even some of the aforementioned niche applications), no matter what performance and environmental constraints are given, it is hard to accurately predict end-of-life performance and/or time. One can speculate based on prior data, but there is no substitute for actual testing. For some of these applications, testing will begin on the core battery as soon as feasible. This core design (size of the pack, form factor, etc.) often will not change throughout the process. Testing on this "bare bones" level helps our predictions, but is still no substitute for hard data. This line of testing is why, throughout the life of a project, testing will often be ongoing on some of the earliest prototype batteries prepared for a system.

Hopefully this gives a more accurate view of testing.


On Jul 29 02:02 PM John Petersen wrote:

> MRTTF, my personal favorite are the claims of a 10 to 20 year useful
> life based on computer simulations and rack tests. As a Li-ion battery
> research scientist do you have any thoughts you might like to share
> on that topic?

Jul 29 06:12 PM

[John Petersen:]

ari5000, I'm flattered by the comparison but my outlook is simply the result of many painful failures to distinguish between the leading edge and the bleeding edge. On balance, I guess you could say I've finally reached the point that I've been burned so often by the hot that I blow on the cold.

Jul 30 01:18 AM

[John Petersen:]

MRTTF, thanks for your insights. I hope you keep reading and commenting because my goal is to try and educate people on the sector and I can only tell a story from a single viewpoint. Readers who take the time to comment from a different viewpoint always add to the level of clarity and I appreciate your effort.

Jul 30 01:20 AM

[Don Harmon:]

Wow it took Ford only 60 years to figure that out....just think what they will be able to do in another 60 years. Am I supposed to be impressed?


On Jul 28 04:32 PM Jack Lifton wrote:

> A Ford top R&D manager told me today that Ford's continutiy of
> battery engineering extends from the 1960's when Ford Scientific
> hand-made sodium sulfur molten-salt batteries for all electric vehicle
> powertrain storage. I surprised this gentleman when I told him that
> I worked on that project in 1966 at Ford's "Sci Labs" where even
> the lowest grade technician was a hands-on experts in wiring and
> basic electrical circuits. Amazingly Ford has been working on the
> eelctrification of the personal car for more than 50 years! Compare
> this please with the rash of new battery developers who are out to
> show Detroit a thing or two.
>
> Ford's general feeing seems to be that the electrification of personal
> cars is a project driven today primarily by politics not economics.
> The company has developed every aspect of its own nickel metal hydride
> battery cell, pack, and control and cooling system and contracts
> out the mass production of them to experienced competent qualified
> companies that specialize in the manufacturing engineering of batteries.
>
>
> Ford does not believe that the design of lithium -ion batteries is
> anywhere near ready for prime time mass production, and, John, this
> is for you, believes that the lead-acid battery system is under-utilized
> today and has room for large growth in hybrid vehicle powertrains.
>
>
> Ford thinks that the full hybrid is here to stay; that the plug-in
> hybrid is a non-starter in the market due to its exteremely limited
> range and performance; and that a full hybrid with a lead-acid system
> should be considered as a low price high volume car.
>
> Interestingly enough Ford thinks that the the US DOT is right and
> that the IC powered small car will account for 90% of all cars made
> in the world in 2030.
>
> My only concern for anything in 2030 is whether or not I will still
> be able to get a driver's license for the 74th year in a row.

Jul 30 11:47 PM

[John Petersen:]

Don, regardless of what you think of internal opinions at Ford, the odds are pretty good that Jack has reported them accurately. It's certainly a mindset that lithium-ion producers are going to have to come to grips with sooner or later. While it's easy to dismiss negative opinions from unidentified parties in a major company, it's a lot harder to ignore VCs like Vinod Khosla who assert that lithium-ion batteries are overhyped.

earth2tech.com/2009/07.../

Jul 31 06:23 AM

[battman:]

Don, if I'm not mistaken, your primary market is not automotive, so for you it may be a comment to dismiss, but for the other li-ion hypsters, it's good to know what your potential clients are thinking. Well actually in this case, it's better to leave their heads in the sand and keep pumping the stock. "Serenity now!"

Jack, thanks for the posts that give an insight that we could never get as an outsider. That goes for you as well MRTTF.


On Jul 30 11:47 PM Don Harmon wrote:

> Wow it took Ford only 60 years to figure that out....just think what
> they will be able to do in another 60 years. Am I supposed to be
> impressed?

Jul 31 08:14 AM

[Jack Lifton:]

Don,

Are you now an engineer or scientist?

Ford did not put any constraints or restraints on its Scientific Laboratory then (in the 1960s) or now. My director, for my short stint at Ford Scientific, was a Dutch (then former) university professor named Van Goole. he was a world class researcher in energy storage systems. The lab director then was Bernard (Bernie) Weinstock, a student of Harold Urey, the physicist who discovered deuterium and won a Nobel Prize. One of the proudest moments of my young life was the day that Harold Urey walked over to my bench (he was visitng Bernie) and said, "Young man, what are you up to? May I see?"

A friend of back mine then was the budget manager for Ford's Engineering Dept. In 1966 he eliminated Ford's Sci Lab from the budget, and he got to meet Henry Ford II for the first and last time. Ford came down to his office and asked why my friend thought he should eliminate a program that was a personal favorite of the "Deuce." My friend couldn't at that moment think of one, so Ford told him to restore it to the budget and try and realize that innovation takes time and great leaps of imagination but it mostly takes time. Ford told him that no one can predict when or if scientific research will result in something commercial so it is a necessity that a company like Ford always have a group like the Sci Lab.

If you want to know the difference between Ford and GM just read the above story.

Don, you can speculate on the progress of energy stroage research towards an advanced lithium battery, but so can I. Isay we are further away in time from it than you say we are. That is our only difference.

I'm betting that Ford will always use the best system for making a profit in the near term, and that it is doing so right now.

Jack

Jul 31 10:59 AM

[Don Harmon:]

Agreed Jack - I just couldn't resist making that comment as it just popped into my head after reading your post! I just wish Henry was still around - maybe then Ford and the whole bunch wouldn't be in the dumpster they put themselves in.

Jul 31 12:39 PM

[Jack Lifton:]

Don,

There's no one in Detroit who I know that wouldn't agree with you. America seems to have discontinued that model, unfortunately.

Jack


On Jul 31 12:39 PM Don Harmon wrote:

> Agreed Jack - I just couldn't resist making that comment as it just
> popped into my head after reading your post! I just wish Henry was
> still around - maybe then Ford and the whole bunch wouldn't be in
> the dumpster they put themselves in.

Jul 31 01:37 PM