On EESAT and Energy Storage Opportunities on the Smart Grid

Last week I appeared as a luncheon speaker at EESAT 2009, a biennial international technical conference sponsored by the DOE, Sandia National Laboratories and the Electricity Storage Association that focuses on storage technologies for utility applications. The conference included dozens of high-level technical presentations from storage technology developers and was far and away the best-organized event I've ever attended. The only notable absence was a large contingent of buyers, which left some participants wondering whether they were preaching to the choir. Nevertheless, I was encouraged by rapid growth in the number and size of utility-scale demonstration projects and the growing body of proof that storage will be a critical enabling technology for the smart grid. I left Seattle more convinced than ever that the opportunities in grid-based energy storage are huge, but that successful investing will require study, patience, diligence and a firm grasp of economics.

The theme of my presentation was that some developers of energy storage devices are destined to follow in the footsteps of Arkwright, Fulton, Vanderbilt, Carnegie, Rockefeller, Ford, Moore, Gates, and Brin, and become the next generation of industrial legends for one simple reason: we're entering an era where 500 million people in North America and Western Europe can no longer lay claim to the lion's share of global resources because the other 6 billion inhabitants of our planet know for the first time that there's more to life than mere subsistence. While each of them may only want a small piece of the pie, the law of large numbers will give rise to explosive increases in global demand for everything and the only way to avoid armed conflict or catastrophic environmental damage is to minimize waste in all its forms, beginning with energy.

On the cautionary side I returned often to the unpleasant reality that most grid-connected storage applications won't pay under current economic conditions because the spread between the cost of storage and the value of storage remains narrow. That cost-benefit equation is changing rapidly as energy costs rise and renewables are added, but as long as waste is cheaper than storage, waste will prevail. The following graph comes from a November 2004 presentation (.pdf) by John Broyes of Sandia National Laboratories that provided an overview of the DOE's Energy Storage Systems Program. The chart focused on the California utility market and showed the clear inverse relationship between the installed cost of energy storage systems and total demand for those systems. It merits more than a passing glance from investors who want to know where the business is (see p. 11 of the presentation for an expanded version).



While the graph contains a wealth of information on the wide variety of potential uses for storage in the utility market, the most important lesson for energy storage investors is price sensitivity. When total installed costs for energy storage systems are $1,000 per kW or higher, demand for storage is almost insignificant. As installed costs fall into the $600 per kW range, the number of cost-effective utility applications soars. I've been told that an updated version of the graph is in the works and will be released shortly. You can bet that I'll be among the first to write about it.

There were several EESAT presentations that focused on important but expensive frequency regulation technologies that are priced beyond the high-range of the graph. Over the last year, demonstration systems from Beacon Power (BCON), Altair Nanotechnologies (ALTI) and A123 Systems (AONE) have shown a remarkable ability to respond to regulation signals in microseconds and provide up and down regulation at speeds that traditional systems can't even begin to match. Based on estimates from the PJM Interconnection, one of the independent system operators that manage the U.S. grid, national demand for frequency regulation installations is on the order of 6,000 MW and could be much higher if flywheel and battery systems prove capable of handling longer duration load ramping intervals. The ongoing tests are not conclusive because the new systems have not been in service long enough to establish their useful lives, but the preliminary results are promising.

There were also several EESAT presentations that dealt with more mundane energy storage applications that were priced in the mid-range of the graph. Those projects ranged from the use of flow batteries at cellular telephone installations in Africa to a recently completed 12-year demonstration where Exide Technologies (XIDE) used lead-acid batteries to effectively eliminate the need for diesel fueled backup power on a remote island where the primary power source was renewable. Yet another presentation showed how computer analysis of satellite maps was being used to identify new locations in Ireland for pumped hydro, a technology that generally falls in the low-range of the graph but is commonly believed to have limited potential because most of the desirable locations are already developed.

Overall, the most important takeaways from EESAT were that from a utility perspective:

• Storage is the economic equivalent of a dispatchable generating asset;
• Installed cost and reliability will be the primary drivers of decisions to implement storage solutions;
• Maintenance and cycle life will be secondary decision drivers;
• An optimal smart grid configuration will need storage equal to at least 5% of peak system load; and
• As renewables become prevalent, storage will become increasingly critical to grid stability.

In Energy Storage on the Smart Grid Will Be 99.45% Cheap and 0.55% Cool, I explained that the required annual storage build in the State of California was estimated at 500 MW per year for the next decade. Of this total, 50 MW would need to be fast storage in the form of flywheels and Li-ion batteries and the 450 MW balance would be 4 to 6 hour storage in the form of pumped hydro, compressed air, flow batteries and advanced lead acid batteries. When the California numbers are scaled up to a national level, they translate to billions in new annual demand for as far as the eye can see. When you add in billions in new demand for transportation, it's clear that the sector isn't even close to ready for the near-term demands. To compound the problem, essential raw material supply chains aren't ready either.

In preparation for my EESAT presentation, I spent a good deal of time analyzing how the energy storage industry of today is different from the industry that existed a few years ago. My most important conclusion was that energy storage devices are rapidly evolving from minor components in high-value durable goods to stand-alone end user products. As a result, the cost of energy storage is rocketing from less than 5% of product cost in the case of portable electronics to more than 50% of product cost in the case of an EV like the Tesla roadster. When you get into the utility arena, the storage devices are the products and represent 100% of the product costs. Since consumers generally have higher payback expectations and shorter investment horizons than utilities, I believe consumer price sensitivity will be very high notwithstanding the current flood of optimistic stories, speeches and reports from the mainstream media, politicians and environmental activists.

While some of the stock market valuations in the energy storage sector reflect the emerging reality that energy storage is and will remain a highly price sensitive product, others do not. As a result, we have a weird market dynamic where Enersys (ENS), the world's largest manufacturer, marketer and distributor of industrial batteries, trades at a 50% discount to a newcomer like A123 Systems (AONE); and Exide Technologies (XIDE), the world's second largest manufacturer of OEM automotive batteries, trades at a 28% discount to a newcomer like Ener1 (HEV). While the valuation disparities might be justified if either of the newcomers had a technology that would displace the established leaders or significantly erode their revenues or margins, that outcome can't be expected in the foreseeable future because the newcomers are focused on far more expensive products for markets that don't even exist yet.

Over the last fifteen months I've written 92 blog entries that focus exclusively on the energy storage sector; the established and emerging energy storage technologies; and the principal competitors in the industry. My recurring simple hypothesis has been that cheap energy storage will beat cool energy storage in the market and that companies that manufacture objectively cheap products will experience far more rapid and sustained stock price growth than companies that are developing objectively expensive products. Over that time, my personal trading account that includes Active Power (ACPW), Enersys (ENS), Exide Technologies (XIDE), ZBB Energy (ZBB) and Great Western Minerals Group (GWMGF.PK) has gained over 300%. Nevertheless, I think I've finally reached a point where I've said most things that can be said. Accordingly I plan to slack off a bit and write in response to current events instead of trying to maintain a regular schedule.

Over the next decade, I believe that every energy storage company that brings a product to market will have more business than it can handle. Nevertheless, I believe that companies that have attained lofty market valuations based on ambitious plans to develop exotic products are likely to trade flat or decline in price while the companies that have less ambitious goals and less expensive products have substantial upside potential.

My favorite short-term holding is ZBB Energy (ZBB) because its ZESS 50 and ZESS 500 flow battery systems are market ready and carry an attractive mid-range price while its market capitalization of $15.3 million is but a small fraction of the peer group average. My favorite mid- to long-term holding is Axion Power International (AXPW.OB) because its first generation PbC batteries are in production and have been delivered to select end users for testing, the PbC battery promises a cheap solution for a wide variety of mundane energy storage applications and Axion's market capitalization of roughly $80 million is well below the peer group average.

The only thing that will prove me right or wrong is time.

DISCLOSURE: Author is a former director of Axion Power International and has a substantial long position in its stock. He also has small long positions in Active Power, Enersys, Exide Technologies, ZBB Energy and Great Western Minerals Group.

Comments

[PhreddyPhert:]

VERY interesting... your articles seem extremely well researched, wide ranging and future focussed. As you say: "The only thing that will prove me right or wrong is time."

Oct 16 06:30 AM

[jerrydd:]

Your line that 'what was missing was buyers' is telling. Facts are we already have enough grid to handle the load. How many blackouts have you heard about this summer?

Nor is there much of a market until energy prices go back up for a while which will take a few yrs in the electric market as there are so many sources of electricity and far more ways to stop wasting it, lowering demand. Facts are even before the recession we used less electric that before that.

RE is not a grid problem except for distant wind, solar farms. Spread out home size units average out so no storage is needed.

Nor are EV's going to be in any real number for 4-5 yrs. Only Nissan has plans for large scale production soon. The others will do very small numbers for as long as they can get away with it. Car companies do not like EV's. PHEV's as they last too long and need few parts, service.

Advanced lead better be only 50% more expensive than regular lead or it won't be viable. Utility size lead only costs about $60/kwhr. Home size only $100/kwhr. So unless carbon/lead or others can beat that and I don't think they can, they are not going to make it.

Oct 16 08:46 AM

[Franklin76:]

In the analysis for $/kW in the chart how is that calculated for batteries and how do you account for cycle life etc. Is this $/kW over a specific service life?

For instance, industrial lead-acid batteries run ~$100/kWh for a 35Wh/kg VRLA and have PD of ~150 W/kg. So the cost is only $23/kW but it's good for only 300 cycles.

The A123 M1 cell runs ~$1200/kWh, has 105 Wh/kg and 3000 W/kg or is $42/kW but lasts 1000 cycles.

Thanks,
Franklin76

Oct 16 09:12 AM

[Dave Marsh:]

One of your previous articles had a graph showing projected storage demand by type, and it showed the greatest future growth in flow batteries and ultra capacitors. Investors seem to have bought into the ultracap idea in a big way, as evidenced by Maxwell's meteoric rise, especially in the last two months. So I took the flow battery route and bought ZBB, thinking their day would surely come. Well it hasn't, yet, and it barely trades at all some days. Any thoughts on why ZBB, and for that AXPW, just aren't attracting much volume at all, though AXPW is "sort-of" on the radar now, post-XIDE deal?

Oct 16 09:19 AM

[John Petersen:]

PhreddyPhert, one of my biggest reasons for slowing down a bit is a desire to remain fresh and not re-till the same fields. If you ever find yourself with questions on the energy storage sector, you'll probably find an answer and a third-party link in one of my archived articles. They're all available by clicking the link under my picture at the top of the page.

Jerrydd, there are lots of folks at the DOE and Sandia who would disagree with your assessments of need and future growth rates. Utilities live in a world of complex Federal regulation and a plethora of local utility commissions. Storage does not fit conveniently into any of the regulatory cubbyholes that have been created over the years. While it's true that the utilities have usually done a pretty good job of keeping the lights on, the grid is currently operating on a razor's edge during peak demand periods and when bad things happen, they're very bad. Without rapid deployment of grid based storage, satellite pictures like these will become far more common.

www.noaanews.noaa.gov/...

There are apparently discussions in several quarters over the need for "storage portfolio standards" like many States have already adopted for renewables.

Oct 16 09:27 AM

[John Petersen:]

Franklin, the underlying Broyes presentation does not get into the detail of how the costs of various systems will be calculated, but you can rest assured that the cost-benefit analysis will look at a period of years and make appropriate adjustments for energy and power curves and also replacement cycles. The Exide project I referred to used the same lead-acid batteries for 12 years and saved $8 million in fuel costs for a $2 million installation. So I wouldn't get too attached to absolute cycle-life numbers like 300, 1,000 or even 20,000. It all depends on design parameters that are far too detailed for a blog like mine.

Dave, ZBB was one of those companies that started losing ground right after its IPO and has pretty-much fallen off the radar screens. It's IPO came out at $6 in mid-2007. It's been hanging around at about 20% of the IPO price for the last year in spite of some very positive business developments. The last company I saw in that position was ACPW which I bought at $0.26 on Christmas Eve and which closed at $1.24 yesterday. ZBB's day is coming, but I'd be reluctant to say what the triggering event will be or how long it will take. One of the biggest challenges for any small company is developing name recognition. You'd be amazed at the number of people who attended EESAT and thanked me for taking the time to raise public awareness of the sector in general. Until very recently, storage has been thought of as a boring rust belt sector and nobody paid any attention. That dynamic is changing rapidly.

Oct 16 09:45 AM

[captainccs:]

If you wait for a brown-out to start doing something about it, you'll have guaranteed blackouts before you solve the problem.


On Oct 16 08:46 AM jerrydd wrote:

>
> Your line that 'what was missing was buyers' is telling. Facts are
> we already have enough grid to handle the load. How many blackouts
> have you heard about this summer?
>

Oct 16 09:50 AM

[captainccs:]

How soon will ZBB run out of cash? Reminds me of the dot-com no-revenues-but-great-... bargains. ;)

I just don't see investing in any energy related company that is not currently making a profit. I'll leave that to the VCs.

Oct 16 09:58 AM

[John Petersen:]

captainccs, ZBB had $3 million in cash at year end (6/30) and has raised $2 million more since then. While it's still losing money, it's operating expenses are very small and its marketing partner Eaton is monstrous large. When I was a much younger lawyer, a wise old mentor once quipped that "Small companies are like small children in third-world countries. They rarely die of starvation but frequently die of dysentery." Twenty-five years later, I understand the wisdom well.

Oct 16 10:09 AM

[andrewjmcd:]

Any news from CHP/firefly technology?
When is the trials expected to be completed?

Thanks,
Andrew

Oct 16 10:15 AM

[William Taylor:]

As you know, John, I am a fan of BCON but I am getting a bit hesitant as I don't see much progress. I am wondering if they have a chance in this game based on their low carbon footprint and the fact that they seeming require virtually no maintenance as opposed to battery systems which degrade, need replacement and maintenance.

I think that grid operators are conservative buyers, particularly of any new technology like flywheels, and that the path to acceptance will be difficult for BCON but I am hoping that the fact that they are probably the "greenest" technology will overrule cost difficulties.
As you sure that, factoring in maintenance and replacement costs for batteries, that flywheels are not in the financial ballpark? Thanks for your work, it helps push away some of the fog of uncertainly for many of us.

Oct 16 10:38 AM

[Ed C.:]

John, as always, you have written an excellent, well-researched article. Regarding the 2004 Sandia chart - how does storage duration factor into the graph? If an energy storage system were designed for 1 kW for 1 hour vs. 1 kW for 8 hours, the price would vary dramatically, and I'm not sure how to read the chart to account for that? Thanks.

Oct 16 11:07 AM

[John Petersen:]

Andrewjmcd, I've not seen anything new from Firefly and the deal is too small to meet a materiality standard for C&D, so they really don't have anything to talk about. But like I said, there should be a large market for any improved devices that come out over the next decade and Firefly's technology certainly fits that mold.

William, I was rough on Beacon early on because its market cap in the summer of 2008 seemed a bit on the high side. I would not dismiss the potential of flywheels because even 6,000 MW of regulation translates into a very respectable market if regulation services are worth $250,000 to $500,000 per MW/year.

There are a number of good things that play in Beacon's favor over the long term. First, while the frequency regulation market is not as big as some of the others, proving the usefulness of flywheel systems in load ramping could be far more significant. Second, it's easier to get big improvements in systems like flywheels that rely on the laws of physics instead of the laws of chemistry. Finally, their strategy seems to be build a few installations, prove their financial merit and then open the technology to utilities that want to buy their own systems instead of merely paying for services.

I continue to believe the only way to play the sector is through diversification. As humans we're always looking for the single silver bullet and that just won't exist in storage. We need them all and a bunch of stuff that hasn't been invented yet.

Oct 16 11:29 AM

[John Petersen:]

Ed, the chart talks about installed cost per MWh. So if you had a $4 million per MW NAS battery with a 7 hour discharge cycle like the ones from NGK Insulators, the cost per MWh would work out to roughly $600 per KWh. Likewise, if you had a $500,000 per MW lithium-ion battery with a 15 minute discharge cycle, the cost per MWh would be closer to $2,000.

Oct 16 11:35 AM

[jerrydd:]

On Oct 16 09:27 AM John Petersen wrote:

> Jerrydd, there are lots of folks at the DOE and Sandia who would
> disagree with your assessments of need and future growth rates.

The difference is I live in the real world and they don't. Fossil Energy is about to skyrocket which will make it more profitable to conserve, more eff or switch to another fuel or RE. Basically fossil fuels are going up and RE equipment is going down. And our national security, economy needs it to happen.

DOE is for unsurprisingly nukes as their budget 70%? subsidizes nukes.

If Sandia was for RE they would design, test a 3kw solar CSP unit that only cost $3-4k. It's only a 5hp solar engine, 3kw alternator and a 200sq' trough collector and would supply all the power, heat many eff homes would need, even get a check back from the utility. This one unit of which we need 50 million could be 10-20% of our energy problem solution and create many jobs, building, installing, maintaining them. So even at $8k almost all your energy needs for under $8k for 50 yrs is a deal. Payback in 2-5yrs.
Here is a start up to do that, waste heat engines and biomass. Can be fueled by most anything
cyclonepower.com

Wind generators now cost $2k/kw with inverter. Google Axial Flux wind generator

So no the grid will not be larger as plenty of people soon will be making their own because it is cheaper and never going up in price. We will need less grid but smarter. Now add eff buildings, eff retrofits and demand drops. And this will happen because it's cheaper than paying for energy. It's $.25/kwhr standard rate in some markets. There home storage would be very profitable.

Utilities
> live in a world of complex Federal regulation and a plethora of local
> utility commissions. Storage does not fit conveniently into any of
> the regulatory cubbyholes that have been created over the years.

I agree. I think the first market will be home units, storing the household's daily supply needed at night cheaply to power it during the day/peak/expensive hours. This can be done in most any home, business and cut your bill by 50% in many areas.


> While it's true that the utilities have usually done a pretty good
> job of keeping the lights on, the grid is currently operating on
> a razor's edge during peak demand periods and when bad things happen,
> they're very bad. Without rapid deployment of grid based storage,
> satellite pictures like these will become far more common.
>
> www.noaanews.noaa.gov/...

This hasn't been much of a problem for yrs after that last large blackout many yrs ago, the FERC bit down hard on the utilities to keep enough peak power on hand.
Especially now with all the NG plants which can be throttled and smaller, works as well as storage.

>
> There are apparently discussions in several quarters over the need
> for "storage portfolio standards" like many States have already adopted
> for renewables.

I'd bet among those making storage equipment especially!!

Don't get me wrong, I think storage, EV's and RE are going to be big but not yet. I've been around this since 70 and seen al this before. It will take 4-5 yrs to get it going enough that it makes a difference so those should pick their energy stock very carefully as too many won't make it.

The reason EV's won't be a problem is many of them will be the grid storage system in 10 yrs. They will charge off peak and put power back into the grid as needed during the day since each already has a 50-200kw inverter easily matched to the grid.

As far as real investment, people might want to build their up their own RE generation for investment income. Used wind generators from upgraded wind farms can be very inexpensive to reinstall, make money from for 15-30 yrs. And very profitable if near a good market. Not profitable like near hydro, etc so check your rates first and RE laws.

Oct 16 11:42 AM

[Mayascribe:]

John: Great summation of your trip along with investing angles, combined with a new slant. As you know, I have shares in Exide, Axion, and Active Power. Although I sold off much of the Active Power after the recent huge surge, and will reaquire after the stock settles.

My e-gamer plan right now is all about oil and junior miners, and a few H1N1 stocks, with a small smattering of other stocks.

I'll keep track of the batt sector by maintaining ownership of the above batt stocks, and your terrific columns. Currently, unless some accelerating event occurs, I believe the short term dough needs to be planted in the other above sectors. Long term, though, the energy storage sector will go from rust belt thinking to glitz and glam thinking.

Again, good article. Glad for your safe return!

Oct 16 12:48 PM

[John Petersen:]

Mayascribe, take a closer look at ZBB because I think it's my next four bagger (already there with ENS, XIDE and ACPW). Maybe Jack will get something fun posted over the next couple days.

Oct 16 12:59 PM

[Dave Marsh:]

Well John, right after your response to me about ZBB and your mention of it being your near-term choice in the sector, it shot up 10% on >100K volume. Coincidence, or correlated, it's nice to see.
Also, you may have noticed the go-ahead for BCON's 20MW frequency reg. project in NY was announced this morning.

Oct 16 01:23 PM

[John Petersen:]

Dave, I've been writing for 15 months and have never seen any evidence that my opinion (good or bad) can move a market. That's why I created my own little trading account last December so that I'd have something concrete to point to. About the only thing I know that my work does for certain is raise the profile of a group of 15 small companies that I follow, and that's a benefit for the entire sector.

I'm delighted to see the barriers falling for Beacon. It's working on an important technology that needs to be built, thoroughly tested and documented, just like a half-dozen other companies I could name off the top of my head. This sector, but my mother always told me that the shorter trees either had to grow or die, but as long as you were diversified enough to take a couple deaths the odds were pretty good that you'd get some real growers.

Oct 16 01:49 PM

[Mayascribe:]

Will do, John. Is there any reason you think the stock's going to bust out soon?

Oct 16 02:18 PM

[John Petersen:]

Mayascribe, I need to be careful using words like "soon," particularly with a trader like you. For my style of investing less than 6 months is soon and anything less than 3x or 4x would be disappointing.

ZBB trades at a market cap of $16 million. If you go back to my October 1st article you'll see that the low end of the peer group range is about $50 million and the average is over $100 million even if you take out the best known companies like AONE, HEV, ENS and XIDE. Despite it's low price, ZBB is selling demonstration systems on a regular basis for everything from cell phone base stations in Africa to wind farms in Ireland to universities on the West Coast. With the projects already working, it won't be too long before they can prove cost effectiveness. They've got at least a year of running room with the cash on hand with that many irons in the fire, I'm confident that sooner or later there will be an event that sets the market on fire like we saw with ACPW a few days ago. I don't think my opinion will make a bit of difference, but more eyes on the stock virtually guarantee a response when ZBB does something important. I wouldn't want to try to predict the precise timing, but I am confident that it will happen.

Oct 16 03:11 PM

[Mayascribe:]

Thanks, John. I put some shares on the board. You now have another pair of eyes.

I'm not all about short term, I still have shares in my brokerage account that I never sold all the way through this fiasco. Even in my e-gamer account I still have shares of Jaguar Mining I bought last November. But you're right, I do maintain tight stops, and will take profits if a stock pops like ACPW did. The Jeckyll and Hyde in me...

Giddyup ZZB.

Thanks, again.

Oct 16 03:23 PM

[crtoca:]

How things can change in a year. The VRB flow battery is no longer available from a publicly traded company. However, the VC's that own Prudent Energy, successor to VRB Power, may be able to recoup their investment via an IPO within just a couple of years.
http:utility-savings.com
http:pdenregy.com

Oct 16 06:07 PM

[NanooGeek:]

I wondered what happened to the tech that VRB Power had. They also had a number of irons in the fire, at various times, but none got warm enough to keep them afloat (on a sea of molten salts) ...

Oct 16 08:09 PM

[John Petersen:]

crtoca, Prudent has moved the whole operation to China but remains active and has done several installations in Africa. The odds are that they'll be back with a stronger and better financed company.

NanooGeek, the molten salts are more for NGK Insulators and GE.

Oct 17 01:18 AM

[renim:]

my description of a ZBB battery, its a battery that does reversible zinc plating.
these are nearly always supplied with the expensive electronics to do the grid connect/AC users current.

Oct 17 03:24 PM

[Advill:]

I have been traveling with less time to read lately, it surprises me your comment about the feeling in Seattle of "preaching in the air" when we are in the middle of a green deal with Obama government.

This "testing period" seems endless...with ZBB and AXPW, reading a comment i sent 6 months ago, it seems that things are static, from my point of view, if there is interest in grid owners about storage, they should be doing tests now in US grid, not in cellular stations in islands of Africa...

My point is that any positive decision about buying storage means years of studies, selection of alternatives, suppliers to that alternatives and testing the products in real world conditions and it seems we are not in this stage yet, means that any benefit to AXPW or ZBB or others is still 3-5 years away.

Something similar happened with EV if any change comes, it will be with the next generation of EV´s, the batteries to be used from now to 2014 are already a close deal.

0% doubt about the trend...100% doubtful about the timing (as investor of course).

Regards.

Oct 18 01:14 PM

[John Petersen:]

Advill, the government moves slowly, particularly when it comes to funding opportunities like we see in the storage market. The first step involves a call for proposals that typically take a couple months to prepare, then you have a bevy of government employees sifting through a huge pile of applications to decide which will be the few out of many. Then comes the contract negotiation phase. Given the amounts at stake, they can't afford to give the process short shrift and they sure can't afford mistakes.

Companies like ZBB and Axion have been moving forward with all due speed relying on their own resources to prove their own value. Nobody that I know of is on hold waiting for the government to act. Everybody is generating results, but they can't give the process short shrift either.

For the last 15 months I've been ridiculed for telling readers "this is going to take time - sometimes a long time." I've also been ridiculed for telling readers "this is not like Steve Jobs announcing a new IPod that will be available globally in a week." Everybody needs to prove their technology and build their factories before making their contribution. Companies like ZBB and Axion are already a long way down the road. Wait till you see how long it takes for the supermodels who are still trying to pick foundation garments.

I like some companies better than others because I don't mind buying green bananas but I don't want to clear a plantation from raw jungle. In other words I agree with your timing issues.

Oct 18 05:26 PM

[Advill:]

Hi, John, I never ridiculed a comment of you, all the contrary!, I´m not sure if you got my point...."if somebody is going to use AXPW products in a grid , it´s sure that Axion knows that some years in advance" because implementing a change so big needs a lot of engineering, training, manuals, stages, procedures etc.

Same with cars, today companies are deciding what their products will have in 3-5 years because the same reason (a clear case is the Hyundai SUV arriving to US market in 2009), so, if any grid is going to opt for Axion batts in 2013...you already know it now.

Regards.

Oct 18 08:15 PM

[John Petersen:]

Advill, I failed to ask myself "how will this response be interpreted by an old friend" and have created a situation where I owe you a big apology. You have always been the consummate gentleman even when you disagree. I did not mean to point a finger at you and apologize for carelessly going off on an inappropriate tangent.

Currently the utilities are trying to find their way through the fog and figure out exactly how they can work storage into their systems and more importantly their rate bases. In response, the developers are all focusing on building and demonstrating automated modular systems that will require minimal operation and maintenance after installation. Some of those systems will be centralized, but the big push seems to be for "plug-and-play distributed resources" that can be dropped into place as close as possible to the end user. What everybody seems to be focused on is "common problems" that can be addressed with generic solutions rather than "unusual problems" that will require custom solutions.

We're living in an odd time where everybody would love the luxury of a normal product or service planning cycle but nobody has it. A great example is the push for micro-hybrids that's been elevated to full blown emergency status in the last year as the EU and Obama changed the CO2 and CAFE rules and threw a monkey wrench into everybody's product development plans.

Currently, the scramble to find solutions is far more normal than anybody wants, which makes it difficult to plan from a user's perspective or forecast from a seller's perspective. I would love to know who the users are going to be. Unfortunately the closest I can come is identifying the automotive OEMs and utilities that are searching for solutions. Given a very long list of potential buyers and a short list of potential solution providers, it's pretty easy to be confident, but it would be impossible to accurately predict who will choose what.

Oct 19 02:36 AM

[Ferdinand E...:]

Interesting and something to think about. Thanks.

Oct 19 11:01 AM

[jp17622:]

John - why not do the right thing and just buy yourself a small position in BCON? You talk about each technology playing a part in the storage space however you rarely focus on any technology other than batteries.

Oct 20 07:40 AM

[John Petersen:]

jp17622, when I made an investment in flywheels, I thought ACPW was more attractive at $0.26 than BCON was at $0.53. I still like ACPW better at $1.27 than BCON at $0.67. My rationale is simple, the market capitalizations are roughly equivalent but ACPW's chances for near-term profitability are much higher. At some point that will change and I'll sell ACPW to buy BCON, but not yet.

Oct 20 09:22 AM

[MRTTF:]

John, while this is a bit off-topic, and I am sure that Jack would be the person to ask for the in depth analysis, has anyone thought of other material constraints from the cleantech revolution? We alway wax poetically on both sides about China's eventual stranglehold on REEs and if there is a enough Li for 500,000 PHEV/EVs or for 500,000,000, but what about materials for all the other components?

seekingalpha.com/insta...

Oct 20 10:07 AM

[John Petersen:]

Last spring Argonne was promising an that update of their May 2000 report on "Costs of Lithium-Ion Batteries for Vehicles" would be published in mid-summer

www.transportation.anl...

I've been waiting with bated breath for the update, but so far I've seen absolutely nothing; which leads me to speculate that the update does not support the prevailing happy talk about lithium-ion battery prices collapsing due to "economies of scale." I've already taken myself out of the lithium supply debate by acknowledging that there's lots of lithium deposits, but not enough working mines to fill the anticipated demand. The other battery components (as far as I know) are basic industrial commodities that can only increase in price as 6 billion former have-nots demand their fair share of the global resource pie.

Oct 20 11:28 AM

[Advill:]

Appreciate your comment we are all in the same ship.

Best Regards.


On Oct 19 02:36 AM John Petersen wrote:

> Advill, I failed to ask myself "how will this response be interpreted
> by an old friend" and have created a situation where I owe you a
> big apology. You have always been the consummate gentleman even when
> you disagree. I did not mean to point a finger at you and apologize
> for carelessly going off on an inappropriate tangent.
>
> Currently the utilities are trying to find their way through the
> fog and figure out exactly how they can work storage into their systems
> and more importantly their rate bases. In response, the developers
> are all focusing on building and demonstrating automated modular
> systems that will require minimal operation and maintenance after
> installation. Some of those systems will be centralized, but the
> big push seems to be for "plug-and-play distributed resources" that
> can be dropped into place as close as possible to the end user. What
> everybody seems to be focused on is "common problems" that can be
> addressed with generic solutions rather than "unusual problems" that
> will require custom solutions.
>
> We're living in an odd time where everybody would love the luxury
> of a normal product or service planning cycle but nobody has it.
> A great example is the push for micro-hybrids that's been elevated
> to full blown emergency status in the last year as the EU and Obama
> changed the CO2 and CAFE rules and threw a monkey wrench into everybody's
> product development plans.
>
> Currently, the scramble to find solutions is far more normal than
> anybody wants, which makes it difficult to plan from a user's perspective
> or forecast from a seller's perspective. I would love to know who
> the users are going to be. Unfortunately the closest I can come is
> identifying the automotive OEMs and utilities that are searching
> for solutions. Given a very long list of potential buyers and a short
> list of potential solution providers, it's pretty easy to be confident,
> but it would be impossible to accurately predict who will choose
> what.

Oct 20 12:32 PM

[tireman63:]

John,
Have you published any figures on the individual loads that either EVs or PHEVs will put on your garage at home or your workplace? A standard battery charger with a 40 amp charge rate for 12 volt systems will not overtax the standard 30 amp fused breakers. Of course,if you have to have a dedicated 220v outlet, that would be a different story.

Oct 21 09:05 PM

[John Petersen:]

Tireman, given my generally cynical view of cars with plugs, I've never bothered to publish load figures for home recharging. But if you assume a 30 Amp dedicated circuit, a 110 V connection will max out at about 3 kWh per hour of charge time and a dedicated 220 V connection will max out at about 6 kWh per hour of charge time. Since the values I've seen for PHEVs range from 10 kWh of useful capacity in a Volt to 24 kWh or more for the straight EVs, full recharge times can be lengthy. Since there are very few homeowners who have dedicated circuits in their garage to begin with, I figure every EV purchase will also entail an electrician's call to at least add a dedicated circuit if not upgrade the whole system. Let's call it a hidden tax of PHEV and EV ownership.

Oct 22 06:02 AM

[MRTTF:]

John,
Thanks for the link. Now I just have to find time to read it...

While you know my position on the "economies of scale arguement (pure and utter delusional fantasy)," and I do agree that some materials are simple commodities, there are sure to be some that pop up that are not. More critical to me is the bottleneck for the material components. There are only several reputable suppliers for most components. I could see a problem akin to what Jack has hinted at for lithium mining, i.e. not enough refining capacity.


On Oct 20 11:28 AM John Petersen wrote:

> Last spring Argonne was promising an that update of their May 2000
> report on "Costs of Lithium-Ion Batteries for Vehicles" would be
> published in mid-summer
>
> www.transportation.anl...
>
> I've been waiting with bated breath for the update, but so far I've
> seen absolutely nothing; which leads me to speculate that the update
> does not support the prevailing happy talk about lithium-ion battery
> prices collapsing due to "economies of scale." I've already taken
> myself out of the lithium supply debate by acknowledging that there's
> lots of lithium deposits, but not enough working mines to fill the
> anticipated demand. The other battery components (as far as I know)
> are basic industrial commodities that can only increase in price
> as 6 billion former have-nots demand their fair share of the global
> resource pie.

Oct 22 11:34 AM

[JLBR:]

John Petersen:
As an individual investor interested in the new energy economy, I thank you for your many articles, which I don’t read regularly but catch up on from time to time. You’ve clarified a lot about the electric-powered vehicle space (in short: be skeptical of claims about cars with plugs). But I've not learned much (yet) from your articles about grid-scale storage, the topic of this latest article (in which you, sadly, also announce semi-retirement from the blogosphere). The two topics (transport and grid storage) are related, of course, but It seems you returned from EESAT with a new appreciation of how many new and different issues grid storage involves, and I'd resally like to hear more. Below is some of what I know and hope(ed) you might address in the future.
It seems to me that the prevailing thinking regarding grid storage is suspiciously like and may be infected by the same wishful thinking about cars with plugs.
The utilities want to make grid and transport storage one and the same. Understandably excited at the prospect of selling electricity to charge up millions of electric cars, the utilities bolster that excitement with the claim that those millions of powerful car batteries (when plugged in vehicle-to-grid (V2G)) can also collectively serve as grid storage. A million 10KW batteries is a lot of storage, after all! This way, the EV owners can recover costs by renting access to their batteries. In other words, grid storage will (help) pay the high costs of EVs. Preferring a single technology in both settings, the utilities are jumping on the lithium-ion bandwagon as the universal solution. They envision lithium-ion batteries everywhere -- from 50 MW formations of 2-MW batteries on 50 foot trailers parked next to generating plants, to10KW PHEV/EV powertrain batteries in people's garages across the country. Working on grid storage applications with a hundred or so big batteries for the next couple of years will be a dress rehearsal for the day when millions of smaller lithium batteries provide multi-GWs of storage for grid operators.
Two recent market surveys (Greentech Media and Pike Research) seem to accept and have expanded on this vision. I've only read the free executive summaries, but they both seem to conclude that li-x batteries are going to be the "clear winners" in grid-scale storage technology. But, as far as I can tell, they reach this conclusion only because so many utilities plan to buy grid-scale lithium batteries, and the utilities have these plans because they believe millions of people are going to buy electric cars. In short, it's yet another questionable claim about cars with plugs.
As just discussed, utilities have good, if self-serving, reason to prefer lithium batteries for grid storage services. But even if it's not that simple. Or the self-serving preferences of electrical utility companies.
All this relates to a recurring question among your readers -- whether to invest in Beacon Power. If lithium ion batteries are the clear winners, where does this leave flywheels? And if that claim about lithium batteries is based on the false premise of abundant EV sales, what does that mean for Beacon? Well, Beacon's flywheels are unquestionably the most developed technology today for the highly lucrative frequency regulation ancillary service market (the readiest grid storage market today). Yet they are relegated to a negligible "niche status" in the two market surveys mentioned above, and flywheels certainly are conspiculously absent from any discussions of the subject by utilities. I listened to the "Analysts' Day" presentation last month put on by grid operator PJM Interconnection for Altair Nanotechologies (a lithium battery maker) and never heard "flywheels" mentioned once. This neglect of flywheels reflects the fact that no one is planning to buy them; and yet the truth is that Beacon Power is not planning (or trying) to sell them, just to use them itself according to it's vertically integrated storage-as-a-service business model. It just might be a really brilliant strategy! Beacon will gain all the experience and knowhow, not to mention the profits, from a key ancillary service business, which it can leverage in many ways going forward. To really understand what this means, one has to understand the nature of the still new grid ancillary services industry, not just the pros, cons, and manufacturing costs of various battery chemistries and storage technologies. KEMA, the international electrical engineering consultancy, has described Beacon as the “poster child of electric industry deregulation." Beacon's initial installed costs per MW are greater than large li-x batteries (although they'll be coming down considerably), but their costs of operation over 20 years or so are much lower. So there is still every reason to expect that Beacon's 20 MW flywheel plants (and I believe they have two pretty definite ones in the works now) will be consistent low-bidders on the day-ahead Frequency-Regulation markets. This means that each plant will have the lion's share of a potentially $40 million market to itself (FR may be a $20 Billion market nationally). Keep in mind: (1) that the use of fast-response technologies (like flywheels OR batteries) for frequency regulation (seconds or even miliseconds vs. 10 minutes or more) is so much more effective that it is expected to cut the total amount of frequency regulation needed by half or so from what it would otherwise be, and (2) that since Beacon's flywheels will charge up as often as they discharge they will be able to "keep on going" for a very long time each day before the second lowest bidder gets the nod to kick in. If the utilities, and their lithium-ion batteries, also bid on FR in the day-ahead markets and try to undercut Beacon, they will be closely watched by FERC (Federal Energy Regulatory Commission), which has mandated that 3rd party, merchant ancillary service providers be allowed to compete fairly. One also hears that, unlike flywheels, batteries (which do enjoy larger energy storage capacity and longer power discharge ratings) will have the economic advantage of being able to provide a second ancillary service, say contingency reserves or 12-hour energy arbitrage. That idea sounds nice, but it ignores the fact that the ISOs who run America's grids have ruled, with FERC's blessing, that (variously named) "stored energy resources" (SERs) and "limited energy storage resources" (LESRs) which bid on frequency regulation are not permitted to bid on or offer any other ancillary service.
So, John Petersen, you mentioned the fast-response frequency regulation demonstration projects involving Beacon Power, Altair Nanotechnologies, and A123 Systems. How are the companies and technologies regarded by the utilities and ISO's involved? Is my analysis consistent with what people were saying at EESAT?
I have long positions in Beacon Power, Altair Nanotech, Axion Power, A123 Systems, Maxwell Technologies, Valence Technology, and ZBB Energy, and Exide Technologies. I don't buy a stock unless I expect to hold onto it for at least 12 months (to save on capital gains taxes), usually much longer, and I always consider selling half of a position when the price has doubled. I look forward to staying in the storage sector for a long ime, and to benefitting from your insights in the future.

Oct 23 01:23 AM

[John Petersen:]

MRTTF, I would love to be in a position to individually analyze the critical materials suppliers, but that's a bit beyond my depth because the only thing I really understand is that the current generations of lithium-ion chemistry require raw materials that are refined and purified way beyond "run of the mill" and there are a limited number of producers who can make those materials in volume. While the ARRA battery grants provided funding for 10 suppliers of critical materials suppliers, I don't know enough to identify other potential bottlenecks.

JLBR, while my future schedule will be less predictable, I'm far from retiring from the blogsphere. This is way too much fun. I plan to delve far deeper into the grid storage issues as more information becomes available, but I don't want to become repetitive by re-tilling the same old ground while I wait for new information.

V2G is one of those issues. In the PJM presentation at EESAT, they talked about needing 1,000 MW of frequency regulation capacity, which is the primary market for both the Beacon flywheel systems and the lithium-ion battery systems. In the next slide, they spoke of an expected 180,000 plug-in vehicles by 2015 if the plug-ins are spread evenly across the country. With an average battery capacity in the 20 kWh range, it seems to me that 180,000 plug-ins could provide about four times the frequency regulation capacity that PJM says it needs. If that's the case, I don't think I'd want to count on $250 to $500 per kWh per year in V2G revenue. It's the old supply and demand thing at work. Once you get out of the frequency regulation regime, the value of other storage applications plummets unless you want to plan on a world where every parked plug-in will be connected to the grid at all times.

I had a chance to talk with Beacon at EESAT and think their long-term plan is to build and operate their own FR installations, and also sell equipment to others who want to buy it based on company funded demonstrations. Unlike many analytical types, I remain convinced that the coming smart grid will require a combination of solutions and everybody who brings a product to market will have more demand than they can satisfy.

Oct 23 11:57 AM

[MRTTF:]

John--

I guess my focus wasn't so much on the active materials (which is where a majority of some of the ARRA grants went to), separators, or electrolytes. I was thinking more about, current collectors, cell casing, tabs, wiring, etc. While I agree that most of these will be general commodities, there will eventually be supply issues, both production volume and actual reserves with some of these materials. That is why I am a little shocked that there wasn't more investment into recycling...

On Oct 23 11:57 AM John Petersen wrote:

> MRTTF, I would love to be in a position to individually analyze the
> critical materials suppliers, but that's a bit beyond my depth because
> the only thing I really understand is that the current generations
> of lithium-ion chemistry require raw materials that are refined and
> purified way beyond "run of the mill" and there are a limited number
> of producers who can make those materials in volume. While the ARRA
> battery grants provided funding for 10 suppliers of critical materials
> suppliers, I don't know enough to identify other potential bottlenecks.
>
>

Oct 23 02:18 PM

[John Petersen:]

MRTTF, the really crazy part is that recycling was the only ARRA category that went begging and the Feds couldn't give away the money. It's a sad state of affairs, but there seem to be a lot of folks out there who have no idea what waste minimization means.

Oct 23 02:29 PM

[Advill:]

I know that is not John´s favorite but there is an interesting article about EESTOR where Wired arrives to the conclusion that it has a market theoretical value of 1.5 billion!.

And WSJ has something good about the 5 key technologies for the future where grid storing electricity is one.

nextbigfuture.com/2009...

Regards

Oct 23 08:58 PM

[John Petersen:]

Advill, it's not an issue of favorites because I can get behind anybody that brings a product to market. I have a real problem with PR that would be excluded as hearsay in any court, particularly when the only source of the hearsay is using it to support a market cap that would be laughable in the absence of the hearsay.

My real issue with the EEstor saga goes back to a July 2008 Green Car Congress article about them needing chemical purities in the parts-per-billion range. One of the big problems that lithium-ion battery producers have is getting to materials that are several orders of magnitude less pure, and while parts-per-billion is theoretically possible with an unlimited budget, it is neither easy nor cheap. EEstor may well develop a supercapacitor that has all the magical technical qualities the hearsay witnesses claim, but it will never be able to make a cheap supercapacitor using materials that need a parts-per-billion purity.

Oct 24 03:16 AM

[tireman63:]

John, I followed Advill's next big future.com/2009 tag and then read a few of the Disqus comments. There is a fellow known as GoatGuy that has one of the most sensitive BS detectors I have ever seen. I hope you can take a look at some of his comments.

Oct 24 02:22 PM

[DanEA:]

I must add my two cents to this. #1: Blackouts have nothing to do with grid reliability based on what grid frequency regulators are offering at this day and age. A black out is complete loss of power often resulting from a complete loss of connection. Not even nuclear power can deliver energy where there is no connection. I suppose when the next Einstein develops energy to be transmitted through radio waves and not kill every living thing with in it

Oct 27 03:25 AM

[John Petersen:]

DanEA, there have been a number of cases where a small fault starts a cascade and the result is a wide-area blackout that could well have been avoided with a relatively small amount of buffering storage. I've seen estimates that the big northeast blackout several years back could have been avoided with six seconds of buffering. Frequency regulation is an entirely different regime and requires far less storage.

Oct 27 05:47 AM

[user1010101:]

hey John, was anyone at this conference from EEstor or Zenn Motoros?

Oct 27 08:31 AM

[John Petersen:]

user1010101, the closest we came was a guy from Lockheed and a Kleiner Perkins partner, neither of whom was willing to comment.

Oct 27 10:54 AM

[JLBR:]

JP: The PJM estimate you cite -- 180,000 plug-ins on the road (in the PJM region, I presume?) by 2015 -- is not credible, is it? It's just the sort of forecast about cars with plugs that your articles have been warning us about. And you are no longer the only one saying this. Lux Research's EV/PHEV forecasts have turned negative, which, rumor has it, is why A123 dropped Lux before their IPO (See: "Speed Bump: Don’t Bank on the Electric-Car Revolution, Lux Says" Wall St Journal, Oct 7). Of course, there are plenty of forecasts out there that continue to predict a surging market in EVs and, worst of all, too many journalists and politicians who still don't even distinguish between cars with plugs and without – they seem to think that, “all electric cars are the same, they will all use lithium batteries, and lithium-based V2G is right around the corner.” But, in reality, “mild hybrids” using “cheap” advanced lead batteries (or something comparable) will likely comprise the first real mass market in e-powered vehicles. When a pure EV market does develop, the current lithium battery incumbents may be caught without the right product. Venture capitalists like Vinod Khosla, as I think you mentioned somewhere, are already at work on cheaper and safer, solid-state lithium batteries for that time. But my concern now is that mistaken forecasts like PJM's about EVs and V2G, are distorting the frequency regulation market -- by leading utilities to adopt grid-scale lithium batteries for frequency regulation services as a way of preparing for the "inevitable," lithium-based V2G business which they believe is just around the corner. One mistake built on top of another. I would like to see some reassurance that the grid-scale lithium batteries utilities are apparently planning to purchase for frequency regulation really will be low bidders in the day-ahead FR market. For now, because of Beacon's lower costs of operation, maintenance, and replacement, I think Beacon's flywheel plants will be able to under bid all competitors, making grid-scale lithium batteries for FR services another market that didn't develop as fast or as far as everyone hoped. See the NYISO tariff governing LESRs (limited energy storage resources) providing FR to get an idea of how this market will work (ferc.gov/EventCale...).
Viewed from this angle, your earlier categorizing of Beacon's flywheels as “cool” and expensive could be wrong. I agree they’re cool -- how could a one-ton flywheel that spins at Mach 2 not be cool? -- but I think they will also be cheap (low bidders) in the day-ahead market. Unfortunately for Altair, A123 and others, lithium batteries are plagued by both coolness and high cost at both grid scale and vehicle scale.

Oct 27 05:29 PM

[John Petersen:]

JLBR, the number was presented as an example based on the President's target of 1 million vehicles and their service area encompassing 18% of the population. In other words, it was an ultra rough wild guess assuming that the President's goal of 1 million cars with plugs is met.

I don't for a minute believe cars with plugs will fly with consumers, but with 100 million cars on the road, it doesn't take much market penetration to get to 1 million vehicles in five years.

The more intriguing question is "If you have 4,000 MW of potential frequency regulation capacity in 180,000 plug-ins but only need 1,000 MW of frequency regulation, how much are you going to be willing to pay the plug-in owners." The law of supply and demand tells me not much!

Oct 27 06:21 PM

[D. McHattie:]

JP, you've no doubt by now viewed the Envision video featuring an Axion battery as part of the overall 'Solar Tree' concept - what do you think?

It's nice to see a specific way in which Axion can capitalize if plug-in hybrids actually do become popular since we know Axion batteries won't be inside the cars themselves.

However, your research has shown us that plug-ins will not be much of a factor for at least 5-10 years.

This Envision SolarTree thing seems a little premature.

Oct 27 08:14 PM

[JLBR:]

JP: Good point about supply/demand issues. But they are only one of the problems with V2G, albeit one that most clearly shows the public may be being taken for a ride. There’s also the sheer complexity from the dispatcher’s viewpoint of accessing thousands of vehicle size batteries, all in unknown charge states, physical conditions, and availability. A VERY smart grid is clearly going to be a prerequisite, but this will add expensive control electronics to the cost of the battery itself. I have seen frequency regulation listed as a possible service for V2G, but seeing what’s involved in FR with true grid-scale storage resources (www.ferc.gov/EventCale...), it’s hard to see how any ancillary service other than maybe contingency reserves would be technically possible. In any case, actual competition for ancillary services with V2G is a long way off. More imminent is the brewing competition between two fast response storage resources – flywheel plants and big lithium-ion batteries – both true-grid-scale resources. Was there any discussion at EESAT about how the respective trials were going with Beacon, Altain Nano, and A123? Which one is going to be the consistent low bidder in the day-ahead FR markets?

Oct 28 12:55 AM

[John Petersen:]

D.McHattie, the envision solar video is a good presentation and highlights one of the many chicken or egg problems of plug-ins; which came first the charging station or the vehicle. The video is here:

envisionsolar.com/vide...

I've previously written on the solar tree concept and think it's a wonderful dual use that provides a valuable customer service in hot and sunny climates where getting into a car that's been parked in the sun for a couple hours is always an adventure.

seekingalpha.com/artic...

I don't expect to see Axion's PbC used in new micro-class plug in's because of size and weight limitations. There is, however, significant potential in using the PbC to convert existing pickups, vans and SUVs to dual mode, something that can be done today to slash oil consumption.

seekingalpha.com/artic...

It also looks like the PbC may be an ideal solution for the new stop-start micro-hybrid technology that is expected to become standard equipment over the next three to five years.

seekingalpha.com/artic...

JLBR, the technical presentations at EESAT dealt with performance rather than pricing so I don't have a lot of insight about who the low bidder will likely be. That being said it should be a good deal easier to improve the performance of a flywheel than it will be to improve the performance of a battery.

Oct 28 01:42 AM

[JLBR:]

JP: I agree about performance improvements. Beacon has an impressive track record in R&D and has been at it for more than a decade. The Generation 4 flywheels going into their current 20MW plants (the first ones good enough for FR) have 300% more storage capacity but 700% more power output than Gen 3. Gen 5 is expected to bring similar cost performance improvements. And this is not chemical engineering. It’s electronics, software, materials (nanotech and carbon composites), and rotor dynamics – all technologies where progress is sort of infinitely possible. Being mechanical systems, flywheels can be precisely monitored to the milisecond as to things like reserve capacity, potential energy, availability, etc., all of which enhance their functional value and help the dispatcher's confidence level and situational awareness. With each 20MW plant being composed of 200 individual flywheels, redundancy is built in. These are all areas where improvements can never end. Journalists like to point how ancient flywheel technology is, but these things are amazingly high tech. I haven’t yet read the Natl Battery Collaborative roadmap for lithium-ion R&D which you discussed last June, but I doubt that lithium batteries can equal this rate of advance.
One of the benefits of Beacon's business model -- running their own flywheel plants -- is that it lets them constantly tweak their technology and control electronics and spot improvements for the next generation of flywheels -- maybe even make improvements in the current line as they go. Since each ISO will have at least slightly different operating requirements, this flexibility is helpful. As an investor, I'm impressed by the robustness not only of their technology but also of their business plan. I assume Beacon decided to go to market with Gen 4 because it is already so superior to the way frequency regulation is currently performed -- fossil-fuel-burning, slow-ramping generators, capable of varying up regulation only (generators can't absorb energy, just reduce output), etc. But now that Beacon is having to gird for competition with other fast-response storage technologies (big lithium batteries), I have confidence in their ability to do so. Still, I would love to hear how their trials are going in comparison with the big batts.

Oct 28 10:37 AM

[waitaminit:]

John--Why are people dumping ZBB, your favorite short term stock?
Now lost 60% in less than 3 months.

Why we should buy at $1.08?

Oct 29 01:47 PM

[John Petersen:]

waitaminit, my price chart shows ZBB peaking at about $1.80 last December and trading a little below $1 in April. I'm unaware of any reason for people to be selling ZBB. Unfortunately with small companies when there are more sellers than buyers prices fall, sometimes precipitously. I'm seeing the same thing with Axion right now and while it's irksome as a short-term trend it does not change my opinion. My challenge for today is deciding whether I want to take a profit elsewhere and increase my ZBB position.

Oct 29 03:59 PM

[Mayascribe:]

Hopium! Hilarious, John.

I'm with you. I put 100 shares of ZBB @ $1.47 on the board the day you suggested I should. Nothing out there on the wires about why it, or Axion dropped, though last Friday I sold off most of my Axion, as well as other stocks to go to cash because of some charts I study, especially, (SPY), and the over all mounting negative market sentiments. Yesterday and today, I reintiated an Exide position, and am looking at increasing ZBB and re-acquiring Axion, soon.

No less than four people on this site predicted today's moonshot rise in the market, yesterday.

Oct 29 04:14 PM

[John Petersen:]

Mayascribe, I always love adding new words to the lexicon, especially when they are so thoroughly descriptive. The prior addition was eco-bling, which I was really depressed to find had been in popular use for a couple years.

It looks like last Friday was a pretty good decision day. For the last few days I've had a clear sense that ZBB and Axion are both seeing sales from somebody who needs to raise cash but doesn't know the first thing about illiquid markets.

The biggest problem with morons is that we seem to have an unlimited supply in both the government and private sector.

Oct 29 05:10 PM

[Mayascribe:]

My latest fav creation is the swine flu prevention handshake: a thumbs up fist bump. I now see people doing it even when I'm not involved.

Also, DoubleGuns and myself are going to patent swine flu beer and cider cans, made of coloidal silver. Slogan: "Have an apple cider a day, to keep H1N1 away."

Oct 29 05:28 PM