Lithium-Ion Batteries and Centerfolds: The Final Chapter 32 comments
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I’m convinced that energy storage is going to be the next major investment trend and I have a very bullish outlook for the entire sector. My rationale is simple. As industrialized nations switch from fossil fuels to inherently variable alternative sources like wind and solar power, robust dispatchable energy storage will become essential to insure that electricity continues to flow at the flip of a switch. The only other options are more coal fired power plants or an unstable grid that suffers from increasingly severe disruptions when variable power supplies fail to mesh with variable power demands.
When I began studying the storage sector almost five years ago, I was amazed at the complexity and scope of the problem. While my simple mind was looking for a silver bullet solution, I quickly learned that there is no single technology that can solve all energy storage problems. Instead, there are a multitude of technologies that can each solve part of the problem. That’s why professionals believe a comprehensive solution will require a multi-pronged approach and something north of a trillion dollars in energy storage investment.
While I am not an engineer or a power professional, I have almost 30 years of experience in representing companies that raised money from investors and then either succeeded or failed based on their own merits. The following is a short list of experience based rules that I use as guideposts when considering a new client engagement, and I believe investors ought to at least consider before making an investment in the energy storage sector:
- A rising tide lifts all boats but the greatest percentage gainers are boats with low profiles. In market terms, the best way to capitalize on a major long-term trend is to buy unloved stocks with low analytical ratios and avoid the current market darlings.
- In knowledge-intensive industries, significant performance gains and cost reductions arrive with each new generation of products. But Moore’s law does not apply to materials-based industries and without heavy R&D spending, modest performance gains and cost reductions are the best one can hope for.
- A business plan that does not work without governmental incentives describes a business that does not make sense. With due respect for good intentions, Congress almost never gets it right when it comes to business and energy policy because there are too many conflicting special interests.
- Reliable current access to cheap raw materials does not provide any protection from future price increases or raw material shortages, particularly when essential raw materials come from overseas.
- A PhD working in a well-equipped laboratory can always generate test results that are vastly superior to the best results one can expect from a factory staffed by high school graduates; which is why R&D companies rarely survive the transition from research to manufacturing.
- Scientists who invent technologies are almost always incapable of commercializing them because there is invariably something new to investigate, improve or refine.
- Environmental protection is a fun topic for conversation and polite debate, but green products must be priced competitively or they will never take substantial market share from cheaper alternatives.
- A well-run factory in North America or Europe will not be cost competitive with an identical factory in Asia that produces a similar product using similar manufacturing methods.
- While past performance does not guarantee future success, age, experience, track record and personal commitment are unbelievably important.
Ten years of life in Europe has shown me that high gas prices force consumers to buy more efficient cars, live closer to work and rely more heavily on public transportation. But in the land of $8 gasoline, HEVs are a rarity and electric vehicles are never seen. Based on my personal experience, I believe the market for HEVs, PHEVs and BEVs will be very limited until these alternatives are cheaper to own and operate than a Mini Cooper or Smart. I also believe that anyone who honestly believes that the average consumer will voluntarily pay a large premium for less performance should have his medication levels checked.
I’m a believer in the Pickens Plan because it represents a workable short-term solution to the economic disruption caused by high oil prices and its principal proponent has the experience, persistence and financial clout necessary to make his dream a reality. I also like the idea that any large-scale Pickens Plan implementation will require cost-effective energy storage to ensure grid stability when the wind isn’t blowing in the Great Plains. While I think that compressed air energy storage [CAES] will likely do the bulk of the heavy lifting for Pickens Plan class mega-projects, batteries will also be essential for the fine work of load leveling, grid stabilization and instantaneous demand response.
For better or worse, the world changed while most of us were busy making other plans. When waste was cheaper than conservation, waste ruled. Now that waste is getting painfully expensive and global energy demand is growing far more rapidly than supplies, we have a serious problem with no easy solution. In my view, three things have to happen in the energy storage sector:
- We must improve existing large format energy storage technologies;
- We must scale-up existing small format energy storage technologies; and
- We must develop new large format energy storage technologies.
Each of these R&D efforts will have its own risks and rewards; but they will all be essential to ensure an energy future that isn’t significantly darker and less reliable than our energy present.
I’m a proponent of advanced lead-acid batteries because basic R&D on lead-acid technology was largely abandoned in the ‘70s and ‘80s when gas was $1 a gallon and cars, fork lifts, golf carts, industrial equipment and backup power systems were the only markets for large format batteries. So we had a 30-year gap where the world changed but lead-acid technology didn’t. In my experience, it is both easier and cheaper to improve established technology than it is to develop new technology. Over the last few years, lead-acid innovators like Axion Power (AXPW.OB) and Firefly Energy have taken a fresh look at lead-acid technology and achieved remarkable improvements in performance, durability and cost per kWh of energy storage. Other important advances have come from industry stalwarts like C&D Technologies (CHP), Enersys (ENS) and Exide (XIDE). I sincerely hope that the improvements to date are mere harbingers of improvements yet to come. While I believe advanced lead-acid technology will only be part of the long-term energy storage solution, I’ve already made my bet that it will be an important part of the solution.
I remain an unrepentant skeptic when it comes to companies like Altair Nanotechnologies (ALTI) and Ener1 (HEV) that plan to make large format batteries for the automotive market using exotic chemistries. Here too, my rationale is simple. First, I don’t believe consumers will flock to HEVs, PHEVs or BEVs en masse unless purchase prices and operating costs are competitive with small cars like the Mini Cooper or the Smart. Second, I think using exotic raw materials for large format energy storage is incredibly wasteful; it’s like using titanium to build highway bridges. Third, I don’t believe the safety risks of large format Li-ion batteries will become clear for years. If HEVs, PHEVs and BEVs start blowing batteries and killing people, the costs to society and the storage industry will be enormous. Finally, even if you solve the other problems, Asian manufacturers will still be the lowest cost producers.
While I don’t know enough about the underlying technologies to make a recommendation, I’m intrigued by the results Beacon Power (BCON) is reporting from flywheels; ZBB Energy (ZBB) is reporting from zinc-bromine flow batteries; and Electro Energy (EEEI) is reporting from bi-polar NiMH batteries. From what I understand, each of these companies has the potential to play an important role in the energy storage industry at a competitive cost.
For the last hundred years, oil and gas were the prize because they provided reliable energy when and where it was needed. But peak oil is already upon us and the wind and solar alternatives are inherently variable. Since cost-effective energy storage is the only thing that can bring variable supply into balance with variable demand, I believe the energy storage sector holds the key to our energy future.
Disclosure: Author holds a long position in AXPW and is a former director of that company.
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This article has 32 comments:
> jack
Thanks again for an excellent article
I've been intrigued by EEEI for awhile, but have been afraid to jump in because of their fundamentals and issues. At least they did do a 5-for-1 reverse stock-split (it appears) in order to stay listed on NASDAQ.
Yes, I do not believe that storage battery tech will ever be any significant portion of the world electricity storage solution, as all modern evidence appears to favor self contained energy production devices, e.g., fuel cells, of various forms and sizes to replace the heretofore 208-year unsolvable conundrum of storing massive amounts of electricity in a battery. It will then be a produce-it-as-you-need... solution instead of a use-it-as-you-need-it one that we are now wasting our time researching. That new research is where I would now put my investment dollar, and am doing so.
I wish I had the money to cover all battery bets, so I'll stick with the
few that are tried and true: ULBI, ENS, ABAT, VLNC.
Happy hunting, folks...one of these gold veins will someday hit the
motherload.
Aug 02 03:46
PMjhm47 - you should maybe check on peak time-of-day electical demand - lest it's changed (and I have not looked at the numbers in a decade), residential occurs breakfast and dinner hours; summer A/C follows the heat and early evening; some winter peaking for air movers, etc.; and don't forget wheeling opportunity with east to west time of day change for the sun to pass over the US providing 4-5 hour peak movement.
As for storage potential, we have not begun much lest exhausted hydro storage, numerous underground vehicles (gas, air), thermal w/ and w/o change of state in salts, chemicals, etc.,), conversion storage (making/catalyzing recombination of h2/h2o), flywheels, giant capacitors, methane storage/splitting/fuel... all without even touching batteries.
nakedjaybird
Aug 04 11:30 AMlongoil - and to all of that I say:
None of what you say is stopping T. Boone from moving ahead with targeting wind power to replace 22% of the NG power generation, nor all the other countries opting for alternatives, as we speak.
And (as for investing) don't forget all the remote/undeveloped locales in many nations that can utilize solar and a small lead-acid or the like battery without infrastructure nor major storage (not unlike our railroad crossings and other remote power uses that already exist).
And, as I've said elsewhere/other times: having a real need for what we should maybe call BULK ELECTRICAL STORAGE will help bring it to fruition.
And as for vehicles, most favorable are hybrids. Those will really take off with efficient solid state waste heat conversion directly to electricity (which is developed for standard technology and getting close with nano-tech) by injecting biofuels into a burner (container) encapsulated by electical conversion devices and a small on-board battery or storage device - maybe even a flywheel (already demonstrated in busses, years ago).
And as for electrochemical couples, ie., batteries, there is nothing new under the sun. No matter how they are repackaged, they lose energy upon charging and discharging, and also while doing nothing. But they do work, and they have a useful purpose. However, the more exotic, the more the risk regarding safety (molten salts, etc) and probably even more risky is just having such systems in the hands of Joe Blow consumer, who doesn't even want to take care of the battery that's under the hood of his present behomouth.
If subsidies won't work, why are we giving the oil companies $84 billion a year in tax credits and other subsidies? The amount being debated in congress for solar, wind and geothermal combined is only $6 billiion annually. This argument simply doesn't hold water.
Coal gets about $3 billion annually and nuclear about $9 billion.
Many parts of our infrastructure were built with subsidies.
If intermittency is such a problem for the U.S., where we have less than 1% of power derived from solar and wind, why is it that Denmark has 20% wind power already?
Parts of Germany and Denmark have 40% wind power.
The argument about pricing of alternative vehicles doesn't hold water either. The difference in price is a difference in economy of scale more than anything. What happens to the price of PHEVs for instance, when they are mass produced at the rate we now mass produce conventional vehicles?
Plug in hybrids, while costing more than conventional cars, would pay for the price difference over the life of the car, in fuel savings. And that estimate is based on $1.50 gallon gasoline. And so another argument holds no water.
Give me an electric car that looks like a WWII jeep or dune buggy, gets 45 miles to a charge and can go 45 mph at a cost under 10k and they will go flying off the lot.
The president of GM recently said that the fuels cell vehicles they are working on has more computing power and technology than the Apollo spaceship NASA sent to the moon.
He needs to realize I'm not going to the MOOOON, just the freaking store 2 miles away!!
SO THERE!
Bleeding the oil out of our veins will be a painful process but with every barrel we cut, the age of healthy, affordable energy gets closer.
Try anything and everything, as soon as possible. I haven't seen anyone tearing up and throwing away any problem solar or wind generators lately, just putting up more.
@ frflyer. You suggest subsidy as an answer and correlate to oil. You seem like a smart guy. That is not the answer nor is it the comparison. Do NOT subsidize solar. The solar revolution will only proceed under the auspices of scale and not subsidy. It is a lethal canard to constantly drag new energy systems back into the oil subsidization fray. We simply need to move forward and let these new systems invalidate the legacy systems. It seems counter intuitive but it really isn't. We need to use the new energy systems in a very disruptive manner and hobbling their implementation through disastrous subsidy programs actually questions if they will ever be succesful.
Solar is succesful now. Subsidies are no longer needed. Make them compete. It will be world changing when the subsidies go away, the price drops and solar becomes ubiquitous.
I believe that the current energy providers of all stripes fear the collapse per installed watt of solar energy more than any other contingency on the horizon.
> jack
It always amazes me how people get when it comes to new technologies. We will see smaller batteries for vehicles and we will see storage substations and there will be many techniques used in different segments. Oh and just look at the electric train industry with the rest of the world for technological innovations.
Altair Nanotechnologies Announces Successful Grid Interconnection and Operation of Two-Megawatt Battery System
Tuesday July 8, 7:00 am ET
Grid-Scale Validation Expected to Open New Markets in the Utility Sector for Altair's Battery Technology
RENO, NV--(MARKET WIRE)--Jul 8, 2008 -- Altair Nanotechnologies Inc. (NasdaqCM:ALTI - News), a leading manufacturer of safe, high-performance lithium-titanate battery and energy storage products, announced today the successful completion of a demonstration and validation program for a two-megawatt 500 kilowatt-hour battery system purchased by AES Corporation (NYSE:AES - News).
Not only in energy storage but conversion and ambient energy harvesting.
Even fossil carbon will be much more valuable as a nano particle feed stock for the DNA programed self-assembled production of everything.
As for the author's current "technologies that can each solve part of the problem."
This ONE Technology can solve SEVERAL parts.
Biochar, the modern version of an ancient Amazonian agricultural practice called Terra Preta (black earth), is gaining widespread credibility as a way to address world hunger, climate change, rural poverty, deforestation, and energy shortages… SIMULTANEOUSLY!
This technology represents the most comprehensive, low cost, and productive approach to long term stewardship and sustainability.
Modern Terra Preta Soils technology is a process for Carbon Negative Bio fuels from cooking Biomass without Oxygen (Pyrolysis) in a closed-loop furnace, yielding 20% Bio-Gas, 40% Bio-oil and 40%charcoal (Biochar), with no Green House Gas (GHG) emissions.
The Bio gas is typically burnt to run a electric generator, the Bio-Oil is equal to No-2 Heating Oil or further refined as Bio-Diesel.
The Biochar is a valuable soil amendment with many enduring benefits.
1. massive Carbon sequestration, (.4 ton for every 1 ton of Biomass processed)
2. 10X Lower Methane & Nitrous Oxide GHG soil emissions,
3. 3X Fertility and yields from major increases of soil microorganisms and soil structure.
Indeed, Dr. James Hansen, NASA's top Atmospheric authority, is now placing it in the center stage of pro-active solutions for the climate crisis.
arxiv.org/ftp/arxiv/pa...
There are 24 billion tons of carbon Biomass controlled by man in his agriculture and waste stream, all that farm & cellulose waste which is now dumped to rot or combusted and ultimately returned to the atmosphere as GHG should be returned to the Soil via Biochar.
As Dr. Lehmann at Cornell points out, "Closed-Loop Pyrolysis systems are the only way to make a fuel that is actually carbon negative". and that " a strategy combining biochar with biofuels could ultimately offset 9.5 billion tons of carbon per year-an amount equal to the total current fossil fuel emissions! "
For instance, we have used diesel generators for standby and peak electrical power for a century (almost) [with lead-acid batteries from outage untill onto switched diesel generation]. So, instead of diesel (and batteries with their charge/discharge inefficiencies), use biodiesel (biofuel?) and generate when solar/wind are not, as an active "storage" device. That's twist one (30% useful energy produced).
Twist two is recover the waste heat from twist one with efficient solid state direct coversion to electricity [which is the energy T. Boone still wants to throw away in his NG cars - duh!] (now we're 60+% useful energy produced).
Twist three, now throw away the diesel engine, spinning generator and complexity of twist one, and burn the biofuel in a simple no-moving-parts-inject... burner and add 1/3rd more of the efficient direct conversion electrical devices of twist two (now we're near 100% useful energy produced).
And yes we grow the switch grass, etc., and other celulosic bio feedstock [corn stocks maybe, but not the kernal - save the world with available edible corn again); and we start by taking idled dryland farms out of the CRP programs where we pay farmers "TO DO NOTHING!!"; we may have to pay them to do something productive, or maybe pay them nothing: now this is becoming a real win-win-win: plus no imported oil, no drill, drill, drill,; no money leaving our borders; and we can then chant FARM, FARM, FARM and drive Kudlow crazy.
And farming is on the surface, and we do it over and over and over with most of the technology already in practice; DUH!!! KUDLOW, DUH!!!.
What are your thoughts on ultra capacitors?
To me that means Congress will do everything in its power not to invest/give Tax Credits to anything which requires Infrastructure and even more money on their part. Swim or Sink will depend entirely on Corporations which will do what is necessary to enhance corporate earnings for shareholders...the public at large is secondary.
Those of you who think otherwise should keep their Rosy Glasses on "Permanently".