John Petersen

A Very Smart Plan for Federal Smart Grid Grants

Avooch, it's not so much a niche factor as an idea whose time has come. Historically, it's been cheaper to waste excess electricity than store it. Between rising fuel costs and an increasingly overburdened grid, that dynamic is changing rapidly. Utilities are finally coming to grips with the idea that storing power during off-peak periods is cheaper than building and operating new on-peak resources. They're also seeing that even a little distributed storage can sometimes defer massive investments to upgrade transmission and distribution resources for several years. When you add renewables to the mix the economic argument for storage becomes compelling. At Storage Week, the California Energy Storage Alliance did a presentation that showed how adding enough $500 kWh storage to push PV solar by a maximum of 4 hours could increase the IRR on the entire system by about 50%. Those numbers are not easily overlooked.

A Very Smart Plan for Federal Smart Grid Grants

Avooch, I know ABB very well since it's a Swiss based company and is largely responsible for the incredibly stable power grid I enjoy every day. I'm also fairly familiar with AMSC. The reason I don't discuss either company is that I don't have any particular expertise in either generation or distribution technologies. The only sector that I can claim to know in depth is storage. If I ever find myself with a client engagement that requires me to learn those sectors like I've had to learn storage, I'll be delighted to comment, but I learned years ago that knowing your limitations is more important than knowing your strengths.

A Very Smart Plan for Federal Smart Grid Grants

Old Wizard, I share many of your reservations and think domestic natural gas needs to be a much bigger part of the solution than it has been to date. I'm also a bit of a skeptic when it comes to wind and PV solar without cheap ultra-large scale backup which doesn't really exist. There seems to be an increasing focus on thermal solar and geothermal, which is a good thing because both are far more stable. We are also seeing cracks appear in the PHEV wall that I'll be writing about shortly.

Overall, the ARRA smart grid seems to be focusing much more on intelligence, demand response, transmission and distribution, all of which are good things. In any event, we need a coordinated approach that has been sorely lacking in the past.

A Very Smart Plan for Federal Smart Grid Grants

Douglas, I'm having a lot of fun right now talking about issues that are broader than a single company and technology, but you can rest assured that I won't forget my first love in the process.

Old Wizard, the bulk of the ARRA money is for technology deployment and demonstration, not R&D. The DOE is taking about providing matching funds for smart meters, demand response equipment, storage, improved transmission and distribution and distributed generation. Those asset in turn are supposed to make a profit for the sponsoring entities who have to believe the project is important enough to come up with half the cash themselves.

There will undoubtedly be some projects that may not prove to be cost-effective and might therefore be classified as advanced development, but ultimately it will take a private party that is willing to share the risks with the government.

I suspect one of the biggest problems in formulating a comprehensive energy plan is the lack of concrete performance data on the vast majority of the solutions that people are currently developing. If you put enough money on the table to adequately deploy and evaluate the principal contenders on a relevant scale, then a far more rational choice can be made with respect to the second through seventh steps. I agree that we have an immense and highly interconnected problem, but if we don't know what part various technologies can contribute to a solution, we'll never find a solution that does not involve starting over at dirt level.

A Very Smart Plan for Federal Smart Grid Grants

Advill, one of the beauties of the ARRA plan is that the something for nothing crowd won't stand a snowball's chance in hell.

The DOE may well agree to make $20 million grants available to companies that you or I would not invest in, but unless those companies can come up with matching funds from private sources, the DOE money won't be released. In 30 years of working in small company finance I've seen very few investors that are willing to throw their good money after somebody else's bad money. The grant availability may make the private tranche easier to obtain, but the private sector will almost certainly serve as a counter-balance against DOE optimism.

Unless both the DOE and private money agree, nobody's money will be spent. That kind of public-private check and balance is, in my view, extraordinary.

A Very Smart Plan for Federal Smart Grid Grants

Great guess John. They're currently talking about a 3x to 5x and the Sandia number for the ultrabattery is closer to 50x. So I'm personally hoping something on the order of 10x is the final number.

If we take a $200 LAB and get 500 cycles, the cost of storing a single kWh for future use is around $.40. If we take a $500 PbC and get 2,500 cycles, the cost of storing a single kWh for future use falls to $.20. If the PbC price comes in closer to $250, the cost of storing a single kWh for future use approaches $.10.

The 2,500 to 3,500 cycle range is a real sweet spot because it equates to a 10 year life in daily use. Anything much longer than that and you have batteries that outlive the devices they're supposed to power which leads to all manner of wild speculation about how the batteries will be re-tasked rather than recycled.

A Very Smart Plan for Federal Smart Grid Grants

Road Runner, Axion's website discloses a 300% to 400% improvement in cycle life; 1,600 cycles for PbC compared to 300 to 500 for deep discharge lead acid. So they're effectively talking about undercutting lead-acid storage costs by 50% to 75%.

I've previously published a chart from Sandia where a similar device known as the Ultrabattery survived over 17,000 cycles at a 10% depth of discharge from a 50% state of charge, which engineers tell me are real torture conditions. See:

seekingalpha.com/artic...

Knowing management's tendency to low-ball forward looking numbers, I would not be surprised to see higher numbers when they start producing a commercial product.

A Very Smart Plan for Federal Smart Grid Grants

petyaczar, I like Beacon's technology and the fact that it has progressed a long way through the DOE loan process. But I have to say that with $24 million in annual losses and $26 million in stockholders equity, I think Beacon will have a very hard time (a) coming up with enough equity to make a 20% to 50% down-payment on its projects and (b) enough equity or revenue to cover debt service costs and ongoing operating expenses. The individual projects may indeed be cash flow positive, but I don't foresee a profitable company for a long, long time. I've negotiated equity raises for companies in Beacon's position before and it is never a pretty thing for existing shareholders over the short term.

A Very Smart Plan for Federal Smart Grid Grants

searcher, since "legislate it and it will appear" invariably brings the laws of unintended consequences into play, I'd rather let the market sort this one out. There are many who argue that solar panels are still not at grid parity and I don't know enough to agree or disagree. But I spent many summers scorching my buns in the Phoenix and Houston sun and if given a choice, would always pick a store with covered parking over one with open parking.

A Very Smart Plan for Federal Smart Grid Grants

In an early article titled seekingalpha.com/artic... I printed a 2004 vintage chart from Sandia that showed the relative value of storage applications from lowest to highest. The highest value applications were transmission and distribution upgrade deferrals and end-user power quality. Diurnal storage for renewables was way down on the list. But even at $500 per kWh, the projected California demand was on the order of 10,000 MW which translates into a national demand of 80,000 MW which in turn translated into $40 billion in battery sales.

A Very Smart Plan for Federal Smart Grid Grants

User 395761, a standard sized deep discharge lead-acid battery typically holds about one kWh of useful energy and costs about $200. The PbC will probably be a little larger because it uses 40% less lead per battery. The DOE pricing estimates have lead-carbon starting in the $500 per kWh range and dropping to about $250 per kWh over time.

A Very Smart Plan for Federal Smart Grid Grants

Freya, I own both ENS and XIDE and while I'm up over 100% on both, I still think they're terribly undervalued compared to the other companies in my tracking list.

Dave Marsh, welcome to the club. Your decoder ring and secret handshake should be arriving shortly. ZAAP has always been an interesting company that is still looking to hit its stride, a problem that most of the EV makers will have to cope with while they look for solutions that work and sell. Today the public seems to view EVs as a sacrifice, a downgrade from what they already have. Sooner or later a developer is going to come up with a must-have product (perhaps the PUMA) that the public views as superior to what they have. Then the game will change completely. In the meantime I think Axion will likely focus on the boring but profitable industrial and commercial markets that use engineers and accountants to make decisions and buy truckloads of batteries at a time.

frflyer, it's a brave new world out there and it certainly looks like the opportunities will be endless for cost-effective energy storage. If Merrill Lynch is right, the reports we are seeing on a daily basis are just a glimmer of things to come. It will be a wild ride.

The biggest barrier to any acquisition is control that's concentrated in a small group of people. While anything can be had for a price, there are a lot of us who have sweat blood for Axion and will not let go easily or cheaply.

A Very Smart Plan for Federal Smart Grid Grants

ginchinchili, energy storage in general is rapidly morphing into the most target rich product marketing environments in history and the only thing I can do is keep referring readers back to the Merrill Lynch thematic report that suggests "cleantech markets dwarf IT to the tune of two orders of magnitude." A great example of the diversity of potential applications is a new partnership that Envision Solar and Bright Automotive announced today at a capitol hill press conference. They're planning a nationwide network of solar powered charging stations for PHEVs that will use Axion's batteries for the storage function. It's kinda fun to be a third tier partner that may not get the glory but will get a big share of the revenue.

www.earthtimes.org/art...

A Very Smart Plan for Federal Smart Grid Grants

No I can't, but that's why I'm convinced the choice is evolution or extinction.

A Very Smart Plan for Federal Smart Grid Grants

Creative, I suspect the Mr. Burns you describe has been dead and gone for a couple of decades and his company is struggling mightily with making the transition from what was to what will be (both of which you described very well). The public utilities are all too aware of the fundamental weaknesses in the power grid and the leaders like AES have all come to the realization that distributed generation and storage are the only way to supply an increasingly power hungry nation and insure that capital investments by NIPSCO actually benefit NIPSCO customers instead of PG&E customers.

Like any industry, the utilities have their leaders and their laggards. But I don't think it's fair to assume that the leaders lead because of legal compulsion. They lead because they want to provide the best possible service for their customers and they know that a failure to evolve will result in the extinction of their species.

I've seen enough unintended consequences over the last 30 years to assure you that you'll never hear me say "there oughtta be a law . . ."