John Petersen

Battery Investing for Beginners, Part 3

truthteller, I've been quiet for a couple of weeks while I waited for everybody to post Q-3 results but expect to start back in again soon. One of the areas that I plan to focus on in detail is timelines and probabilities for emerging technologies. One of the more interesting factoids that came up in this round of conference calls is that Enersys is already doing about $30 million a year in grid-based business, which seems to support the idea that cheap beats cool, particularly when the companies that make cheap products also generally have objectively cheap stocks.

How PHEVs and EVs Will Sabotage America's Drive for Energy Independence

fireofenenergy, one of the reasons my articles contain as many links as they do is so that readers who want to understand can refer to the source documents themselves. LiFePO4 is a good battery chemistry but it is not cheap and it is not likely to become cheap unless the industry can successfully take the chemistry through three additional generations of chemistry and two additional generations of manufacturing technology. Under the best of conditions that's a six to eight year process that will cost billions and carries no guarantee of success. In my experience, R&D rarely follows the path people expect and the projects that do succeed take twice as long, cost twice as much and deliver about half of the intended benefit.

I've written on the difference between resource availability and commodity availability. The resources may exist in nature, but the mines and processing facilities do not. They will take decades to develop and cost billions more.

Vehicle electrification like most things economic is subject to the laws of diminishing returns. A Prius class HEV needs a little more than one kWh of battery capacity to eliminate the first 40% of gasoline use. Eliminating the other 60% of gasoline use requires another 15 to 50 kWh of battery capacity depending on what you think an electric driving range would be. To make that decision you can use a rough standard of 4 miles per kWh.

As of today, batteries that can be used in cars are a very limited commodity. The highest and best use of those batteries is the low-hanging fruit of the HEV, not the tree-clearing harvest of a plug-in.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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!

On EESAT and Energy Storage Opportunities on the Smart Grid

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

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.

On EESAT and Energy Storage Opportunities on the Smart Grid

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.