John Petersen

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

ginchinchili, your overall view that the battery market is divided into stationary applications and motive applications is accurate. But energy storage devices generally aren't smart enough to be able to tell the difference between the two broad classes or the various sub-classes. All an energy storage device knows is that it's supposed to deliver it's stored charge over an interval measured in (a) seconds, (b) minutes, or (c) hours. A couple simple examples may help clarify what I'm talking about.

The starter battery in your car is designed to provide a big surge of power for 5 to 10 seconds of cranking before the engine kicks in. At that point the alternator takes over. While you can run the accessories for a while without running the engine, leaving the headlights on overnight can seriously damage the battery by drawing more energy than it's designed to deliver.

The battery in an uninterruptible power supply is designed to keep a mission critical system operational for 10 or 15 minutes in case of a power outage. It's goal is to keep things running smoothly in the event of a brief outage and permit an orderly shut-down in the event of an extended outage.

The battery in your laptop is never subject to a huge power drain but it's very important that it pack enough energy to keep the laptop running for hours while you're away from a plug.

Ultimately the choice of an energy storage device is controlled by the requirements of the application, and that's true regardless of whether the application is stationary or mobile.

Electric utilities have a wide variety of storage needs that cover the entire seconds, minutes and hours spectrum. Some of the better known high-value applications include "frequency regulation," which smoothes second-to-second fluctuations in the grid from changes in customer demand, "buffering," which is basically just a large UPS application, "upgrade deferral," which involves putting storage at weak points in the grid to defer the construction of new substations or transmission lines, and "load-shifting" which involves taking the power from a windmill at 4 a.m., storing it for 12 hours, and then delivering it to the grid at 4 p.m. when the need is greatest. Each application has it own technical requirements and economics and there is no single solution that will work best for all of them, but a small piece of a very big pie can still make for a very successful business.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

bartpr, while I don't want to sound like I'm blowing my own horn, my entire article archive is available on my author's page, which you can get to by clicking the link under my picture. Since I have a substantial personal interest in Axion and believe the energy storage sector will be an investment wave that eclipses anything we've ever seen, I work very hard to find reliable source documents whenever possible, and include links to those documents in my articles. If you take the time to read the articles and source documents, and then consider that information in light of the reader comments which are frequently more interesting than the articles themselves, I think you'll get to a well-rounded understanding of where the industry is and where it's going.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

bartpr, there has been more recognition of the need for storage on the smart grid than you can imagine. A series of links to some key policy documents can be found in these articles:

seekingalpha.com/artic...

seekingalpha.com/artic...

While it has not yet gotten the level of press attention that the rash of PHEV and EV proposals have seen over the last couple years, grid-based storage is more technology agnostic and has greater economic potential by as much as an order of magnitude.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Mike, Axion's fundamental value proposition is pretty simple. Add a more sophisticated negative electrode to a fundamentally cheap chemistry and improve both cycle life and power by wide margins. When you turn the crank and calculate the cost of storing a kWh of electricity, it works out to a number that is far lower than the competition. The PbC battery will probably not be a "best in show" performer for any particular application, but it will almost certainly be a cost-effective choice for wide swaths of mundane demand in both transport and grid connected markets. In the final analysis, I look at the area under a bell shaped curve and conclude "the PbC won't excel at the tails but will work just fine for the mass of customers in the center."

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

User 419580, the gigawatt magnitude power swings described in the article you linked are difficult for any utility system or battery technology to deal with because they're so massive and require assets to be taken off line quickly and then brought back on with comparable speed. It's also not profitable to invest in a system that is only used occasionally. It's far better to have a system that is used at predictable times on a daily basis, and results in consistent recurring revenue for the owner.

The most promising application area for a battery like ZBBs seems to be storing underused generation capacity from wind during the nighttime hours and delivering it back to the grid during peak load periods; or storing underused generation capacity from solar during the morning hours and delivering it in the afternoon. In both cases, you're basically shifting the power delivery time by 4 to 12 hours so that the owner of the generating assets gets the best possible price for his power. Another big potential is off-grid or end-of-grid areas that want, for example, to run on solar or wind, but deliver reliable power 24/7 without having to resort to diesel generators.

In grid-based energy storage, there will always be sexy applications that grab an inordinate share of headlines and more mundane applications that grab the lion's share of the revenue. While we all like to think of ourselves as extraordinary in one respect or another, the reality is that most of our needs and wants are pretty average, no matter how good we may be in our personal sphere of excellence.

When it comes to building a sustainable business, there is a much bigger future in catering to the mundane needs of the masses than there is in catering to the extraordinary needs of the few.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Avooch, the only area where I can claim any real expertise is manufactured energy storage devices, which happen to have significant potential application in both motive and stationary markets. It's not that I have anything against AMSC, I just don't know enough about transmission to give it the treatment it deserves.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

realist2, you'll get no argument from me about the reasonableness of CNG (methane) or propane as a transportation fuels. They may not be a permanent solution to the problems but they can be a very long-term and stable bridging technology that at least keeps consumer dollars in the US economy instead of exporting them.

The Hyundai hybrid you provided a link for is also quite cool since it combines CNG with what appears to be mild hybrid technology. I reach the mild hybrid conclusion because 20 horsepower is too small for a full hybrid and too large for a simple stop-start system. Now if someone would just do the same thing with diesel . . .

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Nottrunner, risk/reward is an extremely difficult thing to quantify because I like different companies for different reasons. I bought Enersys at $5.90 and thought its risk reward profile was better then than it is now. The same goes for Active Power which I bought at $0.26. I've had a good run on Exide but it's still trading at about 25% of its one-year high; so it seems undervalued to me. Axion and ZBB are both trading at close to their all-time lows and well below the peer group average. Both have good products and are tied to much larger distribution partners (Exide and East Penn for Axion and Eaton for ZBB). Since small companies are like babies in third world countries that rarely die of starvation but frequently die of dysentery and both companies have solid discipline when it comes to controlling costs, they both strike me as stocks that have limited downside risk and impressive upside potential, even if the best they can muster is catching up to the peer group averages.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Freya, you're probably right, but there are times when outright challenges to my honesty are more than a bit irritating.

On the H2 scene, interest in fuel cells seems to be waning rapidly because the catalysts are so expensive. Nevertheless, there are some really smart people working in the sector and I'd never say never.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

speculawyer, I said "cars with plugs." The gas guzzler to dual mode conversion of vans, pickups and SUVs work well because there are no effective volume or weight restrictions on those types of vehicles. Moreover, using batteries to supplement the least efficient ICs and vehicles is a darned sight more sensible than using batteries to supplement ICs and vehicles that would be gas mileage champs in any event.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Dirk, the costs of wind and solar keep falling and those that work in the generation field expect further economies, but solar is still more expensive than wind. While the feed-in tariffs can be problematic, the incorporation of storage into renewable power facilities does a lot of good for the fundamental economics. I think the big takeaway is that electricity is going to cost more tomorrow than it does today. One of the nice things about wind and solar is that once the systems are in, they work for a long time with minimal maintenance. So even if the economics don't pan out the way the initial investors planned, the generating capacity will still be there.

The current religious fervor against carbon in all its forms is, in my view, counterproductive. I'm willing to accept the idea that coal is unacceptably dirty and that imported oil is too expensive, but when it comes to natural gas I'm firmly in the pro-development camp. We have lots of it at home and a wonderful national distribution system is already in place, so I think we're foolish to let an aversion put us in a position where we may have citizens freezing in the dark. Mercifully, I'm hearing a lot of pro-nuclear sounds coming from the DOE so maybe - just maybe - we'll both live long enough to see nuclear technology get back on track.

Supercapacitors and flywheels are not large-scale energy storage solutions. They are power oriented frequency demand solutions that can only be used to smooth second to second spikes. When you start talking about storing energy to run a home, factory or city for hours, the grunt work will fall to pumped solutions, thermal solutions and batteries.

Storage is an ultra-broad field and the simple fact is that there won't be a single dominant technology. It's hard to find suitable locations for pumped hydro and CAES, so while they're great their future is limited by topography and geology. Above ground CAES is great where feasible, but the industry really seems to be heading toward a distributed system where generation and storage will be located closer to the end user in order to increase security, reliability and performance.

When all the shouting and hand-waving is done, the utilities are going to take the most cost-effective route to their goals. It's the ultimate cheap beats cool application. I really do believe that we need every storage technology we can get our hands on. The real key is to avoid the irrational beliefs that (1) a single technology will dominate or (2) cost per kWh out the factory door is not the only metric that matters.

I'll have a follow up article in a day or two that adds some more color. Stay tuned.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

speculawyer, I've never suggested that lead-carbon or advanced lead acid will work in cars with plugs. At the same time I've said that Li-ion cannot be cost effective in cars (including HEVs) without plugs. My time at Storage Week has only strengthened my conviction that the plug is the dividing line and I will be explaining why in greater detail in a day or two.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

ari5000, I appreciate technical analysis but don't understand it well enough to put it into practice. Besides, it has a checkered history in the smaller and relatively illiquid stocks that I'm most familiar with. Overall, I suppose I stay away from active trading because every time I give it a serious try I lose money. I do far better at buying stocks when they seem undervalued and selling them when they seem overvalued.

Mayascribe, my younger brother will be tickled because he's apparently been following you for quite a while on Motley Fool. This last year has been so much fun for me I feel like I ought to be paying for the privilege. Readers like you make it all worthwhile.

jerrydd, actually the slippage on both wind and solar is far more dramatic than most realize. One speaker at Storage Week talked about a presentation where an expert on wind energy held up a transparency of a daily utility demand curve and said "this is demand." He then turned the transparency upside down and said "this is typical output from wind." According to the California Energy Storage Alliance, the combination of wind and storage increases the IRR of the entire system by roughly 50%. The same is true of solar which reaches an output peak at noon as compared to a utility demand peak of about 4 p.m.

Sodium batteries are great in utility scale applications, but their high operating temperatures (400 to 700 F) can be very problematic in distributed systems. Flywheels are great for fast response, but their discharge duration is typically measured in seconds or minutes, which is great for frequency response but useless for load shifting. Ultimately the big dollars are going to go into CAES where possible, and flow-batteries and lead acid where CAES is impractical.

I'll have a new article up in a day or two that explains why I don't believe V2G will ever happen. It's just my opinion, but I think you'll agree the underlying rationale is sound. In any event, it will make for some interesting comment.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Nobody ever lost money by leaving something on the table for the next guy, but I am curious. What do you mean by TA?

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

Flywheel, the grid cares about electrons and nothing but electrons. High speed flywheels are one way to fast response electrons and batteries are another. In general flywheels can deliver them a bit faster and batteries can deliver bigger volumes. It would be dangerous to assume than any company has anything approaching a monopoly position.