I interviewed Dr. Michelle Chitambar at last month’s EV and Battery show in Novi, MI, near Detroit.
Dr. Chitambar has a job description I’d love to have on my business card – Technology Futurist at Spider9 – and some insights into what that company is doing on the frontiers of energy storage.
Dr. Chitambar would neither confirm nor deny whether she actually has any super powers – but I don’t think its a coincidence that the show went off with absolutely no interference from super criminals, mutants, or extra-terrestrials.
Conventional electricity generators have already received a battering from the revolution inspired by rooftop solar. Most fossil fuel generators – particularly those in Europe and Australia, are struggling to make a profit.
But things are likely to get worse. The influx of battery storage is destined to further reduce demand from conventional generators.
A major new analysis from global investment bank HSBC – Energy Storage, Power to the People – says the boom days for the fossil fuel generation are over. “There is no prospect of any return to anywhere near the level of profitability seen in the latter part of the last decade in generation,” it writes.
The HSBC analysis looks at a range of storage technologies and how that will impact the conventional energy systems. Its major conclusion is that affordable battery storage will increase distributed generation – solar panels on household and business rooftops – and further reduce demand from the grid.
As this graph shows, the combined cost of solar and storage is on the way to being lower than the residential price. Welcome to “storage parity”.
The flow of analysis about battery storage from big-end investment banks continues apace. Last week it was HSBC and Citigroup with ground-breaking reports – which we wrote about here and here. UBS also jumped in on the act too.
Why is this so? Well, according to UBS, interest from both investors and corporates has accelerated in recent months. That’s because the big end of town is suddenly alive to the opportunities of a technology that will likely be even more disruptive than solar. And the key is in the forecast on costs.
Citigroup last week cited $230/kWh as the key mark where battery storage wins out over conventional generation and puts the fossil fuel incumbents into terminal decline.
UBS, in a report based around a discussion with Navigant research, says the $230/kWh mark will be reached by the broader market within two to three years, and will likely fall to 100/kWh.
And it predicts that the market for battery storage will grow 50-fold by 2020, mostly in helping households and businesses consumer more of their solar output, but also at grid scale and with electric vehicles.
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And, it quotes Navigant researcher Sam Jaffe in this clear point, that battery storage is coming now.
Jaffe said most of his ten years in the sector had been “sitting at conferences hearing the same presentations from the same people about the same hypothetical benefits of energy storage.
”But I see a very important change in the last two years where most of the presentations at these conferences are now talking about actual deployment of storage. So what has been a hypothetical concept for so long is now becoming a real business.”
As Jaffe noted, the $180/kWh price paid by Tesla compares to about $1500/kWh even five years ago, maybe seven years ago when it was $1200 to $1500 per kilowatt-hour. “So $180 per kWh is the price of those batteries, not the manufacturing cost but the price that they’re paying for them,” he said..
He also made this point about the comparison between battery storage and gas-fired peaking plant:
“If you assume that we’re at around a $200 per kilowatt- hour price point today for high quality Lithium-Ion batteries that are going to last ten years under frequent cycling, and if you wanted to build a very large peaker plant with four hours of energy duration behind it, it would be about $1400 per kilowatt on those costs.
“Interestingly, that’s actually pretty comparable to the cost of building a natural gas fired peaker plant. Keep in mind, you’re not buying fuel for batteries – you’re essentially just arbitraging low and high cost of daily electricity.”
One must keep in mind that the cost of storage is IN ADDITION TO the cost of the energy one puts into it, divided by the efficiency of the storage system (e.g. 4.5¢/kWh power stored at 75% efficiency costs 6¢/kWh by the time you get it out again, plus amortization and maintenance).
The amortization costs the same regardless of use. One consequence of this is that the less you cycle your storage, the more the amortization costs you per kWh. If you can cycle your storage daily, it’ll cost you a lot less than if you are trying to save for gaps of several days.
Amortizing $230/kwh over 10 years at 5% interest is an annual cost of $29.27/kWh [spreadsheet formula 12*PMT( 0.05/12; 120; -230; 0)]. If you store 40% of your daily consumption and drain your storage every day (365 cycles/year), your cost of storage is 8.0¢/kWh stored or about 3.2¢/kWh over all consumption. Losses cost you too.
Other storage media can cost far less, at the price of flexibility. Take ice. A freezer operating at a CoP of 4 can turn 1 kWh of electricity into about 95 pounds of ice (starting with icewater). The 95 pounds of water you started with is going to cost closer to $1 than $230, so as long as you need air conditioning, it is going to be a lot cheaper to store energy as ice than in batteries.
The amortization cost of storage is what kills you when you try to go “all-renewable”.
Take that $29.27/kWh/yr cost, and multiply by enough kWh to carry you over a 3-day lull. Cycle it once a week. Instead of pumping 365 kWh through it per year, you’re getting just 52 kWh/year in throughput. Your cost of storage becomes:
($29.27/kWh/yr) / (52 kWh/yr) = 56.3¢/kWh!!!
Clearly, the all-renewable schemes only become economically bearable when storage falls to $10-$20/kWh.
Thing is, even at $230/kWh storage becomes the trump card for nuclear power over the unreliables. The argument is that nuclear power can’t be turned down easily, but if you have a big battery handy you don’t NEED to ever turn it down. You can reliably charge up that battery every night, and you know just how much power you can get out of it the next day. That lets you do a really good job of running your remaining combustion-driven plants at their absolute maximum efficiency (and thus minimum carbon emissions).
@ E-P
If you think about it, the economics of batteries only make sense if the cost of storage is less than the cost of generating on-demand. And for grid power, that can only be true if the stored energy is very, very cheap to generate, and/or gets a very high price when taken out of storage to be sold.
That situation should occur often on a renewable-heavy grid, because they are weather-driven, and when the weather is favorable the wholesale price drops close to zero as the grid becomes over-saturated with renewable energy. At that point, it certainly makes sense to store the energy rather than sell it for almost nothing. So a renewable-heavy grid offers great opportunities for that kind of arbitrage.
But a nuclear-heavy grid? Not so much. An all-dispatchable grid will see much less severe swings in wholesale prices, which sharply reduces those arbitrage opportunities. It’s hard to make a case that turning a nuclear plant down to 75% of rated power overnight costs more than a battery bank large enough to store that 25% of the NPP’s output overnight.
One must keep in mind that the cost of storage is IN ADDITION TO the cost of the energy one puts into it, divided by the efficiency of the storage system (e.g. 4.5¢/kWh power stored at 75% efficiency costs 6¢/kWh by the time you get it out again, plus amortization and maintenance).
The Spider9 folks are claiming 83% efficiency in their brochure:
http://www.spider9.com/pdf/ResidentialStorageBrochure.pdf
The tower’s acute functionality however is monitored via a wifi connection so perhaps that’s an added cost. Conversely, the residential model is relatively light (215kg) so that may help with installation cost.
Amortizing $230/kwh over 10 years at 5% interest
If it’s only $230/kwh, and I still had a grid tie-in for cloudy weeks, then I personally would go for a 7kwh tower at $1,600 and pay cash up front. I’d probably still take a loan out for part of the solar component though if i was assembling things from different places. Then again I don’t use very much energy where I’m living at now: over the last 12 months I’ve used 2,700kwh of electricity, with my heaviest air-conditioning months (heaviest use months) averaging 370kwh/mo. Actually where I live now, it’s always sunny, and it only rains a few days a year, and never gets cold enough to snow, so I could probably get by with something smaller than 7kwh.
$230/kwh actually sounds cheap. Am i missing something here?
The amortization costs the same regardless of use. One consequence of this is that the less you cycle your storage, the more the amortization costs you per kWh. If you can cycle your storage daily, it’ll cost you a lot less than if you are trying to save for gaps of several days.
So basically live in a sunny area (CA, AZ) and buy the smallest battery you can get away with.
A freezer operating at a CoP of 4 can turn 1 kWh of electricity into about 95 pounds of ice (starting with icewater). The 95 pounds of water you started with is going to cost closer to $1 than $230, so as long as you need air conditioning, it is going to be a lot cheaper to store energy as ice than in batteries.
I have a head cold and am a bit fuzzy, but I’m going to guess that the storage cost advantage for ice is outweighed by the upfront cost + maintenance of a single family home scale ice chiller/ac system. I’m also going to guess that kitting out a home with such a system involves smaller diameter pipes (i.e. more resistance) relative to a large building system and thusly more work has to be done by the pump relative to its scale, or in other words the $ per amount of work it does would be higher at the residential scale (that may or may not make much difference; I’m only stating such could exist, without assigning it a significance magnitude). I think my skepticism is mainly motivated not by a rational physical/mechanical explanation, but from the fact I haven’t witnessed someone hook up one of those IceBear units to their house and run it on solar. Incidentally i think some of the efficiency from those systems comes from running them at night when the ambient air temp is lower, so that feature too is lost on a solar powered (day time) version. I always took it, when Amory Lovins talked about ice storage, to mean on the industrial or commercial building scale. Though I won’t totally discount a residential scale version, as innovation always has a way of making things possible…
How much of the population of the industrialized countries, where electricity is essential to life and making a living, can say the same thing? Come close to being able to say it?
What would you do if it was cloudy, your storage ran dry… and the grid had vanished?
That’s the figure where Citigroup claims battery storage beats the grid. By my figures it only seems to if you intend to stay “off grid” for mere hours. At $230/kWh, there would be huge gains in the transport sector, building hybrids and PHEVs. It wouldn’t work for the grid itself, except maybe at scarcity-priced New York City rates.
You’re starting to get it. The residential customer doesn’t try to cut peak demand because their rates don’t bill for peak demand. They don’t get the savings a commercial customer would.
If residential customers paid by peak demand plus energy, or by local market rates plus transmission cost, they’d have a strong incentive to manage demand and arbitrage price swings using things like the Ice Bear. They would also have next to no incentive to install PV, especially if they had to sell at low or even negative rates when the grid was over-supplied.
The net-metering customer offloads all the costs of maintenance for the pseudo-storage. How many off-grid people even have air conditioning? Such loads are the first things to go, usually.
This is part and parcel of the “Green blind spot”. The public claim is that changing everything to RE is easy and cheap. In reality, a bunch of things get costly enough that most people would have to give up on them even if they are serious quality-of-life enhancements. The most economical way to go about others changes quite a bit. None of those changes would be cheap.
It’s good news that the world’s major banks are parting from fossil fuels and development continues on battery technology, here’s an interesting development from Ohio State University with a hybrid solar cell/battery combined.
http://ibnlive.in.com/news/worlds-first-solar-battery-developed-recharges-itself-using-air-and-light/504055-11.html
Not only banks a major Australian pension fund is ditching coal companies too.
http://www.rtcc.org/2014/10/07/leading-australian-pension-fund-ditches-coal-holdings/
Grid services, voltage regulation, reactive power, arbitrage (charging while wholesale rates are low and discharging during high priced peak demand) are all part of the uses of storage. The arbitrage market is changing and diminishing for now, as solar depresses the daytime peaks and lowers wholesale rates. Ironically, solar is reducing the need for storage just as storage is becoming cheaper. At present, there is very little storage on the grid, so there is still a market for storage. Primarily, the market is for short term storage for regulation, grid stability, and the like. Day/night storage is disappearing with the emergence of solar. Storage will play a stronger role as renewables integration gets somewhere near the 50% mark. There will be many changes as renewables penetration increases, and EVs emerge as a clear winner for transportation. As that happens, the grid revolution will accelerate, putting EV batteries on the grid most of the day, both charging and discharging.
Solar City just started giving loans to people so they can buy their system outright.
Solar stock prices are headed south for now. One of the companies in the largest solar ETF (Guggenheim Solar ETF or ‘TAN’) went into bankruptcy, destroying 2% of the fund’s holdings and causing its price to plunge. Broader worries in Europe and China are affecting things too and the outflow of capital is naturally hitting smaller cap, high-tech stuff first before the blue chips get bailed on (if it comes to that). If there wasn’t some chance of a broader market correction, it would be a good chance to get in on First Solar, currently in overbought territory. TAN is heavy in China companies so i would expect good things to happen there as China adds its next several GW’s, though again, as worries on the country amp up – everything gets collaterally drug down, so it pays to watch and keep an open mind.
And it predicts that the market for battery storage will grow 50-fold by 2020, mostly in helping households and businesses consumer more of their solar output, but also at grid scale and with electric vehicles.
The question is how can i get in on the action? There’s no way to properly value Tesla – that would be pure gambling. Who are the big companies involved here? The freaking banks already know and they’ve already pulled the trigger with their $$….
I know how I value Tesla. As a sideline to an aerospace company that makes rockets, and whose owner wants to establish a colony of a million people on Mars. And that puts it just above Solar Roadways and Clean Wind Energy Tower on the “buy” list.
Jeeze – and here I am thinking that Tesla is a company that makes electric cars!
That’s no surprise since you still have the drum on your head and that inhibits your ability to “think outside the drum”. Yes, Tesla makes (expensive) electric cars, and its total value IS bigger than SpaceX’s (in large part because the Tesla stock is overvalued).
SpaceX makes rockets and is seeking to raise $$$$ and double its valuation to $10B. If and when you can “think outside the drum”, you may figure out that even though Tesla may be bigger, Musk’s heart seems to be more in the rocket and “go to Mars” world than it is in electric cars, and that is not confidence-inspiring for someone who would buy stock in either company.
Gingerbaker – its not you. Everyone gets the same treatment. 😉
If you’re somehow referring to me here, yes, that’s certainly true.
I am an equal opportunity educator. Some of my pupils ARE more difficult, however, and require more of my time.
Andrew, Andrew—–when will you ever learn that the stock market is rigged so that the rich can bleed ever more wealth out of the country? The hedge funds are in there manipulating stock prices, and they concentrate on high tech and innovative companies because the “story” makes them attractive to people who would really like to invest, and that provides “food” for the sharks.
Perhaps you read about the recent expose of a hedge fund and financial analysis writer who colluded on manipulating the stock price of a company with a new drug? Google Northwest Biotherapeutics (or Biovail for an older case). The hedge fund shorted the company and the writer slammed the stock whenever the price rose in order to drive it down.
You are naive if you don’t think the same thing is going on in the energy field, and the fossil fuel interests are playing their games for their own purposes as well. Have you forgotten 2008?
Yeah – there’s always manipulation happening: JPM has trade algorithms where a computer is making trades at the speed of fractions of a second which has been empirically shown to throw the probability of making $$ grossly in their favor. Institutional investors get the ‘scoop’ before the retail investors do, get the opportunity to invest before it becomes available to the retail folks, and therefore have a clear advantage. There’s QE. There’s the fact that US Congressmen are legally aloud to participate in insider trading when they know a law will be passed that favors a given company. &c., &c., &c.
Still, when i saw Bank of America fall to something like $7/sh. during the melt down, I realized that because of manipulation and cronyism, they would never be allow to go bankrupt. So i invested whilst everyone else was yelling, ‘sell, sell, sell’. Their stock is now worth $16.88/sh. and I’ve more than doubled my money.
Solar stocks are pretty volatile because of hedge fund trading. But because I take a long term approach, where I stay invested for years at a time, all the daily noise from manipulation or otherwise is smoothed out. The long term trend is clear – solar will grow extensively. The big players can control the weather, but they can’t control the climate when it comes to the market.
You DO realize that you are helping to perpetuate the system that is destroying the planet, don’t you? I don’t expect you as an individual to be able to make much difference, but buying Bank of A stock did exactly that. Few of us can point fingers, because we are all just trying to survive, but no one should get overly smug about “doubling their money”.
I used to keep a substantial amount of cash in B of A CD and money market accounts. They offered better than market rates because of association and alumni affiliations. Bank of A, like all banks, lowered their rates because of QE, but then got greedy and decided that they were no longer going to give away all that profit. MM rates dropped from near 1% to .7% to .5% in just a few months, and then to BELOW .1% When I called and said that I was going to withdraw 6 digits worth of $$$$ if they didn’t up their rates, they said “We’re just doing what all the other banks are doing”. My spare cash now sits with Ally bank at .86% and earns over 10 times what it would with Bank of A. Bank of A should have been allowed to go under.
You had better hope that it all doesn’t “do a 2008” on us again anytime soon, because the road back next time will likely be longer and harder. All that &c., &c., &c. is still operative. (Have you read Flash Boys yet?)
Well, I was also at ground zero of the the housing collapse, so if it makes you feel any better, Bank of America has destroyed a lot more of my $$ than I’ve made off their shareholders running for the hills. I almost find it my duty to take advantage of those holding shares prior to ’08.
Solar is still in sell-off mode, so I’m watching my recent gains vanish, but again, I’m in it for the long term, and one the prices turn back above their 50 day and 200 day MA’s, with the 50 day MA above the 200, I’ll deploy a bit more of my cash and add to my positions.
I wish the CD’s would get back to 5, 7, 8, or 10%. Anything above 8% and I wouldn’t have to deal as much in the equities market. I don’t think that will happen anytime soon. The Fed backed away from their rate hike talk as soon as global worries started crescendoing again. The system is now fully addicted to large scale manipulation that makes the USSR look like free market fundamentalists.
Yeah, 50% of my $$ is in cash, waiting for another large correction, a la 2008.
I’ve had so much going on the last few years I haven’t had time to read much. Every once in a while I’ll re-read parts of the Aubrey/Maturin cannon (about the Royal Navy circa 1800 to 1810), and I’ve read parts of Erasmus Darwin’s Zoonomia, Jame’s Hutton’s Theory of the Earth, Humphrey Davy’s Elements of Agricultural Chemistry, Henry Stephen’s Book of the Farm, John Sinclair’s General Report of the Agricultural State, and lots of bits and pieces of stuff nebulous to these for a project I’ve been working on for the last few years…
Update: After doing some reading, it appears China is severely missing their rooftop solar goal for 2014. It appears only 1/4 of the goal is presently met which revises several GW growth downward for the year. This is a contributing factor to the TAN sell off.
In other energy news, the price of oil is in the 80’s region which is causing a sell off in fracking related stocks. The low 80’s is where fracking profit margins are destroyed and their cost of capital gets crazy. You see, in order to keep the game going they have to have revenue which relies on accelerated growth in well numbers. When the price of oil drops, that revenue isn’t there to invest in the new wells. Also the value of the oil in the ground drops and banks won’t loan as much $$ to recover it. Also they become more reliant on the junk credit market (which in turn wants a higher % return as the risk amplifies).
Tesla has nothing on these guys for grid level storage:
http://www.ambri.com/technology/
Liquid metal batteries that effectively do not degrade over 1,600 charge/discharge cycles. 2Mw of storage in the size of a shipping container. They are still in development, so there is no cost of the system, but their mantra is to use cheap abundant metal for their batteries (they use magnesium and antimony). Along with manufacturing processes that have looser tolerances.
Looks promising at the lab level, but scaling up to usable size may be a problem. The operating temperature of 700 degrees C is rather high and the molten salt mixture rather corrosive. Anyone who wants to be a first adopter should have good insurance coverage.
storage will be used when generation costs are low or negative cause generation exceeds demand. Then generation costs are out of the picture. Storage is also used behind the meter where rates are high. The real impediment to utility storage is not generation plus storage cost. It’s the lack of difference between night and day rates that was used to buy low, sell high. Solar is killing that. Spring and fall in some locations have negative wholesale pricing during the day. For now, utility grid storage is not a great market, except for grid services, a short time case. So contrary to all the fuss, utility storage is a sideshow right now.
The real action in storage is demand side behind the meter in high rate areas. Peter has presented this. It’s australia, Germany, hawaii, california in the next five years.
Here is a comprehensive report on storage. Bottom line? It’s not needed and not useful until renewable percentages are over 40%.
“Energy storage has become this year’s cause célèbre.
The main selling point for storage, forged into a meme by story after story in the press, is that storage is needed to compensate for the variable output of wind and solar. “Today, the power grid isn’t able to easily handle the rapid fluctuations in the production of wind and solar power,” is just a random sample quote.
But this claim is not true now, and will not be true for quite some time. The electricity grid is by far the most cost-effective and reliable way to deal with the variability of wind and solar, just like it deals with the variability of demand.”
First, everything backs up everything else. There is no need to have one thing dedicated to backing up one other thing
Second, and related, the electricity network takes advantage of the awesome power of statistics. The bigger the sample size, the less likely variations will correlate with each other, meaning their variability will be smoothed out
Third, from the perspective of the grid operator, supply and demand are increasingly interchangeable. The grid operator’s task is to match supply and demand at every microsecond. Controllable demand is just as effective as a dispatchable power plant in this regard. In other words, storage will have to compete not just with generation but with increasingly interactive demand.
(Another meme to be addressed at another time is the notion that natural gas is the only kind of power plant that can follow load. This is also not true, as evidenced by a region like the Upper Midwest that was 88 percent coal and nuclear in 2011 and only 5 percent gas. Coal is now and always has been used for load following — although there is an emissions penalty with this approach.)
Last on the list is storage. Even within storage, “chemical storage” in the form of batteries falls well behind thermal and pumped hydro. While the authors take care to point out that “option costs are system-dependent and evolving over time,” batteries clearly have a long way to go to be a competitive option against the twenty-two others on the list.
Another study, released by NREL last November, found that storage wasn’t cost-effective until variable generation reached at least 40 percent of annual energy. The study points out that only surplus renewable energy would be used to charge storage, since selling it as it is produced would have a higher value. As long as there is demand for the power, it will displace other generation rather than be put into storage.
http://www.greentechmedia.com/articles/read/questioning-the-value-proposition-of-energy-storage
Actually, the reason cited for grid storage I looked at had nearly nothing to do with variability of supply with wind and solar (although that would be a side benefit). It had more to do with peak demand and the capacity built into the system to meet peak demand.
Talk about balance all you want, but balance doesn’t mean anything at 2pm in late July in Texas. It’s all about demand and the potential lack of capacity.
So imagine this: We have coal fired power plants to meet that peak demand. What happens at night when demand falls? Those plants sit idle. Why did we build them in the first place if they will sit idle? We could have built fewer plants if we had a way to flatten the peak demand curve.
And that is where grid storage comes into play. Once you have it installed, compensating for peak demand and as you ramp up wind/solar, it becomes an indispensable part of your overall electrical grid. Then keeping supply/demand in balance becomes easier.
Instead of storing electricity at night to use for the next afternoon’s A/C peak, you could instead make ice at night and use that for cooling. Water pumps and fans don’t take much power compared to compressors. It’s also cooler at night, so the compressor may actually require less total energy since it’s working against a lower condenser pressure.
But if the consumer can’t capture the difference in cost between on-peak and off-peak power, they’re not going to make any investment in such load-levelling measures.