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Summary:

The key to getting utilities to embrace renewable energy is investment in inexpensive, convenient, and highly efficient utility-scale storage for solar and wind power. The issue remains one of supply and demand: Supply the energy storage solutions without demanding too much of anyone.

WindNREL

The key to getting utilities to embrace renewable energy is investment in inexpensive, convenient, and highly efficient utility-scale storage for solar and wind power. That’s a topic I addressed in depth in my last post. And the issue remains one of supply and demand: Supply the energy storage solutions without demanding too much of anyone.

So far, Pumped Storage Hydropower (PSH) is the only real show in town in terms of large-scale electricity storage. The problem, of course, is that a PSH facility can take a decade to build, and requires an enormous amount of zoning acrobatics (unless it is located in China), water resources, and the right topography. On top of that it can cost billions of dollars to construct and then operate.

So although PSH facilities now provide over 120,000 megawatts of capacity across the globe, growing this sector significantly is not logistically viable. It is also not patently environmentally sound, with environmental groups opposing PSH projects as a matter of course.

Then there are batteries, which can be used to store energy harnessed from wind and solar installations. But no matter how you look at it, batteries fail the environmental acid test — they don’t degrade well, some tend to explode, and they do not arbitrage well due to both capital cost and life-cycle cost. This problem is made even worse because most types of battery cells wear out quickly and must be replaced fairly frequently, while utility equipment is generally expected to last decades.

Worse yet, batteries are also very expensive for large scale energy storage, given their limited capacity and the above limitations. The comparison below is battery energy storage that can be sited fairly flexibly and provide four hours of storage (from EPRI):

10MW Systems:

(Total Capital ($/kW) = $/kW installed + (Number of hours times $/kWh)

1.  Lead Acid (Commercial) – Total Capital ($/kW) = $1,740 — $2,580 /kW

2.  Sodium Sulfur (Projected) – Total Capital ($/kW) = $1,850 — $2,150 /kW

3.  Flow Battery (Projected) – Total Capital ($/kW) = $1,545 — $3,100 /kW

4.  Lithium-Ion (small cell) – Total Capital ($/kW) = $2,300 — $3,650 /kW

5.  Lithium-Ion (large cell, projected) – Total Capital ($/kW) = $1,950 — $2,900 /kW

All of these numbers start to make PSH look a little better, with total capital ($/kW) ranging from $1,500 — $3,000/kW, comparable to the battery costs listed – but for ten (not four) hours of storage . . . or even more.

The truth is that no current utility scale storage works well for flexible seasonal storage, i.e.:  storing wind energy in the winter for use in the summer. Not even PSH is good for this, and at its heavy monetary and logistical costs, this fact has begun to vex the industry.

So, where can those of us seeking a viable utility-scale storage solution look to? How can we not only catch the power of the sun and the wind, but save it for many, many hours after the sun sets and the wind dies down?  And how can one solution capture all the benefits of PSH, yet eliminate its inherent barriers including finding a suitable location, obtaining permits, construction time and enormous capital expenditures?

Dig deep, is how. Answer coming soon.

David Anthony is the Managing Partner of 21Ventures, LLC, a VC management firm that has provided seed, growth, and bridge capital to over 40 technology ventures across the globe, mainly in the cleantech arena. David Anthony is also Adjunct Professor at the New York Academy of Sciences (NYAS) and the NYU Stern School of Business where he began teaching technology entrepreneurship in 2009.

David received his MBA from The Tuck School of Business at Dartmouth College in 1989 and a BA in economics from George Washington University in 1982. He is an entrepreneurship mentor at the Land Center for Entrepreneurship at Columbia University Graduate School of Business. In 2002, David was awarded the Distinguished Mentor of the Year Award from Columbia University.

David blogs at David Anthony VC

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  1. Mr. Anthony’s, “dig deep” admonition hints at his portfolio company “Gravity Power” covered here: http://bit.ly/cbCp0r. Anthony’s dismissal of electrochemical solutions might be less than informed. The battery costs he quotes are outdated and in fact, according to a number of energy storage experts (Rubenius and MWSF) – technologies such as NaS and Li-ion can be used today for ancillary services and diurnal energy arbitrage.

    1. Eric, you are correct that I hint at Gravity Power providing a solution that has vexed the industry to date; this being a true, grid-scale energy storage technology that can be sited flexibly, not entail hundreds of millions or even billions of USD investment in factories or reservoirs and penstocks and many, many years to revenue and one that lasts as long as industry demands. I quoted the 2009 EPRI battery numbers, which may or not be the most recent, publicly available and accepted numbers. If you or the experts you speak of have better/newer numbers, let’s by all means discuss them openly. You are correct; I “might” be less than informed…..This is a war to find a viable economic solution to a major problem globally and I am in this daily. Your own article and public releases on NAS, including those regarding RUBENIUS, whom you wrote about in October: http://www.greentechmedia.com/articles/read/4-billion-1-gigawatt-energy-storage-warehouse/, show functional solutions yes, but at costs that are at least in equivalent to EPRI’s numbers I sited. If my and EPRI’s math are wrong and the economical production capacity exists to supply several GW of grid-scale energy storage from batteries that last 20 – 30 years, then let’s openly compare solutions. If Li-Ion is suitable from a cost and life (and safety) perspective, then it should be being widely deployed in Ancillary Services now; as there is a readily verifiable market today (e.g., Frequency Regulation).

  2. GigaOm, I’m seeing more and more poorly fact-checked cleantech articles showing up here (and on other blogs) and I respectfully encourage you to step it up in the editorial department. To second Wesoff’s comments, Mr. Anthony’s numbers are simply outdated. Furthermore, a number of companies are on the verge of breaking through in the distributed energy storage game. The most notable of these is GE, whose Durathon batteries appear to be seriously impressive. Dig deep, indeed.

    1. Dear Abhi, same comment as put to Eric; if there are better, verified numbers, let’s discuss them openly. As for your comment that there are a number of companies on the verge of breaking through the distributed energy storage game, that would be a very good thing. But this is not necessarily Gravity Power’s proposition, the proposition of mainstream PSH or CAES, nor is it the proposition of RUBENIUS’ energy warehouses. In my line of business, there are always several companies just about ready with the breakthrough/epiphany; most fail. Having players like GE involved is only a good thing. David

  3. Nice piece David, can’t wait for next week :-)

  4. zbb which manufactures zinc-bromide flow batteries is targeting $500/kw. but more power to him if he can attract investors.

  5. John, for flow batteries like ZBB, there are commonly two costs associated with them, as they separate out cost of capital per kW and the cost/kWh. To compare solutions apples to apples, one needs to account for the all-in costs, which Mr. Anthony was doing on a fair basis. To Eric and Abhi, batteries will likely never be suitable for true, grid-scale storage. NaS is way too expensive, even higher “all-in” than the EPRI numbers listed. This is readily available public information and Eric has written about this before, so his comment surprises me. Li-ion (very expensive on a $/kW basis) can provide Regulation and so can flywheels; I’d suggest a better fact-check by the both of you on the suitability (cost, life, safety, etc.) before making such critical statements. For the power market like Regulation, it is the cost/kW that matters (not energy on a $/kWh basis). Li-Ion won’t last for decades without replacement. So, PSH works, batteries work, flywheels work – the point is finding something that works the best for utilities, project developmers, the environment, customers and investors…provide better facts and discuss them openly.

  6. Matthew Shapiro Monday, November 29, 2010

    I’m glad the article alluded to the lifetime issue when making comparisons. I have seen figures of potentially 15 years for batteries (remains to be seen), whereas pumped storage can last for 50 years, maybe 100. I would also note that pumped storage technology has not been static, but has been advancing as well; there are new designs (particular the adjustable speed variety) that can respond extremely quickly to grid fluctuations and even compete with batteries on the speed front. But they are challenging to site. So the “porfolio” concept is probably most fruitful: every approach has a fit – from “demand response” on the user side to batteries and flywheels in the short-term response to CAES and pumped-storage (where sitable) on the longer storage value.

    1. Matthew,

      Good comments. Gravity Power uses the proven principles of PSH, but eliminates the traditional issues of siting, environmental permitting and the long lead time and huge capital to revenue. It is a totally closed system, mostly underground, save for the powerhouse – which is at ground level, and can provide anciallary services and eventually, peaker plant services (better than open cycle gas turbines someday). As each GPM comes on line, each starts to produce revenue and modules in close proximity act to amortize many elements of the construction process. This installation process, once staged at an appropriate site, takes months, not a decade and does not require a billion $ or more. Gravity Power also does not need a new factory (batteries and flywheels do) to begin installing its modules globally (key partnerships). Also, done correctly, Gravity Power Modules will have a life more equivalent to PSH – which, as you have mentioned, is nothing like one can or should reasonably expect from batteries. The third next story from David will contain the details…..

      1. Are you absolutely sure that FERC will exempt you from its licensing rules? Remember that even closed-loop pumped storage projects that have no impact on waterways fall under FERC regulation (even though they shouldn’t) – simply because they (a) involve water, and (b) affect, directly or indirectly, interstate commerce. You will need to prove to any investors that FERC will agree to let you off the hook – and if they do, then every developer of a closed-loop pumped storage project will also sue to get off the hook. So it’s a bit of a can of worms there. You may have already consulted with FERC on the question, of course, but it won’t be tested until you begin development on a particular site. I don’t see anything come up in the FERC archives on Gravity Power, so I’m assuming you have not asked for an official ruling from them yet.

    2. Matthew, no, we’ve not inquired for a ruling or judgement from FERC. The U.S. will be most likely not be an early adopter of the GPM technology from what we’re seeing, thus the FERC Licensing process does not concern me that much in terms of our business plan. Good point though for U.S.-focused developers.

      1. Here are FERC’s guidelines for jurisdiction determination:

        Unless a project has a valid pre-1920 federal permit, non-federal hydroelectric projects are subject to the Commission’s jurisdiction if:
        1. The project is located on navigable waters of the United States.
        2. The project occupies public lands or reservations of the United States.
        3. The project utilizes surplus water or waterpower from a federal dam.
        4. The project is located on a body of water over which Congress has Commerce Clause jurisdiction, project construction occurred on or
        after August 26, 1935, and the project affects the interests of interstate or foreign commerce.

        Since the Gravity Power Module does not fall under any of these categories, it seems unlikely that FERC regulation applies.

      2. Here are the requirements for FERC jurisdiction:

        Unless a project has a valid pre-1920 federal permit, non-federal hydroelectric projects are subject to the Commission’s jurisdiction if:
        1. The project is located on navigable waters of the United States.
        2. The project occupies public lands or reservations of the United States.
        3. The project utilizes surplus water or waterpower from a federal dam.
        4. The project is located on a body of water over which Congress has Commerce Clause jurisdiction, project construction occurred on or after August 26, 1935, and the project affects the interests of
        interstate or foreign commerce.

        Since the Gravity Power Module does not fall under any of these categories, it seems unlikely it will be subject to FERC regulation.

  7. Matthew Shapiro Wednesday, December 1, 2010

    Jim – thanks for this. I’d agree with the interpretation that unless the Gravity Power project was to use surplus water from a federal dam for its charging, or be located on public lands, then it would indeed be exempt from FERC regulation.

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