Navigant Research Blog

EV Maker Coda Moves Into Chaotic Grid Battery Market

— January 30, 2012

Even before selling its first all-electric sedan, Coda Automotive has spun out a subsidiary looking to take its battery technology in a new direction. 

The newly created Coda Energy will leverage the company’s expertise in designing automotive battery systems and apply it to the grid energy storage market.  Coda Energy  hopes to carve out a niche in the burgeoning market for lithium batteries that will be used to support utilities, renewable power, and microgrids. 

Coda is hardly alone in this move.  Many battery companies that originally targeted the automotive market (e.g., A123 Systems and Ener1) have widened their focus to include the grid storage market. 

With its origin as an automaker Coda is unique, but the company has built up several battery assets that it will use to pursue grid opportunities.  The company’s batteries are produced in China through a joint venture with China’s Lishen Power Battery, and Coda acquired battery management systems company Energy CS in September of 2011.  This expertise in building complete battery systems can be applied to either market, although there are important distinctions (customers, regulatory requirements, etc.) that Pike Research will be exploring in an upcoming webinar

Though sales from lithium ion battery makers to the transportation industry are expected to be more than four times greater than to the grid services market ($14.6 billion and $3.5 billion, respectively, in 2017), having a secondary battery market is essential to producing batteries in volume and for competing with other similarly diversified companies. 

Diversifying the battery customer base is a credible strategy for a young company, but dividing the company’s attention even before the first sedans are sold (cars are due to ship in February) could give the impression that the Coda is hedging its bets on becoming a serious contender in the EV world. 

Coda is also hoping to build batteries packs in Ohio, but it has been waiting for a loan from the Department of Energy.  Approval for that loan would face intense political scrutiny as many of the clean tech companies that have received loans have been in Republican crosshairs since the Solyndra debacle.   

Most recently, on January 26, 2012 DOE loan recipient and lithium ion battery maker Ener1 filed Chapter 11 bankruptcy, and the political blowback occurred almost immediately.  However, as pointed out, state and Federal and state financial support started during the Bush Administration, and was championed by Indiana’s Republican governor Mitch Daniels, who is featured in an Ener1 promotional video. 


Wind Power Industry Faces Solar-Like Challenges in 2012

— January 27, 2012

The recent announcement by Vestas, the largest manufacturer of utility-scale wind turbines in the world, about a major shake-up at the management level and the loss of 2,300 jobs in Denmark, raises the question of whether wind – like solar photovoltaics (PV) in 2011 – may be entering a major shakeout and downsizing period.

While the growth of wind power is still an astounding success story, there are clouds on the horizon, particularly in the United States. Among the major challenges facing the industry today are record low natural gas prices, which have lowered the price of electricity, making it more difficult for wind to compete in wholesale power markets.

A rush to develop new supplies from shale deposits through the controversial practice of so-called “fracking” raises interesting questions about how we regulate future energy supplies.  In Texas, it is possible to get a permit to drill for natural gas wells in a residential neighborhood within a week, without an environmental permit, and at a total cost of around $3,000. Contrast that streamlined approach – for a technology that has been implicated with polluting drinking water supplies and contributing to air quality concerns, as well as leading to possible lethal explosions – with wind (and solar) technologies.

Where I live, in Marin County just north of San Francisco, the county is imposing a height restriction of 40 feet for any wind turbine located in the western, rural part of the county, which, in effect, is an outright ban, even on small on-site wind turbines.  Why?  There’s just not enough wind at that height to generate power.  Furthermore, local activists successfully filed a suit against NextEra Energy to block the erection of a meteorological tower to measure wind resources for a possible wind project near the town of Tomales, in the northwestern corner of the county.  Since Marin County has set a goal of becoming completely powered by renewable energy over the long term through a community choice aggregation program, this reluctance may seem a tad ironic.

The good news (at least for the wind industry) is that the growing backlash against fracking, and the familiar boom and bust cycle in fossil fuel exploitation, may send prices for natural gas upward again within the next few years.  Innovations and global competition appear to be driving prices for wind and solar down, and that trend will likely continue. How much would natural gas cost if it had to undergo the same kind of environmental scrutiny as wind and solar projects?

Wind power will always face greater opposition than solar PV, though trends toward utility-scale solar PV projects have engendered intense debates over land use.  In this case, wind power may actually have fewer impacts, since turbines have small footprints and allow farmers and ranchers to continue their traditional way of life, whether grazing livestock or growing crops.  Solar arrays, on the other hand, blanket the entire landscape.

The other major challenge facing the wind industry is continued uncertainty around the extension of the production tax credit (PTC), the federal government’s prime vehicle for making wind more cost-competitive with traditional fossil fuel resources.  Vestas has announced it may trim another 1,600 employees here in the U.S. (mainly in Colorado) if the PTC is not passed. At a time of great economic uncertainty, it seems unwise to send mixed signals to the private sector about the U.S. commitment to clean energy.

Given the fracking/natural gas dynamic – and the poisoned political environment in Washington, DC in regards to government support for renewables, the “austerity and delays” scenario in the graph above may be the best current forecast for the future of wind power worldwide.


EV Industry Makes Room for the Big Guys

— January 27, 2012

Electric and hybrid vehicles are often derided for their petite size, hefty purchase prices, and lack of range.  Recent improvements have made these cars more appealing to individual consumers, but like their size, their deployment globally has so far been relatively small.  Recent reports show that more than 17,000 plug-in vehicles were sold in the United States in 2011, mostly first year models of the Nissan Leaf and the GM Volt ().

Though lower than the ambitious targets set by Nissan and GM, sales of both the Leaf and Volt outpaced the first year sales of the popular hybrid vehicles Toyota Prius and Honda Insight when they were launched more than a decade ago.  Furthermore, nearly every major auto-manufacturer in the world has declared it has some type of plug-in model in the works.  Despite these indicators though, Pike Research estimates that the U.S. market share for plug-in vehicles will not breach the 1% mark before 2017.

Countering the subcompact image of EVs, though, is a growing number of medium to heavy duty electric and hybrid vehicles that stand to make a significant impact in electrified transportation.  While these vehicles also tend to carry high initial purchase prices, models are being developed and deployed for almost every transportation related purpose, from garbage trucks to school buses.  The cost reductions are greater, and range concerns fewer, for fleet managers deploying these vehicles than for individuals buying new passenger plug in models.

Plug-in vehicles can significantly reduce costs tied to vehicle maintenance and transportation fuel, an appealing element for fleet managers who have few conventional alternatives for cutting operating costs.  Fleet vehicles often run predictable routes and distances, so that the limited ranges of electric vehicles do not pose the same concerns for fleet managers as they do for individual consumers.

The Electric Drive Transportation Association (EDTA) reports fleet managers are willing to pay 10-14% more for electric vehicles based on operating costs reductions, and 73% of government fleet managers are willing to consider deployment of these vehicles in their own fleets.  In accordance with these findings, Pike Research estimates that by 2017 sales of plug in and hybrid medium/heavy duty vehicles will gain increasing market shares in major world markets, from 6% in the United States to 22% in the United Kingdom.  All which indicates that while sleek sports cars and subcompacts may get most of the publicity, the transition to electrified transportation will likely be exemplified by boxy delivery trucks as well.


How Not to Build a Nuclear Plant

— January 27, 2012

The Utah state engineer, a man named Kent Jones, has approved the water rights for the proposed Blue Castle nuclear project in Green River, Utah.  The two-reactor plant would be the first nuclear power plant built in the West since the late 1980s.  Jones’ decision has caused outrage among environmental and anti-nuclear groups in the West, and justifiably so.  The Blue Castle project pretty much sums up everything that’s wrong with today’s nuclear power industry.

First, it’s huge: the twin reactors would produce up to 3,000 megawatts (MW) of power.  The future of nuclear power lies in small, modular reactors (SMRs) that are prefabricated, easy to transport, easy to assemble, and easier to win permits for than gargantuan reactors.  Recognizing this, the American Nuclear Society, among other groups, is campaigning for new licensing procedures for SMRs that could avoid the absurdly long lead times facing most nuclear-power projects in the United States (see below).

“Big” means “expensive,” and the Blue Castle project is nothing if not costly.  It will take on the order of $18 billion to complete the project, including $100 million just to shove it through the approval process.  Blue Castle Holdings, needless to say, does not have that kind of cash.  In its water-rights application, the company listed as a primary backer a Wall Street company called LeadDog Capital.  LeadDog, which Blue Castle said was putting up $30 million for the nuclear project, has been accused in a cease-and-desist petition filed by the Securities and Exchange Commission of running a scam operation.  Blue Castle CEO Aaron Tilton, a former Utah state legislator, says that he never “pulled the trigger” on the LeadDog financing and that his company no longer does business with the embattled funder; however Jones, the state engineer, listed the LeadDog funding as primary evidence that Blue Castle “has the financial ability to complete the proposed project.”  In interviews with the Salt Lake City Tribune, Jones admitted that he took Blue Castle’s word for that: “It was just a plan presented by them, and we didn’t do a lot of investigation into the plan, about the validity of the plan.”

Even if the money becomes available, Blue Castle is years, if not decades, away from actually producing power.  Tilton said his company is readying an Early Site Permit to be submitted to the U.S. Nuclear Regulatory Commission (NRC) in 2013.  The application could take three years to be approved.  Then a combined construction and operating license (COL) would be needed, which would add another four years to the process. “The earliest the project could break ground is 2020,” points out Dan Yurman on his nuclear blog, Idaho Samizdat.  Nuclear power that might come online sometime in the mid-2020s is not exactly going to help reduce carbon emissions from coal plants in the short term.

Inevitably, there’s the question of water.  The state specifically approved Blue Castle’s lease of water rights held by Utah’s San Juan and Kane counties.  As with all Western water rights, the San Juan and Kane rights are part of a complicated tangle of competing claims. They are set to expire in 2015 if not put to beneficial use.

“At times, the Blue Castle proposal looks like a water right in search of a project,” remarked High Country News in a 2010 feature on the project.

The design for the reactors at Blue Castle has not been finalized, but they are most likely to be boiling water reactors, which are considered “Generation III+” designs – in other words, hardly a real advance over today’s uranium-fueled light water reactors.  There is no plan in place for where nuclear waste from the plant would go.

Finally, the Blue Castle plant would require the construction of massive transmission lines to carry the power to the coastal cities Southern California, the project’s ultimate customers.  Most of those lines would cross federal lands, requiring yet more permits – and more years to approval.  Yurman calls Blue Castle “a continuation of California’s ‘colonial’ strategy of banning new reactors within its borders while buying nuclear powered electricity from plants in other states.”

As I’ve noted elsewhere, the NRC should not be in the business of sitting for years on grandiose plant proposals, backed by speculative (if not fraudulent) investors, based on obsolete technology, requiring huge amounts of scare water resources and new investment in transmission and distribution facilities.  The U.S. nuclear power industry badly needs to move into the 21st century. With Blue Castle, it’s still pursuing the failed strategies of the 20th.


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