Navigant Research Blog

Advanced Batteries: The Year Ahead

— January 22, 2013

Source: WikimediaThe energy storage team at Pike Research has developed a 2013 research roadmap for storage and battery-related coverage.  Armed with lessons learned in 2012, presented below is a brief summary of what this year might have in store for advanced batteries.

In the United States, independent system operators (ISOs) are making real market changes to implement Order 755, concerning pay for performance, handed down by the Federal Energy Regulatory Committee (FERC) in October 2011.  The ISOs are able to design their own approach to resource participation and compensation, and this move should increase the revenue-generating opportunities for battery-based storage (and storage in all forms).  While the ancillary service segment remains a nascent market, Order 755 could potentially unlock revenue potential bound up in dated regulatory policies.  While the real impacts of these market changes have yet to emerge, look for new projects to join the queue for interconnection in 2013.  These projects will likely focus on capturing revenue from providing frequency regulation to the grid.

Putting Out Fires

Pike Research published the latest version of the Energy Storage Tracker in the fourth quarter of 2012.  From the second quarter to the fourth quarter in 2012, 60 new storage projects came online and 107 new projects were announced.  Pike Research’s analysis reveals quite a bit more technology diversity in projects being deployed across the globe, as well.  Advanced battery technologies, particularly lithium-based chemistries, are capturing significant market share.  The new projects are essential to furthering energy storage players’ understanding of the technical and market issues.  These projects can leapfrog over older projects and demonstrate competency at weak points in the supply chain.  As more projects come online, 2013 will represent another year of maturation for the energy storage industry.

One of the primary issues that developers of large-scale advanced battery projects must pay attention to in 2013 is safety.  Scaling up delicate chemical reactions and interconnecting them with an electric grid is an inherently risky proposition, and already public accidents threaten to derail the market’s development.  In 2012, we saw several critical projects undermined by battery fires, including the Xtreme Power installation in Hawaii.  The lithium ion battery fire onboard the Japan Airlines Boeing Dreamliner showed that 2013 is not exempt from battery safety issues.  As lithium ion batteries reach the mainstream power sector, the discussion of safety needs to become more public.

The current year will also see several new players move toward commercialization of their technology.  This could be the year that the hype cycle dies down and the industry can address market and technical issues in a more sober and clear-eyed way.  Still, the abovementioned issues are just a handful of the challenges that will face both legacy battery players and new entrants.

 

In Energy Storage, The Numbers Don’t Add Up – Yet

— January 21, 2013

If you take a close look at Duke Energy’s Rankin Avenue Retail substation in Mount Holly, North Carolina, you’ll notice a few pieces of equipment that you usually don’t see.  Two 20 ft containers sit on cement pads in a corner of the fenced-in area.  Inside are a bank of batteries and the power electronics and inverter required to control them.  Even stranger is the large, H-shaped structure that looms over the trailers.  It’s an old-fashioned version of line disconnects that are rarely utilized in distribution networks anymore.   It’s been resuscitated for this project – and the reasons point to why most energy storage projects are not quite ready for prime-time.

The overhead switches installed in Rankin are there because the line crew that worked that sector was uncomfortable with a simple hand-operated lever-switch.  To move the overhead device from on to off, a linesman must hold a reach pole and physically disengage a blade from its enclosure.  It’s a 19th-century tool for a 21st-century battery system.  The switch itself costs approximately $15,000, but Duke Energy designers felt that it was important to include it to make the linesmen comfortable with the addition of the battery at the substation.

Making the Case

I heard about the Rankin overhead line disconnects during a presentation by Dan Sowder, a project manager at Duke who deals with energy storage, at the Marcus Evans Energy Storage Conference held in Phoenix last week.  The point I kept hearing in multiple sessions is that we’re in the very early days of understanding the economics of energy storage – both the cost of the systems and the value of the services they provide.  The overhead switches at Rankin are just one example: an extra $15,000 was spent on the system to ensure linesman safety (utilities never skimp on safety).  Here are two more examples I heard of energy storage systems that lack clearly visible costs and benefits:

  • San Diego Gas & Electric (SDG&E) will soon hear from the California Public Utilities Commission about whether the request SDG&E made for rate-basing $50 million for energy storage systems is approved.  The ruling should come down by the end of February.  If approved, the program will be the realization of every battery vendor’s dream: a large, rate-based energy storage request for proposal (RFP).  However, Bob Lane, a consultant with SDG&E, stressed that even if the program is approved, that doesn’t mean that SDG&E will issue an RFP.  It might decide that there are better ways of spending the money than for energy storage units.  The financial case has still not been made for the utility to jump into a major energy storage project.
  • Nathan Adams of Puget Sound Energy also gave a talk on the financial models for energy storage – and why they just don’t work today.  He pointed out that any battery project will be at least twice as expensive than building a combined-cycle natural gas plant.  Distributing the energy storage units throughout the distribution network might make more sense, but Adams emphasized that he has no solid method for providing a viable dollar figure for the value of the services such a network could provide.

In other words, energy storage might make sense at the edge of the network – or it might not.  And until an electric utility can positively answer that question, no major orders will be placed.

 

Report Card: Pike Research’s 2012 EV Predictions

— January 9, 2013

Source: WikimediaThe end of the year is not only a good time to look ahead with a new set of electric vehicle predictions; it has also become our tradition to look back at our projections from the previous year.   Here’s a quick summary of how our predictions from a year ago panned out.

The global availability and increasing sales of EVs will put an end to the “are they for real?” speculation.  B.

While plug-in electric vehicle (PEV) sales for 2012 will be less than half of the 257,000 we forecast in 2011, a market of 120,000 PEVs this year verifies that they are here to stay.  Sales in North America weren’t off by that much, but Europe (thanks to austerity measures and the generally crappy economic environment) and Asia Pacific (lack of consumer demand in China) both fell far short.  While some automakers (Toyota, Honda) continue to hedge their bets, Nissan, Ford, Audi, BMW, and GM are all expanding production of PEVs.

Car sharing services will expand the market for EVs and hybrids.  A+

In Paris, the Autolib project has been a great success story using PEVs, Daimler is expanding its Car2Go carshare cities, BMW brought PEV carsharing to San Francisco, and so on.

Battery production will surge ahead of vehicle production.  A

The aforementioned lagging PEV sales resulted in excess inventories, falling prices, and struggling battery makers such as A123 Systems heading for the (bankruptcy) exit.

Road tax legislation in the United States that will require PEV owner contributions will fail. INCOMPLETE. 

Legislators were too busy with other things, such as keeping their state and federal governments from insolvency, to bother with proposing (let alone passing) any mileage tax legislation.  Fiscal crises in many areas will eventually make this a polarizing issue.

The Asia Pacific region will become the early leader in vehicle-to-grid (V2G) systems.  A

Japan continues to be the test bed for many vehicle-to-grid and vehicle-to-home projects, thanks in part to broad automaker support, and Hangzhou China is beginning a test of 20,000 EVs for V2G.   Hurricane Sandy’s impact on distributing gasoline was worse than the impact on the power grid in many towns, which has more companies in the United States  thinking about the benefits of EVs.

PEV prices will continue to turn off many consumers.  A

The $10,000 or more price premium for PEVs continues to frustrate consumers who might otherwise be interested in buying a PEV.  Ford’s entries into the market hasn’t helped, and both Tesla and Nissan are raising prices on their vehicles.

Third-party EV charging companies will dominate public charging sales.  D

After piling up deals (often involving DOE money) in 2011, EV charging service company 350Green  got very quiet in early 2012, and then agreed to be acquired by competitor CarCharging Group.  CarCharging, which recently snagged former presidential hopeful and New Mexico Governor Bill Richardson as Chairman of its Board of Directors, and fellow competitor EV Connect continue to make inroads with hotels and property management companies.  However, this business model requires rapid subscriber growth and is running out of steam faster than anticipated.

Germany, South Korea, and Japan will see the most progress toward the commercialization of FCVs and rollout of hydrogen infrastructure in 2012.  B

Daimler, Hyundai and Toyota, which continue to push for fuel cell vehicle commercialization, recently toured Germany and other European countries to tout the technology’s viability.  Germany’s Clean Energy Partnership continues to gain momentum.  The Japanese government continues to push for hydrogen fueling incentives and is streamlining the process of building stations.  The fuel cell sector is also heating up in the United States, as Air Products had a busy year building out hydrogen infrastructure.

Employers will begin to purchase EV chargers in large numbers.  C

With a few notable exceptions (Facebook, Google, Microsoft) employers are waiting for the penetration of PEVs to increase before committing to large purchases of EV charging stations.  It will happen, but perhaps not until 2014.

EVs will begin to function as home appliances.  D 

The integration of EV charging equipment into the home is happening more slowly than anticipated.  While communication standards, such as ZigBee and HomePlug,  for connecting EVSE to smart meters or home energy management systems are in place, EVSE manufacturers have yet to enable their products to work as smart appliances.

 

GE Demos Lower-Cost Fuel Cell Bus

— January 7, 2013

GE Global Research recently demonstrated its new battery dominant fuel cell bus, which attempts to address a sticky problem for fuel cell buses: cost.  Fuel cell bus system costs have dropped, but the buses are still expensive (the costs aren’t just in the fuel cell system, but also the hydrogen storage tanks, the hybrid battery and the system controls).  The U.S. Departments of Energy and Transportation jointly set a target bus price of $1 million by 2016, which is still pretty steep.  The long term goal is $600,000, which would put the fuel cell bus in the range of today’s hybrid buses, which have captured significant market share in the United States and are making inroads in Europe.

In my report this year on the global electrified bus market, I forecast that sales of fuel cells buses will experience good growth, with a 55% CAGR from 2012 through 2018.  Nevertheless, they will remain a niche technology, accounting for well under 5 % of global transit bus sales.  Pure battery buses and plug-in hybrids will see higher sales rates, but this is driven almost entirely by the muscle China is putting into battery bus development and deployment.  Indeed, it should be noted that the costs of both batteries and fuel cells must come down to move these technologies beyond niche status in the bus market.  As I have discussed earlier, transit agencies in North America and Europe are already struggling to make do with less, with tax revenues down or austerity measures kicking in.

Which brings us back to GE’s fuel cell bus.  Its development was supported by the U.S. Federal Transit Administration’s fuel cell bus program, which has funded a range of development and demonstration projects to help this technology meet the cost target noted above as well as key performance targets.  GE has integrated the fuel cell with not one battery (as other fuel cell buses do) but two: a lithium ion battery for acceleration and launch assist and GE’s own Durathon battery for load leveling of the fuel cell.  Putting together three different power and energy storage devices seems complicated, but each can then be downsized, reducing its cost, and operated in its preferred mode – steady state in the case of the fuel cell and power in the case of the lithium battery.  GE is gung ho about its Durathon battery for a variety of energy storage applications.  What is less clear is how gung ho the company is to move this bus concept beyond a demonstration.  Their FTA funded project has been underway for 4 years, suggesting that there is no great urgency.  So, though we’re still a long way from commercial viability, the GE program provides an interesting approach to addressing the cost conundrum for both battery and fuel cell buses.

 

 

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