Discussions about markets for advanced batteries – everything from electric toothbrushes to grid storage, and the various consumer-facing products in between – are some of the most interesting conversations we have at Pike Research.  End markets may exist somewhere, but the pathways these technologies will take remain unclear. Will they be lithium ion? Flow batteries?  We’re not sure. So, as we do with many cleantech technologies, we look to the U.S. military for guidance.

Microgrids have been floated as one pathway advanced batteries might take to achieve electricity grid integration.  In Texas, the Army’s Ft.  Bliss installation is now home to a 100 kW (20 kWh) lead acid battery system that is seamlessly integrated with the base’s microgrid.  The installation, and particularly the inclusion of the battery system, is as much about security for the U.S. military as it is about generating a return on investment.  The advantage of batteries is that they can address multiple applications – supply security, frequency regulation, and renewables integration.  While microgrids offer unique control over systems or islanding capabilities, batteries enhance these features and provide avenues to other revenue streams.

Utility procurement of advanced batteries may be a few years off while companies pursue a “wait-and-see” approach, but microgrids – either on islands, off-grid, or for niche applications – could provide a near-term testing ground.  Microgrids may ultimately be where advanced batteries meet the smart grid.  For example, the Jeju Island smart grid project in South Korea will integrate community and residential energy storage as part of a microgrid on the northeastern part of the island.

Pike Research’s upcoming report on advanced batteries for utility-scale applications broadens the discussion on the microgrid opportunity for advanced batteries.  We anticipate the discussion growing over the next year.

A good example of the trouble with storage – that commoditizing the full value of energy storage in a system is difficult – is a recently commissioned advanced battery system in Northern Chile.

The system, installed in partnership with AES Energy Storage and AES Gener at a 544 MW thermal power plant in Antofagasta, Chile, is a 20 MW lithium ion battery system supplied by A123 Systems with power controls contributed by ABB.  The project is frequently called Angamos, after the AES Gener subsidiary that operates the system.

The primary benefit of Angamos is that the 20 MW battery covers AES Gener’s spinning reserves obligation (4% of generation capacity) for this particular power plant.  As a result, AES Gener can sell more energy each day than it could before the system was installed.  The market benefits because the cost of energy has decreased as the supply has increased. The power system itself benefits because the battery system has a better response time to events on the grid.  And, since the battery system responds more quickly than other types of reserve assets, the system operator does not have to resort to load shedding as much to recover from events. That’s an economic benefit, particularly since the area has a great deal of industry. The primary benefit, however, is to the utility, AES Gener, which can now sell more energy every day because its spinning reserves obligation is covered by the battery.  That is why the energy storage system was installed in the first place.

From an analyst perspective, although consuming a product may offer many benefits, typically one or maybe two major problems will push a consumer to buy a particular product.  One of the most important parts of market analysis is figuring out what those one or two problems are. When we know that, we know the market need.

The fact that there are additive benefits is fascinating, but those benefits occur outside the transaction for the energy storage product.  In the future, it will be interesting to see what emerging business models reflect these various benefits.

According to the Pike Research Energy Storage Tracker, there are over 6,000 megawatts (MW) of grid storage installed in the Southern Hemisphere, most of which is traditional pumped storage.  Likely market suspects populate the list of installations – including Australia and South Africa – but the Tracker doesn’t tell the whole story of the role electricity storage can play in emerging markets like Chile, South Africa, and island nations across Southeast Asia.  Nor does it highlight the budding business case for battery storage in these emerging markets.  The debate around economic growth, utilization of domestic resources, and clean electricity generation presents an interesting opportunity for electricity storage, particularly advanced battery storage, in markets where grid conditions are unreliable, economic growth is unrelenting, and commitments to resource conservation are on the rise.  The value proposition of advanced battery storage – which is, to be sure, unproven at this time – could give emerging markets in the Southern Hemisphere inroads to the broader utility market globally.

With growth rates over 3% in the last several years, both Chile and South Africa have navigated the global financial struggle relatively well.  A handful of other countries display the same market conditions as Chile and South Africa.  Each serves as a driver for economic growth in its respective region and is building industries that support global infrastructure and commerce.  Meanwhile, utilities in both Chile and South Africa increasingly struggle to keep the lights on.  Here is where the evolving debate around economic growth and resource utilization could lead strategies for expanding the power sector, the lifeblood of economic growth, to a pivot point.

Innovations in solar, wind, and transmission infrastructure have expanded the menu of power generation options from which emerging economies can choose.  The economic development model, on the other hand, hasn’t changed significantly, leaving bulk energy generation, whether from fossil fuels or renewable sources, as the primary solution to accommodating rising electricity demand.  But the forces of social change, new financing models, and global drivers for cleaner environments have the potential to drive forward new power sector paradigms.  If the building blocks of the future grid in Chile and South Africa were distributed solar and advanced batteries instead of coal-fired power plants and long-distance transmission lines, the resulting power sector could exploit local, renewable resources and deliver them efficiently.

Distributed generation and advanced battery storage present a unique value proposition to both developed and developing countries in economic transition.  Likewise, these new power sectors could be ripe for additional technological innovation in 21^st century, while preserving local landscapes, natural resources, and indigenous ways of life.

Ultimately, countries like Chile and South Africa present ideal conditions for dispelling preconceived notions about the market barriers to advanced batteries in the utility industry – high CAPEX, lack of empirical operations data, and unclear value streams.  But much of this potential hinges on the path the governments in Cape Town and Santiago take for power sector development.

Often described as the next evolutionary leap in battery systems, solid state batteries substitute solid electrolyte films for liquid electrolytes, thus eliminating the need for cooling devices and supporting materials and making the battery more stable and efficient.  Theoretically, they have the potential to cut both the size and the price of batteries in half.

In pursuit of this technological achievement a host of start-ups have emerged, some backed by big names.  However, in the last three months, major tech and manufacturing juggernauts (GM, IBM, BASF) have announced big investments and/or breakthroughs in technologies utilizing liquid electrolytes that promise to achieve competitive results with solid state technologies.  Listed below are the companies working on the cutting edge of battery chemistries and materials development, their backers, and announced time to commercialization.

Liquid Electrolytes:

Envia

The GM backed start-up announced in late February that it has produced a Li-Ion battery with 400 watt-hour per kilogram (Wh/Kg) energy density and with a mass-produced cost of around $125 per kilowatt-hour (kWh).  Most lithium cells currently in production offer 100-150 Wh/Kg and are significantly more expensive than Envia’s estimates.  Envia expects commercialization could come as soon as 2015.  The company’s major innovation is the utilization of manganese within the battery cathode.

Sion Power

One of the biggest single investments in a battery developer to date was BASF’s $50 million stake in Sion Power.  Based in Tucson, Sion Power is developing a lithium-sulfur (Li-S) battery that could theoretically achieve energy densities of 2600 Wh/Kg.  The company says it has created a battery cell with a density of 350 Wh/Kg, and that 600 Wh/Kg is achievable in the near future.

IBM

The latest announcement may also be the biggest.  In April IBM demonstrated the lithium-air battery, which “breathes” as it derives power from taking in and expelling oxygen from the ambient environment.  IBM estimates the battery is capable of powering a vehicle over 500 miles, but the technology won’t be available for at least 10 years.

Solid State:

Planar Energy

A spin-off from the National Renewable Energy Laboratory (NREL), Planar Energy has developed solid-state electrolytes that can be deposited as film directly on to battery substrates through the company’s SPEED process.  The SPEED process can be applied to a diverse body of compound materials and can theoretically cut battery costs in half while tripling current energy densities.  Planar says it hopes to be producing batteries for plug in vehicles in about six years.

Sakti 3

Michigan-based, GM-backed Sakti3 is has developed software capable of identifying material combinations conducive to solid state electrolyte structures and is also working to develop mass production manufacturing techniques.  Sakti3 is primarily working with Li-Ion chemistries but has been mum on specifics and a timeline to commercialization.

Prieto Battery

Born from Colorado State University’s Synergy program, Prieto battery is a high tech start up looking to utilize copper nanowires for battery cathodes, anodes, and separator materials.  If successful, the battery can achieve energy densities of 650 Wh/Kg and drastically decrease recharge time while increasing battery life.

Advanced battery development will never rival the extraordinary performance leaps and bounds microchips exhibited for the last 50-plus years, commonly described as Moore’s Law.  However, the race for the next advanced battery stands to profit its victor so enormously (see chart below), that the race is sure to remain heated.

Portable Power Revenue by Geography (Consumer), World Markets: 2010-2015

(Source: Pike Research)