Navigant Research Blog

A Fuel Cell By Any Other Name

— January 23, 2012

To my chagrin, both flow batteries and fuel cells are often referred to as “fuel cells.”  Neither term is incorrect, strictly speaking, but this usage causes confusion about what each technology can do.

The misunderstanding has been compounded since the fuel cell industry began rigorously promoting hydrogen and fuel cell technology for energy storage.  There have always been discussions of energy storage and fuel cells, especially for island systems and large-scale renewables integration.  However, there has been more market activity in this sector recently, on the fuel cell side.

For the sake of clarity, what exactly is a fuel cell? And what’s the difference between a fuel cell and a flow battery?

A fuel cell – such as the ones that helped power the space shuttle – generates electrical and thermal energy much like the engine in a car does (point of clarification: a fuel cell is a more efficient generator than a car engine but the basic function is the same).  For example, the Honda Clarity is a car with a fuel cell instead of an engine.

The other type of “fuel cell” is actually a flow battery.

In the case of a flow battery, the “fuel” is in fact an electrolyte mixture that passes through a cell, or many cells, as the case may be.  The battery is rechargeable, meaning it can charge and discharge energy over and over again.  Conceivably, with an additional supply of the electrolyte mixture, you could keep “fueling” the battery.  On its own, a flow battery does not generate any energy; it stores and releases energy from another source.

In the case of a fuel cell, the “fuel” is hydrogen, natural gas, methane, or any number of hydrocarbon fuels that undergo an electrochemical reaction.  A fuel cell also has an electrolyte, in the membranes that the fuel passes through.  This is where the electrochemical reaction occurs that generates heat, electricity, and water (along with other emissions, depending on the fuel).  Without fuel, a fuel cell will not run.

Both are exciting technologies with profound implications for the grid, renewables, air quality, and energy security.  For the sake of clarity, I promise to refer to fuel cells only as fuel cells, and flow batteries as flow batteries.


China Launches Major Energy Storage Project

— January 17, 2012

China made news earlier this month in the energy storage sector with the announcement that a 6-megawatt (MW)/36 megawatt-hour battery has been installed alongside a 40-MW solar PV installation and a 100-MW wind installation in Hebei Province.

The storage system may seem oversized, but according to the State Grid Corporation of China, which is one of the two major utilities in China (China Southern Power Grid Company is the other) and Chinese battery manufacturer Build Your Dreams (BYD), the site will eventually incorporate 300 MW of wind and 100 MW of solar.  Pike Research has hypothesized that China will be a great market for energy storage if vendors can get the secret sauce right: reasonable value for energy, power and a proven ability to deliver renewables integration services, and ideally, a manufacturing presence in China.

China’s energy mix is dominated by coal, followed by hydro and nuclear.  Although the country has a significant installed capacity of renewables, not all of this capacity is online.  Overall, renewables in China currently account for a small portion of energy generation (approximately 2%).

China does not have significant natural gas resources, and as a result has prioritized coal as its primary fuel, including so-called clean coal plants.  The country’s leaders seem to have seen the writing on the wall where energy security is concerned. China is aggressively pursuing wind, even though two-thirds of its current wind installations are not connected to the grid for fear of the instabilities wind can cause on the system.

In China, the opportunity for storage might not only be a wind integration benefit, but also a transmission benefit – which is typically easier to attach a dollar value to. It will be interesting to see which benefits China decides are most valuable – and in turn which technologies end up as winners in the Chinese market as a result.

With $500 million in state funding, this isn’t exactly a commercial project. But it is the next step beyond the energy storage technology being tested at the China Electric Power Institute (CEPRI), which is coincidentally a subsidiary of State Grid.  CEPRI has experimented with several different technologies and renewables.

It’s no big surprise that State Grid has chosen to install a 6 MW iron phosphate battery from a domestic manufacturer. What’s encouraging is that China is trying to understand storage technologies and their benefits.


Debunking EV Market Myths

— January 5, 2012

I always enjoy reading John Petersen’s blog posts and articles.  He and I often look at the same data and yet come to very different conclusions.  In his latest blog post, he claims that diesel and plug-in electric vehicles (PEVs) are undermining the hybrid EV market, that all non-lithium-ion battery technologies are doomed to failure thanks to the U.S. Department of Energy’s Li-ion worship – and that Li-ion manufacturers are also doomed to failure, anyway.  (Petersen’s views may not be entirely objective: the disclaimers at the end of his posts on Seeking Alpha claim that Mr. Petersen is a former “director of [lead carbon battery-maker] Axion Power International and holds a substantial long position in its common stock”).

On the face of it, Petersen’s data appear to support his statement that clean diesels and PEVs have cannibalized the hybrid market.  But cannibalization is a complicated issue, and just looking at the sales numbers is a superficial method of getting to that conclusion.  There are few examples of similar vehicles offered by the same manufacturer to try to make this a valid comparison. (VW now offers gas, hybrid, and diesel versions of the Touareg, so it will be a good vehicle to watch over the next year.)

Comparing apples to oranges, one could look at the Toyota Prius, with half the volume in the hybrid market, and the VW Jetta TDI, with almost 60% of the clean diesel volume in the U.S.  The Prius looks like it will be down about 4% for the year, while the Jetta TDI (which got redesigned for 2011) is up about 18%.  Yet, the gas version of the Jetta is up about 39% this year.  So, on the face of it, the data seems to say that the TDI version is being outpaced by its gas-powered sibling, rather than cannibalizing from hybrids.  The PEV side of the board is clearer, as Mr. Petersen’s claim that PEVs are stealing share from hybrids may be valid.  We hear anecdotally about hybrid trade-ins for PEVs, and the plug-in Prius, coming in early 2012, will also likely draw interest from current Prius owners.

The second claim is that in essence 95% of the $1.2 billion in federal ARRA grants for battery manufacturing was wasted tax payer dollars (I’m paraphrasing here).  If John Petersen were in charge, the federal government would be investing more broadly in a wider array of battery technology, including lead acid.  This despite the fact that even as far back as late 1990’s, GM was finding the limits of lead acid in their EV1.  Can lead acid or nickel metal hydride be improved?  Sure, but that doesn’t mean that we as taxpayers should be dedicating equal funding to companies whose technology seems unlikely to ever match the performance of Li-ion.  If his argument is for technology that’s based on current market acceptance, then why spend money on batteries at all?  Following that argument, the $20 billion in oil subsidies and tax abatements would grow, since that’s where the DOE will get guaranteed business success.

Petersen points to the spotty supply chain for lithium ion transportation and stationary batteries, claiming that this either “reckless apathy or simply a childlike faith that the taxpayers, like doting first-time grandparents, are breathlessly waiting for any opportunity to provide whatever the golden child needs or wants.”  The accompanying chart he uses to back up this claim comes from a Roland Berger study on the Li-Ion battery value chain.  As I went through that study, though, I came to very different conclusions than Mr. Petersen.

It seems unlikely to me that as the demand for Li-ion increases, the supply chain will remain stagnant.  Most of the Li-ion battery manufacturers that I’ve spoken with point to the cathode as the critical cost driver in the batteries, so we can expect that this will be the focus of process and supply improvements in the coming years.  Recent news shows that manufacturers are recognizing the supply chain as an opportunity as well.

Interestingly, Mr. Petersen, Roland Berger, and I all agree that cell production is in excess capacity for the current opportunity in PEV vehicles. Pike Research is anticipating global demand of 27.7 million kWh for Li-ion in transportation in 2017, based on 2.9 million global hybrid and PEV sales.  By comparison, the global market in 2011 is 2.53 million kWh, and A123 has stated capacity of 0.6 million kWh.  If this all went to transportation, then A123 should have 24% market share of the global market.  Suffice to say they do not, and layoffs have been the result.  However, that also equates to roughly 2% of the market in 2017 (or about 10% of the North American market), which will be too small if their success in the stationary market continues.

I even agree with Mr. Petersen that the prices of PEV are too high for mass adoption, and Pike Research forecasts the start-stop market will be the dominant sector in years to come (growing from 3 million in 2011 to 37.3 million annual vehicle sales in 2020).  However, while he jumps to the assumption that this means the PEV market is a failure out of the gate, I would argue that it points to increased specialization in the automotive market.

The Leaf’s early success is a proof-of-concept that limited range city vehicle can make a go of it in the U.S.  The Volt is proving that the plug-in hybrid model also makes sense.  Let’s not forget that the Prius didn’t sell more than 25,000 in a year until its first redesign in 2004 – five years after launch.  The Ford Escape hybrid has never broken the 25,000 sales/year mark.  But I’d venture to say that neither of these are considered failed programs by their battery suppliers or by the DOE.


Reviewing Our EV Predictions for 2011

— January 5, 2012

Plunging headlong into 2012, it’s a good time to pause and look back at our predictions for what Pike Research forecast would happen in the world of electric vehicles in 211.  Here’s a quick rundown of what Pike Research predicted for 2011 along with analysis of where we hit and missed:

1. The majority of people who drive a plug-in vehicle won’t own it.   

This prediction was on the money as GM and Nissan allocated a good percentage of their vehicles to dealers to make them available for test drives and to corporations for fleet use.  As predicted, car sharing programs are incorporating EVs into their fleets to enable many consumers to get their first taste of electric motoring, and we expect that trend to continue in 2012.

2. Automakers will get pushback from EV owners regarding the length of time it takes to fully charge a vehicle.

We haven’t heard as much negative feedback on charging times as we anticipated, partly due to the fact that most consumers are buying faster Level 2 charging equipment rather than plugging vehicles into a standard outlet.  However, Nissan decided that offering a 3.3-kilowatt onboard charger was a competitive disadvantage for the Leaf and therefore doubled the speed for the 2012 model.

3. Stop-start vehicles will arrive in the United States, albeit in small numbers

Sales of non-hybrid vehicles with stop-start technology were indeed minuscule in 2011.  During 2011 Ford and Volkswagen announced they were bringing stop-start to their North American lineups by 2012, and Wisconsin-based Johnson Controls announced it was investing more than half a billion dollars globally in stop-start battery manufacturing capacity.

4. Many EV charging stations will spend the majority of their time idle

We didn’t exactly go out on a limb with this prediction.  Despite the fact that public charging stations installations have lagged, in many cities there are more public chargers than EVs today.  We’ve heard many anecdotal stories of charging stations that are rarely if ever servicing vehicles and we can expect that to continue in 2012.

5. Fuel cell vehicles (FCVs) will be sold to fleets and consumers in small but growing numbers.

Automotive companies are continuing to slowly push forward towards commercialization of FCVs, but the quantities sold were very limited in 2011.  Based on the lack of availability of vehicles during the year, we sharply reduced our expected sales of FCV for 2011 to less than 700 globally – but that’s up from less than 200 the prior year.

6. Someone somewhere will have a bad EV experience and the media will overreact.

Fortunately for automakers the only negative EV experience that received significant media attention was at a NHTSA test facility.  The web and media did play up the event and some reports accused NHTSA of not responding quickly enough.  However, the coverage avoided overreaction.  Fisker also has an issue about potential fires due to coolant leakage within the battery pack, so we’ll see if the “EV batteries are a fire hazard” follow up stories continue.

7. The advanced battery category will heat up with M&A activity.

Way off.  There were no significant acquisitions or mergers during the year, and the biggest news was actually of an “anti-merger” – the dissolution of the Johnson Controls and Saft joint venture.  We expected some of the smaller companies to be acquired, but the independent battery startups managed to survive on their own despite sluggish EV sales.  Lithium-ion battery maker Boston Power received the most interest from investors as the company is shifting its focus, and its operations, to China.

8. Range anxiety” will prove to be more fiction than fact.

The accuracy of this prediction is hard to quantify, but the hypothesis that EVs would become stranded as drivers would not be able to cope with the shorter driving ranges appears to be false.  The media attention to range anxiety is slowly subsiding and should continue to fade from view in 2012.

9. The best-selling EVs won’t have four wheels.

This one was a gimme.  Global sales of electric bikes and motorcycles are continuing to grow rapidly, and are finally making inroads in the United States.  Two-wheeled electric vehicle sales far outpace all forms of hybrids and EVs, and with companies such as SRAM getting into the game, the gap will continue to widen.

10. The landscape for charging equipment will undergo a seismic shift as the category swiftly moves toward becoming a commodity market.

We were on target in predicting a seismic shift in EV charging equipment, but we picked the wrong one.  Prices didn’t fall as quickly as expected due to lower than expected sales of EVs and chargers.  But an emerging business model where third-party companies own and operate the charging equipment at no cost to the property owner has shaken up the industry.  These charging-as-a-service providers (350 Green, Car Charging Group, etc.) will help drive up volumes and drive down sales.

Overall, six of Pike Research’s 10 predictions mostly hit the mark, while four were off or missed entirely.  Undoubtedly we’ll do better than 60% for 2012.


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