Navigant Research Blog

Eastern Approaches to Smart Grid Development

— November 20, 2014

Japan and South Korea have emerged as leaders in smart grid technology development and deployments.  On a recent trip to East Asia I noted some similarities and some marked differences between the two countries’ approaches and styles.

At Korean Smart Grid Week in Seoul, I spoke about global demand response (DR) trends.  The Expo hall for the conference was as big as any I’ve seen, including large players like Korean Electric Company (KEPCO), Samsung, and LG exhibiting enormous booths and showing off cutting-edge technologies.  There were also a plethora of smaller companies and startups displaying their innovations to challenge the status quo and create the next-generation electric grid.

Next, I traveled to Jeju Island, the so-called “Hawaii of Korea.”  I got to enjoy the palm trees and volcanic landscape only by bus as we traveled to the Smart Grid Information Center, where KEPCO laid out its vision of the grid of the (not too distant) future.

Then we caught a quick ferry ride to tiny Gapa Island, which is only about 1 square mile in size but has an immense amount of solar, wind, and energy storage packed into a microgrid test bed, complete with a state-of-the-art operation center.

All of the Above

Next I embarked for Tokyo.  Japan is undertaking an “all of the above” energy strategy after the Fukushima nuclear accident in 2011.  Restarting the country’s nuclear plants is still on the table, but Japanese companies and government agencies are also deregulating the retail electricity market and designing opportunities for renewables, energy efficiency, DR, and energy storage.

Both countries, and the companies within them, have a laser focus on energy storage as a key solution, which is not surprising given their level of technological advancement.  Grid-scale energy storage is still a few years away in the United States, but Japanese and South Korean vendors are intent on leapfrogging Western suppliers and exporting their expertise.

Hare and Tortoise

The two countries’ business cultures, however, are quite divergent.  South Korean companies tend to take an aggressive, American-style approach to forming a plan, executing on it, and tweaking it along the way.  For instance, the country opened its DR market in November after a relatively short design phase, and U.S. provider EnerNOC has already entered the fray.

Japan, on the other hand, has been studying DR for a few years and it will take a couple more years of pilot programs until the market is ready.  Japanese firms tend to take a much more measured approach to development, trying to perfect the model before setting it free.  In the long term, both methods may work; but in the short term, the real action is in South Korea.

These developments are outlined in the new Navigant Research report, Demand Response for Commercial & Industrial Markets.  The report was actually published while I was abroad, so it includes updates from the trip.

 

With New Plant, Alevo Claims Major Battery Advances

— November 10, 2014

Swiss manufacturer Alevo has launched a new battery and grid storage division in North Carolina that it promises will lead to hundreds of megawatts worth of battery-based grid storage projects.  The U.S. subsidiary hopes to manufacture its formulation of lithium iron phosphate (known in the industry as LFP) batteries in the 3.5-million-square-foot Concord, North Carolina factory.

Alevo’s battery chemistry is not new – there are dozens of LFP manufacturers (most based in China) cranking out hundreds of megawatts of batteries for portable power and grid storage applications.  However, Alevo claims that its formulation of the chemistry (primarily its secret electrolyte additives) will enable its LFP batteries to last as long as 43,000 cycles of full discharge.  If such a cycle life is proven in the field, this chemistry will represent the most durable lithium ion (Li-ion) battery available today.

An Impressive Debut

Alevo also claims that it uses a non-flammable electrolyte, which makes its battery less prone to catching fire than most grid storage batteries.  Although the company won’t discuss manufacturing costs, LFP batteries have relatively cheap material inputs, opening up a potential path toward low-cost cells.

During the unveiling ceremony at the Concord plant (complete with a drawing back of the curtains on stage, swirling searchlights, and wolf whistles from the employees that packed the audience – all for a 20-foot shipping container), the air-cooled battery bank was displayed, along with its Parker Hannifin inverter and fire detection and suppression equipment.  Alevo also highlighted its big data and analytics capabilities, which it says are needed to help deploy and optimize the energy storage system.

While Alevo seems to have plenty of capital behind it (Reuters reported that Swiss investors have put up more than $1 billion), as well as several global partnerships, it has significant challenges ahead.  The most important of these focus on the battery cells themselves: real-life durability and manufacturing cost.

Two Challenges

On the durability front, Alevo’s internal accelerated testing of 43,000 deep discharge cycles is indeed impressive.  But accelerated testing is an imperfect science.  Batteries tend to perform very differently in the real world over the course of decades, as opposed to laboratory benchmark tests that model expected long-term battery durability.

As for manufacturing costs, Alevo has a hard mountain to climb to learn how to become a battery manufacturer, especially with the challenges that LFP technology brings to the factory.  Unlike other Li-ion chemistries, LFP requires very finicky vacuum technologies that make large-scale manufacturing hard to do efficiently.  Many other LFP manufacturers have assumed cheap manufacturing costs only to find that the chemistry left them with much higher costs, lower yields, and more failures than expected.  While other cobalt-based Li-ion chemistries have higher costs for material inputs, the manufacturing processes are much simpler and easier to scale.  Alevo’s claims are impressive; proving them will be another matter.

 

Energy Storage Enjoys a Breakthrough Day

— November 5, 2014

While most Americans were paying attention to election results, news emerged out of California that truly heralds a new era for the energy storage industry.  Southern California Edison (SCE) announced that it will acquire 2,221 MW of new generation assets, of which 250 MW will be energy storage systems.  This is the end result of the lowest-cost resource request for proposal (RFP) that is designed to eventually replace the generation provided by the shuttered San Onofre nuclear power plant.

While the sheer scale of the announcement is staggering (no utility has ever purchased 250 MW of non-pumped hydro energy storage before), the details of the announcement are even more impactful.  SCE was expected to use some of this bid for energy storage (it listed energy storage as a preferred resource on the RFP), and Navigant Research assumed the energy storage part of the purchase would be about 50 MW.  By ordering 5 times that amount of energy storage, SCE is making a very loud statement about how highly it values energy storage as a grid management tool.

The Land Rush Begins

Another important aspect of this move is that it was done on a completely level playing field.  SCE decided to purchase 250 MW of energy storage because it felt it had a higher value than any other generation asset (including natural gas, wind and solar).  That in itself is an extremely important positive note for the energy storage industry.

Even more important for the industry is that SCE’s big vote of confidence for energy storage happened just before the launch of three big RFPs that were designed as part of the energy storage mandate that California is forcing on the big utilities.  By December 1, 2014, all three of the large investor-owned utilities in the state will introduce a total of more than 200 MW of energy storage purchases.  It’s the energy storage industry’s equivalent of the Oklahoma land rush.

Other Big Deals

A couple of other important nuggets regarding the SCE announcement:

  • AES Energy Storage will be building a 100 MW battery plant that will dwarf all existing battery power plants.  Over the last few years, AES Energy Storage has discussed how such a plant might work, but now it will have a chance to actually implement a battery peaking plant.  If this project is successful, it will open up a completely new business model for the energy storage industry that could, in the long run, be the largest segment of the stationary storage market.
  • San Francisco-based startup STEM won an 84 MW contract that will make up hundreds (if not thousands) of distributed battery packs working on the customer side of the meter.  Like many other behind-the-meter energy storage system integrators, STEM has preached the concept of distributed battery packs that, in aggregation, work like a virtual power plant (see Navigant Research’s report, Virtual Power Plants).  STEM will be the first company to implement such an idea at scale in the real world.  If it succeeds, then other players like Coda Energy and GreenCharge Networks will also benefit.

Whatever your politics, for the energy storage industry it is morning in America.

 

Innovative Energy Storage Technologies Gain Ground

— October 18, 2014

According to the Navigant Research Energy Storage Tracker 3Q14, the 2007 to 2013 period has seen the commercialization of a number of key technologies in energy storage, including several advanced battery chemistries, flywheels, and power-to-gas.

The Energy Storage Tracker is a database of energy storage projects that tracks announcements and deployments of energy storage across a range of technologies in an effort to identify industry trends.  The chart below shows the deployed power capacity for six advanced storage technologies in utility-scale applications.  There was a peak in installed capacity across most of these technologies in 2011 and 2012 in response to stimulus funding under the American Recovery and Reinvestment Act.  The purpose of this funding was to jumpstart the energy storage market, and while 2013 was a slow year for most battery technologies, preliminary 2014 data (not shown) indicates improved numbers over 2013 levels.  In contrast to advanced batteries, flywheels and power-to-gas saw an uptick in deployed capacity from 2012 to 2013.

Utility-Scale Energy Storage Power Capacity by Technology, World Markets: 2007-2013

(Source: Navigant Research)

Playing Catch-Up

Although no single technology is a clear winner in the global stationary energy storage market, lithium ion (Li-ion) has arguably established itself as a key frontrunner going forward.  Over the past 13 years, sodium sulfur (NaS) batteries, manufactured solely by Japanese power infrastructure giant NGK, have established themselves as the clear leader in terms of installed power capacity in the stationary energy storage space, with 243.7 MW from 2007 to 2013.  However, publicly announced deployments are typically large orders in the tens of MWs, which results in peaks and troughs in NGK’s market activity.

Li-ion sits in second during the same time period, with 231.9 MW aggregated over all its subchemistries.  In 2013, Li-ion had the highest number of MW installed and managed to keep output steady with 2012.  Of this 231.9 MW, lithium iron phosphate (manufactured by A123 Systems, now NEC Energy Solutions and BYD) accounts for at least 114.8 MW, lithium titanate (manufactured by Altairnano and Toshiba) accounts for at least 10.6 MW, and lithium manganese spinel (manufactured by Samsung SDI and LG Chem) accounts for at least 16 MW.

Peaks and Valleys

Other technologies that have seen significant deployments from 2007 to 2013 include advanced lead-acid batteries (71.4 MW), the vast majority provided by Xtreme Power (now a part of Younicos).   More than 58 MW worth of advanced flow batteries were deployed, primarily by ZBB and Premium Power, during the same time period.  In addition, 50.9 MW worth of flywheels were deployed, with 45 MW of that capacity coming from Beacon Power (though 4 MW of Beacon’s installations have since been decommissioned).   Lastly, 11.1 MW of power-to-gas storage capacity was deployed between 2007 and 2013, primarily by ETOGAS and Hydrogenics.

In the early period of commercialization, it’s not unexpected to see strong years and weak years for technology deployment.  Li-ion is maturing and is showing signs of being a fully commercial technology, similar to NaS batteries.  Advanced lead-acid, flywheels, and flow batteries will continue to grow, but in some cases will be limited due to the small number of suppliers in the market.  Power-to-gas is in the very early stages of commercialization, and will likely see growth and decline in deployed capacity in the demonstration stages before commercializing, similar to Li-ion.

 

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