Navigant Research Blog

Regulatory Focus on Air Transit of Li-Ion Batteries Increases

— July 2, 2015

Lithium ion (Li-ion) batteries have been highly touted for their long lifespan, high discharge rate, and ability to perform effectively in a number of different energy storage applications, which has led to their widespread adoption across the consumer electronics, automotive electrification, and utility grid energy storage sectors. The key factors driving the design and application of Li-ion battery technologies include power capacity, energy capacity, cost, lifespan, and safety. On the cost side, Navigant Research sees the maturation of the automotive and energy storage manufacturing and supply chains creating market forces that are expected to drive costs to new lows. However, the safe transport and use of Li-ion batteries is paramount and must be factored into each step of the manufacture, sale, transport, and use phase of the battery.

Since Li-ion cells are shipped partially charged to maximize their lifespan and reduce the chance of oxidation over time, they are classified as dangerous goods for transport, according to the United Nations (UN) Model Regulation for the Transport of Dangerous Goods.  Further, it has been well-documented that heat generation coupled with metal contamination and poor battery management systems can increase the risk of thermal runaway and fires during the use phase of a Li-ion battery. Whereas design, manufacturing, and quality control improvements have been implemented to reduce these risks during battery use, new scrutiny is being placed on the air transport of partially charged Li-ion cells and battery packs due to combustion risk from extreme temperatures. These developments are creating a challenge for Li-ion battery manufacturers that are considering export strategies due to the increasingly complex set of regulatory challenges facing airline carriers.

For example:

Assessing and Addressing the Risks

To address safety risks during transport and use, scientists at NTT Facilities, Inc. have tested adding a chemical flame retardant called phosphazene to lithium batteries to increase their safety in different applications. Their study has shown that fully charged 200 Ah packs, like those commonly used in portable electronics, did not explode, ignite, or undergo thermal runaway when undergoing significant laboratory testing protocols. Further, larger battery packs were also tested and operated for 400 days in a state of floating charge with positive results and minimal impact to battery capacity.

Though this advancement is still in the early stage of development, the prospect of integrating a material that is commercially available with a high voltage resistance and low cost to further improve safety while balancing costs merits a watchful eye. Whereas battery manufacturers are loath to add materials, those battery manufacturers and energy storage systems integrators looking to ship (or procure) Li-ion batteries from long-distance manufacturing sites will want to track these developments.

 

Offshore Wind Farm a Milestone for New England Energy

— May 18, 2015

At an industrial facility in Rhode Island, work has finally begun on what will likely be America’s first offshore wind farm. Originally proposed in 2008, Providence-based company Deepwater Wind’s project has overcome significant headwinds to receive permits, sign power purchase agreements, and finally begin construction. Made up of only five turbines, work on the relatively small project comes at a time when New England’s energy future faces uncertainty. The region generates almost no energy locally, being dependent primarily on natural gas and coal imports from other parts of the country. As a result, consumers are susceptible to volatile rates due to severe weather and supply constraints. A proposal to expand natural gas pipelines represents one way forward for the region, while the wind farm on Block Island represents a very different path.

As a former resident of Block Island, I have been intently following the progress of this project since its initial announcement. While working on the ferry to the mainland, I spent many hours on a nearly empty ship hauling truckloads of diesel fuel to be burned at the island’s one power plant. It comes as no surprise that island residents have to pay some of the highest electricity rates in the country, around $0.50 per kWh. These rates are significantly higher than even Hawaii, where expensive electricity has set off a rush of solar PV and other local energy generation.

Looking Ahead

The wind farm is a crucial component of Block Island’s energy future. Deepwater Wind claims that once operational, the farm could reduce island electricity rates by nearly 40%. Many island communities around the world have recently initiated ambitious plans to wean themselves off imported fuels completely by integrating locally generated energy. Local energy storage has been an important aspect of many islands’ plans to reduce dependence on imported energy, as discussed in a recent post by my colleague Anissa Dehamna. A great example of this can be found on Kodiak Island in Alaska. Global power electronics provider ABB worked with the local electric cooperative to install both battery and flywheel-based energy storage systems to help stabilize the output from the island’s wind turbines, and to store excess power generated at night to be used at times of high demand. The addition of energy storage on Kodiak Island has enabled up to 100% penetration for renewable energy and greatly reduced diesel consumption.

The development of the wind farm on Block Island will present great opportunities to demonstrate the value that other clean energy technologies can provide. The island is an interesting case due to the dramatically smaller population outside of the summer months. There are only around 1,000 year-round residents on the island, meaning demand for electricity most of the year is only a fraction of summer demand. For most of the year, the 30 MW output from the wind farm will be far more than is needed to power the island. By integrating local energy storage, the island could easily be a net exporter of energy through the soon-to-be-built transmission line connecting the mainland while only ever using locally produced clean energy. This can provide substantial benefits to residents through lower electricity rates and a much cleaner, more reliable power system.

 

Tesla Introduces a Missing Piece for PEVs

— May 15, 2015

In late April, Tesla announced the expansion of its product line beyond cars to include battery systems for homes and utilities. Called the Powerwall, the system can store 7–10 kWh of energy and respective costs are $3,000 and $3,500. Adding a battery to a home enables greater utilization of solar generation and of off-peak pricing in time-of-use (TOU) rate plans. For utilities, the home system may be considered a threat because it enables consumers to bypass services entirely; however, it also presents opportunities to mitigate potential energy management problems stemming from the rapid increases in residential solar installations and plug-in electric vehicle (PEV) adoption happening now.

Challenges

The grid is constantly being monitored to match electricity supply with demand. As demand fluctuates throughout the day, resources are ramped up or down in response to keep grid frequency within a narrow range of around 60 Hz. The more reliable generation resources are in responding to shifts in demand, the more cost-effective the grid is. Traditional generation resources like nuclear, coal, and natural gas are dependable generators; however, renewable resources like solar are not, because generation depends on the weather. This means that solar requires additional grid resources like batteries to backfill lapses and absorb spikes in generation.

PEVs can create additional problems because most can consume up to 6.6 kW from home electrical infrastructure. The most power-intensive appliances in a home (clothes dryer, dishwasher, or oven) can use from 2 kW to 5 kW. While there is enough energy produced by the grid to supply massive amounts of PEVs, there may not always be enough power (instantaneous energy). So the challenge created by PEVs is the collective charging behavior of a 9-to-5 workforce that plugs in at the end of the work day.
In the near term, this behavior is a threat to distribution-level transformers in neighborhoods with high PEV concentrations. In the long term, this may exacerbate problems stemming from widespread solar generation, as the sun will be setting when people are plugging in. The theoretical lapse in generation and leap in consumption will require grid operators to ramp generation assets quickly and significantly; not a cheap or easy exercise.

Solutions

The root cause of the above challenges is that most electricity is consumed almost immediately upon generation because there are few storage resources on the grid. The PEV itself can be a solution, as grid operators can manage battery charging; or, in more advanced PEVs, the car itself may be able to supply power back to the grid. In both cases, the PEV owner is compensated financially and most of the costs of adding grid-level storage are avoided by the electric power sector. Pilot programs utilizing PEVs for such services are already underway. However, there will always be limits to these services, as PEVs are not always plugged in, don’t always need a charge, and sometimes do need to charge regardless of compensation.

Enter the home battery. Though the upfront costs are high for the homeowner, there are multiple economic benefits that may be had by both the owner and the utility. As mentioned above, it enables lower energy costs for the homeowner, and for the utility, a home battery can directly mitigate the challenges posed by intermittent residential solar generation and PEV charging at the distribution and generation level. Even more than that, it provides an opportunity for energy aggregators and utilities to incorporate homeowners into lucrative grid-service markets in a manner that is more reliable and consistent than PEV integration into these same services. Though reservations have been significant early on, the $3,000–$3,500 price point will be a hard sell to individuals in the mass market; it’s unlikely home batteries will exhibit similar gains to PEV and residential solar market growth without some financial incentives from utilities and/or governments, both of which stand to benefit from this technology.

 

EnerNOC Rides the Tesla Wave

— May 13, 2015

Tesla’s announcement on April 30 of its stationary storage product has been treated like the biggest energy news since Edison invented the lightbulb. Elon Musk’s cult of personality has captured the world’s attention, and anything he says gets extreme coverage. That’s not to say that there is no substance behind Tesla’s developments or that they won’t lead to changes in the industry. At the very least, the attention raises the profile of the normally staid energy world, which should benefit all players in the space.

One company that caught the Tesla wave was EnerNOC, which announced a partnership with Tesla’s new commercial and industrial storage offering. EnerNOC’s stock jumped over 20% after the news hit. That’s the short-term bump that such notoriety can lead to. I spoke with Micah Remley, EnerNOC’s senior vice president of product, to learn about what the company sees as the real benefits of this relationship.

Enhanced Intelligence

Basically, Tesla will provide the storage hardware to a facility and EnerNOC will provide the software smarts to tell the unit when to charge or discharge in an optimal manner. The software does this by taking in signals from inside the building and from external markets and figuring out how to gain the most financial benefit on an ongoing basis. Remley said that the Tesla unit has some smarts as a standalone unit, but the gains from EnerNOC’s software should outweigh the costs. When asked about the potential economic impact on EnerNOC’s business from this relationship, Remley said it is too early to measure as the partnership is still in its pilot phase. But it does not appear that this will add significantly to the bottom line in the near term.

I spoke with EnerNOC’s CEO Tim Healy at the company’s analyst conference back in November 2013, when the company launched its foray into the energy intelligence software space. I asked him if he planned on getting more into the hardware side with topics such as combined heat and power, solar, and storage; Healy said EnerNOC is clearly focused on the software side of things. It appears the company has found a way to keep to that mantra while not letting the proliferation of distributed energy resources pass it by.

Back to Earth

EnerNOC struck a similar deal with SunPower in the solar space in March that didn’t get nearly as much attention as the Tesla deal. From EnerNOC’s standpoint, things like solar and storage are just new endpoints that can be integrated into its existing software that has mainly been developed for demand response purposes. This move represents an important diversification strategy as competitors offer holistic solutions, customers demand central control systems for all of their various resources, and regulators in states like New York and California attempt to add value to all types of new technologies and market structures.

EnerNOC’s stock has come back down after the Tesla hype, but the partnership strategy should benefit the company in the long term.

 

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