Navigant Research Blog

Drones Paving the Way for Next Generation Advanced Batteries

— July 17, 2018

Unmanned vehicles (UVs), or drones, are becoming increasingly mainstream in several industries, but the underlying issue they face is determining what the ideal power-to-weight ratio should be for drones. The power-to-weight ratio is the metric that determines the amount of time the drone can operate on a single charge. For example, aerial drones typically have flight times of 10 to 30 minutes. Compounded with key functionalities like traction controls, guidance systems, sensors, cameras, data acquisition, data analysis, and cataloging, energy can be drawn from the battery quickly.

Advanced batteries provide inroads to solve this problem, and Navigant Research expects this market to reach $224.9 million in 2026 alone. Historically, the drone industry used nickel-cadmium batteries, but lithium ion (Li-ion) batteries immediately improved the performance of the vehicle because of their lighter weight and higher power/energy density. Still, current Li-ion batteries may not be ideal in high temperature, elevated pressure, or extreme weather environments. These batteries operate best within a 0º F to 45º F temperature range at atmospheric pressure. Any deviation from this could result in catastrophic failure.

As battery manufacturers are looking to bring their next generation technologies to market, particularly in the transportation sector, drones are looking to be an important early market. This is because they can be used in similar use cases (i.e., for traction and propulsion) at a smaller, less capital-intensive scale. They can also be engineered for use in extreme environments. This is an important consideration when developing vehicles used underwater or in aerospace applications.

Aerial Drones: The Ideal Market for Battery Cells?

SolidEnergy Systems, a Massachusetts-based company, manufactures a semi-solid lithium metal cell. The company reports that this is the lightest rechargeable battery cell in the world. With the ultimate goal of entering the EV market at scale, the company has determined that aerial drones are an ideal niche market to test the performance and scalability of its technology. SolidEnergy states that—compared to current Li-ion batteries—its battery can increase flight times to over an hour and that this is steadily improving. The company closed on a funding round of $34 million in late January. These funds will be used to help spur the current low volume sales and increase manufacturing capacity to further drive down the battery’s current $500/kWh costs.

UK battery manufacturer Oxis Energy also sees aerial, aerospace, and underwater drones as early markets for its lithium sulfur (LiS) batteries. Though the company is continuing to mitigate the characteristic polysulfide shuttle problem endured by LiS batteries, it has seen interest from several UV companies to develop its technology and eventually deploy in the coming months. Oxis notably secured a grant to develop a 425 Wh/kg cell for aerial drone technology for aerospace applications.

Oxis Energy LiS Cell Diagram

(Source: Oxis Energy)

Niche markets like drone technology will be vital in ensuring that improved advanced batteries are meeting their technology roadmaps and that these batteries are on track to help tackle the impending EV and energy storage system boom. Ensuring that the batteries improve the power-to-weight ratio, meet performance requirements, and are safe in extreme environments will be critical to their mass deployment. As these are proven, economies of scale will develop and rapidly drive down system costs, paving the way for inroads into new, highly profitable market opportunities.


New York State Energy Roadmap: The Future of Energy Storage in New York

— July 17, 2018

In June 2018, the New York State Energy Research Development Authority (NYSERDA) and the Department of Public Service (DPS) unveiled an energy storage roadmap. The roadmap clarifies the state’s approach to achieving a nation-leading energy storage target of 1,500 MW by 2025. It recommends a range of actions including market acceleration incentives, wholesale market plays, price signal adjustments, and other tools that encourage competition among energy storage technology solutions.

The roadmap outlines a plan to increase energy storage installations in three areas that are projected to contribute 500 MW toward the 2025 goal:

  • Bulk system: Large-scale storage with renewables, standalone storage, and hybridizing peaker plants with onsite storage
  • Distribution system: Expanded non-wire alternatives, community distributed generation, and regenerative energy storage systems (ESSs)
  • Customer sited: Grid-tied and standalone ESSs, which are solar plus storage systems, microgrids, and vehicle-grid integration

Market Acceleration Incentives

The roadmap recommends establishing a $350 million bridge incentive, funded by existing revenue sources, to help the market drive down energy storage costs. This includes a storage adder within NY-Sun for solar plus storage scheduled to begin this fall, followed by a program designed for standalone storage, which will be developed later through the DPS proceeding in Case 18-E-0130. It is also recommended that NYSERDA expand the value stacking demonstration program (PON 3541) to support the future deployment of commercial scale ESS projects in New York State.

This incentive is expected to support a significant amount of customer sited and distribution/bulk sited storage while accelerating cost declines, deploying over 500 MW between 2021 and 2022. If approved, the incentive is projected to decrease soft costs by around $50/kWh for a distribution/bulk sited system and around $150/kWh for a commercial site.

Five Key Strategy Recommendations to Address Soft Costs and Likely Implications 

  • The state should use commercial property assessed clean energy (PACE) financing to reduce the cost of capital (CoC) by increasing the portion of debt financing available for a project. This would result in a CoC that could reach 6%-7% or less. New York City is likely to introduce commercial PACE financing legislation later this year.
  • Utilities should provide developers and operators with hourly load data (actual and forecast) for substations connecting the distribution and bulk systems (e.g., transmission nodes). This will inform distributed energy resource development and optimize utility peak shaving that could lower utilities’ installed capacity tags and increase ESSs deployment.
  • NYSERDA and utilities must coordinate to develop, implement, and maintain a searchable data platform containing aggregated, customer-related data. This will invariably help developers better pinpoint candidates for energy storage. A beta version of the platform is scheduled for testing by summer 2021.
  • NYSERDA should build a skilled talent pipeline through workforce development to ensure the governor’s directive grows the energy storage sector to 30,000 jobs by 2030.
  • DPS and NYSERDA should prepare an annual state of storage report, led by DPS, that tracks storage deployments, progress in meeting the 2025 and 2030 storage targets, impediments, and recommended solutions.

Retail Customer Sited Storage Cost Components in New York City

(Source: New York State Energy Research Development Authority)

Next Steps

This roadmap acknowledges that change is coming with a price tag and responds with a definitive way forward. However, the successful execution of the suggestions will dictate whether the opportunity stays on paper, or if New York transforms into a nation-leading storage market. As a next step, the state will hold multiple technical conferences to gather public feedback on recommendations and identified approaches. Additionally, the New York Green Bank has requested input from developers on financing gaps for energy storage with plans to invest $200 million in storage-related projects. The request for proposals will be issued later this year and focus on combined solar and storage projects.



Stone Edge Farm Pioneers Open Source Controls for California Microgrids

— July 10, 2018

The importance of microgrid controls is paramount to the success of any microgrid project. It is the most important aspect of any microgrid’s performance, but is also the technology component stack that is the least understood.

The Stone Edge Farm microgrid in Sonoma, California has emerged as the poster child of microgrid innovation in the US. With eight different kinds of batteries incorporated into a single microgrid that produces hydrogen for use in vehicles, one could argue that it represents the bleeding edge in microgrid technology innovation.

Innovate for the Future: Open Source

Perhaps its most radical idea—cooked up by Craig Wooster, the project engineer for the project—is the release of an open source controller developed at the farm out of necessity. “I was pretty disappointed with the controllers we’ve tested at our microgrid, both by performance and the cost,” he said. Wooster instructed his interns to attack the problem of controls—and they have apparently delivered.

The watershed event was the wildfires that swept through Sonoma County last October. Wooster elected to run the microgrid in island mode for 10 days based on a controls system developed at the farm dubbed the Helia IQ optimizer, a distributed controller that did not require any instructions from a higher level master controller. Navigant Research believes that this distributed approach is where the industry is going, especially when responding to immediate threats to grid stability.

“Our plan all along has been to create a place where innovation can take place. And that’s what we’ve done,” Wooster added. During the fires, there was no internet (or Ethernet) to enable communications between devices, so a distributed, autonomous approach was the only way to go. The resulting controls product has been labeled as Breeze and will be available for microgrid hosts and vendors this September. Wooster thinks this open source controls approach will help accelerate growth in commercial and industrial (C&I) microgrids, which Navigant Research is projecting will be the fastest growing microgrid market segment over the next decade.

Build Lego Blocks

“The high cost of controls is often a major barrier for C&I customers to adopt microgrids,” observed Wooster. “With this distributed, open source approach, one can build up a microgrid like Lego blocks, and incrementally grow a microgrid in step with the internal growth of the company,” he added. While he observed larger controls vendors such as Siemens may view this open source approach as competition, Wooster believes these companies can dedicate their expertise where they best add value: in the higher level provision of grid services. This is a value proposition that will clearly grow over time. (DC Systems currently provides higher level tertiary controls at the farm today, a firm that just hired Ken Munson, formerly of Sunverge, as CEO.)

It was Stone Edge Farm’s inability to provide such grid services with excess energy generated at the farm that convinced Wooster to instead focus on hydrogen production for clean air vehicles. He was able to avoid wading through the red tape attached to trying to sell grid services to Pacific Gas and Electric or the California Independent System Operator. Wooster’s engineering company is now working on designs for six more microgrids in Sonoma County, all of which incorporate renewables-to-hydrogen as a key enabling storage medium for microgrids and a clean transportation fuel. The success of Stone Edge Farm has helped sire the creation of Repower Capital, an investment group that can plow $60 billion into clean energy systems such as microgrids. And this entity’s largest investor is none other than Siemens Financial.


How Corporate Offsite Renewable Energy Procurement Can Mitigate Power Market Risks

— July 10, 2018

Back in February, I highlighted how the emergence of large C&I energy users procuring renewable energy from utility-scale, offsite renewable energy (ORE) project sits within Navigant Research’s EaaS framework as part of the Offsite Energy Supply solution. Now, Navigant Research has just released a market forecast report highlighting the drivers, barriers, deployment models, and market sizing for this new ORE supply procurement option.

What Does the Market Want?

It’s clear now that large multinational corporations, universities, and municipalities want to go beyond installing onsite renewable energy systems. This is also true of buying voluntary renewable energy tracking instruments from existing projects that are unbundled from the electricity delivered to the grid as part of their sustainability commitments. This driver has led early-mover corporate buyers to engage in innovative transaction models to procure renewable energy from utility-scale ORE projects.

What Can Be Gained?

There has been less focus on the potential risk mitigation benefits that renewable energy project developers and independent power producers (IPPs) can reap by developing a corporate ORE supply procurement option. These developers and IPPs are increasingly required to compete with traditional electricity generation sources, often now with uncertain wholesale power or capacity market prices and reduced or eliminated renewable energy incentives. The resulting uncertainties in long-term income streams can affect the bankability of renewable energy projects.

Flexibility Is Likely to Lead to Success

As corporate buyers become new power market electricity offtake partners, Navigant Research anticipates that that renewable energy project developers and IPPs will increasingly view these energy supply transaction models as a beneficial opportunity. With creditworthy corporate buyers, these models can mitigate the risks developers face when deploying new projects. Navigant Research believes that the developers and IPPs that will see the most success are those that craft flexible contracting mechanisms, such as shorter contracts and transferable commitments that take advantage of the creditworthy benefits of a corporate buyer. Further, the renewable energy developers and IPPs that will be at a competitive advantage are those that equip these flexible contracting mechanisms with terms that mitigate the power market price risk for risk-averse corporate buyers, such as fixed rates and narrow price collars.


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