April 5, 2012
Cleantech Risks Losses To Electronics In Energy Storage Quest
Dan Adler, president of the influential California Clean Energy Fund (CalCEF), told last week’s Cleantech Forum in San Francisco: “It is the holy grail and that’s why we continue to focus on this notion that there’s some piece missing.”
“Can we do some structured thinking as an industry as to where these markets are going, what’s driving them to develop, what the connective tissue is across consumer electronics, transportation and grid storage? What we need to be thinking about beyond batteries and can we really take storage to the next level?”
Calcef is a nonprofit, evergreen venture capital fund that was established with a $30m settlement to stimulate the development of cleantech in California after the state’s energy crisis.
“We’ve been active in VC for about the last 7 years and from the beginning, we saw a lot of venture interest in storage, particularly battery storage. Unlike everything else in cleantech, [storage] has the classic venture profile in that you can imagine multiple different channels into the marketplace – the consumer electronics piece is the leading edge.
“Absent policy at grid level, I’m concerned that storage will remain a consumer electronics application and not much more.”
Advancing Through Partnership
Douglas Davenport, a program manager at LBNL, said: “Just in the San Francisco Bay Area there are about 30 companies that are emerging [but] they’re all struggling with how to get to a fundamental shift.
“We’re looking some of the underlying gaps in performance. What is it going to take to get to a battery that performs as well in car as a gas engine?
We’re at the still at the Model T phase but we’re progressing to the Ferrari phase” – Coe
“We’re looking at new material applications like graphene, silicon-based batteries, new configurations of battery systems to make them more efficient, carry more charge and last longer.
Davenport added that a lot of companies were focused on the device space sector because of demand to power gadgets and electric vehicle applications as a share of the market were not yet competitive.
Adler, a former analyst at the California Public Utilities Commission who designed the state’s Renewables Portfolio Standard, said:
“As advocates on the clean side of this industry, we need to be thinking forward about what a grid scale storage asset looks like. Is it dispatched by the generator or by the grid operator? My bias at this point is for the latter. If we substantiate that there will be a market for storage at the grid scale, it’s going to have knock on effects on innovation.
Federal Energy Regulatory Commission Chairman Jon Wellinghoff told AOL Energy recently that he was open to energy storage being included in important power capacity market design. Read more from that interview here.
But Adler said that the industry might be too narrowly focused on battery chemistry.
“One of the things I’m concerned about on the innovation side is that people are trying to take a certain battery chemistry and configuration and imagine its application everywhere from consumer electronics, transportation and the grid. It might not work.
“But it’s the forced frame of reference because we know we have a consumer market, we sort of have a transport market, we definitely don’t have a grid market with any meaningful application so we have to hedge our bets and pick one technology to bootstrap all the way through. If we have more of a market segmentation we can let different technologies through.”
Davenport said that he was already seeing changes in battery chemistry and architecture.
“Near-term we’re seeing companies like Polyplus batteries that are not conventional lithium-ion. What we see further out is replacing carbon with silicon. And there’s a lot of work that could be done in nanomaterials that can significantly increase the surface area to capture lithium.
“One of the more early term transitions from carbon to silicon could be graphene which has a lot more surface area and more ability to control lithium [movement]. But it takes a long time and a lot of money to take something from concept scale to something you can plug into a car – maybe 10 years.”
Start Up Energy at Large Industrials
Strategic partnerships between incumbent industrial companies and startups could accelerate this process, said Robert O’Connor, partner at law firm Wilson Sonsini Goodrich & Rosati. O’Connor said that his company had noticed an uptick in participation from large incumbents working with emerging companies.
Strategic partnerships were critical to energy storage projects, said Carlos Coe, the founder and chairman of Xtreme Power. The company, based in Austin, Texas, is working with Duke Energy to supply a 36 MW storage system using dry-cell batteries at the 153 MW Notrees project in Texas. The $44 million project is scheduled for completion in October this year and will be the world’s largest power-storage device linked to a wind farm.
Coe also said that regulations passed last year by the Federal Energy Regulatory Commission would favor the acceleration of the energy storage market. FERC’s “pay for performance” rule means that independent system operators will compensate energy storage services for provide fast response and performance.
“We can react much faster than any other tech on the grid,” said Coe. “Assets that can do that balancing better should be paid a premium. Not only does that allow storage to play in the utility space it also recognises the unique value it brings.”
“Power management might be one of the more important elements associated with energy storage. We’re at the still at the Model T phase but we’re progressing to the Ferrari phase – maybe not in cost, but performance.”
Once costs decrease, applications for storage will open up dramatically, said Coe. “Nuclear power plants lose up to 5% loss of power a year because they can’t balance the bars in real time. So systems can address that kind of loss and keep the main system up which is a different kind of safety feature.”
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