HyperSolar moves along lonely path to hydrogen

HyperSolar is working to make it easier to create hydrogen on site at commercial and industrial locations, or even filling stations such as this one. Pic: Toyota.

HyperSolar is working to make it easier to create hydrogen on site at commercial and industrial locations, or even filling stations such as this one. Pic: Toyota.

By Jason Deign

US-listed technology firm HyperSolar is looking to develop a commercial-scale solar-powered hydrogen generation system after unveiling a working prototype last month.

The Santa Barbara, California-based company is hoping to give the hydrogen fuel cell industry a boost by removing one of hydrogen’s biggest problems: having to transport the gas over long distances.

Hydrogen “is expensive enough in the manufacturing process,” said Tim Young, president and CEO. “When you add on trucking it 500 miles in a pressurised truck, it stops making economical sense.”

Being able to manufacture hydrogen on site, using water and sunlight, could eliminate these costs and open up a vast array of potential energy applications, Young told Energy Storage Report.

These include “thousands and thousands of backup power plants” that “would all love to be hydrogen powered” because the fuel can be stored indefinitely until needed, he said. 

Emitting water from hydrogen

Also, Young said, “you’ve got all this power equipment inside warehouses” that currently creates greenhouse emissions but “would love to be emitting water from hydrogen.”

HyperSolar’s plan is to put solar-powered hydrogen generation plants on top of warehouses and similar sites, next to fuel cells provided by manufacturers such as Plug Power. Admittedly that vision is still some way off, however.

A video of HyperSolar’s prototype shows the company’s patent-pending technology splitting water into hydrogen and oxygen in the lab, but not at a scale, efficiency or cost that is commercially viable.

The design contains a proprietary hydrogen production unit that consists of a high-voltage solar cell encapsulated in a protective catalyst coating, integrated into a membrane separator.

“The protective coating has been demonstrated to allow hydrogen production to run for hundreds of hours in very corrosive water, without damage,” said HyperSolar in a press release. 

Demonstrating fuel cell capabilities

“To fully demonstrate fuel cell capabilities, the produced hydrogen is connected to a fuel cell that converts hydrogen into usable electricity, ultimately facilitating electrical power to illuminate the two light bulbs.”

However, Young explained: “What we used in that video were expensive gallium arsenide solar cells where were really good but would never be cost effective.”

HyperSolar is currently investigating whether it can use US-made triple-junction crystalline-silicon solar cells instead. “They would be much more cost efficient,” said Young.

The company is also hoping to double the efficiency of the hydrogen generation process, so that 10% of the energy from incoming sunlight gets captured rather than 5% at present.

Finally, a commercial-scale hydrogen generator would need to effectively capture and store the gas in volume. Young viewed this as a minor engineering problem that could be solved with pumps. 

A fairly simple process

“If the solar cells are able to effectively split the water molecules, we think the piping is a fairly simple process that could be quickly perfected,” he said.

Despite the hurdles, it is also true that HyperSolar has gone a long way towards perfecting the technology for solar-powered hydrogen generation.

The company has filed patents for the means to split water molecules, separate oxygen from hydrogen, and capture the gas without losing most of it.

Plus the technology has been found to have some unlikely side effects, such as helping to purify the water used for hydrogen production.

The higher the salinity and the greater the organic content of the water, “the easier it is” to generate hydrogen, Young said. “The organics in the water are just more conducive to the process. It becomes more efficient.” 

Tweaking the production process

Water salinity and organic content have forced HyperSolar to tweak its production process to include an anti-corrosive polymer coating for the solar cells and to add a commercial anti-foaming agent to the feedstock.

With most of these refinements now in train, the pieces for solar-powered hydrogen generation are “starting to come together,” Young commented.

How long it will take to get to full commercialisation is still highly uncertain, of course.

But Young, who is planning to lease a Toyota Mirai in the coming months, remains convinced there is a massive potential market for hydrogen not just in commercial and industrial settings but also in the automotive market.

“The other day I test drove a Tesla,” he mused. “It takes 25 to 30 minutes to get a full charge and there was a line eight-deep of Teslas wanting to charge.

“Two miles from there, there’s a hydrogen filling station where in four minutes you can fill your car. Elon Musk says hydrogen is and always will be the technology of the future. I’m trying to prove him wrong.”

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Military interest in energy storage remains strong


The US Army is interested in using energy storage to improve tactical capabilities on the battlefield. Pic: Trish Harris.

By Jason Deign

Military enthusiasm for energy storage applications is at an all-time high, according to one supplier close to the industry.

“There’s no doubt that their interest is strong,” said Ryan O’Keefe, senior vice president of business development at the power conversion systems maker Ideal Power.

Energy storage is seen as one of a number of technologies that can help military chiefs offset costs and risks while allowing troops to operate more independently in the battlefield, he said.

“They identified quite some time ago that their military bases, wherever they are, are at the mercy of the electric grid. The military is clearly in planning mode for how to make their operations resilient.”

Ideal Power is currently working with “a couple” of military suppliers on how to improve frontline logistics and power quality.

Mobile hybrid solar-plus-battery system

Last month the company unveiled a project with EnerDel, a lithium-ion battery maker and energy systems integrator, to create a mobile hybrid solar-plus-battery system for the US Air Force.

The system, which is mounted on a military-grade trailer and can be towed by a humvee, is “aimed at reducing the diesel fuel used to power forward operating bases (FOBs),” said Ideal Power.

“The project supports the US Air Force’s Energy Strategic Plan, which seeks to improve the resiliency of their FOBs and reduce dependence on diesel-powered generators.”

Ideal Power said the mobile microgrid concept had been undergoing tests for the past seven months and could eventually be deployed at Air Force locations across the globe.

For now it is operating at the 319th Training Squadron’s Basic Expeditionary Airmen Skills Training facility at Joint Base San Antonio-Lackland, where it is powering lights and air conditioning systems for 10 FOB living quarters.

Eliminating the need for diesel-fuel convoys

“We’re deploying these systems to minimise and eventually eliminate the need for diesel fuel being trucked into frontlines or hostile territory,” said O’Keefe. “The logistics cost is what the real motivation is here.”

Diesel fuel consumption can be reduced by about 75% using EnerDel and Ideal Power’s battery system, he said. And when that fuel is being transported in warzones, it does not come cheap.

Add into the equation the fact that the ‘logistics cost’ may also include the lives of servicemen and women, and it is evident the military has a big motivation to adopt energy storage.

There are added benefits beyond simply saving lives and money, however.

For example, said O’Keefe, the power quality of diesel generators “is awful”, which means troops relying on them have to carry additional stabilising equipment or risk outages that could affect vital battlefield technology.

A true grid-quality waveform

“Our unit will use the battery to put out a true grid-quality waveform that can be used to power even sensitive electronics without spikes in power or voltage,” said O’Keefe.

Another plus is that battery systems are much less conspicuous than diesel generators in the field. “There’s nothing noisier behind enemy lines than a diesel generator running,” O’Keefe said.

Given these benefits, it is perhaps unsurprising the military interest in energy storage is on the rise, with the Ideal Power and EnerDel deal being just one of several contracts announced so far this year.

In May, for example, Sandia National Laboratories announced a project with the US Marine Corps to “increase energy security and reduce fuel dependence through alternative technologies, including renewable energy and microgrids.”

A Sandia Microgrid Design Toolkit will “enable the Marine Corps to make smart choices in planning investments in microgrids and renewable energy technologies, such as solar and batteries,” said the announcement.

A long-range US Navy weapon

A fortnight previously, it emerged that battery maker Saft had been selected to provide storage for a long-range US Navy weapon that fires projectiles using electrical rather than chemical energy.

The Naval Surface Warfare Center in Dahlgren, Virginia, was said to be using the batteries for an electromagnetic railgun capable of launching missiles at almost six times the speed of sound.

Despite such futuristic plans, however, O’Keefe said the military’s approach to technology adoption was more conservative than you might expect.

Pretty much all the military battery systems he was aware of were based on industry-standard lithium-ion batteries, for example.

“The US military doesn’t make quick decisions, nor are they necessarily the first adopter of commercially available technologies,” O’Keefe said. “They like to test and prove.”

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Powin uses batteries to charge batteries


Intel’s award-nominated electric vehicle charging station avoids demand charges thanks to Powin Energy’s battery technology. Pic: Powin Energy.

By Jason Deign

Systems integrator Powin Energy could gain an award today for a seemingly bizarre energy storage application: using batteries to charge batteries.

The Oregon, USA-based company is among those shortlisted for a 2016 Energy Storage North America Innovation Award for an electric vehicle fast-charging station at the headquarters of microprocessor firm Intel.

The installation, in Santa Clara, California, uses Powin Energy’s Battery Pack Operating System (bp-OS) to manage 30kw and 43kWh of lithium iron phosphate storage linked to 15 SolarWorld PV panels with a capacity of 4.1kW.

The use of batteries for electric vehicle fast charging avoids the need for standard three-phase 208/277/480V AC connections and helps avoid high demand charges, said EV4, the firm that designed and manages the station.

The technology also makes it possible to place charging stations in areas where three-phase AC is hard or costly to obtain.

Using patented technology

Danny Lu, Powin Energy’s vice president of sales and marketing, said the company has sold five other electric vehicle (EV) charging station setups, all in Oregon, using the patented technology in place at Intel.

Because of high demand charges in parts of the US, “a lot of times the economics of fast-charging doesn’t really work if it’s a privately owned EV system,” he told Energy Storage Report.

“If you add battery backup to it, you can pretty much discharge the battery any time the charger turns on, and keep that charger under the demand threshold so the privately owned EV station can make some profit.”

EV chargers typically deliver power at 50kW while demand charges kick in above 30kW, Lu said.

“We discharge 30kW of power for 30 minutes while the charger can stay below that 30kW-threshold, so you can eliminate a lot of those demand charges,” he explained.

Storage delivered six months ago

The Intel storage, which is linked to OpConnect charging software and an Ideal Power conversion system, was delivered six months ago.

Powin Energy also has an agreement to supply battery packs that will be built into the charging stations being developed by an unnamed large Portuguese converter and transformer manufacturer, Lu confirmed.

Since most European markets do not have punitive demand charges like those seen in the US, the main attraction for this and other charger makers is likely to be the ability to place charging stations beyond the reach of three-phase power.

Electric vehicle charging is only a minor part of Powin Energy’s overall focus, though.

Lu said the company’s bp-OS used sensors to determine the charge in each battery cell and adjust it to keep all the cells in a system at a uniform level, maximising the capacity.

Installation and product costs

“Some of the issues we’re seeing in other [systems] is that installation and product costs may be a little elevated because of the amount of DC connectors associated with transferring energy between packs,” he said.

He claimed bp-OS can connect 36 battery strings onto a single DC bus of a centralised inverter, whereas competitors often require inverters and transformers for each string.

Powin Energy’s approach means the company can roughly halve the current cost of battery system installation, according to Lu. It can also reduce battery management system costs by about 10%, he said.

These advantages do not have much of an impact on small systems but could shave about 5% off overall costs for a 50MWh system, said Lu. It has taken the company a while to gain acceptance in the market, however.

Powin Energy originally trialled its technology with Bonneville Power Administration and Pacific Northwest National Laboratory, assembling a 120kW, 500kWh mobile system that was put through its paces in a range of settings.

Award-winning programme

Over a period of two years, the setup was tested for wind power integration, solar firming and smoothing, and demand response, the latter as part of an award-winning programme with Energy Northwest.

In late 2014, Suntech investor Shunfeng International Clean Energy Limited paid USD$12.5m for a 15% stake in Powin Energy, adding to about $3m in seed funding obtained over the previous three years.

The company initially struggled to win projects in US utility and commercial and industrial-scale energy storage markets, Lu admits. But the Intel deal seems to have signalled a change in fortune.

Last month, for example, Southern California Edison selected Powin Energy for a 2MW, 8MWh project in Irvine, California, which is due to be commissioned by the end of December, using Chinese-made prismatic batteries.

Powin Energy has also been awarded a 1MW, 1MWh project with Bonneville Power Administration and National Renewable Energy Laboratory, which is due for delivery in February or March 2017.

“Aiming for 75 to 100MWh”

The systems integrator is now “aiming for 75 to 100MWh” of capacity to be installed in 2017, Lu said.

Around 75% of that volume is likely to be installed in the US, he said, and almost all of it will be stationary storage. Powin Energy can call on up to 200MWh a year of production capacity in China, said Lu.

The company is now seeking additional investment to fund its growth, targeting mostly Chinese backers with a fundraising target of between $5m and $12.5m.

The funds should be enough to take the company into positive cash flow within two years, Lu said.

Being an awards finalist at today’s US version of the Energy Storage trade fair, alongside prestigious entries such as the Stone Edge Farm Microgrid featuring technology from Tesla and ESS, certainly won’t hurt its chances of succeeding.

Also in this week’s newsletter headlines: the European Environment Agency, China Energy Storage Alliance, Siemens and more. Get your free copy now.


The utility veteran’s choice of energy storage

Utility veteran Michael Niggli's decision to join the board of flow battery maker ESS is a vote of confidence for long-duration storage. Pic: ESS.

Utility veteran Michael Niggli’s decision to join the board of flow battery maker ESS is a vote of confidence for long-duration storage. Pic: ESS.

By Jason Deign

An executive appointment last month has signalled increasing confidence in the ability of flow batteries to tap into the promising market for long-duration energy storage.

Michael R Niggli, the former president and chief operating officer of San Diego Gas & Electric (SDG&E), joined the board of all-iron flow battery maker ESS Inc. amid a growing focus on storage applications exceeding four hours of duration.

“As the renewable energy trend continues to reach penetration levels of 25% to 35% and potentially well beyond, it’s evident that the impact on local distribution networks, and the entire grid, is going to be pretty profound,” Niggli told Energy Storage Report.

“That suggests there is a growing need for need for medium and long-duration storage.”

Electrical energy storage’s current focus on short-duration applications, such as frequency response, is partly a consequence of the still relatively low penetration of renewables in most grids and a need for ancillary services. 

Longer-duration tasks

Going forward, however, Niggli said the greatest opportunity for financial returns was in longer-duration tasks.

Studies forecast energy storage could deliver USD$250bn in benefits across 17 different applications in the next 10 years, he said. Of this, $205bn represented opportunities that could be tapped through flow battery technologies.

“I’ve seen figures that suggest the crossover point between [short- and long-duration] technologies is rapidly approaching and the potential for flow batteries to achieve this point is high,” said Niggli.

There are good reasons to go along with this view.

Although there are theoretically a number of different technology categories that can deliver long-duration storage, many of the alternatives to flow batteries suffer from drawbacks. 

Lowest-cost resource

Pumped hydro, for example, is by far the most widely used and lowest-cost resource for long-duration storage but suffers from high capital expenditure requirements and location and permitting restrictions.

Furthermore, the cost of pumped hydro is probably already as low as it could get, and costs could in fact go up in the future as suitable sites get harder to find.

Similar problems face compressed air energy storage, along with the fact that its use so far has been restricted to relatively few projects around the world.

Another potential long-duration contender, thermal energy storage, similarly seems to be having a tough time gaining mainstream acceptance.

In contrast, flow batteries’ similarities with traditional battery systems are increasingly making the technology a target for developers keen to provide electricity storage services with longer-duration capabilities. 

Suited to distributed applications

Another bonus for flow batteries compared to pumped hydro, compressed air or thermal energy storage is that they are well suited to distributed applications.

Research suggests these will become the norm in the near future, and they are ones that frequently demand a combination of energy and power delivery that flow batteries seem highly qualified to offer.

And on levelised cost of storage (LCOS), flow batteries are well qualified to compete with mainstream battery options such as lithium-ion.

“Flow batteries can absolutely beat the cost of lithium-ion on LCOS for longer-duration storage applications,” Niggli said.

“ESS’s all-iron flow battery, in particular, can dramatically lower the levelised cost of storage with its safe and scalable chemistry.”

Nevertheless, there are lingering concerns over the safety of some flow battery chemistries. Others, such as those based on vanadium, could be susceptible to materials shortages when manufactured at scale.

These concerns about safety and cost led Niggli to join a team developing an all-iron electrochemistry instead of other flow battery variants. “They’re solving the right problem,” he said.

“I was very intrigued by the fact that [the batteries] are entirely benign.” 

Lower storage costs

As well as insulating ESS against the possibility of reputation-damaging safety incidents, the all-iron chemistry means raw materials are cheap and easy to come by.

This translates into lower upfront and operating storage costs, and greater scalability.

Niggli said he took several additional factors into account, including the safety of the inherent design, with no chance of adverse chemical reactions or fires, and ESS’s zero footprint from a hazard and environmental standpoint.

Finally, said Niggli: “The ESS folks have a very strong founding team and a robust and growing intellectual property portfolio. That was important to me.”

Niggli’s focus on executive excellence is hardly surprising given his own pedigree. 

Curriculum includes senior posts

Besides leading SDG&E, his curriculum includes senior posts at Sempra US Gas & Power, NV Energy, Sempra Generation, Nevada Power Company, Sierra Pacific Resources and Entergy Corporation, among others.

A power engineering graduate from San Diego State University, he has also authored many articles on the utility business and provided expert testimony before legislative committees and public service commissions.

Having been in a buyer’s position for products such as the ESS flow battery means Niggli is uniquely placed to understand what might motivate utilities to choose a given long-duration storage option.

And he clearly thinks there is potential for success at his new corporate home.

“The utility business has been around 100 years but this is probably the most exciting three years we’ve ever seen and the deployment of energy storage is at the heart of this dramatic rethinking about the utility business model,” he said.

“I expect the next five to 10 years will be even more exciting.”

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What does the PV glut mean for energy storage?

Solar panel pricing is at an all-time low due to overcapacity in the market. Image: SunPower.

Solar panel pricing is at an all-time low due to overcapacity in the market. Image: SunPower.

By Jason Deign

Present forecasts of PV-and-battery adoption could end up significantly underestimating true adoption levels by not taking into account a massive glut in solar capacity.

Josefin Berg, senior analyst for solar demand at IHS Technology, told Energy Storage Report there are currently “several gigawatts’” worth of new solar panels worldwide that nobody wants to buy because of excess supply.

IHS alerted to the potential for manufacturing overcapacity in the PV market back in June, and has forecast there will be a shakeout among what few manufacturers are still left from previous oversupply and consolidation periods.

For now, however, as EnergyTrend noted: “Prices across the PV supply chain have collapsed to new lows in the second half of 2016 due to plunging demand.”

What will happen to the excess PV capacity currently sitting on the shelf is unclear, but in Australia CleanTechnica earlier this month predicted it would lead to a “big solar boom.” 

Tripling utility-scale PV

The forecast came just days before the Australian Renewable Energy Agency announced 12 new large-scale PV plants, tripling the country’s utility-scale PV capacity overnight.

Meanwhile RenewEconomy reported on Curtin University research indicating that solar plus storage could become cheaper than Australian grid suppliers as soon as next year. Could the same happen elsewhere?

It seems eminently plausible if PV panels are being sold at cost or less.

Whether the customer is a large-scale PV project developer or an environmentally conscious homeowner, being able to buy high-quality panels for next to nothing will not only help cut the cost of energy but also free up cash.

For large-scale plant developers, cutting the cost of energy may be all that is needed, particularly in highly competitive markets such as Chile or Dubai. 

Adding battery storage

In many other instances, however, a significant cut in the budgeted cost of solar panels might allow the asset owner to consider adding battery storage into the equation.

The storage option is even more attractive given the fact that battery costs are plummeting, too.

Earlier this month Tesla, which already has one of the cheapest battery systems on the market, cut the price of its commercial and utility-scale Powerpack product by 5%.

There are reasons to suspect the main impact of record-low PV prices will be in the distributed energy market, though.

This is partly because utility-scale developers tend to be pickier about their modules, since they need to be sure they can maximise the profitability of a project over its full lifespan. 

Residential solar market

Hence they may still be willing to pay a slight premium for higher-quality PV panels, leaving the very cheapest products to find their way onto the residential solar market, where customers might not be quite as choosy.

An unexpected boost to residential solar generation could add impetus to a growing trend for distributed storage, highlighted by Bloomberg earlier this month.

And the distributed storage market is likely to be further helped by an increasing influx of cheap second-life batteries from electric vehicles, although admittedly this is not expected to happen for a couple of years.

Taken together, though, the price reductions that could come about from today’s PV oversupply plus ongoing cuts in the cost of batteries seem increasingly likely to remove financial barriers to solar-plus-storage adoption.

Any faster-than-expected reductions in solar-plus-storage pricing could put pressure on regulators. 

Legislation is still challenging

Although some markets (most notably Germany) have put in place support mechanisms for solar-and-battery adoption, in many places the legislation around distributed energy storage is still challenging.

Legislators may want to keep it that way since, as the Curtin University research makes clear, once solar plus storage costs fall far enough below the cost of grid power there is a real risk of users cutting their utility bills to a bare minimum.

The Curtin University researchers estimate this could slash AUD$100m off annual utility revenues in West Australia alone, effectively reducing the funds available to maintain the grid.

However, it is difficult to see how obstructive regulation could benefit energy markets in the long run, particularly if there is a need to increase renewable penetration as part of carbon reduction efforts.

Thus regulators will need to think carefully about how they adjust legislation to cope with increasingly decentralised energy production and storage, while at the same time safeguarding the grid. And they may not have much time to do it.

Also in this week’s newsletter headlines: Tesla, Southern California Edison, Sungrow-Samsung and more. Get your free copy now.

Could the grid stymie India’s storage plans?

Pumped hydro might not be the best option for long-term storage in India (pic: animam.photography).

Pumped hydro might not be the best option for long-term storage in India (pic: animam.photography).


By Jason Deign

Doubts over the strength of the grid have called into question a USD$17.2bn plan to build 10GW of pumped hydro storage in India.

Central Electricity Authority chairman SD Dubey unveiled the five-to-six-year pumped hydro programme last month.

The administration would be adopting pumped hydro to store excess power from India’s growing renewable energy sector because the storage medium is cheaper than batteries, he said.

But being able to store energy in pumped hydro reserves depends upon getting it to the dams in the first place.

And observers have questioned whether India’s grid is up to the task, particularly since it is already groaning under the impact of solar energy. 

Curtailing solar power

Last week, for instance, reports surfaced of the Tamil Nadu Generation and Distribution Corporation (Tangedco) curtailing solar power because the grid could not cope.

“The Tamil Nadu Electricity Regulatory Commission has asked the Tamil Nadu Generation and Distribution Corporation to technically justify why it asks solar power plants to back down from the grid,” The Hindu Business Line reported.

“Tangedco argued that it had only asked solar plants to back down when grid stability was affected,” said the report.

“Recently, the Solar Power Developers Association had also written to the MNRE [Ministry of New and Renewable Energy] and Tangedco expressing concern over 50-100% ‘generation curtailment’ during peak generation periods.”

The weakness of India’s grid could end up being a powerful argument for installing distributed battery storage instead of relying on large pumped hydro projects, said a respected Indian energy analyst.

“Pumped storage will be idling”

“For pumped storage, the power generated from solar plants has to be first evacuated to the grid, after which it can be converted to hydraulic head,” said Madhavan Nampoothiri, founder and director of RESolve Energy Consultants.

“In a country like India, where the ‘backing down’ happens because the grid infrastructure is not sufficient, pumped storage will be idling since this solar power is getting wasted and not reaching the grid in the first place.”

In contrast, he noted: “Battery storage can be sited within the solar power plant. In case of in-situ storage, the power can be stored in the battery during peak hours, and gradually evacuated when the grid can handle it.

“In this sense, battery storage has a distinct advantage over pumped storage, as long as evacuation constraints remain.”

Pumped hydro has several other apparent disadvantages compared to batteries. The first is that it is highly location-specific. 

Suited to the mountainous northeast

From a purely geographical perspective it would seem pumped hydro would be most suited to the mountainous northeast of the country.

This would potentially put it some distance away from India’s top solar and wind resource areas in the west and south, exacerbating the stress on the national grid.

Such distances could also lead to major transmission losses, reducing round-trip efficiency.

Even assuming a solid grid and relatively low transmission losses, however, the fact remains that the capital costs for pumped hydro are currently about as low as they will get, while batteries are predicted to get significantly cheaper.

In particular, the second-life battery effect is expected to slash the cost of lithium-ion batteries significantly in the next three or four years. And India has the world’s biggest lithium-ion battery right on its doorstep, in China. 

Cheap second-life batteries

Given the scale of lithium-ion production in China it is entirely likely the Indian market could soon be swamped with cheap second-life batteries from its northern neighbour.

How far second-life products could eventually decrease the cost of batteries remains to be seen, of course.

However, it is possible that in a couple of years battery costs in India could reach a level that makes solar-plus-storage a option not just for plant owners wanting to avoid curtailment but also for industrial and commercial-scale users.

If this happens, batteries could easily pull ahead of pumped hydro as a large-scale storage medium since the planning, permitting and construction process for battery plants is potentially much easier than that for reservoirs and pipes.

Given this mid-term outlook, there are good reasons to suspect that India’s big plans for pumped hydro could end up joining a list of other major development programmes the country has failed to bring to fruition.

The main difference between this and grand schemes such as India’s national broadband rollout is that if it fails then at least there might be an alternative that allows the country to still enjoy the benefits.

Also in this week’s newsletter headlines: Genex, Axiom Energy, Tabuchi America and more. Get your free copy now.

Study: distributed storage is going to take over

Residential solar could become energy storage's heartland in a few years, according to research from Bloomberg New Energy Finance. Pic: SunPower.

Residential solar could become energy storage’s heartland in a few years, according to research from Bloomberg New Energy Finance. Pic: SunPower.

By Jason Deign

A major study published last week not only forecasts massive energy storage growth but also predicts a seismic shift in the structure of the market.

The Global Energy Storage Forecast, 2016-24, from Bloomberg New Energy Finance (BNEF), predicts about 45GW and 81GWh of storage could be installed by 2024, representing an investment of USD$44bn.

The figure excludes pumped hydro capacity, of which there is currently 104GW according to 2012 US Energy Information Administration data cited by the American Energy Storage Association.

Perhaps more importantly, though, the Forecast shows worldwide behind-the-meter storage overtaking utility-scale applications between 2020 and 2021.

By 2024, predicts BNEF, 66% of all storage will be behind the meter, compared to just 16% at present.

This estimate may prove conservative

Energy Storage Report can reveal that even this estimate may prove to be highly conservative since the Forecast does not take account of the impact of second-life batteries likely to flood the market from 2020 onwards.

The second-life effect, which could reduce lithium-ion battery costs to as little as $49 per kWh in a couple of years, was only uncovered in a separate BNEF study a fortnight ago.

Forecast author Logan Goldie-Scot told Energy Storage Report that this factor had not been incorporated into his global market sizing calculations and would be included in a second phase of the research.

Second-life batteries could further skew energy storage market dynamics to behind-the-meter applications.

Colin McKerracher, manager for advanced transport insight at BNEF, said “behind the meter is the most promising application” for second-life batteries, “so residential will play a big role.”

A clear swing towards behind-the-meter storage

Even without taking into account the multiplier effect that second-life batteries could have, a clear swing towards behind-the-meter storage within the next half decade could carry profound implications.

The first and most obvious one is that future energy markets would seem increasingly unlikely to resemble those currently seeing a boom in grid-scale storage, such as California or the UK.

And they are even less likely to look like markets where the legacy energy model still prevails, which equates to most of the world.

Instead, a mere five years from now an increasing number of electricity markets will start to take after Germany and Australia, where a growing proportion of power customers are partially or totally disengaging from the grid.

The Forecast makes it clear that the move to behind the meter is all about energy independence.

“64% of all commissioned capacity in 2024”

“Behind-the-meter PV plus storage goes from being a niche application in 2016 to making up 64% of all commissioned capacity in 2024,” it says.

This trend threatens the energy sector status quo. Utilities could face a powerful new competitor in the shape of customers’ ability to service their own energy needs. And dealing with this competition might not be easy.

Consumer buying habits are hard to predict because they are only partly based on price.

In many parts of Australia and Germany, for example, the business case for residential PV and storage is still marginal at best, but that has not deterred homeowners from installing systems for a range of other reasons.

Hence utilities may find it hard to predict with certainty if and when a stampede towards solar plus storage might hit the market. Nevertheless, how they deal with the situation could be important for their future success.

Distributed generation with storage

In Spain, for instance, the major utilities have earned the contempt of many consumers by seeming to have a guiding role in national laws clamping down on distributed generation with storage.

But in Germany and Australia, a handful of far-sighted utilities such as E.ON and AGL Energy are attempting to head off the grid defection trend by providing solar-plus-storage systems of their own.

This seems like a smart move, potentially allowing the utility to maintain its customer relationships and deliver other value-added services down the line.

Maintaining that customer relationship could emerge as a critical task for utilities since one of the big problems with partially disconnected customers is that their grid requirements will be difficult to predict and control.

For the sake of grid stability, most utilities and network operators would want to have a say in how behind-the-meter storage assets are used, ideally for example aggregating them to form virtual power plants.

Storing excess solar energy for customers

Some could even go as far as MVV Energie in Germany, and create a grid-scale battery plant to store excess solar energy for residential customers. And it is not just utilities that could be affected by the behind-the-meter trend.

If the future of energy storage lies in homes and commercial or industrial installations, rather than on the grid, then that calls into question the prospects for a host of current start-ups commercialising grid-scale battery products.

“There will be swathes of lithium-ion batteries deployed,” said Goldie-Scot. “The challenge for alternative technologies is how do you compete with the large lithium-ion manufacturers if you can’t compete on scale.”

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The second-life threat to non-lithium batteries

Second-hand batteries from electric vehicles such as buses could drastically cut the price of lithium-ion-based storage, research predicts. Photo: www.animam.photography

Second-hand batteries from electric vehicles such as buses could drastically cut the price of lithium-ion-based storage, research predicts. Photo: www.animam.photography

By Jason Deign

Lithium-ion’s potential to dominate the stationary storage battery sector may be stronger than previously thought, according to the implications of a new study.

Research published last week by the analyst firm Bloomberg New Energy Finance (BNEF) shows a glut of second-hand lithium-ion (Li-ion) batteries from the auto industry could cut battery storage costs significantly.

By 2018, says Used EV batteries for stationary storage: second-life supply & costs, the cost of repurposing batteries for second-life applications could go down to as little as USD$49 per kWh.

This compares to a cost of roughly $300 per kWh for new batteries at the moment, and $160 for lowest-cost battery chemistries such as the zinc hybrid cathode technology being commercialised by Eos Energy Storage.

Given that BNEF expects around 10GWh of capacity from used electric vehicle batteries to be entering into the stationary storage market by 2025, second-life applications could deal a real blow to the prospects for non-Li-ion chemistries.

“This does move the goalposts”

“This does move the goalposts for what an energy storage technology will have to compete with,” admitted Colin McKerracher, manager for advanced transport insight at BNEF.

“The sheer scale of manufacturing puts [Li-ion] pretty far ahead for quite a while. We believe it will significantly lower the average cost of stationary storage projects.”

Currently, BNEF estimates repurposing second-hand batteries costs about $100 per kWh, or a third of the cost of new batteries. This cost will roughly halve in the next two years due to economies of scale and improved learning.

Present second-life volumes are low, however, and will remain so until a significant number of electric vehicles are on the road with batteries that need replacing.

Nevertheless, between now and 2015 BNEF forecasts 95GWh of storage capacity will come out of the electric vehicle market. That is 60 times the world’s current installed electrical energy storage capacity, McKerracher said.

Volumes affecting price by 2020

“Around 2020 we do expect volumes to come on and affect the price of batteries going into stationary storage,” he said.

Ultimately up to around a third of all used electric vehicle batteries could end up being used for stationary storage, BNEF predicts.

Just how significantly this cut-price capacity might affect the dynamics of the stationary storage industry will depend on a number of factors.

The first is that the price reductions will only apply to batteries, which themselves are only a part of total energy storage system costs.

This means technology developments in other areas, such as inverters, could also have a similar or greater impact in overall system costs.

Acceptance of second-life batteries

All other things being equal, though, second-life batteries would still contribute to significant price reductions. Potentially more important is what kind of acceptance second-life batteries will have in the market.

This depends not just on cost but also on factors such as performance and warranties. On performance, said McKerracher, the current generation of electric vehicle batteries is exceeding expectations.

“So far batteries have held up well, with reduced degradation,” he said. “Most of what we are forecasting is reduced capacity, not catastrophic failure.”

Regarding warranties, it is still too soon to tell what kind of guarantees manufacturers will offer on second-life batteries.

However, McKerracher hinted that carmakers would most likely play it safe in order to avoid problems with products carrying their brands. This could mean some manufacturers might shy away from repurposing.

Tesla, for example, is most likely to prefer recycling batteries to feed demand for new Powerwalls. A number of other car firms, though, seem more committed to going down the second-life route.

The price of new batteries 

None of this would seem a major barrier to second-life battery adoption in stationary energy storage. The one thing that could ultimately stymie the second-life market, though, is the price of new batteries.

Beyond around 2022, it is possible that reductions in the price of new batteries might wipe out the cost advantage of using second-life units. But there is a great deal of uncertainty over exactly when that might happen, BNEF notes.

And the decision over whether used batteries should be repurposed for second-life applications or recycled into new units may depend on the evolution of commodity prices for materials such as cobalt and lithium.

“If commodity prices do not rise, recycling would remain a cost for battery owners and the second-life market could grow significantly, with repurposers being paid to take batteries,” said the BNEF report.

For now, though, “the second-life industry must establish itself soon before new battery prices drop even lower and begin to compete,” said BNEF.

Most auto companies are indeed taking an active interest in second-life applications. “In the last six months there have been a lot of announcements,” McKerracher said. “I expect we will see a lot more of that.”

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