General Electric is significantly scaling back production of its sodium-ion Durathon batteries, a move that comes amid what the company says is a slow-to-develop market for grid-scale energy storage -- or, at least, not as fast-growing as it hoped it would be by now.
GE announced that it’s reassigning about 400 workers at the Schenectady, New York plant to other operations, leaving only about 50 to staff the facility, according to local newspaper reports. The plant, built at a cost of $170 million, has been idled since September due to equipment failure, but this week’s announcement appears to be more permanent in nature.
GE isn’t abandoning its Durathon batteries, however. "GE is still committed to the energy storage business," GE spokesperson Nik Noel said in a statement this week. "Our goal is to build a long-term product and commercial strategy that better serves our customers' evolving energy storage needs."
But GE certainly hasn’t seen the kind of market growth that it may have hoped for when the plant opened in 2011 with a visit from President Barack Obama. Back then, GE CEO Jeff Immelt said the company hoped to achieve $500 million in revenues by 2016, and $1 billion in revenues by 2020. The next year, GE announced it was hiring more workers in hopes of tripling production at the facility.
Since then, however, GE has seen slow sales of its sodium-nickel-chloride Durathon batteries, originally developed for train locomotives. As we covered in late 2013, most of GE’s sales were of smaller-scale units to back up cellphone towers and other telecom sites, with about $63 million in orders placed as of 2012. GE has also put 50 kilowatt-hour versions of its Durathon batteries to use in a few wind power deployments, and in 2013 it announced a 500-kilowatt-hour system to back up the nonprofit Discovery Science Center in Santa Ana, Calif. Last year it announced a partnership with Komatsu to put its batteries in heavy mining vehicles.
Prescott Logan, general manager of GE Energy Storage, told me in 2013 that GE had deployed multiple megawatts of its Durathon batteries in projects ranging from microgrids tosolarenergy storage. But the company hasn’t publicly disclosed details of these projects.
GE claims that its Durathon batteries are half the size and one-quarter the weight of the equivalent large-format lead-acid batteries it can replace in industrial and grid settings, with longer life spans and safer operating characteristics than competing lithium-ion batteries. But GE hasn’t provided any hard details on the cost of its batteries or how well they’ve performed in real-world settings.
Even so, GE’s slowdown in Durathon production shouldn’t be taken as evidence that it’s giving up on the technology, Ravi Manghani, senior energy storage analyst with GTM Research, noted. Rather, it's a sign of how the utilities and other large companies that are investing in grid-scale batteries today view new battery chemistries with some skepticism -- and that reassuring them of their quality can take years.
"New emerging technologies such as GE's sodium-nickel-chloride Durathon battery are in very early stages of development," he said. "This news on GE's downsizing is more likely a reflection on all emerging battery technologies, rather than just the sodium-nickel technology alone. In order to scale up, battery vendors need to prove their technology, and not a lot of investors will take a chance on something that’s still emerging or unproven."
"Proving technology and business bankability can take several years of real project data, in order to make a case to potential customers, who in many cases are conservative utilities," Manghani continued. "GE, being a multinational industrial conglomerate with vast resources and an international presence, is more likely than other companies to succeed, as it doesn't have to prove business bankability -- as long as the technology works."
Bill Acker, executive director of the New York Battery and Energy Storage Technology Consortium (NY-BEST), said in a Thursday interview that GE's decision appears to be centered on market issues, rather than technology issues.
“My take on this is that GE is looking at the markets, and looking at how they’re positioned within the market, and is adjusting so that they’re not building inventory too much in front of the market growth,” Acker said. “I don’t view this as any sort of negative, or any readjustment of the future expectations of this market -- and I think that’s consistent with what we’ve heard from GE.”
GE also picked go-to-market partners for its Durathon batteries back in 2012 that haven’t panned out. Its plan to use Xtreme Power’s battery management software in projects faltered after that startup went bankrupt and saw its technology assets purchased by German startup Younicos. And while GE said it would be working with Arista Power on grid integration control systems, that Rochester, New York-based company has been struggling financially over the past several years, and the companies haven’t announced any projects together.
GTM Research forecasts robust market growth for battery-based energy storage for both grid-scale and behind-the-meter applications, with a particular focus on pairing batteries with solar power. Several states are pushing the market along, including California with its mandate to deploy 1.3 gigawatts of grid storage by 2022, as well as New York, where utilities like Consolidated Edison are building grid-scale battery incentives and procurements into their future plans.
Even so, “to fully open and really capitalize on that market, particularly here in the United States, there’s still a lot of work to be done, in terms of getting the market rules right...[and] creating a situation where the values of these devices can be monetized,” Acker noted. “We’re starting to see orders, particularly associated with the work in California. But it’s important to bear in mind that those are all generally still in the future.”