by Julian Spector
October 23, 2019

Massive battery plants no longer surprise based on size alone. But in the last week, we learned of two new storage plants that break serious new ground in terms of market and technological advancement.

New York regulators approved a 316-megawatt battery plant that would replace 16 down-on-their-luck combustion turbines in New York City’s iconic Ravenswood Generating Station. Not the first battery peaker to get moving, as we’ve seen a few in California and Arizona, for instance. But this would be the first major example in the Northeast, and the first to answer New York Governor Andrew Cuomo’s call to clean the air and the grid by surgically replacing the oldest and dirtiest peakers with zero-emission batteries.

A few days later, technology innovator Highview Power revealed it is developing a 50-megawatt/250-megawatt-hour storage facility in a retired thermal plant in the northern United Kingdom. Like Ravenswood, it’s Extreme Makeover: Power Plant Edition. This is pathbreaking for storage plants in the U.K., but particularly noteworthy because it’s a weird new technology: cryogenic air storage, which involves liquefying gas and pumping it into tanks.

Our skeptical Squared readers know not to put too much stock in early-stage developments, so I’ll emphasize that neither of these projects have firm contracts or offtaker agreements; they remain ideas in search of a financial reason to assume a physical form.

But ideas can move markets (which are, themselves, ideas), so this week’s Storage Plus will explore what changes these two projects will effect and what they reveal about the state of the storage market today.

Gas-to-battery pipeline

We’ve known for a while that New York leaders want to move their oldest and dirtiest peakers to battery capacity. Besides the greenhouse gas implications, these air pollution offenders represent a major environmental justice concern, because they almost invariably dump particulates into low-income or minority neighborhoods.

The state government has been working on an air-quality rule to push things in that direction, but the rule has not yet been solidified. That regulatory backdrop likely contributed to the Ravenswood project calculus; developer LS Power just moved faster on getting construction approval than the other plant owners that will be affected.

The air-quality regulation helps crystallize an economic opportunity: to turn an underutilized plot of land, where most of the turbines have ceased to operate, into a revenue-generating opportunity.

A word about LS Power: It’s one of those firms that validates the adage that the less you hear about them, the more powerful they are. This is a privately owned firm that develops, owns and operates billions of dollars' worth of grid infrastructure. From its well-capitalized and farsighted vantage point, LS can step back from the Silicon Valley hype cycle and calculate exactly where batteries will make a good long-term investment.

It helps that the company owns quite a few thermal power plants. This eliminates two major barriers to developing storage in New York: real estate and interconnection. Fire safety permitting may still be a headache, but it will be more straightforward in an industrial space purpose-built to hold batteries than it would be to retrofit batteries into a dense urban block.

As a result, LS Power has the makings of a significantly cheaper storage developer than a firm starting from scratch with a map of New York City. And that will be a delightful advantage should it choose to compete in utility Con Edison’s energy storage RFP, which just happens to have a final deadline in November. The target: 300 megawatts of capacity.

This is a development in the mold of Vistra’s California projects, in which that independent power producer reimagined outdated generator assets as land and interconnection for new battery plants. Like LS Power, Vistra doesn’t bother ginning up buzz in the trade press or positioning itself as a thought leader; it just drops major projects out of the blue like an electrical Beyoncé.

All of which makes one wonder why so few power plant owners have actually pulled off this transition. There are plenty of old and underutilized plants around the country. It stands to reason more than a handful could present a worthwhile investment opportunity, if pitched by people who understood the storage market and its opportunities.

Long-duration leader?

Of all the myriad eccentric long-duration storage technologies vying to excel where lithium-ion falls short, cryogenic storage may not have been the obvious pick to reach mega-plant status first.

To be sure, Highview Power has not yet actually accomplished the feat. It just said it’s working on it, which is technically easier to do than building it. The announcement, prior to finalizing a contract, serves to alert potential offtakers of the opportunity. We can only speculate on how necessary that outreach may be.

Nevertheless, having a site secured and a specific large-format project in mind jumps Highview ahead of all the other technologies that have been laboring in this category for years.

Flow batteries have been at it far longer, but even with a decades-long head start, they have failed to reach the kind of scale Highview proposes. The exception to this observation is China, where Rongke Power reportedly is building an 800-megawatt-hour vanadium redox flow plant. I’ll let that exception stand, based on the insurmountable differences between the electrical system there and power markets farther west.

Take ESS, one of the few U.S. flow vendors that has not gone bankrupt. It is quietly chipping away at the market obstacles, racking up runtime for its early demos. It also invited Munich Re to vet the technology, and the re-insurance giant now offers a policy protecting customers from the risk of ESS going insolvent. When I checked in with ESS at Solar Power International, company reps told me they’re aiming to do a plant 5 megawatts or larger in the next six to 12 months. No word yet on when 100-megawatt-hour systems may arrive.

Form Energy, commercializing an unidentified electrochemical system, moved up its decade-long go-to-market timeline to target the next five years. It’s still much too early to talk about sites and specific project sizes.

Energy Vault, the buzzy block-stacking storage startup, is building its first commercial system, which is supposed to clock in at 4 megawatts/35 megawatt-hours.

All of this is to say that it’s hard to find a long-duration startup even talking about the level of ambition that Highview declared this week, which leads me to two complementary propositions: Remain skeptical until something concrete happens, and identify what’s different about Highview that could support its faster pace of deployment.

The former is just good policy when considering any unconventional storage technology. The latter has a lot to do with global supply chains and the locus of innovation.

"Nothing unproven"

At the risk of oversimplification, I’ll say that Highview Power is not a technology innovator so much as a business-model innovator. Its staff did not invent a new technique for storing energy. They figured out how to piece together readily available industrial equipment to perform a task nobody thought worth performing until recently.

“There is nothing unproven in this technology,” CEO Javier Cavada told me this week. “Every single stage of this project has been proven for decades.”

So much so that Highview was able to lure Cavada away from a leadership position at the very old and very stable engine company Wärtsilä. When I asked Cavada why he took that career risk, he rejected the premise of the question.

“It was the safest bet I could have [made] in my career,” he said. Confidence is a valuable trait in a CEO.

In any case, Highview’s growth trajectory looks different from the other unusual storage technologies. The conventional story is, as you ramp manufacturing capacity, you unlock incremental cost declines due to economies of scale. But Highview’s unit economics improve at the 50-megawatt level by accessing the existing supply chain of turbines at the 50-megawatt scale. That’s a more dependable route than hoping enough customers line up to justify expanding a pilot factory line.

The closest corporate strategy to this would be Hydrostor, the Canadian company that shares Highview’s goal of decoupling compressed-air storage from specific geologic formations, thereby making it more widely accessible.

Hydrostor’s CEO told me early this year that he was bidding on plants as big as 300 megawatts with 12 hours of duration. Like Highview, Hydrostor adapts equipment from other industries, but it draws more from mining. From first principles, it would seem that a storage design that involves excavation and doing things underground would come at a cost premium compared to setting up tanks on the earth’s surface, but I’m open to being proven wrong on that one.

The arms race among unconventional storage vendors is just beginning, and that's a very good thing for the grids contemplating massive renewable penetration in the next few years.