by Julian Spector
August 23, 2018

The air really does smell nice in places that burn no fossil fuels for electricity.

I recently went on vacation to give my mind a break from fiending on this energy transition thing, and ended up in a remote sub-Arctic island powered almost entirely by geothermal and hydropower.

I couldn't find a clean energy tour of Iceland, but any number of firms will take you to all the Game of Thrones filming locations.

In any case, I’d recommend sipping some lungfuls of air that hasn’t seen a coal plant for several hundred miles. It provides a literal taste of the distant end point of this decarbonization trend that we talk about all the time.

Then I got home and saw the Environmental Protection Agency advocating a policy of higher premature mortality from power plant air pollution. One must always consider both sides of a matter.

Of interest amid the coverage of the Trump administration’s replacement for the stillborn Clean Power Plan was this tripartite factoid from Brad Plumer at The New York Times:

  • By the government’s accounting, Obama's CPP would have reduced coal generation 29 percent by 2030.
  • With no climate regulations, market forces alone would drive coal generation down 23 percent in that time.
  • The administration plan would save some of that coal, but its production would still fall 20 percent.

Left to its own devices, the power sector is weaning itself off coal already. As we mentioned on the last Storage Plus, all those retired coal plants could be delightful locations for the battery storage mega-plants of the near future. 

The future is closer than you think

Those massive storage plants may start materializing sooner than many people expect.

Next time someone asks you how fast energy storage is growing, rock out with this slick stat: Lithium-ion deployments are on track for 55 percent annual growth between now and 2022.

That’s from a recent study on battery pricing from analysts Mitalee Gupta and Ravi Manghani, which I wrote about here.

These sorts of projections are tricky, because so much will change in that time. Historically, though, storage predictions have tended to underestimate the speed of price declines and deployment. This will be a good one to keep on file and revisit in a few years.

Also notable in that report: the storage version of Swanson's law, which charts solar price declines as deployment increases.

For every doubling in battery production, the report notes, cost comes down between 5 and 8 percent. Cell production capacity is on track for fourfold growth by 2025, based on announced manufacturing expansion plans.

Big moves behind the meter

For all the growth expected in the near future, utility-scale storage has had a lackluster year so far in North America.

After last year’s excitement around the Aliso Canyon surge, this year has seen small projects, and few of them. It’s been quiet enough that a customer-sited battery just tied two front-of-the-meter projects for largest power capacity installed in 2018.

The system, at a petrochemical facility in Ontario, wields 10 megawatts — increasingly a small amount for utility-scale, but unprecedentedly massive for C&I.

The size suggests that Ontario’s commercial demand management market can support far bigger projects than the early U.S. markets for C&I storage. Even more impressively, it can do that without a generous subsidy program, or stacking utility capacity contracts.

This project, developed by Convergent and supplied by IHI Energy Storage, tackles the province’s Global Adjustment charge, which hits large commercial customers for consumption during five one-hour-long system peaks in a year.

Remember Global Adjustment, because it’s already popping up frequently. Stem just raised a CAD $200 million financing fund to tackle it for Ontario customers. Fluence has an even bigger system heading into Sault Ste. Marie.

Will the Canadians take an American concept and improve upon it, like they did with reasoned democratic debate and carbon taxes? Or will the translation come out a little funky north of the border, like bacon and football?

Stay tuned for the answer. In the meantime, it’s pretty clear that anyone looking to make a living off commercial storage should summer in Ontario while they wait for New York and Massachusetts to turn their road maps into market opportunities.

Battery investment watch

The hunt for the next best battery is alive and well in Silicon Valley.

Alameda-based Sila Nanotechnologies raised another $70 million in venture funding to scale up its energy-dense silicon anode product to replace conventional graphite anodes in lithium-ion batteries. That brings the company up to a $350 million valuation, according to PitchBook.

That’s a healthy sign for the industry, because battery startups have swallowed hundreds of millions of VC dollars over the last decade with little to show for it. The basic science involved demands many grueling hours in the lab, and then there's the trick of translating successful small-batch batteries into industry-grade production.

Survivors of the early cleantech VC bloodbath have taken a more cautious approach. Sila aims to supply its anodes to OEMs, saving it the risk of building a $300 million factory and then rolling the dice.

Successful battery improvements could reap windfall profits in the electric-vehicle space, which vastly outsizes the grid storage market. As such, the sums of money flowing into battery materials lately make downstream stationary storage funding rounds look like tooth fairy money.

2017 was relatively quiet, with less than $100 million in disclosed alternate battery investments. In just the first half of 2018, though, total investment approached $400 million.

Volkswagen sank $100 million into QuantumScape, a secretive solid-state startup. A consortium including Renault/Nissan/Mitsubishi and Samsung SDI invested $65 million in Ionic Materials (Samsung also participated in the Sila round). Siemens, Saft and others raised $233 million for a solid-state venture.

File these startups under high risk/high reward. It’ll be some years and hundreds of millions of dollars more before we know if Sila can fulfill its claims of 40 percent capacity improvement. If it does, it will have a massive EV market to serve.

Battery bonanza?

Anyone with a stake in the storage industry’s future should have their eyes on the California legislature over the next week, as lawmakers come down to the wire to pass a 100 percent clean energy law.

SB 100 would raise the renewable portfolio standard to 60 percent by 2030, and require completely carbon-free electricity by 2045. Lawmakers have until the end of the month to pass it, but I’m hearing the vote could come as soon as Monday.

If this passes, as currently seems likely, it would cement California as the leading battery market for years to come. Energy storage would have to take on the role that natural-gas peakers play now.

There simply aren’t other options ready to deploy at mass scale; pumped hydro is too hard to permit, carbon capture hasn’t reached commercial readiness, and small modular nuclear reactors face years of testing to even get licensed.

Granted, passage of SB 100 would be a powerful driver for new research on those and other alternatives, which means battery storage could face new competitors by 2045, but for now, lithium-ion has a remarkably clear lane in this race.

Also of value, if less monumental: SB 700, which would extend California’s storage incentives for five years, continues to advance and could reach a floor vote next week.