Tom Konrad, Ph.D.
In order to electrify transportation, well need batteries, with ultracapacitors and compressed air playing supporting roles. Based on cost, John has been making the case that the batteries for economical cars are more likely to be advanced lead-acid (PbA) than the media darling, Lithium-ion (Li-ion.) I generally agree, especially since recycling Li-ion batteries is an expensive and difficult process, although I see a future where both cars and oil are simply more expensive, and we have far fewer of them.
But transportation is only one application for energy storage technologies. Another is matching the electricity output of variable power sources such as wind and solar with demand, as well as providing standby power to accommodate sudden ramp-ups and ramp downs.
Storage for Grid-Tied Applications
Below is a chart I put together comparing the cost per kW (Power), cost per kWh (Energy) and Round-trip efficiency of a large range of technologies. Both axes are log scale. This slide will be part of a presentation I’ll be giving at Solar 2009 on May 15th. (I’ll also be on this panel on the 13th.) Technologies to the right can store energy cheaply, and are the best for matching variable energy output with demand. Technologies near the top deliver high power at low cost, and so are best for accommodating sudden changes in supply or demand on the grid. Larger bubbles represent higher round-trip efficiency, meaning that more of the stored power can be sent back to the grid.
There are many other important characteristics of storage technologies, such as cycle life, O&M costs, memory effects, response time, and size/weight, so the technologies which look best on this graph will not be the best for all applications.
Batteries: Mostly for Cars
It’s easy to note that lead-acid batteries dominate Lithium-ion batteries for grid tied applications: In a grid-tied application, the light weight of Li-ion batteries no longer makes any difference, and cost is much more important. More important, however, it’s also easy to note that neither the battery nor flow battery technologies are truly dominant in this context (note that I’ve lumped hydrogen electrolysis/fuel cell combinations (H2) with flow batteries in this context. The bubble hidden behind NaS is ZnBr, a Zinc-Bromide flow battery, being commercialized by ZBB Energy (ZBB).)
If I’d done this research a few years ago, I never would have recommended Vanadium Redox flow batteries (VRB) or Sodium Sulfur (NaS) in 2007, although a quick look at the chart makes clear why NGK Insulators (NGKIF.pk) is still selling NaS batteries while VRB Power declared bankruptcy not long after I sold it: NaS batteries produce much more power at the same cost. They also have the advantage (not shown here) that they are small enough to be moved, and so can be used to defer transmission and distribution upgrades in multiple locations over the life of the battery.
Lead Costs More than Salt, Water, or Air
When it comes to dealing with the large scale power for grid tied applications, the best technologies are the ones with the cheapest storage media. Thermal storage molten salt, while pumped hydro (PHES) uses water, and Compressed Air Energy Storage (CAES) uses air. Demand Response and Transmission do even better by shifting power use in time or space, and dispensing with a storage medium altogether.
The primacy of Demand Response and Transmission should not come as any surprise to regular readers, who will recall that Demand Response was the hero of the Texas Wind incident, while Transmission compares favorably to most storage technologies because it diversifies away many of the ups and downs of variable electricity supply and demand.
Pumped Hydro vs. Thermal Storage vs. CAES
Transmission is unfortunately difficult to permit and build, and demand response can only be used a few hours a year (at least until we get more responsive demand through smart grid investment.) This means that there will continue to be a large need for the three other forms of large scale, cheap energy storage. Unfortunately, all three can only be used effectively in special situations. Pumped hydro requires two adjacent reservoirs with a vertical drop between them, Thermal Storage works best with Concentrating Solar Power plants, especially in the tower configuration, and CAES requires an underground, air-tight cavern.
While reservoirs and caverns can be built, doing so erodes the economics of the technologies. It’s worth noting that the economics of pumped hydro vary widely depending on the location, and so the apparent advantage of CAES only holds in some cases; the locations of the bubbles are based on averages of the highest and lowest costs in the literature.
For investors who see opportunity in integrating renewable electricity into the grid, the media fascination with battery technology is an opportunity. They should focus on Demand Response and smart grid stocks such as EnerNOC (ENOC), Comverge (COMV), Itron (ITRI), Echelon (ELON), Telvent (TLVT), and RuggedCom (RUGGF.PK), Transmission stocks such as ABB Group (ABB), Quanta Services (PWR), General Cable (BGC), Pike Electric Corp (PIKE), ITC Holdings Corp (ITC), and Siemens (SI), before investing in traditional storage plays.
In many ways, this is fortunate, since Pumped Hydro, Thermal Storage, and CAES are all difficult for a stock market investor to get exposure to.
UPDATE: The full presentation comparing large scale energy storage technologies can be found here.
UPDATE 12/29/09- I came across better numbers for the cost of transmission, and updated the graphs here.
DISCLOSURE: Tom Konrad or his clients have long positions in ENOC, COMV, ITRI, ELON, TLVT, RUGGF, ABB, PWR, BGC, PIKE, ITC, and SI.
DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.
Thanks for the reminder on VRB. The technology is back with the purchase by Prudent Energy. We recently announced that my company will be selling the VRB-ESS for smart grid storage, and the combination of lower costs from overseas manufacture plus the smart grid stimulus should bring pricing much more in line with NAS or other alternatives.
Any information on companies doing research on new storage technology… technology that might be considered,”Outside the box”?
I genrally consider investing in “outside the box” companies a good way to lose money, but since you asked, I just got an email from one, below. I think this is *way* outside the box. I suspect that the round-trip efficiency will be lousy, because heat pumps are not good at moving temperature across large energy differentials.
I was forwarded and article you have just written about electricity storage. I thought I should bring to your attention our company Isentropic Limited. We have pioneered a new technique for large scale energy storage that we call “pumped heat electricity storage”.
We have spent the last 5 years developing a completely new kind of exceptionally efficient reversible heat pump/heat engine. The fundamental idea is that we heat pump argon gas to +500C on one side and -150C on the other. The gas is pumped through two large silos of gravel where it gives up its heat. To recover the energy the cycle is simply reversed. More details are at http://www.isentropic.co.uk
The key features are that:
It is 50x more compact than pumped hydro – energy density about 30kW/t (same as lead acid but much cheaper)
It requires neither mountains not caverns – can be built anywhere
It is extremely low cost
It is totally environmentally alert
We are giving a talk on it (with Saipem SA – a major Italian on and offshore construction company) at the Energy Storage Association next week in Washington.
Mark A. Wagner
Tom, Does it make sense to invest in GE now partly to have exposure to the smart grid? I read that they do sell smart meters. And their price is still down. Its a company with a (slashed) dividend, which I prefer.
I know GE was on your list of 10 for ’09. Of course I know about its exposure to wind from this blog as well.
Also, SI is on your list and they also have exposure to LED, I believe, which might lead me to favor them.
I currently believe that we are in a bear market rally… I’m not buying anything right now. While I still think GE has value as a company (I bought some in early March for $6.12 a share :), I expect that the market will resume its downward trend this year, and there will be better buying opportunities for a broad range of stocks.
I like Siemens, too. They also have exposure to rail and transmission. But I’d still wait for better prices.
I appreciate it, Tom. You and Jubak agree about this rally. I bought TRN on March 2nd for 6.56 so I’ve enjoyed the rally too!