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Best storage for grid applications – The EV factor

Since the mid-2000s, around the time I launched utility-scale storage projects in US, people have asked me: “What’s the best energy storage technology for grid applications?” My answer then is the same as it is now—and in fact, over these last ten years or so I have become even more confident that it is “whatever the electric car industry will hand down to us.”

After my experience in deploying a few large-scale storage devices and observing how utilities reacted to them, it became very clear to me that grid applications of energy storage have a large variety and diverse requirements that standardization of applications and mass production of storage units would be a far-fetched dream. Consequently, I recommended the community energy storage (CES) solution to help utilities move towards what could potentially become a modular storage unit that could be mass produced at low cost. However, they were so slow in adopting it that the market is now taken over by behind-the-meter storage options.

Unlike grid applications, the electric vehicle (EV) industry has a relatively well-defined application for energy storage, and their technology options are much fewer than what is available for grid applications. Thus, they order very large volumes of the same battery package and, therefore, are getting a much better price for it. I keep hearing from suppliers (who are selling the same battery to both markets) that the car industry is purchasing the same battery cells for half of what we pay for grid applications.

In other words, the EV industry is becoming an increasingly large force pushing the price of batteries down and forcing vendors to give them a safer and more reliable product. But who on the grid side has the comparable clout to shape the energy storage industry to conform to the grid’s needs and offer storage at lower price? Despite such differences in the ability to influence the storage manufacturers, transportation and stationary applications of energy storage have a few synergetic storage requirements:

  • Both want low-cost storage, especially in transportation, which is very cost sensitive
  • Both want safe energy storage, because it will be located very close to people and needs to survive accidents
  • Both want reliable storage that people can count on
  • Both want compact storage (even for stationary applications where storage size and weight correspond to higher manufacturing, transportation and installation costs)
  • EV battery size is very close to what is needed for residential applications, which is one of the fastest growing segments of stationary storage applications.

These synergy factors—especially the fifth factor—have encouraged EV manufacturers, like Tesla and Mercedes, to leap frog ahead of their battery vendors and offer their batteries directly to the stationary applications market.

Figures 1 and 2

(Left): Source: Mercedes Benz. (Right): Source: Tesla Motors

For now, Lithium ion (li-ion) batteries are the preferred type of EV battery, and will be until a better technology replaces them. According to the storage database of the Department of Energy, one third of all storage projects installed in the world are Li-ion. According to GTM Research, 70% of all US storage installations in 2014 (measured by capacity) were li-ion.

Pie Graph

Source: GTM Research

Of course, li-ion is not going to be the only feasible storage option for stationary applications as, unlike EVs, they have a very diverse set of requirements that li-ion would be very challenged to meet. However, li-ion has already become the “yardstick” to measure the feasibility of its competitors. You may have noted that very recently a giant global company wrapped up (or suspended) its newly started battery manufacturing operations simply because it kept losing to li-ion in essentially every project it bid on. Li-ion is putting pressure on all storage technologies to meet its cost and performance characteristics.

Allow me to play the devil’s advocate to address some of the reasons people used to feel safe from the transformational impact of EV batteries on stationary applications:

“Flow batteries are less expensive and can discharge for much longer time than li-ion.”

  • For now, these claims are correct, but li-ion is being used in a 4-hour application at California. The EV giants who offer li-ion for stationary applications will certainly push it to handle longer discharge time. However, flow batteries have a lower efficiency and larger size (lower energy density) compared to li-ion batteries.

“Bulk storage, such as pumped hydro and compressed air, are too large to be threatened by li-ion.”

  • With the availability of modern communications and control, it is a matter of time before an aggregation of small distributed storage units could functionally surpass pumped hydro and compressed air units. We must also keep in mind that it takes several years to build a large bulk storage at a capacity that li-ion factories can deliver in less than a year (see Distributed Bulk Storage: Is This the New Shape of the Grid?)

All things considered, I believe li-ion—or “whatever the electric car industry will hand down to us” —will continue to be the most preferred storage technology for stationary applications, but there will certainly be a share of the market for other storage technologies. Li-ion will continue to exercise higher pressure on other storage technologies, and only the fittest competitors will survive.

3 Comments Add your comment
Avatar Richard W. Goodwin says:

I offer an alternate application of the Tesla’s solar battery as an alternative to standby emergency power in South FL due to hurricanes. Although my estimate is conceptual your readership might be interested in the application of solar battery instead of standby gas or propane power emergency generator. The underground tanks pose a hazard and the generators are noisy. Applying Tesla’s solar battery at about the same cost would avoid these problems.

25 KW generator with 500 [400 gallon actual] gallon tank at 5 gallons per hour will deplete within 80 hours or 3.3 days

Cost of tank and generator about $20-25K.
Tesla Solar Battery and Panel operational concept: Once installed the roof mounted solar panel can provide continuous energy to hot water heater and charge the solar batteries.
Operation of Solar Battery during power outage
Assume 6 batteries [@10 KwH] at peak load 60 KwH and recharge batteries from panel as each battery discharges on a six hour cycle over a 12 hour daily [sun available] cycle. At night, when solar batteries fully charged, set AC to 78 deg F and do not use high energy items e.g..washer dryer. The benefit of solar batteries include (1) energy for hot water heater and possible tax rebate etc. (2) not dependent upon truck delivery of Liquid Propane Gas (3) eliminate noise and potential accidental hazard The problem is whether Solar City markets to South FL and are their local reliable installers.
INSTALLED COST OF SOLAR PANEL FOR TESLA BATTERY
Size = 200 SF say 15’ X 15’ total – 225 SF @ $8/SF [$2010] = $1800 Say $2000
INSTALLED COST TESLA SOLAR BATTERY
Assume 6 batteries [@10 KwH] @ $3500 = $21000 material cost with installation (30%) and OverHead and Profit {15%} = $30450 Say $31000
INSTALLED COST SOLAR PANEL AND BATTERY = $ 33000
Weight of Solar Panel for Tesla Better @4 PSF = 900 pounds
Using Tesla solar battery is about 50% higher than the cost of underground propane tank with generator for emergency power
Richard W. Goodwin West Palm Beach FL 7/23/15

Avatar alan kneisz says:

I do not understand this when all the auto companies have fully put their resources behind Fuel Cells, Not Lithium Ion storage. The only company that supports battery only is Tesla and they produce 30,000 cars a year while the major auto companies are all supporting long term development of fuel cells.

Ali Nourai Ali Nourai says:

Fuel cell cars may be fine for fleets where there is a trained maintenance crew to keep them operating. Otherwise, they are too complicated and prone to high-cost maintenance for the public at large. Regardless, even fuel cell cars are electric cars that need batteries for acceleration. Therefore, with or without fuel cells, we will be facing electric transportation with batteries . The conclusion still is the same, “whatever battery the electric transportation uses will become popular in grid applications”.

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