The Energy Storage Story

The key to getting utilities to embrace renewable energy is investment in inexpensive, convenient, and highly efficient utility-scale storage for solar and wind power. That’s a topic I addressed in depth in my last post. And the issue remains one of supply and demand: Supply the energy storage solutions without demanding too much of anyone.

So far, Pumped Storage Hydropower (PSH) is the only real show in town in terms of large-scale electricity storage. The problem, of course, is that a PSH facility can take a decade to build, and requires an enormous amount of zoning acrobatics (unless it is located in China), water resources, and the right topography. On top of that it can cost billions of dollars to construct and then operate.

So although PSH facilities now provide over 120,000 megawatts of capacity across the globe, growing this sector significantly is not logistically viable. It is also not patently environmentally sound, with environmental groups opposing PSH projects as a matter of course.

Then there are batteries, which can be used to store energy harnessed from wind and solar installations. But no matter how you look at it, batteries fail the environmental acid test — they don’t degrade well, some tend to explode, and they do not arbitrage well due to both capital cost and life-cycle cost. This problem is made even worse because most types of battery cells wear out quickly and must be replaced fairly frequently, while utility equipment is generally expected to last decades.

Worse yet, batteries are also very expensive for large scale energy storage, given their limited capacity and the above limitations. The comparison below is battery energy storage that can be sited fairly flexibly and provide four hours of storage (from EPRI):

10MW Systems:

(Total Capital ($/kW) = $/kW installed + (Number of hours times $/kWh)

1.  Lead Acid (Commercial) – Total Capital ($/kW) = $1,740 — $2,580 /kW

2.  Sodium Sulfur (Projected) – Total Capital ($/kW) = $1,850 — $2,150 /kW

3.  Flow Battery (Projected) – Total Capital ($/kW) = $1,545 — $3,100 /kW

4.  Lithium-Ion (small cell) – Total Capital ($/kW) = $2,300 — $3,650 /kW

5.  Lithium-Ion (large cell, projected) – Total Capital ($/kW) = $1,950 — $2,900 /kW

All of these numbers start to make PSH look a little better, with total capital ($/kW) ranging from $1,500 — $3,000/kW, comparable to the battery costs listed – but for ten (not four) hours of storage . . . or even more.

The truth is that no current utility scale storage works well for flexible seasonal storage, i.e.:  storing wind energy in the winter for use in the summer. Not even PSH is good for this, and at its heavy monetary and logistical costs, this fact has begun to vex the industry.

So, where can those of us seeking a viable utility-scale storage solution look to? How can we not only catch the power of the sun and the wind, but save it for many, many hours after the sun sets and the wind dies down?  And how can one solution capture all the benefits of PSH, yet eliminate its inherent barriers including finding a suitable location, obtaining permits, construction time and enormous capital expenditures?

Dig deep, is how. Answer coming soon.

David Anthony is the Managing Partner of 21Ventures, LLC, a VC management firm that has provided seed, growth, and bridge capital to over 40 technology ventures across the globe, mainly in the cleantech arena. David Anthony is also Adjunct Professor at the New York Academy of Sciences (NYAS) and the NYU Stern School of Business where he began teaching technology entrepreneurship in 2009.

David received his MBA from The Tuck School of Business at Dartmouth College in 1989 and a BA in economics from George Washington University in 1982. He is an entrepreneurship mentor at the Land Center for Entrepreneurship at Columbia University Graduate School of Business. In 2002, David was awarded the Distinguished Mentor of the Year Award from Columbia University.

David blogs at David Anthony VC

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