The transition to renewables requires utility companies to expand energy storage capacity to an extent never before seen. At the same time, regulators are introducing new rules while energy bidding is becoming more sophisticated, which causes prices to become more volatile.
Combined with the need for grid stability and frequency control, these factors are paramount in the future of distribution design for storage solutions. However, lithium batteries do not fit all storage requirements. Indeed, lithium storage solutions recently experienced a significant drop in price due to over capacity at production facilities. Two major factors driving this downward trend are Tesla, which is building a “Giga Factory” in Nevada, and Chinese manufacturers, which plan to increase lithium battery manufacturing output. Simultaneously, major car makers are deciding to electrify their entire fleet. Most of them will choose lithium-based batteries to power their cars. This will lead to a scarcity of lithium batteries and incentivize the search for alternatives.
Despite the hype from these major players, lithium creates downsides compared to flow batteries and other emerging battery technologies. In 2017 lithium batteries caused instances of exploding smartphones and raised grave safety and reliability concerns.
Besides these disadvantages, other significant challenges confront lithium batteries. For example, the price and power densities claimed by lithium manufacturers are not crucial for utility applications. More than ever, discharging cycles and charging curves influence how batteries can be used in utility-scale applications.
New standards published by the PJM power pool favor batteries with longer life cycles, so lithium is not always the best solution. Indeed, a major utility-scale lithium battery would mass more than a million times the size of a smartphone battery. Public perceptions of feasibility, health and safety risks with lithium batteries are largely justified.
California, a state on the forefront of the energy transition, has mandated utilities to test batteries by adding more than 1.3 gigawatts of electrical power storage capacity by 2022. Southern California Edison started making energy storage deals to alleviate the risk of blackouts. These projects are scheduled to be completed in less than six months, a timeframe unprecedented in the world of power transmission and electricity generation.
Many analysts expect lithium batteries to suffer the same fate as poly-crystalline solar panels by dropping significantly in price over time and with scale.
Yet there are noteworthy differences since the main raw materials and components used in solar panels are abundant and the manufacturing of wafers for solar panels are easier to scale up and less complicated than manufacturing batteries.
Taking these complexities into account, we believe that emerging technologies, including flow batteries, zinc air, silver-zinc, sodium-sulfur, salt water, nickel-zinc and nickel-hydrogen will play a larger role in the transition of energy than most people expect. Advanced research in these areas is currently proceeding at Stanford University, the University of California Berkeley, MIT, and institutions in China, Japan, South Korea and Germany.
Leaning on our deep experience in electrical storage and distribution systems, some areas we follow closely include:
1. Interchangeable systems that will allow for easy upgrade of the exiting lithium-ion batteries with future batteries.
2. Agreements for battery storage units that allow for uptime of >90% (the average is currently around 75%). The AI algorithms, predictive maintenance and monitoring software to achieve this goal already exists.
3. Design solutions for utilities and IPPs that place storage units in close proximity to their intermittent power generation units, including solar and wind.
While the future direction of energy storage technology remains uncertain, we have a high conviction that the next two decades will bear witness to new solutions at a scale difficult to imagine today.
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