Giant Batteries Supercharge Wind And Solar Plans (#GotBitcoin)
Utilities are investing in large units that make it more affordable to store renewable energy and deploy it when needed. Giant Batteries Supercharge Wind And Solar Plans (#GotBitcoin)
A global wave of investment in high-capacity batteries is poised to transform the market for renewable energy in coming years, making it more practical and affordable to store wind and solar power and deploy it when needed.
Government-owned utilities and companies are buying batteries that can be larger than shipping containers. Some like Tesla Inc. ’s new utility-scale battery can hold enough energy to power every home in San Francisco for six hours. Battery makers also are working on more advanced models that will hold more power and last longer.
In the U.S., the Silicon Valley-based firm introduced its new battery technology called Megapack last month that Pacific Gas & Electric Co. plans to use in California. Mitsubishi Hitachi Power Systems is developing high-capacity batteries for a 1,000-megawatt venture in Utah that it touts as the world’s largest renewable-energy storage project.
In the U.K., ScottishPower is spending $7.2 billion on renewable energy, grid upgrades and battery storage between 2018 and 2022. The utility owns Scotland’s largest electricity network and operates in Europe’s windiest region, and generates all its power from renewable sources after selling its last fossil fuel assets in January.
China’s goal is to increase the use of renewable energy and batteries by 2030 as part of a massive national energy overhaul aimed at helping to reduce the use of polluting coal-fired power plants.
And the World Bank Group has set aside $1 billion to invest in battery projects, including one of the world’s largest mixed solar, wind and storage power plants in India and a battery project in South Africa anticipated to be the largest of its kind in sub-Saharan Africa.
“We certainly feel a momentum in the market for batteries,” said Riccardo Puliti, global director for energy at the World Bank.
High-capacity batteries have previously been too expensive for most energy providers to invest in, which has slowed the growth of renewable power, according to analysts.
“The lack of cheap and readily available energy storage has been one of the impediments for wider adoption of renewables,” said Ravi Manghani, director for energy storage at consulting firm Wood Mackenzie.
But storage-battery prices have dropped nearly 40% since 2015, according to Wood Mackenzie data. The prices of lithium and vanadium—two of several key raw materials that are used in such batteries—also have declined over the past year or so.
The batteries have the potential to solve problems that have hampered the adoption of wind and solar power. The reliability of those sources can vary when the wind is calm or the sky is cloudy, and some of the power can go to waste if there is no effective means to store it.
Such problems have left renewable energy vulnerable to criticism. “When the wind stops blowing, that’s the end of your electric,” President Trump said in March at the Conservative Political Action Conference.
With high-capacity batteries, utilities can store energy generated by wind turbines and solar panels and then provide it to customers when weather conditions are less than ideal or during periods of high demand.
Some batteries are the size of a refrigerator, while others are far larger, and utilities generally deploy several at a time. There are several competing battery technologies. Lithium batteries are less expensive and the most widely produced, but vanadium-based batteries have a longer lifespan and can hold more power.
Utilities around the globe deployed a record 6.1 gigawatt hours of energy-storage capacity in 2018, enough to power about 50,000 households for a day, according to Wood Mackenzie.
That is relatively small, but spending on high-capacity batteries is set to grow sixfold to $71 billion by 2024, according to Wood Mackenzie.
In California, Tesla and other firms are delivering batteries that will replace three aging gas plants. The storage solutions will provide power to the grid during periods of high demand.
China is already a major user of high-capacity batteries. China and South Korea deployed more than 40% of the new gigawatt hours put into service world-wide for stationary energy storage solutions last year, according to the market intelligence firm IDTechEx.
Meanwhile, the World Bank’s battery program is aimed at providing power to the more than 800 million people world-wide particularly in parts of Asia and Africa that don’t have access to electricity. The bank expects to raise an additional $4 billion in private funding to drive ventures such as the partnership with South Africa’s state-owned utility Eskom to develop a 1.44 gigawatt-hour battery.
ScottishPower’s investment in batteries is intended to help prevent some of the wind power it generates from going to waste and to help balance the electricity supply on the grid. Scotland produces more wind energy than it can use, and it currently sends excess production to other parts of the U.K., but some of that energy is lost because of the lack of storage capacity, according to the utility ScottishPower.
“Our vision for the future of energy has storage at its core,” ScottishPower Chief Executive Keith Anderson said.
Businesses Charge Up Batteries To Corral Power Costs
More companies are installing big batteries on-site to preserve green energy for later use and reduce exposure to utility electricity charges.
As batteries capable of powering buildings get bigger and cheaper, businesses are increasingly looking to install them to gain more control over their electricity costs.
Unlike large battery arrays being built by utilities to feed power to the grid, these batteries are typically being built on site to cater to the needs of individual users. Installing them locally can help companies manage costs by storing power when it is cheaper to produce or buy, and tapping it when wholesale prices go up or there is a power disruption.
Swiss asset manager Capital Dynamics broke ground last month on a massive battery system that will allow data-center company Switch Inc. to store solar power and manage the cost of electricity it uses to cool a 1.3-million-square-foot data-server center in Nevada. It will provide 60 megawatts of storage capacity for four hours, making it the largest so-called behind-the-meter battery in the world.
The battery system is large enough to help supply the facility with solar energy when the sun isn’t shining, minimizing the company’s reliance on the grid. Switch expects to pay about 5 cents a kilowatt-hour, several cents less than what it would cost to buy power from NV Energy, the local utility owned by Warren Buffett’s Berkshire Hathaway Inc., BRK.B 2.18% saving the company tens of millions of dollars a year.
“The batteries create a whole new level of flexibility for us in how we’re able to manage our energy,” said Adam Kramer, the executive vice president for strategy at Switch. “Our goal is to be running around the clock on green electrons.”
The batteries are part of a $1.3 billion solar-and-storage portfolio Capital Dynamics is building to supply customers in Nevada as prices fall for large-scale solar arrays and lithium-ion batteries. Capital Dynamics anticipates profiting from the project after about 15 years.
“I’m hoping that this project will be a template within the industry,” said Benoit Allehaut, the asset manager’s managing director for clean-energy infrastructure.
Utilities across the U.S. are experimenting with electricity prices based on time of use as more solar power is added to the grid, adding to daytime energy supplies. That presents an opportunity for some businesses to save money by storing power throughout the day, when prices are lower, and using it during the evening, when prices are higher.
Research firm Guidehouse Insights estimates U.S. businesses will deploy 220 megawatts of storage at or near their locations next year, up from 77 megawatts this year.
Commercial and industrial batteries claim a relatively small portion of the overall storage market, where growth has been driven by large-scale utility projects. Utilities are expected to deploy about 3,170 megawatts of battery storage next year, up from 846 megawatts this year. But Guidehouse anticipates the two segments to grow at similar rates in the coming years, with each more than quadrupling in size by 2029.
“We’re going to start seeing the case for a wide array of commercial and industrial customers deploying battery storage,” said Guidehouse storage analyst Ricardo Rodriguez.
To date in North America, the largest commercial batteries not owned by utilities exist in Ontario, Canada, where demand charges—extra fees some utilities charge for maintaining constant supplies no matter what—are relatively high for industrial customers.
Convergent Energy + Power LP, a developer of storage systems owned by private-equity firm Energy Capital Partners LLC, last year set the record with a 10-megawatt battery system with a two-hour duration built for a Royal Dutch Shell PLC refinery there.
Convergent Chief Executive Johannes Rittershausen said the company is looking to tap emerging markets in the Northeast and mid-Atlantic as battery prices decline. When the company was founded in 2011, battery systems cost about $2,000 a kilowatt-hour, he said. Now, prices have fallen to roughly $300 a kilowatt-hour.
“That has put in play a lot of customers who obviously didn’t have a value proposition 10 years ago,” Mr. Rittershausen said.
Still, it isn’t possible for businesses in every region to install their own batteries because of regulations. California, New York and Massachusetts were among the first U.S. states to allow commercial and industrial battery storage. More are expected to open up as businesses pursue renewable-energy goals and look to cut down on electricity costs.
Sierra Nevada Brewing Co., which operates breweries in Chico, Calif., and Mills River, N.C., is already seeing returns on a 500-kilowatt battery system it installed in Chico in 2017 to store power from on-site solar arrays and gas microturbines. The company, which requires large amounts of power early in the morning to ramp up operations, for years faced high demand charges from its local utility, PG&E Corp.
Before installing the batteries, the company’s monthly demand charges could at times exceed $50,000. Now, it is able to keep them under $10,000 a month by discharging power from the batteries when its needs exceed its ability to generate electricity on site.
Mandi McKay, Sierra Nevada’s sustainability manager, said the system is paying itself off quickly. “We’re talking hundreds of thousands of dollars in savings,” she said.
US ‘Battery Belt’ Will Be A New Kind of Job Magnet
College graduates flocked to urban centers to create software, but a more diversified workforce will be needed to build a future based on electrification.
The Battery Belt is taking shape, and it’s creating a new economic development model where a college degree won’t be the ultimate qualification for jobs.
In 2022 we saw industrial policy passed by Congress intersect with investment plans from major manufacturers and startups, all emphasizing the future need for batteries for energy storage.
But unlike the urban employment centers we’ve seen emerge in the last several decades, the regions now being dubbed the “Battery Belt” don’t feature college graduates clustering together in office buildings in a handful of expensive cities to create internet and software-related products.
It’s more geographically diverse, with different economic and infrastructure needs than the prior era that was so heavily influenced by Silicon Valley.
An obvious difference between building batteries and building software is that batteries for electric vehicles and other large-scale industrial uses can weigh more than 1,000 pounds.
The production and warehousing requirements for that kind of equipment rules out urban knowledge centers — the economic winners of the past 40 years — as the focus for this new wave of industrialization.
A year ago I foresaw that the electrification of the auto industry would be a boon for the South. While that’s certainly been the case, the Midwest has also seen its share of wins this year.
With an additional year of data to analyze, there are patterns emerging in the kinds of places being chosen for new battery plants.
The most important feature for sites is large tracts of land available near the right kind of physical infrastructure and major population centers. Here in Georgia and adjacent South Carolina, five multibillion-dollar battery plants have been announced over the past few years.
Two of them are in the counties next to the ports of Charleston and Savannah, and the other three are about an hour outside of Atlanta next to both railroads and highways.
After that, softer factors come into play: the quality, size and cost of the local workforce, proximity to future customers, the ability of local officials to woo manufacturers, and whether there are other related production facilities close by.
For instance, Stellantis NV is building a battery plant in Kokomo, Indiana, in large part because it already has a plant there that produces vehicle motors (gasoline and hybrid for now, electric in the future).
While the Battery Belt will need a trained workforce, it won’t be as reliant on workers with elite educations as the Silicon Valley economy was.
In the four counties in Georgia where battery plants exist or are being built — Jackson, Bartow, Coweta and Bryan — the percentage of adults with at least a bachelor’s degree are 23.5%, 19.8%, 33.3% and 33%, respectively. That compares with 50% for the main two counties encompassing Atlanta: Fulton and DeKalb.
Reading through press releases and articles with details on the plant announcements, a different role for government officials also stood in contrast to the internet and tech economy that we’re used to.
We think of Apple Inc. as the company that was started in a garage, and Facebook being started in a college dorm room, and that’s contributed to the cult of the founder.
Only if a community is lucky enough and suitably “cool” enough to attract young and talented people might it become the place where the next hundred-billion-dollar company is founded. The governor of California in the 2000s had very little to do with Facebook moving to California, even if in prior decades the government played an important role in creating and shaping Silicon Valley.
The Battery Belt isn’t like that. Once a community has enough of the above key factors, the question of whether or not it gets a billion-dollar plant comes down to whether its governor and economic development officials can work out a deal with manufacturing companies like Stellantis, Hyundai Motor Co., General Motors Co. or Ford Motor Co.
It’s perhaps noteworthy that Georgia and Ohio, with their more restrained Republican governors, have had more success in winning battery plants than the bombastic, attention-seeking governors of Texas and Florida.
This should shift the priorities of both voters and politicians toward being more grounded and pragmatic rather than ideological and emotional.
It’s still early days in this trend — Battery Belt is a term that’s only caught on over the past several months, and most of these plants have only recently been announced or started construction.
But it looks like the economic center of gravity in America, after being overly concentrated in communities full of college graduates, is finally broadening out as we set out to build the industrial economy of the future.
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