I've been waiting for going on 15 years to see real progress in the deployment of grid-scale batteries, ever since I was part of a sort of SWAT team at the Department of Energy in 2010 that invested $37.5 billion of Stimulus Act money to foster innovation.
Matt Rogers, a senior partner at McKinsey at the time and the leader of the group, made all the sorts of investments you'd expect in solar, wind, etc. but also focused on ensuring that those sources of electricity could be incorporated into the grid. That meant a focus on batteries, to store power for the times when the wind wasn't blowing and the sun wasn't shining. And those batteries had to have enormous capacity, not just enough for a car or even a home but for a town or even a city.
Battery prices have, in fact, declined at an almost magical rate, down 81% in the past decade as measured in price per kilowatt hour. But the focus of innovation has been on small batteries — for your Fitbit, your iPhone, your car. Grid-scale batteries are a different beast entirely. They have to be radically cheaper than those used in consumer devices and thus are based on different chemistries entirely.
I've seen evidence of progress for years, but everything was still very experimental — until this past week, when two articles described a series of projects that have moved through the early stages and either have gone live or will soon do so.
The effects on insurers will take years to play out, but there has been so much industry interest in climate change that I thought I'd share the latest developments.
I, for one, am encouraged.
The article describing the more concrete progress concerns California — where else? The San Jose Mercury News reports that grid-scale batteries are being used effectively to handle the surges in electricity demand from air conditioners in the state's hot summers.
The article says:
"Four years ago this week, California’s power grid was so strained by a heat wave that rolling blackouts hit hundreds of thousands of residents over two days. It nearly happened again two years ago, when state officials issued 11 “flex alerts” asking businesses and homeowners to voluntarily reduce electricity use to avoid power disruptions.
"But this year when a record heat wave scorched the state over three weeks from mid-June to July — sending temperatures across the Bay Area and the Central Valley soaring over 110 degrees — there was plenty of power. No warnings. No shortages. No flex alerts."
The reason:
"Battery storage has increased sevenfold in the past five years in California, from 1,474 megawatts in 2020 to 10,383 megawatts now. A megawatt is enough electricity to run 750 homes."
In other words, California has the capacity to run 7.8 million homes off batteries, at least for short stretches such as those that occur in the evenings, when sunlight is diminishing as people are returning from work and cranking up their AC.
And the state is just getting going. The article says California has 175 large-scale battery storage projects in operation, up from 36 five years ago, and has "dozens more planned or under construction.... On some days this year, battery power has become the largest source of electricity on California’s power grid. On Wednesday, a record 8,320 megawatts of battery power was on the grid at 7:35 p.m., the equivalent of 16 natural-gas-fired power plants running full power, or four nuclear power plants... running at peak capacity."
The benefits go well beyond reliability for consumers. As I learned during my stint at the DOE, so-called peaker plants have had to be kept on standby to handle the roughest stretches of summer in hot climates. Many only operate for dozens of hours a year, but they had to be there or those ACs would stop functioning in some late afternoons and evenings. Those plants are the most expensive to operate and pollute the most, so anything that keeps them offline cuts costs and emissions disproportionately, and being able to get rid of them would take out a whole layer of expense for the utilities.
The plant featured in the Mercury News article is using what seems to me to be a stopgap solution, based on the chemistries used in consumer batteries. It says the PG&E storage facility that has replaced a natural gas unit at the famous Moss Landing plant — if you ever drive down the Monterey Peninsula, you see its 500-foot concrete towers for miles before you get there — uses 256 Tesla “Megapack” units, "gleaming white steel boxes, each about the size of a shipping container and weighing 56,000 pounds, [that] were built at Tesla’s Gigafactory near Reno."
But, stopgap or no, the plant is providing practical experience for PG&E about storing and distributing power, about tapping into the existing lines that connect with the grid, and so on. Such lessons will be useful for PG&E and others, no matter what chemistries are eventually used in large-scale batteries.
The more speculative, but perhaps more intriguing, application of grid-scale storage was written up in the New York Times. It concerns a project in Becker, Minn., a town of 5,000 about 50 miles northwest of Minneapolis, where one of the nation's largest coal plants is being retired and a massive solar farm and batteries are being built. The article adds that Becker, where the solar project is to go online next year, "is one of the first of a group of seven Minnesota municipal areas, called the Coalition of Utility Cities, making the change from a fossil-fuel-based economy to clean energy."
I find the Becker example especially intriguing because it uses a more experimental chemistry that, if everything works as planned, could be used broadly. While Tesla uses the lithium-ion technology that appears in most consumer applications — and lithium is expensive these days — the Becker project relies on water, air and iron. When the iron is allowed to rust, the battery discharges electricity; when the battery is recharged, the iron is deoxidized, and energy is stored for later use.
The initial project is far smaller than what's happening in California but is still designed to be able to power 2,000 homes for as long as five days. And Xcel Energy, the utility that is building the solar project using batteries from Form Energy, is undertaking a similar project in Pueblo, Colo., and a smaller one, based on different battery technology, in Aurora, Colo.
We're still a long way from home. My brother in St. Paul, Minn., can easily go more than five days in winter without seeing any appreciable sun, so energy storage will have to get much denser and prices will have to drop far lower before there can be a full-on switch to renewables based on grid-scale batteries.
But I'm taking hope anywhere I can find it these days, and I've been waiting a long time for grid-scale batteries to make it into the implementation phase.
Cheers,
Paul