This Vision of the Post-Pandemic Food System Looks a Lot Like a Microgrid

on April 27, 2020

The immediate impacts of the coronavirus pandemic are brutally clear: Exhausted medics, empty supermarket shelves and lines at food banks. It’s also clear that the pandemic will reshape societies and economies in the longer term. What we struggle with, as we do whenever we try to forecast the future, is to know how to use today’s impacts to predict what that reshaping will look like.

A couple of macro points first. We should take a wide-angle view of what’s to come. As the New Yorker noted, previous pandemics have “sparked riots and propelled public-health innovations, prefigured revolutions and redrawn maps.” But that doesn’t necessarily mean imagining wholly different futures. Many analysts are basing forecasts on the idea that the pandemic will exacerbate existing trends rather than create new ones.

So which trends should we pay attention to? I see two that are critical to food. The first is the ongoing backlash against globalization, which has led populist leaders — Trump, Bolsonaro, Putin — to back away from free-trade deals and promote inward-looking policies. The other is an awareness of the need to build more resilient systems, forced upon us in part by the knowledge that climate change will make extreme weather more frequent. Both forces likely will be accentuated by a pandemic that is restricting travel and exposing the brittleness of some supply chains.

I was mulling the impact of these forces when an email arrived from Stephan Dolezalek, an executive director at the Wheatsheaf Group, a $500 million venture fund with close to 30 investments in the food and ag space. Dolezalek has spent a long time looking at trends in his sector and has come to believe that we’re heading for a food system that “emulates the characteristics of a microgrid: Redundant, distributed, resilient, smaller scale and locally powered, yet connected to the larger world in ways that benefit it when safe but can be disconnected when not so.”

His forecast is based in part on his experience as a VC in other industries that have been upended by similar transitions. Computers used to fill rooms. They migrated to our desks, laps and now our pockets, a transition made possible by the creation of the decentralized computing network that brought you this email. Electricity is in the middle of its own transition to a more decentralized network, as smaller local facilities — think microgrids, residential solar, batteries — start taking on some of the load previously shouldered by large power plants.

The same thing is happening in food, Dolezalek argued. When we spoke by phone this week, his Exhibit A was the beer sector, where a multitude of small craft breweries is taking share from the big incumbents. (Beer sales fell 2 percent last year, but craft sales grew 4 percent to reach almost 14 percent of the U.S. market.)

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Fractal Energy Storage ConsultantsThis Vision of the Post-Pandemic Food System Looks a Lot Like a Microgrid

6,610 New Microgrid Projects Identified in Q1-2020

on April 27, 2020

Some 6,610 new microgrid projects representing 31.784MW have been identified in the first quarter of 2020 by Guidehouse Insights.

36.3% of the new microgrid projects are in North America. This means North America has overtaken the Asia Pacific as a market leader. The Asia Pacific and Latin America follow North America in terms of number and capacity installed.

North America’s push for the top spot is due to a large quantity of fossil-based commercial and industrial system additions for resiliency.

On a segment basis, remote microgrids and C&I represent more than 65% of all microgrid capacity globally at 36.0% and 29.1%, respectively. According to the report, the remote segment represents 11,452.2MW of capacity, and C&I represents 9,263.9MW. Regarding new entries, the C&I segment accounts for 85.8% of new projects identified.

Shayne Willette, research analyst with Guidehouse Insights, said:“North America’s push for the top spot as the global capacity leader is due to a large quantity of fossil-based commercial and industrial (C&I) system additions being deployed as resiliency solutions.

“This contrasts with last year’s findings, which showed a large amount of rural electrification projects in Asia Pacific and the Middle East & Africa.”

Click here for more information about the report.

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Fractal Energy Storage Consultants6,610 New Microgrid Projects Identified in Q1-2020

Healthcare & Critical Service Microgrids in an Era of COVID-19: The Latest

on April 27, 2020

A hospital in Victoria, Texas, later this month will announce commissioning of a new microgrid, likely to be one of the first healthcare microgrid to come on line during the COVID-19 pandemic.

Of course, the timing is fortuitous — Citizens Medical Center announced plans to install the 2.8 MW microgrid long before the pandemic, about a year ago, spurred by a different disaster, Hurricane Harvey.

But the project stands out because it will draw attention at a time when the argument is likely to intensify for microgrids at critical facilities, such as hospitals, community shelters, grocery stores and data centers. Power outages could be catastrophic in places where the pandemic has put these facilities under extreme pressure, especially if utility crews are spread thin.

Citizens learned what it’s like to face a power outage with only emergency generators when Harvey hit Texas in August 2017. The back-up system provided only enough capacity to support the equipment, life safety and critical loads required for regulatory compliance — a common circumstance in hospitals. As a result, the hospital had to evacuate patients.

Built in partnership with Texas-based Enchanted Rock, the new natural gas microgrid will keep the hospital fully powered during a grid failure.

The project is also providing cost and environmental benefits for the hospital.

The healthcare microgrid will operate under Enchanted Rock’s resiliency-as-a-service offering, which allows hosts to pay a fraction of what they would pay if they owned the microgrid outright. For this installation, Citizens only paid 20% of the total cost of ownership.

Enchanted Rock is able to do this because it leverages the microgrid for use by the grid when the hospital does not need its backup power. The company aggregates microgrid systems and sells their output to the grid to earn revenue that subsidizes the cost of the systems.

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Fractal Energy Storage ConsultantsHealthcare & Critical Service Microgrids in an Era of COVID-19: The Latest

Vertical Integration Will Drive Further Energy Storage Demand For Tesla In 2020 And Beyond

on April 24, 2020

Tesla (NASDAQ:TSLA) has always said that non-auto revenues are planned to equate to 50% of revenues long-term for the company. Tesla does not regard itself as specifically an auto company as many erroneously state.

As my article in February detailed, last year showed strong growth in their energy storage business. This has a wide geographical spread and a wide usage. However, the full potential was not realised. This was primarily due to the need to divert battery production to meet soaring Model 3 demand. At the Q3 earnings update and analyst call last year, Elon Musk emphasised that energy storage supply was now back at the front of the agenda. Non-auto products were targeted to meet 50% of company revenue.

The company’s vertical integration advantages should drive this business strongly forward. Vertical integration and diversification can drive incremental revenue and provide risk protection in these uncertain times. It also enables the company to spread the high fixed costs across its divisions.

The company had been hoped that this year would see the supply/demand equation balancing out. COVID-19 puts this in doubt. We will have to see how long U.S. factory shutdowns last, how much demand is postponed due to the economic fallout, and how quickly the company can ramp up production in China.

Energy storage does nevertheless represent an under-rated potential for revenue growth, which is not reflected accurately in the stock price.

Battery Developments & Renewables
My article here detailed some of the fast-moving developments. All the forecasts show the very rapid growth of the sector. This is happening as renewables take an ever-increasing share of the energy market and as battery costs fall. Lithium-ion battery costs have fallen about 85% in the last decade.

Lithium-ion will dominate for some time but batteries will continue to get cheaper and more efficient. There is enthusiasm from different quarters for new developments such as solid state batteries, potassium-based batteries, and flow batteries. It will be some time before commercial alternatives to lithium-ion get developed.

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Fractal Energy Storage ConsultantsVertical Integration Will Drive Further Energy Storage Demand For Tesla In 2020 And Beyond

Spot The Difference: Europe and North America’s Energy Storage Markets

on April 24, 2020

While a large portion of our thinking at the moment is shaped by a tiny but potentially deadly virus, we thought it might be preferable – for a few minutes at least – to think about a bigger picture topic: why battery energy storage and solar-plus-storage have become such a key part of the US energy industry in a way that they have not in Europe, as yet.

Corentin Baschet, an expert at technical consultancy and market analysis firm Clean Horizon is based in France and took some of our questions. We’ve already spoken with Baschet about the energy storage market in France, which, after the success of solar-plus-storage tenders on its island territories is deploying several large-scale batteries on its mainland in an experimental phase and has opened up a limited Capacity Market opportunity for low-carbon assets, including batteries.

France is also part of the European six nation shared frequency regulation market – which we heard more about from Corentin Baschet in our discussion of why energy storage deployment in Europe experienced a 2019 slowdown but is expected to bounce back and then continue to grow in the coming years. Of course, as we’ve seen in the past few months with COVID-19, everything can change rapidly, and in Europe the EU Clean Energy For All Europeans package could be an equivalent to a US Green New Deal in terms of overarching policy. For now, here’s what Corentin Baschet of Clean Horizon sees as as some of the main differences.

E-S.n: So, taking solar-plus-storage as a starting point, why hasn’t the US’ experience of year-on-year record deployments been enjoyed across the pond?

CB: The markets are fundamentally different. There’s a lot of frameworks to support that in the US, the investment tax credit (ITC), a whole lot of initiatives to support PV-plus-storage deployment which we don’t have in Europe. So it’s really driven by the incentives and the regulation in the US. Whereas in Europe it’s not really the case.

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Fractal Energy Storage ConsultantsSpot The Difference: Europe and North America’s Energy Storage Markets

Ameresco Report Touts Potential, Challenges of Flow Batteries in Military Microgrid Energy Storage

on April 24, 2020

Flow battery technology in energy storage could eventually replace or compete with diesel generation and lithium ion as part of a microgrid package but needs to improve on load reliability and cost-competitiveness.

This conclusion ends a new report by renewables and energy efficiency firm Ameresco. The company is working with 2ndPath Energy on U.S. Department of Defense-funded research into vanadium redox flow (VRF) battery energy storage systems as an alternative for diesel generators (DG) in microgrid applications.

“First, based on assessment of the reliability modeling results and critical load coverage curves produced, we can conclude that a VRF battery enabled microgrid can provide satisfactory reliability performance at all five sites by meeting the baseline performance requirement over a 168-hour outage that could occur at any time,” reads an executive summary of the Ameresco-2ndPath Energy report.

“However, we can also conclude for all five sites that critical load coverage at 168 hours was below the variable load DG-only coverage by between 1.6% to 3.0%,” the executive summary added. “This is to be expected since the newer VRF technology is assumed to have lower reliability factors that the DG technology.”

Vanadium redox battery technology utilizes the ability of vanadium ions in solutions in various oxidation states to store potential energy. It has been studied for years but has not found a way to market at scale.

Lithium-ion battery technology, meanwhile, dominates the energy storage landscape and makes up more than 90 percent of the U.S. battery storage installed capacity. VRB offers the potential for a competitive, comparative solution but not yet.

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Fractal Energy Storage ConsultantsAmeresco Report Touts Potential, Challenges of Flow Batteries in Military Microgrid Energy Storage

NextEra Energy Looks to Spend $1B on Energy Storage in 2021

on April 24, 2020

Companies across the global renewable energy industry are anxiously assessing the negative impact of the coronavirus outbreak on their bottom line. Every company, it seems, except NextEra Energy.

NextEra, the leading U.S. renewables developer, reported its first-quarter financial results on Tuesday, saying that not only has its renewables development unit been unaffected by the COVID-19 pandemic, but it may actually benefit by being able to scoop up other projects that run into trouble.

NextEra expects to build around 5 gigawatts of renewables capacity this year, and it added another 1.6 gigawatts of wind, solar and storage to its pipeline during the first quarter. None of its 2020 projects are expected to be delayed.

The company also made a stunning, if not entirely surprising, prediction: It will spend $1 billion on battery projects next year. NextEra believes it will be the first company in the world to cross that threshold for energy storage investments in a single year.

That investment will include the 409-megawatt Manatee Energy Storage Center in Florida that NextEra announced last year, which will be powered by solar panels and replaces a pair of aging natural-gas-fired plants.

In addition to building renewables through its Energy Resources development arm, NextEra is adding wind, solar and batteries through its regulated utilities, Florida Power & Light and Gulf Power. FPL alone expects to add more than 10 gigawatts of solar capacity during the 2020s as Florida’s solar market consolidates its position as one of the country’s most important.

Energy Resources reported first-quarter adjusted earnings of $529 million, or $1.08 per share, up from $467 million, or $0.90 per share in the year-ago period.

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Fractal Energy Storage ConsultantsNextEra Energy Looks to Spend $1B on Energy Storage in 2021

Energy Storage Net Metering: An Illustration of Why It’s So Valuable

on April 22, 2020

Energy storage net energy metering (aka NEM paired storage) allows a customer with a behind-the-meter solar + storage system to discharge their battery, exporting stored energy back to the grid and receive a net energy metering credit, if the battery can verifiably charge 100% from solar. In certain cases, NEM paired storage can meaningfully increase the amount of savings an energy storage system (ESS) can capture. As illustrated in the graphic below, energy storage net metering effectively enables a battery to utilize its full capacity by discharging fully when a strong price signal exists, regardless of customer usage.

Policy background
NEM paired storage was codified into law in California in February of 2019 when the California Public Utilities Commission (CPUC) finalized a decision permitting customers with ESS to receive credits for storage energy sent back to the grid if the storage system verifiably charged entirely from solar. The policy change was initiated by the California Solar and Storage Association (CALSSA) who filed a petition for modification (PFM) to grant the permissibility of NEM paired storage. CALSSA’s PFM drew support from California’s big three investor-owned utilities who filed a statement of support, which helped pave the way to the CPUC decision. Energy Toolbase published a blog “CPUC Approves Energy Storage Net Metering” summarizing the eligibility requirements laid out in that CPUC ruling.

Several months later the IOUs began allowing NEM paired storage systems to be interconnected to their grid. Energy Toolbase published another blog in December of 2019 entitled “California Utilities now Accepting Applications for Net Energy Metering (NEM) – Paired Storage,” which summarized many of the new metering and verification requirements, including the newly created Certification Requirements Decision (CRD) standard, which allowed utilities to verify the ESS charges entirely from PV. Previously, for ESS systems larger than 10 kW, customers were required to install additional metering hardware, which could be time-consuming and prohibitively expensive.

Case Study: NEM Paired Storage
To illustrate the value of energy storage net metering, we compared two identical solar + storage systems operating in time-of-use (TOU) arbitrage mode. We held all project inputs and assumptions constant, except in Case No. 1 we ran the ESS dispatch simulation assuming ESS cannot export to grid, and in Case No. 2 we ran the simulation assuming NEM paired storage: ESS can export to grid, but it must charge entirely from PV.

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Fractal Energy Storage ConsultantsEnergy Storage Net Metering: An Illustration of Why It’s So Valuable

Battery Storage, Smart Grid, and Efficiency Companies Raise $252 Million in VC Funding in Q1 2020

on April 22, 2020

In Q1 2020, $252 million was raised by battery storage, smart grid, and energy efficiency companies, a 20% increase from the $210 million raised in Q1 2019. This is according to a new report by Mercom Capital Group.

Battery Storage
Total corporate funding (including venture capital, debt, and public market financing) in battery storage came to $244 million in nine deals compared to $635 million in 10 deals in Q4 2019. Funding was up 88% year-over-year (YoY) compared to $130 million in nine deals in Q1 2019.

VC funding (including private equity and corporate venture capital) raised by battery storage companies in Q1 2020 came to $164 million in six deals compared to $78 million in seven deals in Q1 2019. Quarter-over-quarter funding was also higher compared to $126 million in seven deals in Q4 2019.

According to the report, the top VC funded battery storage companies this quarter were:

  • Demand Power Group, which raised $71 million from Star America;
  • Highview Power raised $46 million from Sumitomo Heavy Industries;
  • Advano raised $19 million from Mitsui Kinzoku SBI Material Innovation Fund, Future Shape, PeopleFund, Thiel Capital, DCVC, Y Combinator;
  • ZincFive raised $13 million from 40 North Ventures, and
  • TWAICE raised $12 million from Creandum.

A total of 14 investors participated in battery storage funding this quarter. In Q1 2020, announced debt and public market financing for Battery Storage technologies was 54% higher YoY compared to $52 million in two deals in Q1 2019. One battery storage project fund of $140 million was also announced in the quarter.

There were four M&A transactions involving battery storage companies in Q1 2020 (no transaction amounts disclosed). There were no M&A transactions in Q4 2019. There were four M&A transactions in Q1 2019, of which only one disclosed the transaction amount.

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Fractal Energy Storage ConsultantsBattery Storage, Smart Grid, and Efficiency Companies Raise $252 Million in VC Funding in Q1 2020

VC Funding Into Energy Storage Stepped Up in First Quarter of 2020

on April 22, 2020

While the renewable energy industry has suffered significant blows such as loss of employment during the COVID-19 crisis, venture capital (VC) funding into the battery energy storage sector in the first quarter of this year nonetheless saw a significant increase over the previous year’s equivalent period.

Corporate funding overall was in fact up 88% year-over-year in Q1 2020 to US$244 million over nine deals, from US$130 million in the first quarter of 2019 from the same number of deals, according to the latest funding and mergers and acquisitions (M&A) report from Mercom Capital Group. The company tallies up and publishes its quarterly report into funding and M&A activities in the battery storage, smart grid and energy efficiency sectors, including VC funds and their investments.

While it shows a big increase since the beginning of last year, momentum has dropped from the previous quarter when a massive US$635 million of funding went into the battery storage sector. That said, VC funding appears to be trending upwards: in Q1 2019, seven VC funding deals totalled US$78 million, in Q4 2019 seven VC deals netted companies in the sector US$126 million, whereas in the Q1 period of 2020, US$164 million was raised across just six deals by battery storage companies. reported in February that US developer EsVolta had secured a US$140 million credit facility for a project portfolio with industry debt financing specialist CIT the Mandated Lead in arranging it, and Mercom Capital noted that that amount raised made it the most noteworthy project financing transaction to close in the quarter. That said, this site also reported that AES Distributed Energy raised a much larger amount – US$341 million – in a transaction announced at around the same time as EsVolta’s, although the AES Distributed Energy deal was for debt financing.

Mercom Capital also noted that some significant M&A deals were announced in the sector, the most notable being the acquisition of the commercial and industrial (C&I) arm of Canadian developer NRStor by Blackstone Energy Partners.

While the full Mercom report includes more details and provides more depth on the quarter’s activities, a release seen by did rank the top five battery storage sector deals by amount raised. These are as follows:

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Fractal Energy Storage ConsultantsVC Funding Into Energy Storage Stepped Up in First Quarter of 2020