Liam Stoker and Andy Colthorpe reflect on the biggest news in energy storage in 2019, while also gazing into their crystal balls and predicting what the energy transition may hold in store for the year ahead.

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Following long-duration storage is like rooting for a home team that’s always about to win next year.

Lithium-ion batteries utterly dominate grid storage deployments these days. That’s great for the cost decline narrative, in the way that cheap Chinese photovoltaic cells produced a massive expansion in solar deployments. But cost obsession results in technology lock-in, boxing out other tools that could prove useful or even better if given the time and space to grow.

It also makes for homogeneous storylines: In other news, the latest energy storage plant looks and performs exactly like all the other ones; check back as this story develops.

There are good reasons to root for the scrappy upstarts challenging the conventional wisdom and building alternative technologies to store clean energy for days, as will be needed for renewables-heavy grids. But the last decade has seen the long-duration storage field make outlandish promises and instead deliver bankruptcies or a slow-rolled smattering of small demos.

This year, the remaining entrepreneurs gave us something different: signs of financial sure-footedness and tangible steps toward long-awaited scale. At the same time, the mainstream storage industry reminded the world of the value of different, more fire-resistant technologies.

This is still more windup than pitch, but just wait for next year.

1. Cash like never before
   Investment tallies provide an indirect measure of long-duration storage startups’ prospects but a crucial one nonetheless. And this year delivered windfall investment for leading entrants in this space.

Energy Vault made the biggest splash, pulling in $110 million from SoftBank’s Vision Fund this summer. That marked the single largest equity investment in a stationary storage company, according to Wood Mackenzie’s investment database (battery companies targeting electric vehicles have raised bigger rounds).

SoftBank’s judgment took a reputational hit when star investment WeWork imploded this fall, and it doesn’t have a track record of storage picks. But the money stands: Energy Vault has gobs of cash to construct its initial pipeline of gravity-based storage plants, which use a futuristic automated crane to stack and lower massive blocks. That’s not a sentence Greentech Media could have written a few years ago, when the litmus test for a promising long-duration storage company was mere survival.

Ten teams working to drive down the cost of long duration storage are competing in a way, using federal grant support to make enough progress to earn a follow-on grant for pilot-scale production. Projects include a sulfur flow battery for full-week backup capability, and a more efficient means of converting electricity to hydrogen and back again.

Each project aims toward a goal of 5 cents/kWh for storage that can last for days, under the DAYS program of the U.S. Department of Energy’s Advanced Research Projects Agency (ARPA-E).

Here are highlights of the ten projects, spanning corporate, university and hybrid teams.

Sulfur flow batteries

Flow batteries use electricity to produce an electrolyte, which may be stored separately from the battery. The electrolyte is later “flowed” through the battery to generate electricity. As a result, long-duration storage using flow batteries requires only a large storage capacity for electrolyte.

Form Energy aims to achieve “full-week backup capability” with a sulfur flow battery “at a factor of 10 or greater cheaper” than lithium-ion batteries, said company co-founder Marco Ferrara in a video posted by global utility Enel. Form Energy may ultimately pilot its battery technology in a joint project with Enel.

“Aqueous sulfur flow batteries represent the lowest chemical cost among rechargeable batteries,” says Form Energy’s grant award notice, but have low efficiency. To improve efficiency, the firm is working on anode and cathode formulations, membranes and physical system designs.

A United Technologies project is focused on sulfur and manganese flow batteries, and has three project partners: Lawrence Berkeley National Laboratory, MIT, and Pennsylvania State University. The project aims to “overcome challenges of system control and unwanted crossover of active materials through the membrane.”

Electricity to hydrogen

A team at the University of Tennessee, Knoxville aims to improve the efficiency of the round-trip process of converting electricity to hydrogen and back again. The current process uses electricity to power an electrolyzer to convert water to hydrogen and oxygen, and then uses the hydrogen and oxygen in a fuel cell to produce electricity and water.

“It has long been a goal to make a regenerative fuel cell, a single device that functions as both a fuel cell and an electrolyzer,” said lead researcher Dr. Thomas Zawodzinski, as quoted in a university press release. “However, such devices have previously suffered from poor overall efficiency. The new project uses an alternative approach by changing one of the chemical reactions in the cell and bypassing the efficiency bottleneck.”

What a difference a decade can make. In 2010, batteries powered our phones and computers. By the end of the decade, they are starting to power our cars and houses too.

Over the last ten years, a surge in lithium-ion battery production drove down prices to the point that — for the first time in history — electric vehicles became commercially viable from the standpoint of both cost and performance. The next step, and what will define the next decade, is utility-scale storage.

As the immediacy of the climate crisis becomes ever more apparent, batteries hold the key to transitioning to a renewable-fueled world. Solar and wind are playing a greater role in power generation, but without effective energy storage techniques, natural gas and coal are needed for times when the sun isn’t shining or the wind isn’t howling. And so large scale storage is instrumental if society is to shift away from a world dependent on fossil-fuel.

UBS estimates that over the next decade energy storage costs will fall between 66% and 80%, and that the market will grow to as much as $426 billion worldwide. Along the way entire ecosystems will grow and develop to support a new age of battery-powered electricity, and the effects will be felt throughout society.

Changing electrical grid
If electric vehicles grow faster than expected, peak oil demand could be reached sooner than expected, for instance, while more green-generated power will alter the makeup of the electricity grid.

In a recent note to clients, Cowen analysts said that the grid will “see more changes over the next ten years than it has in the prior 100.”

The growing energy storage market offers no shortage of investing opportunities, especially as government subsidies and regulations assist the move towards clean energy. But like other highly competitive markets — such as the semiconductor space in the 1990s — the battery space hasn’t always provided the best return for investors. A number of battery companies have gone bankrupt, underlining the fact that a society-altering product might not reward shareholders.

“Eventually this will come down to some industry leaders who make some money,” JMP Securities’ Joe Osha said. “I think all these companies are going to do a good job of delivering declining prices for [electric vehicle] manufacturers over the course of the next 5-10 years. I am not so sure that they are going to generate great stockholder returns in the process.”

Energy storage is a rapidly growing segment of the clean energy sector, and prices are dropping fast. Yet many are still struggling to understand how to value energy storage as an investment.

As a growing number of cities, states and businesses commit to 100 percent clean energy, storage is already playing a pivotal role in determining how they will meet these targets. Wood Mackenzie’s latest Global Energy Storage Outlook projects that deployments will grow 13-fold over the next six years, from a 12-gigawatt-hour market in 2018 to a 158-gigawatt-hour market in 2024.

This emerging market represents a huge opportunity. Global investments of $374 billion a year will be needed to upgrade the grid with enough flexibility to account for the variable power generation profiles of renewable technologies like solar and wind. Storage solutions are now a growing part of this energy transition and will represent a $150 billion industry in the U.S. alone by 2023.

However, massive deployment numbers and dropping costs won’t streamline project finance for energy storage in the short term. As a nascent industry, battery storage lacks historical data, requiring investors and lenders to familiarize themselves with its unique qualities.

Installing storage, whether as a standalone asset or by adding it to an existing utility power source, is highly individualized from one project to another. So extrapolating risk and returns from any given asset is not straightforward. Each project draws power from a unique generation source (renewable or traditional power plants) and is interconnected to a regionally regulated power market and a unique revenue stream.

Some storage projects are able to generate income both while charging and deploying energy, while others are focused just on deployment. There are also interconnection considerations depending on how and where your storage project plugs in. Are you directly charging from the grid? From a solar or wind farm or some other standalone generation facility?

Another consideration for investors is that batteries in a storage project have shorter lifespans of 10 to 15 years versus solar or wind energy assets that may last twice as long. And similar to PV modules, which lose efficiency as they age, it’s critical to understand the factors that impact a battery’s ability to store energy as it ages and to factor in the cost of replacement as needed. Understanding the intricacies of asset management and optimization is highly complex, but it is necessary in order to adequately mitigate risk for each storage portfolio.

To realize the full potential for the investment markets and the global energy transition, it’s critically important to understand the entire value stack that integrated storage brings to the table.