A week after Tesla announced it had won a tender for the installation of the world’s biggest battery storage system in Australia, Siemens and AES launched a joint venture that focuses exclusively on battery storage systems. The first comments from observers suggest that this joint venture, called Fluence, could turn into stiff competition for Tesla, and there are facts to support this suggestion.

Tesla has 300 MW worth of battery-powered storage systems across 18 countries. AES and Siemens boast a combined 463 MW of such projects across 13 countries. Tesla has a gigafactory and plans to build three more. AES has a decade of experience in energy storage systems, and Siemens has more than a century of experience in all things energy technology as well as an established presence in over 160 countries around the world.

It certainly looks like the energy storage sector just got a lot more exciting. Bloomberg’s Brian Eckhouse quotes AES’ chief executive, Andres Gluski, as saying that energy storage is “the holy grail for renewables.” Gluski is certainly right: the biggest hurdle for the wider adoption of renewable energy in the past has been the lack of reliable energy storage capacity that would solve the pesky intermittency challenge that is inherent in solar and wind power generation.

With battery-based storage, renewable energy will receive a major boost; there’s hardly any doubt about it. According to Bloomberg New Energy Finance, while there was 4 GW of battery-based storage capacity installed by the end of 2016, it is estimated to reach 45 GW by 2024.

There are three drivers to this increased adoption: reliability, sustainability, and affordability, as expressed by Siemens’ head of energy for the U.S. and Canada. This is what led Siemens and AES to join their forces, in fact, or, as Gluski put it to Green Tech Media, “We have to massify this product to continue to bring down costs. On long-duration systems, we think we’re the most competitive in the market, but we’ll be even more competitive if we’re even larger.”

Given the experience, reputation, and international presence of the Fluence partners, the company could indeed become a serious challenge for Tesla, and it’s not going to be the last one.

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There goes Texas again. European researchers are talking up the advantages of compressed air energy storage, and a Houston startup called Apex-CAES has already jumped the gun with big plans for a new compressed air system near the city of Palestine, Texas. If all goes well with the first system Apex has plans for more, and Texas can kiss its fleet of aging coal power plants good-bye.

The rise of compressed air energy storage (CAES) also complicates the picture for natural gas power plants and large scale lithium-ion battery storage, so let’s take a look and see what’s going on with that.

The key factor making CAES economical in Texas is the state’s booming wind industry. Apex explains that it will take advantage of low cost (as in, practically freesometimes) off-peak power from wind turbines spinning at night.

Cheap wind power, and the state’s unified wholesale electricity market, provide Apex with the price differential that will turn a profit.

Low cost natural gas also factors in, since the system requires compressed air to be heated during peak demand periods and other times (more on that in a minute). According to Apex, though, CAES is more economical than conventional gas power plants, and uses far less gas.

Here’s the breakdown on emissions from Apex:

CAES energy production results in 40% fewer emissions per MWh than a combined cycle gas turbine, and its ancillary service production yields 98% fewer emissions per MWh.

Apex also points out that the system does not transfer energy from fuel to steam, so it requires “a fraction” of the water used in conventional power plants.

That should make natural gas stakeholders nervous. Right now cheap natural gas is the driving force pushing coal out of the power generation market, but low cost wind and solar are beginning to compete with gas in some areas, and the U.S. Department of Energy is working toward a grid modernization strategy that includes a growing share of renewables.

Compressed air storage could give renewables the edge they need to start claiming bigger chunks of the power market and accelerate the transition out of fossil fuels.

That could make lithium-ion battery stakeholders nervous, too. According to Apex, the cost advantages of CAES over large scale Li-ion arrays are significant:

Cost of storage for CAES is $18/kWh, versus $435/kWh for a lithium-ion battery.

CAES operating life of more than 30 years is three times that of a lithium-ion battery, resulting in dramatically lower annualized costs.

One additional advantage is that CAES is essentially an underground operation. Apex anticipates that surface “disturbance” can be kept as low as 10 acres for a 317 megawatt CAES system.

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Battery lifespan to match generation assets

In recent weeks, discussions over the credibility of Elon Musk’s statements have been culminating. Even though the commencement of the Model 3 production and Q2 deliveries grabbed the most attention, the last few days indisputably belonged to Tesla’s Australian energy storage deal. Much to my surprise, the project has been immediately surrounded by a strong wave of skepticism, which comes primarily from Tesla’s short sellers. For example, Seeking Alpha fellow contributor Montana Skeptic wrote:

If the South Australia deal were going to change the losing trajectory of Tesla Energy, wouldn’t Tesla be announcing the great news in a press release, accompanied by tweets from Musk? Of course it would, and of course, he would.

However, as convincing as these statements and main arguments of the article may seem at first glance, I believe that they fail to put the deal in a broader context and as a result provide a distorted view of the reality.

Let me explain this further in the following paragraphs.

Is money the only benefit Tesla gets from the Australian deal?

Certainly not. As Elon Musk emphasized on several occasions, Tesla’s mission is to accelerate the world’s transition to sustainable energy. In this sense, Tesla focuses on goals greater than making money every single quarter and therefore financial details of the latest giant battery deal in South Australia should be seen at least as important as the company’s reputation, credibility and expertise.

Apart from helping to solve Australia’s power problems, Tesla’s energy storage solutions also support numerous other applications such as electricity price optimization or availability of an emergency backup in the event of a grid interruption due to unexpected environmental disasters, which was the key rationale for building the world’s current largest battery system in Southern California.

With a constantly growing share of renewables in the global energy basket, the demand for energy storage systems will only rise. More and more commercial subjects will be looking to take an advantage of peak shaving, load shiftingand demand response features of energy storage systems and therefore Tesla needs to be building its brand in this sector from now on.

Was the tender non-standard by any standard measure?

Although the majority of media reported that there were 91 bidders on the project, 14 bidders were invited to provide more detail and five considered for detailed assessment, some observers suggest that the tender was rigged and “normal bidding procedures were sidestepped“. If this were true, some investigation would likely have been already launched and a tangible evidence would have been provided. Without any material testimonies, these allegations remain just false assumptions and Twitter photos will mean nothing more than Twitter photos.

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Unveiled just before the July 4th holiday, Massachusetts’ new energy storage target left a bittersweet taste with many battery companies. 

On July 1, the state’s Department of Energy Resources set a target for the state’s electric distribution companies to procure an aggregate of 200 MWh of energy storage by Jan. 1, 2020. But the State of Charge report that the DOER issued in September 2016 had said that the state could support a 600 MW energy storage target.

“The 200 MWh target is slightly under par even after accounting for potential market ramping from 2020 to 2025, as costs keep coming down and market is more mature,” said Ravi Manghani, director, energy storage at GTM Research.

And Timothy Fox, vice president and research analyst at Clearview Energy Partners, said the target set was “far more modest than broad stakeholder expectations.”

Fox also noted that the DOER target is less stringent than proposals offered by the state’s electric companies. “Unitil, Eversource and National Grid collectively recommended voluntary targets of 200 MW, 500 MWh by 2020, and 600 MW, 1,500 MWh by 2025.”

But “the key to understanding the target is the time frame,” said Judith Judson, Commissioner of DOER.

The 600 MW target recommended in the State of Charge report was for a 2025 timeframe. The recently set target has a 2020 target date to coincide with the deadlines in Massachusetts’ comprehensive energy bill signed in August 2016.

The energy storage target is “more aggressive than what was required in the law, Judson noted, but she also notes that there are several other programs aimed at bolstering energy storage, and they should all work in concert to move storage forward in Massachusetts.

“The new target sets up the state perfectly for hitting the 600 MW target by 2025,” she said.

In addition to the recent energy storage target, the DOER has implemented several measures to promote energy storage in Massachusetts since the State of Charge report was released last year,

Judson said Massachusetts was the first state in the nation to offer incentives for combining solar power installations with energy storage through its Solar Massachusetts Renewable Target (SMART) program. And the state’s ongoing solicitation for 1,600 MW of offshore wind also allows for pairing storage with wind resources.

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Albemarle’s (NYSE:ALB) leading lithium business provides avenues for growth through the electric vehicle and battery storage markets. These growth markets, coupled with supply constraints buoying lithium prices, will power the firm’s business for decades.

Quick Take and Stock Performance

Albemarle is a leading supplier to the growing energy storage and electric vehicle markets through its lithium business. ALB also has exposure to solar through its Performance Catalyst Solutions business, which produces high-purity metal organics used in solar cell production. The same division supplies LED manufacturers (general lighting and displays). While these are the “in-demand” markets the company serves, the firm is a diversified specialty chemicals producer serving the petroleum refining, consumer electronics, plastics, lubricants, pharmaceuticals, crop protection, food-safety and custom chemistry markets. ALB’s diversified portfolio is a foundation from which the firm can power growth in these in-demand markets.

The company’s stock has handily outperformed the S&P since the start of 2016, returning 89% vs. 19%, respectively. The same performance carries over to the 2017 YTD subset, with ALB returning 23% against the S&P’s 8%. The recent stock performance is heavily driven by the company’s purchase of Rockwood Lithium in 2014; ALB’s lithium business grew EBITDA 56% YoY and contributed $37M to the $21M EBITDA growth YoY for the first quarter. For full-year 2016, the Lithium and Advanced Materials division grew both net sales and EBITDA 16%, while company wide net sales were down 5% and EBITDA virtually flat.

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Delta Group, a global leader in power and thermal management solutions, today launched its Outdoor Energy Storage System (ESS) Cabinet, expanding its extensive line of energy storage solutions. This new solution joins the company’s already comprehensive portfolio of renewable power conversion and energy storage technologies for the commercial and industrial applications. The ESS Outdoor Cabinet will be on display at booth 9021 at Intersolar for the first time, now through July 13.

“With Delta’s diversity of product offerings and systems expertise, we have become a key resource of complete solutions for commercial and industrial buildings, schools and healthcare facilities, as they look to adopt and optimize onsite renewable energy installations,” said M.S. Huang, President of Delta Americas. “Our commitment to R&D is unmatched, which allows us to provide the most cutting-edge solutions in support of the ever changing energy landscape.”

Delta Outdoor ESS Cabinet

The Delta ESS Cabinet incorporates lithium-ion battery modules, a Battery Management System (BMS), and a built-in HVAC system for thermal management. Boasting a scalable system configuration, and IP55 rated for dust and water protection, the ESS Cabinet can easily meet a diverse array of field capacity requirements, making it the perfect solution for any environment.

Through high energy density and a long lifecycle, the ESS Cabinet helps commercial and industrial buildings optimize energy usage and save on operational costs by enabling demand charge management through peak shaving, time-of-use optimization via load shifting, power backup, renewables self-consumption optimization and ancillary power services. The ESS Cabinet has a scalable capacity up to 1.32 MWh, making it ideal for medium to large scale commercial and industrial deployments.

Delta’s Full PV and Energy Storage Solution

At booth 9021, Delta will also be showcasing a wide range of solutions that can be paired with the new ESS Cabinet or serve as add-ins for existing installations. Delta’s portfolio consists of a wide-range of solar inverter technologies, power conditioning technology and even control solutions.

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It also shows that increasing the deployment of energy storage combined with renewable energy would help Minnesota meet its statutory goal of 80 percent carbon reduction by 2050 sooner and at a lower cost than other technologies.

The report, “Modernizing Minnesota’s Grid: An Economic Analysis of Energy Storage Opportunities,” is the result of months-long effort led by the Energy Transition Lab (ETL) at the University of Minnesota’s Institute on the Environment. Lessons learned could also be applied to other Midwest states that are in the Midcontinent Independent System Operator (MISO) footprint.

“Energy storage is a linchpin for Minnesota: It has the potential to reduce our system costs, increase electric grid resiliency, and even decrease greenhouse gas emissions in our broader coal-dependent region,” said Ellen Anderson, director of the Energy Transition Lab. “While the federal government questions the reliability of renewable energy, states like Minnesota are stepping up to show it’s possible to connect renewables and storage to reduce both costs and greenhouse gas emissions, while maintaining a reliable grid.”

Input from dozens of Minnesota energy experts laid the foundation for the analysis and final report. ETL convened more than 60 stakeholders, including representatives from utilities, energy technology companies, nonprofits and government, in two Energy Storage Strategy Workshops starting in 2016 to assess the opportunities for energy storage in Minnesota and at MISO. Participants explored whether and how energy storage could be used to help Minnesota achieve its energy policy objectives, and enable greater system efficiency, resiliency and affordability. Project collaborators Strategen Consulting and Vibrant Clean Energy conducted the use-case and system-wide modeling for the analysis, with input from MISO.

In addition to showing that storage plus solar already could be more cost effective than peaking gas plants, including environmental benefits, the analysis shows that the deployment of storage in Minnesota is projected to increase the use of low-cost renewable energy generation dispatched in MISO and to reduce the need for expensive transmission investments.

Furthermore, it shows that as standalone storage becomes more economic, it will be able to compete with and displace new gas combustion turbines installed to meet peak demand. Beyond 2022, storage was found to be more cost effective than a simple cycle gas-fired peaking plant for meeting Minnesota’s capacity needs.

Connexus, Minnesota’s largest distribution cooperative, was a participant in the workshops and is already pursuing procurement of a 20MW, 40MWh energy-storage system. It will be one of largest storage projects of its kind in the Midwest. According to Connexus, responses to its Request for Proposals have been encouraging, with prices even more competitive than anticipated.

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Two of the biggest names in energy storage development have decided to join forces.

AES, a leader in megawatt-hours deployed, will launch a new company along with global energy systems provider Siemens. The jointly owned venture, dubbed Fluence, will scale up commercial and grid-scale storage deliveries worldwide.

The unprecedented move marks a pre-emptive consolidation of power in a young industry — and a new competitor for emerging market leader Tesla. 

AES started deploying large utility-scale storage a decade ago, making it a seasoned veteran in the new and emerging advanced energy storage world.

The major independent power producer deployed its own projects in PJM’s frequency regulation market, and gradually transitioned to selling its Advancion system to third parties. The company recently completed the largest lithium-ion battery to be deployed date for San Diego Gas & Electric as part of the Aliso Canyon gas leak response.

It could have kept going with the same game plan. But early leaders of emerging markets don’t always retain that lead. With Fluence, AES hopes to solidify its position amid an increasingly bustling competitive landscape.

“We have to massify this product to continue to bring down costs,” said AES CEO Andrés Gluski, in an interview. “On long-duration systems, we think we’re the most competitive in the market, but we’ll be even more competitive if we’re even larger.”

For more than a century, Siemens has built the heavy-duty equipment that drives the grid, like generators and balance-of-plant devices. In the storage space, it has focused on commercial and industrial development for the last five years with the Siestorage product, and will bring that expertise to the joint venture.

Perhaps more consequential, though, is the company’s global footprint, which includes a sales presence in 160 countries with deep ties to utility, industrial and commercial customers.

“If you look at our energy business, we’re very well connected with all the leading utility players in the world,” said Dan Wishnick, sales and business development manager at Siemens Energy. “It’s a rare customer we haven’t touched in some shape or fashion.”

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