Lux’s breakdown of the market as forecast by analyst Chris Robinson and team. Image: Lux Research.

We are pleased to share our Energy Storage interview with Dr. Carolin Funk,  Chief Operating Officer, FreeWire Technologies, USA. Dr. Carolin was a speaker at the 10th Energy Storage World Forum in May 2017 in Berlin. Learn more about the 11th Energy Storage World Forum and the 5th Residential Energy Storage Forum 2018 in Berlin by downloading the program

And here are the questions from our editor. Enjoy the interview!

What are the global technological market innovations that drive the next generation Energy Storage solutions? And in your opinion, what are the biggest challenges?

A number of variables contribute to, and detract from, growth in the energy storage market. As with many industries, we are seeing economic and political factors playing vital roles. Cost reductions from adjacent markets, such as battery-powered electronics (like electric vehicles) and large-scale renewable energy growth (such as solar) are paving the way for increased storage, while regulation around grid stability and renewable adoption has been extremely inviting as well. That being said, significant challenges exist in the market, too. In particular, there is no “one-size-fits-all” solution to energy storage, meaning a certain amount of customization is required. Value stacking and flexible solutions are the key to finding the right option across customer segments and scaling up manufacturing.

At ESWF in Berlin you tapped into very interesting topic “Will second-life Battery Systems Ever Be More Cost Effective Than An Efficient Battery Recycling Industry?” Is there a straightforward answer and where are the things headed?

The battery world is constantly innovating, meaning there are no straightforward answers! That being said, a number of patterns are emerging in the second-life battery ecosystem that allow us to make some predictions about what factors will be most influential. Right now, there is very little regulation, meaning that utilizing second-life batteries is an economical choice. However, as prices for new batteries fall, and the market becomes more saturated with second-life batteries, we will see new trends emerge based on this changing landscape.

FreeWire believes that second-life batteries have the potential to benefit the entire energy storage market; however, all the players will need to rally together to share insights and make this opportunity a viable one. The question of whether or not it will be more cost-effective than recycling will also depend on the simultaneous development of the lithium-ion battery recycling industry. Battery costs, industry expectations, and other variables — such as regulation — will factor into cost-effectiveness. Whether we are looking at the future of recycling or energy storage, voices from each of these different corners will likely impact the direction of the market. The worst thing that can happen is just seeing these batteries locked up in warehouses; as long as all the different partners work together to offer a better solution, recycling and reuse can both be viable alternatives.

What kind of partnerships do we need to build between different members of the value chain to make energy storage successful?

There are a number of invaluable partnerships on both the supply and demand sides of the process. Fostering relationships early on in the development of energy storage systems with original suppliers (such as lithium-ion battery manufacturers) and policymakers is key to a lean, reliable supply chain. On the other end of the spectrum, tapping into the right markets for demand is vital. Partnering with large-scale adopters of energy storage, such as utilities, ensures a healthy understanding of customer need and viability.

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State standards are driving electric utilities’ use of renewable energy — but without battery storage capacity, electricity generated from wind, water or the sun may soon saturate the market in certain regions.

Ten years ago, utilities underestimated how much renewable energy they would use due to states’ regulations and the falling cost of wind and solar power. But without large-scale battery storage, the increases observed so far could be at risk of plateauing.

The growth and breakthroughs in renewable energy contributed to lowering the country’s carbon footprint since renewable and nuclear energies do not create carbon dioxide; a saturation in the renewable energy market could also hurt some states’ ambitious climate goals.

The Energy Information Administration estimates carbon dioxide emissions from the electric power sector fell about 5 percent last year and the year before, the largest-ever decline for two years in a row since 1973.

A study out this month funded by the Energy Department looked at the relationship between planning and electricity procurement for 12 utilities in 10 Western states through 2015. The study showed Western utilities bought three times more wind energy more than regulators expected based on the utilities’ resource plans.

This uptick may not be surprising due to newer laws in 29 states and the District of Columbia that require utilities to get a set amount of renewable energy. In addition, eight other states have renewable energy goals (as opposed to enforced standards). Montana, for instance, had set a renewable portfolio standard in 2005 to use 15 percent renewable energy by 2015.

NorthWestern Energy, a Montana utility, currently surpasses the standard, with 60 percent of its electricity coming from hydropower and wind generation. But the company says renewables aren’t as reliable as other sources of power.

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Companies are increasingly turning to intelligent energy storage solutions to reduce emissions, increase energy efficiency and enable renewable energy.

According to proudgreenbuilding.com, benefits of intelligent energy storage include:

• Demand charge reduction – Intelligent energy storage reduces demand for energy from utilities, thus reducing the company’s carbon footprint while saving money. It also allows it to respond automatically to spikes in energy usage without increasing electricity costs.
• Onsite power generation – Companies can use intelligent energy storage to implement renewable energy sources such as solar and wind power. This offsets energy demand and reduces its carbon footprint. Companies employing this method can sell unused power back to the grid, resulting in an even greater impact to the bottom line.
• Improved backup control – Blackouts and other power shortage situations can threaten a company’s productivity. However, intelligent energy storage can detect shortages and implement stored power reserves automatically so that a company’s operations are uninterrupted.
• Intelligent building management – Building automation systems (BAS) and building information management (BIM) increases facilities’ operational efficiency by automatically monitoring building systems. BAS and BIM are supported by intelligent energy storage, which increases the efficiency by which buildings use, generate and store energy.

Hybrid Energy Storage Systems (HESS) — an energy efficient storage alternative — have gained media attention of late. The advantages to deploying an HESS include lower cost, increased system efficiency, increased system lifetime due to optimized operation, and the ability to do more and last longer with less overall storage capacity.

States, as well as companies, are adopting energy efficient energy storage initiatives. Today, the New York legislature announced that it has unanimously passed a bill establishing an energy storage deployment program.  The bill, S. 5190, aims to promote the installation of energy storage systems.

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When most people think of energy storage, they probably think of Elon Musk and Tesla‘s (NASDAQ:TSLA) splashy moves with the Powerwall and Powerpack. Panasonic, Samsung, and LG Chem are also eyeing the energy-storage market in one form or another, building out capacity that could supply an expected boom in lithium ion battery demand. 

Lost in the shuffle is General Electric (NYSE:GE), a key supplier to the electricity market worldwide. The company builds everything from fossil-fuel power plants to wind turbines and the components that make up the transmission and distribution grid. And it may have some energy-storage solutions other companies just can’t match. 

Hybrid energy storage

Potentially the most meaningful energy-storage product GE released recently is a hybrid battery storage and gas turbine power plant. The product is designed to replace spinning reserves that are required to keep the grid functional as volatile wind and solar assets fluctuate in their output throughout the day. But instead of burning just natural gas to keep those reserves spinning, there’s a battery acting as a buffer. 

When the storage system is called upon, there’s a 10 MW lithium-ion battery that will ramp up power quickly, with up to 50 MW of natural gas generation. GE estimates the system will result in fuel savings, reduce maintenance cost, and lessen greenhouse-gas emissions that are burned keeping spinning reserves available. 

In this case, the battery isn’t a massive energy-storage system the grid can call upon, such as what Tesla or AES Corporation are building. It’s a buffer between the variable resources on the grid and the fossil-fuel plants that need to back up those resources. 

Energy storage for renewables

In the future, it would make sense that either battery energy storage or a hybrid power plant will accompany major renewable-energy power plants. If GE paired a battery with its wind turbines or a hybrid power plant, it could add tremendous value to the grid, reducing the variability that grid operators have to deal with. Eventually, it could even pair these products with inverters it already sells for the booming solar market. 

A few weeks ago, when I suggested that GE should buy First Solar (NASDAQ:FSLR), I mentioned that energy storage is the kind of product it could easily fold into its offering to make the solar product more valuable. And with GE trying to grow its inverter business, it would make a lot of sense to vertically integrate its offering with solar and energy storage. 

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Concentrating solar power (CSP) has existed since 1866, but for the last couple of decades, photovoltaic (PV) has been the dominant solar technology. Now with technological advancements and energy storage, CSP is poised to make a significant comeback. Cleanergy AB, a Stirling CSP technology provider based in Sweden, has signed an agreement to deploy a 200-MW CSP project in China. Datang Holdings New Energy Technologies Ltd in China will secure government approvals and financing for this CSP project.

The project will be built in two phases: 50 MW in 2018 and 150 MW with latent heat storage. There are three forms to store heat: latent, sensible, and thermochemical. The latent heat storage uses the process of melting or crystallizing a material known as Phase Change Material (PCM). Cleanergy believes that it will be essential for all renewable technologies to be equipped with energy storage as penetration of renewable energy increases in the grid. “For CSP specifically, the competitiveness against PV hinges on a more efficient solution for delivery of dispatched energy,” commented Jonas Eklind, president and CEO of Cleanergy.

Aalborg CSP, another CSP provider, made a joint development agreement with SaltX Technology to offer cost-effective, fully-scalable, and dispatchable renewable energy solutions. Based in Sweden, SaltX has invented a patented technology to store thermal energy with salt.

“EnerStore, SaltX’s large-scale storage, is a thermochemical storage, which chemically holds the thermal energy in the salt so that the temperature 500 degree Celsius can be taken out at the same level without maintenance heating and with no or marginal heat losses,” explained Karl Bohman, CEO of SaltX Technology. “In addition, the EnerStore material, with the nano-coating, does not corrode as opposed to molten salt. It is non-toxic and can be recycled at the end of its life cycle.”

Eklind’s comment echoed this. “In order to compete with PV, the storage component in CSP is critical,” he said.

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Stem Inc. activated several of its virtual power plants, networks of energy storage systems located at business and institutions throughout the state, multiple times during a heat wave last week, automatically dispatching stored energy to provide emergency demand response services to the California System Independent System Operator (California ISO) and three power utilities.

As a heat wave approached California on June 19, 2017, energy prices in the day-ahead wholesale market rose, signaling a need for resources that could act quickly to increase energy supply or reduce demand to prevent widespread blackouts. Having regularly offered stored energy from its network into the California ISO markets since 2015, Stem’s latest bids started to clear.

Stem first committed to reduce energy demand for Pacific Gas & Electric (PG&E) and Southern California Edison at 5 pm PT on June 20 through the Day-Ahead settlement process the night before. Then at 5:15 pm on June 20, while already dispatching in four areas within the PG&E and SCE service territories, additional Stem offers to provide energy with less than five minutes’ notice were accepted further south in three parts of San Diego Gas & Electric’s (SDG&E) service territory. Stem stepped up, dispatching energy storage systems at customer locations across seven utility zones to deliver on-time and more than promised.

In this one hour, Stem delivered stored energy from its customer network to seven strained areas of the CA grid simultaneously at the height of a heat wave. Acting as virtual power plants, aggregations within the Stem network automatically responded to rising wholesale prices in as little as five minutes to dispatch 1.6 MW of targeted relief, 21 percent more than committed. Stem’s network similarly dispatched fast, on-demand power 10 more times across the three utilities’ service territories in the remainder of the week as the heat continued.

In California, Stem uses the CAISO Proxy Demand Response (PDR) mechanism to aggregate DERs, and has been a very active participant in their wholesale market over the last three years. CAISO prices have cleared higher than the bids of storage-based demand response providers more frequently than expected in 2017. For example, Stem’s network responded to 150 “real-time,” or five-minute dispatch events for SDG&E from January to May of 2017. Stem is the leader in bidding aggregated distributed energy resources (DERs) into wholesale markets in California and across the U.S.

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Boston, MA, June 27, 2017 (GLOBE NEWSWIRE) — Consumer electronics like smartphones and laptops have traditionally driven the most demand for energy storage devices such as lithium-ion batteries, but clean energy advances mean that transportation and stationary energy storage will soon become the largest energy storage markets, according to Lux Research, a leading provider of intelligence services, helping clients drive growth through technology innovation.

While consumer electronics make up the majority of revenue today, increased adoption of electric vehicles and hybrids drive transportation to dominate the energy storage industry with a $69 billion market in 2025. Transformations in the electricity grid mean that stationary storage has the highest growth rates and will reach $19 billion in 2025. This growth will have profound implications, ranging from how whole economies are powered to how populations and products move around.

“From electric cars to consumer electronics, we’ve already seen the importance of improved energy storage to enable better performance,” said Christopher Robinson Lux Research analyst and a lead author of the report, Quantifying Growth Opportunities in the $105 Billion Energy Storage Market. “The emergence of plug-in vehicles from Tesla and its competitors will reshape the energy storage market, while increasing renewable deployments will make stationary storage energy another source of growth.”

Lux analysts studied more than a dozen energy storage applications to quantify the opportunity in this rapidly growing market, finding that:

• Transportation is the clear long-term driver of energy storage demand. Transportation applications are now the largest source of energy storage demand – expected to reach 46 GWh in 2017 compared to just 27 GWh from consumer electronics. Although energy storage volume in consumer electronics will grow at six percent compound annual growth rate (CAGR) through 2025, falling battery prices mean the market size will remain relatively flat.
• Electric vehicles (EVs) are the largest opportunity for growth. Within the transportation market, the applications that will drive the highest revenues are those using the largest packs: electric buses and passenger EVs. Passenger EVs make up the biggest opportunity, worth $32 billion in 2025 – 46 percent of the market for energy storage in transportation. Electric buses will see a faster rate of adoption compared to EVs, but with fewer total vehicles sold, they remain the second largest opportunity, growing at 22 percent annually to a $9.7 billion opportunity in 2025.
• China and India lead stationary energy storage growth. Stationary energy storage will be a 34 GWh market worth $19 billion in 2025, largely driven by the emerging long-duration market. The need for long-duration storage in uses like peak power shifting or renewables integration will expand significantly, with the emerging markets of China and India driving the most growth.

The report titled, Quantifying Growth Opportunities in the $105 Billion Energy Storage Market, is part of the Lux Research Energy Storage intelligence service.

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The list of huge multinational companies seeking to source 100 percent of their energy from renewable generating sources seems to grow on a monthly basis — 63 percent of the organizations on last year’s Fortune 100 list have made a proclamation of this sort.

While many have turned to the U.S. market first to start delivering on those promises, the reality is that they’ll need to look far beyond America’s borders to reach them.

They won’t need to search for long, as evidenced by ongoing investments in clean energy that totaled more than $53 billion during the first quarter of 2017, according to data from Bloomberg New Energy Finance. While that was a relatively quiet period compared with past years, it still brought one of the largest solar projects: Italian energy powerhouse Enel’s 754 megawatt photovoltaic installation in Mexico.

And make no mistake, investments in clean energy aren’t simply altruistic.

While the concerns of each region and market are unique, common themes drive the worldwide transition away from coal-fired power plants to other generating sources and motivating energy companies such as Enel. The utility has set a goal of becoming a carbon-neutral generator by 2050, and it is far less grounded in emotions than economics. 

The reality is that it makes sense to avoid huge capital investments in massive new power plants that will become obsolete before they come online. Instead, companies such as Enel and another market disruptor — Australia’s AGL Energy, which is in the process of closing all its coal plants — are prioritizing investments in digital technologies.

In particular, their focus is on software and hardware that help make intermittent generating sources, such as solar and wind, more reliable. Extending the life of legacy plants during the transition is another priority. These energy companies also are keenly interested in applications and services that help them sense and respond much more quickly to the concerns (and buying habits) of commercial and retail customers.

“There are two major mistakes that this industry has made over and over again, in the past two decades,” said Francesco Starace, chief executive of Enel. “One is to build huge plants that will take years and years to be completed. When I say years and years, I mean more than three years. And second, build generating plants without visibility into whom to sell the energy to, for what price and how long, which is called merchant exposure in the industry. We said, ‘We think that this is one of the worst possible times to [keep making] this mistake.'”

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