Think the plummeting costs of solar and wind are transforming the energy landscape? Then you should be betting on ways to warehouse that power.

To understand why, consider: Unlike almost all their rivals in the energy-generation space, solar panels and wind turbines are mass-produced goods. That means they’re subject to the rules of continual improvement and falling costs that we see with semiconductors, household products and clothing as production volumes rise and factories undercut each other. Traditional power plants are essentially large-scale construction projects, which rarely achieve the same sorts of efficiency dividends.

As a result, the cost of new-build renewables has been sinking. The highest-cost solar and wind projects in the U.S. will now produce electricity at least as cheaply as as the lowest-cost coal plants, according to a report last year by Lazard Inc.

In Australia, that price differential means one of the world’s largest coal exporters is unlikely ever to build another generator powered by the stuff, Catherine Tanna, managing director of EnergyAustralia Pty, told a Bloomberg Invest conference in Sydney Wednesday. By the early 2020s, renewables will have gotten so cheap that it will be more cost effective to build them than to operate even an existing coal or nuclear plant, Jim Robo, CEO of Florida-based NextEra Energy Inc., said during an investor call in January.

Negative Charge

The price premium for new solar generation over coal in Asia has slumped, and gone negative in India.

Coal miners hope to see a final leg of demand over the coming decade as incomes in emerging Asia rise — but even there, the rapidly falling cost of renewables means solid fuel is close to being priced out of the market, data from Bloomberg New Energy Finance show.

The trouble with things that get extremely cheap, however, is that you often end up with too much of them. That situation is exacerbated by the no-off-switch nature of wind and solar power. Take California’s recent mandate to put solar panels on the roofs of all new buildings. As my colleague Liam Denning wrote last week, one likely effect will be to push more electrons into a mid-afternoon electricity market that’s already glutted with supply.

A “may day”’ call this year came from the U.S. Department of Energy. The DOE made a $30 million funding commitment to long-term energy solutions through its Advanced Research Projects Agency-Energy (ARPA-E) office. “Long-term,” as defined in the project scope, starts at 10 hours and extends up to 100 hours of stored energy.

Funding from the new program called DAYS (Duration Addition to electricitY Storage) is open to any technology able to meet siting, output, and cycle requirements. And the solution must deliver an average cost of 5¢/kWh cycle across the range of storage durations.

Why Fund Energy Storage

The shift to renewable energy continues, despite uncertainty about the direction of U.S. policy under the current administration.

¤ Non-hydro renewable energy generation increased +15% in 2017 with wind and solar capacity reaching 143 GW, a 431% increase in the last decade.

¤ And a recent survey of North American utility companies from Utility Dive shows sector leaders remain bullish about the growth of renewable sources. Results shown in the table below indicate the industry recognizes the transformation cannot be implemented without energy storage:

The anticipated growth reflects current commitments to cleaner energy by leading U.S. utility companies.

¤ Consumers Energy in Michigan: 40% renewable energy by 2040.

¤ National Grid in the Northeast: 80% reduction in carbon emissions by 2050 (vs. 1990).

¤ Xcel Energy in the Central U.S.: 40% renewables by 2021, 60% by 2030.

¤ Ameren Missouri: Increase wind power to 700 mw by 2020 and solar to 50 mw by 2025.

¤ Duke Energy in the Southeast and Midwest: 40% reduction in carbon emissions by 2030.

¤ Southern California Edison: 80% solar, wind, hydro power by 2030.

¤ American Electric Power in the Southeast and Midwest: 80% reduction in carbon emissions by 2050 (vs. 2000).

¤ MidAmerican Energy in Iowa: 95% renewable energy by 2021.

¤ WEC Energy Group in Wisconsin: 40% reduction in carbon emissions by 2030

¤ DTE Energy in Michigan: At least 80% reduction in carbon emissions by 2050.

¤ First Energy in the Mid Atlantic: At least 90% reduction in carbon emissions by 2045 (vs. 2005).

It’s great in the lab, but will it actually work? That’s the million-dollar question perpetually leveled at engineering researchers. For a family of layered nanomaterials, developed and studied at Drexel University — and heralded as the future of energy storage — that answer is now, yes.

For some time, researchers have been working on using two-dimensional materials, atomically thin nanomaterials, as components for faster-charging, longer-lasting batteries and supercapacitors. But the problem with the existing techniques for doing so are that when the thickness of the material layer is increased to about 100 microns — roughly the width of a human hair, which is the industry standard for energy storage devices — the materials lose their functionality.

Recently published research from Drexel and the University of Pennsylvania, shows a new technique for manipulating two-dimensional materials that allows them to be shaped into films of a practically usable thickness, while maintaining the properties that make them exceptional candidates for use in supercapacitor electrodes.

The study, published in the journal Nature, focuses on using soft materials — similar to those in the liquid crystal displays of phones and televisions — as a guide for self-assembly of MXene sheets. MXenes, are a class of nanomaterials discovered at Drexel in 2011, that are particularly well-suited for energy storage.

“Our method relies on a marriage between soft material assembly and functional 2-D nanomaterials,” said Yury Gogotsi, PhD, Distinguished University and Bach professor in Drexel’s College of Engineering, who was a co-author of the research. “The resulting electrode films show rapid ion transport, outstanding rate handling, and charge storage equal to or exceeding commercial carbon electrodes.”

WASHINGTON (May 16, 2018)—Today, the U.S. House Committee on Appropriations passed legislation that would cut Energy Department funding. Renewable energy and energy efficiency programs would sustain a $243 million dollar cut, while ARPA-E, a program key to advancing clean energy technology creation and development, would be slashed by about $28 million. The White House had proposed eliminating ARPA-E in their budget proposal for fiscal year 2019. The legislation would, however, also increase funding for federal energy storage programs.

Below is a statement by Rob Cowin, director of climate and energy government affairs at the Union of Concerned Scientists.

“This committee continues to miss opportunities to speed up the country’s transition to clean energy. The bill cuts the nation’s flagship clean energy research and development program, ARPA-E, which helps develop game-changing energy technologies and fills a critical gap in private sector investments.

“By reducing support for these kinds of programs, the U.S. is ceding leadership on clean energy and technological innovation to countries like China, which is investing in these technologies. You would think U.S. lawmakers would want to promote economic growth by capitalizing on the expanding global market for clean energy technologies.

“This legislation also exposes tensions in ideologies between Congress and the White House. The appropriators increased support for federal energy storage research, approving nearly $10 million in additional funding over the level set in the fiscal year 2018 omnibus bill. Energy storage systems can enable excess wind and solar energy to be stored for later use at times when the sun is not shining, and the wind is not blowing—making them more competitive with fossil fuel-based energy sources.

Vivint Solar (NYSE:VSLR) has spent the past year cleaning up its house in residential solar after the company’s sale to SunEdison fell through. Now, operations are steadily improving. Vivint has also been one of the beneficiaries of Tesla‘s (NASDAQ:TSLA) decision to shrink its solar business, and it has made a relatively quick transition to selling solar systems rather than financing them and then leasing to customers. That’s the good news.

What hasn’t been going so well for the company is its launch of energy-storage products. A partnership with Mercedes-Benz recently went up in smoke after the automaker decided to focus its efforts on large-scale installations, and its effort to go head to head against Tesla’s Powerwall apparently hasn’t been as successful as the company had expected. This leaves Vivint Solar without its key energy storage partner, and with no obvious path to becoming a leader in the rapidly growing energy-storage market. 

Mercedes-Benz abandons Vivint Solar

In May 2017, Vivint Solar and Mercedes-Benz forged an alliance to bring energy storage to the residential solar market. Mercedes-Benz’ supplied the battery units; each one had a 2.5 kW-hr capacity, and up to eight could be strung together in a storage system, enough to power the average U.S. home for about 16 hours. 

Now, the two companies are going their separate ways. Vivint Solar has already replaced Mercedes-Benz’ batteries with LG Chem batteries on its website, but Greentech Media is reporting that LG batteries are only available in Utah, and won’t be rolled out to larger markets like California until later this year. 

It’s likely that more than one fatal flaw contributed to the partnership’s collapse. The requirements an automaker has for an electric vehicle battery don’t entirely translate to what’s needed for one being installed in the home, so there could have been some issues with fit. Also, its batteries individually had far less capacity than Tesla’s 14 kW-hr Powerwall 2. Finally, Vivint Solar was relatively opaque on pricing, but Electrek has reported that the cost of a Mercedes-Benz energy storage system was between $5,000 and $13,000, which may not have been a compelling deal compared to the Powerwall, priced at $5,900 plus installation.

Replacing Mercedes-Benz batteries with LG Chem should help lower costs and bring a company more focused on what the home market needs in energy storage, so there are some positives to bringing LG Chem onboard and it’s probably the right move short-term. But it doesn’t help at all with differentiating Vivint Solar’s product in the marketplace. LG Chem is also partnering with the biggest residential solar installer in the U.S., Sunrun (NASDAQ:RUN), meaning Vivint Solar is only catching up to, not surpassing, the competition.

Lockheed Martin has signed an agreement to supply a GridStar Lithium energy storage system to ComEd, Illinois’ largest electric utility and a unit of Exelon. The 2 MWh system will be integrated into ComEd’s Bronzeville community microgrid project in Chicago.

As explained by Lockheed Martin, a microgrid is a small power grid with defined boundaries that can operate when connected to the larger electrical grid and as an “island” when there’s an interruption on the main grid. It draws on distributed energy resources, like solar power, to serve customers within the microgrid footprint. Lockheed Martin’s GridStar Lithium storage system will help ComEd integrate and use multiple energy resources to provide electricity to critical facilities in an emergency, when the microgrid is not connected to the main electric grid.

“Lockheed Martin is excited to work with ComEd on this innovative project,” comments Frank Armijo, vice president of Lockheed Martin Energy. “Improving grid resiliency and reliability is crucial to the future of secure, efficient energy supply, and Lockheed Martin is looking forward to collaborating with ComEd to reach this goal.”

ComEd’s Bronzeville microgrid will include battery storage and solar power. It will be connected to a microgrid on the campus of the Illinois Institute of Technology (IIT), creating the first utility-operated microgrid cluster in the nation, claims Lockheed Martin. ComEd’s microgrid is expected to serve more than 1,000 customers, including critical service providers such as the Chicago Police Department. In an emergency, the microgrid will enable services to continue and demonstrate the capability of solar photovoltaics and energy storage within a microgrid.

“The use of solar PV and battery energy storage are critical features of the Bronzeville microgrid, and Lockheed Martin’s expertise in the integration of renewable energy resources will help ensure this project benefits the community and produces learnings that will inform the evolution of the system serving northern Illinois,” notes Michelle Blaise, senior vice president of technical services at ComEd.

The energy industry is being reshaped by major forces, including decentralization, digitization, shifting demand and prices and greater sustainability as a public policy issue. As the risks shift, so too do the opportunities. In March in Dubai, Christoph Frei, secretary general of the World Energy Council, spoke at Marsh’s Energy Industry Conference. Brock Meeks caught up with Frei after the conference.

Tom Carver: First of all, what risks to innovation do you see in the energy sector?

Christoph Frei: There are several key risk areas regarding innovation in the energy industry.

One of the main ones is decarbonization. If you look back over the past 45 years, we’ve managed to decarbonize gross domestic product by, on average, 1 percent per annum. If we want to achieve a change of 2 degrees Celsius, we must accelerate this from 1 percent to 6 percent per annum. The challenge of decarbonization is massive. We have a factor of 2.8 times more CO2 in our resources — coal, oil, gas — than we are allowed to emit.

Another challenge is innovation around electrification, decentralization and digitization. The one thing above everything else that is keeping energy leaders awake at night is the impact of digitization on the future of the energy system. New business models and digitization will define momentum on a path of innovation, which will change the way we produce and use energy in industrialized and developing worlds.

Carver: What is the industry saying about its key risk concerns?

Frei: We have an issues map where we look at about 40 risk issues in the energy sector through interviews with 300 energy leaders in more than 90 countries. Over the past five years, this has shown us a very dynamic market. The risks that have heightened in importance most dramatically are decentralized systems, digitization, electric storage, market design and renewable energies.

Issues such as carbon capture and storage have been cooling down — people just do not believe they will deliver on its promise. Unconventional, or renewable, energy is seen as less of a risk for the industry. Consider that 18 months ago, solar was being sold in Chile for 2.9 cents per megawatt. I recently spoke to several sources who said that this year they were probably looking at 2 cents per megawatt. That tells a story of continued crashing of prices.