The idea that giant batteries may someday revolutionize electrical grids has long enthralled clean-power advocates and environmentalists. Now it’s attracting bankers with the money to make it happen.

Lenders including Investec PLC, Mitsubishi UFJ Financial Group Inc. and Prudential Financial Inc. are looking to finance large-scale energy-storage projects from California to Germany, marking a coming-of-age moment for the fledgling industry. The systems help utilities solve a long-standing clean-power conundrum: managing the unpredictable output from wind and solar farms, and retaining electricity until it’s needed.

Battery costs have declined 40 percent since 2014 and regulators are mandating storage technology be added to the grid. That’s encouraging utilities to offer longer contracts and developers are expected build $2.5 billion in systems globally this year. These trends are changing the risk profile, giving lenders confidence in batteries in much the same way that power-purchase agreements opened banks’ doors years ago for wind and solar power.

“Having big money come in is the first step to widespread deployment,” Brad Meikle, a San Francisco-based analyst for Craig-Hallum Capital Group LLC, said in an interview.

That’s a shift from many of the storage projects we’ve seen to date as expensive components and unproven revenue potential made commercial lenders leery. Developers typically have financed systems from their own balance sheets, cobbling together revenue from short-term utility contracts or wholesale electricity markets.

“We see an opportunity in the space,” Ralph Cho, Investec’s co-head of power for North America in New York, said in an interview. “We’re attempting to be a first mover.”

Storage contracts to date in the U.S. and Canada rarely exceeded three years, said Bryan Urban, head of North American operations for the Yverdon-les-Bains, Switzerland-based storage developer Leclanche SA. Now utilities are signing agreements for three to seven years, and sometimes as long at 10 years, he said. And in the U.K., National Grid PLC is signing four-year contracts for storage services.

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The German home battery startup Sonnen is expanding its U.S. footprint with a significant investment in a new North American Innovation Center in Atlanta, Georgia.

Sonnen announced today that the InnovationHub will bring all of the company’s U.S. product development and manufacturing capabilities under one roof, allowing for new product innovation and the ability to rapidly scale up production capacity.

“Sonnen U.S. has experienced exponential sales growth over the past year, making the Sonnen InnovationHub a smart investment to capitalize upon the immense potential of the North American energy storage market,” said Christoph Ostermann, Sonnen Group CEO, in a statement. Bringing the company’s U.S. manufacturing and R&D teams into one facility will “enable us to better adapt to the future needs of the high-growth U.S. residential energy storage market.”

In an interview earlier this month, Ostermann said U.S. monthly sales had recently reached triple digits — growing threefold in December alone. Those sales lag well behind Sonnen’s home market in Germany, where the company has sold more than 15,000 battery storage systems to date, but they still position Sonnen as a leading residential storage company in the U.S.

The InnovationHub is no Tesla Gigafactory — but that’s by design, said Blake Richetta, vice president of Sonnen’s North American sales, and former sales manager at Tesla. While Sonnen is focused on scalability, the new factory is part of a concerted strategy to “grow smartly,” he said.

“We’re not going to make [the factory] so that it’s able to build thousands and thousands of units right away,” said Richetta. “It’s going to be what it needs to be to foster innovation and for our current level of production needs, and then we’re going to have an open-ended footprint to be able to grow.”

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It is not only the grid that is changing. Buildings are also changing how they use energy. Some are generating energy with wind or solar power and many are engaged in energy management programs.

All those functions increase the complexity of energy flows and require sophisticated technology to ensure reliability and efficiency.

The demonstration project is funded with about $1 million from the Department of Energy and corporate sponsors. The corporate partners in the project are FirstEnergy, Eaton, Siemens and Johnson Controls.

Simulated tests of energy control and flows will be conducted by the NASA Glenn Research Center.

The project aims to develop and showcase means of incorporating smart building technologies with conventional, solar and wind power while using batteries for backup power and to meet peak demand and store non-peak energy.

“What we’re doing is kind of preparing these campuses to be these living labs for these concepts,” Alexis Abramson, director of the Great Lakes Energy Institute at Case Western, told The Toledo Blade.

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Comments have poured into the Federal Energy Regulatory Commission (FERC) in recent weeks on proposed rules that industry players say would boost energy storage in wholesale markets and open new opportunity for microgrids.

Issued in November, the FERC Notice of Proposed Rulemaking (NOPR) attempts to smooth the way for energy storage to transact in six regional wholesale markets that span much of the U.S. The proposal (RM-16-23) also gives distributed energy aggregators wholesale market inroads.

As is customary, FERC has called on stakeholders to comment on the ideas before it puts them into effect. More than 100 companies, utilities, organizations and state agencies have weighed in.

The interest isn’t surprising. Ted Ko, policy director at Stem, says the proposal has monumental significance.

“It is probably the most significant thing at the federal level ever in terms of the rules changing for our business model,” said Ko. Stem aggregates energy storage so that it can participate in energy markets. The company’s mission is to build and operate a digitally connected energy storage network.

Under the FERC proposal, such aggregations could at last get the chance to compete against the power plants that now dominate the wholesale markets.

“It is finally going to make the different wholesale markets around the country adjust their rules to accommodate what energy storage is capable of doing,” Ko said in a recent interview.

Existing rules were designed long before the rise of energy storage and microgrids. Hence, they accommodate the sale of energy, capacity and ancillary services by large, centralized generators, but not small distributed energy resources (DERs) and energy storage in wholesale markets.

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Australian firm 1414 Degrees, formerly Latent Heat Storage, has developed a molten silicon thermal energy storage system it says can store 500 KWhs of energy in a 70-centimeter cube.  

If true, this is approximately 36 times the capacity of Tesla’s 14KWh Powerwall 2 lithium ion home storage battery utilizing the same space.

A prototype of the system had its first successful run on September 30, 2016.

By way of cost comparison, 1414 can build a 10MWh storage device for about $700,000. The 714 Tesla Powerwall 2s needed to store the same amount of energy would cost approximately 10X that amount, 1414 Degrees said in a news release.

Kevin Moriarty, a former chairman and managing director of zinc and gold miner Terramin Australia, joined the company late last year to help get commercial operations off the ground.

He says 1414 Degrees needs $10 million to $20 million to forward its plans, and is involved in “investment discussions” with several large energy companies.

The technology involved is unique in that it stores electrical energy by using it to heat a block of pure silicon to melting point – 1414 degrees Celsius. It discharges through a heat-exchange device such as a Stirling engine or a turbine, which converts heat back to electrical energy.

If the device stands up to commercial testing it could substantially reduce the costs of storing energy from solar and wind farms.

Rather than just sell its storage devices, 1414 Degrees wants to enter into joint ventures with customers – or partners – and share in the benefits.

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Tesla, Inc.’s CEO Elon Musk has made his company’s mission to help the world to transition away from reliance on fossil fuels and toward the embrace of sustainable energy sources. Now a U.K. energy-storage startup called Powervault is now in competition with Tesla, Inc. to outfit homes with affordable backup battery power across the pond.

WHY IS SOLAR POWER AND STORAGE THE KEY TO THE WORLD’S ENERGY INDEPENDENCE?

Solar photovoltaic (PV) power generation is at the heart of a transformation that will revolutionize the world’s electricity systems, letting consumers produce power for their own needs and feed surplus energy into the grid. Solar power is becoming ubiquitous: from large-scale utilities to micro-grids; from billion-dollar corporate HQs to rural rooftops; and from urban sprawl areas to small islands and isolated communities. We see solar next to airports, along highways, in fields, powering road signs, even at local small businesses like breweries.

Energy storage is an essential link needed to make intermittent solar energy reliable. Batteries installed inside homes can store excess energy produced by panels during peak hours of operation. When combined with smart meters and digital technologies, batteries can help utilities regulate the grid by providing power reserves which can be tapped and transmitted on demand.

As prices have dropped, solar PV generation uptake by households and local communities has increased dramatically. In 2015, around 30% of solar PV capacity installed worldwide involved systems of of less than 100 kW. This is gradually changing the face of power system ownership. Two companies — U.K.’s Powervault and the U.S. Tesla — are helping consumers to make the shift to solar installations combined with battery energy storage and a chance at energy independence.

POWERVAULT

Founded in 2012 with money from the U.K. government and private investors, Powervault has made a mission of reducing the cost of batteries in order to make them affordable to more homes. Powervault stores electricity in a home using either Lithium-ion Phosphate cells or Lead Acid batteries.

Powervault’s Lead Acid version is for customers who want a product with a low up-front cost and the prospect of upgrading to Lithium-ion technology when their Lead Acid batteries reach the end of their useful life in three to seven years. With Lithium-ion technology forecast to fall dramatically in cost over the next five years, customers can benefit from a low-cost Powervault using Lead Acid batteries now, then replace its batteries later. A Powervault lead battery that can store 3 kWh of power sells for 2,500 pounds ($3,117) a unit, or, about $1,039 for each kWh of electricity stored.  That price is about 12 percent cheaper than the $1,175/kWh average price in the industry, according to Bloomberg New Energy Finance.

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Vermont Business Magazine South Burlington-based Dynapower, the global leader in energy storage inverters, and Intertek, a leading provider of quality solutions to industries worldwide, have jointly announced that Dynapower’s MPS-250(link is external) is the first storage-only energy inverter to be confirmed by Intertek to meet the UL 1741 SA draft requirements for a “smart” inverter.

Compliance with this standard ensures that Dynapower’s MPS-250 smart inverter is California Rule 21 and Hawaii Rule 14H compliant through development of advanced inverter features. This was achieved by Dynapower through the use of Intertek’s SATELLITE™ Data Acceptance Program.

The first energy storage inverter to be given the distinction of being UL 1741 SA listed. Dynapower Company photo.

“Dynapower has always been on the forefront of energy storage inverter technology and we are extremely pleased and proud to receive confirmation from Intertek that our MPS-250 inverter meets the UL 1741 SA draft requirements,” said Chip Palombini, sales manager of the energy storage group at Dynapower. “Working through the Intertek SATELLITE program enabled Dynapower to have full control over the timeline of the compliance process.”

“Intertek is proud to work with global leaders like Dynapower to advance the energy industry through smart inverter functionality, enabling PV integration and improving grid resiliency, crucial steps toward smart grids and smart cities,” said Sunny Rai, Vice President of Renewable Energy at Intertek. “Dynapower’s storage-only energy inverters are the first confirmed by Intertek to meet the UL 1741 SA draft requirements, and they achieved this through Intertek’s SATELLITE program, which allows manufacturers to run more efficient compliance programs.”

In addition to the smart inverter features required by the new standard, Dynapower also incorporated Dynamic Transfer as a standard feature into the Generation 2 MPS-250. Dynamic Transfer enables a “backup power” mode of operation for energy storage systems.

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A research team at Oregon State University is very excited over their new energy storage system, and not just because it is the world’s first hydronium-ion battery. They’re also excited because the new device provides a way forward to the next generation of grid scale stationary batteries that will enable the US grid to accommodate more solar and wind power.

A hydronium ion (H3O+) is what happens when you add a proton to a water molecule. They have been the object of much study these days, partly because of their emerging importance in battery systems.

Here’s an explainer from our friends over at Quirky Science:

…the water molecule allows acids to ionize. This is possible because of the formation of the hydronium ion. This is of immense importance not only to the physical properties of the universe, but to life itself.

Okay so that’s a little over the top but QS provides a hint why energy storage researchers are so interested in hydronium:

While the hydronium ion contains the hydrogen ion in its structure, the hydronium ion itself is surrounded by yet more water molecules. This serves to spread the positive charge further, stabilizing the system to a greater extent. The number of molecules associated with a given hydronium ion can range from perhaps six to many more than a dozen.

First Energy Storage Device With Hydronium Ions

In the new energy storage breakthrough, the OSU team created a rechargeable battery with hydronium ions as the charge carriers.

The break with conventional energy storage devices is a big one. Until now, positively charged ions that are used in batteries have belonged to the metals family.

The electrode which stores the hydronium ions is made of PTCDA, short for perylenetetracarboxylic dianhydridem. That sounds exotic but it’s basically just a solid crystalline material with a lattice structure, in the class of organics (think: plastic, not metal).

OSU explains why PTCDA was selected for the new battery:

…PTCDA material has a lot of internal space between its molecule constituents so it provides an opportunity for storing big ions and good capacity.

The hydronium ions also migrate through the electrode structure with comparatively low “friction,” which translates to high power.

Here’s chemist Xiulei Ji of OSU enthusing over the potentials:

“This may provide a paradigm-shifting opportunity for more sustainable batteries…It doesn’t use lithium or sodium or potassium to carry the charge, and just uses acid as the electrolyte. There’s a huge natural abundance of acid so it’s highly renewable and sustainable.”

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Parker Hannifin (NYSE: PH), an American energy company, recently announced the completion of the Cochrane energy storage facility, a project undertaken with AES Gener.  The partnership with the Chilean energy producer and supplier has resulted in a large plant located Mejillones, Antofagasta, Chile. The facility will provide spinning reserve and grid reliability services to Northern Chile, part of the Norte Grande Interconnected System. This system in particular primarily provides energy to the country’s mining operations, which take place in the north. The facility can provide 20 megawatts of energy storage.

AES is also partnered with Parker Hannifin in the building of an energy storage facility in San Diego, California. The contract with San Diego Gas & Electric includes the installation and commission of two storage arrays, which will help energy reliability and renewable energy grid integration. 75 megawatts of flexible storage capability will be added to the grid when completed. One of the arrays included in this project is in Escondido, supplying 30 MW of the power. When completed, this array will be the largest battery-based storage project in the United States.

The storage containers for the Chilean Cochrane project were commissioned and manufactured in Charlotte, North Carolina. It consisted of ten 2.2 MVA outdoor 890GT-B PCS and 2-MW containers. These units are essentially large batteries, and the storage allows for better integration of both traditional and renewable energy. Renewable energy sources provide high-output fluctuation, making it hard to match supply and demand. This is especially true of solar and wind energy. Storage facilities such as these allow for better management of the difference between forecasted and actual energy usage and production, which increase price efficiency. Furthermore, some analysts have gone as far as to suggest that renewable energy sources will not be able to effectively penetrate the energy market without extensive battery and storage systems in place.

Jim Hoelscher, General Manager of the Energy Grid Tie Division at Parker Hannifin, had the following to say concerning the project’s completion: “We have a proven record of accomplishment in engineering and commissioning advanced battery energy storage systems around the world, and we look forward to meeting global demand for clean energy solutions for many years to come. Our power conversion systems are highly scalable and can be customized for many applications, making them ideal for use by AES, our longtime partner.” This scalability is of particular importance as the rise of renewable energy will require more energy storage units across the world.

The Cochrane project added 20 megawatts of storage capability to Chile’s grid. The US as a whole has over 21.6 gigawatts of energy storage, and the world as a whole has 149.91 gigawatts (as of June 2016). Between 2013 and 2016, storage facilities in America increased 105%. However, the US falls behind in terms of how much energy is cycled through these storage facilities; only 2.5% of delivered electric power comes from a storage facility. This compares to 10% in Europe, and 15% in Asia. As America and other industrialized countries transition from traditional to renewable energy, the need for storage facilities will certainly increase.

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This excellent infographic on global megacities from Visual Capitalist caught my eye because of what we might be able to extrapolate about energy/transport issues. The infographic notes that while in 1950 30% of the global population lived in cities, by 2050 70% will live in urban areas, many of which will be megacities. I think this dynamic has the potential to significantly impact future fuel demand because, as I’ve pointed out before, cities are already struggling (and will continue to) with traffic and transport-related air pollution.

This is an underlying force propelling transport policy solutions such as improved/expanded public transport, zero emission vehicles (ZEVs) and outright car bans (or limitations). I believe that’s going to continue. And oddly enough, neither the recent BP and ExxonMobil energy outlook appear to account for these potential impacts. The focus from some other stakeholders has been on the disruptive force ZEVs (particularly battery EVs (BEVs)) present to future oil demand. But I wonder if the real attention should be paid to the potential power shift from national/provincial governments to the cities — especially as it pertains to future energy/transport policies.

It will be cities, for example, that institute car bans, expand and improve infrastructure for both public transport and ZEVs, autonomous, shared driving, and redesigning cities to promote walking and cycling. Some advocates are encouraging and planning for this power shift, and recently, a Global Parliament of Mayors was created to “leverage the collective political power of cities.” It may be cities that end up carrying much of the water to actually implement the Paris Agreement. And consider: McKinsey has estimated that the 600 top urban centers contribute whopping 60% to the world’s total GDP today.

The infographic notes seven types of global cities, with these classifications and data coming from the Brookings Institute.

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