We Have An Energy Storage Problem

Back in April, a company in which I’ve been interested in – Energy Vault NRGV, co-founded by Idealab’s Bill Gross – posted respectable quarterly earnings numbers after its first three months of operation as a public company.

I had the opportunity to speak with another of Energy Vault’s co-founders and CEO, Robert Piconi, and was impressed by his background as a multi-faceted builder of businesses.

An upcoming article will look closely at what Energy Vault is doing, but before that, I wanted to offer some background about energy storage technology in general to provide context for my Energy Vault-specific comments.

This article discusses two ways to store energy on a grid scale (pre- and post-generation), investigates some of the issues regarding these two methods as well as the technologies used to implement them, and provides a back-of-the-envelope calculation of the scale of the problem for which we need to solve.

If you would like some background to this article, see my earlier articles on this topic:

• Grid Modernization: We Must Rebuild Our Innovation Engine (forbes.com)
• Texas Energy Failure: A Prelude Of What’s To Come (forbes.com)
• EnerVenue: The Batteries We Need For Grid-Scale Storage (forbes.com)
• A Smart Way To Provide Long-Term, Grid-Scale Storage: Hydrostor (forbes.com)
• Transitioning To A Smarter Grid: Virtual Power Plants (forbes.com)

Buckle up! Storage is a fascinating topic and a lot more complex at a grid level than simply plugging an iPhone into a wall socket.

Pre- and Post Generation Storage

Pre-Generation Storage

Pre-generation storage comes in the form of an inventory of fuel of one form or another that can be converted into electrical energy that allows us to do some work.

An inventory of coal is, in this sense, a form of pre-generation storage, as is a supply of Uranium for a nuclear plant or the build-up of river water behind a dam. Storing potential energy – within chemical or nuclear bonds or by virtue of gravity and location in the case of dams – is the old-fashioned way of doing things.

While old-fashioned, pre-generation storage solves a lot of problems for the organizations tasked with making sure we all have electricity when we need it. Demand for electrical energy fluctuates, depending on the time of day, the time of year, and the severity of weather conditions. Having an inventory of fuel on hand allows operators to quickly generate electricity for the grid during sudden demand spikes.

Post-Generation Storage

This is the form of storage that most people probably think of intuitively because it is what most people do every day: plug a phone or other portable device into a socket to store grid electricity in the device’s lithium-ion battery.

Post-Generation Storage has become an especially important topic with the rise in popularity of solar and wind generation. Sometimes, solar and wind facilities generate more electricity than is needed by the grid. If we were able to store that excess electricity as easily-available potential energy to be used when electrical demand is high, the carbon footprint of our grid would decrease considerably.

We Have a Storage Problem

In an earlier article about grid modernization, I wrote that grids were never really set up to store energy. I’ve since realized that, in fact, grids have always been set up to store energy, just in pre-generation form.

My revelation came while reading Meredith Angwin’s book, Shorting the Grid: The Hidden Fragility of Our Electric Grid. In this book, she points out that the shift from coal to natural gas has ended up disrupting the storage dynamics in a real and negative way.*

Unlike coal-fired plants or nuclear installations, which keep months of fuel on hand, natural gas power plants do not typically keep fuel in inventory. Natural gas flows directly from pipelines into the generation plant in what, in the manufacturing world, might be termed as “Just-in-Time” inventory management.

This Just-in-Time management of natural gas means that pre-generation energy storage capacity has dropped in proportion to the shift from coal to natural gas as a generation fuel. This lack of natural gas inventories led to the blackouts in Texas during the cold snap of winter 2021 and in the Northeast last winter.

We have post-generation storage issues as well.

Usually, when people think about post-generation energy storage, they think of electrochemical batteries. However, batteries represent a small minority of electrical storage capacity at present.

About 90% of current grid storage is in the form of pumped hydro facilities. This type of storage uses energy to pump water from a low-lying reservoir into a reservoir a few hundred feet above during times when grid demand is low. Then, when demand increases, water is released from the upper reservoir to spin generators to produce the needed electricity.

While this solution works well, it has some problems. Ecologically, many thousands of tons of reinforced concrete needs to be used in constructing these facilities, which boosts their carbon footprints. Also, these installations are usually situated in scenic locations – hills, rivers, and lakes are the essential inputs – so there is often vigorous pushback to building an industrial installation in across the lake from somebody’s scenic vacation home. Last, there’s the obvious topographical and geographical limitations; you can’t build one of these plants easily in a place without hills, rivers, and lakes. Because of these shortcomings, a new pumped hydro plant has not been built in about 30 years in the US.

Electrochemical batteries represent the intuitive “right” storage solution in many people’s minds simply because of familiarity, but at present, batteries only make up a very small proportion of the US grid’s storage capacity.

As I have pointed out in prior articles, batteries have issues too. Lithium-ion cells – the leading battery technology at present – might be great for mobile phones, but it’s not clear to me that it is a great technology for grid storage. Among the problems are raw material scarcity, a relatively short effective operating life, the risk of fires and toxic chemical release, and sensitivity to extreme heat or cold.

One of the reasons I am so interested in EnerVenue – a company about which I wrote at the end of 2020 and will write more about soon – is because the Metal-Hydrogen batteries it has pioneered make up for a lot of the weaknesses of Lithium-ion technology.

The other post-generation storage technology about which I have written in this column is Compressed Air Energy Storage (CAES). CAES is an older technology – pioneered in the 70s and 80s – that has experienced a recent revival. The main issues related to CAES relate to efficiency – most CAES systems only return 50% of the energy originally generated with the rest lost to heat and other factors – and to issues related to site selection.

I featured a company called Hydrostor in this column last year (see link in intro) which has figured out a way to improve the efficiency of the CAES process in a very clever way.

Scaling Storage

The largest battery installation in the US is Vistra Moss Landing, in Monterey County, California that can sustain an output of 400 MegaWatts (MW) for four hours. In the energy business, that means that it has a capacity of 1,600 MW hours (MWh).

According to the California Energy Commission, in 2020, the state generated or imported around 300,000 MWh of fossil fuel-based electricity every day. Furthermore, in 2020, California generated around 250,000 MWh of renewable electricity every day.

Based on a simple-minded, back-of-the-envelope calculation based on these statistics, to completely free itself from fossil fuel-based generation, California would need to roughly double the amount of renewable generation capacity that is installed now and build around 350 storage facilities with as great a capacity as the largest one in existence right now.

Note that these calculations were made by someone whose training in electrical engineering comes from scanning Wikipedia articles. Also, note that I am not assuming any other changes to energy mix (e.g., nuclear), nor am I assuming that we abandon our current centralized paradigm for generating and storing power rather than using the localized, distributed paradigm discussed in an earlier article.

While someone with better training might quibble with the details above, these calculations should offer at least a ballpark estimate of the strength and magnitude of demand for storage.

With this general overview of storage as a reference, an upcoming article will look at Energy Vault’s post-generation storage solution. In short, Energy Vault’s solution overcomes some of the most difficult shortcomings of current post-generation storage technologies in a creative way.

Intelligent investors take note!

NOTES:

* You might say that natural gas is much cleaner of a fuel than coal, so even the decline in storage capacity is worth less greenhouse gas emissions. However, it has become clear over the past few years that the potential climate benefits of natural gas are largely offset due to the supply chain leakage of methane, a powerful greenhouse gas in itself. See The Abatement Cost of Methane Emissions from Natural Gas Production by L. Marks, published in the Journal of the Association of Environmental and Resource Economists and this Bloomberg article about the systematic undercounting of methane leaks.