FAQ’s with Extended “Read More”
What are grid connected batteries
Grid connected batteries are being used for many grid services that would be much better and more cheaply delivered by large-scale long-duration storage, for four reasons:
- Their intrinsic cost is higher,
- Their intrinsic efficiency is lower,
- Dedicated batteries need to be built to deliver each of many services, and
- The services that they can deliver are often inferior.
How does a power grid system collapse
Three Perfect Storms?
Three severe winter storms swept across America in the period February 10-20, 2021. While causing many problems across the country, in Texas they caused widespread blackouts, affecting almost the entire population in rolling brown-outs and total blackouts, peaking at 4.5 million at a time on 16th February. The power system collapse was due to failures in nuclear, coal and gas-fired power stations (totalling about 40% of generation capacity) and the grid; some wind farms also seized up but they are such a small part of the energy mix that this was largely irrelevant. However that fact didn’t prevent die-hard climate-change deniers trying to blame the energy transition for the black-outs.
How is the need for storage calculated
Currently each country and grid calculates its need for storage in very complicated manner, by creating a model with various scenarios, projecting different generation mixes all based on huge assumptions as to what will be rolled out in future. Using the UK’s National Grid’s annual Future Energy Scenarios as an example, every year their estimate of the storage needed by 2050 increases over the previous year’s estimate. In round numbers it is currently at 20-40GW storage (across all scenarios, including the do-nothing “steady progression” scenario) for a projected 80GW grid, with that requirement still rising. This begs two questions:
- Is there a simpler way to calculate storage requirements;
- If forecasts are increasing continually, what is the end point to which they are trending?
What are the UK government’s grid upgrade plans
- Sourcing balancing services;
- Sourcing stability services;
- Upgrading the grid to where those services are provided.
How does intermittency effect renewables generated electricity
Storelectric has identified a number of critical challenges for the energy transition, and their solutions. These are discussed below.
Most renewables generate electricity intermittency, i.e. when it wants to. This applies to wind, solar, tidal and wave energy. But we want the electricity when we want it: a constant “baseload” demand to which is added variable (time of day, day of week, and weather related) demand. Long-duration storage is needed at the same scale as renewable generation in order to turn its intermittency into on-demand (“dispatchable”) energy.
If grids are (very expensively) reinforced to cope with the ups and downs of intermittency, then not only are they building to 2-8 times the capacity that would be required if the renewables had connected through Storelectric’s storage, but also they would not have the balancing services or stability (inertia) injected at the point of greatest need – at such grid connection. Consequently, not only will the grid have to buy such services separately and more expensively, but also they would have to reinforce the grid to such other suppliers. This risks making the energy transition inordinately expensive in both capital and operational costs, disruptive in grid construction, and less reliable and resilient as the services are delivered far from where they would do most good.
What are the four fads and fallacies of the energy transition
Warning: this blog article is rather more strident than most.
First Four Fads: Batteries, Distributed, Virtual, Demand-Side
The energy transition isn’t carefully thought through – it’s driven by fads, the current ones being batteries, distributed, virtual and demand-side. They all fall down on a number of factors, including:
- All are small-scale and rely on the grid for back-up: what’s on the grid providing that back-up? (Us…)
- All are DC connected and therefore have no inertia, real reactive power/load, grid-forming capability (unless expensively fitted out), voltage/frequency regulation etc.: what provides those naturally? (Us…)
- All are small scale: how do they expect to solve GW scale problems with kW or MW scale solutions? (We’re at the right scale…)
- What happens after sunset on a windless winter evening, when batteries and DSR are exhausted by 6pm and there’s no real power for virtual solutions to optimise? (Us…)
Does the UK have enough domestically generated electrical energy for its own peak needs
The United Kingdom no longer has enough domestically generated electricity for its own peak needs, and relies on imports through interconnectors. As the grid decarbonises, power stations are closing, increasing the country’s reliance on intermittent renewable generation. But the sun doesn’t always shine and the wind doesn’t always blow, so how do we power the grid after sunset on a windless winter evening?
What are Net Zero Grids
Net Zero grids have very low levels of dispatchable (i.e. on-demand) generation – largely hydro-electric, nuclear, gas-fired power stations with CCS (Carbon Capture and Storage), and biomass power stations. The bulk of their energy derives from intermittent (i.e. varying according to factors other than demand, e.g. weather, state of tide) generation which is usually DC connected and has no natural inertia. Nuclear power stations cannot be used for Black Start, i.e. re-starting the grid following total black-out. For most grids, this leaves insufficient dispatchable generation to re-start following failure.
National Grid (the principal Transmission Services Operator in the UK) has been studying the challenges of Black Start under such a grid structure. In particular, they have analysed the opportunities and challenges of re-starting the grid from distributed renewable assets, in their Distributed ReStart project.
What are the issues associated with ever-shortening contract durations
Since privatisation, the only major capital investment into infrastructure-scale plant and equipment that was not planned before privatisation has been undertaken under special financial instruments (ROCs, OFTOs, CATOs, CfDs, CM etc.) that guarantee 15+ year contracts. (The Capacity Market failed to incentivise substantial amounts of new construction as it accounts for under 10% of required asset revenues, it is therefore used as a revenue top-up.) Each such instrument has rules and is therefore a market distortion. I note that 15-20 years is half the planned operational life of such assets.
What is Vehicle to Grid and Shared Mobility
Do renewable power plants impact the environment
was recently asked: do renewable power plants impact the environment? Quite obviously the questioner was seeking to justify pursuing the fossil-fuelled status quo by nit-picking faults in the case for clean energy. This led me to reflect on some environmental aspects of how we should live.
Everything impacts the environment. Being born, living and dying impacts the environment. Eating harms the environment. The point is that in our lives, with
respect not only to the environment but also to people and society, we should:
- Leave the world better than we found it – or at least as good;
- Minimise the harm done;
- Maximise the good done.
Does the contract structure secure investors' interests?
A similar structure to that used on CCGT plants will be employed using either an EPC contractor or an external consortium between the main equipment supplier and the erection civil contractor with combined wrap around guarantees.
Several schemes are being considered including possible bonus/malus schemes to incentivise all sides to execute the first projects.
Is there a market?
The global market has been analysed by Storelectric as having three phases:
- Enabling renewables to power variable demand;
- Enabling them to power baseload demand;
- Enabling them to support the energy transition of heating, transmportation and industry.
The first is ~$1trn capital costs (~10trn p.a. operational costs) globally. The second is 3-6 times that, and the third 3-10 times the second.
In the UK, National Grid’s Future Energy Scenarios identifies a need by 2040 for 20-28GW of mostly long-duration (>4hrs) storage – and this is for the first phase (an analysis supported by other reports too), and to target 80% carbon reductions; much more will be needed for a Net Zero grid. But 20-28GW equates to $20-25bn capital costs.
This is just for the energy. It is worth noting that during the 2020 Lockdown, on days on which renewable generation was able to meet most demand, National Grid undertook very expensive Control Room actions to bring an additional 3.4GW fossil fuelled generation onstream, purely to maintain sufficient levels of inertia and related stability services – which our plants also provide.
Why has no CAES plant been built for 30 years?
Past projects relied heavily only on arbitrage (balancing and ancillary services being low). As the price difference between peak and off peak was too low the economics were unviable. With the increased renewable generation and the reducing fossil generation the need for balancing and ancillary services has increased the number of revenue streams a CAES plant can attract. These additional revenue streams and the capacity mechanism make the right CAES technology viable.
The lower efficiency of the existing plants (42% for Huntorf and 50%for McIntosh), required a much larger arbitrage ratio making them uneconomical. Storelectric CAES technologies are calculated to be substantially higher efficiencies reducing this ratio.
Nevertheless, in 2007 Huntorf was re-fitted and expanded from 290MW to 321MW because it is so useful to the system and, more recently, McIntosh has also been retro-fitted with updated equipment throughout.
The development of large-scale renewable generation has created a need for balancing, ancillary and stability services, all of which Storelectric’s CAES is uniquely able to offer.
CAES can also provide unique benefits if built in conjunction with the power cables from such large-scale renewable generation farms – see “Operators” page.
Are there operational CAES plants?
The 2 references are Huntorf in Germany (originally 290MW, now 321MW, operating since 1978) and Alabama Macintosh in the USA (rated at 110MW, operating since 1991). The first has a round trip efficiency of ~ 42% and the second 50% (upgraded later to 54%), the increase being due to the waste heat recovery employed in the US plant. Storelectric roundtrip efficiencies vary between 60-70% depending on size and configuration, a significant improvement on the original designs.
While Storelectric’s solution has further refined these technologies the components and process flows remain similar. All the improvements serve only to enhance, simplify and improve functionality of the earlier plants.
How will Storelectric maintain its market position in the medium and long terms?
Storelectric is active with support of partners and university collaborations to further evolve the technology along 3 distinct energy vectors: enhanced storage options; hydrogen and blended fuel options; cross technology integration options for distribution & transmission networks. All represent game changers in growth sectors and as such position Storelectric in the most favourable position to maximise market share and profitability ratios.
Storelectric also has a further programme of R&D to keep ahead of the field.
Is the regulatory framework a support or a hindrance to CAES?
The market is not yet set up optimally for storage projects. However this is noticeably changing with both the recent UK consultations and the storage definition initiatives in the EU. Almost all the regulatory changes over the past few years have been driving in the right direction. Storelectric is actively involved in consultations, and National Grid is developing numerous additional means of contracting services that Storelectric’s CAES is uniquely able to offer, but are not currently remunerated. These include their Stability Pathfinder, Distributed ReStart (Black Start) and Early Competitions (constraint management). This allows forward looking companies to invest in a market that is on a start trajectory for substantial and continued growth. Subject to additional fund availability Storelectric expects to be fully prepared for this take-off: those who don’t start now will be playing catch-up later.
Is long term certainty of revenues possible particularly in case of non recourse financing?
There are several channels developing.
The CfD market mechanism was deliberately introduced to provide developers and investors the revenue security that longer term contracts afford. Ministers and BEIS have indicated that storage may in the near future be eligible for CfDs. The CfD route requires several important pre conditions to be met before a successful completion can be assured, one of which is ensuring that planning permission is secured (or very likely to be secured within a defined time window) and that a CfD counterparty is confirmed. Several CfD counterparties have been identified and discussions have already been initiated. Initial investment will provide for these up-front costs. The process is well defined and can be managed by a competent and experienced team. Storelectric is well versed in the nuances of this process and has developed contacts with both council bodies and the Planning Inspectorate. This is one of several options in securing longer term revenue certainty thatStorelectric is pursuing.
As explained above the recent consultations (to which Storelectric has already contributed and continues to do so) are expected to result in regulatory and legislative changes to strongly promote longer term revenue certainty for storage.
It should be noted however that much higher IRRs can be achieved by avoiding being locked into longer term contracts. Analysis from well reputed, independent industry analysts confirms that the increase in peak prices and reduction in off peak prices from 2021 onwards under almost all scenarios. These levels will reduce linearly over the next 5 years. Our financial models use the off-peak and peak price levels as of 2015 which show a considerably lower spread than we now see in 2016 and will continue to evolve. Our IRR is continually improving and this makes the merchant arbitrage business model an incredibly attractive investment proposition with limited down-side.
Isn't it something like fracking?
No, nothing like it.
- Fracking uses a geological layer (stratum) of shale.
- Salt caverns us a stratum of salt (usually Halite).
- Fracking injects water, chemicals and sand into the shale. The water is at high enough pressure (~2,000 bar) to crack the rock; the sand keeps the cracks open and the chemicals leach the hydrocarbons from the rock.
- We use pressures that are in equilibrium with the rock (~50-100 bar) and so don’t de-stabilise it; and we inject and dispose of nothing noxious.
- Fracking requires 24/7 drilling, pressurising and traffic to carry in the clean sand and chemicals and to remove contaminated waste which needs special disposal.
- Our solution mining activites are much quieter (due to the lower pressures) and once-off (while making the caverns, not during their operation).
- Fracking is known to cause earth tremors.
- Since the technology of salt caverns was mastered many decades ago, they are stable and while about 1/3 of the natural gas stocks in Europe (along with most oil stocks and much special waste) are in such caverns, none of them has ever had an underground accidental release.
- Finally, fracking is well known to contaminate aquifers and drinking water.
- Salt cavern operation does not.
It’s been around since the 70s, so it’s clearly a proven technology, but why is now the right time for CAES to take off?
Short Answer – Because of continuing revenue stream improvements, the new challenges of widespread introduction of intermittent renewable generation and because we have recently devised two more profitable versions of CAES.
Multiple key revenue streams are naturally increasing in value as renewable use picks up and this is expected to continue in the future. These include the price arbitrage, and balancing / ancillary / stability / other services revenue streams, see the section ‘Plant Revenues’. In addition, we have recently devised more efficient versions of CAES that can increase the profit that can be made from those revenue streams. One is almost as efficient as pumped hydro-electric power, zero emissions and one-third of the cost; the other is retrofittable to existing power stations, cheaply providing new life to otherwise stranded assets, adding revenue streams and almost halving their emissions; hybrid versions are possible. Furthermore, we have developed configuration that offer unique benefits to renewable generators and to grid operators. Combined, we believe this means the time is very much now for Storelectric CAES.
Doesn’t the relevant patent need to be granted before the first plant can be built?
We can still proceed as we have validated the system infringes no other patents. Moreover, proceeding without a patent still gives us a few years’ head start on the competition. The patent merely retains the technological lead for longer. Arguably, even this is not required as the market is so big that there is room for many competitors. We believe the first mover advantage to be very important and as such progressing with project development takes priority.
Can’t we use batteries to provide grid-scale energy storage?
Short Answer – In our opinion, no. They are too expensive and do not have the power, duration or length of life. Moreover, 3-5 equivalent-sized batteries are needed to deliver all the services that one of Storelectric’s plants can deliver – see the section ‘De-Carbonising Electricity Grids‘.
Most existing battery storage projects can only store or generate power on the order of tens of MW, for durations of tens of minutes maximum. This does not match the specification of grid-scale energy storage given in the section ‘Properties Of Grid-Scale Energy Storage’. Although they have the advantage of being unconstrained geologically, doubling its size or duration increases its capital costs by ~75-85%, whereas doubling the size of Storelectric’s CAES costs, less, and doubling its duration increases costs by~30% for Green CAESTM, or ~15% for Hydrogen CAESTM. Batteries current use is limited to quick-response, short-duration applications. Very recent projects are emerging that can match the low end of CAES in terms of power and duration, but this does not mean they are equivalent in other regards.
Costs are one issue, which are falling, but are not expected, for example, to make lithium ion batteries cost-competitive with Storelectric’s current levelised cost per MWh until 2027 by consensus, though, on historical learning rates, further out still.
Batteries also have lifetimes on the order of a fifth that of a CAES plant, and efficiency tends to go down over the course of this life, whilst CAES plants can operate near peak efficiency their whole life 34. Efficiency figures for batteries are often quoted at about 90% but, in reality, can be < 50% when taking into account auxiliary loads and losses and low load operation 35.
Another issue is that batteries simply do not scale well, whilst CAES scales very well. The following table shows the capex implications of doubling the size (megawatts) or duration (megawatt-hours) of batteries and the two Storelectric CAES technologies:
For batteries, efficiency decreases with scale owing to their heat output and consequent cooling requirements. For both TES and CCGT CAES, efficiency increases as they are large rotating machines.
Finally, the supply chain is an issue. Using figures from the Economist, we estimate that the 40-60 Gigafactories planned world-wide would, if all were built, exhaust the lithium supplies of all the world’s fields that are currently exploited and currently being developed. And cobalt is in even shorter supply, with just one Chinese producer signing a contract over 3 years for half the cobalt that the entire world mined last year. A more detailed version of this discussion is available on request.
Can’t we use distributed storage, or hydrogen storage, or X or Y to solve the intermittency problem?
Short Answer – Not at the moment. They may, or may not, help with this problem at some point in the future, but it needs tackling now, using proven solutions.
Distributed storage is already used to some extent. In the future, it is certainly possible that we all use our electric cars as one giant distributed storage device (known as vehicle-to-grid), though there are doubts over whether this will ever be commercially viable. And it is certainly possible that each of us ends up with a small battery in our smart homes. Would these solve the problem? Unlikely on their own, as these batteries would still need the grid to charge (in some cases) and to provide backup – so the need for grid-scale storage is still there – and how do we cope before distributed storage takes off, if ever? We see that the two do, and will, co-exist quite happily.
Over decades, we could well transition into the hydrogen economy. We may all drive around in hydrogen cars – rather than electric ones – and we may pump hydrogen around our existing natural gas lines and heat our homes with the stuff too. Under these circumstances, it may make sense to store electricity in hydrogen form (known as power-to-gas). Just like today’s gas grid, it would complement the electricity grid that we would support. Currently, we see that hydrogen storage is only really under development for cars, and efficiencies are low, though this is improving. And Storelectric has the patent on a unique and potentially transformative technology for electrolysis – see the section ‘High Temperature Electrolysis’, above.
No-one knows if any of these, or other, as-yet unproven technologies will ever be able to meet the sheer scale of the challenge and do so economically. In our view, these other technologies will never supplant CAES: just as the world’s current energy systems are diverse with different fuels and technologies being best in different places and applications, so we believe that future energy systems will benefit greatly from having all types of storage and renewable fuel. For now, we see CAES as really the only solution.
Is CAES safe?
Short Answer – Yes, as evidenced by decades of safe operation of existing CAES plants and underground gas storage.
All that is happening is that air is being pumped in and out of large underground spaces – to begin with, salt caverns. These have been used safely with CAES since the 70s, as described in the section ‘How Does CAES Work?’. Moreover, we estimate that about one-third of Europe’s natural gas reserves are stored in identical salt caverns used in highly analogous ways. As rock salt is like glass (harder than concrete, but flows under geological pressure and over time), it makes the salt caverns (a) naturally airtight and (b) self-healing if any cracks do extend into the formation, or if any tremors do occur.
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Why is high temperature electrolysis important?
Electrolysis is currently small-scale, expensive and/or noxious. The principal methods are:
- PEM (Proton Exchange Membrane): a synthetic membrane separates the anode and cathode; oxygen exits one side and hydrogen the other. The membranes are expensive consumables. The use of membranes restricts the size of each cell, so large electrolysers (like large batteries) are made up of thousands of small cells. And the membranes provide impedance to the flow of both water and the gases, thereby reducing efficiency; they break down in temperatures much above 80oC preventing the process benefitting from heat input.
- Acid / Alkali electrolysis: higher volume process, but requires large volumes of concentrated acids or alkalis, giving rise to many issues of cost, safety and disposal.
High temperature electrolysis is intrinsically high volume, and potentially low cost. It can be applied to electrolysing water itself, rather than chemicals such as acids or alkalis, and at higher temperatures the process becomes increasingly efficient. This combination of benefits can have marked effect on the economic viability of h2 production thereby accelerating the way to a more developed hydrogen economy, a goal currently pursued by many governments. For Storelectric our H2 CAES is already a use case for H2 and therefore a means of producing H2 safeguarded by patent protection (secured by Storelectric in 2020) can represent a strong addition to our technology portfolio, at the same time increasing our attractiveness to the many hydrogen enterprises currently underway.
Is strategic asset acquisition possible for a company like Storelectric?
Yes, however acquisitions (as opposed to leases and options) need to be more strategic in intent and represent a means of maximizing control of project development (by increasing Storelectric’s contribution over and above its technology and project development involvement). Post the Covid crisis more and more companies are considering asset disposals to either improve cash flow or downsize. This, coupled with the bottom falling out of the gas markets (and therefore for underground storage assets), gives rise to opportunities to secure both underground and above-ground assets more cheaply than before. By managing the process correctly, acquisition options can be made with very little up-front payment and any deferred considerations pegged to achieving specific milestones providing an additional safety net. This selective approach provides the opportunity to flip the acquisition to the SPV and enable us to maximize the benefit of land value accretion behind the current COVID driven quantitative easing pursued by central banks worldwide. Additionally, any land acquisitions can have use cases other than CAES storage, representing additional revenue streams.
What is your plan for development in other countries?
Storelectric has had numerous enquiries from many countries, to finance and build follow-on plants. We have current strong interest from America, Saudi Arabia and Thailand. Storelectric’s strategy and the need for its technology are global. However, to optimise business development expenditure we need a structured and organised approach to country development. While the specifics for each country will vary depending on regulatory frameworks, level of readiness for renewable deployment and geological constraints, the general approach remains the same and allows us to continually improve and refine the process. We have prepared a 6-step “road map” consisting of the following:
- Securing geological data;
- Conducting geological feasibility;
- Identifying specific site locations;
- Conducting initial sizing and confirming business economics;
- Partnering (joint venturing) with local developers; and
- Starting 1st project planning approval through the JV.
Our partners such as Mitsubishi, Arup, ERM etc are international companies often having footprints in target territories. Where possible, such as our activities in Thailand we have the support of the Energy catapult and DTi (department for trade an industry) helping us strengthen our network, provide access to development funds and improve Storelectric intends to start building its country activities over the coming year, a process which has already started. We anticipate the current funding round to provide funds to accelerate activities in several key countries.
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