By the Blouin News Business staff

FEATURE: Cheap, efficient batteries finally within reach

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A Tesla Motors Inc. Model S P85 electric automobile stands connected to a charger inside a Tesla store in Munich, Germany, on Monday, March 30, 2015. Bloomberg/Bloomberg via Getty Images

A Tesla Motors Inc. Model S P85 electric car in Munich, Germany, on March 30, 2015. Bloomberg/Bloomberg via Getty Images

Efficient energy storage batteries are taking center stage in efforts to make clean energy affordable and widespread. They dominated the conversation at the high-profile Intersolar 2015 conference, which took place from Tuesday through Thursday in San Francisco and drew nearly 18,000 visitors. In his keynote opening address on Tuesday, Tesla’s Chief Technical Officer J.B. Straubel said that the energy storage industry is “right at the precipice” of massive cost declines already experienced with photovoltaics.

Many of the new battery packs are using lithium-ion batteries, similar to the ones found in laptops and cell phones. But most of those that have been connected to the power grid in recent years use lead acid batteries, like the kind found in cars. Despite the comparatively low amount of energy they hold per volume, lead acid batteries have long been the cheapest (and sometimes the only) option available.

However, the next few years will see major changes on that front. Referring to the lithium-ion technology, Straubel stated, “In our view battery costs are going to decline much faster than most people expect.” This is not just wishful thinking — Tesla’s battery factory, which is being constructed outside of Reno, intends to lower the cost of the company’s lithium-ion batteries (made in partnership with Panasonic) by over one third by 2025. Straubel believes that the demand for batteries coming from just his company will be something like 35GWh of energy storage by 2020. “That is more lithium-ion capacity than existed in the entire world in 2013,” he pointed out.

He also declared that in less than a decade nearly all cars will be electric, and running on lithium-ion batteries. Furthermore, Straubel believes that bulk storage using those batteries will grow faster than predicted. “Our view is that batteries are really going to win” over other energy storage technologies like pumped hydro, compressed air energy storage, and flow batteries, he said, adding “We are seeing price declines that make a lot of those technologies somewhat stranded.”

While Tesla’s grid battery business is new, the company says there has already been a large amount of demand since it was first announced in April. The market for energy storage for utilities and businesses is predicted to grow quickly in regions like California, Germany, Australia, and Japan. (Hawaii is also a hub for intelligent battery storage technology, with its supportive policies and electricity costs that are on average three times higher than in the continental U.S.) According to GTM Research, 62MW worth of energy storage was installed in the U.S. in 2014, where the annual increase is set to reach 220MW this year and 848MW by 2020. (Tesla expects 80% of its grid battery sales will be to utilities and businesses via its larger Powerpack system, while the smaller Powerwall battery for homes will target a much smaller market.)

Analytic software, which will play a key role for managing all of these batteries that will be connected to each other and the power grid, also received much attention at Intersolar 2015. Battery software startup Geli showed off new software that lets customers that are interested in buying batteries figure out how many, what kind, and what set up they might need. And startup Greensmith debuted new auditing software that reviews battery projects and makes sure they’re operating properly.

Separately, the $1 billion- Swiss battery startup Alevo claimed on Wednesday to be a full year and a half ahead of Tesla in industrial energy storage. Its 40-ft long GridBank battery modules (cleverly built into shipping containers) use lithium ferrophosphate and graphite, which it claims to be far superior to the other battery options out there. The firm’s business model is fundamentally different than Tesla’s: Alevo does not sell the GridBank systems it manufactures. Rather, Alevo sells energy-storage services to utilities to balance grid operations and make transmission and generation function more efficiently. (Most grid delivery systems currently waste about 30% of their electricity.) The key to Alevo’s approach is the use of its own proprietary analytic software, to assess and adjust the deployment of its batteries most efficiently for each customer’s grid.

Alevo has done computer simulations, including one with Duke Energy (the nation’s largest electric utility company), that calculated substantial energy savings. “We’ve never tested it [in the real world], but we know it would work,” said Jeffrey Gates, Alevo’s vice president of global sales. The absence of real-world results has not dissuaded customers, however. In February, Alevo announced a 200MW partnership with Customized Energy Solutions to deploy 200 MW of its GridBanks to a still-undisclosed wholesale energy grid operator in the U.S. Gates also said that the firm will ship its batteries to China this fall. And if they deliver their promised results- – Alevo’s analyses show a utility would recoup the investment in GridBanks in about five years, and then profit from the energy savings afterwards — more contracts will surely follow.  The firm ultimately plans to invest $1 billion into the manufacture of its battery technology.

It’s doubtful that any one company will capture the global market. And thus far, international attempts at standardization — which could accelerate the adoption of clean technologies —  have amounted to basically nothing. “I’m a bit of a pessimist on how hard it will be to standardize the battery module in every pack,” said Straubel. He said Tesla didn’t want to wait for standardization before it went to market with its products. “I much prefer building products and making things work than sitting on standards committees and trying to get everyone to agree,” he said.

But if batteries for electric vehicles could be standardized, and made more efficient and cheaper (finally putting an end to “range anxiety”), than their use would likely take off. However, even with firms scaling up different types of efficient batteries and intelligent grids, collectively the results will still be very impressive. The real kicker is that together they can reduce waste and improve performance not just in future grids reliant on renewable energy, but in today’s mixed grids that are slowly transitioning away from fossil fuels. As Jeffrey Gates of Alevo said, “the technology is definitely ready now.”