Electricity storage has arrived

models-powerwall@2xAlternative energy has cleared a major hurdle: what good is solar energy when the sun isn’t shining, or what good is wind energy when the wind isn’t blowing? Elon Musk, CEO of Tesla Motors has unveiled a variety of lithium-ion batteries to store electricity.

Now, the sun and the wind can charge the batteries, and the batteries can supply electricity on the darkest, calmest night. Tesla has reduced the cost of battery storage to $250 per kilowatt-hour, which no expert expected to see before 2020.

Does this advance mean that we can all go off grid and the electric utilities can go out of business? No. First, even at a lower than expected price for the batteries, they do not yet make economic sense for homeowners. Second new batteries have advantages for utilities, too.

What are becoming the old days

The Public Utility Regulatory Policies Act of 1978 helped developers of alternative energy to get past market barriers that utility monopolies create. “Qualfying facilities” can receive favorable rate and regulatory terms.

Chicago-based Exelon built wind farms in the Texas panhandle to sell electricity to Southwest Public Services Company. About 10 years ago the two companies began to dispute whether Exelon is a qualifying facility. Southwest maintained that wind farms cannot supply predictable power, and therefore Excelon was entitled only to receive only the lower price available at time of delivery for power as available.

In September 2014, by a 2-1 vote, the US Court of Appeals for the Fifth Circuit sided with Southwestern on the grounds that only companies that could forecast when they can deliver electricity are eligible for the special pricing. The ruling favored wholesale purchasers and put power producers at a serious disadvantage.

Wind farms in the Fifth Circuit’s jurisdiction (Louisiana, Mississippi, and Texas) had accept the as-available pricing. They could increase their reliability by buying and selling electricity in partnership with other wind farms, but the court decision underscored the need for reliable, cost-effective storage to supply power during calm winds in order to provide predictable power.

Meanwhile, consumers with solar panels on their roofs or home wind turbines generate electricity according to how brightly the sun shines or how hard the wind blows, not according to their need for electricity at any given time. They must purchase power from the utilities. They can sell unused production back to the utilities, but as in the Excelon case, the price is most favorable to the utilities.

Home and business storage

powerwall-battery-group@2xTesla will begin delivery of its home batter, called Powerwall, in late summer in 7 or 10 kilowatt-hour versions. They will mount on the wall and come in different colors—essentially the same choices available for Tesla cars. Musk claims they will look like beautiful sculptures.

The batteries can store power created in daylight so that the homes can use it at night. They can serve as a backup in case of power failure. They can also charge when electricity prices are lowest because of less demand and discharge when they are highest because of greatest demand, a process called load shifting.

Tesla’s sister company SolarCity has chosen not to offer the smaller Powerwall with new installations at all. On average, American homes use about 30 kilowatt-hours. The 10-kilowatt hour Powerwall is rated to supply only 2 kilowatts of continuous power and is designed for no more than 50 discharge cycles per year.

Bloomberg estimates a cost of $45,000 to put together enough Powerwalls to provide the kind of dependable backup power provided by generators already sold at places like Home Depot. At present, therefore, only people who want the latest and greatest technology and for whom price is no object will buy Powerwalls immediately.

As with all new technologies, prices will come down. Today’s noisy backup generators require fossil fuels to operate. Batteries are silent and emit nothing into the atmosphere, so they will be preferable once they are affordable. For residential systems, that will probably take about ten years.

Tesla already supplies larger batteries to companies like Walmart or Cargill. Amazon and Target will also begin pilot programs for business use of Tesla’s batteries.

Utilities and storage

At present, grid operators must adjust to constant change in demand for electricity. Utilities operate several different types of plants. Baseload plants operate continuously at full output as much as possible.

Load-following, or cycling plants operate or not in response to variations in demand. There are two kinds. Intermediate load plants meet most of the day-to-day variation. Peaking units operate only at times of peak demand, often a few hundred hours or less every year.

In addition, utilities must maintain operating reserves to deal with load forecasting errors, losses of regular plants and/or transmission lines, and other contingencies. Plants that provide these reserves are often called spinning reserves. They are online, and their machinery is in operation only at part load most of the time.

Baseload units, then, operate at highest efficiency and use the least expensive fuels. Load-following units operate less efficiently, and spinning reserve plants even less so.

Therefore, dependable storage also solves problems for utilities. It can at least replace spinning reserves. Tesla’s utility-scale batteries will group 100-kilowatt-hour blocks in configurations from 500 kilowatt-hours to 10 megawatt-hours or more.

Nonetheless, affordable storage batteries are a disruptive technology. Eventually they will transform the way electricity is created and distributed. Utilities nimble enough to adjust their business plans to suit new conditions will thrive. Utilities that try to hang on to traditional ways of operating and continue to create regulatory roadblocks to home ownership of alternative energy will go out of business.

If very many utilities go that route, we can only hope that they fail without taking the economy down with them.

Remaining challenges

powerwall-how-it-worksLithium-ion batteries have become the most common battery for consumer electronics and electric vehicles. They have now become the first technology commercially developed for electricity storage.

Lithium is inexpensive. At less than one cent per watt it represents less than 0.1% of the cost of a lithium battery, with less than $100 worth of lithium in the $10,000 batteries used in hybrid vehicles. Bolivia, Argentina, Chile, Austria, and China have the largest known supply. China is also the world’s largest consumer of lithium.

Most lithium comes from briny lakes, and in South America it takes 750 tons of brine to obtain one ton of lithium. The entire process takes two years. Lithium is recyclable an infinite number of times. It takes 20 tons of spent lithium batteries to recover one ton of lithium, but so far it costs more to recycle it than to mine and process it.

Lithium has many uses. In 2009, batteries accounted for 26% of it. That percentage can only grow with the advent of electric vehicles and electric storage. Electric cars themselves might become a way to store energy. Consumers could recharge their cars at work during the day when the sun is providing the most power. Then at high-demand evening hours, they could feed some of that electricity back to the grid.

No other known material can replace lithium in batteries. Although supply is ample, keeping up with demand will test the mining industry as demand skyrockets. Even so, shortages of other raw materials for lithium batteries, including rare earths, cobalt and graphite, appear more immediately critical.

Even after the technology becomes affordable Powerwall appears to be analogous to replacing coal-fired power plants with natural gas-fired plants. It’s a start, but no solution to the problem. Ultimately, we need flow batteries made with common materials for truly sustainable electricity storage. We need alternatives to lithium for cars and gadgets, too.

Sources:
Tesla Launches Batteries for Homes, Businesses, Utilities / Dana Hull and Mark Chediak (Bloomberg Business), May 1, 2015.
Bloomberg Says Tesla Powerwall Doesn’t Make Sense / Steve Hanley (Teslarati) May 11, 2015
US Court Decision a Loss for Wind, but Boon for Storage? / Elisa Wood (Renewable Energy World) 9/18/14
Avaliability of Lithium. Battery University

Photo credits: Tesla Powerwall page.


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