Seminar Charges Forward with Discussion on Energy Storage

Guest Contribution by Robert Wakulat

I finally found an excuse to make my first visit to the MaRS Discovery District in downtown Toronto this morning to attend a Cleantech in Canada seminar. While the complimentary breakfast was no Sunday brunch, I was pretty impressed with the interior design. Exposed brick is always a winner in my books!

Today’s seminar was entitled Charging Forward: Opportunities in the Energy Storage Market and addressed a topic that has typically been discussed at the periphery of “sexier” energy and technology issues such as the smart grid or smart phone. However, energy storage is an issue that has been identified as a potential barrier to maximizing the full potential of other energy-related technological improvements. While nothing revolutionary was mentioned during the seminar, the panelists made a number of interesting points.

1. Market Sizes:

- The moderator, Deloitte’s Duncan Stewart, opened by quoting the rechargeable/storage battery market as being already an $80 billion per year industry. He was echoed by Sankar Das Gupta from Electrovaya who pointed out AT Kearney has valued the lithium ion battery market as reaching $23 billion by 2015 and $74 billion by 2020. The main driver for this development emanates from the United States where the Obama Administration has called for 1 million plug-in cars on the road by 2015.

- Ultimately, Gupta sees a $5 trillion opportunity in clean transportation driven by concerns in climate change, pollution, oil prices, energy security and government incentives.

- Conversely, Kirk Washington chimed in as the “sober investor” pointing out that AT Kearney was predicting a fuel-cell market of $80 billion by 2020 which is now an unlikely to be achieved target.

- Mark Tinkler has seen market estimates of about $8 billion for utility energy storage. Currently the major utility storage method is pumped hydro, but Tinkler cites compressed air as a serious growth opportunity.

- Many of the panelists pointed out the obvious communications technology developments that will be required to optimize energy storage solutions.

2. Cleantech Players:

- While considerable media attention has been paid to the apparent cross-over of IT entrepreneurs into the cleantech space, the speakers cautioned that the demands of this market favour more experienced hands. Gupta sees traditional transportation heavyweights GM, Chrysler, Ford and Nissan as being the leaders in lithium ion storage developments.

- Washington noted that even if you have a superior technology solution, utilities prefer to buy from organizations that have financial strength and significant industry experience (e.g. Siemens, GE) because “reliability is king”.

3. Grid Implications:

- Tinkler, formerly of OPG, pointed out that storage technology should lead to a fairer outcome for Ontario ratepayers who are currently paying wind farms under the FIT to produce energy at 3 am when nobody actually requires its generation. Tinkle would like to see a FIT premium that recognizes storage-enhanced renewable energy projects, which will allow generators and distributors to bring that power into daytime use.

- Tinkler also pointed out the natural symbiosis between improved storage technology and an effective smart grid that is better able to smooth energy peaks and valleys.

- Utility infrastructure congestion in high-urban density can be alleviated by the use of lithium ion batteries as distributed or community storage, which can store off-peak energy and release it during daytime peak hours. This will delay expensive and environmentally suspect investments such as major transmission line expansions and additions.

4. Storage Types:

- Lithium ion was the panel’s preferred option for simple and effective energy storage but acknowledged the value to long-term storage of pumped hydro and compressed air. Zinc and sodium sulfur batteries were also discussed as alternatives with the latter particularly popular in Japan where they have been in use for approximately 15 years.

- Washington cautioned that it is still more cost-efficient for utilities to purchase gas-fired facilities to meet peak loads than it is to invest in any storage solutions.

5. Product Lifecycle: Panelists agreed that a key driver to improving the economic appeal of lithium ion batteries would be the development of a secondary use market by utilities (i.e. “repurposing”) who use these batteries as energy storage devices once their charge capacity is below 80%.

6. Product Quality: Rudisuela and Tinkler agreed that lithium ion batteries must be incredibly robust and efficient for use in automobiles. The former believes lithium ion battery manufacturing will need to get to 7-sigma or greater before their quality is high enough for use in automobiles.

7. International Outlook:

- The panel cited Japan and the EU as two regions that are well ahead of Canadian developments in energy storage.

- Ken Rudisuela noted that Canada has a great history of lithium ion development but very poor record of commercialization. He sees erosion in this capacity in favour of Asian countries.

- India and Africa are relying heavily on communication systems that need to constantly run batteries and are frequently replaced. Developing solutions to meet these needs will reduce waste and costs for these countries.

- Washington sees China as short-circuiting North America’s search for energy storage standards by undertaking a top-down analysis, making a decision and implementing it. They will avoid a considerable amount of wasted time, money and effort in the process.

Robert Wakulat is a lawyer working on climate change and renewable energy issues he can be reached at rwakulat (at) gmail.com