Batteries enable inventory for electrical grids
the Plug #9 | On Long-Duration Batteries
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Last week, a breakthrough in battery technology made the news!
But, despite the abundance of related media coverage, I haven’t seen much discussion around the relationship between batteries and renewable energy.
So today, we’re focusing on batteries.
We’ll look at why batteries are important to achieving our Net-Zero ambitions. More specifically, we’ll explore how batteries will help to facilitate the growth of renewable energy in our electricity grids.
This week’s edition has four sections:
The Latest Breakthrough in Battery Tech 🔋
Toilet Paper & Electricity Supply Chains 🚽
Legislating a Renewable Energy Future ⚡
Renewable Energy Has a Weather Issue 🌧️
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The Latest Breakthrough in Battery Tech 🔋
Last week in Somerville, Massachusetts, a little-known business made big waves. Form Energy showed off its progress in the company’s pursuit of developing a better battery.
But you won’t find this battery in your electric toothbrush or TV remote. Instead, Form Energy is working to build a large-scale, long-duration battery that could serve as a critical component in the electricity grids of tomorrow.
Or, at least, that’s the goal.
The technology behind Form Energy’s battery isn’t my focus today. Although you can read more about it here if you’d like.
Instead, I bring up last week’s breakthrough to introduce the global race to develop better batteries.
To enable the mass-adoption of batteries within our electrical grids, companies first have two main challenges to solve:
Extend Storage Times: Batteries need to be able to store massive quantities of electricity for over 100 hours while maintaining dispatch speed.
Bring Down Cost: The cost of battery technology needs to come down materially to be considered a viable complement to renewable energies.
Batteries May Help to Reduce Emissions
Through ongoing innovation and competition, the field of battery technology may hold the key to decarbonizing our electrical grids.
In an interview, Form Energy CEO, Mateo Jaramillo, stated:
Form Energy will soon be producing the “kind of battery you need to fully retire thermal assets like coal and natural gas” electricity generators.
To better understand the role of batteries in emissions reduction, we’ll start in an unusual place: the toilet paper aisle.
Toilet Paper & Electricity Supply Chains 🚽
In April 2020, with COVID cases accelerating, North Americans faced another threat – we couldn’t buy toilet paper anywhere.
As lockdowns sent our workforce home from the office, consumer buying patterns changed. Naturally, households needed more toilet paper, while commercial demand fell.
The change in buying patterns stoked fear of a widespread toilet paper shortage, which in turn led to panic-buying and hoarding. Finally, the unanticipated spike in demand drained toilet paper inventory at our local grocery stores.
Before long, North American grocery stores sold out of toilet paper.
This episode of consumer irrationality served to highlight the importance of inventory. To account for natural demand and supply variability, retailers keep inventory on hand.
Not enough inventory? Customers grow frustrated.
Too much inventory? Costs and related waste increase.
.
Last April, no retailers had enough toilet paper inventory to accommodate the surge in customer demand. And so, retailers across North America ran out of toilet paper.
A Dystopian World Without Inventory
Now imagine that, for some hypothetical reason, your local grocery store can’t hold any toilet paper inventory on hand.
Each time you go grocery shopping, upon request for toilet paper, the retailer must kick its supply chain into gear to get you your toilet paper. This approach would be the ultimate extreme of Just-in-Time inventory management (but without the inventory component).
The outcome would be inefficiency, expensive toilet paper, and frustrated customers.
Seems unfeasible, right?
Well, in the supply chain which brings us electricity, this seemingly absurd example isn’t far off from reality.
Electricity Without Inventory
Once generated, storing electricity in sufficiently large quantities for an extended period (days and weeks, not hours) is quite complicated. And so, in the past, it’s mostly been prohibitively expensive to do so.
The result is that our electrical grids are effectively supply chains without inventory.
But, thanks to batteries like the one Form Energy is developing, this reality may soon become a relic of the past. Developing larger-scale, longer-duration batteries would effectively introduce inventory into our electrical grids.
And as we saw with toilet paper, inventory serves to increase supply chain flexibility. Batteries in turn would enable increased flexibility in our electrical grids.
Renewable energies generate electricity intermittently and unpredictably. And so, as the presence of renewable energy (mostly solar and wind) in our energy mix continues to grow, our electrical grids will need to change.
Because, by switching our electricity generation away from fossil fuels, towards cleaner renewable energy sources, the dynamics of electricity supply will also change.
Batteries will help to accommodate those changes.
Legislating a Renewable Energy Future ⚡
In North America, national ambitions to achieve “Net-Zero Emissions” are well established.
And to achieve that ambition, decarbonizing our electrical grid will be critical. This will involve replacing electricity generated from fossil fuels, with renewable energy.
What To Expect
The Internal Energy Agency (IEA) highlighted the growing role of renewable energies in its Net Zero by 2050 roadmap.
Therein, under the IEA’s “Net-Zero Emissions” scenario, the share of electricity generated by renewables globally is expected to increase from ~29% in 2020 to ~88% by 2050.
And importantly, that transition will happen more quickly in developed countries, like Canada and the U.S., relative to the rest of the world.
Despite the IEA’s projections, increasing our reliance on renewable energy technologies will also bring new challenges.
In fact, renewable’s strength - which is its ability to capture recurring energy generated by our climate and weather - is also one of its greatest weaknesses.
Solar energy is great, until a cloud rains on the parade.
Renewable Energy Has a Weather Issue 🌧️
Historically, our inability to store electricity is one of the reasons we’ve been so reliant on fossil fuels to generate our electricity.
Because electrical grids have no inventory, electricity supply must always be equal to or greater than consumer demand for electricity.
And if electricity demand exceeds supply?
Well, the grid failure in Texas earlier this year served as a great example of what happens in that scenario. Californians and New Yorkers can also empathize, as each state has warned of rolling blackouts and power outages as recently as this year.
Predicting the Weather is Hard
By using coal, oil or natural gas to generate electricity, the resulting electricity supply is both dependable and predictable. Those two qualities are what North American consumers have come to expect of their access to electricity.
Renewable energies, on the other hand, rely on energy from the weather - specifically, wind, sun and water energy. And the electricity generated by renewable energies is not nearly as predictable as fossil fuels. It’s also entirely out of human control.
Think back to the last time you got caught in the rain without an umbrella. That example serves as evidence of the weather’s unpredictability.
As any meteorologist can tell you, predicting short-term weather patterns is incredibly complicated. And given our inability to predict tomorrow’s weather, consider how challenging it is to project weather patterns for the 20- or 30-year life of a solar plant or a wind turbine.
In December 2010, Californians came face to face with this challenge.
As a result of uncharacteristic weather conditions, in the week leading up to Christmas electricity output from the state’s renewable energy fleet produced significantly less electricity than was expected.
Relying on renewable energies, which in turn are reliant on fluctuating weather patterns, create challenges.
The uncertainty around how much electricity will be produced by weather-dependent renewables is a nightmare for grid operators, who are constantly engaged in a balancing act between electricity supply, and consumer demand.
And Also, Seasonality
The difference in weather patterns in the summer compared to the winter also limits the electricity generation potential of renewables.
Let’s use my hometown of Vancouver as an example. While solar energy reliably generates electricity during the summer months, in Raincouver, it can be exceedingly hard to find the sun throughout the winter.
And so, solar energy’s ability to provide stable, predictable electricity to Vancouver’s electrical grid varies significantly based on the season.
Back to Supply Chains
Renewable energies generate electricity when the weather permits. Not when consumers need it most.
For a supply chain without inventory, increased reliance on weather-dependent renewable energy presents challenges. Because it creates more uncertainty and variability in electricity production, creating an electrical mismatch between supply and demand.
That is, without the presence of large-scale, long-duration batteries.
Connecting the Dots ⚠️
Further innovation in battery technology will help to address some of the grid challenges created by renewable energies. This is great because increasing renewable energy penetration within our electrical grids will reduce carbon emissions.
Batteries will enable inventory, or electricity storage, in our electrical grids.
While renewable energy helps to solve our emissions challenge, they do create challenges of their own.
As grid operators and meteorologists know; it’s tough to predict the weather.
If you want to learn more about battery technology, here are some of the best resources I’ve found on the topic:
Podcast: On the state of the battery industry (The Energy Gang)
Article: Background on long-duration storage (Green Tech Media)
Article: On the State of Renewable Energy (Trader Ferg)
Article: FAQs on Grid-Scale Storage (NREL)