Policy Committee Meets in Washington: Highlights of the Meeting

Written by James Greenberger on May 11th, 2013

On Friday, the Policy Committee of NAATBatt met in the office of Duke Energy in Washington, D.C. to discuss the advanced battery industry’s public policy and legislative agenda for 2013-14.  Joining the committee were representatives from the leading industry organizations promoting electric drive and electricity storage on the grid:  Electricity Storage Association (ESA), Electric Drive Transportation Association (EDTA), Advanced Lead Acid Battery Consortium (ALABC), NY-BEST and the California Energy Storage Association (CESA).

The meeting began with reports by Katherine Hamilton (ESA), Gen Cullen (EDTA), John Howes (ALABC), Bart Sheinberg (Houston Community College), David Ventola (MEGTEC Systems) and Wendolyn Holland (consultant and former DOE official) about the status of legislation and other issues affecting electric drive and electricity storage and their prospects in the 113^th Congress.  Next, representatives from each of the NAATBatt commercial members attending the meeting were asked to digest what they had heard and to address the question of which of those initiatives was most important to them and most likely to advance their business interests.

In no particular order, the following were some of the principal points I took away from the discussion:

• Electricity storage on the grid enjoys good bi-partisan support, at least among those legislators who understand what it is.  Grid reliability is an issue of growing public concern and electricity storage feeds right into it.

• Initiatives supporting electric drive are running into serious partisan headwinds.  Although EV and PHEV sales are doing well by some measures, high profile failures such as A123 and Fisker have made electric drive a convenient political scapegoat.  Electric drive advocates expect to be playing defense in the 113^th Congress.  The Administration’s proposals to increase the consumer tax credit for electric vehicles and make it refundable are admirable but have no realistic chance of success in the current political climate.

• The STORAGE Act has been reintroduced in the 113^th Congress and has some possibility (as opposed to no possibility in the last Congress) of being enacted.  Storage advocates are trying to include electricity storage in all discussions, initiatives and tax credits that favor other new forms of energy technology.

• Electricity storage technology has been included among the technologies that would be covered by the Master Limited Partnerships Parity Act, which is being considered by Congress.  The Act, if enacted, would make investment in electricity storage projects more attractive to the public and to private equity investors.

• Workforce education is a growing concern, particularly in regards to training workers who can install and service electricity storage systems.  Efforts to support more STEM education at the community college and other educational levels may benefit the storage industry and find ready political support.

• Within the DOE, EERE seems to be gaining power and influence.  David Danielson, Assistant Secretary in charge of EERE, understands the importance of storage and is likely to be a supporter.  The attitude of incoming Secretary Ernest Moniz towards electricity storage technology is still somewhat unclear.

• Among commercial NAATBatt members promoting government purchases of advanced battery enabled systems, whether that is purchases of EV’s or of microgrids including an electricity storage component, is seen as a top priority.  Tax incentives and lower cost capital will be helpful.  But what industry needs to keep advanced battery technology alive and thriving in the United States is sales.  Period.

• Effective messaging in Congress in support of electric vehicles and advanced battery technology research will focus on preserving and enhancing the U.S.’s foothold on a key technology of the future:  electric vehicles.  Vehicle electrification in the future is inevitable.  By our actions today, we are deciding whether U.S. workers will be making those batteries and vehicles, or whether they will be made somewhere else.

• Effective messaging in Congress in support of electricity storage will focus on the role of storage in making the grid more resilient and secure.  Storage also makes the grid more flexible, allowing the country more options in how it chooses to produce electricity (including, if it so chooses, by adding more renewables).
  

To follow up on the meeting, the NAATBatt Policy Committee will form two subcommittees:  The first will study ways to promote purchases by federal agencies (including the Department of Defense and the GSA) of advanced battery systems and electric vehicles.  The second committee will consider ways to promote funding for programs that train workers in installing and servicing electricity storage systems.  NAATBatt members interested in serving on either subcommittee, should send me an e-mail at their earliest opportunity.

NAATBatt Convening Storage Advocates to Talk About Policy Initiatives

Written by James Greenberger on May 05th, 2013

Next Friday, the NAATBatt Policy Committee will meet at the offices of Duke Energy in Washington, D.C. to take stock of federal legislative and agency activities that are likely to impact the advanced battery industry in 2013-14 and to decide on a course of action.   Representatives from the ESA, the EDTA, NY-BEST and CESA have been invited to attend, as well as representatives from NAATBatt member firms.

While there are many policy initiatives under discussion that may impact the advanced battery market in North America over the next two years, the volume of discussion concerning these issues is noticeably lower and more diffuse than it was two and four years ago.  Our industry is suffering from a sort of ARRA “hangover”.  New energy—and new direction—is sorely needed on the policy front.

There is a lot to discuss.  The STORAGE Act, proposing a series of tax credits for storage applications, is again working its way through the Senate.  The Administration has proposed increasing the electric vehicle tax credit for consumers and making it refundable.  The Energy Security Trust Fund, which President Obama outlined in an appearance at Argonne National Laboratory last March, offers an intriguing source of funding for research and development of advanced energy storage technologies that might one day replace petroleum.  And perhaps most intriguing is the Administration’s proposal to direct $200 million to grid modernization through a program modeled on the Department of Education’s very successful “Race to the Top” initiative.

From the standpoint of federal financial support for advanced battery technology, the last four years were an anomaly.  In 2009, the advanced battery industry became almost an accidental beneficiary of an unprecedented $787 billion effort to save the U.S. economy from collapse.  The question of whether stimulus moneys directed to advanced battery applications were well-spent will be debated for many years.  The truth undoubtedly lies somewhere in the middle of that debate.

What is clear is that for whatever support our industry and technology continues to enjoy in Washington and among the states, the next four years are going to look a lot different than the last.  Advanced battery technology is still developing and still requires public investment to perfect and deploy.  New funding sources need to be identified.  New, fresh political messaging needs to be developed.  The next few years will be challenging, but also quite exciting.  The innovation needed to push our technology into mainstream applications is not confined to the laboratory alone.

I hope that NAATBatt members with professional government relations and policy advisors on staff, as well as members with thoughts and opinions as to the best way forward in Washington, will join us next Friday for our discussion.  The next four years in our industry may well be outlined at that meeting.

Sponsored Conference Program to Kick-Off with AWEA WINDPOWER 2013

Written by James Greenberger on April 26th, 2013

I am pleased to announce the launch of NAATBatt’s latest membership benefit:  the Sponsored Conference Program.  Under the program, NAATBatt will from time to time rent a booth at industry trade shows that involve some form of advanced battery technology but which most of our members are unlikely to attend.  NAATBatt will use its booth to distribute marketing materials for our member firms and to collect business cards and contact information from persons making inquiry about advanced battery technology or NAATBatt member firms.  NAATBatt will provide participating members with a report summarizing those contacts within 10 days following the show.  This is a great, low cost way for members to generate “warm leads”.  A summary of the program will be posted soon on the “Members Only” section of our soon-to-be-updated Web site.

The Sponsored Conference Program reflects a problem that our members have talked about for some time:  There are more conferences and trade shows relevant to advanced battery technology than any person or company could possibly hope (or afford) top attend.  Companies attend trade shows in large part to identify “warm leads” for their products and services.  But there is time and budget to attend only so many shows.  Accordingly, many potentially interesting opportunities go unpursued.

That is where a trade association such as NAATBatt can come in handy.  By identifying and attending shows that may produce leads for our members, but are not likely to be at the top of most lists of “must attend” conferences, NAATBatt will provide an important resource for our member firms.  NAATBatt cannot (and will not purport to) represent any of our member firms.  But it can provide general information about advanced battery technology, hand out literature describing our members’ products and services, and carefully collect information about who has stopped by our booth and why.  Many of these contacts will be bona fide “warm leads” for our members.  And best of all, beyond the cost of a NAATBatt membership, our members’ acquisition cost of these leads will be $-0-.

The rollout of the Sponsored Conference Program will be AWEA WINDPOWER 2013, which will be held in Chicago on May 5-8.  AWEA WINDPOWER 2013 is the leading conference and North American trade show in the wind energy business.  Energy storage technology, once an anathema to the wind industry, is increasingly seen as a potentially useful tool by wind developers.  Moreover, many wind developers, reacting to difficult times in the wind energy business, are seeking to diversify their product offerings into other areas, such as frequency regulation.  While AWEA WINDPOWER 2013 may not be at the top of your list of “must go to” conferences this year, it could produce some interesting opportunities.  More information about AWEA WINDPOWER 2013 can be found at: http://www.windpowerexpo.org/2013/. 

To have NAATBatt distribute your firm’s marketing materials at AWEA WINDPOWER 2013 and to receive a “warm leads” report after the show, please follow the instructions set out in the Sponsored Conference Notice that you received from NAATBatt earlier this week (if you are a NAATBatt member and did not receive a notice, please contact Elena Pitt at epitt@naatbatt.org as soon as possible).

We hope that you will find the Sponsored Conference Program to be interesting and valuable to your business.  Please give it a try.  NAATBatt is constantly looking for ways to add value to our members’ bottom lines.  Your comments and suggestions as to how we can do that more effectively are always welcome.

What’s Going On At NAATBatt?

Written by James Greenberger on April 19th, 2013

At its meeting last week in Greenville, I updated the board on the status of a number of ongoing programs and projects at NAATBatt.  The NAATBatt board also made some important decisions that will affect the future direction of our organization.  A summary of those programs, projects and decisions is as follows:

• DES Demonstration Project Initiative.   NAATBatt is continuing its efforts to coordinate the creation of a roadmap of coordinated distributed energy storage (DES) demonstration projects to be rolled out nationwide by industry, electric utilities and the federal government.  This roadmap is intended to move the technology of distributed electricity storage forward and facilitate widespread deployment of DES systems by electric utilities throughout the United States.  NAATBatt is in advanced discussions with the U.S. Department of Energy, EPRI and Sandia National Laboratory about implementing Phase I of this initiative.  More information will be available soon.

• Policy Committee Meeting in Washington on May 10.  The Policy Committee of NAATBatt will meet in the office of Duke Energy in Washington, D.C. on Friday, May 10, to discuss legislative and government relations opportunities for the electrochemical energy storage industry over the next 18 months.  The meeting will seek to coordinate and prioritize the government relations initiatives of our members and define a common agenda.  Representatives of the ESA and EDTA have also been invited to attend.  This will be an important meeting, as NAATBatt must implement any legislative agenda before the next Presidential election cycle closes Washington down again in about 18 months.  Representatives of all NAATBatt members are welcome, and encouraged, to attend.  Proposed agenda items for discussion should be submitted to me by no later than May 3.

• Deepwater Operations Workshop on Energy Storage.  NAATBatt is organizing a workshop on electricity storage technology in connection with the Deepwater Operations 2013 conference in Galveston, Texas this coming November.  Davion Hill of DNV is leading the charge on this project.   A new market for advanced battery technology appears to be emerging in connection with offshore drilling platforms and the vessels that service them.  The workshop will seek to educate the oil and gas industry about the utilities of advanced battery technology in its business and build contacts for NAATBatt members among potential oil and gas customers.

• Lithium Battery Safety Education Initiative.  The recent safety incidents involving the Boeing 787 Dreamliner have created serious problems for our members working in lithium-ion battery technology.  There is no reliable source of information about lithium-battery safety available to the public, the media or potential commercial customers, which allows them accurately to understand the true nature of battery safety incidents reported in the media and true level of risk of involved in lithium-ion battery technology.  The NAATBatt board has decided that NAATBatt will become the clearinghouse for such information and will include prominently in its mission educating the public, the media and the government about lithium battery safety.  NAATBatt is speaking with several consulting firms about creating this database, which will be hosted on NAATBatt’s soon-to-be-updated Web site.

• NAATBatt Research Council.  NAATBatt continues to explore the possibility of creating a NAATBatt Research Council.  The purpose of the Council would be to fund the creation of a Lithium Battery Safety Center within the U.S. national laboratory system.  The Center will develop pre-competitive tools and testing protocol that will better enable individual members of the Council to understand the electrochemical processes involved in lithium battery thermal failure and create non-flammable electrolytes.  NAATBatt is in discussions with the U.S. Department of Energy and prospective members of the Council about this project.

• Upcoming Members’ Site Visit.   One of the trademark activities of NAATBatt is hosting members’ meetings at the facilities of our members around the country.  KEMET Electronics, General Motors, EaglePicher Technology and Cabot have hosted past meetings.  Duke Energy has kindly agreed to host the next members’ meeting on October 17, 2013 in Charlotte, NC.  The Duke meeting will include a tour of electricity storage facilities in North Carolina and, of course, the always enjoyable members’ networking dinner.  Please mark your calendar and plan to attend.

• NAATBatt Sponsored Conference Program.  There are more conferences and trade shows today relating to advanced battery technology and applications than any company could hope, or afford, to attend.  As a service to our members, NAATBatt will provide coverage for interested member firms at certain industry conferences that may be relevant to advanced battery applications but that are not likely to be a top priority for many of our members.  NAATBatt will rent a booth at such conferences and hand out literature provided to us by members requesting coverage.  NAATBatt will collect business cards from all persons making inquiry about advanced battery technology at the NAATBatt booth and a general conference attendance list.  We will provide those cards and lists, and the warm leads they may represent, to all NAATBatt members who have requested coverage at that conference.  The first such sponsored conference will be WindPower 2013 in Chicago on May 5-8.  Please contact me or Elena Pitt if you have an interest in trying out this new NAATBatt member service.

• Internationalization of NAATBatt’s Mission.  The advanced battery business has become an international business, with few, if any, of our members focusing exclusively on any single national market.  Accordingly, our board has decided that NAATBatt’s focus going forward will not be confined to the U.S. battery market alone.  NAATBatt’s mission will be to promote the business and opportunities of our members in advanced battery markets all around the world.  While NAATBatt will continue to concentrate on the U.S. market for the time being, NAATBatt will enter into relationships with sister battery associations in China, Japan, Asia and Europe with a view to better promoting the interests of our members worldwide.  Stand by for more information and more opportunities, as we roll out these new alliances.

• Patent Mapping Project.  NAATBatt is nearing the end of its project to map patent filings for advanced energy storage technologies.  A group of NAATBatt members has been working with IP Checkups to produce a database of patents and patent filing worldwide relating to advanced batteries and capacitors.  This will be the most comprehensive such database ever produced and will be a powerful tool for predicting the future of the advanced battery/capacitor market.  The NAATBatt members who participated in the database creation will have full access to this new database.  It will be available for purchase at a substantial discount by other NAATBatt members.  Interesting portions of the database will be published on NAATBatt’s soon-to-be new Web site from time to time.

As you can see, we have a lot going on this year at NAATBatt.  These projects and programs are made possible by the continued support of our membership.  Thanks for that support.  This is going to be a great, interesting and active year.

Thoughts on the Deliberations of the NAATBatt Workshop on Manufacturing Cost Reduction

Written by James Greenberger on April 12th, 2013

The NAATBatt workshop on manufacturing cost reduction that concluded this week in Greenville, SC continued NAATBatt’s practice of holding small, interactive workshops, which allow companies active in the advanced battery supply chain to share thoughts on problems that impact everyone in the industry.  Past workshops have focused on how to promote deployment of distributed energy storage on the grid and strategies for improving lithium-ion battery safety.  This past week’s workshop discussed how best to reduce the cost of manufacturing lithium-ion batteries in the United States.

The workshop started with presentations by General Motors and Duke Energy about the cost requirements for advanced battery technology by the ultimate battery customers.  Presentations by Siemens and PARC followed with descriptions of new manufacturing process technologies, which have the potential to reduce, perhaps dramatically, the cost of manufacturing lithium-ion battery cells.  Finally, Alan Goodrich of NREL presented DOE-NREL’s new study about the cost drivers of lithium-ion battery production and their implications for the future of advanced battery manufacturing in the United States.

Following the individual presentations, however, the real work of the workshop began.  Representatives of companies from across the lithium-ion supply chain, from graphite miners to automotive OEM’s, dug into NREL’s analysis, parsing its individual cost components, and sharing views on where and how progress on each of those components is likely to be made.  Over the next week, NAATBatt will summarize those discussions and make that summary available to NAATBatt members and to the DOE.  But some of my take-aways from the discussion are as follows:

1. A team approach to cost reduction is critical.  A battery is a system and what might seem like great progress on one component of that system (e.g., a better or cheaper cathode material) will inevitably have implications, and perhaps negative implications, elsewhere in the battery system.  Closer and more interactive cooperation among battery customers, manufacturers and component suppliers would lead to more efficient adoption of new battery technologies.
2. Manufacturing process R&D is essential to battery cost reduction and has been grossly underfunded by both government and industry.   Government grants and R&D investment have flowed into areas such as new materials for next generation batteries.  But much of the low-hanging fruit for battery cost reduction lies in developing better, faster and more efficient ways to make the batteries themselves and, in the case of EES, to deploy them in the field.  More investment in this decidedly less sexy end of the business is needed.
3. Large format battery makers need to learn something from consumer electronics battery makers.  According to the NREL study, the cost of the materials in a large format lithium-ion cell (which NREL calculates as about 52% of total cell cost) equals the cost of an entire consumer electronics battery cell (about $200 per kWh), even though both cells use the same or similar materials.  Automotive and EES battery makers need better to understand the efficiencies that consumer electronics battery makers are squeezing out of the manufacturing process.
4. Factory utilization rate (i.e., manufacturing at scale) is a critical determinant of battery cost.  A battery manufacturer cannot price its products competitively unless it is able to operate near capacity or is willing to accept operating losses.  Many manufacturers of battery components face the same challenge.
5. The most helpful thing government could do to drive down battery costs, promote EV sales and encourage deployment of electricity storage on the grid is to ensure demand for products that would fill the underutilized capacity of U.S. advanced battery manufacturing plants.  Increasing market demand for EV’s, grid-connected EES and other products employing advanced battery technology is an indispensable component of any strategy to reduce the cost of manufacturing lithium-ion batteries in the United States.
6. The government should encourage and fund battery development by consortia, rather than by individual companies, in order to encourage the multidisciplinary teamwork referenced in point #1 above and to reduce political tension over the government’s picking of winners and losers in the private sector.

Details of NAATBatt 2014 Annual Meeting Announced

Written by James Greenberger on April 05th, 2013

I am pleased to announce that the NAATBatt 2014 Annual Meeting and Conference will be held on Tuesday, January 21 – Thursday, January 23, 2014 at the Hilton San Diego Resort & Spa in San Diego, California.  The title of the program is “Advanced Batteries Today: The Myths and The Reality”.  Make sure to save the date!

This will be our fourth annual meeting and our best one so far.  We are going to San Diego at the invitation of San Diego Gas & Electric.  SDG&E has more installed distributed energy storage assets than any other public utility in the United States.  Representatives of SDG&E will talk to us about their experience with distributed energy storage and their future plans for DES assets.  We will then board buses for a tour of DES facilities in the San Diego area.  If you have heard a lot about the theory of electricity storage on the grid, don’t miss this chance to see the reality of what is actually happening in Southern California.  This will be an unprecedented opportunity for everyone interested in utility-owned electricity storage.

The more conventional part of the conference will focus on the market for advanced battery technology in North America in 2014.  We will have a presentation about the soon-to-be-completed NAATBatt patent mapping project, which will track patents filed in the United States and several foreign jurisdictions on various aspects of electrochemical energy storage.  The presentation will explain how NAATBatt members can use this tool to understand exactly where the market for advanced battery technology will be going over the next few years, and who will be leading it.  We will also have a presentation about the increasing M&A activity in the advanced battery and battery component space and how the owners of those assets can best optimize value.

The meeting will also concentrate on the ongoing development and improvement of lithium-ion battery technology.  What new opportunities will these developments open for makers of electrode materials, electrolytes, separators, and other battery components?  How can suppliers of these components best differentiate themselves?  The meeting will offer some insight.

The 2014 meeting will also continue the traditional Industry-Academic Summit portion of our annual programs, in which we give leading battery researchers from around the country a short opportunity to pitch new technology coming out of their laboratories for license to established commercial companies.  The 2014 Summit will focus on the hot topic of supercapacitor technology and will include presentations by start-up companies as well as academics.

Best of all, the meeting will be held at a resort on the water in San Diego in mid-January.  It will start on the Tuesday immediately following the three-day Martin Luther King Day weekend, and the hotel has generously agreed to make the discounted hotel rates for the annual meeting available to attendees who might wish to extend their stays, either before or after the meeting.  Registration information will be made available soon.  But you are advised to act quickly, as I suspect that space will be limited.

Finally, big thanks to our 2014 Annual Meeting Planning Committee, Brian Morin of Dreamweaver and Pierre-Jean Arvers of Digatron, for their help in pulling the program together.  The program is not yet finalized, however, and Brian, Pierre and I would welcome input from other NAATBatt members as to content, speakers, sponsors and organization.  I look forward to seeing you all in San Diego next January.

Game Changing Natural Gas and Energy Storage

Written by James Greenberger on March 29th, 2013

Abraham Lincoln, before he became President, was a trial lawyer in Illinois and a storyteller of some note.  One of the stories he told in the closing argument of a trial went something like this:

A young boy, all excited, runs into his father’s study.  “Daddy, Daddy, you have to come quick!”, shouts the boy.  “What’s the matter, son?”, asks the father.  “Daddy, Daddy”, the boys says, “there’s a man and a women in the hayloft of the barn.  The man has his pants down and the woman has her dress up.  And, Daddy, Daddy, you gotta come quick: the man is about to pee all over the woman!”  “Well, son,” replied the father calmly, “you’ve got the facts right, but you’ve got the conclusion wrong.”

I was reminded of this Lincoln story in reading a commentary by Olivier Vallee of Natureo Finance in the new Spring 2013 edition of Batteries International.  Mr. Vallee suggests that President Obama’s appointment of Ernest Moniz to be the next Secretary of Energy represents a policy shift.  “[S]pecifically support for development of battery-driven hybrid/electric vehicles, Stephen Chu’s orientation, has given way to supporting low-carbon alternatives for grid power, specifically natural gas…”  Unstated by Mr. Vallee, but clearly influencing his analysis, is Dr. Moniz’s oft-cited statement that unconventional natural gas technology has been a “game changer”.

While I do not know Dr. Moniz’s intentions, it certainly does not follow from his statement that federal energy policy will favor natural gas technology over hybrid and electric vehicles for the next four years.  Dr. Moniz was right about new gas technology:  it is a game changer and will cause coal to be displaced as a source of electricity generation on the grid far more rapidly than renewable energy sources could ever have hoped to do.

But as cleaner natural gas displaces coal on the grid, the case for electric vehicles gets better, not worse.   A cleaner grid only increases the carbon emission advantages of electric and hybrid vehicles over cars powered by internal combustion engines.  There is little reason to believe, therefor, that Dr. Moniz, who is reportedly very interested in reducing carbon emissions, will favor cutting support for electric vehicles and advanced automotive batteries.

Mr. Vallee also suggests that natural gas, because of its relative cleanliness and ability to cycle, will also decrease the need for energy storage on the grid.  This is, of course, old news.  Electricity generated by natural gas peaker plants has always competed with energy storage in providing power balancing, load shifting and ancillary services on the grid.  If gas-fired generation could not provide those services, energy storage would probably be ubiquitous on the grid today.

The ongoing competition between energy storage and natural gas-generated electricity will continue and should not be unduly affected by increasing reserves of unconventional natural gas.  This competition with gas generation is, and always been, a tough one for storage.  But storage has a number of advantages, which may be increasing in importance.  And several of those advantages are likely to be of interest to Dr. Moniz.

First, storage is clean and, at the point of discharge, carbon neutral.  While natural gas is cleaner than coal, it is still a hydrocarbon fuel that releases carbon dioxide and other pollutants upon combustion.  Moreover, if a gas turbine is used to produce electricity in variable cycles, rather than at a constant rate, its environmental attributes become considerably less favorable.

Second, storage is essentially a fixed-cost grid resource.  Natural gas has historically been a highly volatile commodity—a real problem for an electricity grid comprised of assets with half century lives.  That there is a glut of unconventional gas reserves is true.  That natural gas prices in most North American markets have been consistently low for the past three years is indisputable.  But what those prices will be five, ten or fifteen years from now is unknowable.  Going “long” on natural gas is a risky bet for the country.  Going “long” on storage is not.

Finally, storage is about creating an efficient and flexible 21^st Century electricity grid; natural gas is about just adding more 20^th Century infrastructure to it.  For the past four years, the watchword of federal energy policy has been “clean.”  For the next four years, if Dr. Moniz’s statements and background are any indication, the watchword is likely to be “efficient.”  Unconventional gas is a great and valuable resource, which should be fully (and safely) exploited.  But energy storage, electrified vehicles and “smart grid” technologies are the real game changers of energy efficiency.   It would be a mistake to conclude that these technologies will not be fully supported over the next four years.

Seizing the Microgrid Opportunity

Written by James Greenberger on March 22nd, 2013

Late last October, as Superstorm Sandy was bearing down on the East Coast, I suggested in this column that the storm would present a great marketing opportunity for the advanced battery industry.  Four months after the storm the nature of that opportunity is becoming apparent.  In response to the vulnerability of traditional grid infrastructure, which Superstorm Sandy made so abundantly clear, communities across the East Coast are exploring the creation of microgrids, often including a storage component, to backstop power reliability at critical facilities.

A recent article (March 7) by Whitney Wyckoff in Greenwire cites a new and growing interest in microgrid systems as a result of the storm.  Ms. Wyckoff identifies new microgrid initiatives underway or under discussion in Connecticut, Massachusetts, Maryland and New Jersey.  In Connecticut alone, 27 microgrid project proposals are vying for $15 million in state, storm-motivated grants.

Although microgrid technology is still largely experimental, the deployment of microgrid systems on the grid is expected to grow dramatically over the next five years.  A Pike Research (now Navigant Research) report estimates that worldwide microgrid capacity will reach 4.7 gigawatts by 2017, generating $17.3 billion of revenue.  That represents a compound annual growth rate (CAGR) of more than 22% over the next five years.

Microgrid systems do not, however, need to include an electricity storage component.  Microgrid systems can be designed and built without electricity storage, if the customer so chooses.  The challenge for the advanced battery industry will be persuading the public bodies that will be considering microgrid purchases over the next five years that adding storage to their microgrid will make its function more robust and will be worth the additional cost.

Fortunately, electricity storage proponents will have a good argument to make.  Electricity storage benefits microgrids in three distinct ways:  First, battery powered electricity storage provides immediate ride through capability in an emergency situation.  Following an interruption of primary power, battery-powered electricity storage comes on line instantly, allowing a microgrid to provide a seamless supply of energy to its customers.  Microgrids without storage, which rely on conventional backup power systems, may subject customers to some amount of power interruption, as the backup generators ramp up and come on line.  These types of interruptions, though relatively short, can have significant negative impacts on certain critical infrastructure, such as hospitals and IT centers.

Second, battery electricity storage systems are generally more reliable than back-up power generation systems.  Back-up generators must be rigorously maintained in order to ensure reliability.  This maintenance is often deferred or forgotten in periods between emergency events.

Finally, electricity storage will allow microgrids to use electricity from variable, renewable sources, such as distributed solar and small wind generation.   Not all microgrids will, of course, be designed to include renewable energy generation within the system.  But for those microgrids designed to supply their customers with electricity that is clean as well as secure, electricity storage capacity will be a useful and often indispensable system component.

The design of electricity storage into on microgrid systems is not just going to happen.  The public and the public bodies that will be making microgrid purchasing decisions over the next five years must be educated about the benefits of storage in the microgrid context and the additional spend involved must be justified to them.  This is a job too big for individual companies.  The entire industry must band together to take up this task.

Got Juice?

Funding Outside the Box: The Energy Security Trust

Written by James Greenberger on March 15th, 2013

In an address today at Argonne National Laboratory, President Obama proposed the creation of an Energy Security Trust.  The Trust would use $2 billion from royalties and lease payments received from oil operations on federal lands over the next ten years to fund research aimed at replacing oil as a transportation fuel.  Technologies mentioned by the President as eligible for funding would include electric vehicles, biofuels, fuel cells and natural gas vehicles.

It was unclear in the President’s proposal whether these royalty payments would come from existing oil leases on federal lands or from new leases, which the government might agree to make available.  The Administration’s past reluctance to expand oil production on federal lands has, of course, been a major Republican complaint.  Although the President offered no deal with respect to expanded drilling–and probably pointedly so–it is hard to ignore the obvious implication.  Significantly, Alaska Senator Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, has already suggested that she might be able to support the idea.  Perhaps this is a deal that Congress can actually get done?

The Energy Security Trust is a good idea.  It is a good idea, not just because it will fund important energy research, including research in advanced battery technology, but because it is scrappy:  it identifies a novel way to generate revenue for an important public purpose, which revenue might not otherwise exist.  The President was specific in crediting the Washington advocacy group Securing America’s Future Energy with the idea of the Trust (NAATBatt can bask in some reflected glory; until recently we shared some office space with the group).  Finding money for energy technology development from new and creative sources will need to be an important priority in the federal budget-constrained world of the future.

In a round-about way, the President made a similar point in his address at Argonne.  In his remarks, the President heavily criticized the current federal budget sequester, citing a recent article in The Atlantic magazine co-authored by Eric Isaacs, Argonne’s Laboratory Director.  The article outlines how the sequester will do great, long-term harm to important scientific research.

While the President confined his point to criticism of the sequester and his antagonists in Congress, the issue is, in fact, a larger one that just the sequester.  The development and deployment of new energy technology in the United States has been chronically underfunded.  As the American Energy Innovation Council recently noted, the U.S. government spent about $5 billion on energy research in 2010 (including one-time stimulus funding) compared to about $30 billion for medical research and $80 billion for defense research.  Moreover, that underfunding promises to become even more severe as Congress moves to address the federal deficit and as growing entitlement obligations increasing squeeze discretionary outlays, such as energy research, for remaining government funds.

We need to start thinking outside the box to find new ways to fund investments in the infrastructure upon which the future prosperity of our country and our world depends.  Energy technology is a key part of that infrastructure.  The Energy Security Trust is a good and creative start.  But we must actively look for new ideas and new opportunities.