This is Dana Perkins and you're listening to Switched on the BNAF podcast. Today's show is about long duration energy storage, a potential answer to the intermittency for renewable energy, given how fickle, whether it can be at times when you need it for solar or wind power. How close are we getting to that answer?
Well?
Today I am joined by analysts Yee Zoo, a clean power specialist at BNAF, alongside Evelina Stoiku, who's from our energy storage team. From electrochemical to thermal to mechanical. What are the long duration energy storage technologies that are out there and how mature are they? They draw upon notes from the inaugural Long Duration Energy Storage Cost Survey. This can be found at bn EF once logged into the
Bloomberg terminal, or at BNAF dot com. But right now, let's jump into our conversation with Yee and Evelina about some of the possible opportunities for long duration energy storage. Evelina, thank you for joining today.
Hi Dana, nice to be here, and Yee.
Thank you for joining on the show.
Thanks for having Austin.
So we're going to talk about long duration energy storage and the first question has to be what do we mean by long What is the time frame that makes it long duration versus just energy storage.
Well, that is a very good question, and the reality is that there's no consensus on the definition of long duration energy storage. BENIF defines it as a storage technology that can offer disurgeration of at least six hours. However, different sources define it in different ways. For example, the US Department of Energy classifies long drage and energy storage with duration of at least ten hours, while Chinese agencies define it as four. So it really varies.
So the companies that are creating the technology for long duration energy storage would not then classify themselves as long duration energy storage providers necessarily because in many res they may just be making batteries at how different applicability and so is this is this an industry that I guess largely look at each other as competitors and as technologies that can be swapped out for each other or do they have quite different use cases?
Well, they can have very different use cases. And again, because we're talking about technologies that can offer anywhere between six to twenty four to one hundred hours, they're really very different applications that are fit for for these durations. So many of these companies or technologies cannot be swapped out directly and their success might be dependent on different parameters.
So we can talk about those different use cases as we get into the technologies. And I think then the question is, because there's no strict definition of what this industry is, you had to make some choices regarding which technologies you were going to look at, and you know what those use cases were. So which technologies did you decide to focus on and why did you pick them?
Well, in our work we covered of our of different technologies. Specifically, we covered seven broad long duration energy storage technology groups and twenty technology types under each of these, but broadly you can think of lds based on major classifications such as electrochemical, mechanical, or thermal. Electrochemical storage technologies basically store
energy through reversible chemical reactions. They're also typically referred to as batteries, and the most widely widely known type of battery that's electrochemicals lithium ion, but others include flow batteries.
Now with mechanical energy is stored through utilizing the physical movement of materials to store and release energy, and examples of these technologies include compressed air and liquid air energy storage, gravity energy storage, compressed gas energy storage, and novel pumped hydro at last pog least with thermal we have energy stored through heat, so energy can be used for heating or cooling and power generation later. And there are multiple subcategories under thermal energy storage.
So oftentimes when we end up talking about on the show or lithium ion batteries because invariably they're a source of storage for the energy system, but also very much in vehicles, which is another space that we cover. And you know, we've just gone through a series of different technologies that you looked at within these electrochemical, mechanical, and
thermal categories. Of those three categories, or if you want to name a specific technology that works too, which ones are most cost competitive with lithium ion batteries.
So when we're thinking about the cost competitiveness of long duration energy storage technologies against lithium ion, there are multiple ways to think about it. The costs really vary by dissart duration, and it also really varies by by region. While the typical storage duration for lithiumon batteries is two to four hours, long duration energy storage technologies tend to
be more cost competitive over longer durations. So if we're to look at that specific duration of two to four hours, actually none of these long duration energy storage technologies is really competitive. However, one of the very unique characteristics of long duration energy storage is that the costs, specifically capital
costs drop at higher durations. That happens because the energy and the power related components of these systems tend to be decoupled versus this is not the case for lifiumion. If we take an example of flow batteries, you can increase the dis sharg duration of a system by adding bigger tanks to store the liquid electrolyte versus in the case of liftumine batteries, you would need to add more
battery cells. So for lds, this means that capital costs drop for higher durations and they become more cost competitive for these higher durations. The technologies that we've seen as the most cost competitive for these higher durations tend to be compressed air and thermal energy storage, and many of these others might become cost competitive for longer durations.
Now in the storage market, specifically, the THEAMYA and you've seen China be a really dominant force in terms of really driving cost declines and producing its scale. And is China also involved in some of these other technologies and which ones are they most interested in?
Yeah, well, China has been leading the Lisima batteries because of this massive adoption of lisa my batteries in both electrical vehicle industry and also stationary energy storage markets. For launderation storage, actually, China is also leading on that front as well. So the technology deployment in China for launderation storage is that generally cheaper compared to the rest of boards.
This is especially true for technologies such as compressed aian gies storage and flow batteries, which China has considered them as the major focus for now for the nature, so most of those technologies actually at least fifteen percent cheaper compared to those deployed in other markets. This is mainly due to the more advanced commercial status of those technology
deployment in China compared to the rest of boards. So while other nations are still trying to understand the value of different launderation storages and also developing piloting projects, China is starting to deploy those massive projects. We're seeing some records setting large scale projects that has been developed in China. Some of those are with gig wle hours scaled well, but most of those projects deployed in the rest of WOARLD is actually less than five macworld or less than
ten awards, so those are mainly those piloting projects. So this massive adoption of laundrosan storage deployed in China has been one of the major driver in driving down the course of laundrotion storage in China currently.
And is it a fragmented market or are there a few suppliers that are actually really heavily involved in some of these specific technologies, because the parallel I think about is the gigafactories that have risen in the luthium ion space, and those are certainly very big projects focused on you know, specific companies that you're doing them. So how fragmented or consolidated is this market in China?
So lntruition storage is you're an emergent technology, so there are some emergent companies entering into this market. For instance, for flow batteries, we are seeing over thirty energy storage system greater in this market, so this is quite a large number. And this number is continuously increasing over time
as well. So I would say this is a quite fragmented market for now, but over time on when the market is mature, we're likely to see some consolidation or some markets some companies may need to acceed markets ultimately because of the fist competition and limited market size.
And how supportive is the policy environment in China towards these technologies, because they've certainly been very supportive of lithiumyon and of solar. Is this very much in the government sites.
As well, definitely, So the Chinese government has released multiple policies driving the adoption of laundrousian storage since twenty twenty two. So it has identified laundursion storage as one of the key abler for its energy in netz zero transition by twenty sixty. And also it has set its target to reach early stage commercialization of nondrousion storage by twenty twenty
five and full commercialization by twenty thirty. So we are seeing a large number of I think utility scale companies and also great companies or provincial governments that's starting to enter into this market and start to build those large scale demonstration projects to get first move. And this has been one of the major driver dropping the adoption of
laundrotion storage in China currently. In addition, China mandates a certain amount of energy storage to be paired with new build wind and solar projects, So this has been one of the major driver of energy storage adoption in China currently, and this applies to both short duration storage and laundurition storage. So this has been meaningful I think policy in driving the adoption of those laundroation storage in China.
Yeah, we really robust domestic market because the renewables industry is taking off, so then this follows and complements it. Yeah, which then leads me to are there other countries that are also really keeping a close eye on this? And I'm thinking about perhaps the US. We have the Inflation Reduction Act that has put renewables on the map in the US. Has that then also created a market for long duration energy storage? And is there really anywhere in the world that's looking like China.
At the moment?
So I think in nan Chinese markets, there's a growing consensus in terms of the importance of laundrosians over time, So many countries are calling for need of launchurition storage as one of the key able for its energy transition over time. But I would say most of the policies support for from non Chinese markets are quite limited to date. One of the major reasons is that most of the projects in other markets are economic driven rather than policy driven.
So we needs strong financial incentives to drive those adoptions of those projects in non Chinese markets. But I think the financial incentives are quite limited to date, which is not sufficient to drive the economic buildouts of laundrous storage to date.
So you've already established that these are capital intensive projects and in some cases very much right now. They are not compelling from a cost standpoint in that they don't pay for themselves. So we are certainly looking in an industry that needs to be experiencing pretty dramatic cost declines to have much wider deployment in the future without policy support. Outside of China, though, where a lot of the support for clean tech is often coming from the companies themselves
and they're looking for independent backing. You know, what is the real driving force for long duration energy storage? Is it actually policy in Europe or North America or is it really coming from private industry and investors.
I think there are two types of revenue resource or investment resources for launduration storage currently, so partially they come from the government, So the Department of Energy of the US is actually selecting a few technologies and provide funding for those technologies to establish their demonstration projects. And on the other hand, I think a lot of high profile companies are receiving a lot of fundings from PBC firms.
We are interesting in developing the next twenty four to seven clean firm technologies which can enable the future Nazero transition. So actually we're seeing a surge of investment in laundering storage since the past three years.
One of the things that Clerk Curry, who a lot of the work that we have on the innovation side of things, she pointed out that actually a quarter of VC financing at this point in time is actually going into clean technologies, and so this very much echoes the fact that a lot of vcs have their strategy to see some of these technologies where there is so much need, hoping that in the future they will actually end up getting much bigger and growing at scale.
And I think in addition, there are some corporate firms, technology firms, big technology firms in US are highly interesting in those technologies is one way to enable your twenty four seven energies supply for their data centers such as Microsoft, such as Google, all of those are actually looking to developing those new technologies at their data center as well.
So companies that are actually really interested in decarbonizing are leading the way and actually driving technology deployment.
Yes, it's currently I think those corporate firms investing significantly in those new technologies, and they appear to be the frame runner of this technology sector.
So at the beginning of the show, we talked about how this really isn't a cohesive space, lots of different definitions regarding what constitutes longeration energy storage to begin with, and this is emerging tech. Well, there are some incumbent technologies and we'll get to that because some of those
are becoming popular again. But in this world of emerging tech, and we can continue to use China as the framework to discuss this to begin with, But which technologies are most cost competitive in China and perhaps some of the ones that maybe are more cost competitive in other parts
of the world. Let's pick a couple sample technologies and talk about them, and also talk about kind of the mechanics we'll get into some of the mechanics of how they work, because I think it would be nice for us to have some sort of picture in our mind of what some of this technology actually looks like in the amount of space it takes up. So when we first start thinking about this, I mean one of the
ones that I'm aware of is compressed gas. Can you talk a little bit about compressed gas as a technology.
So in general of China is cheap of foremost relatively too launche usion storage technologies, including compressed there and in the flow batteries, which has been deployed since ninety seventies. So it has been a long history of those technologies and this is the major focus of China's currently. So I would say most of those technology relatively material. Launduction storage technologies are cheaper in China, are way more cost
competitive in China compared to the rest of awards. But there are more laundrotion storage technology that are being developed
outside of China. Infecting our costs survey, we have received cost data for over twenty different laundation storage technologies globally and twenty yeah twenty, So most of those technologies that developed outside of China including technologies that compressed gas or other technologies which are just the emergent and their adoption of those technologies in China are quite limited to date.
And what is the split between technologies that existed from a while ago, so the nineteen seventies, like pumped hydro or compressed gas versus new and like really properly new technology that's emerged in let's say the last five to ten years.
Yeah, I think among all a different launchrution stores technologists compressed the guests and uncompressed area and the flow batteries are too, Matio technologists. Other technologists are just emerging in most of them are as piloting phase or on the face.
So many of them are actually in this piloting phase of that twenty. Yes, I suppose there's something to be said for with the older existing technologies, they've had some time to ramp up, and then that would be the reason that we're actually looking for some additional solutions that can be used in a way that perhaps the existing
technologies can't. Okay, So Evelina, I did ask for some sort of technical picture in my mind of a technology, and there's one in particular that I would like to know more about because I think the title of it actually is really compelling. It's called supercritical CO two energy storage. What is it and what does it look like?
Yeah, well maybe we need to go back to physics class, and please no, So if we go back to our physics class, the phase of materials depends on pressure and temperature, and basically, with supercritical CO two, it's a fluid state of carbon dioxide where it's held above its critical temperature and critical pressure. So if you, for example, lower the pressure, it becomes a gas, or if you lower the temperature,
it becomes a liquid. So the phase of material depends ultimately on pressure and temperature, and for supercritical carbon dioxide CO two, it's just a state where that material, or that a substance, it's held at a temperature and pressure above that critical point where distinct liquid and gas phases do not exist.
So when I started working in this industry, renewables were ninety percent hydro power, and as such, as someone who perhaps wasn't very creative when approaching their master's thesis, I decided to write my master's thesis about hydropower. So invariably I have a personal interest in this, but additionally we have a lot of aging infrastructure in that space, and it has historically served as a source of kind of
a great source of flexibility and energy storage. And as we are trying to increase the amount of renewables on the grid and we are looking to new and old technologies, I want to know a little bit about what potential pump tydro has in the future of the storage space and whether or not it will be a comeback story.
So I think palm tydro is indeed a very well established technology and the destorage industry, and in fact, palm hydro is the dominant technology besides lisima batdteries today. But as we all know that developing pump tido could be quite challenging both from the I think capital requirement perspective and also the environmental impact perspective. In the addition, it requires a very long time to get those projects developed.
But as we are seeing higher renewbal penetration growthing, there's some renewed interest in palm taijo in markets such as China, such as India, such as Europe such as Australia and others. So there's indeed a comeback story of pump tijo but there are some challenges associated with developing those green field projects globally. To date, most of those activities actually in China.
Again, so there's the new projects, but then there's the aging infrastructure. Is that something that people are looking at in close detail and when we're then repairing and retrofitting existing pump hydro projects, is there new technology within that like best available technology that's moving in or is that space not really changed a lot in the last several decades.
In fact, we are seeing some new pump tido technologies or we called novel pump tydo technologies, so we have actually collected some cost data for those projects as well. So one of the I think high profile technology is called high density pump tijo. So instead of using water as a storage medium, this type of new technology used flud with higher density than water, so this allows a lower elevation and smaller footprints required to deliver a similar
amount of energy compared to those conventional ones. However, most of those novel pump ygo technologists, as you, very early stage of developments and most of those technology will be developed by twenty thirty, so it's not a neutron story.
So let's jump in on another technology that is of interest at the moment, So gravity energy storage. I like the name of this one too, just because it has gravity in the name. Talk to me about gravity energy storage. What is it and kind of what is the potential?
Well. Gravity energy storage is another technology that is gaining a lot of attention in use and media, primarily also because it's very different from a lot of the electrochemical solutions that were used to and seen in the past. The way it works is by using energy to raise mass, storing energy and potential energy by maintaining it elevated, and then dropping it and releasing that energy when they want
to release the energy back to the grid. So it basically uses electricity or energy to lift these masses when prices are low, and then lower it when prices are are high or where energy is needed to discharge it in the grid. There are many advantages to gravity energy storage, but also quite a lot of drawbacks. One of the advantages is that the design is relatively simple. It's mechanical, so it also has a long lifetime. These systems tend to have a long lifetime because their life depends on
the lifetime of mechanical components. Which are generally pretty advanced. They don't degrade, and we were quite familiar with it because they're also used in other industries. However, drawbacks include low round trip efficiency and very significant physical footprints, so you needed a lot of space for such systems, so it makes citing them and finding appropriate locations for them quite difficult.
So another issue with land use. But what does low round trip efficiency mean?
Basically means that you need to put more energy into charging it and you get less energy out of it, so you have a lot of energy losses while charging and discharging.
Yeah, it's for fear of stating the obvious batteries in many respects and well hydrogen actually being one of those things where there are use cases for it, but it takes energy to make energy is energy storage invariably, there's so much that we have to put into it in order for it to be effective. And then it's that ratio right on what it is that you actually get out of it when you need it and for how long. So nothing is a perfect solution. Everything fits to a
specific use case and in this case enabling renewables. So I want to circle back on cost because cost is an important part of deployment of any technology. And if we think about China where they are actively supporting long duration energy storage co located with renewables, and you're seeing this roll out happening, what kind of percentage or even in absolute terms, what are we seeing in terms of
cost for this overall project. Is it a really big financial part of it or is it something that's sort of a no brainer and it's pretty obvious that you would want to include it because building over capacity is going to be so much more expensive.
I think it's how to get and some projects, but I think in general it would be most of the developers in channel will struggle to collect sufficient revenue streams for laundursion storage to cover your initial costs. So most of those projects are not actually economically stupn or not economically viable in China.
Over a long period of time, Like the payback on the capital expenditure will not come back on this specific part of it.
It's hard to say for now because most of those Laundusian storage startups or companies that claim me very ambitious cost reduction targets. It's applicable to anyone in the industry, but I think it's remains to be seen how cost effectively der technology can ultimately become and.
If I can add something. There may be two ways to think of costs. The way that we looked at it for this work that we put out was in terms of capital costs, but another way to look at it is in terms of level life's cost of electricity. So what we focus on this report is capital costs, so basically the cost of a fully installed system. That's
the first step into making analysis. That's a major input into levelized costs of electricity, which we're going to be doing as well for these technologies, so we'lltch out for that. But generally, while levelized costs of electricity might make some of these technologies look more cost competitive, many investors might hesitate to use it as a metric because the lifetimes of these projects are very, very long, and we're talking about long payback periods. So capital cost remains a very
important metric. But it's important to mention that they're both and different companies and different agencies might be using both, and they're both helpful in making decisions and evaluating these technologies.
So, because this is certainly an emerging technology space, if we look away from the established technologies that have a new life potentially in front of them, and we look at some of the more emerging technologies. You have choices to make regarding your time. I used to ask this question actually quite frequently on the show. So I'm going to bring back a favorite question type of mind, which is use the export. What are you watching and what
are you ignoring? At least for right now. You can always change your mind next time you come on the show. Are you watching or ignoring sodium sulfur batteries?
Yes, it's definitely one of the technologies that we're looking at. And a good way maybe to frame it is that we keep an eye on all of these long duration and restorage technologies, and there are many that maybe we didn't have the chance to talk about today. These include sodium sulfur like you mentioned, and because they make a smaller share in terms of deployments, maybe they're not the
center focus of attention. So I wouldn't want to count any of them out, or just maybe paying less attention and focusing on the metric of deployment in terms of how we would split our time.
So you're not ignoring them, but they don't get their own research note, yet it's the right way to put it.
Not yet. Okay, we look forward and we're excited to see new technologies gaining traction so that we can write reports about all of them.
So how about liquid metal batteries another name that I just love. This is the show of favorite names for me for some reason. But liquid metal batteries, you know, how close are they to getting their own research note?
Again, they're probably in that category that they can't get their own research note yet. If we're to define them, they operate using liquid electrolytes, with a defining characteristic being a molten salt electrolyte. But again, maybe they don't have a note on them yet.
And then another one that is an emerging technology. Tell me a little bit about sodium iron chloride batteries.
So it's another type of high temperature rechargeable battery. Again it's grouped in one of these other technologies that we didn't have enough data points to get their own section. But another technology that we look out for.
Not enough data points then means the world is not yet putting it all together. That we may see as more projects come to light and ability to analyze it further. I want to know on this spectrum of how long that energy can be stored for which one has the
longest duration energy storage? And then within this definition of just you know China, in some cases saying only four hours is necessary to be classified as long duration energy storage, what is the least long duration and what is the most long duration technology?
Yeah, maybe we can give some context in terms of the data points that we're received to give you a sense of where we see the most need in terms of durations. So about forty percent of the data points that we collected were actually four dishort durations of one to four hours, and then forty two percent was for a dishort duration between five and ten hours. So we have a majority of the data representing technologies and projects
that are between one and ten hours. This means that the industry is still moving and around that duration phase just because one many of them are early stage, so it makes more sense to do a smaller project for a shorter duration to prove it as a concept. And another key reason that we're seeing shorter durations is because
that's the need we're currently seeing. So as Ye previously mentioned, there's not a lot of policy supporting long duration in many markets beyond these that we're seeing that I previously mentioned, and there's not a way that these storing energy for long durations is compensated in energy systems such as in the US. That's one of the reasons that we're seeing a shorter duration. And within each of these durations, there
are different technologies that might be competing. For example, thermal energy storage typically makes sense for higher durations, so you might see more thermo energy storage projects for higher durations.
What's the maximum number of hours a thermal energy storage project could do.
So it really varies. We can see durations up to twenty four hours, so from the data point that we collected, in addition to costs, we ask people about different performance metrics including duration and thermal energy storage could really vary between two to four hours up to twenty.
Four So some of these technologies, if I really put it simply, are being used as speakers. Meanwhile, others are actually being used for let's say, night time energy for solar or for changes to weather patterns. When we're thinking about other parts the renewables as opposed to being plugged in for peak demand. Yes, but both use cases are valid within this launderation.
Energy storage.
It highly depends, so we are seeing companies developing for hours up to one hundred hours more launderation storage, so.
What can do one hundred hours.
Some companies, I think one of the I think most high profile companies called form Energy, which is a startup in the US, is actually developing the iron air technology
that can serve duration over one hundred hours. And I think one of the major use case of those technologies are actually pelling with renewable projects to turn the renewables into the round the clock electricity supply and they can display the core and gas pop plants, and also they can also defer the great investments in some markets or some region. Actually, we're seeing quite some projects that are
being developed by this company in the US. Actually, some utilities are very interesting in such kind of technologies as one of the I think promising options to displace those Asian core and the guess power plants. So this is one of the I think major use case we are
seeing for those and new storage. But oftentimes we are seeing a lot lot of intro day and new storage, so duration with six up to twelve hours, so they're actually paired with solar assets to generate elegacy during the evening peak and also over the nighttime, So this is another dominating usage of I think lun duration storage use case currently we are seeing.
I mean, I know you've both said that the majority of the market is at these kind of single digit to kind of low double digit numbers of hours, but I find the one hundred hour use case to be incredibly interesting and will be watching that so closely because to your point, it's not about these technologies competing with one another for market share. It's actually about how they
can displace existing legacy energy like gues so ye ye. Evelina, thank you so much for joining today and talking about this really rapidly evolving space with so much potential and necessity for the rollout of renewables deployment.
Thank you Dana for having us.
Thank you, Dania.
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