the research consultancy for energy technologies
‘Levelized cost’ can be a useful concept. But it can also be mis-used, as though one ‘energy source to rule them all’ was on the cusp of pushing out all the other energy sources. Cost depends on context. Every power source usually ranges from 5-15c/kWh. A resilient, low-carbon grid is diversified. And there is hidden value in materials, power quality and electronics. These ideas are explored in our 15-page note.
The purpose of this data-file is to aggregate all of our patent assessments in a single reference file, so different companies’ scores can be compared and contrasted.
In each case, we have tabulated the scores we ascribed each company on our five different screening criteria, mectrics on the companies’ size and technical readiness and a short descripton of our conclusion.
24M was founded in Cambridge, MA in 2010, spinning out of MIT. It now has over 100 employees and has raised over $100M in venture investments. It is licensing a “semi-solid” lithium ion battery technology, offering greater energy density and lower costs. It is the main technology provider for Freyr, Kyocera’s Enerezza product line, and being fine-tuned for use in Volkswagen’s electric vehicles, under a 2021/22 deal where the auto-maker took a 25% stake in 24M.
Semi-solid electrodes are aimed at “dramatically reducing” costs of lithium ion batteries, with higher energy density, safety and reliability, for use in battery storage (to replace gas peakers) and in electric transportation solutions. The process requires 50% less capex versus a conventional manufacturing line, mixing active materials in a clay-like slurry, and a dry coating process. Next-generation research is looking to couple the cells with lithium anodes for electric aviation.
Our patent review focuses in on a sample of c15 out of c50 distinct patents that 24M has filed. This clearly shows how the technology improves upon the prior art. Specifically, the traditional method for manufacturing battery electrodes is to coat a metallic current collector with a solution. The solvent is commonly N-methyl-pyrrolidone. As it evaporates, a thin layer remains, including the active materials and a ‘binder’ that acts as a glue. A common binder is polyvinylidene difluoride. The first drawback is that the electrode layer is thin (<100μm), whereas thicker materials can store more energy. The second drawback is that the binder does not store energy, it may even block energy from flowing (tortuosity), while it adds mass, volume and potential degradation pathways (oxidizing). The third issue is that evaporating the solvent and post-processing the material is time-consuming and complex.
24M battery technology review. Overall, 24M’s patents explain why large battery companies have licensed its simpler, more energy dense, lower-degradation battery manufacturing technology; the general workings of which are locked up for at least another decade. We see a moat and can partially de-risk the scale-up of semi-solid electrodes. However, we think there is one technical challenge that decision-makers should still factor in, plus three smaller risks.
To read more about our 24M battery technology review, please see our article here.
Air conditioning energy demand is quantified in this data-file. In the US, each 100 Cooling Degree Day (CDD) variation adds 26 TWH of electricity (0.6%) demand and 200bcf of gas (0.6%). Total global demand for air conditioning consumes 1,885TWH of electricity (7% of all global electricity, 2.5% of all global useful energy). IEA numbers see air conditioner demand trebling, from 1.9bn to 5.6bn by 2050, underpinning 3,500-6,000 TWH of electricity demand for air conditioning in 2050. We think the numbers could be materially higher, and will more than treble from 2021 levels.
A brief history of air-conditioning. In 3rd Century Rome, Emperor Elagabalus built a mountain of snow in his summer villa, permanently replenished by donkeys descending from the mountains. Similarly, Seneca mocked the “skinny youths” who ate snow rather than simply bearing the heat ‘like a proper Roman’. Millennia later, dying US President James Garfield was palliated by blowing air over ice-water: The White House went through half a million pounds of ice in two months. It took until 1902 for the first modern air conditioner to be invented, by Willis Carrier, while he was working at the Sackett-Wilhelms printing plant in Brooklyn. His systems sent air through coils filled with cold water, where the latent heat of evaporation would be transferred out of the water into the air. In 1922, Carrier added a centrifugal chiller, to reduce the unit’s size. Carrier Air Conditioning later developed a belt-driven condensing unit and mechanical controls for commercial units by 1933.
A surprising influence on the entirety of 20th century society stems from this world-changing invention of air conditioning. It was debuted at the Rivoli theatre, in Times Square, in 1925. Some sources say that the move industry’s “summer blockbuster” even has its roots in air-conditioned cinemas, as American audiences would attend as much for the coolness as the entertainment. At the same time, US populations began expanding into otherwise inhospitable regions of the sun belt. The US population living in the sunbelt has risen from 28% in 1950 to over 40% today. In 1960, the tiny town of Las Vegas hosted 100,000 people, and it has since grown by a factor of 30x. Over a similar timeframe, Persian Gulf Cities went from 500,000 people in 1950 to 20M now, and now these hot climates even host air-conditioned football stadiums and indoor ski-slopes.
Present energy demand. By 2022, there are 1.9bn air conditioners in circulation globally, of which two thirds are situated in China (c60% household penetration), the US (90%) and Japan (91%). They accounted for 1,885TWH of electricity demand in 2020 (7% of world electricity consumption). They accounted for 390TWH of US electricity in 2021, comprising 10% of the US’s electricity consumption, of which two-thirds are residential, one-third commercial. This share rises to 25% of ASEAN’s, 30-40% of Singapore’s electricity consumption, and up to 70% of the UAE’s.
Future energy demand. The IEA projects that by 2050, the number of air conditioners around the world will reach 5.6bn (up 3x). This could see air conditioning demand rise to 3,500-6,000 TWH of electricity in 2050, depending on future efficiency initiatives. c75% of the gain is seen coming from increasing income in emerging markets, as less than 10% own air conditioners in India and Africa, compared with 44% of the world’s “hot climate population” today. Another c25% of the demand increase is actually expected to come from climate change itself.
We think IEA numbers are light, and the most likely output will see total global electricity demand for air conditioning rising by over 3x, to well above 6,000 TWH pa by 2050. In a ridiculous case, where 1.4 bn people in India ultimately aspired to achieve a US-level of air conditioning comfort, despite India’s 4x hotter climate (as measured by cooling degree days), then the resultant energy demand in this one country alone would be 6,500 TWH (10% of today’s total global energy), equivalent to 1,000 MTpa of LNG demand. These numbers are insanely high. They are quantified back-of-the-envelope in the data-file.
Weather dependency. Power demand can double on a hot day versus a mild day, in a city with heavy air conditioning demands. This happens to be at the exact same time that heat detracts from the output capacity of solar, wind, gas plants, nuclear plants, power lines. Hence we have previously noted how “hell is a hot still summer’s day” if you are power-grid planner. This data-file calculates how energy demand changes with cooling degree days. Against a baseline of 1,500 US Cooling Degree Days per year (in Fahrenheit terms), a good rule of thumb is that each 100 Fahrenheit variation will add 26 TWh of electricity demand, which equates to 200bcf of gas demand, or 0.6% upside in total US gas consumption. Numbers can be stress-tested in the data-file.
Incremental technologies are envisaged to make future air conditioning more efficient, and even take the string out of growing global cooling demands. Interesting options that have crossed our screens include improving insulation, smart energy, phase change materials, heat pumps, power factor correction, absorption chillers with CHPs, and urban trees that can reduce temperatures in cities by 2-8°C.
A new solar cell is vying to re-shape the PV industry, with 2-5% efficiency gains and c25-35% lower silicon use than today’s PERC cells. This 13-page note reviews TOPCon cells, which will take some sting out of solar re-inflation, tighten silver bottlenecks and may further entrench China’s solar giants.
This data-file provides an overview of energy economics: 90 different economic models constructed by Thunder Said Energy, in order to help you put numbers in context.
Specifically, the model provides summary economic ratios from our different models across conventional power, renewables, conventional fuels, lower-carbon fuels, manufacturing processes, infrastructure, transportation and nature-based solutions.
For example, EBIT margins range from 3-70%, cash margins range from 4-85% and net margins range from 2-50%, hence you can use the data-file to ballpark what constitutes a “good” margin, sub-sector by sub-sector.
Likewise capital intensity ranges from $300-9,000kWe, $5-7,500/Tpa and $4-125M/kboed. So again, if you are trying to ballpark a cost estimate you can compare it with the estimated costs of other processes.
To read more about our overview of energy economics, please see our article here.
What is the marginal cost of offshore oil and gas? To answer this question, offshore oil’s marginal cost is modelled in this data-file, capturing the economics of a small-mid sized oil project, off the coast of Africa, first found in the mid-1980s and vying for development ever since.
Our base numbers include $15/boe of development costs, $15/boe of opex and 70% of the ‘profits’ accrue to the host government in fiscal tax, spanning royalties, PSC take and income taxes. All of these are good ‘ballpark’ numbers, although a more detailed cost breakdown is in the data-file.
In NPV terms, the project ‘breaks even’ at $35/bbl (0% IRR), covers a 6% WACC at $40/bbl, 10% WACC at $45/bbl, 20% WACC at $60/bbl and 30% WACC at $90/bbl (the increasing sensitivity is a function of the PSC structure).
Note these are life-of-the-project averages. If oil prices spiked to $200/bbl in 2023, it would be irrelevant, given a 2-4 year development time. Project returns will mostly be determined by oil prices in the peak production years of 2025-2028, which ideally could be hedged.
If we were private equity investors, considering funding a project with this risk profile, honestly, we would start getting excited at a 30% IRR, which in turn might require the forward curve to offer up $90/bbl through 2028, for projects like this to definitively move ahead and improve future energy balances.
Details will of course vary, project by project, and some projects may receive helpful tax incentives. You can flex details in this model.
To read more about the marginal cost of offshore oil and gas, please see our article here.
The electrical conductivity of energy transition materials is tabulated in this data-file, intended as a useful reference.
Electricity conductivity is simply the inverse of electrical resistivity, measured in Ohm-meters, and varying from 10^-30 in super-conducting materials through to 10^20 at the most highly insulating plastics as might feature in HVDC power cables.
Most of ‘the action’ in energy transition will take place in the range of 10^-8 to 10^-3 Ohm-meters.
Silver is the most conductive metal used in the energy transition, which combined with its high stability, to make it the most commonly used front contact material in solar cells, which in turn consume around 10% of global silver production today.
Copper is used in machinery and appliances. As a rule of thumb, wind, solar and EVs are around 4x more copper intensive than the conventional generators and ICE vehicles they replace. Hence we see copper demand trebling in the energy transition.
Aluminium is c50% more resistive than copper, but it is also 70% lighter and stronger, which explains why it is used in overhead transmission lines or in rigid conductors behind the back contact of solar panels.
Battery metals are 5-10x more resistive, and graphite is 200x more resistive, than the excellent conductors discussed above, because they are primarily selected for their ability to intercalate lithium ions and promote battery energy density.
Electrical grade steel is another 3x more resistive again versus battery metals. Electrical grade steel is used in electric motors, transformers and generators, in order to create electro-magnetic fields.
Finally, PV silicon is a semi-conductor, around 10,000 more resistive than conductive metals, because in order to conduct electricity, it requires electrons to be promoted from their valence bands to their conductance bands. Conductivity depends on doping levels (silicon metal hardly conducts at all) and it is higher for N-type silicon the P-type silicon.
We will continue building out this data-file, into electrical conductivity of energy transition materials, so please email if there are any materials that we can helpfully add, or model more fully.
To read more about The electrical conductivity of energy transition materials, please see our article here.
Wind and solar have so far leaned upon conventional power grids. But larger deployments will increasingly need to produce their own reactive power; controllably, dynamically. Demand for STATCOMs & SVCs may thus rise 30x, to over $25-50bn pa. This 20-page note outlines the opportunity and who benefits?
Nexwafe technology review. Nexwafe is developing a next-generation PV silicon technology called the EpiWafer process, growing standalone silicon wafers onto mono-crystalline seed wafers, with no need to slice ingots and surrender 30-50% of the PV silicon as ‘kerf’ sawdust.
This should improve the manufacturing efficiency, module efficiency and energy intensity of solar PV, and possibly also the costs. Silicon efficiency also matters more in the solar industry, to deflate future costs, after improved passivation has decreased the relative contribution of surface losses.
Data from the patent library shows how the resulting wafer can have 98% lower levels of oxygen impurities, and 4-5x narrower distributions of dopant distributions. 1.1% total efficiency gains are also targeted through a combination of optimizing wafer width and dopant distributions.
Our Nexwafe technology review found 60 filings and re-filings of 8 separate patents. We conclude that many underlying aspects of Nexwafe’s PV silicon ambitions are locked up with high-quality patents. However, our main surprise was the simplicity of the process, which is both a blessing and a curse (details in the data-file).
Company. Nexwafe spun out from Germany’s Fraunhofer Institute in 2015, has c40 employees, closed a €32M financing round in October-2021, lead by Reliance and including Saudi Aramco Energy Ventures.
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