Solar volatility: interconnectors versus batteries?

Interconnectors cure renewables volatility

The solar energy reaching a given point on Earth’s surface varies by +/- 6% each year. These annual fluctuations are 96% correlated over tens of miles. And no battery can economically smooth them. Solar heavy grids may thus become prone to unbearable volatility. Our 17-page note outlines this important challenge, and finds that the best solutions are to construct high-voltage interconnectors and keep power grids diversified.

Power grids: global investment?

This simple model integrates estimates the global investment in power grids that will be needed in the energy transition, as a function of simple input variables that can be stress-tested: such as total global electricity growth, the acceleration of renewables, and the associated build-out of batteries, EV charging, long-distance inter-connectors and grid-connected capital equipment for synthetic inertia and reactive power compensation.

Global investment into power networks averaged $280bn per annum in 2015-20, of which two-thirds was for distribution and one-third was for transmission. This is a good baseline.

Our base case outloook in the energy transition would see total global investment in power grids stepping up to $400bn in 2025, $600bn in 2030, $750bn in 2035 and $1trn pa in the 2040s.

Our scenario is also not particularly aggressive around renewables, which are seen accelerating by 10x to provide around 20-25% of all global energy in 2050. You can realistically reach $2trn pa of global power network investment in a scenario that relies more heavily upon renewables and batteries.

Amazingly, these numbers can actually become larger than the total spending on producing all global primary energy. Whereas in the past, transmission and distribution were a kind of side-show, equivalent to c30% of total primary energy investment, the energy transition could see them become comparable, at 50-100%.

Definitions. By ‘power networks’ we are referring to the grid, which moves electrical energy from producers to consumers. Please note that our classification of power grids excludes (a) investments in primary energy production, such as renewables, nuclear, and hydro (b) investments in large conventional power-generating plants (c) downstream investments made by customers, such as in switchgear, power electronics and amperage upgrades.

The model can be downloaded to stress-test simple numbers, inputs and outputs. Please contact us know if the work provokes any questions, or further numbers that we can heplfully pull together for TSE clients.

Nostromo: thermal energy storage breakthrough?

Nostromo technology review

Nostromo technology review. Nostromo is a public company, founded in 2016, with c40 employees in Israel and California. Website here. It is commercializing a thermal energy storage system, which integrates with AC, to store coolness (e.g., during peak wind/solar generation), then re-release the coolness at ‘peakload’, (e.g., in mid-late afternoon, or after sunset).

The flagship product is called ‘IceBrick’, a modular, water-based energy storage cell, which can be retro-fitted onto most commercial buildings in about 4-6 months. It claims 86-92% round-trip energy efficiency, 94% depth of discharge over 4-hours and <1% degradation over 20-years.

We have reviewed the company’s patents on our usual patent framework. Nostromo’s patent library is concentrated, but it scores highly on our framework, as it lays out specific challenges that have hampered other designs, very specific details on how Nostromo’s system improves efficiency and consistency, and the patent library is also easy-to-understand, focused and considers deployments.

The technology is an exciting alternative and complement to lithium ion batteries for energy storage, or more specifically demand shifting. It may be particularly well-suited to commercial buildings in hot climates, where AC can comprise 50% of peakload power generation, per our note here. The main challenge is system costs, explored in the data-file and compared with lithium cells and lithium battery storage. Finally, we think there may be other applications of phase change materials that do not simply accomplish energy storage, but also reductions in total energy consumption (note here).

Full details of our Nostromo technology review can be downloaded in our data-file below.

Further conclusions are linked in the recent article sent out to our distribution list, here.

24M: semi-solid battery breakthrough?

24M battery technology review

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.

Pumped hydro: the economics?

Pumped Hydro Economics

This data-file assesses pumped hydro costs, as a means of backing up renewables. A typical project might have 0.5GW of capacity, 12-hours storage duration, and capex costs of $2,250/kW.

Our base case model of pumped hydro costs and economics therefore requires a ‘storage spread’ of around 25c/kWh, in order to generate a 10% IRR, which is not dissimilar from the economics of lithium ion batteries (recent notes here and here).

Inputs to the data-file include an overview of past projects and technical papers, in order to quantify capex drivers (chart below).

The data-file allows you to stress-test the impacts of lowering hurdle rates, capex costs, improving utilization, lower input power prices, higher round-trip efficiency, lower maintenance costs, lower labor costs, improved capex schedules or lower taxes.

In a best case scenario, it may be possible to reduce total storage spread to around 10c/kWh; while more marginal projects will require above 50c/kWh.

To read more about pumped hydro costs and economics, please see our article here.

CATL: sodium ion battery breakthrough?

CATL: sodium ion battery

Contemporary Amperex Technology Co. Limited (CATL) is a Chinese battery manufacturer, HQ’ed in Fusian, founded in 2011, with >30,000 employees. It may produce as many as one-third of all the lithium ion batteries in the world. This data-file assesses whether it has made a breakthrough in sodium ion batteries.

Lithium shortages. Our review finds that CATL has been vocally warning of lithium shortages since 2016. Lithium demand rises 30x in the energy transition, per our own models here, while there are also challenges ahead for next-generation lithium extraction technologies.

However sodium comprises 2.7% of the Earth’s crust, versus Lithium’s 0.006%. In principle, sodium ion batteries can achieve comparable energy densities than lithium ion batteries, c80-90% round-trip efficiencies, similar temperature ranges and better safety. Hence in 2021, CATL announced it would be bringing a sodium-ion battery to market by 2023.

Technical challenges for sodium ion batteries are nicely illustrated in this data-file, which has simply reviewed a subset of CATL’s sodium ion battery patents. A core challenge recolves around innovating new anode and cathode materials that are adapted to sodium’s c30% wider diameter than lithium.

There are undoubtedly some exciting innovations in this patent library, especially around cathode materials. So can we de-risk the CATL sodium ion battery? If this was a standalone patent library, we might not be able to de-risk CATL’s 2023 target to produce sodium ion batteries at commercial scale.

Recent Commentary: please see our article here.

Direct lithium extraction: ten grains of salt?

Direct Lithium Extraction

Direct Lithium Extraction from brines could help lithium scale 30x in the Energy Transition; with costs and CO2 intensities 30-70% below mined lithium; while avoiding the 1-2 year time-lags of evaporative salars. This 15-page note reviews the top ten challenges that decision-makers need to de-risk, in order to get excited within the fast-evolving DLE landscape.

Lithium from brines: the economics?

Battery-grade lithium from brines

This data-file approximates the production costs of battery-grade lithium from brines, both via traditional salars, and via the emerging technology of direct lithium extraction.

Costs are c40-60% lower than mined lithium production in ($/ton of lithium carbonate equivalent). CO2 intensity is 50-80% lower (in kg/kg).

The data-file is informed by capex and opex disclosures from companies, and data from technical papers, which also cover the ionic composition of different brines.

Note: compared to other models we have constructed, there are more uncertainties and rounding in this model, because precise chemistries vary brine by brine, and because direct lithium extraction techniques are still not fully mature. Hence we have only attempted a high-level model.

To read more about battery-grade lithium from brines and to compare and contrast our lithium mining/refining and salar/DLE brine models, please see our article here.

Graphite: upgrade to premium?

Graphite opportunity in energy transition

Global graphite volumes grow 6x in the energy transition, mostly driven by electric vehicles, while marginal pricing also doubles. We see the industry moving away from China’s near-exclusive control. The future favors a handful of Western producers, integrated from mine to anode, with CO2 intensity below 10kg/kg. This 10-page note concisely outlines the opportunity.

Graphite production: the economics?

Battery graphite cost

This data-file on battery graphite cost captures simplified economics for producing battery-grade graphite (i.e., 99.9% pure, coated, spheronized graphite) in an integrated facility, from mine to packaged output.

Marginal cost is estimated at around $10,000/ton for a 10% IRR. CO2 intensity is highly variable and debatable. Input assumptions come from technical papers, company disclosures and one detailed feasibility study (see below).

Numbers are more uncertain than other models we have constructed. However, you can nevertheless stress test the impact of changing graphite prices, electricity prices, CO2 prices, capex costs, wage rates, ore grades, processing efficiency and tax rates.

Further research. Our outlook on graphite in the energy transition is linked here. A broader discussion of this model is linked here. Our screen of leading graphite companies is linked here.

Copyright: Thunder Said Energy, 2022.