22 May 2022 |

Beyond Batteries

By Nick Van Osdol

john-cameron-QukrVl1F9Q0-unsplash

When you think of energy storage, perhaps you think of the AA batteries in your smoke detector. Perhaps all the massive innovation in EVs and their increasing range comes to mind. Either way, when you think of a battery, what you imagine likely ‘works’ pretty well. The batteries in our day to day lives would blow engineers’ minds 50 years ago.

To go from 50B tonnes of CO2-equivalent global greenhouse gas emissions annually to zero, there’s a ton of different supply chains and entire industries to ‘electrify’. That will include everything from how goods are transported around the world to how electricity is generated and how industrial processes achieve high heats to make things like steel. 

As we approach this future, there’ll be a massive need for more energy storage. Renewable energy sources like solar and wind are intermittent – they don’t produce energy 24/7. They can be diurnal, but the fact remains, but are also often asynchronous with peak electricity generation times in aggregate. Take a look at what’s up in Texas if you want a case study in why more energy storage (and better transmission) is critical.

Said differently? When the sun isn’t shining and the wind isn’t blowing, the need for energy keeps on rollin’. 

Next. Batteries are great. The world is going to need billions of them to meet future energy storage needs. The U.S. alone produces 10B+ bullets annually. Bullets aren’t that different from batteries – they’re metal wrapped around significant energy potential. I make this analogy to point out that yes, battery production and energy storage capacity will and can expand. Big time.

But batteries alone won’t be able to carry the entire load. There’s an ever-growing need for more utility scale energy storage as well as a wide variety of energy storage systems optimized for lots of different applications. 

Batteries are also resource intensive. Energy storage that doesn’t require rare earth minerals will become more critical as rare earths become, well… increasingly rare.

The good news? There are lots of other types of energy storage. And many of them look nothing like ‘conventional’ batteries.

PUMPED HYDRO

Batteries store energy chemically. Another great way to store energy? Physics. 

One good example is pumped hydro. It’s almost laughably ‘rudimentary’. But it works:

  • Take two reservoirs of water at different elevations.
  • Use the energy you want to store to pump water from the lower reservoir to the higher one.
  • To harness that energy again at a later date? Let the water run downhill to the lower reservoir.
  • On its way down, it powers a turbine. 
  • Voila, you have a waterslide turned battery!

Pumped hydro represents 75% – 95% of utility scale energy storage in the U.S. depending on who’s doing the estimating. We don’t talk about it (or thank it) enough.

The benefit of pumped hydro is that it can be scaled massively and with long-duration. If you build it once, you can also leverage the infrastructure (and the water) countless times. One thing you do have to worry about is water evaporating, so this doesn’t lend itself to all climates. 

At the end of March, renewable energy developers inked a deal with Greenko Group to pair pumped hydro storage with the development of a new ~1,000 MW renewable energy project to help with intermittency (described in the first section of this note).

These types of pair deals that combine pumped hydro with renewable energy projects are making headlines in the U.S. too.

HYDROGEN

Hydrogen is another chemical form of energy storage. Again, the benefit here is scale:

  • Electricity can be converted to hydrogen in a process called electrolysis
  • Electrolysis uses electricity to split hydrogen out of water or another substance. 
  • Importantly, this process can be reversed.
  • This means that turning hydrogen back into other chemicals can release electricity via a hydrogen fuel cell.

Importantly, this isn’t as efficient as other energy storage (e.g. batteries). You lose a decent amount of the original electricity going through the conversion process. Hydrogen conversion has a ‘round-trip’ loss rate that’s closer to 50%… chemical batteries are closer to 5%. 

Still, as ‘green’ hydrogen production for use in heavy industry takes off, hydrogen as a flexible, scalable storage option will probably get some looks too. Storage of the hydrogen is another challenge, but massive underground caverns, e.g. ones that used to house natural gas, can lend themselves to storing the gas at scale.

COMPRESSED AIR ENERGY STORAGE

Speaking of underground caverns? Compressed Air Energy Storage (‘CAES’) is another long-duration form of energy storage. Here’s the low down:

  • Use electricity to compress air 
  • Store the compressed air in underground caverns (similar to hydrogen).
  • Later on, the compressed air can power a generator, producing electricity again.

Hydrostor recently raised $250M from Goldman Sachs to scale their CAES technology.

ALTERNATIVE BATTERY MATERIALS

I know. We said beyond batteries. But it’s also worth taking note of some companies that produce battery-like technology with materials that look like anything but the traditional batteries we have around the house and in our technology.

Ligna Energy is one example. Ligna Energy designs a long-term energy storage material made out of wood and other abundant materials, making it more renewable and much cheaper than batteries & the rare earths they require. The two primary innovations central to the tech are wood-based electrodes + new water-based electrolytes. They spent a decade in the lab working on the tech before even beginning to fundraise and commercialize. 

The material does take up more space than batteries that leverage rare earth minerals, but it lends itself well to stationary applications. Ligna is already working with EV charging, residential solar, and grid frequency control partners to integrate their energy storage solutions

Other approaches to alt materials abound. NantEnergy, for one, uses zinc + oxygen for chemical energy storage. Their tech is in use in rural Africa to help communities there electrify. Their technology may end up being highly cost competitive with lithium-ion batteries.

In the U.S., while diminutive in comparison to other energy storage industries, the zinc-air battery market is forecast to exhibit strong growth over the coming 5+ years.

Frankly, this section could constitute one (or many) emails. Let me know if you have an in with companies pioneering alternative battery materials!

OTHER COOL IDEAS

Finally, I asked my Twitter followers for other solutions they’re excited about.

One that came to fore is tapping into the potential of geothermal energy. Geothermal offers a form of renewable energy that draws on the inexhaustible store of heat that lies beneath the earth’s surface. 

In addition to providing energy when it’s needed, there’s ways to ‘build-up’ geothermal energy in advance of when it’s needed. Andrew Simpson pointed me to Fervo Energy as a player to watch in this space. He also linked me to a much deeper dive on the topic here, which outlines how geothermal can provide both baseload and energy storage. 

Proof that there’s always more captivating stuff happening in climate tech than any one person can stay privy too!

THE NET-NET

For innovators and investors? There are entire verticals beyond batteries that are worthy of attention and analysis. Some are considerably capital intensive. Imagine the infrastructure needs of a CAES or pumped hydro sites versus say, an ESG software business. That’s where banks and PE firms come in, namely to invest in and underwrite the large-scale infrastructure needed for massive energy storage via CAES or hydrogen conversion.   

The main net-net here though is that energy storage demand is going to considerably outpace what battery development and greater scale of battery production can handle. 

Which means there’ll be dozens of amazing deals in coming decades in the alternative battery material space and in entirely innovative forms of energy storage. Any company that can eliminate the need for rare earths and still deliver efficient energy storage, even if it’s highly application specific, could be a big winner at scale.