The term “grid energy storage” refers to the methods we use to store electricity at a large scale. One of the best examples of why you might want to store electricity is solar. When the sun shines, you’re making power, but when the sun sets, the power goes away. Why not use an energy storage solution to store some of the electricity during the day so we can use it at night? That’s the general idea behind “grid energy storage”. The vast majority of energy being stored right now is in reservoirs like this one:
What you’re looking at in the picture above on the left is actually the world’s biggest battery, the Bath Country Hydro Pumped Storage Facility. Consisting of an upper reservoir that stores the “energy” and a lower reservoir which pumps it back up the hill, this massive project provides up to 3 gigawatts of on-demand energy to 13 different states. The way it works is quite simple and explained in the diagram above. Water flowing downhill turns a turbine, then you turn the turbine on in reverse, and it acts as a pump to fill the upper reservoir back up. Such a simple solution to store electricity.
Now you might be thinking to yourself, doesn’t it take electricity to run those pumps? That’s exactly right. You lose electricity when you run the pumps and that’s referred to as “efficiency”. In the case of most pumped-power batteries like the one above, efficiency is around 70%. That efficiency is a benchmark for substitutes, and so far none appear to be economically viable. According to the U.S. Department of Energy, there are 352 “pumped hydro storage” facilities on the planet (50 of which are in the U.S.) that produce the vast majority of grid energy storage:
Now that we understand the basic concept of energy storage and the notion of “efficiency”, we can move on to looking at compressed air energy storage (CAES). About 3 years ago we were writing about energy storage quite a bit (it was a popular topic) and mainly discussed new concepts like large-scale flow batteries. We also looked at two startups that were working on compressed air energy storage – Lightsail Energy and SustainX. Now what we’re going to do is look at all the players that are still in the game today and what they’re getting up to.
Founded in 2010, Toronto startup Hydrostor has taken in an undisclosed amount of funding to develop an “underwater compressed air energy storage system” or UWCAES which has been making the news recently because they’re working on some commercial projects. While that’s definitely something to be excited about, the size of these projects is rather small, at least the ones they’re admitting to:
To put those numbers in perspective, the output of an onshore wind turbine is roughly 2.5-3 MW. As you can see in the fine print, they’re engaged with several utilities to deploy systems rated at hundreds of megawatts. In regards to the technical details of their solution, here’s a diagram which shows how it operates:
The key metric here is efficiency (70% for pumped-power), and this solution operates at an efficiency of 60%. It’s offered as a complete solution with financing and warranty, and has a 30-year life before efficiency starts to degrade. Their commercial partner is AECOM (NYSE:ACM), a $5 billion multinational engineering firm that constructs these projects.
One of the CAES startups we covered back in 2014 was LightSail Energy, a company that we had high hopes for based on the caliber of investors that climbed on board, people like Peter Thiel, Vinod Khosla, and even Bill Gates. More than three years later, we sit here wondering just what they’ve managed to do with the $70 million they are said to have raised. The founder, Danielle Fong, seems to be speaking at lots of conferences and talking about how long the journey is in newspaper interviews, like this one with the WSJ:
“First, the resources have to be marshaled” she says from atop her steampunk contraption. Well, it seems like those resources have already been marshaled to the tune of $70 million. That same article talks about how they’re “trying to keep investors happy” and that the biggest challenge is “raising more money“. Sounds like the original investors aren’t so keen to shell out more cash for an idea that hasn’t shown much progress from what we can tell. Greentech Media put out an article that said the LightSnail Energy “company culture guru” confirmed that one-third of LightSail staff were let go 2 months after the above WSJ article – their second round of layoffs. Another article by Greentech Media which sits behind a paywall is titled “LightSail Energy Storage and the Failure of the Founder Narrative” which talks about how LightSail employees have lost confidence in Fong’s leadership. If anyone’s looking to hire a “company culture guru”, there may be one looking for a job soon.
Our third CAES startup is one we discussed before called SustainX. Founded in 2007, SustainX had taken in $24 million in funding from investors that included General Electric (NYSE:GE). In 2015, SustainX merged with a company called General Compression which has taken in $77.5 million in funding so far from investors that included Duke Energy (NYSE:DUK). In an article by Greentech media dated April 2017, the statement is made about SustainX that “it attempted to merge with General Compression to improve below-ground CAES, but both have since wound down“. That doesn’t sound very promising, and we weren’t able to even locate a proper website for the company. The last article we could find talked about how they were working on a prototype in Texas.
A newcomer on the block is a company called Apex-CAES, and as the name implies they’re developing a compressed air energy storage system of their own. They plan to use compressors and expanders from Siemens (ETR:SIE) to build a whopping 317 MW compressed air energy storage (CAES) facility in Texas. No detail is provided about how much funding they’ve taken in, but they count Siemens as an investor. Here are the project’s details:
According to information provided by Apex-CAES, there are “two existing CAES plants in the world, and the technology has been proven to be highly reliable for over 25 years of operation at each site“. That’s hardly promising. Investors can smell money, especially venture capitalists. They took a look at this idea, they took a punt on it with a few startups, and nothing panned out. While we’re hoping to be pleasantly surprised, the facts we’ve presented thus far lead us to believe that CAES isn’t going to take off anytime soon.
Worried you might not have enough for retirement? Fed up with all the corporate greed out there? With Motif Investing Impact Portfolios, you can save for your retirement and at the same time only invest in companies that do good for our planet. You can even roll over your existing IRAs into the plan and also automatically enrolled in Motif BLUE, giving you access to commission-free trading benefits for your trading account. Click here for a free trial of Motif Impact Investing.