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Natural Gas, America’s No. 1 Power Source, Already Has a New Challenger: Batteries

Frank McCamant's picture
Principal McCamant Consulting LLC

McCamant Consulting, owned by Frank McCamant, is a business and strategy development partner for organizations involved in energy resource management and smart grid development. Based in Austin...

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  • May 18, 2021
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"A decade ago, natural gas displaced coal as America’s top electric-power source, as fracking unlocked cheap quantities of the fuel. Now, in quick succession, natural gas finds itself threatened with the same kind of disruption, only this time from cost-effective batteries charged with wind and solar energy."

 

Discussions
Matt Chester's picture
Matt Chester on May 18, 2021

If natural gas was indeed just the bridge fuel to get us to batteries, it will have been worth it, but I worry that batteries won't replace gas but rather be charged by gas. What are the market mechanisms that can actually push the grid to a post-gas battery system, rather than integrating the emissions of gas generation into the natural inefficiencies of battery storage? 

Peter Farley's picture
Peter Farley on May 25, 2021

Batteries will be charged by whatever power is cheapest, sometimes that will be gas but mostly it will be wind and solar and occassionaly hydro. If it is gas it will almost certainly be from CC gas plants which at around 55-60% efficiency and 90% round trip to the battery i.e. net 50%+, is far better than a gas peaker on a hot day which will be flatout to make 35%. Therefore as an interim measure coupling batteries with CC gas plants lowers both pollution and fuel cost, even in the extremely unlikely event that none of the battery charge came from wind and solar.

Bob Meinetz's picture
Bob Meinetz on May 18, 2021

Frank, are there new batteries that can charge themselves?

If not, they'll be charged by the same old dirty gas plants they're being charged by now. Far from "challenging" them, they'll help to waste gas from those plants - the cost for which can easily charged to customers.

Quite an effective but perverse synergy, isn't it?

Frank McCamant's picture
Frank McCamant on May 19, 2021

Bob, if you would read the entire article you would see that the most effective cost is solar to battery charging. Also charging with wind power. And, yes, charging with grid power when solar or wind is not available. 

Bob Meinetz's picture
Bob Meinetz on May 20, 2021

Frank, I don't have a WSJ subscription so I was only able to read the first paragraph. But it seems the article's author is under the impression that batteries installed at solar and wind farms are charged by the farms adjacent to them. In practice, batteries are charged from a grid mix, and are only placed near wind and solar farms for appearance - because it looks "green". The reason is simple: charging from the grid provides the best return on an extremely costly investment.

Another mistaken impression is that batteries can be used to time-shift a significant amount of renewable electricity generated at noon, for example, to power the grid in early evening. Though it may seem feasible, the power available from the largest battery installation in the world would be incapable of powering the smallest grid - analogous to powering an electric car with flashlight batteries (literally). At today's prices, powering California's grid for one day of cloudy, calm weather would require $430 billion worth of battery capacity - about twice California's annual budget.

Batteries do serve a valuable purpose in helping to stabilize brief irregularities in grid electricity caused by solar and wind farms. Wind, in particular, tends to disrupt the phase of three-phase AC, and introduce voltage and frequency fluctuations. Though fixing power with just-in-time sources like batteries fetches a high price for battery facility owners, the price is reflected in customers' electricity bills.

"...you would see that the most effective cost is solar to battery charging."

Are the costs of grid scale batteries, and replacing them every 8-10 years, and the cost of the grid electricity necessary to charge them included in your cost of solar + batteries? I didn't think so.

When people rave about the plummeting cost of solar and wind energy, conspicuously ignored is the skyrocketing cost of integrating them to the grid. It explains why adding supposedly "cheap" renewables never reduces the price of electricity for customers - that keeps going up, and up, and up.

Peter Farley's picture
Peter Farley on May 25, 2021

1. On low wind cloudy days in California there is still wind and solar, just less of it, there is also less demand so in practice if the wind and solar share is say 50% of average demand, then the worst day will be around 30%. On the highest demand day last summer wind and solar supplied 17% of demand vs an average of 21% for the year

So no-one ever has to run California's grid for a day from batteries. Even if they did, according to Bloomberg the benchmark price for large batteries is US$150,000/MWh. California uses about 500,000 MWh per day. That would be $75 billion not the ridiculous $430 billion you claim.

Also as wind and solar penetration rises further, on high wind and solar days then hydro will be constrained allowing more hydro to be used on low wind and solar days. Even now there are days where wind and solar are constrained, that surplus power can effectively be delivered almost free to an onsite battery or at very low cost to offsite batteries.

2. Batteries will be charged from the grid, but most often from excess wind and solar, because those sources can make a contribution to their overheads even at $15/MWh. At that price gas and coal plants will ramp down. But as the article says, the cheapest power on the grid today is solar, therefore the cheapest way to charge a battery is with behind the battery solar, with no transmission losses and no transmission or distribution charges.

3. When the battery cells do have to be replaced all the civil works, permitting, grid connection, transformers and switchgear, even the cabinets are retained so the replacement cost is about half the original installation even if battery costs weren't falling but as battery costs are falling rapidly, the 10 year refurbishment cost will not only be less than 25% of the new cost but the new cells will almost certainly last much longer

4. Where is your evidence for skyrocketing costs of integration. certainly not in Germany, Texas or Australia where wholesale power prices have trended down or the UK where they have been flat as renewables rose above 20-25% share.

Bob Meinetz's picture
Bob Meinetz on May 25, 2021

"California uses about 500,000 MWh per day. That would be $75 billion not the ridiculous $430 billion you claim."

According to DOE, in 2019 California consumed 259.5 terawatthours (259,000,000 MWh) of electricity.
259,000,000 / 365 = 709,589 MWh average consumption, > 900 GWh peak consumption. You're at least 50% too low.

"California there is still wind and solar, just less of it, there is also less demand..."

Californians use less electricity on cloudy days or when the wind isn't blowing? Reference, please.

"according to Bloomberg the benchmark price for large batteries is US$150,000/MWh."

In other words: "an entrepreneur with $billions invested in natural gas wants us to believe batteries can wean us from natural gas." Why would any entrepreneur want to lose money?

The impartial DOE says the installed price of grid batteries is currently $625,000/MWh, over four times what your natural gas investor says they are. Either Bloomberg has made a grievous error by investing in gas, or a man worth $20 billion knows there's a fortune to be made capitalizing on misplaced confidence in renewable energy.

Peter Farley's picture
Peter Farley on May 26, 2021

1. The DOE figures are for past installations and prices are falling rapidly. The Bloomberg figure may also be just for the battery component so lets split the difference and say $300/MWh today which is also the figure suggested by Tesla.  

2. I looked at the EIA daily figures for the last week you are correct it was the low part of the curve 710 GWh per day is a better point.

Again why do you need a days battery storage, is there no hydro or geothermal and zero wind and solar? On the highest demand day last year (840 GWh) wind and solar provided 17% of demand. For a fully renewable grid California will have to increase wind and solar output by a factor of five  5 x 17 = 85% of demand + hydro + biomass + geothermal + hydrogen?. Batteries will definitely be needed but perhaps 15% of demand for 3 days so using the figure of 710 GWh and $300,000/MWh we come to a figure of $95 billion still less than a quarter of your original claim, assuming no gains in energy efficiency and no reduction in battery costs.

 

Bob Meinetz's picture
Bob Meinetz on May 27, 2021

"Again why do you need a days battery storage, is there no hydro or geothermal and zero wind and solar?"

I only calculated a daily capacity to show how ridiculously expensive it would be to provide any substantial power contribution to the CAISO grid with batteries. We're assuming, here, that allowing California to go completely dark would be catastrophic, and is not an option. Given that assumption, California doesn't need a day's battery storage, it needs several weeks.

The image below shows one day's power consumption from earlier this month.

  • The top (aqua) line is demand, the bottom lines are the different sources of energy that are necessary to meet it (the heights of all the bottom lines combined, at any time during the day, is equal to the height of the top line).
  • All the space under the top line has to be filled with energy at every moment during the day - exactly. No more, no less, or the grid goes down.
  • You'll notice after the sun sets late in the day (green) natural gas (light brown) and coal imports (dark brown) come rushing in to fill the space it left.
  • Somehow we need to fill that space with clean energy instead. How? There's no solar, and maybe 4,000 megawatts from wind (green line after sundown).
  • We can continue to build solar - but it would still provide no energy after sundown, and then we have too much during the day (too much is as bad as not enough).
  • We can, in theory, use extra solar generation during the day to charge batteries, and use it to replace fossil fuels at night. But during peak consumption in late summer, the demand line (aqua) will be almost twice as high.
  • Only one day with clouds across central California (location of most utility scale solar farms) and we're screwed. We can't meet demand during the day, we can't charge batteries for that night. The grid goes down.

I get the impression many renewables advocates don't appreciate the challenge of providing a reliable supply of grid electricity, even with dispatchable sources like natural gas. Demand must be met exactly, in real time. Renewables can be used to either charge batteries or provide power to the grid - they can't do both at the same time. Even at one fourth the price, California would have to spend half of its entire budget on batteries - then do it again every 7-10 years.

Either that, or we remain addicted to fossil fuels. One is as unacceptable as the other.

Bob Meinetz's picture
Bob Meinetz on May 27, 2021

"Where is your evidence for skyrocketing costs of integration. certainly not in Germany,..."

Germany has the most expensive electricity of any non-island nation in the world

 

"...Texas..."

What’s behind $15,000 electricity bills in Texas?

 

"...or Australia where wholesale power prices have trended down..."

Among countries with the most expensive electricity, Australia comes in at #10

 

"...or the UK where they have been flat as renewables rose above 20-25% share."

UK residential electricity prices rose 68% in the last decade

Peter Farley's picture
Peter Farley on May 28, 2021

Two posts in one,

I agree evening peaks are difficult and the duck curve in California is particularly severe and given California's setup there will be spillage of midday solar, but so what, the standing costs per MW of a curtailed solar farm are no more than those of a curtailed gas plant and most gas plants have very low utilisation. But the advantage of excess midday solar is that is nearly free. Therefore it can be used for lower value applications such as making ice, pumping water etc. that cannot justify running a gas turbine, so the utilisation of solar will always be higher than that of a peaking gas plant and even most shoulder plants

1) NREL study showed that California could get 72% of its electricity from rooftop solar, however people have to be incentivised to install west facing panels to maximise supply late into the afternoon early evening. In summer they will still be supplying some energy past 7PM. Using that electricity after 3-4 PM  to precool dwellings, make ice etc extends the value of solar well into the evening so while there will still be a need for electricity storage the need can be halved, compared to the current arrangement

2) California needs much more wind, unfortunately early experiences such as Altamont pass have made it much more difficult than it should be to install land based wind in California and wind speeds aren't that good anyway but it has two other options. It can import it from Wyoming and other mountain states via lines like the TransWest Express and it can build offshore wind. Floating offshore wind is more expensive but it has the advantage of shorter transmission distances and very high availability and the costs have fallen dramatically. They are now around $65-80/MWh and they will be an average of 60 miles from the customers but still so far out to sea no one could object to them

3) Germany has always had expensive retail electricity because a) the government has always taxed it and b) it has used high retail prices to subsidise discounts to industry and c) it lumbered all the costs of the transition on retail customers and exempted industry. However power costs to industry have fallen about 30% since 2008. Because of high power prices, buildings are well sealed and appliances are efficient so the average German household spends a smaller share of its income on electricity than the average US customer despite the high prices.

Australian power prices did get out of control but are now falling rapidly, the high renewable states are reducing maximum retail tariffs by 10% and it is easily possible to negotiate 20-30% discounts off that. A small manufacturing friend of mine was recently offered a contract at US 3.5c/kWh

Bob Meinetz's picture
Bob Meinetz on May 28, 2021

"...the standing costs per MW of a curtailed solar farm are no more than those of a curtailed gas plant..."

In California, they're quite a bit more. Our system operator requests "decremental bids" when solar needs to be curtailed: "Who will shut down their farm for the least amount of money?". Since many solar farms are owned by the same entity, they request as much as they possibly can to shut down their farms (with mob rackets its called "extortion", with renewables it's called "business-as-usual"). Solar farm owners are paid both to generate electricity, and to not generate it; customers either get something for their money, or nothing. Either way, they get the bill.

"Therefore it can be used for lower value applications such as making ice, pumping water etc. that cannot justify running a gas turbine..."

In California we can't choose which electrons are used to make ice, or pump water. I think it's probably the same in Australia.

"It can import it from Wyoming and other mountain states via lines like the TransWest Express and it can build offshore wind."

We have no idea how our electricity from Wyoming is generated. Because its source is listed as "unspecified sources of power" we can safely assume it comes from burning coal, the state's prime source of revenue.

"California needs much more wind..."

Reliance on wind last August resulted in outages that denied service to over 3 million customers. Apparently, the wind didn't blow when it was supposed to blow.

"Germany has always had expensive retail electricity...power costs to industry have fallen about 30% since 2008...."

Of course - industrial customers are keeping Germany's coal industry alive. Volkswagen, BMW and Siemens would be crazy to depend on the sun and the wind to keep their doors open.

"buildings are well sealed and appliances are efficient so the average German household spends a smaller share of its income on electricity..."

Residential rates are 27% higher than they were 11 years ago, and residents save nothing from using less electricity (rates are progressive, to make sure generators get their money no matter how much residents use).

Zark Bedalov's picture
Zark Bedalov on May 19, 2021

This may be early to say that batteries are the replacement. There are several questions to be answered;

Overall cost/benefit?

The efficiency of the battery system, assuming a large cooling system is required?

What is  the life of batteries, 10 -12 yrs?

What to do with the spent batteries? Is there any usage from them?

Matt Chester's picture
Matt Chester on May 19, 2021

What to do with the spent batteries? Is there any usage from them?

This is the question, if/when answerd, that will be the lynchpin in truly unleashing energy storage at greater scale, IMO

Peter Farley's picture
Peter Farley on May 25, 2021

According to several sources, recycling batteries is already cheaper than mining new material, however the cheapest source of backup, as it has always been, is excess generation. Most conventional grids around the world had annual capacity about 50% higher than actual delivery. If a wind and solar grid was built with sufficient capacity to supply 50% more than actual use there would be very few days which were not net zero.

There will still be a need for intra day storage of 10-15% of demand for up to three days, or even 35-40% of demand for a few hours but for the US at least half of that can come from hydro, thermal storage and flexible demand.

Typical motor vehicles have 4-8 days storage. If the US electrified 90% of its existing vehicle fleet that would be 18-25 TWh of storage, if 1/3rd of that was available for grid support say 7 TWh, that is 15 hours of demand, with no hydro, no geothermal, no biomass, no nuclear, no wind and no solar. If you go 15 hours without wind, solar and hydro you have much bigger problems than a lack of electricity.

If the transition to 90% EVs occurs as fast as the transition from horses (27 years) the US fleet mileage will be 90% electric by 2035.

Matt Chester's picture
Matt Chester on May 25, 2021

If the US electrified 90% of its existing vehicle fleet that would be 18-25 TWh of storage, if 1/3rd of that was available for grid support say 7 TWh, that is 15 hours of demand, with no hydro, no geothermal, no biomass, no nuclear, no wind and no solar. 

I'm excited by the prospects of vehicle-to-grid like this, but I always wonder about how you count on the drivers to reliably buy into this. Of course you can financially incentivize it, and so there's probably a price where this is done, but how do you deal with large portions of the EV driving fleet not wanting to participate for fear of their battery's health or simply unexpected interruption events that might make much fewer EVs available at a moment than had been planned for? When it's so decentralized, is it putting a lot of faith in patterns or behaviours not to change unexpectedly? 

Peter Farley's picture
Peter Farley on May 27, 2021

No-one can answer that question, but the point is that one third of one potential source will supply 15 hours of total demand. If hydro is run at 75% capacity for a day it can supply the equivalent of 8 hours of electrical energy. Thermal storage has huge potential as it is about 1/5th the cost per MWh of batteries. Although I am not a fan of nuclear it is there and for the next 20 years at least it will supply the equivalent of 5 hours energy per day and so on and so on. The idea that you need a day's worth of grid batteries is just fantastical.

Peter Farley's picture
Peter Farley on May 25, 2021

Batteries have a huge benefit even in a fossil fuel grid, they replace spinning reserves and can ramp much faster. To cover a 300 MW loss of generation in 2 seconds with gas turbines, you need about 3,000 MW of turbines running at no more than 90% capacity. With a 300 MW battery on line you can run 2,700 MW of gas turbines saving fuel and investment in the turbines.

It is only the active cells that need replacing after 10 years although new chemistries seem to be lasting much longer. On most days the battery won't fully discharge so you can rotate the load amongst banks of cells so each cell may only be discharged 10-50% of capacity on a typical day and on light load days whole banks of cells can be switched out so typically any cell might only work an average of 50% of capacity on 60-70% of days. Thus if you have a battery that is rated at 3,500 full cycles, it might still be holding 70-80% of charge after 15 years. At that time only the cells need replacing and by then they will account for less tha 25% of the original installation cost.

As above they can be recycled and there already battery recycling plants in Europe and the US and Canada

Dr. Amal Khashab's picture
Dr. Amal Khashab on May 22, 2021

Sometimes , I get feeling that raised topics are kind of scientific fiction far from reality. May be because I am an old engineer .

Bob Meinetz's picture
Bob Meinetz on May 27, 2021

You're not the only one, Amal. We'd be far better off with engineers in the driver's seat than venture capitalists.

Frank McCamant's picture
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