Analysts and consultants continue to consistently predict a mountainous increase in future grid energy storage investments, but a key question remains unanswered: how exactly do we scale this mountain?
One path will almost certainly involve investments by regulated utilities. While some parts of the electric grid are competitive (similar to wireless carriers competing for mobile customers), significant portions remain regulated, which, for the purposes of this discussion, will be defined as power providers that have captive customers.
The local distribution utility, for example, is often the only company that can carry electricity to your house. And many parts of the country are still vertically integrated, meaning a single company generates, transmits and bills for electricity. These companies get an exclusive right to serve a group of customers in return for public regulation over electricity prices, usually in the form of a Public Service Commission rate case.
Under this structure, regulated utilities must demonstrate to regulators and ratepayers that the benefits of new investments will outweigh the costs. For new technologies like energy storage, this analysis becomes slightly more difficult because of the minimal sample size of operational commercial energy storage systems.
To assist potential investments, the Federal Energy Regulatory Commission (FERC) recently issued a two-part Notice of Proposed Rulemaking (NOPR). The first component, which we’ll refer to as Avista Reform, named for the 1999 case that created the current restrictions, is designed to make it easier for a utility (and its customers) to utilize services from new technologies even if the utility is not yet in a position to purchase the technology outright. The second piece of the FERC NOPR, which we’ll call Financial Reporting, clarifies how utilities can account for energy storage investments when they do decide to purchase the technology.
In an organized market, competitive suppliers submit bids (often daily) to provide ancillary services, such as frequency regulation. In a vertically integrated market, the host utility lists the prices for those same services in a tariff filed with FERC. But what if a third party could supply the same services for a lower price? What if a utility runs out of the generation capacity required to provide these services?
Under current FERC rules, third parties can only provide ancillary services after proving that they are too small to dictate price. In a vertically integrated market, this task is especially challenging because market-size data is generally unavailable since the local utility (the incumbent supplier of all ancillary services) is not obligated to make this data available. The difficulty of a negative market power proof has presented a substantial barrier to ancillary service sales in vertically integrated regions.
Avista Reform would assist potential third-party suppliers by requiring public posting of ancillary service market data. Additionally, the NOPR creates an open-season mechanism, skipping the market power test altogether. In short, the new rules would streamline utility purchases of ancillary services from a third party (for example, frequency regulation from a storage operator). Finally, this NOPR proposes extending the pay-for-performance structure outlined in FERC Order 755 to vertically integrated regions.
The second component to FERC’s NOPR, Financial Reporting, addresses a current procedural deficiency that exists if a vertically integrated utility decided to purchase energy storage technology.
Currently, FERC has several forms on which utilities must report their assets (i.e., transformers, conductors, turbines, etc.). However, there are no entries for energy storage systems. The proposed rule changes would add new accounting fields to the FERC forms to easily record energy storage systems (as shown in the chart). While seemingly a mundane modification, the additions would eliminate what has been a barrier to rate-based investments in energy storage.
This FERC NOPR can be thought of as the rope tow in energy storage technology’s journey up the S-curve by making market adoption far easier than an uphill hike and by expanding the accessible market terrain for energy storage. With simplified procurement procedures and reporting requirements, utilities can quickly and transparently demonstrate the benefits of storage to their customers. As the first few vertically integrated utilities adopt storage, it is expected that FERC will incorporate the lessons learned and upgrade this rope tow into a full-fledged express quad, facilitating a higher throughput of rate-based energy storage technology to integrate with the power grid.
Recently, A123 Systems introduced Nanophosphate EXT, a new lithium ion battery technology designed to operate over a broader temperature range and enabling the significant reduction (and potentially the elimination) of thermal management systems.
While much of the initial interest was focused on the new technology as a breakthrough for electric vehicles—especially the growing micro hybrid segment—and telecommunications backup, there are a number of additional applications for which Nanophosphate EXT is well-suited, including military systems.
MIL-STD-810, the Department of Defense Test Method Standard for Environmental Engineering Considerations and Laboratory Tests, specifies a product’s environmental design and test limits to the conditions that it will likely experience throughout its service life. The MIL-STD-810G standard further specifies procedures to assess the performance of materials to extreme temperature loads.
Typically, the operating temperature range for military batteries is about minus 40 degrees Celsius to about 71 degrees Celsius (as show in the graphic, this is wider than the typical operating temperature range for consumer electronics or hybrid electric vehicles). While the specific impact on performance varies by application, most batteries, especially standard lithium ion, will likely suffer a decrease in cycle life at extreme high temperatures and/or lower power capabilities at extreme low temperatures.
Lithium ion is typically more susceptible than lead acid to performance degradation due to extreme temperatures, which requires lithium ion battery systems to be built with a heating mechanism for cold weather operation and cooling for extreme heat, which adds cost, weight and additional system complexity.
As a result, the Defense Department relies almost exclusively to lead acid, including for the nearly 800,000 6T batteries deployed on military vehicles like HMMWVs, Strykers, armored security vehicles and others, despite the advantages of lithium ion 6T batteries as compared to lead acid.
A123’s Nanophosphate EXT technology is designed to change this dynamic by delivering optimal performance across a broader temperature range without requiring thermal management. By incorporating materials advances in cathode, anode, electrolyte and system components, Nanophosphate EXT is designed to maintain long cycle life at extreme high temperatures and deliver high power (or cold cranking) at extreme low temperatures.
According to the testing performed to date at the Ohio State University’s Center for Automotive Research (CAR) and the very low observed rate of aging, cells built with A123’s Nanophosphate EXT are expected to be capable of retaining more than 90 percent of initial capacity after 2,000 full charge-discharge cycles at 45 degrees Celsius. A123’s internal testing shows that a 60Ah cell built with Nanophosphate EXT is capable of delivering about 700 cold-cranking amps at minus 18 degrees Celsius, putting it on par with the best absorbent glass mat (AGM) lead acid batteries available today and effectively eliminating the only performance advantage of AGM.
This breakthrough holds promise for batteries designed to operate in extreme conditions, and while lithium ion 6T batteries is a near term target application, it is just one of several military systems for which Nanophosphate EXT has potential. Other possible use cases may be in space or satellite systems which require extreme low temperature operation after launch, as well as in aviation where both extreme high and low operating temperatures are a consideration. As the Defense Department continues its push to improve its energy strategy, it could create a potentially significant opportunity for advanced lithium ion battery systems built with Nanophosphate EXT technology.
One of the primary applications for A123’s newly launched Nanophosphate EXT™ lithium ion battery technology is expected to be micro hybrids, a growing segment of the electric vehicle market that analyst firm Lux Research says could reach as many as 39 million vehicles globally in 2017, creating a $6.9 billion market for energy storage devices.
Battery systems built with Nanophosphate EXT are designed to operate over a broader temperature range without sacrificing performance, power capabilities or cycle life. For micro hybrid applications specifically, Nanophosphate EXT is able to deliver high power—or cold cranking amps—at extreme low temperatures, effectively eliminating the only performance advantage of absorbent glass mat (AGM) lead acid batteries for micro hybrid vehicles. A123 testing shows that a 60Ah system built with Nanophosphate EXT is capable of delivering about 700 cold-cranking amps at minus 18 degrees Celsius, putting it on par with the best AGM batteries available today.
While this represents a significant technical breakthrough, questions remain about cost potentially limiting the near-term micro hybrid market share that lithium ion may capture. Lithium ion does carry an initial cost premium, although to clarify misconceptions and speculation, the price delta between AGM batteries and A123’s micro hybrid battery in volume production is expected to be around $250.
But more important than the nominal difference in initial cost is total cost of ownership (TCO) over the life of the battery system. The cold-cranking performance offered by Nanophosphate EXT enables automakers to benefit from the significant additional advantages of A123’s micro hybrid battery as compared to AGM lead acid.
For example, A123’s battery has a greater charge acceptance rate than AGM, enabling it to charge up to 10 times more quickly, enabling the battery to capture substantially more energy during vehicle braking. Once the braking energy is captured, it can be used in several ways to deliver a fuel economy improvement of 50 percent more than what a comparable lead acid start-stop system can offer. A123’s lithium ion micro hybrid battery also weighs less than half of comparable lead acid batteries and is designed to last at least twice as long as AGM batteries.
Collectively, these performance benefits contribute to a lower TCO, and as shown on the chart, A123 expects the recovery of the initial premium cost of its battery will occur in three years or less. At that point, the cost to replace the AGM battery (perhaps more than once) coupled with the increased fuel savings of A123’s micro hybrid battery results in a lower TCO over the life of the micro hybrid system.
Additionally, current cost reduction initiatives continue to bring down the cost of lithium ion battery systems, which should further reduce the price delta between A123’s micro hybrid battery and competing AGM lead acid. As the global market for micro hybrid vehicles grows, the performance benefits enabled by Nanophosphate EXT and a reduced TCO should allow A123 to compete favorably.
As for the question of commercial availability, A123 is scheduled to enter full-scale production next year with a mainstream European automaker on a micro hybrid battery system built with Nanophosphate EXT technology. With this product validation in its final stages, solutions using Nanophosphate EXT are expected to be on the road less than a year from now.
A123’s newly launched Nanophosphate EXT™ lithium ion battery technology has generated some significant buzz, so in addition to the initial six questions about the announce we posted earlier this week, here are a few more that hopefully provide more insight into this exciting breakthrough (and again, if you have any others please send them our way):
1. What are the technological advances behind Nanophosphate EXT?
While we can’t divulge too many specifics of the science and engineering behind Nanophosphate EXT for competitive reasons, A123 looked at the core elements that govern low temperature performance and high temperature storage in order to deliver better performance and life. Nanophosphate EXT is the result of that effort and incorporates materials advances in cathode, anode and electrolyte from A123’s R&D team combined with component advances from A123 Cell Products Group. Nanophosphate EXT uses Nanophosphate as the foundation and existing chargers and battery management systems designed for Nanophosphate will work with Nanophosphate EXT.
2. Does Nanophosphate EXT carry a significant cost premium compared to A123’s standard Nanophosphate technology?
While the price of batteries and systems built using Nanophosphate EXT will depend on the application and customer, in general we do not expect them to cost significantly more than those built with standard Nanophosphate. The advances in the chemistry and cell components do not involve rare or expensive materials—there is no “unobtanium” required to enable these significant improvements in performance and life. Further, cells equipped with EXT technology can be built within our existing infrastructure, so we do not need to significantly modify our manufacturing process to make EXT-enabled batteries.
3. How will Nanophosphate EXT reduce electric vehicle cost?
In electric vehicles, thermal management is used to extend battery performance and life. High temperatures accelerate degradation reactions in batteries, causing them to lose power and energy over time. To help maintain uniform cell temperature within the pack, liquid or air-cooled thermal management systems are deployed, which minimizes the degradation and extends battery life. The wide temperature performance range of Nanophosphate EXT may allow the active thermal management system in an electric vehicle to be greatly reduced in size or potentially eliminated entirely. This would greatly simplify the design of the battery pack, which increases the reliability while also reducing cost. In addition to the cost savings associated with less cooling hardware, there are other benefits, including reduced weight and increased reliability. A simpler thermal management system requires less maintenance and is less prone to failure, and when coupled with the weight savings, these advantages offer significant value to the automaker.
4. Is there any data available to support the claims about Nanophosphate EXT’s performance?
A123 has conducted extensive testing on Nanophosphate EXT under a variety of test conditions. In addition, the Center for Automotive Research (CAR) at the Ohio State University has performed independent testing of A123’s cells and modules built with EXT technology, as well as testing of a leading competitor’s product on the same duty cycle. Results of both the A123 testing and the CAR analysis to date can be found in a new whitepaper published by A123 (download whitepaper here).
5. What are the experts saying about Nanophosphate EXT?
Generally speaking, industry experts have noted publicly the potential of Nanophosphate EXT. But don’t take our word for it…
Menahem Anderman, Total Battery Consulting: “If it can be reproduced in high volume without affecting the cost, it could certainly be significant.” (Bloomberg)
Ahmad Pesaran, National Renewable Energy Laboratory: “They have been able to increase the operating window to colder and warmer temperatures simultaneously without sacrifice to performance or life at each extreme.” (Detroit Free Press)
Jeffrey Chamberlain, Argonne National Laboratory: “If this is real, it's a major breakthrough” (Scientific American)
Yann Guezennec , CAR at the Ohio State University: “We perceive only positive characteristics for this remarkable technology” (Scientific American)
6. Has A123 patented Nanophosphate EXT?
A123 has filed patent applications in a few different areas related to Nanophosphate EXT and its usage. These patent applications have not been published yet and we are not disclosing their contents at this time.
Today A123 Systems introduced a new lithium ion battery technology called Nanophosphate EXT™. To help explain this news, we’ve put together six of the questions about EXT. If you have any others please send them our way:
1. What is Nanophosphate EXT and what are its benefits?
Nanophosphate EXT (Extreme Temperature) is a new technology developed by A123 that is designed to deliver improved power at low temperature, increased life at high temperature and superior power retention with usage and time. The net result is a smaller, lighter, less expensive battery that we expect will offer a lower total cost of ownership (TCO) than its competitors for a wide variety of applications.
2. What do you mean by “improved power” at low temperature?
For the same capacity battery, Nanophosphate EXT is capable of delivering a 20-30 percent improvement over standard Nanophosphate, putting it on par with the best absorbent glass mat (AGM) lead acid batteries available today. This is critical for applications that require high power at cold temperatures, such as cold crank in starter and micro hybrid batteries.
3. How does Nanophosphate EXT perform on high temperature storage
Testing shows that Nanophosphate EXT has excellent high temperature storage characteristics and is even better than standard Nanophosphate. EXT demonstrates less capacity loss when stored at elevated temperature, and it shows even better power retention than standard Nanophosphate, which is one of the leading battery technologies in this regard. A key advantage of the technology is the improvement of both low temperature power AND high temperature life at the same time, which is unique—it is not difficult to optimize for one temperature extreme at the expense of the other, but improving both simultaneously is much more difficult.
4. What about cycling?
Nanophosphate EXT shows superior cycle life, particularly at high rate and at high temperature. EXT shows two to three times the cycle life of the leading lithium ion competitors and about 10 times the life of lead acid batteries. The advantages are consistent at high depth-of-discharge (DOD) cycling as well as shallower cycling, such as in hybrid electric vehicle (HEV) usage. This longer life translates to a lower TCO because the battery will not need to be oversized as much or replaced as frequently.
5. Has anyone else independently tested Nanophosphate EXT?
Yes, the Center for Automotive Research (CAR) at the Ohio State University has performed independent testing of A123’s cells and modules built with EXT technology, as well as testing of a leading competitor’s product on the same duty cycle. As show in the graph, CAR’s results track A123’s internal data and confirm that Nanophosphate EXT has excellent cycle life at high temperature that is superior to the competition on all tests performed.
6. Where can I get more information?
In addition to the Nanophosphate EXT Web page and press release, A123 has posted a podcast interview with Bart Riley, co-founder, chief technology officer and vice president of R&D of A123, about the EXT breakthrough and its potential. In the coming weeks, A123 will present Nanophosphate EXT as part of technical talks at several industry conferences, including the 45th Power Sources Conference and AABC Europe 2012. At Power Sources, A123 is scheduled to deliver several presentations, including one entitled “Low Temperature Operation of Lithium Ion Start Batteries” on Wednesday, June 13 at 8:50 a.m. At AABC Europe, A123 will present the advantages of its 12V Engine Start battery for micro-hybrid vehicles during a talk entitled “Lithium Ion Advanced in Micro-Hybrid Applications” on Thursday, June 21 at 9:00 a.m. as part of the Advanced Automotive Battery Technology, Application and Market track.
A123 believes that Nanophosphate EXT is a game-changing innovation that overcomes key limitations of lead acid, standard lithium ion and other advanced batteries. We think it will dramatically enhance the business case for deploying A123’s lithium ion battery solutions for a significant number of applications, and we expect Nanophosphate EXT to strengthen our competitive position in existing target markets as well as create new opportunities for applications.
We’ll share more about the technology and its potential use cases, but if you have any questions about Nanophosphate EXT and how we envision it being used by customers, please let us know what you think!
In this edition of A123 @ the Whiteboard, we focus on cycle life, explaining how A123's proprietary Nanophosphate lithium iron phosphate battery technology retains higher capacity over a greater number of cycles as compared with other lithium ion battery chemistries.
In a joint statement issued by the American Wind Energy Association (AWEA) and the Electricity Storage Association (ESA) last year, the two organizations expressed their support of for policies that “create a level playing field and eliminate barriers to market entry for clean technologies, allowing them to more equitably compete with traditional resources.” The statement highlighted how wind and storage can deliver clean and reliable energy in complementary ways through common policies.
In the year since the statement was first issued, a number of policies and rule changes have been proposed at the federal and state level that promote the transparency goals of the joint statement.
One particular objective recommends that “Market and operating rules should be based around the type of service needed, and any technology that is able to reliably provide a needed service should be able to provide it.”
FERC Order 755 is exactly one of these reforms. By recognizing the value of fast and controllable resources, FERC crafted new frequency regulation rules that facilitate the entrance of new technologies, like storage, into the market. Greater supply and greater competition is ultimately beneficial for all energy consumers, and by the end of this year, pay-for-performance will go live in selected regions.
Beyond Order 755, grid rules and markets continue to evolve in keeping with the AWEA/ESA joint statement’s recommendation to “disaggregate” services. CAISO and ISONE have proposed new procedures and products that operate on a time scale in between frequency regulation and spinning reserves. NERC is examining ways to increase—or at least slow the decrease of—the amount frequency response. These initiatives should help manage variability on a system-wide basis and would provide incentives to deploy storage, to quote the joint statement, “where [it] can provide the most value to the power system at the least cost.”
The AWEA/ESA statement, embodied in new rules that reward smarter, cleaner and more efficient technology, shows that wind power and energy storage are synergistic. With the right market structure and incentives in place, storage can manage wide-area variability from all resources and loads, freeing up wind and other renewable sources to provide as much clean energy as is available. This alignment of technology and policy will undoubtedly be a topic of discussion as the power industry descends on Atlanta next week for AWEA’s WINDPOWER 2012 conference.