On reflection, Energy Storage as a broader title for this theme is appropriate as it is a better indication of where I see the opportunity in the long-term, with Lead-Acid Batteries likely to be the most effective way to express the theme in the short-to-medium-term.
Energy Storage broadly encompasses all of the ways that we can store energy for future use, for example through batteries, supercapacitors, and flywheels. There are 2 main areas that I think about as the primary uses for Energy Storage;
- Vehicles, where people are looking for a move from an internal combustion engine to a battery as the primary driver of propulsion. This is something I expect to happen using baby steps (i.e. lots of mild/micro-hybrid cars soon) as opposed to a giant leap (Plug-in Electric Vehicles tomorrow). This is one of the reasons that I think the incumbent technology (Lead Acid Batteries) is being under-rated.
- Power Storage (meaning Electricity grid-related storage, and Industrial-related storage). Unlike in vehicles, there are far more storage options in play here and most will find some role in what will be a massive market. As I’ve not talked much about this before, I’m going to spend the rest of this post talking about Energy storage and the power markets.
Why Energy Storage is becoming more important in the power markets
The easiest way to describe is to think through it aloud. First-off, our demand for electricity is pretty variable. Yes, it follows patterns both daily and seasonal, but it is variable around these broad patterns meaning that while an electricity company has a good estimate for the power they’re going to need to deliver in 30mins/60mins/4hrs/etc they don’t know exactly how much. Electricity’s also pretty binary; your TV can’t show half the picture, it’s either on and working or it isn’t! Hence when the electricity company can’t supply enough power, you get black-outs or brown-outs…which are no fun, and pretty unpopular. Thus, in the energy company tries to supply a tiny bit more power than is actually required at any given minute, and needs some easily accessible reserves if there’s a spike in demand.
On the supply side let’s consider that the vast majority of electricity is still being generated from fossil fuel power plants. Again, while the capacity that these plants are running is controllable, either the plants are running (at the desired capacity) or they’re idle. Now compare this to the alternative sources that have started to become more prevalent over the last couple of years, like wind and solar. The power these plants produce is far more variable and less controllable by man; after all is it suitably windy/sunny, how windy or sunny is it, what happens if there’s a cloud or a gust of wind, etc. Given the variability of these production methods, and how poorly electricity travels via the grid, it is clear that there’s a need to be able to store energy efficiently and to be able to supply it quickly and efficiently from this storage. Furthermore, in the case of solar, the electricity is being generated (during the day when it’s sunny) at a time when it’s not generally being consumed (the evening) thus there is additional need for storage.
As such, you can see how Energy Storage is considered by some as being an important part of the broader Clean Technology “revolution” that is underway.
Different Types of Storage/Needs in Power
An important thing to consider when talking about the power grid and energy storage is the need for different types of storage and delivery. This is due to the different time horizons for the power to be stored, and the differing speeds at which it might need to be delivered from the storage to the grid. For example, the storage and delivery periods for something attached to solar power plants might be hours (i.e. the storage device would be required to store the power for hours, the deliver it over a period of hours), whereas for other things the delivery period may be seconds (e.g. to smooth out the power sent to the grid), with everything else in between. This is important as those electricity providers only want to provide a tiny amount more energy than people need in order to maximize their profits. Furthermore, those technologies that are great at storing lots of energy are not so good at delivering it quickly (i.e. batteries can store a lot but don’t providing it quickly, hence there’s an opportunity for multiple technologies to play a role.
Given this there are other types of Energy Storage systems that we might look at in more-depth in the future, such as Flywheels (likely compete with Li-Ion/Lead-Acid batteries), Supercapicitors (likely will dominate the segment that requires power delivery in seconds), Other-type of battery (e.g. molten sulphur batteries, which can store/deliver power over a longer time period that Li-Ion/Lead Acid batteries) and Compressed-Air Energy Storage (which can deliver power over many hours, much longer than Li-Ion/Lead Acid batteries). However, I expect that Li-Ion and/or Lead-Acid Batteries in addition to being the only real players in the Vehicle space and will be amongst the major players here in the Power space. As such, that’s why they’re the logical first step for us to consider an investment.
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