Flow batteries vs. li-ion - Modo: The Podcast (ep. 28: ESS Inc.)

[Music] hello Alan welcome to the podcast thanks for coming on and thanks for coming all the way over to London from Switzerland somewhere this morning to come see us well Quentin it's my pleasure always nice to meet with you and always excited to talk about storage of course um so I mean for anyone listening I'm pretty excited we're all pretty excited to have Alan on he's been around doing battery stuff for I'd say certainly over a decade um since 2004 since 2004 you've been a battery bod um and today we're going to talk about your current company where you work is ESS Inc which is a flow battery company but we're also going to talk about some of your experience before that working on different battery technologies and some of the big problems that we're trying to solve in our industry um so first firstly thanks for coming on we're gonna have a great conversation um I'm going to jump straight in there and ask about your background so um Alan where do you come from and um how did you get here well for those who didn't guess already I'm originally from Scotland and uh my in terms of my background I started out with engineering and in the Old World Order uh actually was worked paid through University by IBM okay in the in the in the uh back then IBM had most of their non-us manufacturing located in in Scotland and uh you could tell a story about that about cycles of development because the these uh electronic manufacturing of that type was the follow-on business from shipbuilding and steel and now in turn that's all gone so it there's uh that's where my roots are in Scotland um but I I've um actually finished University a time when IBM at the first crisis and they said go and find something interesting to do for a year and I applied for and got a fellowship to go to the Harvard Graduate School of Arts and Sciences which was an eye-opening experience for me because um to equal honest I couldn't have told you where Harvard was before I met a lot of interesting people including my future wife uh congrats and uniwed bumped into some people in the um in that area from Harvard Business School I was at The Graduate School of Arts and Sciences and quickly realized that um that the business school was much more interesting and in fact two HBS graduates who were forming a startup company in Cambridge and England developed a product we're having difficulties with electronic manufacturing and said well you know about electronic manufacturing let's work together in fact we developed a company in Cambridge called datapac which still exists today it's actually part of fluke process instrumentation which was a technology development of going from recording temperature of industrial processes rather than on little strips of paper with ink pens to doing it digitally so fluke they're the guys who do you get flu measurement devices for electronics they're one of the leading companies that business is now with them but I'm proud of the fact of a look at the product range it looks on candidly similar to what we did in the late 1980s so um that was what introduced me to the world of startup companies and I was encouraged by the guys who started that to go back to HBS to the MBA program which I did and then subsequent to to to that um being interested in manufacturing decided to go and work in manufacturing in Germany um and uh that was an interesting eye-opening experience because I always wondered what you know what makes German industry so good why are uh are um the the the the product quality so high and learned a lot about in the automotive component uh industry working for a company called video making instrumentation about what it takes to serve to make high quality products for the German automotive industry did that for a few years very again a very interesting time um that was when the train drawer was also taking place between mechanical instrumentation and electronic instrumentation and I'd say if it if I had to retrospectively draw a thread through what I've done it's all about technology change Hydraulics to electronics that kind of stuff all of these kind of things from mechanical to electronic from from Hardware to software these these kind of things so I worked in a few projects subsequent to that with um some uh some in it mostly in Germany and um in 2001 it sold a business and I had a working theory that Germany a very Innovative place but a very difficult place to start a company and started looking around for interesting Technologies on the Assumption there's a lot of interesting German ideas that don't make it into startup companies because the environment was was not very conducive to that and in that process 2004 I'd looked at a number of things and came across a um R D team working in a specific aspect of lithium batteries and that was long before all of the the hype came about storage but it after thinking about it it occurred to me that for the energy Space Storage was really the the missing piece and if you look back at the history of batteries it says a lot about the industry that even today you know 150 years after the lead acid battery was invented it's still in megawatt hour terms one of the biggest Technologies and possibly even still selling more in terms of capacity and lithium batteries and if you look at the dynamic you see the over over time new battery technologies in general have not replaced a predecessor technology but in fact they're additive yeah because if you find a way of storing energy in a new way people there's lots of useful things you can do with it I find that Dynamic fascinating because in other things I'd worked in before it was a replacement digital replaces mechanical software replaces Hardware all of a sudden you come to batteries where in fact uh there's a first of all a small number of technologies that have ever reached commercial um significance it's probably less than 10 in 150 years yeah I remember when I used to work in oil and gas I mean valve regulated level acid batteries the on Offshore platforms will always always be there and just no there is no um there's interest but there's no will to change to anything else and I think that will happen there's probably no need yeah it's a good solution and I think they'll be around you know they're still being produced in huge quantities and people keep predicting that lead acid will get phased out and never happens and like it keeps on growing apart from the hydrogen Evolution probably we're going to geek out in a second I guess probably for anyone who's listening Alan and I both met first time uh it was in an office in kiwi power I think it was 2017 2000 18. could be and you were working for internet at the time we'll come back to your store in a second and um I think we annoyed everyone in the room because we just geeked out for about half an hour about lithium-ion chemistries um and uh yeah so uh we're gonna try not to go two technicals a day but um it's going to be very tempting so yeah 2004 you got into the battery world and you're excited by this you know this this additive technology you know lithium-ion is a thing and then what happened um well we basically um funded that business properly again it was a typical German story where a good idea good technology but difficult to fund it was funded properly interestingly with within with uh almost none of the funding coming from Germany coming from outside of the uh coming from outside of the country from the US from Switzerland um but the basic concept of what was being done then is that all of the undesirable properties of Lithium-ion batteries come from the electrolyte the the the it's you know it's generally known that they're um safety concerns with flammability from lithium batteries and it doesn't come from the lithium it comes from the electrolyte and this was an approach to develop a um non-flammable replacement electrolytes which would then wouldn't just do away with the with the safety risk it would also do away with most of the Aging problems and just for a reference here so in a battery there's an anode and a cathode um so a positive and a negative and then there's a there's a there's a separator which separates them and some some usually fluid or something like that which is an electrolyte I just wanted to step in just in case just for the for the ground rules because we're going to talk about technology uh in a second and so that company um you're replacing very flammable electrolyte I've got this right with something else that wouldn't have that kind of risk that would basically um had no fire risk associated with it that was the goal of the company and as I say it's often happens with technology companies um it uh it took longer to get the technology uh to get the technology developed there's uh these businesses are always sort of filled with with significant ups and downs and by the time um by the time you get more than seven or eight years into a venture investors start getting concerned this is ever going to work that leads to stress in the company and so in fact we ended up winding up that business although the technology in fact the first there was a version of the technology which was working it just hadn't been productized that IP was then subsequently bought by olivo elevo yes and they um took the first this first version of the of the technology actually developed a product out of it and successfully the product actually worked quite well but made the decision I actually took two years out because I just needed to do something else for a while I made a decision to go for a large-scale production in the US and stumbled on the manufacturing part because in fact although the technology worked to go from small-scale Germany to gigantic scale in the United States is a big challenge so this new this new battery technology that had been in going from the r d phase to trying to productionize it for seven or eight years um you're working on and then that company got wound up and the technology got bought by a levo which for anyone listening doesn't exist now but was a big big player they made a lot of noise and in the early days of the lithium mine well they were they were really onto something and um you were there as Chief technology officer right and what was what happened at Labor as a U.S company right was it basically was it no it's actually a Swiss company with the goal of major Manufacturing in the United States okay um and this is about 2015 something like that yes that's about right and so the um I would the the the say the technology transfer of the of the product worked flawlessly but they had a lot of difficulties in the scale up of production Good batteries I mean it's a it's a very unforgiving business you need to manufacture with high Precision there's all kinds of you know batteries I think most people are unaware that internally they're fiendishly complicated they look really simple but they're fiendishly complicated because you don't just have mechanical and electrical issues electrochemical issues and you've got to make sure that the whole system works so the um that factory did actually produce functioning systems one of them was very very successfully deployed in the PGM grid as a demonstrator of this new version of the technology I said in America so in the US on the east side of America yep in the in the east side of America but again with the with uh with difficulties mounting in um in getting production volumes up um that also came to an end and subsequent to that um the um company analyth was formed which also purchased the the intellectual property and so this is the same the same technology that you've been working on for over a decade before yes um and that then went to the company you know that was Swiss wasn't it it is yeah and illness is still going absolutely and they've just if you if you look at their website you'll see that they've announced a very exciting um high energy product cool that was always the goal the goal was always to not just to have a um a non-flammable product but go for a high energy product and the but as I mentioned before electrochemistry is fiendishly complicated and if you have a solving an issue in chemistry can take a week or it might take 10 years because these new types of um of batteries you're often working at the edge of what you can even measure with measuring equipment so it's it is a it is a complicated complicated process which is why I always say to anyone working on batteries deep respect they're difficult and anyone that comes up with a with a battery technology that functions at all deserves huge respect yeah so uh that is uh words from someone who knows well it's you know through been through many ups and downs yeah but the um the you know the concept of not I was always convinced that non-flamability was a big issue because Lithium-ion batteries they've done you know fantastic service but they were originally commercialized by Sony in 1991 for things like camcorders yeah and the um it's interesting to reflect on why did Sony commercialize lithium-ion and not one of the battery producers and part of the answer is that the battery industry who were obviously experts in making batteries and experts in in in chemistry had never figured out um how to make uh Lithium-ion batteries um how to respond to things like fire and explosion risk and because the in the the the the the the the the move to higher voltages meant to move to these flammable electrolytes and having a system that basically has a fuel and oxygen source an electrical energy inside one package is something you have to treat with a lot of caution but Sony Sony their Master stroke was to say well we're an electronics company why do we just use um a mixture of active and passive control mechanisms to keep the lithium-ion battery operating in a safe Zone shut it down original camcorders and that kind of stuff in the early 90s those batteries there was a tremendous amount of outstanding engineering packed into those with devices who have the function to shut the battery down before it gets into a dangerous state and that really uh you you know the the sort of the origins of everything you read about BMS battery Management Systems single cell monitoring those are all Concepts that were introduced back then for these much smaller batteries in which over time have been expanded to build really huge batteries so hats off to Sony for getting us going I guess in the lithium they were true innovators and really without without that development a whole load of other product categies like smartphones would never have happened because it's funny there isn't um stop everyone wrong here but there's there's Toshiba who have the lithium and titanate um system out in Japan but it feels like the the battery world is very China and South Korea centered now and Japan are not let's say out of it but they're they don't have the the big presence they used to have I guess it's Panasonic um I I I'm not really totally up to date on on on on on on on where the where things are but I think what you have to bear in mind is that um there's three things that matters about that I'm always matter about batteries cost cost cost and it's always been all about cost cost of storage and that is something again which um is a little bit counterintuitive because you think well if you have a wonderful battery all of these new properties then surely people pay a lot of money for it and the answer is no you're storing energy and the and there is a value to the energy but if you want to store a lot of energy um you need to have a cost-effective storage mechanism and I think there was a there were some very wise words said about that uh when um the arpa E project was launched in the US many years ago where the message was to say electricity by definition has to be a cheap commodity and that is I'd say much of the dynamic in the battery space including why you have such a concentration of production of batteries in China and South Korea is driven by the fact they've got to be cheap yeah okay I just want to come back to what happened to Inner lift and then we're going to talk about flow batteries I know we can talk about lithium ion forever but a lot of today's conversation is going to be about ESS and flow batteries but I just want to finish up so you're in a list for um two years two years working on the same batch technology um I can I'd say it's not the same it's a continuous continuation and I was I mean and and so the that that development led to this to to a pathway to high energy high energy systems but after two years I was interested to do to focus uh on do something new and um and left the r d team and the management team to it and uh went on to look at other things and uh later on um so I worked on a number of projects which I can't talk about on batteries but also uh later on I came in contact with some some people from the investment space who said we're um we are looking to make an investment into the battery space how do you navigate the technology area because it's difficult and so I joined the uh joined the team on that and we looked into a number of different battery technologies in that respect it's quite useful to being involved in energy storage for so long because it's a relatively small world and uh but it's it's it's uh it's important to understand um all of the dimensions of complexity to energy storage to figure out whether a technology is likely to be to technically uh technically and commercially valuable you've got two hurdles to get over you got it's got to be it's got to actually function and if it functions it's got to be commercially viable those are the two bars to get over and so is this investors approach to you relating to the ESF the the company that is ESS or is it something else no it was it exactly it was it was in fact the uh the um the SPAC team who were considering making an investment in looking for a business combination in the space so a bit of a background to ESS so ESS we can talk about it in a second but um they did one of the companies that did a SPAC which is a special way of getting onto the stock market in a mainly in America um and ESS was one of the one of the first few companies to do this in this way um and you're involved in the team that made that happen and now you work for ESS full-time we're now getting back to what you actually do which is you pretty you you director of emea right that's correct and the background to that was I worked on this project it was a very successful IPO last year and having looked at the technology I was very impressed with what they were doing to the extent I said well you know I'm interested to then help the company develop and it's uh given that the company is focused in the US we the upshot of that is I'm developing the emea business great and so um where's it listed uh it's listed on the New York Stock Exchange okay um and what what's that like seeing the company from before and now being a listed company is that is a a big noticeable change it's certainly I mean the public illicit companies I mean they have to be much more disa they have to be much more disciplined I mean there's there's a lot of rules and regulations I have to be adhered to but I'd say that from my viewpoint uh there's you know there's often uh you know there's there has been sort of negative comments said about spax I think SPAC the SPAC structure is exactly is is very suitable for what the energy industry needs we've got a big part of it is if you have a technology that works how do you get to scale because the even if you have a technology which is fundamentally better than conventional lithium ion you're in competition with the technology which has been in commercial production since 1991. so 30 years of production you have cumulative scale of making billions of batteries for for other purposes so getting to scale is really important to getting to scale is something which requires capital and I think that this this route where which which gives companies a strong Capital uh backing is a is a very good fit rather than uh yeah if you had to wait till you hit 100 million dollars in revenues before you could even IPO and then raise Capital you you you haven't got time well a fundamental issue with all startup companies is you permanently have chicken and egg problems you can you can where you you you need results to get cap to get funding and you need funding to get results so a significant part of this is how do you how do you uh break that cycle ESS had already broken that cycle they they had done an outstanding job in developing a um a new technology that works with a very a very clear development plan which they started in 2011. well let's talk about ESS for a second so ESS is a battery company based in America it's a bit different and it's doing something um it's it's doing something a little bit different to the lithium ion Market do you want to just talk a bit about the company the scale how many employees where is it based um that kind of thing well let's just take a little side branch into types of battery so uh the ESS develops and produces flow batteries and the idea behind a flow battery is that um if you're wanting to store energy for a long period of time if you want to do it with a like a lithium battery if you want to double the amount of storage capacity you have you need to double the number of battery cells because the amount of energy is defined by the capacity of the cell and in the case of a flow battery you have a different split you have what you can think of as like a little reactor system and you have two liquids and when the liquids flow through the reactor system in One Direction it stores energy and we flow through the actor system in the in the opposite direction in the release energy so you have a decoupling of power and energy because if you want to store energy for a long period of time you just need more liquid just a bigger tank bigger tanks so to speak it's not quite that simple but that's the basic principle so for decades people have looked as at um flow batteries as being a very promising approach if you want to store large amounts of energy for long periods of time because you just have big tanks of reactants and that you can you they react one way to store energy the other way to release energy this is a good way to store energy so the the concept of a flow battery has been around for a long time they've seen relatively limited um uptake in the market and I come back to the you know what matters and batteries cost cost and cost and so the the concept which I like tremendously about ESS is uh that the r d team uh the company Founders they they set out to develop a low-cost um flow battery and said we've got to work fundamentally with materials that are cheap and out of this work they picked up a um a an RD Direction where the the the material the fundamental the materials used for entering storage are basically iron dissolved in salt water so you have you have materials which are low cost they're non-toxic they're non-flammable they have the properties which you like um and uh that basically means that you have a good foundation for a system which um which at scale has fundamentally low cost because it's not using gold and platinum and or other stuff that costs a lot more nickel and Cobalt and or materials that cost cost a lot of money and it also you know you um you know we'll talk maybe a little bit later about supply chain but it's a massive Advantage if your principal materials are not used in any other Battery Technology because you're you're not in competition with with other consumers for all those materials let's just do some quick top drops for now um so how big is the how many employees are there in a company it's the company now has over 300 employees of employees market cap kind of uh what sort of numbers are we talking about market cap right out and check today but it's sort of six seven hundred million something like that and um so and um how old is the company how has it been doing it the company is it the company was founded originally in in um 11 years ago in 2011. okay um and so flow batteries we had Ed who now is actually Ed who works for Moto uh it was on when we first started this podcast if anyone's listening do go back to episode two or three um another flow battery conversation and Ed at the times with a company called Infinity that was red tea that did Vanadium flow batteries and so ESS different right so instead of using Vanadium there's a different kind of there's a different fluid and there's a different kind of reaction happening how does what we'll do um ESS um Iron uh if you like technology versus lithium-ion in a minute but how about between the flows because there's a few different flow batteries what how is ess's technology different uh we've already said it we use iron and not vanadium and uh you know the it's a the Vanadium chemistry is a good chemistry electrochemically works very well um but Vanadium is a relatively expensive material and so the the uh the um operate some of the operating principles are similar but I mean at the end of the day for Batteries it's a material cost game at scale and so it's it's this was the the uh the reason that the um finding team and development team focused on iron is because iron is cheap readily available material and so as um the ions what do you call it iron technology iron fluid iron we call it ifb iron flow battery I can also call it all Iron flow battery because there are some other Technologies where people combine iron with something else okay but the the ESS technology uses uses it's all Iron because it uses um it uses the same iron compound for both of the two electrolytes and so it's iron in water and that's it nothing else it's in principle yes I mean in terms of in terms of the how it works yes obviously there are other there are other additives and things which are which are part of the company's IP and how to make it work because like all of these things how do you make it work I mean the principle of iron flow battery has been around for a long time and people have not managed to figure out how to make them work and that's that's I would say the Breakthrough that the SS team did and so um lithium-ion battery is over time they lose charge right and so with with flow batteries and this particular type of flow battery does it mean that once you store in the tank it doesn't lose charge until you need it later it doesn't self-discharge well you have different operating modes of the flow battery and what you're describing is you have the option that you charge the battery you then pump the system pump all of the electrolyte out of the reactor system into the tanks and in that state you can it'll stay charged for uh for uh in a long period of time basically an indefinite period um so that is a significant difference uh and it happened it it's that's a significant difference compared to to other batteries because you have this separability between the power system which is the reactor system and the actual uh the actual electrolyte the the electrochemical point is that in a lithium battery you store the energy in the electrodes the electrolyte has a function just to allow the lithium ions to move back and forward in a flow battery you're basically storing the uh the energy in the electrolyte oh it's yeah yeah it's a it's it's a completely backwards it's a very different concept yeah um so the there are many different ways you can you can you know that results in a number of other features and you often have to explain these because uh people have the highest level of familiarity lithium batteries but you know they're just one of many different type a battery and um what about efficiency Roundup efficiency and I'm also going to ask you about which Market segment are you guys going after I know you look you're very interested in long duration grid scale stuff but um firstly efficiency how does this particular technology compare to other batteries on efficiency it's about you know some all flow batteries um have a um lower electrochemical round trip efficiency compared to lithium lithium is hard to beat in that because very high but you also need to look at the the complete the complete package and one of the things I like to like a lot about the ESS technology is that um is one of the only chemistries I've seen that is comfortable and in fact likes working at elevated temperatures wow okay and that's actually one of the one of the um one of the important factors to consider when you're seeing talking talking about use cases I mean lithium ions wonderful chemistry but in operation um lithium does not like heat in fact if lithium batteries are run at elevated temperatures it's one of the most effective ways of making them degrade really fast and so large batteries are air conditioned yeah and so you need to so you need to think not you need to think not only about the efficiency of the battery but how much energy you're consuming can air conditioning it so in the ESS system it doesn't require an HVAC system at all and that means that if you're interested in fact being a cooling heating ventilation yeah exactly you don't need it you don't need a cooling system in it or a air conditioning type cooling system in it so if you're operating the battery in a warm ambient temperature uh that's energy you don't need to to to to to to to to to waste or your energy you don't need to spend on it how um how big are these things I mentioned I looked on um the ESS website and in some of the reports and it mentions something called an energy Warehouse um you guys are going to do 50-ish wear energy warehouses this year um what is an energy warehouse and how how can we compare that to something else and energy Warehouse is a 40-foot container and it is a complete system so it has the power modules it has the electrolyte tanks it has the power Electronics everything in one unit and how much power how much energy can we store in a warehouse in a 40-foot container the current version of the product is uh 400 kilowatt hour okay right so it's um comparing to some of the systems we've got installed in the UK it's just under half on energy density on so you need about twice just a bit more than twice as much space to match the those kind of systems but it's a different use case right I would say not necessarily because you you have to bear in mind you have a system which is non-flammable and so if you're you have at the container level you have a lower energy density but you you have much more flexibility in how and where you can position the containers you don't need to leave gaps between them for letting a fire engine through okay yeah so in fact it it depends on the on the percent of the price the the actual use case and there is a study I saw in Germany which I hope will be published soon um where they looked at very large locations and concluded that flow batteries potentially are more compact if you take into account that you need much less space between them uh because of the you don't need to worry about if one of them blows up is it going to set the set off the one next to it so it's uh it again you need to look at the you need to look at the um the precise the actual use case and the talking of use cases so um most grid scale batteries in the UK um are capable of doing um I'd say I wouldn't say heavy cycling but they can do say a couple of Cycles a day at full power um but they can also do frequency response they can respond they can provide that full power almost a step change in power in less than a second obviously there's a vamp rate but we won't talk about that um so can you do that kind of response with a flow battery or is it only um is it longer duration big chunks of power as opposed to the small variations you need for frequency response it's both it's both I can't speak for old floor batteries but the iron flow technology has a very high very fast response time which means that the battery is equally capable of providing things like ancillary Services it's not the primary use case you'd normally buy it for but if you have one it can do that too okay cool and you have to to get the fluid so you've got the um you've got a positive side on the negative side and you get they meet in the middle right do you have to pump them through is it is the the the the game about moving from fluids around or is there also a stage process you have to do in when they meet to like a um to catalyze them if you like there's the power module you have is a is a unit where you have a membrane down the middle so the two liquids they flow on either side of the membrane and the the actual reaction taking place is as I mentioned before One Direction storing energy in the in the other but it's electrochemistry I mean so but to your question you're basically you just have to imagine liquids flowing one way to store energy and floating the other way through the least energy and they are inside the module they don't contact each other directly or you have a membrane which allows ions to flow between two of them but as I say they they are not in they're not in direct contact they're not mixing yeah okay got that and then I guess you need to do something to maximize the surface area between them on the membrane does it go through lots of uh we're getting technical here we're not gonna go there I'm gonna ask you about the states so ESS is in America um and there is I mean America is now moving so so fast um particularly um you know urquhart California New York there is so many gigawatts being built I think ercot's around two and a half gigawatts at the moment August 2022 and it's going to be best part of eight gigawatts by the end of next year so lots happening um how is ESS participating in the American market and what what's happening over there that's that that's changing fast apart from tons of batteries um I would say in the market there's definitely a trend to longer duration batteries it's a natural Trend I mean the first batteries in PGM were sort of half hour then one hour then two hour and then there for a long time they're two hour and then they jump to four hours okay we're gonna do Moto Bingo now okay Define long duration I would say for long duration is more than four hours maybe more than six hours okay kind of like a flexible term um but the um that progression has simply reflected the cost um the cost Falls which you've seen in lithium batteries what I think Sophie you have to this development over about 15 years Lithium-ion batteries fell dramatically in price and I think what uh what shocked a lot of people is that um that came to an end last year where battery prices depending who you talk to or between 20 and 30 up for lithium which was unheard of before and we can have a separate discussion about that but the a lot of the deployment of batteries was based on the historical observation that the price of lithium batteries only go down and on that assumption because that's what happened with solar right well yes it's uh it's uh but everything has a limit and uh you will you'll never sell them for less than the material cost oh you shouldn't at least if you want to stay in business I don't even think that's true now I think there's a lot of battery manufacturers who are going to sell the low cost to keep to keep everything running I don't yeah I I no comment on that one I think that's I think they're they're I mean there's a lot of discussion about whether pricing from China is you know market prices and things like that but I think I think if you look at the leading battery producers they make money so you can make money making even at these very low low prices which you have to achieve they can make money they have to be X very expert in lithium ion about Precision manufacturing and these kind of things but the Assumption was the Assumption if you're living in a world where lithium batteries keep getting cheaper and cheaper and cheaper you can start using them for longer and longer durations and so they're stretching that sort of Beyond four maybe to six hours yeah with prices now going up I think that development is sort of in question and what the market needs is longer durations because what's happening at the same time is that the proportional renewable generation is going up and as a proportion of renewable generation goes up you you know you have it's just the the fundamental if everybody has solar on their roof they all in a given geography they all have exactly the same Peak generation curve so the um as as that becomes a bigger and bigger part of the generation mix you have this oversupply um at uh you know around Peak solar hours becomes more and more severe as you and that's what's actually happened in California it's responsible for the famous duck curve where you someone told me it's a this is probably the coolest thing I've heard in the last two weeks it's now called the Super Duck ah apparently that's the trendy word to describe it because it's so skewed by solar now okay so the the middle of the Ducks is it the duck's belly I guess the dog's belly the Ducks back yeah exactly the duck's back is even even higher now you heard it here first Super Duck I haven't I've it's it's new for me because I've you know I've heard the words you know the duck care so often that have stopped listening for it but the phenomenon is basically as that gets more and more severe the period of time where you have massive overproduction gets longer and longer and so you need to you're then in a situation where the power price is not period or or can go to zero or become negative and and you but you need the energy later in the day so the economics for uh for long duration storage the other need for it has gone up because you know the you've got more energy for a longer period of time and you need it later I just love this as well because um it's the kind of thing you can explain to a non-energy person which is too much Solo in the day you need to move that power to later on all this frequency response blah blah it's very difficult to explain to someone down the pub but loads of sunshine in the day and no sunshine overnight it's very easy to understand but what I I think there's a there's um for the storage industry there's a more interesting development if you're to say that the development up to four hours was principally grid stabilization yes things like voltage control voltage regulation and and frequency regulation when you get to these longer durations you're in the domain of what so far has been handled by gas speaker plants and the see you later sorry I'm just saying goodbye to guest speakers okay well I mean it's it's but it's going to happen it is going to happen but it's a tougher not to crack because it you know gas has been cheap not cheap anymore but it has been cheap and burning it in a gas turbine on demand to to make keep the grid give the grid enough energy has been a very effective way of doing it but if you want to decarbonize you've got to stop burning gas at some point and had we done more in that direction before and had more batteries and less gas speaker plants the whole uh energy crisis right now would be much much easier to handle so I think that the I think that the you know I think it's important to say this is not a Continuum with but with uh with uh with um storage durations the the dominant contribution of batteries so far has been these uh um stabilization functions and peaker plants it's also a form of stabilization uh function but it's getting into sort of you know huge quantities of bulk energy so it's quite um we've done the first Frontier which is okay battery is disrupting frequency response markets and voltage control uh which is great yeah and then the next bit is the longer duration where we might have a new technology that is that that isn't so um yeah that isn't so Reliant uh you described it so well earlier which is you don't need more sales to get more energy which is great and then how long will how long will this thing go so at what point does flow Battery Technology get taken over by something else although that's pumped Hydro or something else seasonal or what's the limit because you guys are in the sandwich somewhere between Lithium ion and something else I would say where the I would say the the the the positioning of long duration storage is between lithium-ion and hydrogen hydrogen is um is often cited as a potential way of storing energy which it is um the question is for what duration and I think to make hydrogen today and burn it tomorrow if you actually run the round trip efficiency on that you get maybe 10 or 20 of the energy back out yeah so so it but that but that was that was until recently the plan in Germany for example there was no role for scene for storage and I think it's very encouraging that the new government one of the when they when they wrote their Coalition contract committed to changing the rules to encourage storage in the German grid because prior to that the the the the the they were heading in the direction of use hydrogen for everything so hydrogen as a very important rule a role to play for certain things I think for heavy industry for steel making it it it's it's it it it's a it's the probably the only feasible way to to do these processes and you've seen so Michael's Michael Lee Wright's hydrogen ladder I mean just there's a nail on the head I think I think Michael Michael has always hit the nail on the head analytically that's exactly right so there are things it's good for and there are things it's less good for and this piece in between hydrogen and lithium where lithium is very good for shorter duration batteries for Fast Response high power and and uh and hydrogen where you know where hydrogen in storage can play a role is if you if you go if you think to a fully decarbonized world and I love how something every now and again German words get picked up the word Dunkel floated yeah found its way into English you know periods of you know dark um dark windless periods you need something is that what flauto means flauta is literally you know windless it's winter the old sailing term when they were sitting on the ocean and there's no wind that's a floater and Dunkle this means dark so yeah so overnight no wind big problem so you need something for periods and they don't happen often but they do happen where you have two weeks in winter with no wind so you need something and um the the um hydrogen is a candidate to be a carbon-less replacement for natural gas for the security function also um but going back to the going back to the to where it sits that the the uh I had the um very interesting opportunity to work with the in the in the in the early days of the long duration energy storage Council on actually working with um uh working with uh McKinsey who actually did the analysis on this on you know how do these things fit together analytically and that's actually what comes out of the LDS council's report which you can download on the internet that that we'll find a link and put it in the comments so I'm going to find out after this sounds like a good read yeah it was which it was presented at cop26 okay and that is that it that's what actually comes out of the numbers that you have for uh for between hydrogen and and and lithium-ion you have an important task it would it was sub broken down into basically two um two archetypes one was eight to 24 hours and the other was 24 hours to it varies a little bit 150 hours maybe 200 hours so yeah and you can't do 200 hours storing on the anoden cathode no because the materials well it's it's a cost cost it'll cost us again but it the the breakout I think is logical because you know eight to twenty four hours a lot of all energy consumption and in in a renewable world uh certainly solar generation follows a 24-hour cycle so shuttling energy around within a 24-hour window is logically that's that's something important to do and and then for a small number of days is basically uh to you have uh you know fluctuations in in generation you have fluctuations and users you need something to to to to smooth that out too so it it is intuitively correct when you um when you when you but that's actually the analytical result that came out of the simulations that we're on okay it makes sense so somewhere between the shorter duration which is where we are at the moment most of the bashes in the world a few hours um then there's a medium bit actually very large medium bit from eight hours and up to a couple hundred hours and then there's a hydrogen bit on top lots of work still to be done in the hydrogen a bit but um we need to get someone on from the hydrogen energy storage world to talk to them at some point in the future you should focus well we I think I think in high dietitian is important too I mean the the uh and if you're interested in making hydrogen you definitely need long elong duration batteries because to make green hydrogen it has to be powered by renewable energy and renewable energy has fluctuations and if you build if you built a large electrolyzer system it's a significant capital investment and you want it to run 24 7. but my

problem with this is I get it but then the power com the losses converting so okay so you're you're wind yield and then by the time you get that power to shore you've got I don't know let's say you've lost um let's say that you lost 10 of what was on the end of the turbine before you've gone through um the power conversion system of the house and then you've got to put that through a flow battery which let's say it's got a I don't know what is 70 80 round trip efficiency I don't know if it's I'm assuming around that number right so you lose 30 there and then you go to hydrogen storage and you've got Roundup efficiencies of less than that at the moment so you're so costly well but that's for storage I think there are other things like as a replacement feedstock for the chemical industry you need hydrogen for producing steel uh within a carbon-less manner you need hydrogen so we're going to need time to forget that bit Yeah but so and that was that was the the the bidders meaning but to put a number on this on the on the um on the scale of the task for long duration storage the LDS Council study concluded that for full decarbonization worldwide you need something between 85 and 140 terawatt hours of energy wow it's a huge number and we're going to have to this is the thing right or I say all the predictions a lot of the back of the packet predictions about Peak demand for electricity and how much how much Renewables we need to build we need to really overbuild Renewables to cover all the efficiency losses from all these Technologies which we're going to require because they're the best we've got plus the intermittency so um we need to build a lot more renewable than than first comes to mind well I would say it's not actually because of the losses I mean I would say it's that the losses of even the worst storage system on the planet are much less than burning gasoline into 20 efficiency where 80 of the energy is as waste heat and we often forget that when we're talking about efficiency that actually all of the internal combustion engines in vehicles they've they produce mostly heat it's a slightly different story in aviation because in the gas turbine for propulsion you can you can you can you either propulsive efficiency is higher but we actually come out of a world where we take this incredibly energy intensive material that nature created for us over hundreds of millions of years and then burn it at 20 efficiency so so I I just want to mention that point because we're often people are often expecting our level of perfection from the new technology which is like five five times better than what the state of the art is for conventional that's incredibly valid and I do need to be put in my in my box sometimes the um the thing is that we're all hooked on lithium-ion round trip efficiency right we and sort of 85 87 round proficiency is amazing um but of course there's such a there's such there's almost intangible cost to that of all the materials and everything else to get the kind of scale we need I want to ask you about ESS and we're almost running out of time um a couple more things the supply chain you mentioned earlier Supply chain for a flow battery manufacturer um I imagine you talk about there's pumps there's membranes there's all sorts um how how does how do you guys manage that and is it is it proving to be difficult in the current climate first thing I would say is that in terms of the basic materials for the actual system they're much more similar to The Standard materials used for industrial products for automotive you know white goods these kind of things so when there's there's no exotic materials in there but obviously if you're building a system you don't just need the raw material you need the raw material and the shape and then the Precision you require so there's clearly a supply chain supply chain challenge uh as you would have with in building anything I mean but ESS has a supply chain team they work on that they have had a lot of challenges because um even a lot of standard materials you know and you know stuff like polypropylene you know have been hard to source for times so um wow yeah what happened I don't know I mean that's that's just that's just the disruption of there's a sort of covert related disruption and now we have a second round of disruption we're effectively the whole uh the whole hydrocarbon industry is disrupted because of the the situation with Russia so these are things that have to be have to be managed but I think it's important to differentiate between uh between the fundamental materials and the conversion of those materials into the specific part you need in terms of fundamental materials by Design um the ESS system doesn't use anything which is hard to Source but there's still obviously a big task in in in getting it all going and and getting suppliers to make the the the the the the parts you need and the quality you need and these kind of things but there's a very professional team dealing with that they've they've battled their way through a lot of things and but as I say um I I could say the same story about bringing a new model of a car to to into production I mean it's there's just lots of bits with suppliers which need to be coordinated to make sure that they're the right shape and size and and uh and fit for purpose yeah it's not specific to ESS is ESS focusing on American-made components um is that part of the strategy the com the company yes I mean it doesn't solely Source material in the United States but I think the whole industry has has there's a a trend back to um in to economic regions wanting to have um have reduced their dependency on imported crucial components that's a general Trend as you see the same in Europe um and with um it's it's it's understandable I think in the current geopolitical situation that that um there's no point in replacing a dependency on imported oil in countries in a portal with uh 100 dependency and imported batteries yeah yeah just sort of to make the point but certainly the US is doing a lot if you look at what's happening in legislation the the the the current Administration there's a lot of I'd say very positive things happening there with the US government is is taking measures to encourage um uh to encourage uh production of of batteries in country there's also a lot happening in the UK and a lot happening in Europe and um two more questions I know you've got to head off but um one about ESS and then one to use specifically as Allen and not the ESS atom so the first one is um where next for ESS what does the roadmap look like and the second question I want to ask you is where do you think our industry is headed what are your predictions you've spent a couple of decades thinking about this now um and we want to know where you think we're headed but firstly ESS what's the roadmap for ESS let's say one one advantage of being a publicly quoted company is that you have access to Capital and you have you're basically uh all of these good things one disadvantage is that any kind of prediction about the future is something which which is uh is uh is has to be handled in the appropriate manner so I'd say on that read the website okay right the the um and it's it's uh you know we have to we have to be respectful of these things I understand I understand but in terms of where I think the industry is going I mean I just um I would just also look at what happened already 15 years ago people said oh we're going to put batteries in the in the power grids there were loads of people standing up saying it's a joke it will never happen batteries are those little things you buy at the checkout the supermarket they're all toys they're never going to play a role wind turbines they're just little paper windmills they have no function and look what happened and there there were um I was involved in a HBS um Think Tank on energy and environments in 2010 and we wrote the wish list of what would need to happen and everyone if you look back at that it's all happened and it was totally Unthinkable even five years ago that the cost of renewable energy should be cheaper than burning gas but it is it's actually happened so I think I think it's important to say what's actually worked really well you know the cost of solar generation is plummeted the cost of wind generation is plummeted the cost of lithium batteries has plummeted and so I don't think we need to ask the question can you do it because if you say look at what what the the the things that people raise now is to say why it's not going to happen we're already said 15 years ago and they were totally wrong so what needs to happen now is we need to progress on these things and and then I I I do think the next big thing is long duration storage uh simply because to get to full decarbonization the the goal has to be the total replacement of gas burn for electricity generation that's a it's a it's a huge um wow it's a huge task to go for the generation costs are already low enough to do it and the storage costs with new technology like ours are also low enough to do it so it's going to pay for it though this is the thing where's the market for long duration does it does the business I I guess so charging with Solo in California in the day and shifting it to the night I can see how the business case works for that if the capital costs are low enough well the but then how do you go beyond the 24 hour thing how do we get to the 200 hours who's gonna who's gonna be incentivized to do that for the short time that you need it there are all kinds of expert groups looking at that right now all I can say is sort of see what's the cost of not doing it yeah if we'd done it five years ago we wouldn't be sitting in a gas or energy crisis right now we'd be saying wonderful you know it doesn't matter what the price of gas or price of oil is we don't care right so so that we were we could we could put a number on what's been the cost of not doing it and it's astronomical and if you look at the the the the horror headlines in the UK about how much your average household is going to have to pay it's it's absolutely terrible so that you can I think it's easier to say what's the cost of not doing it because it's obviously long duration storage is not the the fix for everything but it's part of the fix for the whole thing um so I think that there's a it's easier to say we've got to do it and here's why the other part of it which is really more the regulatory challenge we've got a customed to not paying for certain things you know when we balance the grid by burning natural gas we don't put a price on that service we just burn the gas and we let release the CO2 and and it goes into the up into the atmosphere so the um that they're implicitly Services provided at the moment by the conventional grid which we don't pay for and so you have to figure out how to how to how to monetize the 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2023-03-19 08:05

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