Here's the Next-Generation Battery Market You Never Knew Existed

Argonne National Lab scientist Lynn Trahey prepares a charge cycling test. Source: The Joint Center for Energy Storage Research.

Motley Fool readers have seen Argonne National Laboratory battery researcher Jeff Chamberlain dive into upcoming innovations for smartphones and electric cars. These markets may use the same basic lithium-ion battery chemistry today, but their unique requirements demand very different next-generation designs.

But that's not all. Chamberlain made it clear that another major battery market is primed to explode very soon -- and most people know nothing about it.

"There is something that's more difficult to describe to the consumer, and that is the electricity grid," Chamberlain said.

How do batteries fit in the grid?
As it turns out, today's power grid won't work very well in the dawning era of renewable energy. Solar cells and wind towers generate power on a very different schedule than coal-fired power plants or nuclear reactors. These differences require massive battery banks to bridge the gap between human demand and Mother Nature's uncontrollable supply.

Argonne researcher Jeff Chamberlain. Source: Argonne National Lab.

"Our electricity grid was built a certain way, and that way is to have on-demand production," Chamberlain explained. "So as I flip my light switch on at home, there's some little knob somewhere that turns the power up. There is no buffer. It's a very interesting production cycle compared to other consumer goods. It was built a certain way, and the grid is currently changing in two different ways.

"One is, first our demand is increasing. But another is, around the world human beings are trying to get off fossil fuels and that means using solar and wind. Well, we cannot turn up the sun or wind, or turn down the sun or wind according to our energy needs. So the more those technologies penetrate the grid, the more you need energy storage. You need a buffer.

"And that is a very difficult challenge that's similar to transportation because it's cost-driven," Chamberlain said. "But it's also different from transportation because we're not limited by volume or mass like we are in vehicles. We're working on energy storage systems that are stationary."

To understand the unique properties of battery packs scaled up to power plant levels, Argonne and other research facilities are working closely with giants of industry. Together, they have set some aggressive goals:

  • Grid-scale batteries should cost no more than $100 per kilowatt hour, down from over $500 per kWh today,
  • they should have a usable life of at least 20 years, and
  • safety should be comparable to today's natural gas turbines.

On top of these ambitious targets, Argonne and its partners hope to deliver five times more efficient batteries for one-fifth of current costs, all in just five years.

Industrial partners
Solar power expert Applied Materials (NASDAQ: AMAT  ) is one important partner, filling in the blanks in Argonne's solar energy storage needs. Improving the temporary energy storage situation, in which generated power hangs around until the larger power grid demands an infusion, is a double-header bet for Applied Materials.

For one, the company would like to benefit as Argonne licenses out new grid-scale innovations across the power generation industry.

More directly, Applied Materials should see rising demand for its solar solutions as the energy storage situation improves. Solar power and massive batteries are joined at the hip, aligning the goals across two industries.

Elsewhere, Argonne keeps a working relationship with power utilities such as Southern California Edison  (NYSE: EIX  ) , helping the researchers focus on the right problems. These batteries need to be cheap and efficient, with very long effective lifespans. So far, so good: if that was all, these batteries might feel right at home in an electric vehicle as well.

But grid batteries must handle much larger power loads and amperage levels, which places different demands on the chemistry involved and drives up costs. On the other hand, the low weight and compact space demands in a vehicle that will lug around its own batteries every day simply don't exist in the grid power scenario. These batteries can be much larger and heavier without causing problems for the operator. That takes some pressure off the development and construction costs.

That's not all. Industrial giant United Technologies (NYSE: UTX  ) needs to pair its geothermal power systems  with interim storage, much like the solar and wind power guys. So United is an active part of Argonne's battery research projects, and has won awards for its own work on so-called flow batteries. In this model, much of the work done by electrodes in, say, a lithium-ion battery is shifted to the electrolyte liquid instead. That's a highly scalable system that can also provide a short-term power surge as needed. With some more work put into lowering costs and increasing capacities, flow batteries might just be the perfect solution for power grid installations.

Source: General Electric.

And don't forget about General Electric  (NYSE: GE  ) .

Working separately from Argonne and the Energy Hub, GE pursues its own energy storage ideas. "They have built an energy storage device based on molten sulfur which is quite effective," Chamberlain told me, taking care not to overstate GE's involvement in the broader battery research effort. But General Electric is not a total lone wolf. "There are a couple of people from GE who are in our advisory committee for the Hub, and we're currently trying to rope them into our commercial entity arm. But they do advise us."

Big batteries for small power grids
Apart from exploring renewable energy sources with a whole new supply and demand balance, modern power grids are also getting smaller.

"Microgrids are emerging," Chamberlain said. "The military wants to get off the grid because they view that as a susceptibility for being attacked by enemy combatants."

There are other reasons that not everyone can or wants to connect to the main power grid. In some places it's just not cost-effective. In others, it's more about making sure your community can function under its own power. Whether these mini grids are powered by newfangled solar and wind solutions, or by small coal and natural gas plants, their independence requires an effective storage solution.

"Certainly in the U.S.," Chamberlain said, "but even more certainly in places like India, China, and Africa, there are small grids emerging with wattage independence, and usually that will require a storage element."

That's about the size of it
So power grids, large and small, are becoming increasingly dependent on huge battery installations. And a lot of people don't realize how big this need -- and opportunity -- really is. Chamberlain is struggling to spread the word.

It might feel less tangible, but when a hurricane like Sandy blows through New Jersey and knocks power out for days at a time, wouldn't it be nice if there were an inexpensive alternative that everyone had in their basement or every neighborhood had in a box somewhere, where they could have a small amount of power to keep the refrigerators running, for example? Or to keep essential tools operating? There's this growing need for a stationary source that is a slightly different physics and chemistry problem than transportation-related storage.

Worldwide sales of the power grid batteries are expected to stop at just $164 million this year, according to clean technology market researcher Navigant Research. In 10 years, grid-scale batteries should explode into a $2.5 billion annual market. Keep in mind that these batteries will also be many times cheaper and more powerful than the best energy storage solutions we have today, and it should be clear that the power grid is changing in a big way.

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Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2014, at 3:32 PM, RobertFaheyJr wrote:

    No mention of JB Straubel or Tesla? Hmmm. Here's what JB has to say about this very same subject:

  • Report this Comment On September 01, 2014, at 9:56 PM, cruzn59 wrote:

    The grid in American uses many sources of power at many different voltages. The power that is produced is sent to the grid via a dispatch team that allows the power to ramp up and down depending on the load. There is extra power generated at all times called "spinning reserve" that compensates for small load variances and takes up the slack in the event a generation station goes off line. Regardless of the source, whether it be solar, fossil fuels, or nukes, there will always be a "reserve" because it supports voltage sags. According to the EIA the US generation is 1100 gigawatts leaving 60 gigawatts for reserve or 60,000 megawatts. It seems for batteries to replace this reserve is many years into the future.

  • Report this Comment On September 02, 2014, at 12:14 AM, predfern wrote:

    Battery storage will not work for renewables such as solar and wind because the EROEI is too small. Pumped hydro is the cheapest form of storage and it won't work either. The only energy that makes sense for the future is breeder reactors. For discussion of EROEI (the ratio of the energy produced over the life of the power plant to the energy it takes to build it) see the following article:

    The Catch-22 of Energy Storage

    Barry Brook

    Posted August 25, 2014

  • Report this Comment On September 02, 2014, at 1:35 PM, SkepikI wrote:

    Failed to research Altair....and failed to delineate the Achilles heel of Battery storage- Losses and conversion inefficiency these tend to be killer in most storage technologies particularly in batteries.

    Failed to research or evaluate the unknowns in maintenance and monitoring, management. These are considerable in Lead Acid Batteries, which we have operated for about a century and are very well understood. Just the emergent problems of LI batteries well known in the past few years should give one pause in the unexpected surprises awaiting some new storage technology.

    Finally your Argonne friend either didn't mention or doesn't understand the things battery storage Can't provide to the grid very well that traditional methods (spinning reserve) Reactive power for one.

    Lots of risks left, lots of time to get a handle on them.

  • Report this Comment On September 02, 2014, at 3:15 PM, TMFZahrim wrote:

    For those who wanted a fuller treatment, I just couldn't put all of Chamberlain's insights into a single article - or even three. He gave me over 3,000 words to work with. Here are the two earlier articles (but I still had to pick and choose my material):


  • Report this Comment On September 02, 2014, at 5:35 PM, JamMad wrote:

    Maybe I missed this... are these new stationary grid batteries likely to be Lithium-Ion as well, for those of us with a passing interest in lithium plays ?

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Anders Bylund

Anders Bylund is a Foolish Technology and Entertainment Specialist. Where the two markets intersect, you'll find his wheelhouse. He has been an official Fool since 2006 but a jester all his life.

Hypoallergenic. Contains six flavors not found in nature. Believes in coyotes and time as an abstract.

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