May 15, 2017
ENERGY WATCH #1 by Karel Beckman
Coming soon: Gigafactories, 1,000 km EVs, battery grid storage
May 15, 2017
Will the world soon be covered with battery gigafactories?
Michael Molitor, CEO of Australian startup A2emCo, and former head of climate change at PWC Australia, earlier this month revealed plans to start mass-producing autonomous electric vehicles (EVs) in Australia. He also wants to build a battery gigafactory in Australia, reports Australian website Reneweconomy.
For this plan, he has already consulted with Peter Carlsson, who helped build the Tesla gigafactory in Nevada and is now part of a company that wants to build a gigafactory in Sweden. According to Molitor, who also used to work for BP and McKinsey, the world is going to need 120-150 gigafactories by 2030, to meet soaring demand.
The article, written by Sophie Vorrath, shows Molitor as not only highly ambitious, but also humorous and visionary. At a conference in Sydney, he said he wants to roll out completely Australian made “level 5” autonomous vehicles. “(Level 5) means, you’ve got an app on your phone, you subscribe to the service, the car shows up to your house, or your apartment, there’s a cyber security system that IDs you, the door opens and says ‘good morning’ …the door closes, you’ve got 5G connectivity, it says you’re going to be in the office in the CBD in 17 minutes.”
Molitor, who says the prototypes of his “super-sophisticated EVs” are already being built, called the current global automotive sector one of the top four “dumbest” industries in the world – alongside the thermal energy generation industry and the beef industry – in that it operates on a completely uneconomic model.
A2emCo’s factories, he said, “will tap advanced manufacturing platforms being developed by Siemens and will focus on reducing costs all along the production line, even by keeping the lights off on the factory floor.”
The biggest hurdle for Molitor is consumer acceptance. “We’ll get at the car monkeys”, he said, no doubt about that. “But will we get the mums?”
The mums may go for EVs if the problem of range anxiety can be solved. The outlook for that seems pretty good.
Nissan CEO Hiroto Saikawa has said recently that his company targets a 300 mile (480 km) range three years from now for its batteries, reports Cynthia Shahan at Cleantechnica.
Kazuo Yajima, Global Director EV at Renault-Nissan, said the company has already developed a prototype vehicle that can run 550 km with the same size battery pack that the LEAF has today. It uses a new battery cell with increased energy density.
Fraunhofer, the well-known German research institute, goes one step further: it announced on 2 May that it is working on a new battery concept that will give cars a range of 1,000 km. The researchers believe this can be done by fitting more batteries into the car thanks to a new stacking system.
As Fraunhofer notes, “electric cars are equipped with hundreds to thousands of separate battery cells. Each one is surrounded by a housing, connected to the car via terminals and cables, and monitored by sensors. The housing and contacting take up more than 50 percent of the space. Therefore, the cells cannot be densely packed together as preferred. The complex design steals space. A further problem: Electrical resistances, which reduce the power, are generated at the connections of the small-scale cells.”
Under the brand name EMBATT, the Fraunhofer Institute for Ceramic Technologies and Systems IKTS in Dresden and its partners “have transferred the bipolar principle known from fuel cells to the lithium battery. In this approach, individual battery cells are not strung separately side-by-side in small sections; instead, they are stacked directly one above the other across a large area. The entire structure for the housing and the contacting is therefore eliminated. As a result, more batteries fit into the car. Through the direct connection of the cells in the stack, the current flows over the entire surface of the battery. The electrical resistance is thereby considerably reduced. The electrodes of the battery are designed to release and absorb energy very quickly.”
The approach is already working in the laboratory. First tests with cars are expected in 2020.
There are sceptics, like Björn Peters, who believe battery storage will always be uncompetitive, but from Australia come reports that battery storage is already competitive in many places. Kobad Bhavnagri, analyst at Bloomberg New Energy Finance (BNEF), says that grid-scale battery storage is already “in the money” in states like South Australia, according to Reneweconomy.
“We’ve seen the price of battery packs as fallen by 75 per cent by 2010, and our calculations show that will fall by a further 75 per cent by 2030,” due to technology innovation and manufacturing scale, Bhavnagri said.
“That means that large-scale battery storage is already viable in large parts of Australia”, notes Reneweconomy. “In South Australia, it is offering internal rates of return of around 30 per cent (even without new market rules that will further encourage them), and in Queensland they are also profitable due to that state’s price volatility. NSW and Victoria will follow soon enough.”
Bhavnagri showed the following figure to illustrate his point:
Giles Parkinson of Reneweconomy concludes there is nothing to stop Australia from moving to a 100% renewable electricity grid. He cites a new report, the Electricity Network Transformation Roadmap, “that has been painstakingly put together over the last three years by the government’s premier research body, the CSIRO, and Energy Networks Australia, which represents the grid owners across the country”, which concludes that “Australia can and should reach 100 per cent renewable energy for its electricity by 2050, and therefore zero emissions.”
For natural gas the message may not be so great. The potential for renewables-plus-storage in Australia is so good that Australia’s largest integrated energy company, AGL Energy, earlier this month said that “Australia’s transition away from a coal power dominated national grid to low-carbon generation will largely bypass baseload gas, and instead shift straight to large-scale wind and solar.”
The growth of EVs and renewable energy will of course mean that grid management will have to become much more flexible. In fact, in some areas in the U.S. the high number of EVs is already leading to problems for utilities. EVs are starting to be called “the new air conditioners”, reports Microgrid Knowledge.
Ironically, the problems are caused by flexible pricing systems. Thus, consumers in places Sacramento, in California, all start charging their cars the moment off-peak rates begin, in the early evening, leading to sharp load ramps. This in turn has led to problems with transformers.
“In a study commissioned by the Sacramento Municipal Utility District, an estimated 17 percent (12,000) of the utility’s transformers may need to be replaced due to EV-related overloads, at an average estimated cost of $7,400 per transformer”, notes Microgrid Knowledge.
The solution, for utilities, is “ensuring that electric vehicle owners charge their cars during the entire off-peak time period, not just when off-peak starts. Another approach is to ensure vehicle owners charge their cars when renewable energy production is high, mid-day for solar and nighttime for wind, the report says.”
An interesting test for EVs has just been carried out in Boulder, Colorado. In cooperation with the Rocky Mountain Institute, the city carried out an 11-week pilot which “offered local residents the opportunity to travel to and from downtown using door-to-door mobility services at a price that was competitive with driving and parking their personal vehicles.”
A lot of lessons were learned, such as that “reaching the 45+ year-old demographic and convincing them to participate was a challenge”. You can read more in the report published by RMI.
Despite all the great visions, sales of EVs in the world are still modest, although growing.
Bloomberg reported recently that in Europe “sales of battery-powered cars soared 38% in the first quarter after models including Renault’s improved Zoe won buyers in Germany and Spain. That compares with a gain of 2.9% for all of last year.” New registrations for battery-powered cars increased in the first quarter to 32,627 from 23,703 in the EU, Norway and Switzerland, according to a statement from the Brussels-based European Automobile Manufacturers Association.
That surge still couldn’t match demand in America, where electric car sales jumped 49% to 40,700 units in the same period.
Sales of all alternative-fuel models, which include hybrid vehicles and cars powered by natural gas or LNG, totaled 235,438 in the EU+ region in the first quarter, an increase of 36%, showing that pure EVs are still in a minority.
Meanwhile, sales of “the world’s largest EV maker” – not Tesla, but BYD from China – have dropped sharply in recent months “after years of double-digit growth”, reports MIT Technology Review. The reason is that the government has cut down on subsidies for EVs.
But don’t think that BYD will enter a downward spiral from now on. “Its solution”, writes Technology Review, “is to expand its fleet of electric vehicles, selling more electric buses, trains, and taxis to local governments, and to expand its overall production to drive down manufacturing costs.”
In other words, the lowering of subsidies is a blessing in disguise for the (global) EV market: it will lead to a renewed drive to lower costs.
BYD seems well placed to accomplish great feats in this space. MIT Technology Review tells something of the fascinating history of this company, which seems to come right out of California rather than the big bureaucratic Chinese state.
Here is the story:
“Low costs are how BYD got its start. Founder chemist Chuanfu Wang launched the company in 1995 with $300,000 raised from family. He and a team of 20 employees studied patents of other battery makers and then dismantled their batteries to see the components and how they were put together. They had to figure out the proportions of all the chemicals and the right manufacturing environment, and it took them half a year to determine how to manufacture without the kind of humidity controlled dry rooms that rivals like Sanyo used.
Using cheap labor, Wang designed a system of semi-automated production, and by 2002, he was employing 17,000 workers, and BYD was one of the world’s top manufacturers of nickel-based batteries and lithium-ion batteries.
As the battery market for electronics matured and BYD faced increasing competition in China with the entry of new Chinese rivals, Wang branched out into cars, seeing the nascent sector as a way to leverage its manufacturing capabilities, and in time develop electric vehicles that could be powered by BYD’s batteries.
Initially Wang followed the same copycat method he’d used with batteries, developing BYD’s first model, the $6,000 F3 compact sedan, by having a crew of engineers take apart the Toyota Corolla to see how the engine and body might be re-created. The F3, a pretty good copy of a Corolla for less than half the price, became one of the best-selling cars in China, and within about five years BYD was outselling big names like Volkswagen and Toyota.”
Last year in China 507,000 EVs were sold out of a total of 28 million. Slowly but surely the Age of the electric car is getting closer.
ENERGY WATCH #2 by Karel Beckman
Turkstream: The Dutch Connection
May 15, 2017
On 8 May an “expert roundtable” took place at the Russian Trade Representation in Amsterdam, located at a prime spot on Museum Square next to the Rijksmuseum – and next to the U.S. and Turkish consulates….
The theme was “contemporary developments on the energy markets: new challenges and opportunities for Russian-Dutch cooperation”, but what it really was about could be summed up in one word: Turkstream.
Turkstream? Yes, this was news to me too. The Turkstream company, which the day before, on 7 May, had started laying the first of the two 15.75 bcm pipelines that will take gas from Russia to Turkey by the end of 2019, is located in the Netherlands. And that’s not just a company post office box set up in Amsterdam for tax reasons. The whole company is based there, a team of over 200 experts – just like Nord Stream 2, for example, is located in Zug, Switzerland.
Why not in Moscow, one might ask, since Turkstream is owned by Gazprom after all? Or, alternatively, in Turkey?
An important reason, apparently, is that much of the technology for the offshore part of the pipeline will be supplied by Dutch companies. For example, the company that is laying the pipes is Allseas, which also won the contract to lay the pipes for Nord Stream 2.
Allseas is technically a Swiss company, but most of its activities and its roots are solidly Dutch. It was founded by Edward Heerema, a famous name in Dutch offshore industry.
The vessel that is laying the pipes for Turkstream in the Black Sea, the Pioneering Spirit – which you can see here in a pretty spectacular video (it has the size of 8 football fields) – received quite a bit of negative publicity in the Netherlands when it was first presented, since Edward Heerema had named it after his father, Pieter Schelte Heerema, who had collaborated with the Nazis in the Second World War. Edward Heerema was forced to change the name, especially when Shell also brought pressure to bear, though he retained the initials of his father.
Other Dutch companies that are involved in Turkstream are Fugro, Intecsea, Bezemer Group, Haskoning DHV, Van Oord, Offshore Independents and Boskalis. The company that will build Turkstream, incidentally, is not called Turkstream, but South Stream B.V. – which was of course of the pipeline that Gazprom wanted to build through the Black Sea to Bulgaria, but was later cancelled. Albert Haak, Head of Engineering of South Stream B.V., gave a presentation in Amsterdam entitled “Creating Turkstream: Russian and Dutch excellence connected”, although this mentioned only Dutch companies, not Russian ones.
Technically, the construction of Turkstream is not an easy job. The Black Sea is very deep, with a maximum depth of 2200 metres, much deeper than the Mediterranean, North Sea and Baltic Sea. One of the deepest subsea pipelines in the world is Perdido Norte in the Gulf of Mexico at 2530 metres – and that was also built by Allseas. Each of the two offshore pipelines of Turkstream will be made up of over 75,000 individual pipe joints designed for high pressure gas transport.
The Dutch-Russian cooperation comes at a sensitive time when European-Russian relations are under heavy pressure. Relations with Turkey, the destination of the pipeline, are also at an all-time low. But the large commercial interests also explain why the Netherlands, along with Germany, is one of the staunchest defenders of the Nord Stream 2 project, which Eastern European countries would like to stop.
The expert round table in Amsterdam, which was co-organised by the Energy Delta Institute (EDI) in Groningen, was not entirely confined to Turkstream, however. It also featured a presentation by Huib Morelisse, CEO of Dutch wind turbine producer Lagerwey.
As it turns out, Dutch technology is also helping Russia in this rather unexpected field: wind energy. In February, Lagerwey was selected by OTEK, a subsidiary of Russian nuclear giant Rosatom, as its “licensing partner”.
With the help of Lagerwey, OTEK will be building a homemade Russian wind turbine industry from scratch. The company aims to build 610 MW by 2020 and has a target of 3.6 GW by 2024. It is a first for Russia.
The project is part of a huge diversification effort on the part of Rosatom. The state-owned company wants to develop a $17.5 billion portfolio of non-nuclear orders in the next ten years, of which renewable energy is only a small part.
According to experts, Lagerwey has quite sophisticated wind turbine technology at its disposal. The company, which is 40 years old, was one of the pioneers in wind energy. It has a turbulent history with several bankruptcies as it could not compete with rivals like Vestas and Siemens.
ENERGY WATCH #3 by Karel Beckman
The geopolitics of renewables
May 15, 2017
Climate policies and the inexorable growth of renewable energy and electric cars are continuing to shake up the existing world order in many ways. The interests at stake are huge, the fights are intense.
Some key questions that people are asking themselves:
- What will be the geopolitical consequences of the energy transition?
- To what extent will carbon pricing be adopted in the world, and what form will that take?
- What will be role of natural gas as low-carbon option and nuclear power as zero-carbon, but controversial option?
- What will be the roles of private and public players, in particular in the crucial area of infrastructure?
- How will the traditional left-right opposition in politics play out in climate and energy?
Daniel Scholten, an Assistant Professor at the Technical University Delft, has written a short paper on the implications of the renewable energy transition for energy security and geopolitics, which has been published by EUCERS (European Centre for Energy and Resource Security) in London.
This is a fascinating topic that is beginning to receive more attention as the impacts on established industries and countries are growing, although it is still far from fully explored. Scholten was already on to this topic in 2013, when he wrote a paper about it with Rick Bosman published back then on Energy Post.
Scholten makes a number of key observations:
“The geographic and technical characteristics of renewable energy systems are fundamentally different from those of coal, oil and natural gas.
- renewable energy sources are abundant and intermittent
- renewable energy production lends itself more to decentral generation and involves rare earth materials in clean-tech equipment
- their distribution is generally electric in nature and involves stringent managerial conditions
These stand in clear contrast to the
- geographically fixed and finite nature of fossil fuel resources
- their general reliance on large centralized production and processing installations
- and their ease of storage and transportation as solids, liquids, or gases around the globe”
These differences will lead to a number of important changes in the way energy security must be viewed. Thus, Scholten notes that availability will become a key security concern rather than price volatility.
Another important implication is that control over infrastructural development, operation and regulation will become a strategic priority for countries.
Moreover, in an electrified system, security concerns will tend to be regional rather than global, as they are now.
Not mentioned by Scholten, but perhaps an interesting aside, is that renewable energy production will also become subject to the scrutiny of NGO’s just as the fossil fuel industry is now. Just recently the UK-based Business & Human Rights Resoource Centre (BHRC) reported that “A sharp rise in renewable energy projects around the world over the last decade has been accompanied by an increase in human rights abuses perpetrated by renewables companies and their affiliates”.
Most of the cases involved hydropower projects, but wind farms can also be controversial and a source of human rights abuses, notes BHRC.
Then there is another question that has not been explored yet: what if a country, like the U.S., decides to go against the grain – to essentially stop supporting the energy transition and rely on established energy sources instead? Would that make the country more secure – or less?
In the U.S., a group called Advanced Energy Economy, an organisation of well-known businesses (including Microsoft, Amazon, Facebook, Veolia, EDF, Eon, Honda, Siemens, Schneider Electric and many others), has called attention to a potentially far-reaching memo issued by the Trump Administration on 14 April.
The memo orders the Department of Energy (DOE) to conduct a short-term study, which signals that the Trump administration sees “advanced energy” as a problem to be solved rather than an opportunity.
“In the memo to his chief of staff”, writes AEE, “Energy Secretary Rick Perry directed DOE to perform a ‘60-day study’ of certain ‘critical issues central to protecting the long-term reliability of the electric grid.’
In the memo, Perry expressed concerns about the “erosion of critical baseload resources” due to “regulatory burdens introduced by previous administrations that were designed to decrease coal-fired power generation” as well as “market-distorting effects of federal subsidies that boost one form of energy at the expense of others.” He directed DOE specifically to examine “the extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.
To us, writes AEE, “the assumption that advanced energy technologies are harming reliability was a bit mystifying, coming as it did from the former governor of Texas, the leading wind-power state in the country, and one that the Brattle Group, in a paper for AEE Institute, showcased for its experience maintaining reliable electric power service with a high penetration of variable renewable energy. Texas also has the most open and competitive electricity market in the country, ably managed by ERCOT, showing that renewable energy development need not undermine markets designed to provide affordable and reliable electric power.”
AEE adds that the memo “became a bit less mystifying when it became known that this study was to be put in the hands of appointees who came to DOE from the Institute for Energy Research, a Washington, D.C.-based think tank known for its attacks on renewable energy policy. Here is a sample, from IER’s blog in September: ‘Allowing wind energy to find its natural place in the power grid would require elimination of the PTC [production tax credit’and all state-level renewable energy mandates.”
On April 28, AEE and other groups sent a joint letter to Perry taking issue with the premises of his study order, “noting that the growth of wind and solar power neither accounts for the challenges now facing coal-fired and nuclear power plants in the nation’s electricity markets nor represents any kind of threat to reliability.”
The fossil fuel sector is not only fighting for its interests (perhaps its survival) in the U.S. In Europe, for example, the Brussels-based organisation FuelsEurope has come under fire. The association, which includes members like BP, Shell, ExxonMobil, Statoil, Repsol, Total, ENI and Lukoil, has been accused by NGO Corporate Accountability International of lobbying the UN climate organisaton UNFCCC to weaken international climate policies.
Specifically, the NGO accuses FuelsEurope of:
- Protecting business interests at all costs. Although FuelsEurope claims to support the Paris Agreement, its 2015- 2016 annual report expresses worry that these targets will prove burdensome for the industry. It promises its members and shareholders that it will “continue to advocate … so that our competitiveness does not get damaged further,” and its priorities include ensuring continued production of oil and gas now and in the future.
- Opposed emission trading schemes, lower GHG targets, and more. The organization has repeatedly opposed multiple EU climate policies that would strengthen the EU’s commitment to slowing global warming. It has warned against intensifying efforts to lower GHG emissions targets, adamantly resisted strengthening emissions trading schemes, opposed recommendations that favor renewables, and insisted that no targets “which could harm the competitiveness of European industry” be adopted without the industry’s full consent.
- Shirks the EU’s historical responsibility for the climate crisis. It also argues for Europe to take a back seat in leading climate efforts: “While acknowledging the desire of the EU to continue to show leadership in upcoming global talks to tackle climate change, we need realism … even the most aggressive reduction measures—if unilateral—would be almost irrelevant in the global balance.” Such an analysis ignores the historical emissions of the region and the EU’s obligation to support the mitigation and adaptation of other nations.
One could argue that this is what a lobby group does. Still, some would say that one day, these lobbyists and the companies behind them might find themselves the target of law suits alleging that they ignored the risks of climate change – the same way that tobacco companies were successfully prosecuted for hiding the risks of smoking.
ENERGY WATCH #4 by Karel Beckman
Energy efficiency breakthrough ($$$$$$): Lighting as a service
May 15, 2017
Before you skip this section, thinking “energy efficiency breakthrough, I have heard that before”, and “lighting – who cares about lighting”, consider this.
Lucas Davis, Assistant Professor at the Energy Institute at Haas School of Business (University of California Berkeley) wrote an article the other day showing that despite continued economic growth and electrification of the economy, U.S. households now use less electricity than they did five years ago. Quite remarkable. And essentially the only reason for this, says Davis is: energy-efficient lighting.
In other words, efficient lighting – in the form of LEDs and CFLs (compact fluorescent light bulbs) – is not a small thing. It is a big thing.
That’s as far as households is concerned, but for building owners and property managers the move to energy efficient lighting is often still a problematic step. As the Rocky Mountain Institute (RMI) notes in a new report, “building owners and property managers have been inundated with information about how they should invest in advanced lighting systems that enable increased control, save on energy costs, and have higher-quality light”. However, “capacity and capital constraints limit the ability of building owners and property managers to assess different lighting-system options and to pay for upfront investment in new lighting systems. The result is an underinvestment in advanced lighting systems that could otherwise provide commercial building owners and property managers with measurable operating cost savings …”
But here comes the breakthrough to the rescue and it’s called Lumens-as-a-Service (LAAS) – a concept modelled of course on Transport-as-a-Service (TAAS). It is quite simply a new business model in which the property owner or manager does not purchase a new lighting system but “purchases a service (or subscription) from a service provider who then delivers that service as a fixed price per unit-of-output through assets that the service provider owns, maintains, and improves.”
“In a LAAS business model, a commercial building customer specifies its required lighting outcomes, and a service provider then delivers the contracted lighting service by designing, installing, and maintaining a system designed to meet these outcomes. In addition, a service provider can choose to pay “rent” to the customer to have the right to deploy a lighting system in its space. In exchange, the customer pays 100 percent of the calculated lighting energy cost savings to the service provider, fully aligning the benefits of the upgrade with the roles that each party undertakes.”
The LAAS model is transformational, notes RMI, “because it aligns and incentivizes both service providers and customers to deploy the most energy-efficient lighting systems available. There are several distinct advantages of LAAS over a traditional asset-based model, including:
- Service providers will most likely choose a highly efficient system design—consisting of LEDs with smart controls—because the service agreement puts them in a position to capture most or all of the value of any lighting-related energy savings, depending on contract structure.
- Service providers can choose to make rental payments to commercial building customers based on a preretrofit assessment in order to have the right—but not the obligation—to deploy LAAS in customers’ spaces and capture this value. Depending on contractual arrangements, these payments can also be shared with or passed on to tenants.
- The customer receives indirect benefits and maximizes asset value, given the potential rental income stream and implementation of high-quality lighting systems.
- The risk of owning and maintaining lighting shifts from customers to service providers, who specialize in evaluating energy savings and can optimize lighting performance to maximize savings.
According to RMI, “the global LAAS market is expected to grow from $35.2 million in revenues in 2016 to $1.6 billion by 2025. LAAS is currently considered as an alternative, albeit superior, option to loans, capital leases, and operating leases, due to its simpler accounting treatment—suggesting that the potential market is likely to be much larger than forecast if service providers shift to making LAAS their main go-to-market strategy.”
For more information, check out RMI’s report here.
And if you’re still not convinced, think about this: in my son’s university town, students increasingly don’t own bicycles anymore but purchase bicycles-as-a-service. They get a bicycle at a monthly charge, including full-service maintenance if they need repairs. Opportunity knocks.