Catalyst with Shayle Kann - Four ways to store sunlight

Episode Date: May 25, 2023

Are you a utility or climatetech startup looking to understand how artificial intelligence will shape your company? Come to our one-day event, Transition-AI: Boston, on June 15. Our listeners get a 20% discount with the code PSPODS20. On the Catalyst with Shayle Kann podcast this week: The good news: the U.S. has about 47 days’ worth of energy stored up for later use. The bad news? Virtually all of it is in the form of fossil fuels – coal, oil and natural gas. By comparison, if you add up all the energy stored in batteries, pumped hydropower and other zero-carbon storage, it adds up to just a few seconds’ worth. This small scale of low-carbon energy storage is a big problem. We’re building out intermittent renewables fast, and we need enough energy storage to back up wind when turbines slow down and solar when the sun isn’t shining.  But there are technologies that could get us there. In this episode, Shayle talks to his colleague Andy Lubershane, who is a partner and head of research at Energy Impact Partners. Andy recently wrote a piece called Four ways to store sunlight, which compares lithium-ion batteries, heat storage, ion-air batteries, and hydrogen. Andy and Shayle cover topics like: The storage trifecta: short duration, diurnal, and multi-day seasonal Andy’s guess at how low the price of lithium-ion batteries could go Why we would use heat storage and hydrogen, despite their low round-trip efficiencies Why molten-salt heat storage didn’t take off High hopes for iron-air batteries’ low costs Blending hydrogen into gas turbines How all these technologies are competing against carbon capture and storage (CCS) Recommended Resources: Andy Lubershane: Four ways to store sunlight Form Energy: Enabling a True 24/7 Carbon-Free Resource Portfolio for Great River Energy with Multi-Day Storage Catalyst is a co-production of Post Script Media and Canary Media. Support for Catalyst comes from Climate Positive, a podcast by HASI, that features candid conversations with the leaders, innovators, and changemakers who are at the forefront of the transition to a sustainable economy. Listen and subscribe wherever you get your podcasts. Catalyst is supported by Scale Microgrids, the distributed energy company dedicated to transforming the way modern energy infrastructure is designed, constructed, and financed. Distributed generation can be complex. Scale makes it easy. Learn more: scalemicrogrids.com.

Before we start, we have two events coming up in June that our East Coast and West Coast listeners should know about. On June 15th, PostScript Media is holding Transition AI Boston. It's a one-day conference in downtown Boston digging deep into the applications for artificial intelligence and the energy system. We're going to have panels networking and a workshop on chat GPT. Speakers include Priyadonti, the co-founder and executive director of climate change AI. Pamela Isam, who is the former executive director of AI and technology at the U.S. Department of Energy. Patrick Walsh, a general partner at National Grid Partners, and Savannah Goodman, the data and software climate solutions lead at Google. So if you're in the business of energy and climate tech and a better understanding of AI is important to your job, you should come to the event.

Again, downtown Boston, June 15th, our listeners, get a 20% discount. Follow the link in the show notes and use the code PSPOD 20 when you buy your ticket. And for those of you over on the West Coast, our friends at Canary Media are hosting their next live. event in Seattle on June 28th. It's going to be a good one. I can attest. I've done multiple events with Canary. And Canary Live, Seattle is going to feature some of the biggest names in our industry like Amy Harder, David Roberts, Rames Nam, as well as Canary's executive editor, Lisa Hymas. The venue is the legendary radio station, K-E-X-P in downtown Seattle, and you can expect some amazing panels in lively networking. Again, we've done multiple shows with Canary. The Canary

live events are incredible, so go check it out. Canarymedia.com slash Seattle to get your tickets today. Don't miss out on either of these events. From the studios of PostScript Media and Canary Media. I'm Shail Khan, and this is Catalyst. You know, between the minutes of energy storage we have today and 47 days, I think we're going to fall probably actually ultimately closer to the 47 days. days level than even minutes, hours, or just a few days worth of storage. Well, they killed BuzzFeed News, RIP.

But if this episode were a BuzzFeed article, I think I would call it four weird ways to replace 47 days of fossil energy stockpile with solar electrons. Obviously, I'm not meant for listicles. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to managed 3.4 gigawatts of flexibility built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built

for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more at energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. I'm Shail Khan. I invest in revolutionary climate technologies at energy impact partners. Welcome.

So if you're listening to this podcast, you probably don't need me to convince you that, one, the electricity grid will be progressively decarbonized in significant part, at least, because of the addition of more and more intermittent generation in the form of wind and solar. And two, that the need to continuously match supply and demand on the grid, which we do have, will lead us to need more and more energy storage to pair with that generation. I mean, both of these things are already happening today, so I'm not saying anything new here. But where I think things get more interesting is when you start to think about what form that energy storage will take. And here, there are multiple possibilities, from batteries of various stripes and various chemistries to energy-carrying molecules to fossil fuels themselves.

And they all have their trade-offs, their ideal scenarios, their bottlenecks, their role in the market. And my colleague Andy Lubershain, whom you've heard before, he's a partner at EIP, our head of research, he wrote a great piece recently that lays out what he calls the Four Ways to Store Sunlight. I will note that in this episode, Andy and I do talk about a few companies and a few other categories where we at EIP have already invested. It's not because we're trying to shill for our own portfolio. It's just because we do have strong conviction in the need for energy storage and the opportunity that it presents, as you will hear.

Anyway, with no further ado, here's Andy. Andy, welcome back. It's a pleasure to be back, always. Thanks, Shail. Let's talk about energy storage in all of its various glorious forms. But before we get into sort of the nouveau type of energy storage, let's talk about the type of energy storage that we already have on the grid, which comes in the form of basically stockpiles of fuel for fossil generators.

So talk a little bit about how. much of that we have today and like what's its importance. Right. I mean, you know, when people talk about renewables, oftentimes the kind of big question they ask is how are we going to, how are we going to store enough energy to balance out the variability of wind and solar? And the answer currently is we already have plenty of energy storage capacity on the grid today. It's these massive stockpiles of fossil fuel that we have sitting around. We've got big piles of coal sitting beside coal-fired power plants. We have, well, this isn't as relevant to the power sector, not really relevant to the power sector, but in terms of storage supply for the energy sector writ large, we have these giant tanks of oil

ranging in scale from big industrial facilities. And of course, we all store oil in our vehicles today, in our gas tanks. And then also very relevant to the grid, we've got these big continent-spanning networks of natural gas pipelines and giant underground storage reservoirs. And so we have all this energy sitting around ready to be utilized at a moment's notice. And that's particularly true in the case of natural gas when it comes to power generation, because it can be utilized relatively quickly. If you add it all up, it's actually a pretty large amount of storage. We currently store, by my rough count, about 47 days on average worth of primary energy supply in the country. So that's about nine days of natural gas in storage. It's about 13 days in coal stockpiles,

about 10 days in crude oil storage. And actually, that doesn't even count all of our gas tanks. That's just like big industrial storage. And then about 15 days that we've historically kept around in this strategic oil reserve. So yeah, about 47 days worth of primary energy supply is what we keep lying around currently in the form of fossil fuel. And I guess one question is like how much of that do we keep around intentionally as energy storage, like to ride through a shortage or something like that? And how much of that is just a function of how these markets are constructed, how, you know, generation is scheduled, things like that? Like, is it like, is it an intentional form of energy storage or is it a

consequential form of energy storage driven by circumstance? It's a real mix, right? In some cases, we store it just because it's economically viable to do so. There is, just like, you know, for renewable supply, there actually is intermittency in fossil fuel supply as well. There can be hiccups, for example, delivering coal to various places around the country from coal mines. There can certainly be hiccups in natural gas supply. There can be constraints in natural gas pipelines, right? You know, there's obviously intermittency in the global oil market, some of which is caused by human design, right, by OPEC making decisions about turning on or off the pumps. But it pays to store that energy in some cases just because

it's relatively cheap to store that energy. For example, storing coal in a huge pile of coal is just a ridiculously way, a ridiculously cheap way of storing energy. And in part because it's so cheap, we also, in some cases, make sort of strategic decisions to store the energy, not just because it's economically beneficial to do so to arbitrage relatively low periods of fossil energy prices against relatively high periods of fossil energy prices, but because we want to have this, I would say, sort of strategic level of energy storage backup to provide. reliability and resilience for the energy system. That's most, sort of most obvious in the case of the Strategic Oil Reserve, where we just put strategic right in the name. And we're not, the U.S.

government is not storing that energy for economic reasons. It's storing it for national security and sort of macroeconomic reasons. Yeah. So, okay, so we've got 47 days or so worth of primary energy supply stored today in the form of fossil fuels. I think our premise here is not that we necessarily need 47 days worth of energy storage as we transition away from fossil fuels and toward more intermittent generation. We don't need to replicate that exactly, but we do need some. I mean, there's certainly some degree of energy storage that will be required beyond just the fact that we are trying to smooth out the peaks and valleys of intermittent generation, but also for the reason of resiliency, basically, in this system. And so I guess just to contextualize it, relative to

that 47 days that we've got a fossil fuel inventory, how much do we currently have in batteries, basically, like non-fossil-based energy storage? It's essentially negligible if you're talking about batteries. I mean, just to contextualize in general our sort of renewable energy supply versus the energy. the amount of energy we store in the form of fossil fuels, all of the wind and solar power generated in 2021, if you were to bottle all of that energy up and store it in sort of the same way that we store fossil fuels, it would be only about five days worth of energy supply. So we currently store more energy in the form of natural gas underground and in pipelines than all of the

energy we generated from renewables, you know, two years ago. And then if you look at storage on the grid, the ability to sort of store electricity, powerful sort of power to power storage cycles. The biggest resource we have available to do that today is, you know, what everyone knows is pumped hydro storage, where you basically use pumps to move water back up from below a reservoir to above a dam into a bigger reservoir and then let gravity do its work one more time. again. We have about in terms of primary energy supply, not in terms of electricity generation potential. If you were again, to compare that to primary energy supply, we have about nine minutes worth of pumped hydro storage, which means we have probably, I don't know, in the seconds level

of battery storage capacity today. Might even be like milliseconds. It's possible, yeah. Like there's a couple orders of magnitude within there that I'm not sure where it falls. Yeah. Right, but the point being, it's not much. And so the way that I think about it, we have these dual challenges of like there's a certain amount of energy storage. We're going to need just to, like I said, smooth out the peaks and valleys of intermittent generation as we had more of it. And then probably on top of that, as we, you know, as the real shift away from fossil fuels starts to take hold, we probably need even more than that because we are going to need some to, you know, sort of manage the bigger picture.

macro resiliency concerns. Yeah, I mean, I think that's actually very much an open question, right? I agree with you. We don't need 47 days of primary energy supply. The energy system is going to look very different. We're going to have a lot more domestic energy sources, I think, in a fully decarbonized world. Hopefully, the grid will be a lot more resilient. There'll be a lot of contingencies, you know, crossing our fingers for robust electric transmission system development. And, you know, we're not going to be nearly so concerned about the decisions that OPEC makes and hopefully not nearly so concerned about the potential, you know, interruptions of energy supply that can be caused by, you know, global conflict. But we, I think, I think we would still be foolish to assume that we don't need any kind of strategic energy supply in the long run. So, you know, between the minutes of energy storage we have today and 47. days, I think we're going to fall probably, actually, ultimately closer to the 47 days level than even minutes, hours, or just a few days worth of storage.

All right. So the point of all of this is to say, we are going to need a lot of energy storage. That seems a lot being obviously a generic term, but way, way, way, way more than we have today. Maybe add a couple extra ways to that. Right. In some ways we can set aside the ultimate level, right? Because we're starting from such a small base. Let's build towards 47 days and see how far we can get. So then the next question is what form is that energy storage going to take? And this is where I thought your piece that you wrote was really good because it lays out a few different categories. I think when people think about energy storage in a non-fossil fuel context, they're usually just thinking of lithium ion batteries, at least initially. But it's actually a broader landscape. that is emerging with different characteristics for different types of energy storage.

So you laid out the four, I guess four and a half ways to store sunlight as you describe them. So let's run through them, starting with lithium ion batteries. So talk about the role that lithium ion batteries you think can play and should play in power energy storage, obviously separate from their use and things like electric vehicles. Right.

So every power system is going to have a couple, probably at least one, possibly two, even three, you know, very regular spikes in what we call net load, which is basically total electricity demand minus renewable power supply, minus intermittent power supply. So we're going to have these spikes that are relatively short-lived. I mean, typically anywhere between two and six hours, maybe up to eight hours worth of time that these net peaks occur on. a mostly daily basis, right? There's a pretty classic example that I cite in this article, which is called the kettle surge in the UK, when basically millions of people in Britain who are tea drinkers after the end of popular TV shows, they go and they turn on their electric kettles,

not exactly all simultaneously, but kind of roughly at the same time. And it causes this multiple gigawatt surge in power demand right after soap operas, for example. And then there's a, you know, there's other examples that are up and coming, right? Like there's, there's the fact that the sun sets every evening and also every evening we're anticipating a bunch of people plugging in their electric vehicles as they come home from work or whatever they were doing during their day, which will cause this pretty, pretty big spike in net demand. But it's not necessarily going to be a long-lived spike. It's probably going to last again for, you know, in the ballpark of four to six hours. And that's attacking that those net demand spikes, those net load spikes,

is really what lithium ion is doing today and what it's best suited for. For a couple of reasons. One is that, you know, you can you can address those net peaks with relatively low duration storage. You only need a few hours of storage, which means storage doesn't. have to be crazy, crazy cheap in order to make it economically viable to do so. I think lithium I... Can you just explain that a little bit better? I think it's not obvious to everybody that correlation, which is sort of important between the duration of storage that you need and the cost of storage that you can afford. Yeah. So, you know, effectively every storage system, power storage system, is going to have a kilowatt-rating and a kilowatt-hour rating. The kilowatt-watt rating tells you,

the instantaneous power output potential of that storage system. So if it's got 10 kilowatts, then it can address 10 kilowatts worth of peak. And then the kilowatt hour rating tells you how much energy total in total is stored in that battery. And so if you have a 10 kilowatt system and a 40 kilowatt hour system combined, that means that you can you can basically run at 10 kilowatts for four hours straight before you run out of juice and would need to charge the battery again. And for most storage technologies, the kilowatt rating of the system and the kilowatt hour rating of the system can be scaled up and down more or less independently. So if you want more hours of storage duration, you just find a way to add more kilowatt hours to the system.

And some types of storage technology have a very high cost per kilowatt and a relative low cost per kilowatt hour. So flow batteries are sort of the canonical example of this sort of storage system, which means that for that type of system, it's really expensive to build a short duration battery, for example, to attack those four to six hour peaks, but they get much more affordable, relatively speaking, for longer durations. And lithium ion batteries, while they're leading, certainly on the combination of cost and maturity and supply chain scale today, they do have a weakness, which is that most of their cost scales per kilowatt hour, not per kilowatt. And that means that the total installed cost of storage for lithium ion per kilowatt hour, it doesn't really decline all

that much by adding more hours. So lithium ion is still technically viable for longer durations. its economics just don't really lend themselves super well, relatively speaking, to longer durations. You know, if lithium ion costs about $300 per kilowatt hour at four hours fully installed, which is kind of in the ballpark of where we are today, then it's going to cost nearly $300 a kilowatt hour fully installed for 12 hours. Right. Okay, so back to lithium ion then in its role. So what you're saying is that because lithium ions cost scales pretty linearly, with duration. Correct. What lithium ion seems to be doing today and is generally pretty good at is solving these shorter duration challenges, which are the predictable net load spikes over the course of a day that

last a few hours at a time. And so you build lots and lots of lithium ion batteries that have a two to eight hour duration, and you use them to manage those peaks and valleys over the course of a day. That's right. And lithium ion has other benefits. It's relatively efficient. It's actually a remarkably efficient sort of power-to-power energy storage technology. You can get, you know, 80 to 90 percent AC-to-AC efficiency levels, which means even if you're not yet in a system with so much renewable generation that you're otherwise having to curtail a lot of renewables during, you know, peak renewable power generation hours, lithium ion can still make sense, right? Because even if you're charging at low energy prices, but not zero or negative energy prices, you can still make the economics work with lithium ion

because of that efficiency. And it also has pretty good cycle life, meaning you can do a pretty good number of full, you know, charge, discharge cycles before the battery is degraded to a point where it just no longer makes sense to you. It basically has to be replaced with new battery cells or new battery modules. And lithium ion isn't fantastic at this, but frankly, it's getting better and better, driven in part, actually driven in most part by improvements that are being made by the EV industry. Right. And that also matters here, because if you're going to be doing the daily cycling, if your challenge

that you're solving with these batteries is the sunsets every night, you want to be. to cycle the battery every day. And if you're going to cycle the battery every day, then you need to have fairly long cycle life. We'll talk a little bit later about applications where you might not need to do it every day, in which case cycle life doesn't matter, but it does for these applications that you're talking about using lithium ion in. Totally. I mean, you might even be able to use the same battery if you have pretty consistent, say, net morning peak and a pretty consistent net evening peak or something like that. You might be able to do two cycles a day, hypothetically, with the same storage device. Okay. What are the limitations in your mind?

of lithium ion. Like the benefits are it's a rapidly scaling supply chain. You know, there's just hundreds of gigafactories getting built predominantly for the EV world, but I think stationary storage is benefiting from that, as you said. That means that I think we can expect costs over a mid to long period to probably continue to decline. Now, there are lots of spikes in the meantime. We've seen this over the past couple of years because lithium prices spiked and global supply chain was all gummed up. But generally, we can. could expect cost and continue to decline. We could probably expect continued improvements in cycle life and degradation. It's mature. It works. It's on the grid now. Am I missing any of the benefits?

That's a pretty good list of benefits. I wouldn't, I think the one to emphasize is basically the supply chain. And the fact that the vast, vast majority of innovation and scaling in the lithium ion industry is being driven by the electric vehicle market. where we're already seeing essentially, we're past the inflection point for EVs. And we're seeing the majority of big auto OEMs basically going all in on electric vehicles. They are pot committed.

And so I think if we're at risk of anything as the electric power sector and certainly as people who are looking for new solutions for grid storage, I think the bigger risk is still underestimating the potential for cost declines and performance improvements in lithium ion. It's really, really hard to bet against the weight of the global supply chain today. Now, there are big vulnerabilities in that supply chain, everything from critical minerals to basically all of the

middle layers of the supply chain, all the processing of lithium and nickel and cobalt, etc. That's mostly done in China today. And there's obviously geopolitical concerns about the the state of the lithium ion supply chain. But I am still relatively optimistic about it, and I see potential for next generation chemistries to continue to make a difference. So I guess that's the opposite of the answer to your question, which is what's the problem with lithium ion? So maybe I'll address that. Yeah, I was going to get to that question next. I realized I wanted to make sure to, you know, I think it's important as we start to talk about other technologies, not to forget why lithium ion is a powerhouse, so to speak, in this context.

But it does have some limitations and limitations that pertain to particular applications of energy storage especially. So, yeah, what do you think are the sort of core limitations of lithium ion? The limitation is basically that there is a floor to lithium ion and sort of related, related battery chemistries to the dollar per kilowatt hour cost that you can achieve. And I don't know exactly what that floor is. Nobody does because we are going to assume that there's going to be changes in anode and cathode materials over time. I'm sure changes to some degree in, you know, the full module design that will probably continue to cut cost out of the system, right? but the floor is, in my opinion, probably somewhere north of $150 per kilowatt hour installed.

And I would say almost certainly north of $100 per kilowatt hour total installed cost. And that means as total installed cost, I just want to note this because people often complain when we use these numbers. Just to be clear, total installed cost is an important metric because you see lots of numbers quoted about either sell cost or module cost for batteries. this is inclusive of that, plus all the balances systems, plus labor and installation, EPC margin, right? Like, what is the turnkey cost of a stationary storage system? So that's what you're saying is probably ultimately north of $100 a kilowatt hour. Yeah, I believe so.

That's where I would feel comfortable making a bet on a competing technology, somewhere in that $100 to $150 per kilowatt hour range. Although, obviously, I'd love for it to be lower. And the reason I'd love for it to be lower is not just because of the fact that that makes it more secure against future competition from whatever comes out of the mammoth lithium ion industry. It's also because that's what you need in order to make affordable grid storage for much longer durations, right? So again, because as you add more hours of duration, you add more kilowatt hours per kilowatt that you have in the battery, you need, you know, if you want to go up to a 12 or 16-hour storage solution, which can address really, you know, the diurnal differences in supply and demand in the power system,

particularly that we're anticipating as more and more renewables come online, then you need just a significantly lower battery cost. Virtual power plants are becoming a reliable way for utilities to manage capacity. But enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it from the control room to the living room. Energy Hub's platform handles the full picture, from near-real-time forecasting, locational dispatch, and the kind of rigorous verification that holds up when regulators,

grid operators, or leadership ask, did it deliver? Easy enrollment creates momentum. Proven performance builds trust. That's why more than 170 utilities rely on Energy Hub. to manage over 2.5 million devices delivering 3.4 gigawatts of flexible capacity. See what that looks like at energy hub.com. We're living through a profound economic shift, and energy sits at the center of all of it. Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers,

but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital. As I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Okay, so the fundamental limitation of lithium iod is just,

just its cost floor, basically, and the fact that its cost scales linearly with duration. So I think our premise here is that there are going to be some applications and not small applications, because, again, we need a lot of energy storage, but some really big applications for which there are alternatives that might be better than lithium ion, at least in some cases. So you laid out three others, I guess three and a half. We'll come back to the half at the end. but second one is storage in the form of heat.

So talk about heat storage. So heat storage is one of those concepts that as soon as you sort of wrap your mind around, it just makes incredible amounts of sense. And I'll start by saying one of the, there's two kind of foundational fundamental reasons that that heat storage is so attractive. The first is that there's a whole bunch of materials that can absorb a lot of heat really, really cheaply. I mean, you can use rocks, brick materials, carbon. I mean, I'm sure there's a bunch of other things that you can just get really hot. And these materials

are all really cheap if you consider the cost of thermal energy storage potential within them are super, super cheap. I mean, the core energy storage components of these materials can be in the ballpark of $5 per kilowatt hour or lower. So remember, we're talking about, you know, lithium ion systems fully installed costs today in the realm of $300 per kilowatt hour, and the cell cost of those systems, which is kind of the closest you can think of as the energy storage, the core energy storage material cost of those systems being in the $100 to $150 per hour per kilowatt hour range. I'm talking about $5 or lower per kilowatt hour just to store a bunch of heat in these materials. And that's a really great starting point. And then the other big benefit of

heat is that heat itself is energy loss, right? So if you are storing energy in the form of heat, and then you're using it as heat, and this is one of the big unlocks that's happened in my mind in the past couple of years, and there are a lot of, there is a lot of end uses for energy in the economy in which we don't actually want electricity at the end of the day. All we want is heat. So if you're taking in energy in the form of electricity, storing it is, heat and then dispatching it as heat, then it has incredibly high round-trip efficiency as well because there's basically zero losses. You are turning electricity into heat and then using that heat for something later. So you can achieve really, really high round-trip efficiency at very,

very low cost. Yeah. So listeners of this podcast may remember, we had John O'Donnell, who's the CEO of Rondo Energy, which is one of our portfolio companies we invested in a DAP that does heat storage on the podcast a while ago. So we talked more about this then. But as a a broader category. I mean, you said one thing that I think is important, which is that the big unlock in recent years, and certainly what Rondo is a big part of, is turning electricity into heat and then delivering it as heat. But there also have been a bunch of companies historically, you know, in this sort of, when there was a diaspora of different energy storage technologies competing for the grid storage applications, there were a bunch that were doing thermal energy

storage, storing energy as heat, in a power to heat to power. cycle, right? So rather than delivering the heat as heat, turning that heat back into power. And they were using some, often some other materials. I mean, you mentioned bricks and carbons and basic stuff, but there's some others that have been under development for a long time, things like molten salts. So you just talk a little bit more about like the kind of historical world of thermal energy storage and maybe why it hasn't taken off where this kind of new power to heat to heat world might. There are a handful of full-scale power-to-power thermal storage systems already out there in the world today, and they all basically are driven by molten salt.

And by the way, when I say molten salts, don't think about table salt. These are much more toxic, corrosive chemical salts, and there's a bunch of different options and mixes that you can go with. But it's heating up these salts to temperatures that are able to be run through, you know, basically to heat up water, make steam and run through a steam turbine to turn back into power. And most of these facilities that are out there today are deployed in tandem with concentrated solar power. So essentially, they're not actually turning power, they're not power to power storage. their heat to power storage in a way, basically taking some of the concentrated sunlight that these CSP facilities generate and using it to heat up molten salt, which then can be stored for a pretty good length of time and then, again, run through that steam turbine type cycle to turn back into power.

And, you know, the challenge with molten salt is that it's just proven to be extremely operationally risky and difficult to work with. It's kind of notorious at this point to be, for being really difficult to operate safely and reliably. And there have been some notable instances in which some of these horribly toxic corrosive salts have escaped from the systems that they're a part of, which is a real environmental hazard. These systems are not able to cool down below a certain level, because if they do, then the salts basically harden and can break the pipes that they're flowing around in. And, you know, I've heard from people who have worked on these molten salt projects. In fact, I guess paraphrasing a quote from someone I know who's worked

on one of these molten salt projects that this project made the company that he works for much, much more worried about trying anything else innovative for about a bit. a decade because of just the operational challenges that came from it. Okay, so back to the simpler version. I think we're pretty convinced there's a good opportunity for the sort of power to heat delivered as heat through these simple media, obviously invested in a company in the space. But what do you view as the limitations of thermal energy storage as it pertains to this broader need? Like, why aren't we just doing thermal energy storage? So the biggest, limitation is that thermal storage is incredibly efficient and effective in power-to-heat storage mode.

But if you want to do a full power-to-power cycle, then you need some way of converting the heat that you've stored in a Rondo device, for example, back into power. And we know how to do this, right? Again, similarly to how we converted heat stored as molten salt back to power, you can run that heat through a steam turbine and make power that. way, the challenge is that doing so is just not very efficient because steam turbines are not very efficient, which is okay if the energy you're losing is primary energy that's super, super cheap from coal, but makes the sort of full cycle more expensive if you're charging up on any kind of relatively expensive power in the first place. So I think that's the challenge of

power to heat is whether you can make the economics work for full power to power cycle. I will say that in the kind of relatively high renewable penetration systems that we're anticipating moving forward, let's say 50 to 60 percent penetration of wind and solar. And this is particularly true of solar, by the way. Even at those levels, you're ending up with, you know, on almost every day, you're going to have periods lasting six to ten hours where you have. a large amount of surplus renewable generation that otherwise you just don't have anything to do with. And because you have all that surplus generation, you don't care as much about the full round-trip

efficiency of a storage system that you're pumping that surplus generation into. And so I'm actually convinced that there is an opportunity for thermal storage, even in kind of this power-to-power mode and relatively high renewable penetration systems. And I'll say one more advantage to using thermal storage for power to power that's a little bit more nuanced, which is already today, we have around the world, but let's just talk about the U.S., all of these coal-fired power plants that are on track to be retired in the next five to ten years, maybe a little more than that in some cases. And as they're retired, they're sitting there and they've got, you know, everything you need basically to repower those. assets into thermal storage systems. They've got a steam turbine, which in some cases might still have enough life left in it to be used to provide the back-to-power part of the cycle. They have people that know how to work on this type of equipment, and they have a grid interconnection

in a highly advantageous point on the grid, because basically the transmission system, as we know it, this country was built around all these coal power plants way back in the day. And so they're sort of like in the perfect spot. They're where you want a bunch of energy to be pumped into the grid and where you want a bunch of spinning mass from those steam turbines in the power system. And the slightly more nuanced point is, of course, as utilities are shuttering these plants, they don't want to, they don't want to destroy the communities that these plants are sitting in. And they'd like to be able to retain as much of the workforce that's working in these coal-fired facilities as possible. And so there is an economic development or retention benefit, which is not captured in the kind of

pure economic analysis you do of this type of facility, but really does matter to utilities and their regulators and policymakers from turning these old coal-fired power plants into heat batteries. I think it's a really clever idea and is something I'm excited to start seeing over the coming years. All right, so category one was lithium ion batteries, category two, storage as heat. Category three that you listed is basically one company,

which is also a company we've invested in, which is form energy. It's just one company, not because we only want to talk about them, but because they kind of stand alone on an island doing something that pretty much nobody else is doing, at least at their stage. So talk a little bit about the role form might play in this broader energy storage context. Yeah, you know, I tried, I thought about as much as I could, using a more generic form of storage, right?

Like metal air batteries or iron air batteries, but there's kind of no point. Like everyone knows what I'm talking about here, which is form, which is really the only company that we're aware of at EIP, which is the reason we're so excited about our investment in form. that's really cracked this code on ultra-long duration or what form calls multi-day self-contained power-to-power battery systems. So their solution, it's a battery, it's an electrochemical system that, you know, I think form describes

for lay people like me as a form of sort of controlled rusting and de-rusting of the iron electrode in the battery. And really what makes form distinctive is that, you know, gets back to that dollar per kilowatt hour cost number that we talked about earlier, which is, you know, form is on track to achieve a total installed cost. We're not talking about the cost of the materials here, but a total installed cost for a approximately 100-hour battery system, which is basically a four-day battery system that is in the ballpark of a 10th or lower than a tenth of, you know, what we ultimately think the cost of lithium ion storage solutions can achieve. So it's a super, super cheap way of doing full power-to-power storage. Now, Form also has some downsides. There is no perfect battery that we know of, at least,

at this point. Similar to thermal storage in a power-to-power cycle, it's not super efficient. There's definitely a lot of loss of the primary energy input to the battery along the way. But again, and this is even more true for storage that is going to be used in a multi-day capacity than even storage that's used in a diurnal capacity. If you have relatively high levels of renewable energy penetration, you're not as concerned about efficiency because, again, a good amount of the energy you're going to be using to charge that battery is surplus generation. And again, that's especially true for a system like forms that's really intended for multi-day storage.

And some of the hours of storage in the battery are actually going to be holding energy over the course of months. It's sort of a form of seasonal storage in a way. So there are some hours in that battery that are not being cycled more than a few times a year, maybe even just one time a year. If it's not being cycled that frequently, then you really should think about, the value of adding that additional hour or hours of storage in the battery as a capacity resource. You're using it for a very few hours in the year that you want to make sure to be able to provide power capacity during those hours. You're not relying on them as an energy resource. And so you really don't care that much about efficiency for a good chunk of the cycles that Form is doing.

Right. Form does all this analysis of, you know, they have this super detailed, super sophisticated modeling suite to figure out what the optimal deployment of various types of resources, including their batteries would be on the grid, which they had to build because there was no set of tools that analyzed the possibility of the type of battery that they're building. But one of the things that always comes out of it whenever they run this analysis is that when you create a renewable, heavy grid, what you end up wanting is a mix of resources for energy storage. There's always some lithium ion in there, and there's pretty much always some form batteries in there as well, and they're just serving different ultimate purposes. Just imagine a system that is heavy in wind.

So there's the predictable daily fluctuations in wind, and that's what lithium ion batteries are cycling up and down to solve. But what happens when you're in a wind-heavy grid, and there's three, four days at a time with low wind, which happens regularly. That's when you need more capacity, a capacity-type resource, which is what a form battery starts to look like. So you end up with, and this is just sort of the broader point, which is there's like multiple ways to do this energy storage, and it's not like there's going to be one winner just because the different types of energy storage have different characteristics that lend them to different purposes in the context of what we need from energy storage. That's right. I think we're going to end up

with sort of three tranches of storage in the grid, which are going to be filled by at least three different technology categories. The first is those short duration, peak of the peak applications that lithium ion is addressing today. And I think probably lithium ion or some cousin of lithium ion, maybe like sodium ion moving down the road, is going to be addressing indefinitely. And then you've got this middle tranche,

which is diurnal cycling, which I happen to think heat storage is a really good solution for. But there's probably the most novel, most number, the highest number of novel approaches to storage that fall into this sort of middle duration category, which is, I think, 12 to 16 hours is a good benchmark for it. And then there's very few options for multi-day storage, like the kind that form is doing.

And I guess I would say, you know, we're probably going to see some storage in each tranche. What I'm most confident in is that we'll see some amount of the peak of the peak type lithium ion storage. And I do think what's interesting is that the other two tranches are probably more competitive with each other in a way. Like if you have a bunch of form batteries on a system, you're probably still going to need, I think form zone analysis shows. You're going to need some of these daily or multi, multi, peak per day storage system. like lithium ion to address, you know, to address, you know, the really short duration stuff.

But I'm not so sure you need a lot of the middle category if you have a lot of form and vice versa. So there is, you know, don't get me wrong, going to be some competition among these tranches as well. Okay, so onto our fourth category then. You said there are very few options that provide the multi-day or seasonal storage. But one of the other ones and one that has been gaining more attention in recent years is hydrogen as a form of energy storage. Now, I want to be clear here because hydrogen, you know, the conversations around hydrogen go in multiple directions every time you start to have them. So there's lots of use cases for hydrogen that don't treat it as energy storage, especially on the grid, right? So using hydrogen as a feedstock for ammonia,

for steelmaking, for, you know, other things like that, not necessarily. energy storage, just feed stock. But there is also some growing interest in using hydrogen as a form of long-duration energy storage, either for industrial heat purposes or, I think, more salient to this conversation on the grid. So how do you think about hydrogen in this context? I will admit, I started out very skeptical of hydrogen as a substantial medium for energy storage. And again, that's setting aside all of the other potential use cases for hydrogen, but as a form of energy storage, and particularly as a form of grid storage.

However, I've been becoming more open to the idea, at least over time, and in some ways more convinced that some amount of hydrogen as a true form of grid storage is actually going to happen. So let me explain. I guess I'll start with the reasons for skepticism here. One is that when it comes to full power-to-power cycle efficiency, hydrogen is probably the worst form of energy storage that we have available, right? You lose a bunch of energy right off the bat if you're turning renewable power or any form of clean power into hydrogen via electrolysis, at least probably 30%. You lose right off the bat.

And then hydrogen is a really difficult molecule to work with. you know, I've heard people who actually have worked with hydrogen quite a bit in their careers describe it as basically a pain in the ass molecule. It doesn't want to stay contained no matter, no matter what you do with it. So just kind of taking the hydrogen from wherever it's produced and pumping it around to some degree to transport it, to some degree to get it into some sort of storage container, you're probably going to lose at least another 10 to 20 percent of the energy that you put into the process. And then, again, if you want to convert hydrogen back into power, there's a couple ways to do it.

One way is to run it through a gas turbine. Well, I'll probably come back to the gas turbine question in a bit, but the efficiency of that process is not very high. Running hydrogen in a simple cycle, gas turbine, you're probably going to get on the order of, you know, 35% efficiency. The most efficient way to do it would be to run it through a fuel cell where you can probably get up to 55, maybe 60% efficiency at best. But at the end of the day, the round-trip power-to-power efficiency for hydrogen just as a storage medium is probably going to be in the range of like 20 to at

most, maybe 35%. So it's pretty bad. So you have to have, you have to believe that there's going to be a lot of surplus generation that you otherwise would be wasting if you're going to be doing something that inefficient with primary energy. And then along the way, there's additional challenges and reasons to be skeptical. One is that, you know, I mentioned hydrogen's a pain in the ass molecule that doesn't want to stay contained. Well, the only real way that I can see of storing hydrogen at energy system meaningful quantities for long periods of time in a cost-effective manner is to do it underground.

You have to pump that hydrogen underground. And that means you need to find places where there's good geology for putting that hydrogen underground. Like these salt domes are probably the one that we're most confident in. And those aren't located everywhere. In the U.S., there's a big kind of cluster in the Gulf. There's some in the Upper Midwest, some in the plains. But, you know, it's not like you just have hydrogen salt domes or hydrogen-ready salt domes lying around all over the place. In Europe, they're actually even more clustered in sort of.

of Central Europe and Germany. So anyway, those are the reasons to be skeptical of hydrogen as a storage medium, but there are some reasons that I've kind of come around to think that it might happen. And the first goes back to something you said, Shail, which is that I think we're going to be making a bunch of clean hydrogen anyway, regardless of what we think about its role as sort of an energy storage medium. And even if you set aside some of the more exotic use cases for hydrogen, like transport, for example, which I'm pretty skeptical of, by the way, hydrogen is a feedstock molecule that is irreplaceable because it's hydrogen. Sometimes you just

need hydrogen as an essential building block for certain types of chemicals like ammonia. So we're going to be making a bunch of hydrogen, clean hydrogen, in a decarbonized scenario, for ammonia, for methanol, for petrochemicals anyway, and we're going to be storing a bunch of it anyway, because if you're doing any of clean hydrogen production at industrial scale for these feedstock molecule use cases, you're going to need some amount of storage, and that storage is probably going to be underground.

So I think that the foundations of hydrogen as a storage medium are going to be laid by these other use cases for hydrogen. Okay, but so you mentioned using hydrogen in gas turbines then. Is that a part of your skepticism or is that a part of your optimism? That's actually become one of the reasons, I think, for optimism for using hydrogen as an energy storage medium, which is that, you know, the gas turbine fleet, even starting today, is, you know, in the early stages of being set up to be retrofit down the road in order to run on higher and higher blends of hydrogen. And this is partly because utilities and grid operators, they still need new capacity

today. And they need new capacity today at gigawatt scale while, frankly, there is no energy storage system today that is ready to confidently deliver the scale of capacity they need to balance out the renewables that are being added to the grid already today and probably for the next, let's say, five to eight years. And so we're going to be building a bunch of new gas terms. And so we're going to be building a bunch of new gas turbines. And as utilities are building these new gas turbines, they are considering the fact that if they're going to run for a 25 to 30 year useful life, they need a pathway to be gradually increasingly decarbonized over time and maybe fully decarbonized at some point. And the natural gas turbine OEMs, there's really sort of a big three turbine OEMs, G.E. Siemens and Mitsubishi,

are basically offering them the answer to this conundrum, which is you can buy these retrofit-ready gas turbines today, which can currently blend somewhere in the ballpark of 10 to 18 percent hydrogen by energy content, not by volume, and can be retrofitted over time to blend maybe up to 100 percent hydrogen starting around 2030. And so my view has increasingly become that we're going to have, a bunch of these hydrogen retrofit-ready gas turbine assets sitting around, we're going to be making more and more clean hydrogen, more and more cost-effectively. And we're also going to want an energy

storage medium that when you do it at very, very, very large scale can actually scale to the kind of strategic levels of many, many days of storage theoretically that we have today in the form of fossil fuel. And the other nice thing about hydrogen is it's not just a power-to-power storage medium. Hydrogen can be used for as a, it can be combusted for heat. It's, it enables the kind of sector coupling, meaning, you know, not just, it's not just a solution for the electricity sector. It's a solution for a bunch of sectors.

So it serves as this sort of energy storage medium, as well as an energy medium of exchange between different sectors over time. And so, yes, I've become more and more. comfortable seeing hydrogen and playing a role, particularly for these ultra-long-duration storage requirements that we might have. Okay, so we've alluded to the final thing, which is like a half thing, which you throw in at the end of your piece, which is basically, well, why don't we just keep burning fossil fuels and do CCS, basically? Why don't we just capture the carbon? Then we keep all of our feedstocks, and we keep all of our 47 days of supply, or at least a big portion of it.

So we obviously should talk about that here because that is a possibility that could decarbonize the energy system but still maintain this level of energy storage, at least something like it that we already have. So how do you think about that in the context of all these other options? Basically, it's a possibility. And it is a competing solution for almost any form of storage. And it's especially a competing solution for longer duration storage. You know, you can think about fossil fuel itself as a form of intermillennial storage. We're storing sunlight from millennia ago. And, you know, there's a lot more we could talk about. We could spend, you know, many more episodes talking about CCS. But to the extent CCS becomes, you know, proven and economically viable, I think it serves as a competitive force on, you know, any of these opportunities for grid storage and for energy storage over time because it's probably the next best alternative.

All right, Andy. Thank you for the whirlwind tour through the four and a half ways to store our sunlight. Appreciate it. You're welcome. Always a pleasure to be on Shale. Thanks. Andy Lubershane is a partner and the head of research at EIP. This show is a co-production of PostScript Media and Canary Media.

You can head over to canarymedia.com for links to today's topics and Andy's article. PostScript, as always, is supported by Prelude Ventures, a venture capital firm that partners with entrepreneurs to address climate change across a range of sectors, including advanced energy, food and ag, transportation and logistics, advanced materials in manufacturing, and advanced computing. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Marquand, theme song by Sean Markwan. I'm Shail Khan, and this is Catalyst.