Monday, June 18, 2018

Inside Form Energy, the Star-Studded Startup Tackling the Hardest Problem in Energy Storage

A crew of battle-tested cleantech veterans raised serious cash to solve the thorniest problem in clean energy.

As wind and solar power supply more and more of the grid's electricity, seasonal swings in production become a bigger obstacle. A low- or no-carbon electricity system needs a way to dispatch clean energy on demand, even when wind and solar aren't producing at their peaks.

Four hour lithium-ion batteries can help in a given day, but energy storage for weeks or months has yet to arrive at scale. 

Into the arena steps Form Energy, a new startup whose founders hope for commercialization not in a couple of years, but in the next decade.

More surprising, they’ve secured $9 million in Series A funding from investors who are happy to wait that long. The funders include both a major oil company and an international consortium dedicated to stopping climate change.

“Renewables have already gotten cheap,” said co-founder Ted Wiley, who worked at saltwater battery company Aquion prior to its bankruptcy. “They are cheaper than thermal generation. In order to foster a change they need to be just as dependable and just as reliable as the alternative. Only long-duration storage can make that happen.”

It’s hard to overstate just how difficult it will be to deliver.

The members of Form will have to make up the playbook as they go along. The founders, though, have a clear-eyed view of the immense risks. They’ve systematically identified materials that they think can work, and they have a strategy for proving them out.

Wiley and Mateo Jaramillo, who built the energy storage business at Tesla, detailed their plans in an exclusive interview with Greentech Media, describing the pathway to weeks- and months-long energy storage and how it would reorient the entirety of the grid.

The team

Form Energy tackles its improbable mission with a team of founders who have already made their mark on the storage industry, and learned from its most notable failures.

There’s Jaramillo, the former theology student who built the world’s most recognizable stationary storage brand at Tesla before stepping away in late 2016. Soon after, he started work on the unsolved long-duration storage problem with a venture he called Verse Energy.

Separately, MIT professor Yet-Ming Chiang set his sights on the same problem with a new venture, Baseload Renewables. His battery patents made their mark on the industry and launched A123 and 24M. More recently, he’d been working with the Department of Energy’s Joint Center on Energy Storage Research on an aqueous sulfur formula for cost-effective long-duration flow batteries.

He brought on Wiley, who had helped found Aquion and served as vice president of product and corporate strategy before he stepped away in 2015. Measured in real deployments, Aquion led the pack of long duration storage companies until it suddenly went bankrupt in March 2017.

Chiang and Wiley focused on storing electricity for days to weeks; Jaramillo was looking at weeks to months. MIT's "tough tech" incubator The Engine put in $2 million in seed funding, while Jaramillo had secured a term sheet of his own. In an unusual move, they elected to join forces rather than compete.

Rounding out the team are Marco Ferrara, the lead storage modeler at IHI who holds two Ph.D.s; and Billy Woodford, an MIT-trained battery scientist and former student of Chiang’s.

The product

Form doesn’t think of itself as a battery company.

It wants to build what Jaramillo calls a “bidirectional power plant,” one which produces renewable energy and delivers it precisely when it is needed. This would create a new class of energy resource: “deterministic renewables.”

By making renewable energy dispatchable throughout the year, this resource could replace the mid-range and baseload power plants that currently burn fossil fuels to supply the grid.

Without such a tool, transitioning to high levels of renewables creates problems. Countries could overbuild their renewable generation to ensure that the lowest production days still meet demand, but that imposes huge costs and redundancies. One famous 100 percent renewables scenario notoriously relied on a 15x increase in U.S. hydropower capacity to balance the grid in the winter.

The founders are remaining coy about the details of the technology itself.

Jaramillo and Wiley confirmed that both products in development use electrochemical energy storage. The one Chiang started developing uses aqueous sulfur, chosen for its abundance and cheap price relative to its storage ability. Jaramillo has not specified what he chose for seasonal storage.

What I did confirm is that they have been studying all the known materials that can store electricity, and crossing off the ones that definitely won’t work for long duration based on factors like abundance and fundamental cost per embodied energy.

“Because we've done the work looking at all the options in the electrochemical set, you can positively prove that almost all of them will not work,” Jaramillo said. “We haven't been able to prove that these won't work.”

The company has small-scale prototypes in the lab, but needs to prove that they can scale up to a power plant that’s not wildly expensive. It’s one thing to store energy for months, it’s another to do so at a cost that’s radically lower than currently available products.

“We can't sit here and tell you exactly what the business model is, but we know that we're engaged with the right folks to figure out what it is, assuming the technical work is successful,” Jaramillo said.

Given the diversity of power markets around the world, there likely won’t be one single business model. The bidirectional power plant may bid in just like gas plants do today, but the dynamics of charging up on renewable energy could alter the way it engages with traditional power markets. Then again, power markets themselves could look very different by that time.

If the team can characterize a business case for the technology, the next step will be developing a full scale pilot. If that works, full deployment comes next.

But don’t bank on that happening in a jiffy.

“It's a decade-long project,” Jaramillo said. “The first half of that is spent on developing things and the second half is hopefully spent deploying things.”

The backers

The Form founders had to find financial backers who were comfortable chasing a market that doesn’t exist with a product that won’t arrive for up to a decade. That would have made for a dubious proposition for cleantech VCs a couple of years ago, but the funding landscape has shifted.

The Engine, an offshoot of MIT, started in 2016 to commercialize “tough tech” with long-term capital. “We’re here for the long shots, the unimaginable, and the unbelievable,” its website proclaims. That group funded Baseload Renewables with $2 million before it merged into Form.

Breakthrough Energy Ventures, the entity Bill Gates launched to provide “patient, risk-tolerant capital” for clean energy game changers, joined for the Series A. 

San Francisco venture capital firm Prelude Ventures joined as well. It previously bet on next-gen battery companies like the secretive QuantumScape and Natron Energy.

The round also included infrastructure firm Macquarie Capital, which has shown an interest in owning clean energy assets for the long-haul.

Saudi Aramco, one of the largest oil and gas supermajors in the world, is another backer. 

Saudi Arabia happens to produce more sulfur than most other countries, as a byproduct of its petrochemical industry. While the kingdom relies on oil revenues currently, the leadership has committed to investing billions of dollars in clean energy as a way to scope out a more sustainable energy economy.

“It's very much consistent with all of the oil supermajors taking a hard look at what the future is," Jaramillo said. “That entire sector is starting to look beyond petrochemicals.”

Indeed, oil majors have emerged as a leading source of cleantech investment in recent months.

BP reentered the solar industry with a $200 million investment in developer Lightsource. Total made the largest battery acquisition in history when it bought Saft in 2016; it also has a controlling stake in Sunpower. Shell has ramped up investments in distributed energy, including the underappreciated thermal energy storage subsegment.

The $9 million won’t put much steel in the ground, but it’s enough to fund the preliminary work refining the technology.

“We would like to come out of this round with a clear understanding of the market need and a clear understanding of exactly how our technology meets the market need,” Wiley said. 

The many paths to failure

Throughout the conversation, Jaramillo and Wiley avoided the splashy rhetoric one often hears from new startups intent on saving the world.

Instead, they acknowledge that the project could fail for a multitude of reasons. Here are just a few possibilities:

  • The technologies don’t achieve radically lower cost.
  • They can’t last for the 20-25 year lifetime expected of infrastructural assets.
  • Power markets don’t allow this type of asset to be compensated.
  • Financiers don’t consider the product bankable.
  • Societies build a lot more transmission lines.
  • Carbon capture technology removes the greenhouse gases from conventional generation.
  • Small modular nuclear plants get permitting, providing zero carbon energy on demand.
  • The elusive hydrogen economy materializes.

Those last few scenarios face problems of their own. Transmission lines cost billions of dollars and provoke fierce local opposition. Carbon capture technology hasn’t worked economically yet, although many are trying. Small modular reactors face years of scrutiny before they can even get permission to operate in the U.S.

The costliness of hydrogen has thwarted wide scale adoption.

One thing the Form Energy founders are not worried about is that lithium-ion makes an end run around their technology on price. That tripped up the initial wave of flow batteries, Wiley noted.

“By the time they were technically mature enough to be deployed, lithium-ion had declined in price to be at or below the price that they could deploy at,” he said.

Those early flow batteries, though, weren’t delivering much longer duration than commercially available lithium-ion. When the storage has to last for weeks or months, the cost of lithium-ion components alone makes it prohibitive.

“Our view is, just from a chemical standpoint, [lithium-ion] is not capable of declining another order of magnitude, but there does seem to be a need for storage that is an order of magnitude cheaper and an order of magnitude longer in duration than is currently being deployed,” Wiley explained.

They also plan to avoid a scenario that helped bring down many a storage startup, Aquion and A123 included: investing lots of capital in a factory before the market had arrived.

Form Energy isn’t building small commoditized products, it’s constructing a power plant.

“When we say we're building infrastructure, we mean that this is intended to be infrastructure,” Wiley said.

So far, at least, there isn't much competition to speak of in the super-long duration battery market.

That could start to change. Now that brand name investors have gotten involved, others are sure to take notice. The Department of Energy launched its own long-duration storage funding opportunity in May, targeting the 10- to 100-hour range.

It may be years before Form's investigations produce results, if they ever do. But the company has already succeeded in expanding the realm of what's plausible and fundable in the energy storage industry.

from GTM Solar

Thursday, June 14, 2018

PennWell Partners with Folds of Honor Foundation

In commemoration of Flag Day, PennWell Corp. is partnering with the Folds of Honor Foundation to raise money for military families. The effort is in conjunction with PennWell’s Wall of Honor, a traveling wall highlighting the names of our military service personnel (past and present) and displayed at all PennWell power generation events in North America. The wall displays the branch, the company and the name of each person honored.

from Energy Efficiency RSS Feed

Tuesday, June 12, 2018

Nevada Beats Arizona’s Record-Low Solar PPA Price

Records don't last long in the cleantech business. 

Just days ago, we were reporting that the Central Arizona Project had secured the lowest confirmed solar price in the U.S., when it approved a 20-year power purchase agreement at $24.99 per megawatt-hour. That's setting aside an Austin Energy PPA from December that could be lower, but has more ambiguous terms.

That Arizona record is already under threat from projects that utility NV Energy selected as part of its integrated resource planning. The portfolio of 1,001 megawatts solar capacity and 100 megawatts/400 megawatt-hours of energy storage still needs approval from the Nevada’s utility regulators.

If that happens, the lowest confirmed U.S. solar price would be Sempra Renewables’ Copper Mountain Solar 5 project at $21.55 per megawatt-hour. That 250 megawatt project, though, has a 2.5 percent annual escalation as part of its 25-year contract, so the low upfront price wouldn’t last.

Instead, we can turn to 8minutenergy’s 300 megawatt Eagle Mountain Solar Farm, which clocks in at a flat rate of $23.76 per megawatt-hour throughout its 25-year PPA term.

That comfortably beats the CAP project on pricing, while delivering 10 times the capacity. It also marks a substantial improvement on the $29.50 per megawatt-hour median pricing for standalone solar PV in Xcel’s famous solicitation six months ago.

"We’ve always expected prices to drop a lot," said Colin Smith, a solar markets analyst at GTM Research. "With everything that’s happened with tariffs recently, I’m surprised to see them this low this soon."

The NV Energy contracts (bottom right) continue the trend of plummeting solar prices, which have fallen comfortably below the price of gas generation. (Image credit: GTM Research)

The record low came just months after the White House imposed import tariffs on crystalline-silicon solar cells and modules, which analysts calculated would reduce total U.S. installations by 11 percent over the next five years.

The groundbreaking pricing was achieved through sophisticated design and engineering, but also reflects how far solar equipment and installation practices have come, 8minutenergy CEO and founder Martin Hermann wrote in an email.

"Eagle Shadow Mountain is unique because it’s located in an area of great solar irradiance and with remarkable access to transmission assets," he said. "We are able to benefit from low interconnection costs, for example, by utilizing transmission assets that had previously been allocated for the Reid Gardner coal plant, ensuring that those assets are not stranded."

The low pricing has the utility excited, too.

“With these projects, the Companies lock in a substantial level of renewable energy supply at the current market’s attractive pricing for the long-term benefit of its customers, before the ITC expires,” NV Energy said in its filing.

That’s a notable achievement in a state that previously made clean energy headlines for eliminating net metering for rooftop solar customers and applying that decision retroactively to existing customers. That move, in December 2015, was overturned by legislation that Republican Gov. Brian Sandoval signed in June 2017.

Now, helped by a sunny, arid climate and plenty of open space, Nevada is establishing itself as a leading market for utility-scale solar.

“This is a great value—we’re looking at half the cost of keeping existing coal plants alive,” said Adam Browning, executive director of Vote Solar. “Getting clean energy for that price is a win-win for everybody.”

NV Energy’s awarded bids also included three solar-plus-storage plants, all located in Sierra Pacific Power Company’s service territory:

  • Dodge Flat: NextEra will build a 200 megawatt solar plant coupled with a 50 megawatt/200 megawatt-hour storage system, due online December 1, 2021.
  • Fish Springs Ranch: NextEra will build a 100 megawatt solar plant coupled with a 25 megawatt/100 megawatt-hour storage facility, due online December 1, 2021.
  • Battle Mountain Solar: Cypress Creek Renewables will build a 101 megawatt solar plant coupled with a 25 megawatt/100 megawatt-hour storage system, due online June 1, 2021.

The Nevada pricing doesn’t offer an immediate apples-to-apples comparison with recent solar-plus-storage deals.

Tucson Electric Power signed a $45 per megawatt-hour hybrid contract with NextEra in May 2017. Xcel beat that with its median solar-plus-storage bid of $36 per megawatt-hour.

NV Energy lists each hybrid project as two distinct contracts: one for megawatt-hours of solar generation and one for capacity measured in megawatt-months delivered by the colocated storage.

Xcel’s median bid for standalone storage contracts was $11,300 per megawatt-month. NV Energy’s battery contracts handily beat that, landing at $6,110, $6,200 and $7,755 per megawatt-month, respectively.

These aren’t standalone systems, however. They will enjoy cost savings on labor and interconnection by piggybacking on the larger solar construction projects, not to mention the investment tax credit. They would best be compared to other standalone contracts for storage capacity paired with solar, but this is a new type of deal structure, which makes it hard to find direct points of comparison.

What’s clear is that NV Energy is swinging towards renewables in the face of ballot initiatives that would expand the state’s renewables target and institute competitive retail markets for electricity.

“An IRP is about identifying your needs and finding your solutions for the future,” Browning said. “NV energy is making a strong affirmation that solar is the future.”

The caveat there is that, if Nevada voters approve the competitive retail markets ballot measure, NV Energy has the right to pull out of its resource plan. The need for utility energy production would drop considerably if other companies could compete to supply electricity.

Nevada may be unique for just how sunny and sparsely populated it is, but similar dynamics could benefit the solar industry in Texas, Arizona and Colorado, Smith noted. That means Nevada might not hold onto the trophy for long.

from GTM Solar

U.S. Department of Energy announces funding for six marine energy projects

The U.S. Department of Energy has awarded a total of $6.7 million in funding to six recipients, with the goal of developing innovative marine energy technologies "capable of generating reliable and cost-effective electricity from U.S. water resources."

from Energy Efficiency RSS Feed

The Higher Efficiency State: Massachusetts or California?

In 2017, Massachusetts was ranked No. 1 in energy efficiency by ACEEE for the seventh consecutive year. On the other side of the country, California was ranked a close second after tying with Massachusetts for the top spot in 2016.

from Energy Efficiency RSS Feed

Italy and Spain’s New Leaders Smile on Renewables

New political leaders in Italy and Spain have brightened the outlook for renewables in two of Europe’s biggest energy markets. 

In Italy, the third-largest economy in Europe, new Prime Minister Guiseppe Conte said in his inaugural speech this month that “we will work to speed up the process, already in progress, of the ‘decarbonization’ of our production system.”

Conte was sworn in as a caretaker head of state after months of wrangling between the two coalition partners that emerged from Italy’s latest elections.

The center-right federation called League (Lega in Italian) and the populist Five Star Movement (Movimento 5 Stelle or M5S) both claim a commitment to environmental causes that might affect energy policy. 

And last month Platts reported the coalition had agreed on measures including greater support for electric vehicles and renewables. 

In Spain, citizens are still reeling from a change in government that took place within a week. 

There, Pedro Sánchez used a no-confidence vote to oust Mariano Rajoy as prime minister after senior figures in Rajoy’s right-wing People’s Party (Partido Popular or PP in Spanish) were convicted of corruption.

Pulling a cabinet together over the weekend after the vote, Sánchez put distance between his center-left Spanish Socialist Workers Party (Partido Socialista Obrero Español or PSOE) and the PP. 

His pick to lead energy policy was an acknowledged climate action advocate. On taking office, Ecological Transition Minister Teresa Ribera was hailed as representing “a 180-degree turn in the fight against climate change in Spain.” 

She is widely expected to seek a repeal of Spain’s notorious solar self-consumption ‘tax on the sun’ and in one of her first ministerial interviews said, “I don’t think coal has much of a future.”

Ribera’s stance contrasts the PP, which clamped down on admittedly out-of-control renewable subsidy payments in 2011 and then steadfastly refused to offer any concessions to the industry afterwards. 

Plant owners found themselves in a regulatory quagmire as the rules of the game continued to change. Wind and solar installation rates plummeted. 

Only in the last couple of years, as Spain came close to missing European targets for renewables adoption, did the PP open the door to developers with a series of auctions. Even then, renewable energy groups criticized the design of the auctions. 

Although Spain’s new government appears committed to a different approach, it remains to be seen how much the administration can achieve in practice. 

Sánchez’s party only has 84 representatives in Spain’s 350-seat Congress of Deputies, making it the smallest minority government in the recent history of the nation. And political allies could be hard to find as rivals to the left and right of the PSOE push for elections. 

In Italy, meanwhile, Conte’s room for political maneuver could be hampered by the need to service an estimated €2.3 trillion ($2.7 trillion) in debt.  Foreign investors may also be wary of the anti-European rhetoric that helped propel Lega and M5S to power. 

For now, though, European policymakers are all-in on renewables. According to Euractiv, the European Council upped its 2030 renewable energy target from 27 percent to between 30 percent and 33 percent. 

The target is currently being discussed by the Council, the European Commission and the European Parliament, which was pushing for 35 percent but has now cut its proposal to 34 percent. 

The recent changes in Italy and Spain could have a decisive effect on negotiations, said WindEurope chief policy officer Pierre Tardieu in a press note. “We've been pushing hard for a 35 percent renewable energy target,” he said. “There's clear political momentum in this direction as new governments in Spain and Italy could put their weight behind an ambitious target; 132,000 jobs and €92 billion [$108 billion] of investments in wind depend on it.”

from GTM Solar

Friday, June 8, 2018

Arizona Water Provider Approves Record-Low Cost Solar PPA to Replace Coal

The Central Arizona Project, a legislated municipal water agency that provides water to 5 million Arizonans, voted on Thursday to receive some power from a new 30-megawatt solar installation. Its main source of power, the coal-fired Navajo Generating Station, is set to close in 2019.

The 20-year power purchase agreement with developer AZ Solar 1 would provide power at $24.99 per megawatt-hour for its duration, starting December 31, 2020. That price brings the project within striking range of the most competitive in the country, but also offers plenty of time for system costs to drop to those levels. 

GTM Research senior solar analyst Colin Smith said the Central Arizona Project (CAP) deal marks the second lowest solar PPA in the GTM database — behind an Austin Energy project announced in December that may hit $21 per megawatt-hour. But there is still some price ambiguity around the Austin project, making the Arizona water agency's agreement the lowest confirmed price to date.

“We are consistently seeing utility solar PPA prices under $30 [per megawatt-hour],” Smith said. “While this is aggressive, this is not out of line with our expectations of where PPA prices are going.”

The swap from coal to solar is also in line with expectations of where the energy industry is going. Last year, renewables accounted for nearly half of new capacity additions in the U.S., with solar leading the way. But the ties between CAP’s pivot from coal and the federal administration’s attempts to keep the industry prosperous means the decision is wracked with controversy.

Last week, Assistant Interior Secretary Timothy Petty sent CAP a letter that said the secretary has “governing authority” over the project’s power source and suggested that might require CAP to offtake NGS coal power. Petty oversees the Bureau of Reclamation, which is a partial owner of th Navajo Generating Station (NGS).

CAP was created through federal legislation, the Colorado River Basin Project Act of 1968, which authorized the creation of several water development projects and designated CAP’s water delivery authority. CAP uses power from NGS to pump water from the Colorado River to users in several Arizona counties.

CAP said they interpreted Petty’s letter as “asking questions, not issuing mandates” and will continue to work with the Interior Department to discuss the future of NGS.  

In the Thursday meeting, board member Lisa Atkins noted that "CAP is not required by law to buy NGS power." She also added that the project is not at war with coal, but seeks a "long-term, cost-effective, reliable and diverse power portfolio" for its water users. 

The coal plant also has tribal ties, as both the plant and the mine are located on tribal land. Leaders from the Navajo and Hopi Nations have lobbied to keep the plant open, arguing its closure would be “catastrophic” and plunge workers and communities into dire economic straits (The Hopi Tribal Chairman has also said if the federal government hands over the 144,000 acres it promised to the Nation back in 1996, it would help mitigate these impacts). 

The Hopi Tribe, Peabody Western Coal Co., and the United Mine Workers of America recently filed a lawsuit against the Central Arizona Water Conservation District, which has authority over CAP. It asked the court to require CAP purchase power from NGS while it remains open. The suit also claims there are buyers interested in taking over the plant from current operator, the Salt River Project (SRP). 

As the board prepared to vote on the change in resources, Joe Greco, senior vice president of asset management at Illinois-based Middle River Power, said the company was preparing a plan to buy the plant. 

SRP spokesperson Scott Harelson said that though the utility signed 16 non-disclosure agreements with potentially interested parties several months ago, none have resulted in concrete offers or even negotiations.

If a buyer does materialize, the Thursday agreement doesn’t necessarily preclude CAP from purchasing NGS power in the future. The solar plant, in addition to a 5-year PPA with the Salt River Project also approved Thursday, will only provide 14 percent of the project’s power. NGS currently provides 70 to 75 percent.

“We’re obligated to find power to meet our obligations. Right now, as far as we know, NGS is closing,” said CAP spokesperson DeEtte Persons. “There is plenty of room in the portfolio to discuss using NGS power if that’s an option in the future.”

But, if current price trends continue, CAP may not want to. While the solar power from the new plant will cost about 2.5 cents per kilowatt hour, estimates indicate the coal power from NGS costs double at over 5 cents per kilowatt hour, according to Eddie Burgess with Strategen Consulting.

Michael O’Boyle, electricity policy manager at the clean energy advocacy and research organization Energy Innovation, calls the vote “quite a modest overture into clean energy.” But he added that the phenomenon of solar beating out coal is unlikely to change.

“Solar costs will continue to drop in the long-term and the Desert Southwest has world-class solar resources,” he said in an email. “So, there’s a larger need here to figure out ways to get old, dirty, uneconomic assets off the system early in order to make room for least-cost solar energy.” 

“These incredibly low costs show the default presumption for new resources in Arizona should be solar,” he added. 

According to Persons with CAP, the project has already delayed some decisions related to its Request for Proposal to allow more time for the future of NGS to clarify. But 2019 is fast-approaching, and the solar project and the SRP PPA were all time sensitive, she said. With the board recessing in July, more decisions on CAP’s future generation mix could come in August.  

from GTM Solar