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Why Long-Duration Energy Storage May Be Undervalued, and How To Fix It
By Eric Chaves
Why Long-Duration Energy Storage May Be Undervalued, and How to Fix It
By Eric Chaves
Imagine the rushing waters of Niagara Falls crashing down 30 stories into a powerhouse where every second, colossal turbines spin 30,000 gallons of water into enough electricity to power whole cities. This is what we mean when we talk about grid-scale power. Now, magically harness that power, pack it into shipping containers, and give one to every city in case they need backup power. This is the challenge of building enough long-duration energy storage to support our future grid of variable renewable energy. It will be no small feat.
To stop climate change, we’ve got to decarbonize our energy grid – and that means a lot of wind and solar. As we know, weather can be fickle, and that’s why we need energy storage. But what if the weather is uncooperative for days at a time? Well, that’s where long-duration storage (LDES) might just save the day. The problem is finding ways to make it cheap enough at the massive scales we’ll need.
Today, our grid solves 95% of our energy storage needs with just one solution – pumped hydro. Pumped hydro is wonderful, in fact it’s our only low-cost, large-scale, and high-efficiency solution today. The problem is, we’ve used up nearly all the best hilly locations, and new dams cause environmental damage. So unfortunately, pumped hydro can make only a small contribution to meet accelerating demand for energy storage.  The National Renewable Energy Laboratory estimates that by 2050 we’ll need a five-fold increase in energy storage to support a grid powered by 80% wind and solar.  Today’s U.S. storage capacity of 23 GW must balloon to 120 GW, and with pumped hydro tapped out, this implies a 100x increase of expensive, non-hydro storage. Whew.
Thankfully, a new wave of climate startups is racing to discover cheaper alternatives, and they’re supported by a flood of financial backing. These energy storage innovators have demonstrated a fascinating range of solutions including electrochemical (Form Energy’s Iron-air batteries, Vanadium flow batteries, etc.), thermal solutions (molten salt), chemical storage (electrolytic hydrogen or synthetic methane [SNG]), and mechanical storage (compressed air, gravity storage). The urgency of this problem has also sparked U.S. government funding initiatives like the DOE’s Energy Storage Grand Challenge . And increasingly, these initiatives are earmarked for long-duration storage technologies with durations between 10-100 hours. Examples include the Long Duration Storage Shot  and ARPA-E’s $30M DAYS Program. 
So what is driving this intense focus on long-duration energy storage? As ARPA-E explains in a blog post called Why Long-Duration Energy Storage Matters, we need to find cheaper solutions than Lithium-ion batteries, which are a popular short-duration solution, but are not cost-effective at durations beyond about 6 hours. And furthermore, they explain, “extreme weather events such as fires and strong storms are driving the need for the local, clean, affordable, and resilient backup power LDES systems can provide.” 
As the blog post further explains, building innovative storage technologies is only the first step to solve a larger systemic grid problem – namely, that our grid wasn’t built to support huge amounts of energy storage, and our energy markets don’t know how to properly pay for it. As the post states: “LDES technologies will likely require different value streams that are focused on the resiliency or capacity that they provide.”
Today, energy storage earns revenue through simple arbitrage: buy cheap, sell high. But many regional markets undervalue the ancillary services that energy storage also provides.  These ancillary services become increasingly important as fossil fuel’s “firm” baseload power is displaced by wind, solar, and storage. Some of the important ancillary services that LDES provides are reserves (contingency reserves, black-start, flexibility reserves). These reserves provide critical backup for the grid, acting as an insurance policy. Like insurance, they provide de-risk value even if they’re rarely or never used. But many regions don’t have a way to compensate for this value.
Finally, long-duration storage offers a critical value as an alternative to transmission line upgrades, because energy storage can smooth out peak loads. To use the analogy of a highway, if beefing up transmission wires is like adding freeway lanes, energy storage is like staggering commutes to avoid short bursts of rush hour traffic.
Long-duration energy storage plays an important role in our fight against climate change, but to unlock its potential, our grid system must evolve. As summarized in research by Helman Analytics and EPRI, “new long-duration energy storage may face policy and commercial disadvantages in the next 5–10 years [compared to short-duration storage]...longer duration storage will need to derive more of its value from services where demand, and therefore potential market revenue (or utility economic benefits), is currently more difficult to predict.“  The effect of this insufficient market pricing could lead to a forced tragedy of the commons condition where: even though blackouts are far more expensive than paying for backup storage – since there is no marketplace, no one can buy any storage, so everyone loses.
In conclusion, it’s urgent for U.S. grid regions to work together in establishing consistent, value compensative market standards. Without clear markets, innovative LDES startups will find it difficult to secure the investment they need in order to create the invaluable technology which all regions will soon require to safely balance our decarbonized grids.
Weekly climate art! This week, we’re featuring Nicole Kelner, check her out on twitter.
Each week, The Regenerates will surface a climate campaign or stories to be told—elevating why it works (or doesn't) from a communications and marketing lens.
Marketers are in a Catch-22. Everyone knows greenwashing is terrible (yes, some do it purposely, but that's not the majority). 50% of marketers report that they now avoid talking about their businesses' efforts entirely to prevent any chance of greenwashing. Yet, moving the market forward requires pro-planet companies to speak confidently about their efforts, give consumers information to make informed choices, and pressure competitors. Believe it or not, marketers are used to working within strict advertising guidelines and want similar directions on sustainability. The UK's new guidelines for making environmental claims on goods and services are a step forward, but more is needed to put them into practice broadly. Read more
Spotlight on a climate tech deal of the week. Check out Climate Tech VC for the full roster of companies that raised climate capital this week.
Aether Diamonds, a New York, NY-based producer of diamonds made from atmospheric carbon, raised $18m in Series A funding from Helena, TRIREC, Sound Ventures, Khosla Ventures, and Social Impact Capital. A one carat Aether diamond offsets the average American’s carbon footprint for 1.25 years. Aether creates demand for sequestered atmospheric CO2, supporting CDR companies to drive down the technology cost curve.
🍿Climate Action of the Week
Want to do more? Sign up for the next Climate Changemakers Hour of Action here.
Climate news stories often overlook a critical component of enacting policy change: citizen attitudes on the climate crisis and the shared sense of urgency to see government action. Send newly updated climate opinion data to local reporters and encourage them to include these findings in their reporting to help catalyze climate action. You'll find all the steps in our Action Playbook!
Learn about re-fi news around the world from Toucan Protocol’s team.
This week, dClimate announced a major partnership with the Republic of Namibia. dClimate is a decentralized protocol that aims to make climate data more accessible and incentivize the collection, distribution, and analysis of new data. The partnership with Namibia will create a blockchain registry and verification system for quantifying the country's overall carbon impact. This is a major development in the world of Web3 and climate as it is one of the first partnerships between a decentralized protocol and a sovereign nation. Hopefully, we will see many more to come!
This week, Jason caught up with Greg Constantine, Co-Founder & CEO of Air Company. In this episode, Greg and I explore Air Company's proprietary technology, Greg's career path leading up to Air Company, and the startup's products, from Vodka to perfume. We also discuss the future marketplace for carbon-converted products, the direct air capture ecosystem, and why all CO2 is not created equal.
Check out MCJer, Tsung Xu’s recent article, The Clean Energy Transition, A Guide. The piece touches on what has made the rise of solar, wind, and batteries so remarkable and how emerging technologies can benefit.
For more open positions, check out the #j-climatejobs channel in MCJ Slack.
Toyota Research Institute, Energy and Materials Division is hiring for a Software Engineer for the Battery Factory of the Future team
WeaveGrid is hiring many roles including Product Manager, Product Marketer, and on the Operations team
The Energy Impact Center (EIC), a research institute focused on global decarbonization, seeks a Digital Marketing Associate to oversee the production and marketing of the Titans of Nuclear and Energy Impact podcasts
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