Salt and Battery, When does Storage make Fossil Fuel Obsolete

Last week the world’s biggest Electric Vehicle (EV) battery company made a big opening splash on its IPO. CATL is a Chinese company that IPOed with a massive 44% pop on open. The company offered up only 10% of the shares in the IPO, valuing the company at more than $12B. China has limits on how much a company can IPO at (price based on PE ratio) and a 44% limit on the amount an IPO can rise in first day of trading. Expect this company to jump continually for some time. CATL is now the largest EV battery company in the world, primarily with lithium-ion for autos.

Of course, you can just use power as needed, when needed. With the rapid increase in efficiencies of wind (where the wind blows) and solar (where the sun shines) this is becoming ever-more critical. Once the infrastructure of transmission lines are in place, the renewable power plants are far more cost effective than any other options. Both wind and solar are now less than $.02 per KW, and the combined wind-solar is coming in at less than $.03. Such new power can come onboard in months, not years or decades required for other types of power.

Still, the problem is smoothing out the power for night time when the wind is not blowing. Thus the reliance on storage if we are to move to total renewables. If – well, when – the combined renewable energy and storage costs are lower than coal, oil and natgas, there will be no need for fossil fuels, except maybe for those places where the sun doesn’t shine (much) and the wind doesn’t blow (much).

There are many different options for storage of energy.

Fixed storage can be in the form of solar that moves water (back upstream to a dam that is above the existing hydro power system). It can use mirrors to focus heat for molten salt, for example.

The old lead battery technology has been tried and proved for a century and still is alive and well in the golf-carts.

Many players are after the battery storage market. GE is fighting hard against Tesla (powerwall battery built in their GigaFactories for fixed and battery packs for their cars) and Siemens. Storage options that are as good, or better, then lithium are coming fast to market for different applications. See a great view of new battery technologies in Pocket Lint. Batteries technologies that contain more carbon, nickel or cobalt seem very intriguing. Hydrogen options using fuel cell has been right at the edge of mass breakthrough into the market for decades.

When will certain storage options become a game-changer for existing “built economy” such as fossil fuels?

At some point, the combined renewable and storage will be sufficiently powerful and affordable to render the old fossil fuel options obsolete. McKinsey report discusses this massive drop in price and trend in their battery report. In 2010 battery storage cost about $1,000 per kilowatt hour of storage; their June 2017 report shows it at $230 per kwh in 2016 and dropping fast. It should be well below $200 per kwh now. (Batteries for the Telsa Model 3 are supposed to be at about $190 per kWh based on mass manufacturing; estimates based on SEC filings are for $157 kWh by 2020.)

So, what is the break-even point where storage becomes the game changer, and renewables with battery deflect the entire energy industry onto another course? Apparently, $125 per kWh is the disruptive price point. A scientist name Cadenza has developed battery technology at this price point using super cell and is now working on an extended version that includes the peripherals with the battery at, or below, the magical $125 kWh. She must demonstrate both cheaper and safer, so the housing is critical to avoid fires and short-circuits. “In March of this year, Cadenza published its report (pdf) saying that its super-cell technology can indeed hit that point.”

The technology is already here, yet new improvements are leap-frogging each competing option. How long before fossil fuels are an obsolete option? For just plain generation, fossils are dead and dying. Combined is where the war is won, however.

We argue that you really want to be careful with your oil and gas investments because you can find yourselves, like the oil patch (countries and companies and refiners) with stranded assets.

Moore’s law is at work in the battery complex. How long before combined renewables with storage supplants fossil fuels? Five years? Ten? Twenty?