While they are potential key resources of a net zero emissions energy sector, advanced long-duration battery technologies and green hydrogen generated from water with clean energy face perplexing uncertainties.
First, they may not be ready until the late 2030s and early 2040s, global consultant DNV said Oct. 13. Or Form Energy’s 100-hour battery systems will see “broad commercialization” by 2024, as the company said Dec. 22, and green hydrogen will “play a major role in global emissions reductions by 2030,” as reported by RMI Oct. 11.
Second, that uncertainty may be amplified by significant long-term incentives for both resources in 2022’s Inflation Reduction Act, or IRA and 2021’s bipartisan infrastructure law as well as the just-released national transportation decarbonization plan, analysts said. RH2 and battery providers are seeking the new billions available in the legislation, with either potentially winning overlapping opportunities.
The incentives “are shifting possibilities” for long-duration energy storage, or LDES, technologies “like Form Energy’s battery and green hydrogen” that can meet extended system outages, said American Clean Power Association, or ACP, Vice President, Energy Storage, Jason Burwen. But “neither has been deployed at grid scale yet, which makes this a horse race between two hypotheticals,” he added.
But there are ways advanced batteries and renewables-generated hydrogen, or RH2, could be synergistic with each other or with other clean firm resources in a post-2030 power supply, utility planners and energy sector analysts agreed.
Clean firm energy technologies will be needed for a “zero-carbon grid,” but both advanced batteries and RH2 seem to have advantages and disadvantages, and “there's a future where each finds a niche role in the market,” said Energy Plus Environmental Economics, or E3, Senior Partner Arne Olson. “It only seems now like a race because it is not possible to know which will fit the energy mix best in 20 years,” he added.
The general consensus, that lithium-ion, or li-ion, batteries are the answer now for light-duty electric vehicles, and RH2 is heavy industry’s best clean energy option, leaves the LDES future in the power sector uncertain, analysts said. But LDES will be vital at high levels of variable renewables and regulators and utilities can apply a “no-regrets” planning strategy now to ensure a reliable, least-cost future power system, they added.
Certainties and uncertainties now
A “no regrets” strategy focuses on avoiding generation shortfalls that could result in power outages and have severe economic or human consequences.
As a net zero power system reaches about 90% clean energy, a “no regrets” strategy could require up to 680 GW of cost-effective LDES technologies to avoid potential infrequent periods of potentially long-lasting generation shortfalls, an August study by the Department of Energy’s National Renewable Energy Laboratory, or NREL, said.
RH2, advanced batteries, or other clean firm energy technologies not yet “deployed at scale,” could meet those generation shortfalls, or “seasonal shortages” the report said.
The “gradual transition” after 2030 to greater electrification, changing load profiles, and largely variable renewables generation will lead to a seasonal “mismatch” of demand and supply, NREL said. This mismatch could be addressed by long-duration storage. But infrequently dispatched LDES technologies can have economic challenges because costs “must be recovered with less generation compared to plants that run more frequently,” it added.
Renewables and short-duration li-ion batteries also have “a significant cost premium” at high renewable energy penetrations because overbuilding would be needed for reliability, said a May 2022 paper authored by the LDES Council in collaboration with McKinsey. “LDES has the potential to significantly lower this cost premium,” because it is likely to be less expensive than the potentially very large renewables overbuild needed, it added.
Scaling unproven LDES technologies will, however, require “substantial development of infrastructure,” and “raw materials supply, manufacturing facilities, and trained workforce,” NREL said. “Concerted” research and development and pilot deployments “are needed to reduce costs and improve performance,” it added.
Each LDES technology “has different tipping points for different applications,” LDES Council Executive Director Julia Souder added. New policy approaches and proactive utility planning “done today to be ready for tomorrow” are also needed to identify “the best LDES solution for each application,” she said.
In the absence of policy and planning guidance, utilities and others studying reliability issues have as many questions as answers about LDES solutions.
There could be a role for seasonal energy storage in a fully decarbonized energy system, Salt River Project Manager of Innovation and Development Chico Hunter told a Nov. 9 Electric Power Research Institute seasonal energy storage workshop. But LDES technologies will not be “commercially ready” without “advances in technology, carbon policy, and economic viability,” he added.
“Many of these topics are still ‘in flux’” for the utility industry, Dominion Energy Gas Business Development Manager Andrew Hegewald said, “until the cost, performance, and regulatory landscape around these technologies is further defined.” Hegewald declined to further describe Dominion’s work on LDES options.
Li-ion batteries and other existing commercially competitive storage technologies can “get us most of the way to 100% renewable energy,” Los Angeles Department of Water and Power, or LADWP, Manager of Strategic Initiatives Ashkan Nassiri told the workshop.
Seasonal storage needs could eventually be met by RH2-generated electricity from LADWP’s still under development Intermountain Power Project in Utah, Nassiri said. But the utility is “open” to other LDES solutions and “all promising technologies are on the table,” he added.
Many utilities now recognize traditional regulatory approaches will not meet the coming GW-scale LDES need, Strategen Consulting Director Erin Childs said. And taking years for pilots to grow from MW scale trials to hundred MW scales “is too slow to determine when and how each LDES technology can be used,” she said.
RH2 and batteries now
Biden administration incentives provide funding but also raise questions about how to support the roles of RH2 and advanced batteries in a future energy mix, analysts agreed.
“Batteries consume and reproduce electrons,” but hydrogen “is a molecule widely consumed as a liquid or gas to produce heat for heavy industry,” RMI Climate-Aligned Industries Program Senior Principal Thomas Koch Blank said.
Gray hydrogen, made with natural gas by the emissions-intensive steam methane reformation process, dominates today’s industrial uses of hydrogen at an estimated cost of $1.50/kg to $2.00/kg, according to Energy Innovation, or EI. But the IRA’s $3/kg tax credit for RH2’s near-zero emissions could soon make its current $4/kg to $8/kg cost competitive with gray hydrogen, EI said.
RH2 molecules’ “first best use,” is in eliminating emissions from large industrial processes like fertilizer, cement, glass, or steel production with high demands for heat that cannot be served by electricity, EI Electricity Program Senior Policy Analyst Dan Esposito and Strategen’s Childs agreed.
RH2 can allow heavy industries to transition more quickly and cost-effectively to zero emissions than electricity because it is “the most competitive green molecule in the market right now,” added Ambient Fuels CEO and Co-founder Jacob Susman.
Today’s shorter duration li-ion batteries may be better suited for light-duty EVs because they “have cost and performance advantages” over RH2, EI’s Esposito said. And a national charger network for light-duty EVs that can eventually serve heavy transport is already being built, which should concern regulators considering green hydrogen transportation sector investments, he added.
But the transportation sector’s choice of the best source of power for heavy transport remains uncertain, E3’s Olson, EI’s Esposito, and RMI’s Koch Blank agreed.
It is an area of uncertainty because li-ion batteries could face supply or range issues, but RH2 may lack delivery infrastructure to meet demand, Strategen’s Childs said. “Both need to be developed until it is clear which will be more cost-effective in what application,” she added.
The biggest uncertainty
The best LDES for power system reliability remains the biggest question, Childs and most others agreed.
There are four kinds of LDES, according to the LDES Council. Chemistries like RH2 release energy when molecular bonds are broken, electrochemical batteries release electricity when chemical components react, thermal systems use temperature differences to generate heat or power and mechanical systems store and release potential energy as generation.
RH2 and long-duration batteries are the LDESs currently thought to be the best candidates for power system use cases.
Form Energy is already scaling up manufacturing of its 100-hour “iron-air, multi-day battery” for commercialization by 2024, Form’s Vice President, Policy and Regulatory, Nidhi Thakar said. Analytics validated independently by utilities predict Form’s cost and performance targets will unlock tens of GWs of U.S. multi-day storage demand by 2030, she added.
Form batteries could save “billions of dollars” for consumers through reduced overbuilding of new renewables to meet demand peaks and reduced “land needs and transmission costs,” she added. But a fully decarbonized power system “will need multiple solutions,” and “the trick is to make the right trade-offs” among technologies, Thakar said.
“It is premature to pick winners and losers” for LDES, agreed Ambient’s Susman. “Form Energy and other battery technology developers are working on it,” but RH2 is being used in limited applications and pilots today, “and the IRA tax credits will likely lead to tremendous growth,” he added.
“The clean energy future may come down to how fast transmission for stored electrons and pipes for fuels like green hydrogen are built,” ACP’s Burwen said. Moving electrons is more efficient, but “transmission constraints due to siting and permitting issues may drive power providers to green hydrogen, especially with the IRA incentives,” he added.
RH2 is better positioned as seasonal storage “because it has a substantial customer base for industrial purposes” that can get “extra value” from supplying stored RH2 for power system variability, RMI’s Koch Blank said. Batteries’ primary market in transportation will similarly advantage them. But “it is not an ‘either-or’ choice because current and new use cases can keep both technologies viable,” he said.
Over the next decade, transportation and industrial sector investments could allow scaling of both RH2 and long-duration batteries, agreed Strategen’s Childs. And that could lead to “electric sector planning tools and market structures” that value flexibility in power system applications and “make both viable LDES options,” she added.
Li-ion batteries “were developed for consumer electronics but new use cases in EVs and with distributed solar drove down costs and made them distribution system resources,” RMI’s Koch Blank noted. RH2 production to displace gray hydrogen “could similarly lead to its use as a flexible power system asset,” he added.
“It is easy to create convincing arguments for batteries or green hydrogen that suggest a hypothetical competition, but both will impact the future power system in their own ways,” Koch Blank said.
From no regrets to LDES
Regret for inadequate energy sector choices can be measured in human consequences when power supply falls short of demand as it did during the February 2021 Texas outages that caused at least 210 deaths and $80 billion in economic losses.
The conditions regulators must prepare for “depend on the system, the load conditions, and the resources available,” E3’s Olson said. “The more diverse the portfolio, the less susceptible it is,” and the only way to prepare for extended durations of diminished resources without doubling the cost of reliability is with “a clean firm energy supply” like those in emerging LDES technologies, he added.
A “key step” in no regrets decision-making is reforms of the utility planning processes that “evaluate billions of dollars of utility-proposed spending,” said ACP’s Burwen. “The process must be informed by data-driven, transparent, long-term modeling of costs and needs that is reviewed every few years,” he added.
The new federal incentives make no regrets decision-making by regulators more urgent “because potentially sound utility business cases could inadvertently lead to stranded assets,” said EI’s Esposito. “The best decisions now are to approve as much clean energy and necessary transmission development as possible, and use federal incentives to test emerging technologies until the best LDES options are clear,” he added.
“A no regrets approach means start now,” Strategen’s Childs agreed. “The 2020s can be very precious years for research and pilots to scale great concepts” like Form Energy batteries and RH2 and to find other cost-effective ways “to meet the need for hundreds of GW of LDES” after 2030, she added.
“Batteries were considered too expensive to scale until policies like procurement mandates and markets for capacity products drove down prices,” Childs said. “New policy, like a seasonal capacity product, and new market signals, like a carbon price,” that value LDES attributes “like reduced emissions, reliability and flexibility” can enable competition and accelerate procurement, she added.
The need for LDES “is enormous” and competition between advanced batteries and RH2 “can be avoided by policy and planning that recognizes diverse values,” the LDES Council’s Souder agreed. And “it is important to push hard for policy and avoid competition right now because the new incentives and the urgency to address the climate crisis have created a window of opportunity.”