About the Episode: This episode of the PSI Podcast is, for the first time, featuring two guests with a focus on battery manufacturing and battery end-use. David Van Hek is joined by a Pangea SI Expert/CEO of an IPP platform company dedicated to utility-scale and rooftop solar power projects in Southeast Asia and Australia. We were also joined by an additional guest who is a Co-Founder and CEO of a company capitalizing on 7 years of research to address key issues faced by flow batteries.
About the Pangea SI Expert: We were joined by two upstanding members of the market and have each taken part in the foundation of battery-related platforms/companies. They have each been able to offer an insight into their experience within battery manufacturing, the challenging aspects of the market, the future of the BESS market and more.
Subject Matter Specialist: I would say that the challenges of scaling a lithium battery have been mostly resolved. We have over 860 gigawatt capacity worldwide and China has scaled quite, quite fast. The problem we are seeing is in the supply chain, which is lithium is trapped on lithium is no silicon materials. And there are some people who are looking into the supply chain of lithium batteries, looking for alternatives like sodium ion, replacing it with sodium and improving the technology density, but from a scaling of manufacturing. I think that has already been achieved in China and going from China to another part of the world. If you are asking about scaling in different countries, then it’s about creating a supply chain, creating a manpower specialized manpower production. So these are country-specific challenges of scaling manufacturing.
Pangea SI Expert: Well, the question you’re asking is, where does battery storage make sense? I guess because that reflects the trends that we see in Asia. We see that Australia is dominating the market. That’s where it makes economic sense to deploy batteries on a small and large scale. This is largely because of the balance between on and off-peak power prices. And so because solar or other renewables is rather a peak business if you want to scatter the energy output throughout 24 hours, then definitely batteries make sense. And those places where you have a significant difference in on and off-peak prices.
That’s where you look at batteries. So Australia is growing. Australia is probably going to be dominating the battery storage market for the next decade. We see that other markets are slowly, slowly, slowly starting to pick up. And again, based on the trends of electricity tariff escalation, we need to see parity between the low cost of energy of deploying batteries to a retail electricity price. Once that happens, then the market will explode. And this is happening currently driven by growing electricity prices everywhere around the world. America, big Europe, and some parts of Europe. Battery storage is huge. It’s becoming huge. But we’re going to see this everywhere. It’s just a matter of time.
And so, again, electricity prices are key. Then you have as a second most important topic will be the grid infrastructure, those places where it cannot support a significant offload of renewables during peak hours lunchtime. Those will be the places where you see a lot of storage on a grid level as well, not only on a project level. So it’s really exciting times and I think it’s the point where we’re going to see a supernova very, very soon.
Subject Matter Specialist: So manufacturing is mass bulk manufacturing, right? I mean, I used to say when you change a process, you need to qualify the process and check the performance. So it’s about 6 to 7 months when you can say that this product is ready for mass production. So that is a six-month cycle where whenever you launch, because these are high-value products and it can determine the performance if you want to change, for example, you’re doing lithium chemistry and B and you want to improve the energy density. You will do some changes to the cathode and you want to then launch it, but it needs to be qualified, and certified. So that process takes about 4 to 6 months. And if that’s implemented, then it’s quite scalable.
Subject Matter Specialist: It is a tricky question. So you are talking about bankability if I understand correctly. So you need data points to consider. A bank, in particular, was not bankable 12 years ago, but the more mooted-like image is one of the most bankable technologies that we have today. Same thing with the battery. It’s likely more challenging because battery performance degrades and from your personal experience, you will see that no two batteries perform the same.
You might have the same iPhone, but somebody’s iPhone, mine dies at 8 hours, yours lasts 10 hours. So the data collection emphasis is there are newer insurance companies that are working with battery companies to ensure performance. So you can lock your performance such that you are sure that I, I get 80% of the only capacity is considered as a part of the deal and that certain mechanisms need to be put in place and you can mitigate that, that bankability issues. But this will happen with more deployments and more data. The bank activity will improve further. From a financial perspective, there are incidences that are being in place to ensure performance and you have to lock in or degrade the battery further to ensure that the data points are met, which is a challenge because battery cost is expensive.
Pangea SI Expert: We’re talking about bankability, I guess. The key is really for a few early adopting banks to jump in and everything else follows that restricts it so long as the technology was not bankable. Then there were issues around the power purchase agreements in particular regions. Those were not considered bankable as well. Now everything is bankable. Now everything became a mainstream technology and that will become the case with batteries as well. As you said, the more database of operating assets we have with more historical data, the more even conservative lending institutions will be open to joining the party.
Pangea SI Expert: Price is the key obstacle to the vast expansion of energy storage. But apart from the last couple of years, where there have been ups and downs, mostly downs driven by external factors, essentially prices are on the decline long term. I think obviously we have a little bit better forecasts, but again, really it’s all down to CapEx. The lower the battery price, the more places around the world there will be where economic standpoint will be there. And I think this is also a function of scalability. The more we scale the segment, the more competition there will be in the market. So this is why, you know, new technologies will probably make a breakthrough. I think it will comment on on on what are the advantages in terms of LCD, but that’s the key factor.
Subject Matter Specialist: I mean, that’s a nice question, if I understand correctly. You’re talking about a battery energy storage system. There are multiple technologies like long duration. So I mean, to not add any confusion, if you talk about BST, which is lithium based, we have the same cells, 18 650 or 26, 50, it can be lithium ion or lithium NMC or lithium-ion phosphate technology. and then multiple cells are added in cities in parallel to give you certain output.
Then there are power converter systems going with technical, but the limitation of lithium-ion technologies is that if you use it for 2 hours, it becomes hard almond and to be able to feel enormous. What is happening in the battery energy storage system is we are talking about integrating with renewables where you have power for 4 to 5 hours in a day and then you want to store it and then release it for a long duration, six hours, 10 hours around the clock, renewables. So on that, particular technologies of lithium degrade faster because you are not using them in a more optimized way.
There are other technologies like what we thought it is doing is developing a long-duration energy storage solution, which has a longer footprint but no degradation for 25 years, is very stable and can discharge for long hours. And that is what will make round-the-clock renewable possible, stable, renewable energy. I think there are other technologies like gravity-based pumped hydro is also that other large stationary applications have been used for.
The problem of pumped hydro is new. It has to be location specific. You can’t bring it to a place in Singapore. So basically air flow batteries are pumped out during a box. There are other a lot of different technologies like ITER there. So the upcoming technologies address the long-duration problem of energy storage and bring on to the commercial point. Yes, the battery costs are high. What is required for mass adoption is that battery costs are too high and you need to develop multiple applications.
There is no cost of grid support. If a grid fails, the price is enormous. So if we can use your battery for multiple applications grid support because if it starts to make economical sense and that’s where our particular technology flows battery and yet I’m biased can do multiple functions and makes absolute sense in current commercials.
Pangea SI Expert: We are looking at someone who estimated that if the deployment of solar energy continues with the current trends in about ten years from now, we can have the whole world empowered by solar. Okay, so 100% solar. Of course, that’s not going to happen because there is a significant amount of US existing assets that are operational. But the trend is clear. The trend is clear. The trend is that we not only need to save the world, but we also need to make economic sense of it at the same time. And it may start to make sense. LCD of solar is lowest compared to traditional lower than traditional energy sources.
In many places around the world, we have countries like Dubai, where we have $0.01 per kilowatt hour for solar energy. So the trend is clear, but the trend creates troubles. It creates intermittency and creates difficulty for the grid to absorb power, there are curtailment issues and so on and so forth. And batteries can solve exactly those issues. So once we have a very mature battery storage system industry, we have solved all the problems to make the whole world the powerhouse of renewables.
“From a financial perspective, there are insurances that are being in place to ensure performance, and you have to lock in or degrade the battery further to ensure that that data points are met, which is a challenge because battery cost is expensive.”
These experts hold deep knowledge and understanding of the batteries and energy storage systems markets.
✔ Helped their company to become the 13th biggest manufacturer in 2014 with close to 850 MW of annual sales.
✔ Served some of the biggest distributors and EPCs in the world, such as BayWa, Donauer, Phoenix Solar, etc.
✔ Overachieved Sales volume targets in 6 consecutive quarters.
✔ Through an extended network of partners in each country, achieved over 120 MW of projects in the pipeline on bilateral PPAs with governments, utilities and MNCs in different development stages.
Relevant Educational Background:
– PhD in Electrical and Electronics Engineering