Long Duration Energy Storage - Eclipse Ventures.pdf

LONG DURATION ENERGY STORAGE 1

The deep decarbonization of grids heavily reliant on renewables
requires long-duration energy storage (LDES)
OVERVIEW
Executive Summary
• LDES is a very big market with $1.5-3TR in
cumulative capex deployed over the next 20 years
• We believe that LDES will go the way of solar
panels and batteries in that it will be commoditized
as its costs decrease significantly over time
• The key is to find a technical edge that is cost
competitive and effective
• Selling non-resource-constrained hardware into
this market with a software/ maintenance layer on
top of this could be a winning strategy
Source: https://www.economist.com/technology-quarterly/2022/06/23/decarbonisation-of-electric-grids-reliant-on-renewables-requires-long-duration-energy-storage;
https://www.mckinsey.com/business-functions/sustainability/our-insights/net-zero-power-long-duration-energy-storage-for-a-renewable-grid

Long Duration Energy Storage is an application of storage in a market,
not a specific technology
Long Duration Energy Storage is an
application of storage in a market/energy
system not a specific technology. Some
technologies are more suitable to the
application than others.
An important escalating problem: Increasing
VRE integration creates high curtailment and
near $0/MWh energy prices for non-trivial % of
the day.
PROBLEM IDENTIFICATION
Source: https://www.lazard.com/perspective/levelized-cost-of-energy-
levelized-cost-of-storage-and-levelized-cost-of-hydrogen/

What do we mean when we refer to LDES?
PROBLEM IDENTIFICATION
In Scope
Primary Focus
SHORT LONG: DIURNAL (DAILY) LONG: WEEKLY + SEASONAL
TIME DURATION • Seconds/Minutes to <4 hrs • 4-24 hours • 24+ hours of storage
APPLICATIONS
SERVED
• Frequency regulation & response
• Contingency spinning
• Black start
• Congestion management
• Arbitrage
• Curtailment (before 80% VRE
penetration)
• Congestion management
• Peaker plant replacement
• Resiliency
• Arbitrage
• Curtailment (after 80% VRE
penetration)
• Weekly/Seasonal Storage
ADOPTION
TIMELINE
• LiB and lead acid batteries
used today
• LiB and flow batteries coming
onto market ~now
• Under R&D; likely taking off in
2040+ or after 80% VRE
penetration
TECHNOLOGIES
• Flywheels
• Electrochemical (LiB)
• Electrochemical (LiB, Flow)
• Compressed Air (CAES)
• Thermal
• Mechanical
• Pumped Hydro
• Mechanical
• Pumped Hydro

Can we build a company that has a differentiated technical approach
while staying competitive on cost?
In summary, we are looking for a solution that has the following advantages:
1. Unique technical approach
2. Cost competitive to lithium-ion batteries
3. Short time to market without reliance on critical minerals or relying on EV battery supply
chains
HYPOTHESIS

An Overview of Energy Storage Mechanisms & Technologies
OVERVIEW
Chemical Thermal Electrical Electrochemical
Mechanical
Springs
Pumped Hydro
Major Category
Application
Not Novel
Lithium Batteries
Flow Batteries
Flywheels
Compressed Air
Liquid Air
Power to gas to power Sensible heat Supercapacitors
Lead Acid Batteries
Metal Air Batteries
Nickel Batteries
Molten Salts
Superconducting
Magnetic Energy
Storage (SMES)
Latent heat
Thermochemical heat
Cryogenic Storage
Potential Energy
Given supply chain limitations of current grid-scale battery deployments, we are targeting a long-
duration energy storage system that is not constrained by resources or complex research

Increased curtailment increases risk and reduces profitability for
asset owners, whether the energy is sold via PPA or on the real-time
market.
A storage owner’s rational calculation for diurnal storage
incorporation today:
LCOS + Subsidy < Peak Demand Energy Sale Price
Once we have 80%+ renewable penetration and saved capacity can
be used for reliable baseload generation, with little curtailment:
LCOS + Subsidy + Marginal Cost of Energy Production <
Energy Sale Price
With additional regulation that requires renewable energy
generation:
LCOS + Subsidy + Marginal Cost of Energy Production <
LCOE of next-best energy source + Carbon Tax
Use Case: Decrease curtailment and increase revenues for VRE asset
owners
SOLUTION OUTLINE

LONG DURATION ENERGY STORAGE
Amortized Capex Marginal Cost
8
Levelized Cost of Storage (LCOS) as a starting point to evaluate
different LDES technologies
SOLUTION OUTLINE
• Levelized cost of storage (LCOS) is the cost of kWh or MWh electricity discharged from a storage device when accounting
for all cost incurred and energy produced throughout the lifetime of the device.
• Attempts to measure the all-in costs associated with storage can be simplified as such:
𝐿𝐶𝑂𝑆 =
𝛽 ∗ 𝐶𝐴𝑃𝐸𝑋 + 𝑂&𝑀𝑓𝑖𝑥𝑒𝑑
𝑁𝑐𝑦𝑐𝑙𝑒𝑠𝜂𝑅𝑇𝐸in
+
𝐸𝑛𝑒𝑟𝑔𝑦 𝐶𝑜𝑠𝑡
𝑁𝑐𝑦𝑐𝑙𝑒𝑠𝜂𝑅𝑇𝐸in
• A Power Purchase Agreement (PPA) determines the sale price with a specific customer and should be greater than LCOS
• Excess capacity is potentially available to be sold to other customers or into the merchant market
• Selling into the merchant market means providers are selling at Marginal Cost for the dispatch curve
Two potential opportunities:
1. Low LCOS to win larger market share for new PPAs and larger margins and;
2. Low marginal cost system to satisfy merchant market.

Acquire
Energy
Provide
Energy
Storage
Charging Efficiency
𝜂𝑐ℎ𝑎𝑟𝑔𝑒
Discharging Efficiency
𝜂𝑑𝑖𝑠𝑐ℎ𝑎𝑟𝑔𝑒
Self Discharge
𝜂𝑠𝑒𝑙𝑓
* Efficiencies can be complex functions
with a number dependencies
An energy storage has 3 basic stages, with varying efficiencies
associated with the transition between stages
SOLUTION OUTLINE

• We are taking a first principles approach to identifying optimal energy
storage technologies
• Conversion of energy from one form to another results in losses, some
greater than others
• These are largely driven by the 2nd Law of Thermodynamics which
places limits on the efficiencies of various conversion processes (Carnot
Efficiency)
• The higher the efficiency, the more performant the storage mechanism
Notional example mechanisms:
Battery from grid: Electrical (0.9) → Battery (0.99) → (0.9) Electrical = 0.81
Thermal (500C) to Fly Wheel to Electrical: 500C Thermal (0.31) →
Flywheel (0.99) → (0.98) Electrical = 0.30
Gravity/Elastic Storage from Grid: ElectriclToMech (0.98) → Potential (1.0)
→ (0.98) MechToElectric = 0.96
10
We are looking for solutions with high charging efficiencies…
Type
From To Efficiency
Thermal Thermal <0.95
Thermal Electric < 0.2*ηcarnot
Thermal Mechanical < 0.5*ηcarnot
Thermal Photon ε*
Thermal Chemical 1
Photon Thermal ε*
Photon Electric <0.33**
Mechanical Thermal < 0.5/ηcarnot
Mechanical Electric < 0.98
Mechanical Pressure ≤ 1
Chemical Thermal 1
Chemical Electric 0.9***
Electric Electrochemical Depends
Electric Chemical 0.9***
Electric Thermal 1
Electric Electromagnetic Depends
Electric Mechanical < 0.98
Electromagnetic Electric Depends
*Emissivity of material
**Based on 6000K black body emission spectrum (Shockley-Queisser limit)
***Function of Gibbs Free Energy function with specific species
SOLUTION OUTLINE
Conversion Efficiencies

• Energy is lost during the time energy is stored
• Kinetic experiences drag
• Thermal experiences heat loss, though less than 1000K temperatures
exhibit minimal efficiency loss
• Increased amounts of self discharge are present when:
- Smaller size of storage (low MWh)
- Longer storage times
- Higher storage temperatures
11
Storage Type Self discharge/day
Temperature (<1000K) 0.96-0.98
Kinetic 0.97
Potential 1
Elastic 1
Electromagnetic Operating current
Electrochemical 0.98
…Coupled with low self discharge rates…
SOLUTION OUTLINE
Self Discharge Efficiency 𝜼𝒔𝒆𝒍𝒇
Effective Discharge Efficiency 𝜼𝒅𝒊𝒔𝒄𝒉𝒂𝒓𝒈𝒆
Minimum surface
area volume
(sphere)
with 𝜖 = 0.01
emissivity
Assuming 50% of
Carnot Efficiency

For thermal processes, battery systems, and gravity-
based systems:
>$80/MWh Grid Purchase Price
• High energy prices favor high conversion efficiencies (is this an
opportunity?)
$20-40/MWh Grid Purchase Price
• Low effective conversion efficiencies (𝜂𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 < 0.3) create
significantly higher marginal cost for energy storage providers
• Conversions to thermal energy are seem unlikely to be cost
effective on a marginal basis
$-5 - 5/MWh Grid Purchase Price
• Conversion efficiency is of minor importance when marginal
energy price is low and a most technologies
< -$10/MWh Grid Purchase Price
• High conversion efficiency devices are penalized when there are
large negative costs of electricity
12
Batteries
Thermal
Processes
Gravity
…And low marginal cost
SOLUTION OUTLINE
𝜂𝑅𝑇 = 𝜂𝑐ℎ𝑎𝑟𝑔𝑒𝜂𝑠𝑒𝑙𝑓𝜂𝑑𝑖𝑠𝑐ℎ𝑎𝑟𝑔𝑒

System Requirements
14
Implementation requirements
• Low LCOS: Target < $100/MWh installed
based on existing market prices
• Minimal, easy-to-build infrastructure that can
be deployed anywhere (as opposed to only
areas with abandoned mine shafts, salt caverns,
or other naturally occurring areas)
• Leverage a large, existing supply chain outside
of li-ion batteries as those are in high demand
by EV manufacturers
Technical requirements
• ~4+ hour duration
• Charge rate/discharge rate: Assume symmetric
charging/discharging
• Round-trip efficiency >80%
• Long life (e.g. >20 years or longer than li-ion
battery or similar systems)
• Readily available, non-critical mineral materials

Gravity Energy Storage Model – Pumped Hydro Example
15
The ideal system consolidates the conversion equipment into high power, centralized units to minimize
capex cost and maximize efficiency

Model Observations
16
Some other observations
• The longer the duration, the larger the capex
• Physical structures more expensive than natural ones
• The cheaper the storage media, the lower the cost
• The larger the system charge/discharge power (‘C’
rate)
• Lower the $/MW is for the conversion
equipment
• Higher the efficiency (η) is for the conversion
equipment
• The fewer the number of conversion steps the higher
the round-trip efficiency and lower the capex
• The larger the fraction of steady state (design point)
operation the higher the system efficiency
Each conversion has an efficiency BUT also a capex cost
• While there is cost associated with energy ($/MWh) for a
storage media or energy purchased from the grid
• The conversion cost is based on the Rate of Energy
Exchange which we know as power (MW)
• The larger the power, the larger the cost but
usually at a lower specific cost ($/kW)
• For example, a small motor may cost $100/kW
but a larger motor may cost $20/kW
• For a block lifting these efficiencies and equipment are
symmetrical

Energy Vault – System Overview
COMPETITIVE LANDSCAPE
Source: https://www.energyvault.com/

Gravitricity – Full-Scale Projects
Port of Leith, Edinburgh
250kW, grid-connected demonstration project using a 15-
metre high rig, 2 25-ton weights suspended by steel cables
Knapton Energy Park, Yorkshire
4MWh of storage with multiple weights
Source: https://gravitricity.com/

Other Gravity-Based Energy Storage Companies
New Energy Let’s Go
Gravity Power
Source: https://www.gravitypower.net/ Source: https://n-e-l-g.de/

Source: https://cleanedge.com/data-dive-charts/Battery-Storage-Market-Map
Other leading companies in the non-gravity-based energy storage
space

Potential business models and considerations
21
Seems very difficult to generate initial revenues with this
approach.
System implementation needs de-risking.
Especially in a gravity storage system – construction
system being a critical part of IP + process, would be
hard to get an external party to do it successfully.
Possible highest value capture. Requires strong market
application knowledge and on the ground ops.
Potentially possible to do this with appropriate
warrantees and insurance. Effectively a $/kWh sale.

Key insights for the gravity-based energy storage market
Insights on gravity-based energy storage
1. Centralized power conversion equipment is most effective
2. Automated, intelligently designed construction is critical to reducing cost – one could argue this is a
vertical construction company masquerading as an LDES company
3. Despite high theoretical roundtrip efficiencies, start/stop operations negatively impact the roundtrip
efficiencies (e.g. Energy Vault reports 75-85% r/t efficiencies in publicly available documents) and the
cost of the storage mass and facilities make the economics challenging
Insights on energy markets more broadly
1. Shifting diurnally is most achievable. We want to be discharging the system at positive energy arbitrage
as possible, at a price which clearly pays back its capex.
2. Season shifting requires a 100x+ order of magnitude price reduction on capex (assuming same opex) or
100x+ seasonal energy price change since only a single discharge cycle per year can really happen.

Interested in building a company in this space?
E-mail: diana@eclipse.vc

Long Duration Energy Storage - Eclipse Ventures.pdf

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