There's real long-duration energy storage now. Can it find a market?

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I’ve spent a lot of time on Volts discussing energy storage. As those who read my battery series know, lithium-ion batteries (LIB) currently dominate short-duration storage — in devices, cars, and buildings — and the durations they are able to economically provide are creeping up, from two to four to eight hours and beyond.

However, as I explained in a separate post, the grid of the future, run primarily on renewable energy, will also need long-duration energy storage (LDES), capable of discharging energy for days or weeks.

As that post covered, there are two basic challenges facing LDES. The first is technological: what sort of materials and processes can hold large amounts of energy for cheap?

The second is economic: how can an LDES company make money? Currently, the role they propose to play on the grid (“firming” renewable energy) is being played by natural gas power plants. In a theoretical future clean-energy grid, those plants will be gone, or at least they will be saddled with the additional costs of carbon capture, but for now, they exist, and they are quite cheap. Consequently, there just isn’t much of a market for LDES, as battery industry veteran Cody Hill points out:

A hot new startup called Form Energy believes it can overcome both challenges.

Form Energy has the technology; now it needs customers

I mentioned Form Energy in a previous post. The company — a kind of battery dream team, with Mateo Jaramillo (who built Tesla’s energy storage business), MIT’s Yet-Ming Chiang, and other veterans of previous battery companies — has finally revealed the battery it has been working on lo these many years.

It uses iron as a cathode and air as an anode, in a process called “reversible rusting.”

The best place to catch up on the news is Julian Spector’s piece. (Canary is doing amazing coverage of energy storage.) See also Russell Gold’s piece in the Wall Street Journal for deeper background on the company and its technology.

Neither piece, however, gets deeply into the subject that most interests me, which is the second challenge: where to find markets. So I called Jaramillo to find out more.

Not surprisingly, he sees a clear pathway to profitability. “We see a very compelling business environment for us over the next 10, 20, 30 years,” he says. “It's as much as we can go after, frankly.”

Early markets for clean firming

In terms of its function on the grid, the best way to think of Form’s battery is not as storage, but as the equivalent of a carbon-free natural gas plant. Rather than methane, it runs on renewable energy as fuel, but from the grid’s perspective, it provides basically the same service, which is reliable, dispatchable generation that can run for 100 hours or more when needed.

The problem, as I said, is that natural gas is quite cheap. According to conventional wisdom, natural gas plants will dominate the firming game until policy begins driving them out of the system (or forcing them to install carbon capture). That’s what the models show: when decarbonization of the electricity grid (using mostly renewables and LIBs) goes past about 80 percent, costs begin to spike and more expensive clean firm options like LDES and nuclear become competitive.

That conventional wisdom may be correct at the 30,000 foot level, but closer to the ground, things are much more complicated and varied. As Jaramillo notes, “there's no time at which the country will uniformly be at 80 percent renewables.” In fact, some nodes on the grid are close to that already. More to the point, Jaramillo says, there are a variety of situations in which grid operators need the services a natural gas plant provides but are leery about (or prohibited from) investing in gas.

“Every single US coal plant in the system today has a retirement date on it,” he says, “and all of those dates are sooner than they were five years ago, and they will probably be sooner in two years than they are today.” That means lots of utilities around the country need to replace large chunks of power capacity.

To date, they’ve been doing so with natural gas, but that may be changing. Remember, Form is not talking about entering the market in earnest until 2025. Between now and then, Jaramillo expects two macro trends to continue: first, renewables will keep getting cheaper and cheaper, and second, utilities will grow more wary of natural gas.

“It's not full steam ahead to replace coal with natural gas,” he says. “Indiana [utility regulators] recently rejected a 850-megawatt combined-cycle gas plant and they specifically cited the risk of stranded assets.” Similar rejections of natural gas have taken place recently in Minnesota and Virginia.

Great River Energy, a Minnesota-based electricity co-op, is hosting Form’s first demonstration project, a one-megawatt system capable of discharging for 150 hours continuously. Great River needs to replace lost coal capacity, but while they are under no statutory mandate to phase out natural gas, they “know how to read what direction the wind is blowing,” Jaramillo says.

They don’t want to build a natural gas plant with a 30-year rated lifespan only to face a carbon price or a clean electricity standard (CES) forcing its retirement in 10 or 20. In the long term, gas is on the way out, and every natural gas plant built from here on out is a gamble that could very well come up stranded. That will only be more true in 2025.

There are other reasons utilities might be trending away from natural gas. In California, of course, they are forced by laws mandating rapid decarbonization — and more states, like Washington, Colorado, and Oregon, are joining it in rapidly decarbonizing electricity.

In the New England grid, they’re having trouble importing enough natural gas through the pipelines in times of peak demand; LDES could be the easiest way to ease grid congestion. In grids like Texas’s, natural gas has proven an extremely unreliable hedge against extreme cold snaps; LDES could help improve reliability margins for ERCOT, Texas’s grid operator.

To achieve clean energy targ