The Exchanges

Q And I'm sure a lot of our listeners will already know this, but just as a reminder for anybody who isn't super familiar with, like, the economics, how the economics scale for lithium ion, you know, technically, right, there's no reason lithium ion couldn't deliver days, weeks, seasons of storage. There's no, there's no technical limitation to the duration of a lithium ion battery. It's an economic limitation, right?

A Yeah, that, that, that's absolutely correct, and, and lithium-ion has fantastic technical capabilities for a lot of reasons, very dense gravimetrically and volumetrically. It cycles a lot, uh, and it can discharge at, at much slower rates, um, than what is currently used for today. Like I said, sort of minutes to hours duration, uh, but it becomes economic to do so over that time period. So, so, so that's sort of the key trick. When you, when you talk about duration of a Energy storage technology. It could be any kind. Um, you really have to make sure that we're talking about sort of at rated power. So when, when we, when we rate a battery, we rate it for both energy and power, and the energy is only relevant to the extent that it's, uh, in, in direct sort of connection with the rated power of the system. So you could take a four hour, you know, quote unquote rated lithium ion battery and discharge it for a hundred hours, and you would effectively be paying, you know, a much higher Price for that power over that duration.

AI assessment note: “Yeah, that, that, that's absolutely correct”

Q And why is it that you wouldn't design or shouldn't design a lithium ion battery to do dozens, hundreds of hours of storage at rated power?

A It's really just cost. So you're taking, you have a per unit of per hour cost, essentially, adder, and for every incremental hour that you want to be able to discharge at rated power, you pay that cost. In the case of lithium ion, Let's say that's roughly a hundred dollars a kilowatt hour. You're adding a hundred dollars for every hour you want to discharge. And, and, and the industry normalizes around dollar per kilowatt in terms of comparative resources. So, uh, everything comes, comes back to that figure in the end. Um, you know, sort of in the battery world, we, we, we like to talk about kilowatt hours, dollar cost per kilowatt hour, but the industry does not really do that. Um, and so your, your cost comparisons are always on a dollar per kilowatt. Um, and so, so then the question becomes, how many hours do I get for that cost per kilowatt? And for lithium ion today, that's roughly four hours. Um, but if I need a hundred hours, uh, I'm not going to pay, you know, 25 times as much on a per kilowatt basis, uh, for that resource. It just doesn't clear in the market. It is not, uh, anywhere close to being a least cost alternative to provide that kind of function into the system.

AI assessment note: “It's really just cost. So you're taking, you have a per unit”

Q rated battery. Um, Let's talk about what that, why that. I mean, you sort of alluded to it. You can, you can start to displace some of these mid-merit gas plants, but as, as you said, right, these are operating at 30%, let's say, of the hours out of the year, but the number of consecutive hours that they are operating is sort of equally important in this context, right?

A Yeah, that's right, and it's, it's a, it's a combination of total hours as well, as well as sort of consecutive hours when needed, right? These are, in the end, playing a Role of capacity, reliability on the system, and, and so we, it is really important to, to zoom in, uh, to, to very high fidelity, to, to take a look at what precisely it's doing when, and, and the reason why that number of hours, you know, four days roughly, uh, becomes relevant is because that's where a lot of the Material weather events sort of sit in terms of duration. And, you know, in a grid that increasingly is driven by weather, renewable energy, uh, you need to be able to account for that type of intermittency that does inevitably come along with weather, regardless of what region you're in geographically. It could be a heat dome in the Pacific Northwest, or a polar vortex in the upper Midwest, or a nor'easter, you know, in the Northeast, or an unlikely winter storm Uri in Texas. So, so you really need to be able to account for that duration because the signature of volatile weather events, um, is, is frequently around that duration, three, four, or five days.

AI assessment note: “that's where a lot of the Material weather events sort of sit in terms of duration”

Q a second, but before we do, one thing I'm curious about your perspective on is, do you see any, is lithium ion just gonna remain in perpetuity dominant in that category, in that 15 minute to four hour duration category? Like, do you see any reason why a different technology would play a significant role, or do you think that at this point, like, the train has left the station?

A Well, it certainly is the incumbent, and displacing the incumbent in this industry in particular is challenging. Um, I also think that there's a cost entitlement to be significantly lower than where it is today, which is, which is low cost compared to where it was just a few years ago. Uh, so, so it's a shifting landscape for any sort of aspirant to, to dethrone lithium mine in that, I would say, intraday duration space. So, so ultimately that's, you know, roughly 10 to 12 hours, uh, you know, for a complete cycle, let's say, um, in, in, In the use case that you're going for. And there may be others that come along or are a bit cheaper, but, but again, sort of displacing lithium ion is going to be really hard. I mean, the, the grid markets are sort of the tail on the dog of the automotive markets right now, um, driving the, the production of, of lithium ion at scale. And so, so the, the, uh, industry that we're in, the electric industry gets to benefit from that massive scale. And there is no other sort of chemistry or technology that, that benefits from the same, uh, tailwinds, essentially. Um, so it's really hard to, to see how that happens precisely. Now, there's always, you know, I'm a technologist, optimist at heart, so I like to believe that, you know, new, great technologies will show up in some interesting ways. Um, but I also think it's a really tall task to think that…

AI assessment note: “displacing lithium ion is going to be really hard”

Q The other factor too, I think if you're in one of these situations where you're building out a ton of new generation, which is definitely true of Georgia Power, as you said, um, is that the introduction of multi-day storage actually affects the amount of new generation that you need to build, right?

A Yeah, that, that's right. And, and, and these days, you know, the plans are to build so much new generation overall, and so much new renewable generation specifically, and even within that, so much solar specifically, That the implication on the land, uh, is quite large, in fact, and if, if you take a state like Georgia or the, you know, the plans that they have, you know, it's implying quite a bit of land. Now, to put it in perspective, because I don't want to be like a land doomer on this, uh, it is a tiny percentage of, you know, of, of land that's put for all sorts of industrial uses, so it's not like you're, you're, you're blanketing the state. However, uh, going and getting land for, for any power project, frankly, is challenging these days, and so, um, By having cost-effective multi-day storage, you can incorporate More renewable energy without sacrificing reliability at basically half, half the land cost, and that, by that I mean you only have to put solar on half as many acres to get the same benefit, um, and that's because you're essentially solving the reliability with a different type of asset that allows you to co-optimize your system in a different way, and, and this is a big driver, right? It's, you know, there are, there are very public battles over, over land use these days, uh, for power projects pretty much of any kind, uh, but in particular for, for places U…

AI assessment note: “you only have to put solar on half as many acres to get the same benefit”

Q that's a fundamental tenet. So let's posit that's going to continue to happen. Um, there's going to be other stuff as well in the decarbonized grid. And so, you know, as you think about the forms competitive landscape, I guess, it's not really lithium ion batteries. It's other things that can serve a, uh, uh, capacity reliability type service in a decarbonized fashion. So what's on that list for you?

A Yeah, we, we think about it from a substitution standpoint. So, so what type of resource could perform the same sorts of function? Um, you know, carbon, carbon capture would be one. Um, you know, if you could sort of neatly put a, put a box on top of the flue gas and capture the carbon, that, that would essentially solve, uh, the, the big challenge there. Now it would add cost. So, so again, it all comes down to cost, uh, you know, for the, for the industry, and we have to be really mindful of that. Um, So, but that would be an option, potentially. There are some, there are some pathways that are being explored there. Uh, another would be hydrogen. There's a lot of discussion around hydrogen in the system today. Uh, again, big questions on cost and big questions on sort of scalability of that. Um, at the other end of the spectrum might be more transmission, like a lot more. So if you, if you could, you know, wheel a kilowatt hour from, from Arizona into New York, uh, you know, frictionlessly with no loss, uh, Anytime of the year, well, that would be beneficial for the system. Maybe you don't need as much storage. Um, also has challenges for, for timeline and cost. Um, so, so those are a couple of things. Um, you know, part of what we're going for is speed, however, uh, speed and scale. And, and one nice thing about batteries is that they can be deployed at scale. They're not te…

AI assessment note: “carbon capture would be one... another would be hydrogen... more transmission”

Q it based on the, the actual functions of the Batteries that are being deployed. Beyond the sort of, as you said, the kind of four to, let's say, eight hour range that lithium ion is well suited to, do you think of there being value in a middle category before we get to what you're up to that's in that sort of, I don't know, 12 to 24 hour range?

A So I, I, let me paint the landscape a little bit more broadly because I think it's, it is helpful. Um, we, we at Forum, anyway, always think about, ah, the system operating as a portfolio. And, and within that operation of the portfolio, what I mean is all the different assets, whether they're generation assets, or transmission, or, or storage. Um, they all need to obviously operate in concert. They, they need to be synchronized. Literally, for, for frequency reasons, and then also, you know, just in general, like operating a fleet. And it, it's really important within that context when we're thinking about the function of duration in there, uh, for storage in particular, to understand how that duration fits into that, again, that portfolio operation. Like, what, what is it doing? What, what kind of value does it bring? Through those numbers of hours that we're saying we have. And, and I think we've, what lithium mine has done, as we've talked about, has already established very clearly the value of a few hours of duration, right? Right now it's predominantly four hours. Let's say it's moving to six hours, um, in the applications that I, that I mentioned earlier. So, so there's unambiguous value for, for that duration of energy storage. And then, and then we start to say, okay, well, what, what additional value is there through the incremental hours of duration? And that could …

AI assessment note: “what additional value is there through the incremental hours of duration? And that could be 12 hours”