Almost 250 years ago, a Bolognese physician, physicist, and philosopher put a dead frog on a brass hook, picked up his iron scalpel, started a dissection, and was dead wrong.
If it weren’t for any of these, he may never have spurred his friend — and sometimes adversary — to invent one of the most important tools of modern science and industry.
Luigi Galvani lifted his iron scalpel, touched the dead frog’s leg, and it twitched.
Galvani, astutely noting that a dead frog needs a good reason to move, coined the term “animal electricity” to describe the force that activated the muscles.
The word “galvanism” was used to describe his theory, which involved an electrical fluid that was carried to the muscles by the nerves.
Keep in mind this was 1780, so cut the man some slack. He essentially started bioelectric research that can be traced all the way to mind-reading artificial limbs today.
Galvanism has long since been discarded by science, and Galvani’s name only lives on as “galvanized,” suggesting something is shocked into action, or in reference to zinc coated metals that use electricity to establish a bond.
His friend rightfully deserves more notoriety. He thought Galvani was wrong, and how he proved it holds up to this day.
Alessandro Volta believed the frog leg twitched because a connection between the brass hook and iron scalpel, allowing a current to flow through a medium rich with water.
His legacy was assured in 1800 as he invented the voltaic pile. It was the first — if archaic and weak — true battery.
Just as Galvani’s work can trace to groundbreaking developments today, so too can Volta’s first battery be traced to an emerging breakthrough in the energy sector.
Absolutely Essential, Essentially Flawed
For the vast majority of applications, batteries that power our stuff are old news. We simply don’t think about the batteries we use until our phones die or our cars don’t start.
That isn’t the case for batteries used in the energy sector, though. In spite of over 200 years of history, batteries are still a thing of the future.
As renewable energy expands, we’re starting to realize how batteries fall short, how little it takes to completely disrupt traditional electricity generation, and just how small of a change it takes to make utilities wildly unprofitable.
Currently, utilities enjoy a very stable, if heavily regulated, business model. The Feds and the states, to varying degrees, set rates that balance reasonable energy prices for consumers with revenues and profits that encourage capital expenditures on infrastructure and attract investors.
For the most part it has worked well for a century. Good luck finding a better model that doesn’t result in brownouts or citizen outrage in the long-term.
No seriously, good luck and get started. Someone needs to figure out something better a lot sooner than anyone would like.
The Lawrence Berkeley National Laboratory recently released an analysis entitled, “Financial Impacts of Net-Metered PV on Utilities and Ratepayers.”
This research focuses on how the system we use to compensate owners of solar power panels will financially impact two types of traditional utility companies if solar power rises to 10% of total retail sales by 2022.
This figure is a bit of a stretch, but only for the date. The world now has 200 GW installed total, but will be installing that much annually by 2025. Plus, the IEA has said solar will be the largest source of electricity in 2050.
Ultimately, this is a matter of “when,” not “if.”
Unfortunately for utilities, the report conclusion proves that they will not be viable, and investors wouldn’t want to get anywhere near them, without some sort of shift in the status quo.
Take a look at this chart. The “SW” power company is typical of the U.S. Southwest, where companies own the power plants and transmission lines. The “NE” utility is typical of the Northeast, where companies just own the lines.
So solar power in a net-metering system in 2022 would result in up to a 40% hit to returns on equity and earnings, while marginally raising rates.
Solar power producers don’t need wires or massive infrastructure, so the business model in the heavily productive and populated East Coast will be endangered at a mere 10% penetration.
If the IEA is right and solar will be the largest source of power by mid-century, you can kiss the advantage that an owner of power plants and power lines in the Southwest has goodbye too.
Bringing It All Together
The options, as they stand, fall into two categories. We either pay far more through set fees to utilities as net metering falls apart and live with lower efficiency, or we let utilities starve long-term and create yet another drag on spending, GDP, and productivity that we cannot afford.
However, a third option is right around the corner. Alevo, a privately held Swiss company, claims to have made a breakthrough in battery technology for electricity storage for power grids.
The company bought a North Carolina factory earlier this year, and just announced it will hire up to 2,500 Americans. It’ll produce lithium-based batteries with 20-year warranties that can be charged and discharged tens of thousands of times without losing capacity.
These batteries, called GridBanks, will be manufactured on a “megawatt scale” to store excess power dumped into electrical grids and release it later to mitigate or cancel out peak demand.
It won’t matter if it comes from a coal or natural gas burning power plant, or renewable sources like solar or wind. As long as storage capacity is not exceeded, the power we use will always be generated at peak cost efficiency.
Alevo already has deals in place in China and Turkey, and the company is searching for customers on a global scale.
Most importantly, these batteries will be more cost efficient in the U.S.A. than the gas-fired “peaking plants” currently used, which would ultimately be used more and more as solar and wind power comes online.
Alevo isn’t alone though. Elon Musk’s highly-hyped “Gigafactory” is specifically targeting high-tech batteries for the electrical grid as well.
With widespread deployment of this new generation of battery tech, utilities have a much smoother path as new sources upend the status quo.
It isn’t a silver bullet, but it is a very good start. Coal, gas, wind, and solar power will all depend on batteries to make how we generate, store, and utilize energy commercially viable.
As for who will come to dominate the market, it is too early for anyone to say. Alevo has a hefty $1 billion of funding and a head start, but Tesla’s gigafactory has even deeper pockets behind it and scale of economy on its side.
One thing is for sure, though: A whole lot of new high-tech batteries are going to be put in cars, next to solar panels and wind turbines, and in actual electrical grids very soon.
Two massive factories are being built in the U.S. to provide these batteries worldwide, and only one domestic company stands a chance of meeting the demand for materials they will need to make it all happen.
