Energy transition is a key topic of Freigeist
Technological innovation to save our planet is one of the key investment fields of Freigeist Capital. Besides state-of-the-art technical solutions in the area of mobility, such as Lilium Aviation, we are constantly analyzing the energy industry: From new methods of generating energy, energy storage solutions to efficient energy management.
The global demand for energy has been increasing dramatically over the last decades and it is expected to grow by around 30% until 2040. Reasons for this are - among others - an expanding population and increasing urbanization. Especially electricity consumption is expected to rise drastically over the next few years, accounting for 40% of the total growth in final consumption until 2040.
The impact of the increasing electricity demand on our climate is dramatic and we already observed impacts of climate change on ecosystems, economies and societies.
As this problem becomes more and more aware, we have to find a way to reduce carbon emissions and stop climate change. A crucial factor for mitigating climate change and a sustainable future is the transition to renewable energy.
Why energy storage is needed
However, as clean as renewable energy sources like wind turbines and solar energy might be, they have what Bill Gates called a “reliability problem”: Weather conditions are volatile as the wind for wind turbines blows irrespective of electricity demands, and so does the sun for solar energy shine without being able to care for peak times in electricity consumption. As a result, electricity supply from wind turbines and solar energy is volatile as well - or, as Bill Gates said, “unreliable”.
Therefore, we need technology that allows flexibility on the supply-side to match the demand to provide a reliable electricity supply with renewable energies. A highly promising approach are energy storages which are ideal for smoothing fluctuations in supply resulting from a higher share of wind and solar power.
A recent study has estimated that around 15.000 TWh storage output is needed for the power sector if we want to transit to 100% renewable energy globally until 2050. For Europe, the required storage output would amount to around 2250 TWh for the power sector until 2050. Most of the required output globally comes from North East Asia (around 5000 TWh) and the SAARC countries (around 3000 TWh).
However, in 2015, the global output from energy storages was only 29 TWh, mostly from pumped hydro storages. That is 0.2% of what will be needed until 2050.
There are several fields of application where energy storages are needed, with the two main fields being the integration of renewable energies and applications for grid stability.
Storage for integration of renewable energies
Solar and wind energy are volatile on various time dimensions. The daily mismatch of peak hours in supply and demand of renewables has gained a name as the famous “Californian Duck Curve” (Figure 1). While generation from solar energy is highest around noon, the demand for electricity is highest in the evening hours.
The duck curve illustrates the net load requirements from non-renewable sources in California during a day if the electricity output from solar energy is fed into the grid. We can see that around noon, the demand for electricity from non-renewable sources decreases drastically since solar output is very high then, showing a potential overgeneration in total. After 3PM, there is a steep increase in demand for non-renewables with a peak in the evening hours. The higher the share of solar energy is, the steeper this sudden increase in demand for energy from sources other than solar and wind will be in the late afternoon hours. This large change of electricity supply to match a changing demand in such a short time puts considerable stress on the grid.
Electricity storages could flatten the duck curve as illustrated in figure 2. During the noon hours, when solar power supply is high but demand is low, solar power can be stored for later use during the evening peak hours, when solar power supply is low but demand is high. This flatten the extrema of the curve and decreases the need for a sudden increase in non-renewable power during the late afternoon hours.
The illustration by the Fraunhofer Institute (Figure 3) of the German electricity market shows that supply from wind and solar energy are highly volatile over weekly and seasonal time ranges as well. With the share of wind and solar energy growing from 8.3% in 2008 to 28.8% in 2018 in Germany, an almost three-and-a-half-fold increase in 10 years, the integration of this volatile electricity supply will become more and more important.
In 2017, Germany gave away electricity which could have supplied 15.4 million households for a year.
A common practice in use for high-production days is curtailment, that is, the temporary shut-down of power plants or the reduction of their production capacities, for example to avoid transmission congestion.
Another option is to export electricity but this affects the grids of neighbouring countries and also the electricity prices there. None of the two options is very helpful to reach climate goals sustainably.
Energy storages could make curtailments and exports unnecessary since the excess energy could easily be stored for later usage. In Germany alone, in 2017, 5.5 TWh electricity from renewable energy sources were curtailed and around 77 TWh electricity were exported. To give an example: a 4-person household in a single-family home consumes about 4 to 5 MWh per year, so 15.4 million households could have been provided with (free) electricity for a whole year. Instead, we exported this electricity mostly for negative prices and actually paid others to take our electricity, while at the same time households pay ever increasing energy prices.
Moreover, on low production days, peak load power plants are put in use. These are power plants which are in use only a few days per year and usually have high marginal costs which are passed on as higher electricity prices. To make matters worse, they are usually operated on unsustainable sources. In Germany, the peak load of 82 GW is mostly covered by gas, coal-fired or nuclear power plants and frequently used as an argument against a fast fossil fuel phase-out. Energy storages can provide a more sustainable energy supply for these peak loads and substitute the peak load power plants, paving the way for renewable energies.
Storage for grid stability
But also from a grid operating perspective, storages are highly required and useful.
By reducing the system load in peak-times, they can help to extend the durability of grids without wasting the electricity.
Additionally, they help to ensure a high power quality: A mismatch between supply and demand can have negative impacts on power quality. This causes instability in the grid and can further cause potential damage to terminal devices. One example most Germans recognize is that many clocks go wrong. These are clocks that use the 50 heart frequency to track time. Due to the strong fluctuations in the grid, the frequency changes, causing the clocks to go wrong.
Voltage drops can be tackled by reactive electricity supply and electricity storages could provide solutions which are cheaper than the options in use now.
Additionally, storages can be used to mitigate the effects of postponed investments during grid expansion. For instance, Germany aims to expand its grid by 7.700 km, of which until now 1050 km has been built, less than 14%. The required investments are around 50 billion €. In 2018, 150 km have been built, a much slower progress than necessary. Combined with an increasing demand, this can (and has) lead to bottlenecks in the supply of some areas, which are not only bad for the reliability and quality of electricity supply but also for the grid itself.
So, large-scale energy storages can pave the way towards renewable energies by smoothing volatility on daily, weekly and seasonal levels, making curtailment unnecessary and replacing peak-load power stations. They can further increase the stability and reliability of the grid and help to extend its durability.
Kraftblock, an innovative, sustainable and economical storage solution
For years, we, at Freigeist Capital, are analyzing energy storage solutions and have compared available storage technologies. But, as of now, available storage technologies are neither durable due to the limited number of charging cycles, nor ecologically sustainable. Furthermore, storage solutions such as batteries have tremendously high prices for large-scale energy storages and the mining for their resources is harmful for the environment and indigenous people.
Finally, we found a new and innovative solution in Kraftblock, which is durable, ecologically sustainable, economical and scalable and decided to invest.
Kraftblock energy storage is a modular, scalable energy storage with a capacity from 4MWh up to 10,000 MWh. Its innovative technology makes it significantly cheaper than common Li-Ion batteries and cleaner as it has no negative environmental impact: It consists of 85% recycled material and is made to almost 100% from unlimited resources (compared to critical raw materials like Cobalt). Furthermore, it has an infinite lifespan and contains no toxic materials. With 1-4 cent/KWh energy storage costs, it is not only ecological and sustainable but also a very economical option.
The Kraftblock storage technology is based on high-temperature storage granule which can store extremely high temperatures up to 1.300°C in a very small space.
It has a 4-10x lower capital expenditure than Lithium-Ion batteries and is hence very cost-efficient. Moreover, due to the storage granular, it has a 3-10 times higher storage density than comparable thermal energy storages. Because the storage material allows for a very high storage temperature (1,300°C), which is much higher than the storage temperature of comparable storages, it provides a remarkably efficient reconversion (heat-to-power).
These advantages make it an exceptionally cost efficient and sustainable solution to fill the gap in energy storage needed for a smooth transition to renewable energies.
A transition to renewable energies will be inevitable if we want to limit the damage caused by an increasing electricity demand to climate and environment. Otherwise, the effects of greenhouse gas emissions can and will easily backfire on us through the effects of climate change on society, economy and humans.
As solar energy and wind energy are “clean” but their sources are volatile and beyond any control, energy storages are needed to guarantee a smooth electricity supply from renewable energy sources. Kraftblock will be a valuable solution - among or in combination with others - when we progress toward a sustainable energy future.