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In early December, it was Pacific Gas & Electric’s (PGE ) turn to award 75 MW of projects, from nearly 5,000 MW of applications, to five companies, of whom none overlapped with those on the SCE awardee list. The project technologies covered not only lithium-ion (Nextera – 30 MW; Hecate Energy – 12 MW), but flywheels (Amber Kinetics – 20 MW) and zinc-based batteries (Convergent/Eos – 10 MW; Western Grid – 3 MW) as well.
This was noteworthy for several reasons: The flywheel win was a surprise to some. Also getting attention was the fact that lithium-ion was not the only winning battery chemistry. Zinc-based technologies won as well, with Eos Energy Storage (Eos) grabbing the lion’s share in that department. Eos has claimed on its website that it could provide a battery system for $160 per kilowatt-hour. Although the company has several demonstration sites – most notably with Con Edison in New York, it had not yet won deals to put a lot of commercially viable ‘steel in the ground.’ And most of the major utility-scale storage players – from Tesla to AES – have been deploying lithium-ion (although flow batteries are seeing their share of business as well - Imergy and SunEdison announced in mid December a 10-year contract with Ontario’s grid operator – IESO – for five MW and 20 MWh).
Storage developer Convergent Energy + Power (Convergent) offered a variety of technology options in the solicitation, and a bid utilizing the specifications and pricing provided by Eos was ultimately selected by PGE. A recent conversation with Convergent CEO Johannes Rittershausen and Eos’s VP of Business Development Philippe Bouchard helped to explain how and why that transpired, and what the storage world looks like these days.
First, a little bit of background about Convergent: the company is a technology-neutral development company founded in 2011 that focuses on storage projects for utilities and larger commercial and industrial customers. It has strong ties to project financiers looking to put money into projects and has over 20 MW of battery projects either operating or under contract. and a pipeline of several hundred MW in North America. The company possesses experience with advanced lead acid batteries and flywheels as well as Lithium-ion batteries, so incorporating another new technology such as zinc-based storage was not a huge hurdle. As Rittershausen comments,
In our portfolio we have everything from a 6-hour advanced lead acid battery to a 6-minute flywheel as well as a 1-hour lithium-ion battery. All of these technologies are under contract with credit-worthy off-takers and are utilizing debt financing structures.
Rittershausen also notes that the main advantage Eos brought to the table on the PGE bid was the price. “They brought a compelling price point, which was critical in a very competitive RFP setting.”
Eos’s Bouchard observes that the goal has always been to enable an energy storage solution that represented a cost-effective alternative to traditional gas-fired peaking plants, which translates to the need for very low price and long life.
When we surveyed the technology landscape to find a solution that could compete cost-effectively, we steered away from lithium and focused on zinc as an enabling chemistry due to its low cost. We leveraged technology patented in 2008 when the company was formed.He notes that the essential sub-module building block is about the size of a shoebox, and that the basic design and simplicity of the technology enable a “game changing price point of $160kWh.” Furthermore, the technology is robust, offering a low total cost of ownership, and the aqueous electrolyte makes the battery quite safe.
Image: Eos – the key is what’s in the box
Bouchard admits that the dominance of lithium-ion and its scale is indeed a challenge, but he’s confident Eos can make its mark, in large part because of the advantages inherent in the manufacturing process, which is simple and inexpensive compared with lithium-ion.
We don’t need clean rooms or complex deposition processes. We can manufacture our batteries in the equivalent of a machine shop to leverage existing equipment and production capacity. We work with established contract manufacturers that allow us to produce in volume…With lithium-ion you see massive investments to achieve economies and cost reduction. With our solution, we are undercutting costs even with low volumes at $160/kWh, and we are just beginning our cost reduction curve.However, in the competitive storage space right now, a low cost battery is not enough. There’s a lot more to a storage project than simply the battery. Among other things, Rittershausen observes that for a developer it’s important that the technology be
a fully integrated solution we can take to the bank. This includes a wrapped package including performance guarantees backed by a robust balance sheet. What’s relatively unique about Eos in the new entrant’s tech space is that they have been working to put together these types of guarantees.Eos has developed partnerships with Toshiba, Siemens, NEC, and Alstom – companies with big balance sheets that have been around for decades, or even centuries. Bouchard indicates that this represents a big advantage.
We can leverage existing capabilities and large balance sheets to provide a full financial wrap around the battery solution. We can also provide an insurance offering to stand behind the product in the form of credit enhancement…This represents an add-on to the $160/kWh price, but the combined price still significantly undercuts equivalent lithium-ion pricing.This vastly increases the comfort level of the buyer. Rittershausen puts it this way,
Convergent is not purchasing an Eos battery from Eos – we are purchasing a product integrated by Siemens or Alstom or NEC with a fully wrapped balance sheet behind it. This helps make it a bankable project.In order to make that happen, Eos committed to entering into a significant level of collaboration with various partners, with in-depth information-sharing, direct testing in some cases, and even cooperation on demonstration projects. Bouchard indicates that this takes different forms.
Rittershausen also notes that the main advantage Eos brought to the table on the PGE bid was the price. “They brought a compelling price point, which was critical in a very competitive RFP setting.”
Eos’s Bouchard observes that the goal has always been to enable an energy storage solution that represented a cost-effective alternative to traditional gas-fired peaking plants, which translates to the need for very low price and long life.
When we surveyed the technology landscape to find a solution that could compete cost-effectively, we steered away from lithium and focused on zinc as an enabling chemistry due to its low cost. We leveraged technology patented in 2008 when the company was formed.He notes that the essential sub-module building block is about the size of a shoebox, and that the basic design and simplicity of the technology enable a “game changing price point of $160kWh.” Furthermore, the technology is robust, offering a low total cost of ownership, and the aqueous electrolyte makes the battery quite safe.
Image: Eos – the key is what’s in the box
Bouchard admits that the dominance of lithium-ion and its scale is indeed a challenge, but he’s confident Eos can make its mark, in large part because of the advantages inherent in the manufacturing process, which is simple and inexpensive compared with lithium-ion.
We don’t need clean rooms or complex deposition processes. We can manufacture our batteries in the equivalent of a machine shop to leverage existing equipment and production capacity. We work with established contract manufacturers that allow us to produce in volume…With lithium-ion you see massive investments to achieve economies and cost reduction. With our solution, we are undercutting costs even with low volumes at $160/kWh, and we are just beginning our cost reduction curve.However, in the competitive storage space right now, a low cost battery is not enough. There’s a lot more to a storage project than simply the battery. Among other things, Rittershausen observes that for a developer it’s important that the technology be
a fully integrated solution we can take to the bank. This includes a wrapped package including performance guarantees backed by a robust balance sheet. What’s relatively unique about Eos in the new entrant’s tech space is that they have been working to put together these types of guarantees.Eos has developed partnerships with Toshiba, Siemens, NEC, and Alstom – companies with big balance sheets that have been around for decades, or even centuries. Bouchard indicates that this represents a big advantage.
We can leverage existing capabilities and large balance sheets to provide a full financial wrap around the battery solution. We can also provide an insurance offering to stand behind the product in the form of credit enhancement…This represents an add-on to the $160/kWh price, but the combined price still significantly undercuts equivalent lithium-ion pricing.This vastly increases the comfort level of the buyer. Rittershausen puts it this way,
Convergent is not purchasing an Eos battery from Eos – we are purchasing a product integrated by Siemens or Alstom or NEC with a fully wrapped balance sheet behind it. This helps make it a bankable project.In order to make that happen, Eos committed to entering into a significant level of collaboration with various partners, with in-depth information-sharing, direct testing in some cases, and even cooperation on demonstration projects. Bouchard indicates that this takes different forms.
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