Sonnen is one of our favorite cleantech leaders. It is great at innovation, leadership, and vision. Last month, I published a January interview with sonnen CEO and co-founder Christoph Ostermann. The good folks at The Beam went and created a transcript of it. If you can’t be bothered to watch a video but would like to read it, here you go!

Zach: So, we talked with you last year after you won the prize, I remember mentioning I was not surprised at all — I’m not surprised to see your ongoing progress, because Sonnen seems to be at the head of the game. What are some of the most recent big projects you guys have been excited about in the past year?

Christoph Ostermann: Oh, well, we had a very good year in 2017. Finally, the Australian market developed very, very nicely for us, mainly due to the reason of a retail power priceincrease on the first of July, by 25 or 30 percent or something like that.

You’re talking about for residential storage, right?

Absolutely. This has really kicked off the market and we are developing nicely over there, and then another highlight of 2017 is that the US business did very well. Unfortunately…

California and Hawaii?

California and Hawaii not as much as we thought. It was rather on the East Coast and also in the Caribbean Islands — for example, Puerto Rico due to the hurricanes….

We saw you were on the ground there, you made it to Puerto Rico, we have some coverage of your great work there. (See this, this, and this.)

It’s really unbelievable … if you have not seen it, you would not believe it. It’s unbelievable how the island is destroyed.

And the depressing thing now … there are still so many people without electricity, with roofs not on their homes. It’s a systemic problem. But what was your role? How did you get in to help them? I mean this is sort of a question that has been a little bit still unclear with you and Tesla. You have great — obviously, some of the best solutions to offer — but how did you get in?

How did we get in? I mean, first of all, we saw there is a huge need we have a partner in Puerto Rico we are working with since three years. It’s a company called Pura Energia. They told us about the problems they have on the island and then we sent a team over there.

Virtual power plants (VPPs) can greatly increase the value of home energy storage systems for a range of stakeholders including grid operators, utilities and their customers, according to SolarEdge, which has just launched a VPP software platform.

The Israeli company, known for products ranging from power optimisers and inverters to monitoring and energy management solutions, has over the past couple of years introduced more energy storage compatible inverter products and management solutions to markets including Europe and the US.

“The one word that is most important here is aggregation,” Lior Handelsman, VP for marketing and product strategy and also one of the company’s founders, told Energy-Storage.News of the platform, which Handelsman said “starts in the cloud”.

Essentially, VPPs take numerous battery energy storage systems, typically sited behind-the-meter in customer’s houses, and aggregate together their capabilities. It means they can be more easily controlled by the network operator and can be used to provide grid services.

“To take one example: [Let’s say] you are a network operator, tasked with stabilising the grid and keeping the grid stable. There are so many different distributed generation resources on the grid making your task more and more complex,” Handelsman said.

Network operators could be constrained by money, space or time from building out new infrastructure such as substations in neighbourhoods where there is high peak demand in summer. Instead those same operators could take advantage of growing numbers of distributed energy resources (DERs) on their grid that include solar PV systems, EVs and EV chargers and of course battery energy storage systems.

“If you have a peak in a specific suburb, all you need to do is tell the storage systems in that suburbs to feed energy just for a few minutes into the grid to support that peak. Or if you have a peak you ask all the EV chargers in that area to stop charging or throttle down their charging for a few minutes. These are the bigger examples, but that can be made more and more complex as the challenge becomes more and more complex,” Handelsman said.

The US Department of Energy (USDOE) will be providing up to $30m in funding for the projects that are part of the Advanced Research Projects Agency-Energy (ARPA-E) programme called Duration Addition to Electricity Storage (DAYS).

The project teams under the DAYS will be engaged in the development of new technologies that will enable long-term energy storage on the power grid.

US Secretary of Energy Rick Perry said: “Building the grid of tomorrow will require new tools and technologies to ensure Americans have access to affordable and secure energy.

“At DOE, we are peering over the energy horizon and identifying the key technologies we need to support the power system of the future.

“These new storage options will offer us the opportunity to make the grid more resilient while enabling greater integration of our domestic energy resources.”

The DAYS teams have to design and develop cost-effective energy storage systems that can be deployed at any given location.

USDOE explained that the funding opportunity is not confined to any one particular technology.

The participating teams also have the option to develop energy storage systems using thermal, mechanical, or electrochemical power technologies.

Most of the world was focusing on the Model 3 portion of the Tesla Q1 earnings letter last night. But buried down toward the bottom of that communication, the company reiterated its goal of tripling its energy storage business in 2018. “2018 should be a very important year for our energy storage business,” the letter read. “We continue to aim for a three-fold increase in MWh deployed for our energy storage products this year.

“In Q1, energy storage deployments grew 161% from Q4 2017 to 373 MWh, which includes the 129 MWh South Australia project that was installed last year with final commercial transfer occurring in Q1. Electric utilities and power producers around the globe are increasingly appreciating the value proposition of our Powerpack storage systems based not only on economic benefits but also on the operational benefits of faster response time and greater reliability of the electric grid.”

That giant battery in South Australia surprised people with its insanely fast response the first time it was called upon after it was commissioned — an astonishing 140 milliseconds. That’s how long it took for it to start providing power to the grid when a nearby coal generating plant went offline unexpectedly.

Editor’s note: Admittedly, this is being marked/communicated as a big surprised, but this is how batteries work, and Younicos communicated this point to us well several years ago in Berlin, especially via these two graphs:

Such perfomance is making other utility companies sit up and take notice. Tesla is in talks to provide a similar grid-scale battery to Queensland, Australia. It is also working with Consolidated Edison in New York, Xcel Energy in Colorado, and PG&E in California.

Elon said on the conference call last night, “Tesla may have a gigawatt-scale deal announced in a matter of months.”

Just weeks after the 12th International Renewable Energy Storage Conference (IRES2018) concluded in Düsseldorf, Germany, newly announced figures from Bloomberg New Energy Finance (BNEF) confirmed that battery storage technologies coupled with rapidly expanding renewables are blunting new fossil fuel investments. BNEF’s 2017 figures show that over $330 billion was invested in renewables with comparative costs worldwide showing an 18% improvement in the competitiveness of onshore wind and solar as well as a rapidly developing role for batteries.

As a result of falling barriers to installation, the levelized cost of electricity (LCOE) for all the leading technologies is decreasing. This is causing fossil fuel power to face an unprecedented challenge in all three roles it performs in the energy mix: the supply of bulk generation, the supply of dispatchable generation, and the provision of flexibility. With capital costs for renewables falling and both generation limits and efficiencies rising, when coupled with the plummeting costs of storage—given its inherent ability to smooth output, and if necessary, shift the timing of supply—fossil fuel power stations are simply being fenced in.

“Our team has looked closely at the impact of the 79% decrease seen in lithium-ion battery costs since 2010 on the economics of this storage technology in different parts of the electricity system. The conclusions are chilling for the fossil fuel sector,” said Elena Giannakopoulou, head of energy economics at BNEF. “Some existing coal and gas power stations, with sunk capital costs, will continue to have a role for many years, doing a combination of bulk generation and balancing, as wind and solar penetration increase. But the economic case for building new coal and gas capacity is crumbling, as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants.”

Lower Costs, Larger Energy Storage Installations

Battery units in the 10 MW to 20 MW range already online in Europe are being eclipsed by new 50-MW facilities now being built. And with new investments by Tesla and others taking batteries to 100 MW (at the moment limited to Australia, but watch for other announcements soon), the combined synergy is gaining steam and attracting major players.

“Competitive auctions for new renewable energy capacity have forced developers, equipment providers and financiers to bear down on all the different costs of establishing wind and solar projects,” said Seb Henbest, head of Europe, Middle East, and Africa for BNEF.

The Intertubes are all abuzz over a spate of bad news about renewable energy and energy storage. Among the concerns bubbling to the surface in the last week or so are: (1) renewables might not be doing such a great job of replacing fossil fuel capacity after all, (2) energy storage is fomenting yet another carbon emissions problem instead of solving one, and (3) renewables are making electricity rates go up, not down.

Ouch! Nevertheless, the fact is that renewable energy and energy storage are both here to stay. So, what are we going to do about it?

First, Admit You Have A Problem

The issue of fossil fuel replacement was tackled by a newly published study titled “Have fossil fuels been substituted by renewables? An empirical assessment for 10 European countries.”

The study looks at this problem: energy managers among the 10 nations in the study are coping with the intermittent nature of wind and solar by installing more fossil fuel capacity.

That’s more natural gas capacity, to be specific. The case for natural gas integration with renewables is pretty straightforward if your only goal is to ensure reliability when there’s a lot of wind and solar on the grid. In contrast to coal, natural gas power plants can hang out on standby mode when not needed, and rev up quickly when needed.

On the plus side, the study notes that an increase in natural gas capacity doesn’t necessarily correlate to an increase in fossils burned. Remember, you can build all the capacity you want, but in an integrated grid that new gas power plant is competing with wind, solar, hydropower and other renewables.

The problem will become more apparent as the global economy transitions to full electrification. Unless other measures are taken, that means natural gas capacity will also continue increasing. Eventually, the long-term result could be an increase in fossils burned for electricity.