Board member at System One Holdings
- Demand growth, noting outlook across electricity markets, focusing on ERCOT (Electric Reliability Council of Texas)
- Competitive environment for battery companies and systems integrators, highlighting cost, reliability and chemistry
- Supply disruptions, cost inflation and procurement strategies
- Impact of the Inflation Reduction Act and ITC (investment tax credit) for standalone storage
Could you give an introduction to US grid-scale energy storage? There is plenty going on.
You mentioned that you can configure storage in different ways. Are you saying one technology or set-up of a battery storage facility can serve longer-duration storage or some ancillary services, frequency regulations and inning reserves? Can one facility fulfil multiple roles and be configured in different ways at once, or does that require different chemistries and technology set-ups?
What are you seeing from the newer battery chemistries? Is anything promising on the horizon? There is sodium, zinc and some other chemistries. What is their trajectory?
The supply chain issue is related to the chemistries and you brought it up several times. I recently saw that Fluence is targeting around 30% of its batteries sourced from outside of China by 2023, responding to some of the current supply chain pressures. There are delays in some bigger manufacturing projects that have been slated in Europe and the US, with those gigafactories paused. Do you think this move to onshoring some supply is feasible? How are different players responding to the current supply dynamics?
You’ve emphasised that the low-cost aspect and commoditisation are the principal buying criteria for utilities. The broader implications for the systems integrator market seem pretty dire. Where do you see that industry going, if the hardware and software innovations are not particularly defensible and the play for a systems integrator comes down to lowest cost, even on larger projects? Does that crush margins?
Stem focuses on a lot of the integration software, especially in the electricity markets. Is broadening its scope in cogen or just micro grids – more than a storage company – a possible trajectory for the company?
Understanding the field you mentioned relies on understanding the complex, different arrangements of electricity markets, nodes, congestion and all sorts of distributed energy resources. How does a company get visibility into margins for the different services they could provide to the markets we’re discussing? In non-restructured markets, where there isn’t that kind of transparency, this is nascent. What might margins be like in different regions, markets and areas for different utilities?
How much has changed in the industry since the introduction of the Inflation Reduction Act’s 30% standalone storage ITC [investment tax credit]? How large a difference do you think that will make on deployments over the next couple of years?
Do you have any final thoughts on battery energy storage, or is there anything we’ve missed?
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