Andy Tang, Wärtsilä’s vice president of energy storage and optimization, sat with me in an episode of CleanTech Talks a few weeks ago. This second half of our extensive discussion includes discussions on the large island micro-networks in the Azores and the Caribbean, the benefits of Wärtsilä’s zero-transition engines, and flexible marine and terrestrial fuel engines.
There are two broad sets of topics on why you need to manage storage, security / risk and revenue, both of which are equally important. In terms of safety and risk, while everyone calls batteries a commodity, they are very picky about how they want to live their lives. Health status, charge status, rest point, ideal operating temperature and other factors must be maintained and monitored for guarantees to be valid. Optimal battery discharge avoids the risk of heat escape and preserves the life of the product.
Then, there is the commercial aspect. A battery is a pile of chemicals found in a field. It only makes money if electrons flow in one direction or another. The energy management system (EMS) connects it to the electricity markets for the market. This varies depending on jurisdiction, utilities, independent system operator (ISO) and revenue streams such as ancillary network services. And how to generate these revenues without degrading the battery?
But, in addition, at the points of greatest demand when the utility company is ready to pay $ 9 per kWh for electricity, everything else disappears except the concern for risk. Tango’s efforts in demand management with PG&E and startups have prepared him very well to find the optimal path.
In the Azores on the island of Graciosa, 1,500 kilometers from the mainland of Portugal, 4,000 inhabitants had wind and sun, but could not exceed 17% of the annual demand. Their diesel generators have their own control requirements that can be activated by creating disappearances all over the island. Wärtsilä’s GEM EMS created day-ahead forecasts for wind and solar production from weather forecasting services and combined this with their understanding of optimal generator motor use and put a small battery that lasts one hour. This reduced the uniform price of electricity by $ 0.10 per kWh and increased the use of renewables to over 60%. Huge fuel savings, of course.
A battery alone would not do that. The intelligence embodied in EMS plus the battery allows it.
Another example is on the island of Bonaire from the ABC islands, Aruba, Bonaire and Curacao. It is an island with 20,000 inhabitants in the southern Caribbean. Wärtsilä’s efforts have enabled them to shift their wind power generation resources from average percentages of annual demand to more than 30 years, again with a significant reduction in diesel power generation. These are not tiny networks, but MW scale networks.
This is well aligned with the other side of Wärtsilä’s business, naval force. Their largest engine is a rough output power of 20 MW. All ships are ‘micro-networks’, and literally all systems that do not push them through the water carry electricity. Every massive cruise ship and bulk cargo ship is a micronet. More and more of them also have significant battery storage, although several larger ships have hybrid drives.
Thirty years ago, it would have been almost impossible to efficiently manage storage in a mixed micronet of renewables and generators because the forecast was much worse, computers expensive, and battery technology much less mature. Twenty years ago and that would have been difficult. Now, the crossroads of the emergence of mature LFP and lithium-ion batteries, plus cheap computers, plus the Internet, plus high-precision weather forecasts, has made this type of micronet optimization much more sustainable.
Wärtsilä brings data from several different time systems and uses those appropriate for geography. While 5-day weather forecasts are now as accurate as one-day ones, this does not mean that every weather forecast system is equally good in different regions.
Wärtsilä’s storage business is a subset of their energy business. They are looking to future fuels and are strongly focused on flexible fuel engines to go through the transition. Wärtsilä’s white paper ‘Net Zero with Front Load’ models cost-effective pathways to 100% renewable energy systems in different markets with significantly different socio-economic dynamics, different energy systems and the challenges to be overcome. The key focus is how to do it in a cost-effective way. While critics say it will be too expensive, Wärtsilä has calculated his scenarios. Ignoring the policy, Wärtsilä argues that it is possible to get to zero faster, acknowledging that there is a role for long-term storage engines that run on current fossil fuels but switch to green fuels in the future. California, for example, could use an existing natural gas storage facility, run engines from it, and then switch to biomethane in the future.
This is in line with finding ways to profitability for natural gas and coal generators that will operate at ever smaller capacities until they are no longer needed at all. Denmark did this with its coal production assets as their wind energy fleet grew, as an obvious example.
Wärtsilä has an advantage with its reciprocating engines over gas turbines for this long-term storage path. The engine can be started and stopped hundreds of times a year without affecting maintenance, unlike gas turbines that would be affected. This is similar to modern cars that turn off the engines at stop lights and then restart them. Gas turbines do not like to be turned on and off several times a day. They can be adjusted up and down in terms of power output, but maintenance costs increase with multiple start-stop cycles.
Accordingly, they are developing engines with flexible fuel on ammonia and methanol, because the marine industry is considering both of these fuels. In my maritime shipping projection to 2100, I see that electrification is a bigger wedge than industry, combined with ongoing optimization and innovation in ship efficiency, and I think it is likely that biofuels that are compatible with existing engines will be the more likely path.
Wärtsilä is also considering pure hydrogen for the ship’s facilities and the means of production they sell. Tang points out that if Europe is introduced into hydrogen as a fuel with government actions and incentives, then it could ultimately be a thing despite clear challenges.
Wärtsilä has recently experienced wild changes in battery prices, primarily due to the price of lithium carbonate, which is required for LFP and lithium-ion batteries. Prices at the system level are projected to increase by 21% this year and by 31% next year. The industry is digesting this and some implementations have become unsustainable, with ugly negotiations. Tang’s perspective is that in the period from 2024 to 2025, this will be just a painful trace in the rearview mirror. My opinion is similar, since lithium is an element of comment both in hard rock and in lithium salts in the oil and gas regions, we only experience a short-term mismatch between the volume of resource extraction and market demand.
Tang hopes that things like redox batteries will mature and allow for longer-term storage, because cell-based chemicals have significant limitations in the economic scaling of energy. 6-8 hours is about as long as they can be stored economically, and we need longer lasting solutions. His perspective is that it will be the result of all of the above.
Tang came up with a career choice because of his love of skiing. He has watched the average snow level in the Sierras climb a thousand feet since he started skiing three decades ago. Resorts with basic altitudes of 6,000 feet once had every storm that came like snow, and now half the storms come like rain. Tang’s perspective is that we have a chance to take the lead. We have a chance to fix this. Switching to renewable energy is personally important for Tang. He wants to be the manager of future generations of skiers. He says we have the tools, we just need the policy wrapped up behind it and make it happen.
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