By Richard Stubbe, Bloomberg NEF editor. This article first appeared on the Bloomberg Terminal.
Renewable sources like wind and solar keep increasing their share of the global electricity market, but something has to fill the gap when the wind’s not blowing and the sun’s not shining. That’s where storage is coming in, whether from lithium-ion batteries that can fill in gaps of a few hours or longer-duration systems.
Highview Power, based in London, is offering liquid air energy storage systems as the long-duration answer. The systems liquefy air in tanks when power is cheap, for instance, when solar power is in surplus. Then they expand the liquefied air for use to drive a power-generator turbine when necessary.
Highview has two LAES plants. The newer one, a grid-scale plant in Manchester, England, was launched this year. Now the company has hired longtime Wartsila Oyj executive Javier Cavada as president and chief executive officer with the goal of deploying its systems around the world over the next 10 years. Cavada has been president of Wartsila’s energy solutions division since 2015, and in that time the company has boosted global market share in gas and liquid fuel power plants.
Cavada, who starts at Highview next month, answered questions from Bloomberg NEF in a phone interview Aug. 2.
Q: You’re still working at Wartsila before taking over at Highview. How’s the new business, and how’s the old business?
A: Very well. I’m starting at Highview at the end of September. I’m following the team and learning what the team has been doing.
Since 2015 we have been making a huge revolution in Wartsila, going for energy storage, going for renewables, becoming a successful company in gas power generation. We increased our market share in the last two years, due to the flexibility that the engines provide.
Highview Power has one of the most promising technologies to solve the issues of solar and wind in a future that’s not so far off. Today we’re still in the 14-15 percent range for solar and wind providing power.
Q: What has changed in the past two years for liquid air energy storage, Highview’s signature technology? Where does it stand competitively?
A: The revolution of solar and wind is happening everywhere, and the long-duration storage piece is now the key. Flexible sources have gone from a market share of less than 5 percent to more than 20 percent. The impact on the grid is happening now. Now there’s a need for long-duration energy storage, not one to four hours but even 12 hours if that’s needed, when there’s not enough wind, when there’s not enough sun.
Highview’s storage technology is not a hocus-pocus thing. It’s an extremely mature system, proven technology with proven components. It has worked for decades.
Air is everywhere and extremely easy to liquefy. Once it’s liquefied, it can be stored, transported, kept and delivered, then returned to gas to activate a turbine and can generate power instantaneously, as we have shown in our Manchester plant that’s been running for some months.
Q: So the need for long-duration storage is all about the rising percentage of intermittent power on the grid?
A: Exactly. When renewables were a small percentage of the grid, the longer-duration storage wasn’t needed. Now solar and wind are taking a larger share, and we are reaching a tipping point in many places, including the U.S., the U.K. and South Australia. With 20 percent renewables, the grid is less reliable. This change is happening in the past two years and the next three years.
Q: What about California?
A: California isn’t a country, but it has the fifth-biggest economy on the planet. California is going for zero percent fossil fuels. That means energy storage. Short-duration storage is going to solve many of the problems of stability and reliability on the grid, but long-duration is going to be demanded massively everywhere.
Q: Anywhere else?
A: Hawaii is coming out with an ambitious 100 percent renewable road map. Storage is going to be a crucial part of that grid. Western Europe, the U.K., Germany, and of course South Australia with its growing boost for solar.
There is a need for flexible power. It’s going to come from storing the excess that comes from solar and the excess that comes with wind. That’s what liquid air storage does — you have the equipment, you have the installation, you have the totally mature technology. You just need tanks to keep the liquid, you can put in more tanks, you don’t need a new power system to generate electricity.
Q: How big can Highview’s systems get? How big are they typically?
A: There does need to be volume. They weren’t developed for households or small dimensions. We are looking for big deployments at the utility-scale level, 20 to 50 megawatts and larger.
Q: What’s the line between short-duration and long-duration?
A: The long-duration is going to be the biggest growth area, but the short-duration is going to have a critical role. Short duration is based on lithium-ion batteries, and the maximum available duration is four hours, and it’s normally one to three hours. With liquid air, the duration is simply about the size of the tank. If your tank is large enough, you can reach five, six, seven, eight, 10 hours.
Q: What will the power provider of the future look like?
A: The grid going forward will have much more variety of sources. It won’t be a big power station with a big combined-cycle generator. The planet is going for maximum solar and then maximum wind. Then you add long-duration storage combined and hybridized with short-duration storage.
At our Manchester deployment, our energy storage plant that we have there, we have hybridized it with short-duration systems that can get into the grid in milliseconds. With liquid, you need several seconds.
Q: Why would you leave a comfortable position at Wartsila after 17 years for Highview?
A: It’s a great move. Wartsila is 184 years old, a Finnish corporation, and we have been reinventing it since 2014 to go from this heavy equipment manufacturer to be this integrated company that will launch our vision in 2018 of 100 percent renewables. And energy storage is a crucial component of this. Highview is a leader in long-duration, and it’s attracting an enormous amount of attention even though it’s a small company.
Wartsila and Highview, going forward, will incorporate with big companies so that we have a global network of servicing and a global network of market development so that these technologies are more widely available. This is consistent with the evolution that we have been making at Wartsila. Things are going fantastic. Everything is growing super-strong and well. I have built a fantastic team that will continue, and we and Highview will be very close to each other as we make this journey to 100 percent renewables faster.
Q: There are other technologies competing in the long-duration space, like compressed air, ammonia, and pumped hydro. How is that horse race shaping up?
A: Unlike compressed air, liquid air can be placed anywhere. It’s extremely clean. Compressed air requires caves to hold it. Hydro requires that the water be lifted up to a certain height.
Liquid air systems can be placed anywhere — on a wind farm, next to a hospital. Also there’s nothing cleaner than a liquid air system. You put air in, you take air out. It’s fantastic in that sense, and sustainable.
Q: BNEF has forecast solar plus wind plus battery generating plants that will essentially be able to replace a baseload plant. How do you see it?
A: The key is energy storage. It’s already happening. There are places in which solar and wind have been the baseload. There needs to be enough wind and enough solar, and then you need to be able to store a lot of the power for the moment when there is no wind and no sun. Even in the windiest parts of the U.S. wind belt, there are times when the wind isn’t blowing.
That solution is going to be the new baseload. That is the direction and it’s going to happen.
There’s a prediction that in 2040 energy will be 48 percent wind and solar, and I think it will be much more. Energy storage is the key to make it happen. Solar and wind are ready but they need the storage to make it happen, and the storage has to last longer than a few hours.
Q: Two years ago, your predecessor quoted a price for a 200-megawatt Highview system that would cost $200 per kilowatt-hour to operate. Where are prices now?
A: It’s going below. We are south of $200. But unlike a lithium-battery system, your unit cost comes down with a liquid-air system because you’re just adding tanks.
Q: What’s the next breakthrough you’re expecting?
A: In 2019 and 2020, these solar and wind deployments are going to happen massively. We are working with several companies in Europe and the U.S. for new plants that will need long-duration storage, and this should happen in the coming months, and everything should accelerate. You’ll see that effect like in other industries — it won’t be linear, it will be exponential in growth. It’s going to be historical, and I want to be in the driver’s seat for it. A few years from now, nobody will think about energy storage. It will simply be a given.