Above: Eelpower's Rock Farm storage site in Shropshire, England
Fahrenheiters Meg and Tom are part of the F212 Impact team, bringing a social and environmental consideration to all of our project work. In the previous conversation, we learned how companies in the oil and gas industry are taking steps towards a cleaner future. In this article, they reflect on another side of the challenge with an entrepreneur in the renewable storage space.
They sat down with Mark Simon, Chief Executive of Eelpower Ltd, a leading investor and owner of energy storage assets in the UK. Mark provided insights on how energy infrastructure has to evolve to support renewables, one key part of which is battery storage and managing the “business of volatility”.
Meg Lueck: You’ve had a wealth of experience across different renewable energy solutions, from solar to hydropower to battery storage solutions. Tell us about your journey and what drew you to this field in the first place?
Mark Simon: I left IBM from the chairman's office. Few have ever been mad enough to have a career that winds up in the chairman’s office, and then quit at age 34. But that would be me, and I've been doing entrepreneurial things ever since. There's only one thread that I can trace through the last quarter century, and that is finding solutions to difficult problems.
In 2010 I put solar panels on the roof of our house in rural Hampshire in England, and that, I think, was the trigger for the last 10 years of activity. It cost me $20,000, let's say, and I had a generator on my roof, connected and contracted to provide power back to my utility company.
It got me thinking… if I had $100,000, I could have a bigger generator, or $1,000,000, I could have a bigger one still!
Tom Abraham: What was interesting to you about that? Sounds like it was that power generation could be more distributed?
MS: More bluntly, Tom, it was economic. If the building of these things was possible, what would stop you doing this everywhere? Regardless of the fact that it’s very dark in the United Kingdom, we had this massive government incentive to build solar, so that's what we did. We raised $3 million and built the first ground-mounted solar farm in the UK (picture solar panels in a field). Which is cool and so we built four others.
We didn't scale it as a business for a host of reasons, but we made a very decent return for those first people who trusted us to do it. Manifestly, solar in the UK is not a clever idea in the scheme of things, although we have many of them now because they are cheap.
ML: So what is Eelpower all about, your current venture? Energy Storage for renewables is a super interesting and pressing issue: how did your experience with the solar farms beforehand lead you to this space?
MS: The February 2016 Economist front page showed a visual of an American plug, evidently burned out, and the title “Clean Energy’s Dirty Secret.” The dirty secret is that renewables screw up our existing energy system. Everything is up for grabs and everything is broken. You can't keep the lights on if you replace what you had before now with wind. And, by the way, the economics of everything goes to hell.
A lot has to change, and one of the conclusions is the need for energy storage. So for no very good reason other than the idea appealed to me, we acquired a battery for that original solar farm. Someone said, “we've got this 20 foot containerized battery coming from China, do you want it?” And I said, “yeah, hell, why not?” We then found we could make good money from that battery by providing services to the grid for what is called frequency regulation. That was the first commercial battery in the UK.
ML: How does energy storage work?
MS: Our batteries are containerized. 40-foot containers, just like you see on ships and trucks everywhere. On the Eelpower website, you’ll see a dreamy picture of the English countryside with a fence around 16 of them [the top article visual]. We typically source them from China.
In Britain, a commercial company called National Grid has the license to manage the electricity grid. 10 years ago, that was fairly straightforward: you had a certain amount of energy demand at any given time; all the power went out to people’s houses, was consumed there, and went away. Whereas now, there is similar demand, but we also have solar panels, wind, all sorts of things, pumping power back into the grid intermittently. At times the energy generated isn't needed.
It has become really complex, and the grid company, which was just a messenger like the Postman taking electricity to everyone’s doorstep, is now having to be interactive, and balance, second by second.
Batteries represent the solution. Building renewables is relatively easy. But for storage, the business model is still being established and batteries are expensive.
We believe there is more opportunity from a platform of batteries plugged directly into the wider grid, rather than “co-locating” batteries alongside the renewable source. There's only one risk (!) in this whole business, and that’s right at the middle of it: it's the business model. Can we actually make any money? I'm sure we can, but don't ask me exactly how.
TA: What’s your take on the future of traditional utilities? Do you think that there will be a need for a national grid as a backbone, or as energy sources for generation and consumption get more distributed will the grid itself get more distributed as well?
MS: The grid is absolutely essential. It is almost certainly a social good that should be held publicly rather than corporately, but there are lots of ways to achieve that. In Britain it is owned by a private company, but it’s structured with strict public oversight. Breaking up the grid is expensive and risky, and I don't think human beings will manage their own energy.
My best bet is that it should be managed by an energy company who will take this problem away from you, Mr. & Ms. Householder, because frankly, none of us (even those of us who are remotely interested in it) will struggle to get our heads around it. This is complex stuff.
TA: So it sounds like what you're saying is the future of renewables and storage ownership eventually will be consolidation: even if the location of the resources are distributed.
MS: That’s right.
ML: So how do you make the batteries? The conversation seems to be focused on resources and sourcing Lithium sustainably.
MS: There are two principle flavors of Lithium-ion battery in the world at the moment: one is Nickel-Manganese-Cobalt (NMC) batteries, used because they are particularly energy-dense; and one with an older parallel technology, Lithium-Iron Phosphate (LiPo/LiFePo4), which is less energy-dense. When your batteries are containerized, you don’t care how dense it is as you’ve got lots of space. I don’t need to tell you that iron and phosphates are everywhere, but the lithium supply chain is more concentrated and largely controlled by China.
TA: Are you thinking about other more sustainable forms of batteries? You know like, molten salts or whatever?
MS: In five years’ time we will be having more serious conversations about different technologies other than Lithium-ion, including the flow battery technology that my eldest child has been working on for his PhD at Imperial College and keeps banging on about. But there is only one show in town for now, and that’s Lithium-ion.
TA: How do you think about the different modes of storage, delivering energy at different times during the day, or over the course of a year? (e.g. increased load for heat throughout the winter)
MS: Check everything you think you know about how a battery works before you consider how battery storage makes money. While the idea that you store energy when it's cheap and sell it when it’s expensive is obviously true, it is such a small part of the business model as to be actively misleading.
Batteries live in an electricity system which traditionally only talks about generation and consumption, and batteries manifestly do neither of these things.
The intermittency of renewables is threatening the whole system. For example, on a sunny evening in Summer, 2019 a gas-fired power station in East Anglia failed at the same time as a wind farm in the North Sea went offline. The resulting drop in grid frequency started turning things off up and down the country. All the batteries jumped on because we saw the frequency move and my two little batteries generated 10% of the response to that, responding for 72 seconds to save the grid before it would have turned Newcastle and large parts of the West Country.
What we're selling is the management of volatility. The biggest application is frequency regulation, keeping the grid at 50 or 60 Hertz. We can take power off when it's not needed, and likewise, when the frequency drops down, we can put power back in.
TA: What are you personally most excited about for the future of the energy sector?
MS: If we do this right as a nation and as a globe where does this go? We turn carbon-based generation off and get to a place where all our electricity is clean and the massive bulk of it is delivered by wind and solar. This electricity is, at the margin, free. And if you make electricity so cheap to deliver that you can afford to heat your house with it, you can decarbonize heat. THAT is the way you'll get to zero carbon, and while you’re at it, go a long way to eliminate fuel poverty.
I think that's the real prize, and batteries are a vital first step which we must address in the next five years. That's why we’re doing what we’re doing.
In case you missed it, check out Part 1 of the series, in which we discuss the future of the Oil & Gas industry with Dani Murphy Cannella, Sustainability Lead at ECONNECT Energy.
If you'd like to discuss incorporating Impact into your business model or products, reach out to Tom Abraham to talk.