James Greenberger is the Executive Director of NAATBatt International, the trade association for manufacturers, supply chain participants, and research institutions developing or supplying advanced battery technology in North America.
Read part two of our two-part interview with James to get his advice for energy storage startups and understand the key for unlocking mainstream solar-plus-storage.
Q: What advice do you have for startups getting into the storage market and how to succeed?
It is very difficult being a startup in the battery space. Huge amounts of investment are required in order to get any type of battery technology off the ground. And product development takes a long time in energy storage and advanced battery technology. It is not a good area for venture investment, and most battery startups have been unsuccessful for that reason.
The best advice I can give battery startups is to try to ally with a larger company and to do so sooner rather than later. I think hooking your dreams to a huge venture round, if you’re developing a battery or energy storage technology, is probably a very low percentage bet. The best partners for battery startups are probably larger companies that already have customers who understand the economics of the market. Companies that have products in the market, that are already fully aware of those products’ shortcomings, and that are looking for solutions may be the best long-term partners that battery startups are likely to find.
A good template for the advanced battery industry is the pharmaceutical industry, where the typical roadmap is for a startup to come in, do the technology development, get the IP, develop the proof of concept, and then be acquired or partner with one of the large pharma companies. This is a great model for the energy storage industry because it pairs young companies with those that are already in the business and are looking for solutions for which they already have the money to capitalize.
One of the most interesting pots of money that I am waiting to see unleashed is that controlled by the oil industry. The oil industry has vast amounts of cash and is looking to diversify into emerging technologies. Some of the major oil companies are already doing this, though still at a relatively small level; Shell recently made an investment in mobile energy storage company, Freewire and Total, of course, bought Saft. But I suspect that there are other major oil companies still sitting on the sidelines just waiting for the right opportunities.
For major oil companies, battery technology offers an excellent way to diversify their portfolios. To date, it has just been too small to bother with. But that may change soon. I suspect that as battery technology matures, there will come a tipping point where a lot more of that cash will come in and many more battery technology startups will have access to investment capital than has been the case in the past.
The electricity business is a location-specific business, where one size does not fit all. There are some parts of the country where integrating solar and storage makes complete economic sense. But in other places, incumbent generation technologies (such as natural gas and coal) will likely hold on for some time. That is not a matter of preference; that is simply a matter of local economics. So, I don’t think that there’s a single tipping point for solar-plus-storage. In fact, it’s a mistake for businesses to think about there being a single tipping point. Instead, I would consider there to be multiple tipping points, depending on location, electrical rates, etc., all with different inputs and tipping at different times. Increasingly, we’ll see more tipping points where solar power combined with stationary storage will suddenly have an economic advantage over natural gas and coal in more and more locations.
Generally speaking, one of the factors that favors solar-plus-storage is high electricity prices. If you see a jurisdiction with high electricity prices, it is likely to be a jurisdiction that is probably well-suited for increased penetration of solar-plus-storage. On the opposite side, a jurisdiction with low electricity prices may take longer for that tipping point to occur. Again, there are hundreds of different tipping points, and figuring out when one location has tipped may have little bearing on when other locations will tip.
Learn more about energy storage––all the ways that it is used and can be monetized. Storage is a complicated field. There are so many different things you can do with storage, many of which will have great value in some locations and not much value in others. Understanding the ways that you can use storage technology and understanding the value that your customers can capture is essential for understanding the opportunities for a good return on a storage project. The solar guys that really want to use storage to leverage return need to become very well acquainted with the complicated business of energy storage. Solar is simple; storage is complicated.