Newsletter: It’s time to ask for more from clean energy projects

Climate Week NYC has commenced, and if you’re like me and aren’t in New York right now, follow along at our special page covering the highlights of the event.

For today’s newsletter, I’m highlighting two big stories we’ve dropped recently. One’s about the mind-blowing acceleration of investment in the crucial energy storage sector. The other outlines how we need to think differently about the carbon impact of new clean energy projects if we want to get the most bang for the buck.

The battery business grows up

Battery storage creates flexibility for the grid, which is crucial to handling the influx of wind and solar power. But the industry is in an awkward adolescent phase: The early adopters have figured out the kinks and are making money. But they’ve done so well that now they’re building much bigger and more ambitious projects, and that requires way more money than they have access to.

One storage developer CEO, Jeff Bishop of Key Capture Energy, told me his company has gone from spending tens of millions of dollars on each project to spending hundreds of millions of dollars. Key Capture just got itself acquired by a large South Korean energy company, which pledged $1 billion to build out the pipeline of battery projects Key Capture has lined up.

What struck me there is that until 2020, the entire annual U.S. storage market wasn’t worth $1 billion. Now a single company is building that much, and all its peers seem to be growing at a similar clip.

There’s also been an investing frenzy among the storage integrators — the companies that take the raw batteries and package them up with the equipment and software controls that turn them into functional power plants.

• I tracked three investments over $100 million in this sector this year alone (Fluence, Powin Energy and FlexGen).

• Other leading integrators such as Tesla and Wärtsilä are already well capitalized and don’t really need new fundraising to grow their production.

The recurring theme among all these companies is that the storage market is growing faster than even they expected, so they need more funding to grow faster and meet that demand. They’re finding it, too.

In practical terms, that investment means more solar power gets shifted from the sunny midday hours to evening hours when we’d otherwise burn natural gas to keep the lights on. Or more power being delivered without any local pollution marring the air quality for nearby residents.

But this is still a small change compared to conventional energy projects. The storage market is bigger than it’s ever been, and it has a long way to go yet.

Demand more from clean energy

Not all clean energy plants are created equal, and that applies to their ability to reduce carbon emissions too.

That’s the upshot of a fascinating new feature from Jeff St. John, and the point it makes is a little counterintuitive. You would think that a unit of solar power in one place is just as good as a unit of solar power somewhere else. An electron is an electron, etc.

But Jeff pinpointed several different groups that are digging into the carbon-reduction impacts of clean energy production, and they’re uncovering pretty sizable disparities.

Imagine building a new solar plant in California, right next to a bunch of other solar plants. If the regional grid is already saturated with clean electricity at noon, the new plant may have to throw away its production because there’s nowhere for it to go. But if that same plant were built in, say, a part of Ohio where coal power reigns, the clean electrons would displace dirty power and thereby reduce more carbon.

This concept, dubbed ​“emissionality,” matters for two reasons:

• Actual carbon reductions matter more for the climate than the total amount of clean energy we produce. The threat of climate change demands that we allocate resources as wisely as possible, and that could require incorporating emissionality into how energy is bought and sold.
• Big companies including Microsoft and Google are already paying to zero out the emissions impact of their activities. There’s already consumer demand for the emissions-reduction value of clean power.

Lest you think this is entirely theoretical and esoteric, Jeff spoke to a company called Clearloop that just financed a new solar project by monetizing its future carbon-reduction capability. That’s big:

• If a data-driven understanding of emissionality drives investment for solar projects, it could create a feedback loop that incentivizes more carbon-reducing projects. 

• That in turn leads to more clean energy and more emissions reductions. 

There’s a lot of complex data-crunching that needs to happen before the industry can agree on how to measure this, but in theory, it’s doable.