NanoMarkets

thin film | organic | printable | electronics 

www.na nomarkets.net

Plug in to Materials Trends for Smart Grid Applications 
This article is based in part on research from  Batteries and Ultra-Capacitors for the Smart Power Grid:
Market Opportunities 2009-2016  

Page | 1 
There is a general consensus that the current grid is not sufficient in terms of efficiency, reliability,
security, and its environmental impact to supply the electrical power needs of our modern society.
One solution is to upgrade to a smart grid, the development of which presents many opportunities.
While there are several competing technologies that can store electricity (pumped hydro,
compressed air, flywheel, chemical storage, ultracapacitor, superconducting magnetic),
NanoMarkets believes that the most exciting opportunities will come from materials and systems
applications of chemical batteries and ultracapacitors.

Chemical batteries and ultracapacitors offer a compelling value proposition compared to other
solutions as they are the most economical solutions for electrical storage and are not limited to
certain geographical locations. They also have an extremely small carbon footprint, and offer
significant potential applications today as well as a roadmap to deeper market penetration as
materials improvements and manufacturing improvements/cost reductions evolv e over the next
decade.

Smart grid storage can be categorized into short-term storage for load leveling and quality uses
(less than a minute) and longer-term storage for peak shaving/load shifting applications (storage
for minutes or hours). Ultracapacitors are well suited to load leveling and quality applications as
they have an extremely fast discharge and charging response, have a high current capacity and
can be cycled hundreds of thousands of times without degradation to their storage ability.
Chemical batteries are ideal candidates for peak shaving applications as they have higher energy
densities and in many cases long service lifetimes.

The near-term opportunities for load leveling storage are clear. Approximately 90 percent of power
outages last for no longer than two seconds, and 98 percent of outages last, at most, 30 seconds,
but their economic effects are large. Estimates range from $75 to $200 billion per year impact
from power interruptions due to lost time, lost commerce, and damage to equipment. While there
is currently a large growth market in UPS systems to protect critical infrastructure, improvements
NanoMarkets
thin film | organic | printable | electronics 
www.na nomarkets.net

to ultracapacitors both in capacity and manufacturing costs reductions will create new markets for
them especially in new industrial and commercial construction.

Chemical battery storage represents a critical component for several smart grid applications at
several levels along the value chain. Bulk price arbitrage, central generation capacity efficiency Page | 2 

(peak shaving), transmission capacity/transmission congestion relief and the integration of variable
output sources such as wind and solar are all crucial applications of storage in a successful smart
grid. The need for storage to integrate solar and wind cannot be over emphasized. Thirty states
have renewable energy mandates that average 17-percent integration of renewable energy
sources by 2010-2025. Only with a signif icant amount of electrical storage can this level of wind
and solar be integrated into a stable electrical grid, so the value proposition of new forms of
electrical storage is difficult to overestimate.

Quick Tour of Opportunities in Smart Grid Storage

The importance of the electrical grid is difficult to overstate. The percent of overall energy
consumption in the form of electricity has risen form 10 percent in 1940, to over 40 percent today,
and this is projected to be the fastest growing source of end-user energy supply throughout the
world in this century. The term "smart grid" is a still-evolv ing, catch-all term to describe all of the
improvements currently being made and proposed to the current electrical grid that will increase
efficiency, reliability and security.

Components of the evolv ing smart grid include smart metering of electricity, smart materials to
enable higher current overhead lines and self recovery during outages, intelligent components
(substation components can communicate with the wider smart grid), plug and play components
(new components will actively insert themselves in the intelligent network), reconfigurable
components (can reroute power effectively and automatically when outages occur) and storage of
electricity for quality and peak shaving applications.

There are several driv ers to upgrade the electrical grid infrastructure. For producers, there is a
two-fold incentive. First, as the recent spike in fossil fuel prices shows, feedstock prices are
variable and can wreak havoc with energy producers and their ability to provide affordable power.
There is also an increasing incentive to use the existing power-generating resources more
efficiently --both as a more effectiv e use of capital and because the regulatory impediments to
NanoMarkets
thin film | organic | printable | electronics 
www.na nomarkets.net

increase generating capacity are becoming an ever-larger hurdle to investment in increased

generating capacity. Because there is currently no storage on the grid, there must be enough
capacity to meet maximum demand, which results in an overall usage of generating capacity of
about 40 percent. Increasing environmental concerns is another driver to develop a smarter grid,
Page | 3 
as it will help reduce greenhouse gas emissions through more efficient use of generating capacity.

While it has been one of the least talked about requirements to achieve the desired smart grid,
electrical storage is now starting to be recognized as a crucial piece of the smart grid puzzle. The
U.S. Department of Energy (DOE) is now developing a coherent national plan for energy storage
research as part of the Energy Independence and Security Act of 2007 (EISA). Perhaps the biggest
driver of this for both short- and long-term storage is the planned addition of significant
intermittent generating sources (wind and solar) to the grid. The intermittent nature of these
generating resources requires stored energy that can be released to the grid at a moments notice
when there are sudden fluctuations in power provided by the wind and sun. Significant energy
storage will be a requirement to reach the 2030 renewable energy state and federal mandates. As
the percent of wind and solar on a grid passes above 10-15 percent instabilities can occur if there
is no storage capacity. In fact, Ireland put a moratorium on the connection of new wind power to
their national grid due to instabilities as the wind generating capacity exceeded 7% of overall grid
capacity. Current estimated storage requirements for effective capacity firming of large wind farms
is 15-20 percent of the wind farm rated capacity. Capacity firming also reduces the transmission
line capacity requirements for moving energy from remote wind generation facilities to population
centers.

Large-scale energy storage is not a new concept. For example, a 31-MW pumped hydroelectric
plant came on line in the U.S. in 1929. Pumped Hydro is one of the most efficient methods to store
electrical energy but is limited to areas with attractive geological features that can store the
pumped water. By 2000, about 3 percent (18,000 MW) of the total power delivered to the grid was
supplied through pumped hydro facilities.

Compressed air energy storage (CAES) is also currently under consideration. A 115-MW demo
plant was put into service in the early 1990's. Like pumped hydro, it is limited by attractiv e
geologic features, in this case namely underground formations such as depleted gas fields and salt
NanoMarkets
thin film | organic | printable | electronics 
www.na nomarkets.net

domes. CAES is used to augment the output of a natural gas turbine plant. Thus, while its carbon
footprint is less than a plant without CAES, its carbon footprint is not zero like wind and solar.

Other forms of storage such as flywheels and superconducting magnets have also been tried, but
because of cost and system complexity issues we do not expect these to be used in the near Page | 4 

future beyond certain niche applications. While there are many forms of electrical energy storage
available, Nanomarkets research indicates that chemical batteries and ultracapacitors are two of
the most vigorous potential areas of storage growth.

Near-Term Applications for Chemical Storage on the Smart Grid

Currently, the most pervasive use of large-scale chemical energy storage has been for power
quality in the form of uninterrupted power supplies (UPS). UPS is used to protect expensiv e
electrical assets such as computer data centers and critical infrastructure and represents a 10-
billion dollar/year market. Such systems do not require high-energy content as most power
outages are less than a minute in length. Lead acid and metal hydride batteries are the mainstay
of this industry, but it is an application where ultracapacitors and integrated ultracapacitor/battery
back-up systems may make significant inroads as they have signif icantly quicker response times
than batteries alone.

While ultracapacitors have been known since the 1950's, their application was limited due to lack
of demand when electrical costs were low. Because the applications were mostly niche, the
manufacturing techniques were labor intensive, which resulted in a high price point. Increased
energy prices have driv en new applications, which have in turn resulted in volume manufacturing
and of course significant price reductions enabling the use of ultracapacitors in more and more
applications. Their most visible consumer application at this point is regenerative breaking systems
in hybrid vehicles where up to 80 percent of the energy lost in braking can be recovered with the
ultracapacitor system. The cost of ultracapacitors has dropped 95 percent between 1980 and
today, and manufacturing improvements envision further cost reductions of up to 50 percent. As
these cost reductions become reality, ultracapacitors will become more pervasive, especially in
combination with batteries, such that the market will expand beyond data centers and certain
mission critical applications such as hospitals to protection of electronic assets for retailers, office
buildings manufacturing facilities and ultimately in new home construction.
NanoMarkets
thin film | organic | printable | electronics 
www.na nomarkets.net

After power quality, peak shaving--storing energy generated or purchased during low demand time
periods at low prices and either using or selling the stored energy at times of high demand and
high prices--will be the next application of smart grid storage to experience rapid growth. The
model here will be similar to that of thermal storage, which has been used successfully to reduce
Page | 5 
air-cooling costs in some new commercial office construction.

In addition to peak shaving, storage will also be crucial to efficiently manage the transmission
capacity necessary to realize the wind energy goals for the U.S. By adding energy storage, wind
farms located in remote areas can store energy from peak periods, which allows lower cost, lower
capacity transmission lines to move the electricity to market as the generated electricity does not
have to be used in real time when storage is available. It also adds the benefit of having power
available to sell for maximum profit at peak usage periods, which do not usually correspond with
peak wind output periods.

The applications described above will become more and more attractive as more advanced battery
and ultracapacitor materials become available. Currently, lead acid and sodium sulfur systems have
the most extensiv e track record. In the 1980s, lead acid batteries for utility peak shaving were
tested, but the lifecycle characteristics and economics at that time did not support further build
out; however, incremental improvements over time in lead acid technology and increased energy
costs have changed the situation such that the capital cost of a modern lead acid storage solution
can be realized in new commercial construction in 1-3 years. In addition, recent innovations such
as Firefly's 3D2 lead acid technology have demonstrated three to four times the energy density
with improved lifetimes over conventional lead acid batteries.

Future Advantages of Chemical Storage on the Smart Grid

There are several materials advances that are likely become readily available in the next 3-8 years
that paint an attractive future for grid energy storage. Beyond lead acid and sodium sulfur, flow
batteries such as vanadium and ZnBr show great promise. Flow batteries have good efficiencies
(over 75 percent) and long lifetimes (over 10,000 charge discharge cycles) and are scalable
(battery size determined by electrolyte holding tank size). Vanadium flow batteries of 800 kW to
1.5 MW have been successfully demonstrated in applications such as UPS for semiconductor
manufacturing, island grid capacity firming and grid peak shaving applications. Several ZnBr
systems in the 200-500 kW range have been demonstrated for peak shaving and island grid
NanoMarkets
thin film | organic | printable | electronics 
www.na nomarkets.net

applications. While the current cost of such flow batteries is high compared to lead acid, there are
ample opportunities for cost reductions of these new technologies compared to mature
technologies such as lead acid where most cost reduction opportunities have already been
realized.
Page | 6 

Liquid metal batteries are another exciting concept that may provide up to 10x the current capacity
of current batteries in a simple system that can best be described as an extension of the sodium
sulfur system where a molten salt electroly te is sandwiched between two different metals. Like the
sodium sulfur battery, it is a high-temp stationary solution, but if the current storage capacity is as
high as reported, it may be a lower cost, durable solution that may be commercialized within the
time period covered by this report.

The ultracapacitor roadmap also looks exciting through the length of the reporting period. Beyond
the refinement and cost reductions associated with manufacturing improvements and volume
production of current activ ated carbon based ultracapacitors, several new materials warrant close
examination. Nanostructured ultracapacitors based on nanostructured metal oxides, pervoskites,
nanotubes and graphenes are currently under investigation. These materials are reported to
increase ultracapacitor capacity 5-10 times compared to current activated carbon ultracapacitors.

Nanomarkets research indicates that one of the most promising technologies is the combination of
ultracapacitors and lead acid batteries into what SIRO in Australia refers to as an ultrabattery.
Their ultrabattery hybrid electric car has already demonstrated over 100,000 miles on one set of
ultrabatteries. Maxwell is also working on integrated ultracapacitor/battery ultrabatteries.