By Christian Roselund

A new analysis by energy economist Dr. Joshua Rhodes indicates that renewable energy has already reduced wholesale electricity costs in Texas’ grid by roughly $7.4 billion and are on track to reduce costs by more than $11 billion over the full year 2022. This is a savings of $380 for every resident of the state. Rhodes’ analysis has further found that widespread adoption of renewables has reduced wholesale electric costs by $27.8 billion between 2010 and August 2022 in the Electric Reliability Council of Texas (ERCOT) grid.

Rhodes’ analysis finds that as renewables have scaled, these savings have increased, with an effect on wholesale electricity prices of $1.17 per megawatt-hour (MWh) in 2012 but a $20.60/MWh benefit expected in 2022. The report notes that some of the outsized savings in 2022 come from the ability of renewables to provide a price hedge against natural gas and coal prices, both of which are much higher in Texas in 2022 than in previous years.

But wind and solar aren’t like other hedges. As noted by Rhodes, by bidding into wholesale power markets at zero or close to zero prices, wind and solar consistently suppress wholesale power prices. Rhodes notes that average market prices are around $72/MWh in ERCOT so far in 2022 and its analysis implies that prices would have been around $90/MWh without the suppressing effect of wind and solar. These prices are higher than in previous years, and much of the recent increase in both the actual and reference prices are due to higher natural gas prices, which have nearly doubled from $3.64 per million British thermal units (MMBtu) in 2021 to $6.24/MMBtu in 2022.

In addition to the raw electricity cost savings, Rhodes’ report also documents substantial savings in cooling water, sulfur oxides (SOx), nitrogen oxides (NOx), and CO2 as a result of the replacement of fossil fuel generation with wind and solar.

Source: The Impact of Renewables in ERCOT (IdeaSmiths)

By Anjali Joshi

On 19 October 2022 the U.S. Department of Energy (DOE) announced billions in awards to support and develop the domestic manufacturing of batteries for both EV and electrical grid applications. Using funding made available through the 2021 Infrastructure Investment and Jobs Act, DOE awarded $2.8 billion to 20 battery manufacturing and battery material processing companies for different projects across 12 U.S. states across the nation.

Awardees were selected on a competitive basis from over 200 applicants in a process which opened in February 2022. The funding is intended to boost the production of different battery materials across the supply chain, which includes:

• Development of battery-grade lithium to produce around 2 million EVs annually
• Development of battery-grade graphite to produce around 1.2 million EVs annually
• Development of battery-grade nickel to produce around 400,000 EVs annually
• Construction of the U.S. first large-scale, commercial lithium electrolyte salt (LiPF6) production facility
• Construction of an electrode binder facility which will supply 45% of the anticipated domestic demand for binders for EV batteries in 2030
• Construction of domestic silicon oxide production facilities to supply anode materials for around 600,000 EV batteries annually
• Construction of the first domestic lithium ferrous phosphate (LFP) cathode facility

Currently, almost all battery-grade raw materials – lithium, graphite, nickel, cathodes and anodes, electrolyte salt, and electrolyte binder – are produced abroad, with China controlling the major share of global capacity for raw material refining, cathode and anode materials preparation, and cell production. The absence of domestic mining, processing, and recycling capacity in the United States leaves the domestic EV and BESS sectors dependent on foreign supply chains, which have at times been unreliable. Since this could hinder the development and growth of the EV and BESS sectors in the country, the U.S. government has started taking measures to support the development of a stable and secure domestic battery supply chain.

Major Mining Companies to Receive Funding

Following are some of the major awardees:

1. Albermarle Corp – The lithium company received $149.7 million to build a lithium separation & processing facility in Kings Mountain, North Carolina, that uses spodumene minerals from the site’s lithium mine. The plant is expected to process 2.7 million tons per year of spodumene ore, enough to power 750,000 electric vehicles.

• Piedmont Lithium – Piedmont was awarded $141.7 million to build a lithium processing facility in Tennessee. The plant is expected produce 30,000 metric tons per year of lithium hydroxide for the domestic battery market, when it becomes operational in 2025. Piedmont is likely to initially process ore sourced from Quebec and Ghana as its plans to build a lithium mine in North Carolina have faced strong opposition.

• Talon Nickel (USA) LLC – Received $114.8 million in funding to construct a battery minerals processing facility in Mercer County, North Dakota. The plant is likely to process nickel ore extracted from its planned underground mine in Minnesota.

• Ascend Elements – Received $316.2 million in funding to set up the country’s first commercial-scale metal extraction and precursor cathode active material production facility, using critical cathode materials recovered from spent lithium-ion batteries. The company will use its proprietary Hydro-to-Cathode direct precursor synthesis process technology at its Apex facility in Kentucky.

• Syrah Resources – Received $219.8 million in funding to set up a new 11,250 metric ton per annum anode active material (AAM) production facility in Vidalia, Georgia, using natural graphite from the Balama graphite mine in Mozambique. Once operational in Q3 2023, the facility will be the only large-scale natural graphite AAM producer outside China, and the first large-scale natural graphite AAM producer in the United States.

Microvast – Awarded $200 million to build a separator facility which will supply 19 gigawatt-hours (GWh) of EV batteries. The company’s 2 GWh battery plant in Clarksville, Tennessee is already under construction.   

Source: The U.S. Department of Energy

Although the funding supports projects of different mining companies including Albermarle, Piedmont Lithium, and Talon Metals, the program does not mention any initiative or measure to alleviate permitting delays faced by companies in the U.S. mining industry. This is likely to hamper the development of these mining projects.

Launch of the American Battery Materials Initiative

At the same time, President Biden also announced the American Battery Materials Initiative, which aims to coordinate the government’s efforts in securing a stable and sustainable supply of critical minerals used for EV and electrical grid batteries, while strengthening national security and creating good-paying jobs across the battery supply chain. DOE will lead this initiative and with the support from the Department of the Interior aims to align different programs and efforts taken across the federal government, including the Infrastructure Investment and Jobs Act and Inflation Reduction Act, to support the growth of the domestic battery supply chain.

Source: Biden-Harris Administration Awards $2.8 Billion to Supercharge U.S. Manufacturing of Batteries for Electric Vehicles and Electric Grid (U.S. Department of Energy)

By Christian Roselund

Rhode Island’s main retail electric utility has issued a request for proposals (RFP) for 100 – 1000-megawatt offshore wind projects, to fulfill a legal requirement to procure 600 – 1000 megawatts of offshore wind. Winning projects will be awarded 15 – 20-year power contracts and must supply both electricity and associated renewable energy credits (RECs) to Rhode Island Energy.

Eligible projects must already have a federal lease awarded for their site and have entered the interconnection queue of New England’s regional grid operator. Rhode Island Energy will consider both price and several other factors in determining which projects to select. These include credibility of plans around siting and permitting, information on how the developer plans to avoid, minimize or mitigate environmental impacts, credibility of financing plan, and status of interconnection approval.

Bidders must also submit a diversity, equity, and inclusion plan, and a plan outlining their intentions regarding project labor agreements. By law any project which is authorized must pay prevailing wage, a requirement that makes it more likely that contractors will utilize union labor.

A bidder’s conference will be held on 1 November 2022, as the next step in the process. Rhode Island Energy expects to select bidders for negotiation on 12 May 2023 and negotiate and execute contracts on 4 August 2023.

By filing this RFP, Rhode Island Energy is complying with its requirements under legislation signed by Rhode Island Governor Dan McKee on 6 July 2022. The law spelled out a requirement that contracts be filed with the state utility commission no later than 15 March 2024.

Rhode Island Energy already has a contract to buy power from a 400-megawatt portion of the Revolution Wind Farm, which is under development by Orsted and Eversource. Additionally, the state hosts the nation’s first offshore wind farm, the 30 MW Block Island Wind Farm. The aggregate expected output of Block Island, Revolution Wind, and this additional 600 – 1000 megawatts of offshore wind will be equivalent to 55%-77% of Rhode Island’s 2021 retail electric sales.

This move to procure offshore wind is also in line with the new state targets. In addition to the offshore wind procurement, a second bill signed into law in 2022 requires that Rhode Island source 100% of its electricity from renewable sources by 2033. The only U.S. state-level renewable energy mandate more aggressive is Washington D.C.’s 100% by 2032 requirement.

This additional 600 – 1000 megawatts will further establish Rhode Island as a leader in offshore wind procurement, despite its small size. As of the U.S. Department of Energy’s latest Offshore Wind Market Report, published in August 2022, 17,597 megawatts of offshore wind farms had signed contracts to deliver electricity. Most of these wind farms have contracts with utilities in New York, New Jersey, Massachusetts and Connecticut.

Source: Request for Proposals for Long-Term Contracts for Offshore Wind Energy (Rhode
Island Energy)

By Christian Roselund

The California Public Utilities Commission (CPUC) has published a proposed decision that would dedicate another $1 billion to subsidize behind the meter EV charging infrastructure at residential, commercial, and industrial sites from 2025 through 2030. The program would be fully funded by customers of the state’s three largest investor-owned utilities: Pacific Gas & Electric Company (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric Company (SDG&E) and administered by a third party.

70% of the funds would be reserved for medium- and heavy-duty charging and 30% of the funds would go to light-duty charging at or near multi-family housing. At least 65% of the total budget would be reserved for under-served communities.

The new $1 billion program is in addition to the $1.8 billion in funds for EV infrastructure that has already been authorized by CPUC, of which $1.48 billion remains to be spent. Additionally, California will receive $348 million over five years from the U.S. Department of Transportation to further build out its fast-charging network on major highways (See the 4 October 2022 US Energy Transition Report for more information).

The need is there: California already has 1.2 million electric cars, pickup trucks, and SUVs, but only 79,023 public and private shared chargers. According to a 2021 report, California will need up to 1.2 million EV chargers to support 8 million electric vehicles by 2030.

The CPUC filing envisions that a second phase of the program would begin in 2030, with details yet to be determined. A date to vote on the proposed decision has not been announced, but it could be approved as early as CPUC’s 17 November 2022 meeting.

News coverage: Calif. regulators consider $1B in rebates to plug EV charging gaps (S&P Global)

Source: Decision on Transportation Electrification Policy and Investment (CPUC)

By Christian Roselund

Underscoring the extremely rapid rise of battery storage capacity, a new report has found that the capacity of batteries on the U.S. grid increased 311% from January 2021 through August 2022. Using data from the U.S. Department of Energy, Texas-based consultancy Zpryme reports that cumulative battery installations reached 6,702 megawatts in the month of August 2022, compared to only 1,631 in January 2021.

Zpryme also found that future planned capacity spiked by 5,879 megawatts in the month of August, to reach 22,678 megawatts. However, Zpryme did not comment on how much of this is likely to get built, and in what timeframe. As reported by Lawrence Berkeley National Lab in its series Queued Up, most of the projects in the interconnection queues of grid operators do not come online within five years after entering these queues.

Zpryme reports that California continues to dominate installed capacity, with 3,629 megawatts. This is more than half the total capacity in the United States, and California has been adding batteries at a rapid pace to allow it to shift mid-day electricity generation from solar to meet evening peak demand. California’s capacity is three times the capacity installed in Texas, which came in second place with 1,168 megawatts. Florida, Massachusetts, and Nevada round out the top five for installed capacity.

The report also finds that independent power producers own 80% of the installed battery capacity, with utilities holding the rest. The top five battery owners by capacity are NextEra Energy, Terra-Gen, LS Power, Broad Reach Power, and AES. Together these five own 44% of the battery capacity on the grid.

The report did not provide figures in megawatt-hours, but many of the batteries installed on U.S. grids are in the 1 – 4-hour range.

Source: U.S. Battery Project and Capacity Trends (Zpryme)