ESS is an Oregon-based company that manufactures power batteries that rely on simple, abundant, and inexpensive materials—iron, salt, and water. The secret sauce is the membrane that separates the positively charged liquid from the negatively charged liquid. Last year, ESS concluded an agreement to delivery SB Energya division of SoftBank, with 2 GWh of power batteries in 2026. That was a big deal for the fledgling company, but because SoftBank is also an investor in the company, it wasn’t exactly a sign of full adoption by the utility industry.
That changed last week when ESS and the Sacramento Municipal Utility District announced that ESS will provide SMUD with flow batteries with a total capacity of 200 MW/2 GWh early next year. The utility plans to be a zero-emission energy provider by 2030 — one of the industry’s most aggressive carbon reduction plans and 15 years ahead of the California state target.
The addition of 200 MW/2 GWh of storage, combined with renewable energy sources, is equivalent to removing 284,000 tons of CO2 emissions per year and will provide enough energy to power 60,000 homes for 10 hours,
ESS says its iron flow technology provides cost-effective, long-term energy storage and is ideal for applications that require flexible energy capacity from 4 to 12 hours. ESS systems provide resilient, sustainable energy storage well suited to multiple use cases, including utility-scale renewable energy installations, external solar and storage microgrids, grid load shifting and peak shaving, and other ancillary grid services. ESS technology is safe, non-toxic and has a 25-year lifespan with no capacity fading.
The deal includes a master supply agreement for ESS to supply units over the next few years, starting with several megawatts over the next 18 months. After that, in the second phase, it will increase to tens of megawatts and then potentially to the level of 100 megawatts. The multi-year commitment is designed to follow the natural planning cycles of utility procurement and project development, said Hugh McDermott, senior vice president of ESS. canary media last week.
Flow Battery technology gets more attention
Until recently, storage of lithium-ion batteries was all the rage in the utility sector, but supply chain problems, skyrocketing lithium prices and the occasional battery fire have all conspired to encourage utility executives to consider alternatives.
“This is a very precarious supply situation for the rest of this decade, for everyone,” McDermott said of the network storage market. “[SMUD is] get assurance about the delivery – a big bonus – and they’ll get a commitment that we’ll have the production behind it. We get the visibility [to future demand] so that we can plan our production expansion.” He added that the scarcity of battery materials is likely to continue for some time to come, as demand for both electric vehicles and grid storage grows faster than new generating capacity.
The agreement between ESS and SMUD also includes a unique workforce development component. ESS manufactures its storage technology near Portland, Oregon, but will partner with local colleges and universities around Sacramento to train workers to install, commission and maintain the units. “Right now we are the only people in the world who know how to maintain our equipment,” McDermott said. “We have to build those legions.”
Sacramento could become a hub for ESS installations in California, which requires utilities to install long-term storage as part of its drive to eliminate reliance on thermal generation. Storage of lithium-ion batteries can typically supply electricity to the grid for up to 4 hours. That’s why a recent Stanford study warned that: Charging EVs overnight will become impossible when those conventional base load generating stations are dismantled. But systems like those of ESS and Energy dome could radically change that situation.
For SMUD, using ESS power batteries for long-term energy storage will help maximize local solar generation, provide neighborhood resilience, and increase social equity and equity without compromising reliability or low electricity rates.
“SMUD is committed to a clean energy future that increases grid resilience, supports resource-poor communities and maximizes local economic development,” said Paul Lau, CEO and CEO of SMUD. “Long-lived battery technologies advance SMUD’s 2030 Zero Carbon Plan by expanding our available renewables and opening doors to innovation, job training and development opportunities in the green energy sectors.”
ESS & the IRA
Because ESS manufactures its products in the US, it can take advantage of the energy storage tax credits included in the Inflation Reduction Act. Developers can claim a 30% tax credit on battery projects built with prevailing wages, but they can get an additional 10% discount by using domestic content. Very few energy storage manufacturers currently operate production lines in the US, McDermott emphasized, so ESS expects to be one of the few suppliers to qualify for the domestic content credit in the near term.
The company will also be able to claim corporate tax credits based on the capacity of domestically manufactured storage products that it ships to other countries. That’s valuable for companies scaling up production to compete with lithium-ion batteries that are reaping economies of scale from the boom in EV manufacturing. “It will help us achieve break-even profitability in our scale-up faster than we otherwise intended,” said McDermott.
While the rules and regulations to the IRA. to implement are still being written, that legislation in itself encourages companies like ESS and its potential customers to talk about new business relationships.
Go with the flow
Image Credit: ARPA-E Courtesy of Harvard University.
So how exactly does a flow battery work? Iron flow batteries use three of the most abundant elements on Earth: iron, salt and water. They consist of two storage tanks with a membrane in between. The membrane allows electrons to flow back and forth between the tanks while keeping the liquids separated. If that sounds easy, it isn’t.
Getting the right mix of iron, salt and water is critical, and creating a membrane that will last is not easy. ESS says its systems are expected to have a lifespan of 25 years, which is longer than most lithium-ion batteries, although long-term data is not yet available for either system.
The ESS/SMUD announcement does not reveal any pricing details. In theory, flow batteries should be cheaper than lithium-ion batteries, but they are just gaining commercial acceptance, so the inevitable economies of scale have not yet set in. Most of the cost is in the membrane separating the two tanks of liquid. A feature of flow batteries is that if there is a need to increase capacity in the future, it is relatively easy to exchange larger tanks that contain more electrolyte.
It is clear that there is no single technology that meets the need for energy storage. Flow batteries are only now beginning to be taken seriously. The trajectory for the technology should be straight forward in the coming years, barring unforeseen issues that have not yet become apparent. Long-term storage is now in the spotlight as more people look for ways to replace the base load “spinning capacity” that powers the grid overnight, which often relies on nuclear or coal generation.
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