After focusing our early efforts on producing lithium ion batteries to serve the power tool market, we built an integration team for the purpose of exploring other areas where their chemistry would best fit.
As we began looking at what other areas the A123 Li-ion chemistry might serve, certain key segments became apparent. Certainly the automotive segment ranked high on that list.
Another was the ancillary services market where you didn’t need the battery to have a lot of energy storage to get the job done; what you needed was something high power that was durable — and that was where our sweet spot was.
One of the reasons we developed that team was that the type of lithium ion battery we were making didn’t necessarily have a lot of applications for it. So we had to find customers to take a chance on a battery that was unlike the other products available in that class.
Lithium ion was then seen as a high energy long run time product for portable electronic devices, and what we were making was more of a high power and high cycle life product, with good safety characteristics.
Traditional lithium ion battery integrators didn’t have experience — or didn’t see the value in taking a risk on these new cells — back then, and so we had to do it ourselves. The traditional markets didn’t appreciate the value of the characteristics our battery offered.
As vehicle electrification in the transportation sector began to grow, so did the batteries and packs — we developed what was then one of the largest automotive lithium ion batteries in existence, a 200kW pack for a hybrid-electric bus.
Certainly the grid space had considered energy storage in grid applications by the time the lithium-ion industry began to look at that market more closely, but lithium ion had never reached what was necessary for grid-scale before.
A123 saw a huge opportunity if it could achieve a price/performance ratio to justify the owners’ investment in grid energy storage. When we looked at the grid space we found that grid operators had not contemplated using advanced lithium ion batteries in their infrastructure and systems at all.
Once we understood the opportunity in energy storage, we tried to make our product as modular as possible, designing them for flexibility to accommodate different sizes and shapes for multiple applications.
Having worked in integrative capacities in grid storage for some years now, I don’t think categories of roles and functions can be precisely defined — roles and functions can vary from project to project.
For example, I can see three different categories of hardware alone: the energy storage itself, the power conversion systems, and the controls that provide the AC power to the grid at the right time and rate.
There are companies that can do one or two, or even all of those things; and then there are the equipment makers.
Outside of that there is the task of getting the project into the ground: designing the energy storage installation, getting the permits, doing the system impact studies. A lot of that is typically done by EPC — engineering, procurement and construction — companies, but they’re still learning about storage. Then there are various project structures where the lead company, such as an equipment vendor for instance, might handle some of those functions, and delegate others.
In some cases we’ve done everything ourselves; selecting the type of power conversion equipment that interfaces well with the DC energy storage equipment that we design and manufacture. We’ve developed controls that can manage the storage and the power conversion and in some cases even other components, on-site at the substation.
We’ve also been responsible for the EPC-type work in addition to manufacturing and sourcing all the hardware. That’s where the integration piece has all the value — we not only manufacture the major component, the energy storage, we also can put it all together and hand it over ready to run.
Similarly, clients want a turnkey type of service, and aren’t finding it.
Battery companies provide batteries but these don’t provide an AC output — and most battery makers don’t want to do it because they want to focus on their systems.
So there’s gap there, because so many companies don’t do all of it.
Key to A123’s success in this area has been recognizing the importance of client education. We enabled the possibilities that higher performance batteries could bring to their products and services, in power tools to be both lighter and more powerful, in automotive to drastically increase fuel efficiency, and in the electric grid to provide more effective and valuable grid stabilization services.
It wasn’t easy to establish the expertise required to deploy all those successful grid energy storage installations; there are complexities in doing business in the grid space as well as technical difficulties getting all the parts working together safely and with high reliability.
Today, education continues to play a role in the discourse with utilities and other grid stakeholders, but we’re seeing a tremendous driving force towards greater adoption of energy storage.
It can enhance renewable generation and prepare the grid to accept more of it, support more efficient use of transmission and distribution equipment, and lower the cost of ensuring grid reliability.
Hurricane Sandy and similar events have sparked the discussion as to how energy storage can be used to support reliability and decrease the impact of outages. Having a grid that’s hard to break, hard to kill, but at the same time more sustainable – offers many benefits and storage is clearly going to be a big component of that.