Andy Tang, Wärtsilä’s vice president of energy storage and optimization, sat with me for an episode of CleanTech Talks a few weeks ago. This second half of our extensive interview includes discussions on the main island microgrids in the Azores and the Caribbean, the benefits of Wärtsilä engines in the zero-crossing and flexible fuels for marine and land propulsion.
There are two broad groups of topics why you need to manage storage, security / risk and revenue, both of which are equally important. When it comes to safety and risk, while everyone calls batteries a commodity, he is very picky about how he wants to live his life. For warranties to be valid, medical condition, state of charge, rest point, ideal operating temperature, and other factors must be maintained and monitored. Optimal battery discharge prevents the risk of heat leakage and saves device life.
Then there is the commercial aspect. A battery is a pile of chemicals lying in a field. It makes money only when electrons flow in one direction or the other. The energy management system (EMS) connects it with the electricity markets and the market. This varies according to jurisdiction, energy company, independent system operator (ISO) and revenue streams such as ancillary network services. And how do you get these sources of revenue without sacrificing your battery?
But that means that at peak points of demand, when the company is willing to pay $ 9 per kWh for electricity, everything else disappears, except for the risks. Tang’s efforts to manage demand with PG&E and startups prepared him very well to find the optimal way.
In the Azores on the island of Graciosa, 1,500 kilometers from mainland Portugal, 4,000 people had wind and solar energy, but could not exceed 17% of annual demand. Their diesel generators have their own control requirements that can be shut down and create outages throughout the island. Wärtsilä’s GEM EMS created wind and sun forecasts from weather forecasting services the day before, combining them with their understanding of the optimal use of generator motors and putting them in a small one-hour battery. This reduced the balanced cost of electricity by $ 0.10 per kWh and increased the use of renewables to more than 60%. Huge fuel savings are a matter of course.
The battery alone would not do that. The intelligence contained in the EMS plus the battery makes it possible.
Another example is the island of Bonaire from the islands of ABC, Aruba, Bonaire and Curacao. It is an island with 20,000 inhabitants in the southern Caribbean. Wärtsilä’s efforts have enabled them to shift their wind energy assets from a percentage of annual demand in middle age to 30 years, again with a significant reduction in electricity production from diesel. These are not small networks, but MW-scale networks.
This is well aligned with the other side of Wärtsilä’s business, the Naval Force. Their largest engine has a brutal output of 20 MW. All ships are “microgrids” and virtually all systems that do not push them with water are without electricity. Every massive cruise ship and bulk carrier is a microgrid. More and more of them also have considerable battery storage, although few larger ships have hybrid drives.
Thirty years ago, it would have been almost impossible to efficiently manage storage in a mixed microgrid of renewables and generators because forecasts were much worse, computers were expensive, and battery technology was much less advanced. It would have been difficult twenty years ago. With the penetration of advanced LFP and lithium-ion batteries, low-cost computers, the Internet, and highly accurate weather forecasting, this type of microgrid optimization is much more viable.
Wärtsilä brings data from several different weather systems and uses those suitable for geography. While 5-day weather forecasts are now as accurate as 1-day weather forecasts before, this does not mean that every weather forecast system is just as good in different regions.
The Wärtsilä repository is a subset of their energy business. They look to future fuels and focus heavily on flexible fuel engines to handle the transition. The Wärtsilä White Paper “Front-loading Net Zero” models cost-optimal paths to 100% renewable energy systems in different markets with significantly different socio-economic dynamics, different energy systems and challenges to be overcome. The main emphasis is on how to do it in a cost-effective way. While critics say it will be too expensive, Wärtsilä did the math for his screenplays. Wärtsilä ignores the policy, arguing that it is possible to reach net zero more quickly by acknowledging the role of engines that provide long-term storage that runs on current fossil fuels but will switch to green fuels in the future. For example, California could use an existing natural gas reservoir, start engines and switch to biomethane in the future.
This is in line with the search for profitability for gas and coal producers to work in declining capacities every year until they are no longer needed. Denmark did so with its coal-producing assets as their wind energy fleet grew, as an obvious example.
Wärtsilä has an advantage with its piston engines over gas turbines for this long-term storage path. The engine can start and stop hundreds of times a year without impact on maintenance, unlike gas turbines that would be affected. It’s similar to modern cars, which turn off the engines at the brake lights and then restart them. Gas turbines do not like to be switched on and off several times a day. They can be adjusted up and down in terms of performance, but maintenance costs increase with more start-stop cycles.
Accordingly, they are developing engines based on flexible fuels based on ammonia and methanol, as the maritime industry is considering both of these fuels. In my projection of maritime transport to 2100, I see that electrification is a bigger wedge than industry, combined with ongoing optimization and innovation in ship efficiency, and I consider it likely that biofuels that are compatible with current engines will be a more likely path.
Wärtsilä is also considering pure hydrogen for the marine propulsion and production facilities it sells. Tang points out that if Europe is driven into hydrogen as a fuel through government measures and incentives, then it could end despite clear challenges.
Wärtsilä has recently seen a wild dislocation in battery prices, mainly due to the price of lithium carbonate, which is required for LFP and lithium-ion batteries. System-level prices are expected to rise by 21% this year and 31% next year. The industry will spend it and some deployments have become non-viable, with ugly negotiations. Tang’s perspective is that in 2024-2025 it will be just a painful vibration in the rearview mirror. My view is similar, because lithium is a commentary in both hard rocks and lithium brines in the oil and gas sectors, and we are currently experiencing a short-term mismatch between resource extraction volumes and market demand.
Tang hopes that things like redox flow batteries will mature and allow for longer storage, because cell-based chemistry has significant limitations in the economic scaling of energy. 6-8 hours is about as much as can be saved economically, and we need a solution with a longer life. His perspective is that this will be the result mentioned above.
Tang decided on his career because of his love of skiing. Ever since he started skiing three decades ago, he has watched the average snow level in the Sierras rise by a thousand feet. In resorts at 6,000 feet above sea level, every storm came like snow, and now half the storm comes like rain. Tang’s perspective is that we have a chance to overcome it. We have a chance to fix it. The transition to renewables is personally important for Tang. He wants to be a steward for future generations of skiers. He says we have the tools, we just need the policy wrapped behind it and implement it.
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