News
Cleaning up the grid will require installing a lot of batteries to store renewable energy. Startup Element Energy has delivered a powerful proofpoint for a new way to do that more cheaply without sacrificing safety.
Element has been operating what appears to be the largest grid storage plant in the world composed of previously used electric vehicle batteries, co-founder and CEO Tony Stratakos told Canary Media last week. The 53 megawatt-hour project, which is located in West Texas at a wind farm owned by mega-developer Nextera Energy Resources, came online in May, but the startup is going public with the information now for the first time.
“It’s really a very nice, living demonstration that everything we talked about last time has come to fruition and works,” co-founder and CEO Tony Stratakos told me last week, two years after he first pitched me on the project. “The promise of our technology is, we can operate batteries that others can’t.”
Previously, the largest second-life grid battery that Canary Media had reported on was B2U Storage Solutions’ project in Lancaster, California, which has grown to 28 megawatt-hours.
Element got its hands on a warehouse full of modules taken out of used EV battery packs, all in various states of health after their time pushing different cars around. The startup repackages them into containers operated by its proprietary hardware and software, which fine-tune commands at the cell level, instead of treating all the batteries as a monolithic whole. This enables the system to get more use out of each cell without stressing any so much that they break down or — worst-case scenario for a battery plant — cause a fire.
Element Energy is technically the battery vendor to the power plant’s owner. So far, no company has publicly taken credit for buying this innovative system from Element and installing it, though a Department of Energy grant announcement for the project describes it as a joint pursuit with Nextera, which happens to own the wind farm location where the batteries were installed.
Since Element isn’t in the business of power plant development, its strategy relies on leveraging the success of this first major installation to convince more storage developers to buy its lower priced, refurbished grid batteries instead of the brand-new variety.
Venture capitalists have doubled down on that strategy, handing Element a $72 million Series B last November, alongside a $38 million debt facility from Keyframe Capital. That followed a $15 million Series A in 2019.
Stratakos also revealed that his company finalized a partnership with LG Energy Solution Vertech, the grid storage branch of one of the major global lithium-ion manufacturers. That much bigger company — which previously invested in Element through its venture arm — will take Element’s battery enclosures and supply the inverters and auxiliary equipment needed to make a turnkey power plant. LG will also provide operations and maintenance, alleviating the risks associated with buying a long-term grid asset from a young startup.
Reusing EV batteries lets Element Energy lower the cost for large-scale grid storage compared to buying brand-new batteries. (Element Energy)
The new war chest and industrial-grade quality assurance from LG puts Element in a strong position to unleash more used batteries upon the grid.
But it also means the cell-level battery controls could expand to conventional grid batteries too, eking more useful life out of them while minimizing safety risks. Both efforts stand to accelerate the pace of energy storage adoption, helping the grid meet peak demand and absorb more renewables at the same time.
Texas project installed, manufacturing in the works
When we first spoke in late 2022, Stratakos planned to build the Texas plant in 2023 and start shipping the remainder of its battery stockpile in 2024.
The actual installation process turned out to be “a learning experience,” Stratakos told me last week, meaning it took longer and cost more than initially planned — “but it was worth it.” The company honed its technique for integrating the batteries into large-scale power plants, and improved its enclosure design along the way. Now it’s getting real-world data from daily plant operations in the ERCOT energy markets.
“There is a lot of talk in this category,” said Tim Woodward, who invested in Element as managing director at Prelude Ventures. This project shows Element can operate at the scale necessary “to get the big guys,” — in other words, large, sophisticated clean energy developers.
Onsite learning now informs Element’s plans for large-scale manufacturing: The company is in early stage site selection to build a factory capable of assembling multiple gigawatt-hours of used battery enclosures per year, Stratakos said. That kicks off a race of sorts to determine who builds the first large-scale factory of this kind — fellow startup Moment Energy is in the early stages of building a 1 gigawatt-hour factory for second-life enclosures in Texas.
In the meantime, Stratakos is working to close a number of deals with the 2 gigawatt-hours of second-life capacity Element has stockpiled in a warehouse in Kentucky.
Element has not confirmed where this windfall came from. Incidentally, its backer LG had a major EV battery recall for the Chevy Bolt, which would have freed up a bounty of lightly used battery modules, once technicians fished out the defective cells. In any case, that in-house supply is a major differentiator at a time when second life batteries are still not widely available for bulk purchase.
“I don’t think anyone has that volume [of second-life batteries] sitting there, ready to be deployed,” Woodward said. “Batteries are lasting longer in the field than anticipated. It’s not that common that you’re seeing batteries pulled out of even the earliest Teslas.”
Further success will involve winning over grid storage developers, who currently buy new batteries basically 100 percent of the time. Those are high-tech, uniform, and come with a warranty from an established manufacturer, while second-life batteries are unpredictable, potentially dangerous, and a total wild west in terms of quality guarantees (hence the potency of Element’s backing from LG).
Second-life startups typically tout the sustainability angle to attract first-time customers: Used batteries can reduce the environmental costs of the energy transition and keep valuable battery materials out of the proverbial landfill.
When it comes to actually closing a deal, though, “The number one issue is cost,” Stratakos said. Sustainability and circularity are definitely factors that customers consider, but ultimately that’s “more of a bonus.”
Second-life batteries don’t come free, and operating them safely requires time and money spent grading, evaluating, and monitoring the systems. All told, specialists like B2U Storage Solutions and Moment Energy say they can shave about a third off the cost of a utility-scale battery installation by picking used instead of new batteries. Element says it can cut 30 to 50 percent off the cost on a fully installed basis.
The grid desperately needs more very cheap batteries, especially in places where solar power is maxing out its usefulness during sunny hours and demand surges to lucrative heights at night. Now Element Energy has a live showcase for what it can do in the rough-and-tumble Texas energy market. If they can make it work there, they can surely make it happen elsewhere, too.
- Originally published at https://www.canarymedia.com/ | November 21 2024