USA Government Funded Battery Improvement Effort: Expensive, Impractical Batteries

Commentary, Ross Marchand

(AP Photo/Ross D. Franklin)
For proponents of government-backed renewable energy, utilities are little more than a midwife to a battery-charged future. The reason is that solar and wind power are intermittent, with plenty of seasonal and time-of-day variation that doesn’t match the needs of consumers at any given moment.

One solution tried by states has been net-metering, which forces utilities to purchase energy from solar consumers at artificially high rates. This comes at the expense of other, poorer, utility consumers.

But the rollback in net-metering in states such as Arizona, Michigan, and New York has gone hand-in-hand with a rising interest in batteries that can hold solar and wind energy until consumers need the power. Green backers successfully pushed the Internal Revenue Service to include battery systems as part of the 30 percent Investment Tax Credit. And the Department of Energy is actively chasing a cost-effective battery that could hold a renewable charge for a long duration. But much like the historical quest, the federal government’s “holy grail” search to deliver practical, widespread battery storage is bound to fail.

Rather than chasing expensive, impractical energy solutions, policymakers should embrace grid-compatible electricity sources.

Many implausible technological changes would have to happen before batteries will be capable of doing what clean-energy visionaries hope. Massachusetts Institute of Technology and Department of Energy scientists have found that, currently, “the value delivered by energy storage with a 2-hour storage capacity only exceeds current technology costs under strict emissions limits…” Which is to say, this makes electricity much more expensive unless we regulate conventional generation to a punitive degree.

One major issue is the cost of metals required to bring these batteries into being. The supply of lithium, also the basis for the batteries powering electric cars, is notoriously slow to respond to surging global demand.

The elements that make up these batteries are becoming more expensive, with demand skyrocketing. For example, lithium prices have nearly tripled since the start of the decade, and global demand pressures show no signs of abating anytime soon. Even more troubling is the surging demand of cobalt, which is far harder to obtain due to the limited amount of mines able to churn out the mineral.

According to Roskill metals/minerals analyst Jack Bedder, “After around 2022, we will need to see much more capacity expansion if supply is to meet demand.” This normally wouldn’t be an issue, since price hikes due to shortages can motivate mining companies to dig harder and deeper to find needed inputs or effective substitutes. But complications abound; roughly 70 percent of the world’s cobalt is found in the notoriously unstable and corrupt Democratic Republic of the Congo. Even if a sky-high price motivates more extraction, shutdowns of mines due to political and economic chaos can render miners helpless.

There is, of course, always the potential for researchers to find low-cost alternatives to problematic, in-demand resources such as lithium and cobalt. Enter Advanced Research Projects Agency-Energy, ARPA-E, an agency within the DOE tasked with bankrolling and promoting nascent renewable technologies. ARPA-E has been shelling out tens of millions of taxpayer dollars over the past year to develop new battery storage technologies and increase the reliability of existing models. While research is key to the development of virtually any technology, evidence suggests that ARPA-E is poorly equipped for the job. According to a 2017 National Academies of Sciences report on the agency, nearly three-quarters of projects designated as “completed” have no market engagement whatsoever. No private funding or company formed around the research. And even that figure is probably high, since the Energy Department data undergirding the report shadily includes recipients who had formed a firm prior to ARPA-E funding in their definition of “company formation.”

That’s not to say that researchers will never find a low-cost, reliable alternative to current storage technologies. But, government-fueled research is unlikely to deliver the goods. More private development and experimentation is sorely needed. Instead of tax-advantaging battery technology via the Investment Tax Credit over electricity sources delivered through utilities, lawmakers should push for a level energy playing field. Only a vibrant and diverse market in energy production and storage can lead to a future of low-cost, abundant energy.

Ross Marchand is the director of policy for the Taxpayers Protection Alliance.

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