Like all the trendiest technology companies, Cumulus Energy Storage, a start-up energy storage provider with headquarters in Sheffield, was conceived in Silicon Valley.
In the spring of 2012, engineer and business change expert Nick Kitchin visited the cradle of the technology revolution on a fact-finding and inspiration mission. He also found time to catch up with an old friend, Darren Brackenbury – now chief operating officer at Cumulus – to discuss how best to exploit opportunities in the supply chain for the burgeoning UK offshore wind market Kitchin had been inspired by the “big numbers” associated with UK ambitions in this sector at an event in Humberside.
Rejecting opportunities for novel turbine blades and foundations, the pair agreed that energy storage was the missing link in the sector’s value proposition. Brackenbury, who had experience in battery development, suggested a focus on copper-zinc technology, and Cumulus was born.
Since Kitchin and his partner took that leap, demand for new and more affordable ways to store the electricity from intermittent renewable generation schemes has expanded exponentially.
As deployment of renewables has increased around the globe, so awareness of the challenges this brings for grid stability and security has risen. This in turn has spurred the development of demand-response markets and the high price of buying electricity at sensitive times – such as the “triad” periods – has become so punitive that electricity-intensive users are more than happy to engage with partners that can help them avoid those costs.
In short, there are opportunities for an entrepreneurial company with a sound electricity storage technology to provide “storage as a service” and deliver a variety of win-win scenarios for a range of customers.
The technology
Kitchin and Brackenbury’s decision to focus on a copper-zinc battery innovation might seem a strange one when so much of the wider battery development world has set its sights on developing ever more energy-dense and lightweight lithium ion batteries for use in consumer and mobile devices. But Kitchin says this technology direction is “irrelevant to stationary battery storage”.
The copper-zinc chemistry, based on proven technology used in the mining industry for years, reinvents one of the first batteries ever made, by Allesandro Volta about 200 years ago. The critical development of this seminal design is that, thanks to modern materials science, Cumulus has been able to introduce a membrane between the battery’s electrodes that makes the battery rechargeable.
Kitchin believes this copper/zinc battery innovation has a number of advantages over other offerings in the rapidly expanding electricity storage market. These advantages include the scalability and flexibility of the solution that, when fully developed, will keep running while cells are removed for maintenance or replacement. The “unstressed” chemistry in the cells also means the battery has a long life compared with other technologies. Chief among the benefits though, is cost.
“Our mantra has been to keep it simple and lower the cost,” says Kitchin. “Copper/zinc can deliver what the stationary storage market needs. Copper and zinc are the 25th and 26th most abundant materials in the world. The battery itself is very simple – essentially a tank with liquid electrolyte, and into that you put the cells. It’s very simple, which means it is very scalable.” That means it can be mass produced relatively easily, further driving down costs over time.
Cumulus projects a levelised cost of energy (LCOE) for its copper/zinc proposition of £120/MWh – a price similar to pumped storage hydro but without the associated geographic limitations. Compared with the wider landscape of LCOE measurements for energy storage technologies, Cumulus’ position is positive (see chart).
Summing this up, Kitchin concludes: “There are lots of providers out there that are very, very expensive. When you start talking about big bulk time-shift as opposed to frequency response and ancillary services, apart from pumped hydro there is no low-cost solution out there for the 4-6 hour charge and discharge, security of supply market. There just isn’t a solution.”
Cumulus means to change that.
Market barriers
Kitchin is confident that the energy storage market is going to grow, and outlines plans to ramp up towards “serious production” and opening new factories in San Francisco and China – as well as the one in Sheffield – to service the huge demand he anticipates by 2017.
However, although Kitchin expresses a strong can-do attitude about breathing competitive commercial life into his start-up, he is also aware of a number of barriers before market realisation.
There’s a continuing problem, for example, with the classification of the energy released from storage. Classified as neither generation nor supply, storage providers have to pay two lots of charges – when they fill up and when they empty their batteries. Utility Week identified this market barrier in an extended feature on electricity storage (28 November 2014), but Kitchin says there is little clarity about what’s being done to resolve the problem. He suggests Decc and Ofgem should take action to carve out a new market category.
The market for storage services is “fog-bound” says Kitchin. “It’s very unclear what the value proposition is, who the customer is, where the pain points are, what the policy is.”
Kitchin has decided to focus his efforts first of all on the “low hanging fruit” of about 100,000 UK industrial and commercial electricity users who get stung by high energy costs at peak times.
Policy-makers must develop standards and mechanisms to bring clarity to the market opportunities for storage providers to transmission and distribution operators says Kitchin – but he also identifies “a bit of incumbent behaviour” as a blocker.
How does it work?
Cumulus Energy Storage’s proposition is a rechargeable copper-zinc battery, based on technology used in the mining industry to plate electrodes with non-ferrous metal. This process is called electro-winning.
It is “very unstressed chemistry” says Cumulus founder and chief executive Nick Kitchin, based on a process used in plants that “run for decades at hundreds of megawatt-hour scale”.
To turn this electro-winning technique into a rechargeable battery, Cumulus has introduced a special membrane between the two electrodes to stop the copper and zinc ions crossing from one to the other through the electrolyte. “Every time you charge the battery, copper comes off the copper electrode into the electrolyte and zinc electro-wins onto the zinc electrode. When you discharge the battery the opposite happens.”
How big is it?
Cumulus batteries are scalable and can be expanded and contracted by adding and removing cells. The cells convert electrical energy into chemical energy and store it until it is required. The Cumulus battery is for grid-scale application with a “sweet spot” of between 1MWh and 100MWh. Crucially, Cumulus is working to develop its design so a battery can continue to function when individual cells are removed for maintenance or replacement.
Each cell measures 1m x 1m and a pair of cells can provide two kilowatt-hours of electricity storage. A battery capable of providing 1MWh of electricity storage will be contained in a 40-foot “tank” or container.
Service proposition
Cumulus does not plan to sell its batteries as one-off units. Instead it will provide “storage as a service” contracts for a range of customers (see below). Under these contracts, customers will be charged every month or every year for arbitrage, asset deferral and ancillary services to National Grid.
Target customers
Cumulus plans to market its storage as a service offerings to three key groups of customers:
• Electricity-intensive users
• Commercial scale renewables operators
• Infrastructure operators including electricity transmission and distribution companies, rail operators and electric vehicle charging networks.
Market growth strategy
Cumulus aims to grow first in its home market of the UK but then has plans to expand and service rapidly escalating demand in:
• Ireland
• Germany
• the US
• China
Combined, these countries represent 46% of global electricity consumption and all have large scale political ambitions to decarbonise their energy systems.
How is Cumulus financed?
As it works on developing its technology and bringing it to market, Cumulus will seek investment iteratively. It recently completed a second round of seed finance that brought in just over £1m of investment from business angels.
In December Cumulus will start approaching institutional investors in a funding round designed to raise £5m. With this money it will establish production capability for manufacturing a single 1MWh battery per month.
Toward the end of 2016 it will conduct another funding round to raise £25m and ramp up production to as much as 1GWh of batteries a year.
Cumulus also received a government grant of about £800,000 to develop a 20 kilowatt-hour grid-connected battery in the UK.