Why Energy Storage is About to Get Big – and Cheap

tl;dr: Storage of electricity in large quantities is reaching an inflection point, poised to give a big boost to renewables, to disrupt business models across the electrical industry, and to tap into a market that will eventually top many of tens of billions of dollars per year, and trillions of dollars cumulatively over the coming decades.

The Energy Storage Virtuous Cycle

I’ve been writing about exponential decline in the price of energy storage since I was researching The Infinite Resource. Recently, though, I delivered a talk to the executives of a large energy company, the preparation of which forced me to crystallize my thinking on recent developments in the energy storage market.

Energy storage is hitting an inflection point sooner than I expected, going from being a novelty, to being suddenly economically extremely sensible. That, in turn, is kicking off a virtuous cycle of new markets opening, new scale, further declining costs, and additional markets opening.

To elaborate: Three things are happening which feed off of each other.

  1. The Price of Energy Storage Technology is Plummeting. Indeed, while high compared to grid electricity, the price of energy storage has been plummeting for twenty years. And it looks likely to continue.
  2. Cheaper Storage is on the Verge of Massively Expanding the Market.  Battery storage and next-generation compressed air are right on the edge of the prices where it becomes profitable to arbitrage shifting electricity prices – filling up batteries with cheap power (from night time sources, abundant wind or solar, or other), and using that stored energy rather than peak priced electricity from natural gas peakers.This arbitrage can happen at either the grid edge (the home or business) or as part of the grid itself. Either way, it taps into a market of potentially 100s of thousands of MWh in the US alone.
  3. A Larger Market Drives Down the Cost of Energy Storage. Batteries and other storage technologies have learning curves. Increased production leads to lower prices. Expanding the scale of the storage industry pushes forward on these curves, dropping the price. Which in turn taps into yet larger markets.

 

Let’s look at all three of these in turn.

1. The Price of Energy Storage is Plummeting

Lithium Ion

Lithium-ion batteries have been seeing rapidly declining prices for more than 20 years, dropping in price for laptop and consumer electronic uses by 90% between 1990 and 2005, and continuing to drop since then.

A widely reported study at Nature Climate Change finds that, since 2005, electric vehicle battery costs have plunged faster than almost anyone projected, and are now below most forecasts for the year 2020.

The authors estimate that EV batteries in 2014 cost between $310 and $400 per kwh. It’s now in the realm of possibility that we’ll see $100 / kwh lithium-ion batteries in electric vehicles by 2020, with some speculating that Tesla’s ‘gigafactory’ will push into sufficient scale to achieve that.

And the electric car market, in turn, is making large-format lithium-ion batteries cheaper for grid use.

What Really Matters is LCOE – the Cost of Electricity

Now let’s digress and talk about price. The prices we’ve just been talking about are capital costs. Those are the costs of the equipment. But how does that translate into the cost of electricity? What really matters when we talk about energy storage for electricity that can be used in homes and buildings is the impact on Levelized Cost of Electricity (LCOE) that the battery imposes. In other words, if I put a kwh of electricity into the battery, and then pull a kwh of electricity out, over the lifetime of the battery (and including maintenance costs, installation costs, and all the rest), what did that cost me?

Traditional lithium ion-batteries begin to degrade after a few hundred cycles of fully charging and fully discharging, or 1,000 cycles at most. So naively we’d take the capital cost of the battery and divide it by 1,000 to find the cost per kwh round-tripped through it (the LCOE). However, we also have to factor in that some electricity is lost due to less than 100% efficiency (Li-ion is perhaps 90% efficient in round trip). This multiplies our effective cost by 11%.

So we’d estimate that at the following battery prices we’d get the following effective LCOEs:

- $300 / kwh battery  :  33 cent / kwh electricity storage
- $200 / kwh battery  :  22 cent / kwh electricity storage
- $150 / kwh battery  :  17 cent / kwh electricity storage
- $100 / kwh battery  :  11 cent / kwh electricity storage

All of those battery costs, by the way, are functions of what the ultimate buyer pays, including installation and maintenance.

For comparison, wholesale grid electricity in the US at ‘baseload’ hours in the middle of the night averages 6-7 cents / kwh. And retail electricity rates around the US average around 12 cents per kwh. You can see why, at the several hundred dollars / kwh prices of several years ago, battery storage was a non-starter.

On the Horizon: Flow Batteries, Compressed Air

Right now, most of the talk about energy storage is about lithium-ion, and specifically about Tesla, who appear close to announcing a new home battery product at what appears to be a price of around $300 / kwh.

But there are other technologies that may be ultimately more suitable for grid energy storage than lithium-ion.

Lithium-ion is compact and light. It’s great for mobile applications. But heavier, bulkier storage technologies that last for more cycles will be long-term cheaper.

Two come to mind:

1. Flow Batteries, just starting to come to market, can theoretically operate for 5,000 charge cycles or more. In some cases they can operate for 10,000 cycles or more. In addition, the electrolyte in a flow battery is a liquid that can be replaced, refurbishing the battery at a fraction of the cost of installing a new one.

2. Compressed Air Energy Storage, like LightSail Energy’s, uses physical components that are likewise rated for 10,000+ cycles of compression and decompression.

Capital costs for these technologies are likely to be broadly similar to lithium-ion costs over the long term and at similar scale. Most flow battery companies have $100 / kwh capital cost as a target in their minds or one that they’ve publicly talked about. (ARPA-E has used $100 / kwh as a target.) And because a flow battery or compressed air system lasts for so many more cycles, the overall cost of electricity is likely to be many times lower.

How low? At this point, other variables begin to dominate the equation: The cost of capital (borrowing or opportunity cost); management and maintenance costs; siting costs.

DOE’s 2013 energy storage roadmap lists 20 cents / kwh LCOE as the ‘short term’ goal. It articulates 10 cents / kwh LCOE as the ‘long term’ goal.

At least one flow battery company, EnerVault, claims that it is ‘well below’ the DOE targets (presumably the short term target of 20 cents / kwh of electricity).

[Update: I'm informed that EnerVault has run into financial difficulties, a reminder that the storage market, like the solar market before it, will likely be fiercely Darwinian. In solar, the large majority of manufacturers went out of business, even as prices plunged by nearly 90% in the last decade. We should expect the same in batteries. The large majority of energy storage technology companies will go out of business, even as prices drop - or perhaps because of plunging prices - in the decade ahead.]

Getting back to fundamentals: In the long run, given the advantage of long life, if flow batteries or compressed air see the kind of growth that lithium-ion has seen, and thus the cost benefits of scale and learning curve, it’s conceivable that a $100 / kwh flow battery or compressed air system could reach an LCOE of 2-4 cents / kwh of electricity stored.

Of course, neither flow batteries nor compressed air are as commercially proven as lithium-ion. I’m sure many will be skeptical of them, though 2015 and 2016 look likely to be quite big years.

Come back in a year, and let’s see.

2. Storage is on the Verge of Opening Vast New Markets

Now let’s turn away from the technology and towards the economics that make it appealing. Let’s start with the simplest to understand: in the home.

A. Fill When Cheap, Drain When Pricey (Time of Use Arbitrage)

The US is increasingly going to time-of-use charges for electricity. Right now that means charging consumers a low rate in the middle of the night (when demand is low) and a high rate in the afternoon and early evening (when demand is at its peak, often twice as high as the middle of the night).

This matches real underlying economics of grid operators and electricity producers. The additional electricity to meet the surge in afternoon and early evening is generally supplied by natural-gas powered “peaker” plants. And these plants are expensive. They only operate for a few hours each day, so their construction costs are amortized over a smaller amount of electricity. And they have other problems we’ll come back to shortly. The grid itself pays other costs for the peak of demand. Everything – wires, transformers, staff – must be built out to handle the peak of capacity, not the minimum or the average.

The net result is that electricity in the afternoon and early evening is more expensive, and this is (increasingly) being passed on to consumers. How much more expensive? See below:

In California, one can choose the standard tiered rate of 18.7 cents per kwh. Or one can choose the the time-of-use rate. In the latter, there’s a 19.2 cent per kwh difference in electricity rates between the minimum (9pm to 10am) and the peak (1pm – 7pm).

Batteries cheaper than 19 cents / kwh LCOE (including financing, installation, etc.) can be used to arbitrage this price difference. Software fills the battery up with cheap power at night. Software preferentially uses that cheap power from the battery during the peak of demand, instead of drawing it from the grid.

This leads to what seems to be a paradoxical situation. A battery that is more expensive than the average price of grid electricity can nonetheless arbitrage the grid and save one money. That’s math.

That’s also one of the scenarios behind Tesla’s entry into the home battery market.

One last point on this before moving on. The arbitrage happening here is also actually good for the grid. From a grid operator’s standpoint, this is ‘peak shaving’ or ‘peak shifting’. Some of the peak load is being diverted to another time when there’s excess capacity in the system. The total amount of electricity being drawn doesn’t change. (In fact, it goes up a bit because battery efficiency is less than 100%). But it’s actually a cost savings for the grid as a whole. In any situation where electricity demand is growing, for instance, widespread use of this scenario can postpone the data at which new distribution lines need to be installed.

B. Store the Sun (Solar + Batteries, as Net Metering Gets Pressured)

Rooftop solar customers love net metering, the rules that allow solar-equipped homes to sell excess electricity back to the grid. Yet around the world and the US, net metering is under pressure. It’s likely, in the US, that the rate at which consumers are paid for their excess electricity will drop, that caps will be imposed, or both.

The more that happens, the more attractive batteries in the home look.

Indeed, it’s happening in Germany already, and the economics there are revealing.

First, let’s be clear on the scenarios, with some help from some graphics from a useful Germany Trade and Invest presentation (pdf link) that dives into “battery parity” (with some tweaks to the images from me.)

Current scenario: Excess power (the bright orange bit – electricity solar panels generate that is beyond what the home their own needs) is sold to the grid. Then, in the evening, the home need power. It buys that electricity from the grid.

Potential new situation. Excess power is available during the day. At least some of it gets stored in a battery for evening use.

Under what circumstances would the second scenario be economically advantageous over the first? In short: The difference in price between grid electricity and the net metering rate / feed-in-tariff is the price that batteries have to meet. In Germany, where electricity is expensive, and feed-in-tariffs have been plunging, this gap is opening wide.

There’s now roughly a 20 euro cent gap between the price of grid electricity and the feed-in-tariff for supplying excess solar back to the grid (the gold bands) in Germany, roughly the same gap as exists between cheapest and most expensive time of use electricity in California.

GTAI and Deutsche Bank’s conclusion – based on the price trends of solar, batteries, electricity in Germany, and German feed-in-tariffs – is that ‘battery parity’, the moment when home solar + a lithium-ion battery makes economic sense, will arrive in Germany by next summer, 2016.

Almost any sunny state in the US that did away with net metering would be at or near solar + battery parity in the next 5 years.

Note: Solar + a battery is not the same as ‘grid defection’. It’s not going off-grid. We’re used to 99.9% availability of our electricity. Flick a switch and it’s on. Solar + a small battery may get someone in Germany to 70%, and someone in Southern California to 85%, but the amount of storage you need to deploy to increase that reliability goes up steeply as you approach 99.99%.

For most of us, the grid will always be there. But it may be relegated to slightly more of a backup role.

C. Storage as a Grid Component (Caching for Electrons)

Both of the previous scenarios have looked at this from the standpoint of installation in homes (or businesses – the same logic applies).

But the dropping price of storage isn’t inherently biased towards consumers. Utility operators can deploy storage as well, Two recent studies have assessed the economics of just that. And both find it compelling.

First, Texas utility Oncor commissioned a study (pdf link – The Value of Distributed Electricity Storage in Texas) of whether it would be cost-effective to deploy storage throughout the Texas grid (called ERCOT), placing the energy storage at the ‘edge’ of the grid, close to consumers.

The conclusion was an overwhelming yes. The study authors concluded that, at a capital cost of $350 / kwh for lithium-ion batteries (which they expected by 2020, but which we may have now), it made sense across the ERCOT region to deploy at least 15,000 MWh of battery storage. (That would be 15 million KWh, or the equivalent battery capacity of nearly 160,000 Tesla model 85Ds.)

The study authors concluded that this additional battery storage would slightly lower consumer electrical bills, reduce outages, reduce the need to build added capacity (by shifting the peak, much as a home battery would), and similarly reduce the need to build additional transmission and distribution lines.

The values shown above are in megawatts of power, by the way. The assumption is that there are 3 MWh of storage per MW of power output in the storage system.

You can also see that at a slightly lower price of storage than the $350 / kwh assumed here, the economic case for 8,000 MW (or 24,000 MWh) of storage becomes clear. And we are very likely about to see such prices.

8,000 MW or 8 GW is a very substantial amount of energy storage. For context, average US electrical draw (over day/night, 365 days a year) is roughly 400 GW. So this study is claiming that in Texas alone, the economic case for energy storage is strong enough to motivate storage capacity equivalent to 2% of the US’s average power draw.

ERCOT consumes roughly 1/11th of the US’s electricity. (ERCOT uses roughly 331,000 GWh / year. The US as a whole roughly 3.7 million GWh / year.) If similar findings hold true in other grids (unknown as of yet), that would imply an economic case fairly soon for energy storage capacity of 22% of US electric draw for 3 hours, meaning roughly 88,000 MW or 264,000 MWh.

This is, of course, speculative. We don’t know if the study findings scale to the whole of the United States. It’s back of the envelope math. Atop that, the study itself is an analysis, which is not the same value as experience. Undoubtedly in deployment we’ll discover new things which will inform future views. Even so, it appears that there is very real value at unexpectedly high prices.

Energy storage, because of its flexibility, and because it can sit in so many different places in the grid, doesn’t have to compete with wholesale grid power prices. It competes with the price of peak demand power, the price of outages, and the price of building new distribution and transmission lines. 

Which brings us to scenario 2D:

D. Replacing Natural Gas Peakers

The grid has to be built out to support the peak of use, not the average of use. Part of that peak is sheer load. Earlier I mentioned natural gas ‘peaker’ plants. Peaker plants are reserve natural gas plants. On average they’re active far less than 10% of the time. They sit idle, fueled, ready to come online to respond to peaking electricity demand. Even in this state, bringing a peaker online takes  a few minutes.

Peaker plants are expensive. They operate very little of the time, so their construction costs are amortized over few kwh; They require constant maintenance to be sure they’re ready to go; and they’re less efficient than combined cycle natural gas plants, burning roughly 1.5x as much fuel per kwh of electricity delivered, since the economics of investing in their efficiency hardly make sense when they run for so little of the time.

The net result is that energy storage appears on the verge of undercutting peaker plants. You can find multiple articles online on this topic. Let me point you to one in-depth report, by the Electric Power Research Institute (EPRI): Cost-Effectiveness of Energy Storage in California (pdf).

This report specifically looked at the viability of replacing some of California’s natural gas peaker plans.

While the EPRI California study was asking a different question than the ERCOT study that looked at storage at the edge, it came to a similar conclusion. Storage would cost money, but the economic benefit to the grid of replacing natural gas peaker plants with battery storage was greater than the cost. Shockingly, this was true even when they used fairly high prices. The default assumption here was a 2020 lithium-ion battery price of $528 / kwh. The breakeven price their analysis found was $842 / kwh, more than twice as high as current li-ion battery prices.

Flow batteries, compressed air, and pumped hydro (where geography supports it) also were economically viable.

California alone has 71 natural gas peaker plants, with a combined capacity of 7,418 MW (pdf link). The addressable market is large.

3. Scale Reduces Costs. Which Increases Scale.

In every scenario above there are large parts of the market where batteries aren’t close to competitive yet; where they won’t be in the next 5 years; where they might not be in the next 10 years.

But what we know is this: Batteries (and other storage technologies) will keep dropping in cost. Market growth accelerates that. And thus helps energy storage reach the parts of the market it isn’t priced yet for.

Who Benefits?

Storage has plenty of benefits – higher reliability, lower costs, fewer outages, more resilience.

But I wouldn’t have written these three thousand words without a deep interest in carbon-free energy. And the increasing economic viability of energy storage is profoundly to the benefit of both solar and wind.

Let me be clear: A great deal can be done with solar and wind with minimal storage, by integrating over a wider region and intelligently balancing wind and solar against one another.

Even so, cheap storage is a big help. It removes a long term concern. And in the short term, storage helps whichever energy source is cheapest overcome intermittence and achieve flexibility.

Batteries are flexible. Storage added to add reliability the grid can soak up extra solar power for the hours just after sunset. It can soak up extra wind power from a breezy morning to use in the afternoon peak. Or it can dispatch saved up power to cover for an unexpected degree of cloudiness or a shortfall of wind.

Once the storage is there – whatever else it was intended for – it will get used for renewables. Particularly as those renewables become the cheapest sources of electricity on the grid.

Today, in many parts of the US, wind power is the cheapest source of new electricity, when the wind is blowing. The same is true in northern Europe. On the horizon, an increasing chorus of voices, even the normally pessimistic-on-renewables IEA, see solar as the cheapest source of electricity on the planet, heading towards 4 cents per kwh. Or, if you believe more optimistic voices, a horizon of solar at 2 cents per kwh.

Cheap energy storage adds flexibility to our energy system overall. It can help nuclear power follow the curve of electrical demand (something I didn’t explore here). It helps the grid stay stable and available. It adds caching at the edge, reducing congestion and the need for new transmission.

But for renewables, especially, cheap storage is a force multiplier.

And that’s a disruption I’m excited to see.

—-

There’s more about the exponential pace of innovation in both storage and renewables in my book on innovating to beat climate change and resource scarcity and continue economic growth:The Infinite Resource: The Power of Ideas on a Finite Planet

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How Much Land Would it Take to Power the US via Solar?

I’ve seen some pieces in the media lately questioning this, so allow me to point to some facts based on real-world data.

tl;dr: We’ll probably never power the world entirely on solar, but if we did, it would take a rather small fraction of the world’s land area: Less than 1 percent of the Earth’s land area to provide for current electricity needs.

First, let me be clear: I doubt the future is 100% solar or anything like it. We are in the midst of a multi-decade transition. And while solar is the most abundant renewable on the planet, and plunging in price faster than any other, there’s a role for solar, wind, hydro, nuclear, and geothermal in the distant future based on ideal geographies and scenarios. I very much hope to see highly advanced, high-yield biofuels come into the mix in the next decade. And for a number of decades to come we’re going to have fossil fuels in play. This article is a ‘what if?’ and not a prediction of or call for 100% solar.

Second, to move to a high-renewables world, we need low-cost energy storage. We’re making progress on that. But there’s still quite a distance to go.

For the data, let’s use two examples.

Example #1 comes from a Breakthrough Institute article complaining about the vast amount of land that solar needs. Guest writer Ben Heard complains that solar’s land footprint (specifically at the Ivanpah plant) is 92 times that of a small modular nuclear reactor. (If you’ve read The Infinite Resource you may know that I wrote a whole chapter in praise of nuclear power and of small modular reactors in particular. I’m a fan.)

What Heard’s Breakthrough Institute article doesn’t tell you is how tiny that land footprint, in the grand scheme of things, actually is. Do the math on the numbers he presents: 1087 Gwh / yr, or 0.31 Gwh / acre / year.

At that output, to meet the US electricity demand of 3.7 million Gwh per year, you’d need about 48,000 square kilometers of solar sites. (That’s total area, not just area of panels.) That may sound like a stunningly large area, and in some sense, it is. But it’s less than half the size of the Mojave desert. And more importantly, the continental United States has a land area of 7.6 million square kilometers. That implies to that meet US electrical demand via this real world example of Ivanpah, would require just 0.6 percent of the land area of the continental US.

This fact – which puts the land area requirements in context – is completely missing from Heard’s piece at the Breakthrough Institute site.

Asked about this on twitter, Heard replied that larger size nevertheless is a disadvantage. It threatens ecosystems and endangered species, for instance. And this is a legitimate point, in some specific areas. (Though certainly far less so than coal and natural gas.)

But, for context, agriculture uses roughly 30% of all land in the United States, or 50 times as much land as would be needed to meet US electricity needs via solar.

Ivanpah, of course, may be an atypical site. So let’s look more generally.

Example #2 is a convenient reference from NREL:  Land Use Requirements for Solar Plants in the United States (2013) It’s excellent reading. I recommend pulling it up the next time Bjorn Lomborg writes an op-ed.

The second to last column tells us that, weighted by how much electricity they actually produce, large solar PV facilities need 3.4 acres of total space (panels + buildings + roads + everything else) for each Gwh of electricity they produce.

That leads to an output estimate of 0.294 Gwh / year / acre, and virtually the same total area, around 50,000 square kilometers in the US, or 0.6% of the continental US’s land area.

Update: In my original post I didn’t take the time to compare this area to other suitable areas in the US, such as rooftops, parking lots, and built land. Various people pointed me to pieces of data. So, consider that:

1. The built environment in the US (buildings, roads, parking lots, etc..) covered an estimated 83,337 square kilometers in 2009, or roughly 166% of the area estimated above. (Likely this area would not be as efficiently used, of course. But it could make a significant dent.)

2. Idled cropland in the US, not currently being used, totaled 37.2 million acres in 2007, or roughly 150,000 square kilometers, roughly three times the area needed.

3. “National Defense and Industrial” lands in the US (which includes military bases, department of energy facilities, and related, but NOT civilian factories, powerplants, coal mines, etc..) totaled 23 million acres in 2007, or roughly 93,000 square kilometers, nearly twice the area needed to meet US electricity demand via solar. Presumably much of that land is actively in use, but it gives a sense of the scale.

4. Coal mines have disturbed an estimated 8.4 million acres of land in the US. That works out to around 34,000 square kilometers, not too far off for the estimate from solar, and doesn’t include the space for coal power plants. And coal currently produces around only 40% of US electricity and hasn’t been above 60% in decades. To scale coal to 100% of US electricity would have required far more land than is required to meet that same demand via solar. Other analysis says the same: Counting the size of coal mines and their output, solar has a smaller land footprint per unit of energy than coal.

And the solar estimate of ~50,000 square kilometers, of course, is with solar systems already deployed. It doesn’t take into account the possibility of future systems with higher efficiencies that could reduce the land footprint needed.

Again, the point here is not that we’ll see a 100% solar world. The more solar we deploy, the more sense it makes to deploy wind to complement it. And frankly, I want to see the nuclear industry succeed. Nuclear is safe baseload power that we should be rooting for. I hope the nuclear industry can get costs and construction times down and under control.

But, when it comes to solar, land is not a blocking issue. Be skeptical when it’s brought up as one.

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A Simple Suggestion for the Hugo Awards

If you haven’t followed the Hugo Awards, some context. A slate of nominees backed by a voting block is dominating this year’s awards, so much so that the slate has every single nomination in some categories – like Best Short Story, Best Novella, and Best Related Work. Read more about that here or here.

This was possible for a number of reasons. One reason, though, is that in each category there are five finalists for the Hugo. And every person making a nomination can nominate… five works in each category.

So here’s a small suggestion for a rules change for the Hugos for 2016 and beyond.

The number of finalists in each category should substantially exceed the number of nominations possible on a single ballot.

E.g., if the number of final nominees for each category is 5 (as today), then each person should be able to nominate 2 or 3 works in each category.

Or, if we want each person to be able to nominate 5 works in each category, then the number of finalists per category should be raised to 8 or 10. [This may have a ripple effect on the "5% rule" - to be dealt with.]

Such a change wouldn’t make it substantially harder for a voting block to get their slate of works onto the list of nominees. But such a slate would no longer push out most or all other eligible works in a category (which is the thing that troubles me most about this year).

Other rules changes may also be good ideas, of course. This is just one.

As for this year, I’ll just echo John Scalzi‘s thoughts on assessing and voting on Hugo works in 2015.

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2014 Was a Good Year: Better Than You Remember

Eric Garner. Michael Brown. The Sony hack and surrender to fear. 2014 seems to be ending on a crappy note. My twitter feed is full of people expressing good riddance to the year.

2014 was better than that. I want to take a moment to remind us, and to offer some perspective on the dark stories.

So, good things about 2014:

1. 2014 Was the Year Same-Sex Marriage Reached More Than Half of America

2. 2014 is the Year That American Support for Legalizing Marijuana Tipped

3. And the Year that the First Legal Marijuana Stores Opened in Two States

Colorado and Washington legalized recreational use of marijuana in the 2012 election, and opened their first stores in 2014. Oregon, Alaska, and Washington DC joined them in fully legalizing Marijuana in the 2014 election, while 20-odd other states have allowed medical use or softened penalties for recreational use.

And so far, the evidence is, legalization is working pretty well.

4. In 2014, the Internet Reached 3 Billion People for the First Time

That data is courtesy of the ITU.

Not only is that a staggering number, it’s more than half the adults on the planet. For the first time, this year, more adults have access to the internet than don’t, a trend that’s only going to continue, as seen below in this chart from a presentation by Benedict Evans.

5. 2014 Saw a Historic Climate Agreement Between the US and China

Remember when we would never act on climate change because we’d never be able to agree with China? Yeah, me neither.

While the US-China deal isn’t enough on its own to meet the world’s goal of limiting warming to 2 degrees Celsius, it represents a sea change. It’s a turn of the steering wheel, starting the process of steering us away from the cliff we’ve been headed towards. There’s much more work to do, but every course correction starts somewhere. And, as Slate shows, quantitatively, this one is a big deal.

6. 2014 Saw a Record Installation of Renewable Energy and Energy Storage

Final numbers will show that 2014 had the largest ever deployments of wind power and solar power. This was also the year that saw the largest purchase of energy storage in US history. Both of these are vital steps in bootstrapping the industries that will allow us to power our civilization while cutting the emissions that cause climate change.

And they’re just the latest in the ongoing surge in renewable energy in the market:

Renewable energy remains a tiny fraction of worldwide energy use. It’s starting from an extremely low base. Even growing at its phenomenal rate, it will likely take decades to turn the corner in climate change, but it is possible.

7. 2014 Saw Mainstream Realization of Solar and Wind’s Incredible Price Decline

That possibility is made even more clear here: 2014 saw two incredible graphs from mainstream financial analysts on the price plunge of renewables.

Lazard Capital Management put out a report showing how, in the last 5 years, wind and solar in the US have dropped 58% and 78% in price, respectively, now putting them below the price of grid electricity in many regions. (The red lines below are my own additions.)

And AllianceBernstein published their even more provocative solar “TerrorDome” chart (with slight yellow arrow annotation from me) showing how, in the long term, solar is plunging even more phenomenally in price relative to traditional fossil fuel energy sources.

Both are as important for who published them as for what they say. These are not reports from environmental groups or even greentech investment funds. These are financial analysts advising their clients on trends in the costs of energy – trends they see as upending the market.

8. In 2014, Hunger and Malnourishment Reached a New Low

In 1969, more than 30% of the developing world lived in hunger. Now that’s down to 13.5%. The rate of hunger reduction has accelerated in recent years, according to the FAO. As a percent of humanity, it’s likely that hunger has never been this rare, in the couple hundred thousand years our species existed. And even absolute numbers have dropped over the last 25 years. There is a huge amount of work left to do – but 2014 is the best yet in this measure.

9. And So Did Global Poverty, Child Mortality, and a Host of Other Ills

We don’t have the final data yet, but it’s almost certain that when we do, we’ll find out that in 2014, global life expectancy was at an all-time high, global poverty was at an all-time low, and worldwide child mortality had reached another new low, as part of the long trends of progress on each of these metrics.

For instance, see the trend on poverty, via Max Roser

Or the trend on under-five mortality, which has dropped by half since just 1990:

10. In 2014, the US Became Healthier and Safer as Well

Here again, we lack final numbers, but when we have them, it’s extremely likely that we’ll find that in the US, 2014 continued the long trend of:

- Declining infant mortality

- Declining crime rates.

11. Finally, 2014 Will Be Seen as a Transparency Tipping Point

The stories that drew the most outrage in my corner of the internet – outrage that I shared – were stories of police violence, intentional or unintentional, without proper accountability. And so I’ve saved this for last.

I’m a pragmatist who believes that police are a vital part of society, but who also believes that those who have the most power should be held to the greatest accountability. That isn’t the case today.

On the flip side, many, primarily conservatives, viewed the Mike Brown case through an entirely different lens, instinctively seeing it as a police officer confronting a criminal, and defaulting to trusting the officer’s view of the world. The debate has been loud, acrimonious, and sometimes downright nasty.

What almost everyone agrees on, though, is that more transparency is good. Support for police body cameras has been voiced across the political spectrum. That technology isn’t a panacea, by any means. As we saw in the Eric Garner case, a video doesn’t lead to even an indictment, let alone a conviction.

But the best data we have is that wearing body cameras does reduce police use of force and complaints against them. In other words, if Daniel Pantaleo, the officer who used a prohibited choke hold on Eric Garner, had been wearing a body camera, he might have reconsidered his behavior. Garner might still be alive.

What’s just as important is the increasing ubiquity of cameras in all of our hands. The video of Pantaleo choking Garner didn’t lead to an indictment, but that very fact led to voices on the right and left expressing dismay. One case won’t lead to change. But enough clear-cut cases will. And with cameras becoming cheap and ubiquitous, police officers now need to assume that their every action will be recorded.

Transparency is the key to change. You can’t fix what you don’t know is broken. The problems of police over-use of force have existed for years, if not decades. The problem of police near-immunity from prosecution is even older. These aren’t new issues. They’re simply coming further into view. Social media allows us to take issues that might once have been obscure, carried on the back page of one newspaper, and shine a glaring light onto them. And the presence of cameras everywhere – in our pockets, most of all – means a flood of imagery that we lacked even a few years ago. That visibility is essential. It informs our opinions, our conversations, our votes.

Sunlight is the best disenfectant. In the first few rays, though, the world can look grimy indeed. Just remember, the grime was there all along. What you’re seeing isn’t new. What’s new is that we have the power, for the first time, to wipe it away.

2014 will be remembered as a transparency tipping point. A sunlight tipping point. It’ll go down as a year that authority – in at least one form – had to start becoming more responsive and more accountable to the public.

–Far From a Perfect World–

I could go on about a dozen other ways the world is getting better, but I won’t. This list isn’t meant to convey that the world has no problems, or that it’s getting better in every way. Plenty of things are getting worse. But I trust you can find lists of those pretty much everywhere you turn. They’re over-represented in our discourse, and especially in the news. The good news is radically under-represented.

Good news doesn’t happen magically. The above trends didn’t pop out of thin air. They represent the hard work of millions of people – maybe billions. Some of them are improving the world out of simple self-interest. Others are doing it out of some passion, out of altruism, or out of deep conviction. Either way, optimism isn’t the same as complacency. Optimism is about action.

So here’s to those who act.

I think 2015, while it will have its share of problems too, will be even better.

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The Patents Argument Against GMOs Just Ended With the First Off-Patent GMO

I argued in my 2013 book, The Infinite Resource, that the “seeds shouldn’t be patented” argument against GMOs and specifically against Monsanto was invalid for a very specific reason:  Patents end.

As I wrote then, the patents for Monsanto’s first commercial genetically modified crop, Roundup Ready Soy I, would expire at the end of the 2014 growing season. After that, farmers would be free to save seeds to replant, universities would be free to tinker with the  genetic trait, seed breeders would be free to cross-breed it into other strains, and so on.

What wasn’t clear at the time was how likely that was to occur.

Well, now we know.

The University of Arkansas has released a free, replantable version of Roundup Ready Soy. Any farmer can take this seed, can plant it, doesn’t have to pay any technology licensing fee, and can re-plant seeds from the resulting crop for the next year.

Add to that the fact that glyphosate, the active ingredient in Roundup, went off-patent years ago, and so generic versions of Roundup are available, and this means that farmers can use this product developed by Monsanto without paying Monsanto a dime.

That’s how patents are supposed to work. The inventor gets a temporary monopoly to reward them for their research and development, and in exchange, society gets the permanent benefit of their invention.

And, of course, the scientific consensus is that Roundup Ready plants and other approved GM crops are safe.

I believe this is the beginning of a new era in genetically modified crops, one of much more diversity as the cost of research drops, as more work is done by non-profits, and as more and more patents expire. As I wrote in the book:

In 2014, Monsanto’s patent on Roundup Ready soybeans will expire – the first of a wave of patent expiries that will let anyone take advantage of that gene to create new seeds that can reduce the use of toxic pesticides like atrazine, while being licensed in much more open ways.

At the same time, a host of other competitors have biotech crops that have recently come onto the market or will in the next few years.  And non-profits and universities are producing GM crops that will be free to the poor and which are often developed in the ‘open source’ model.  Golden rice and C4 rice are being co-developed by a network of universities and non-profits, for example, and will be available free of charge to farmers in the developing world.

In the early days of computing, the only computers were giant IBM mainframes that cost millions of dollars.  Today, you have more computing power in your pocket than the entire planet possessed 40 years ago.  The dramatic decline in the price of computing over those decades has democratized computing tremendously.   Proverbial ‘garage startups’ like Apple, Google, and Facebook start with humble resources but can revolutionize the world.  Open source networks of unpaid developers build software used by hundreds of millions.

That revolution is on the very edge of hitting biotechnology.  The cost of gene sequencing has dropped by a factor of 1 million over the last 20 years.  That’s faster than the cost of computing has ever dropped.   Research is dropping in price.  The ability to create new GM foods, tailored exactly for local conditions and needs, is growing.   Already there are dozens of different projects to create GM crops that deliver better nutrition, higher yields, or lower need for pesticides or fertilizer underway. Some are from private companies, who’ll compete with one another to provide the best products, prices, and terms.  And many more are from non-profit foundations and universities.

What we’re going to see in the future is not a monopoly on the technology of food. We’re going to see wide open competition between dozens of companies, hundreds of universities, and some day thousands of different GM foods.   And that is exactly what we want.

I write more about the environmental and humanitarian case for genetically modified foods, agriculture in general, and how to provide enough food, water, and energy for the planet, while beating climate change, deforestation, and other challenges, in my book The Infinite Resource: The Power of Ideas on a Finite Planet.  If you think GMOs are a problem rather than a solution, if you think we can’t beat climate change, or if you think that doing so means giving up on our way of life, then I challenge you to read this book.

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Today I Spoke at the Allen Institute for Brain Science

Today I gave a talk at the Allen Institute for Brain Science - “Neuroscience in the Year 2100: The View from Science Fiction.”  Much of that, of course, comes from the research and decade-long interest that led to Nexus.

It was an incredible honor for me, as a layperson and neuroscientist-wannabe, to be talking to actual scientists about their field. My goal was to provoke rather than to predict, and to bring in insights, observations, and trends from other fields. The room was packed and people stuck around till the end and beyond asking questions (and sometimes politely disagreeing), so it seems like I did okay.

Big thanks to Christof Koch, who I think has this idea that I did him a favor by coming in, when really, he did me a huge honor with the invitation.

I’ll try to get a readable version of my slides up next week.

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Solar and Wind Plunging Below Fossil Fuel Prices

Asset management firm Lazard has a fascinating new analysis of renewable and other energy prices out.

There are a huge number of insights in this, from an outside analyst whose primary interest is financial. (Those are, in my mind, the most objective analysts in this space.)

First, the plunge in renewable prices continues, and over the last 5 years, wind has resumed its plunge as well. Their numbers show an average price decline over the last 5 years of 78% for utility scale solar and 58% for wind.

Those numbers above are unsubsidized, without investment tax credit. The range shown reflects the range of geographies – from windy areas to less windy, from sunny areas to less sunny.

This dovetails with the longer term plunge in wind and solar prices I’ve documented elsewhere:

Second, unsubsidized prices are cost competitive with grid wholesale prices.  Solar, which delivers power during the daytime and afternoon, heavily overlapping with the late afternoon and early evening peak, is well below the wholesale price of peak power (provided by ‘peaker’ natural gas plants that only operate during those few hours of the day). Solar is even closing in on the wholesale cost of 24/7 operated coal and natural gas plants that provide ‘baseload’ power overnight (and as the underlying power throughout the day.)

Wind is well below the cost of peaker plants, and the best wind sites are already well below the cost of ‘baseload’ power.

Here’s the same chart from Lazard above, but with my annotations of the wholesale peak and baseload prices in the US. Click to embiggen.

Note: Just to be clear, the baseload price (the bottom red line) is for 24/7 power, available at night and when the wind isn’t blowing, which means that solar and wind can’t always compete with that price.

Which brings us to the next point:

Third, It’s all about storage now. (Or soon, at any rate.)  Inside of a decade, in most of the US and most of the world, solar or wind will be cheaper than coal or natural gas on an instantaneous, non-stored basis. This trend appears inexorable. And so long as there is demand for more energy at the hours at which solar and wind are delivering (which is the case right now), then the situation is great.

The long-term obstacle, beyond perhaps 20% of grid penetration, is ‘dispatchability’ – the ability to issue the precise amount of energy needed, when it’s needed – perhaps hours after the energy is generated (for example, at night, when the sun isn’t shining, or during still hours of the day), or perhaps just minutes later. That means storage.

And storage is currently the long pole in prices.

Fortunately, as I’ve written before, energy storage prices are dropping exponentially.

By the time we reach 20% grid penetration of renewables, we seem on path to have storage costs down to roughly 1/10th of their current level. That’s a price at which a mix of solar, wind, and storage could outprice even current ‘baseload’ power in large fractions of the country and the world.

In the longterm, of course, the price decline of solar in particular is even more impressive, as documented by AllianceBernstein in their solar “Terrordome” graph.

In the long term, solar appears on path to be the cheapest source of energy in most parts of the world while the sun is shining, and storage may well become cheap enough to facilitate its use even at non-sunny times.

I talk much more about renewables, energy storage, and how to accelerate progress in them in my book on innovating to beat climate change and other resource and environmental challenges: The Infinite Resouce: The Power of Ideas on a Finite Planet 

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The Learning Curve for Energy Storage

Energy storage prices are dropping fast. If you follow me, you’ve seen me write about this before. Energy storage prices have in fact been dropping exponentially for at least 25 years.

Here’s a new piece of analysis –  a model that uses a 20% learning curve per doubling to that project Li-ion batteries dropping to 5 cents per kwh round-tripped through them by ~2030.

You can read more about this here.

This cost projection is roughly in-line with what I’ve seen for Li-ion. For instance, here’s the view of what happened in Li-ion price and density in the well-studied period of 1990-2005.

However, for grid storage, this may be too conservative. Why? Because there’s a very real chance grid storage will veer away from lithium ion and towards flow batteries. Flow batteries are much bulkier and heavier than the lithium-ion in your cell phone and in a Tesla, but they’re potentially much cheaper.

ARPA-E’s GRIDS program has the goal of producing grid-scale energy storage at the capital cost of $100/kwh. With reasonable numbers of recharge cycles, that’s already at or close to 5 cents per kwh. ARPA-E has looked at many different technologies in the program. Among those are flow batteries. And having talked to some of the GRIDS folks, I see the flow batteries coming out of the program (and the other flow batteries coming onto the market) as nearing that line.

All of which is to say that we could see 5 cents per kwh stored closer to 2020 than 2030.

And that’s a price at which large scale grid storage starts to look economically viable.

I talk much more about renewables, energy storage, and how to accelerate progress in them in my book on innovating to beat climate change and other resource and environmental challenges: The Infinite Resouce: The Power of Ideas on a Finite Planet 

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The Renewable Energy Revolution

Transforming the world’s energy supply will take decades. It is a very tall order. But it’s starting. The price of renewables – and energy storage – continues to plunge, putting them on a path to being cheaper than any other form of energy within the coming decade. And they continue to grow exponentially – albeit it from a low baseline – spreading out into the market.

WIND

Wind, more established than solar, has seen it’s price decline by a factor of 10 over the last 30 years.

In many parts of the US and the world, wind power is now the cheapest source of new power.

In scale, the amount of wind power around the world has grown by an astounding 10x (1000%) over the last 11 years. Incredible.

SOLAR

Solar makes wind look slow and sedate. Solar PV module prices have dropped an astounding 100x since 1977.

Of course, module costs are not the whole cost.  Even so, fully system cost continues on an impressive decline of its own, having fallen by a factor of three in just the last 10 years – a more rapid decline than any other energy source.

And the solar market, in response to plunging prices and market and regulatory incentives, has exploded, surging by an incredible 100 times (10,000%) in just 13 years.  A few years ago the total solar installed base was just 1/10th that of the wind power installed base. Now it is almost half the size of the wind installed base, and poised to overtake it in the next 4-5 years.

OUTPACING IEA PREDICTIONS

The growth of solar and wind has been staggering. It has also consistently outpaced the projections of the International Energy Agency, the US Department of Energy, and virtually all other traditional energy forecasters. The graph below shows how the IEA, in particular, has had to raise their forecasts of future solar and wind growth every year to keep up with actual growth rates.

And in fact, the IEA predicts that new installations of solar and wind will stay flat or decline over time, despite all evidence to the contrary.

Here’s a fuller analysis of IEA’s continual under-estimation of renewables.  Bear this trend in under-estimating new technologies in mind when reading forecasts from traditional energy forecasters.

BATTERY STORAGE

Finally, while the battery storage technology for the grid is, IMHO, unlikely to be lithium-ion, and is more likely to be flow batteries, it’s instructive to look at the price history of lithium-ion batteries to see what’s possible.

Between 1990 and 2005, the price per unit of energy stored in lithium-ion batteries dropped by a factor of 10, and the amount of energy that could be stored per unit weight nearly tripled.

That’s instructive, as flow batteries appear to be nearly at the price to make them viable for grid storage. If they have similar price trajectories as they scale, renewables will see one of their most formidable obstacles to adoption removed.

We shouldn’t trivialize the challenges ahead. It took decades, if not a century, to build the modern energy system. We still lack solutions for the nearly 1 billion internal combustion vehicles on the road, for the manufacture of steel and concrete, for growing meat without methane release, and for numerous other issues. This transition will be long. But the trends in the core technologies for electricity are extremely promising.

There’s more about the exponential pace of renewables in my book on innovating to beat climate change and resource scarcity and continue economic growth: The Infinite Resource: The Power of Ideas on a Finite Planet.

 

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Video: Brain Implants to Link and Augment Human Minds (The Science of Nexus)

Here’s video of my Le Web Paris talk, on Linking Human Minds. This is all about the current science of sending sights, sounds, and sensations in and out of human brains, and the frontiers of augmenting and transferring memory and intelligence.  Le Web did a fantastic job producing this. I love the split-screen showing me speaking and the slides at the same time.

The talk itself is a compilation of the very real science that I used in my novels Nexus (one of NPR’s Best Books of 2013) and Crux.

You can read fictionalized accounts of the uses and mis-uses of these technologies in the novels.  (Along with a non-fiction appendix at the back of each with more on the science.):
 Nexus
-  Crux 

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