The long-held promise of solar and wind power — that they’re abundant, not as particular to regions as petroleum or coal, and don’t pollute — has always come up against the longstanding problem with relying solely upon them. Wind and solar are fickle and not always predictable. If the sun is gone and the wind is calm, there’s no way to get the energy they generate.
This has made battery storage the magic bullet in renewable energy conversations. But efficient, effective, inexpensive, long-lasting batteries capable of powering school districts, cities, or regions historically have depended on what U.S. Air Force engineers once dubbed “unobtanium.”
Michael Oster, CEO and co-founder of Eos Energy Storage in Edison, hasn’t discovered “unobtanium.” He has just been riding out the development of battery storage for the better part of this century.
“You have to allow things to develop in the way they should,” Oster says. By this he means that batteries have had to go from clunky, expensive experiments to legitimate, usable energy storage. And he says they’re pretty much there.
In fact, he says, “the time has come for batteries.”
Oster will present “The Energy Storage Market Opportunity” at the Princeton Chamber’s Business Before Business breakfast on Wednesday, January 16, at 7:30 a.m. at the Nassau Club of Princeton, at 6 Mercer Street. Cost: $25. Visit www.princetonchamber.org.
Oster grew up in Bergen County. His father sold zippers for a company in North Carolina and his mother eventually worked for the company, too. Oster grew up with a head for business and earned his bachelor’s in economics from Brandeis in 1986. Two years later he got his MBA in finance from New York University.
From there he set off to Moscow, where he started a company, the Russia Real Estate Fund, in 1991 to tap into the emerging real estate market of the soon-to-be-former USSR. He established the region’s first institutional-quality real estate investment company in partnership with the AR&T Pension Fund and later Nomura Bank.
Oster stayed in Russia until 1998, then came home to found the Grand Central Holdings Venture Capital Fund, which targeted early-stage technology companies in the northeast. It was right around this time that Oster started getting into budding “clean” technologies like solar and wind power.
In 2000 he started an energy software company and in 2004 he founded Clean Energy Holdings, a venture fund built to finance and develop solar power generating systems in New Jersey in partnership with enXco, an affiliate of Electricite de France (Oster speaks French as well as Russian). The partnership, he says, developed more than 10 percent of the state’s aggregate commercial solar power by 2009.
That whole time Oster was developing new companies and increasing his stake in the renewables field, the field itself was still struggling with making battery storage cheap and efficient enough to be something to market openly. In 2008 Oster founded Eos on the promise battery storage was starting to offer.
But before batteries could become viable, solar had to develop a little as well — both the technology and the business model. Solar, Oster says, needed a lot of help (and got it) from government subsidies and private investment to allow it to become a large enough market to warrant supporting technologies like storage to become feasible.
But now, he says, we’re at the tipping point. In areas that have invested in it, “solar is the most competitive energy source.” This is because solar tech has developed to be so scalable. “You can have a kilowatt in a house and 100 megawatts of solar in a field,” he says.
With the increasing ubiquity and flexibility of solar — and, to a lesser degree, wind — battery storage can now start moving into the mainstream and out of where it has been, which is, essentially, something that has existed just enough to keep itself afloat while renewable energy infrastructure takes shape.
Looking to Africa. The future of battery storage, fittingly, could be in an area Oster has a lot of experience with — emerging markets around the world. Africa, for example.
The thing about a solar network is that it needs to grow independent of the old “spokes” model of energy production. In the classic model, there is an energy producing plant from which spread these networks of users in houses, schools, factories, and so on. It all looks a bit like a bicycle wheel with the power plant at the hub.
Solar, of course, doesn’t need that kind of setup. Businesses can put solar arrays in parking lots; governments can invest in solar fields; homeowners can put solar panels on their roofs. None of these setups need to be connected to each other, nor anything past what they are built to power directly.
But imagine if you could connect all these individual systems. Suddenly, the ability for more homes and schools and factories to tap into a grid of renewable energy becomes less a pipe dream and more an inevitability — as long as the energy being generated can be stored for transmission.
So how does Africa fit into this? Because, Oster says, the continent already managed to do this same kind of thing with wireless communications.
“They couldn’t afford to put in a wired network,” he says. “Now they have better wireless than the U.S. has.”
Wired telephone networks, it turns out, are built a lot like the energy grid; that is, like bicycle wheels. Because Africa didn’t have the resources to build a wired network to begin with, they could develop pockets of wireless that eventually connected to themselves in a network, free of the infrastructure burdens that wired systems saddle developed countries like the United States with.
So when it comes to solar, countries (or continents) not burdened with heavy energy infrastructure have been the ones pushing solar forward, Oster says. And as these small pockets of solar energy grow closer together, they will create a network.
“It seems like it happens slowly because nobody sees it all at once,” he says. But in the past decade, as solar and wind have become more central to more communities and the tendrils of the network inch closer to each other, the need for more production of batteries capable of keeping a network humming has grown with it, he says. The more batteries produced, the less expensive it is to buy them.
The money. Few Americans have not heard the word “tariffs” these days. And while governments around the world figure out how to wield tariffs across an assortment of industries, Oster says solar and storage don’t need to worry about that in areas where investment shifts from one energy resource to another.
“In emerging markets, you don’t need a tariff structure,” he says. “Say a mining company is paying for ‘dirty’ energy. They can change the thing they invest in. It has the potential to happen quickly, but it will start with entities where there are good value propositions.”
Put another way: “The capitalist system works pretty well as long as people get to make a profit,” he says. And if investment is done right in emerging areas, people will see they can make a profit and the network will develop along investment routes.
The costs. The biggest problem in making batteries that work in an energy network continues to be that they are more expensive than what we already have.
“What we need to address is how to make batteries that are less expensive than more grid infrastructure,” Oster says.
For one thing, he says, the old spokes-style infrastructure is a known commodity with a lot of support businesses behind it. Generally, that keeps the price of energy around $200 per kilowatt hour in the grid infrastructure system.
A decade ago, Oster says, batteries offered an equal amount of energy for $700 per kilowatt hour. Today that number is getting close to $200. But even when it gets below the cost of the existing grid, it will take some convincing that the new kid on the block is the right one to go with, he says.
Oster, however, is not worried. At least not about solar’s place in the future and the storage systems it will take to keep it running. He believes the tipping point will come up on us sooner than people think. And given the dire warnings climate scientists have issued about the near future, Oster says, the change could be a very good — and very well-timed — thing.