The "Holy Grail" of Energy Investing Is Going to Make You – and Your Grandchildren – Rich

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Storage has long been one of energy's biggest "Holy Grails." It holds the key to every significant move into smart grids.

The reason is pretty simple: If energy cannot be stored, it is lost. Even transferring it from one type of energy to another is of little consequence unless you can reverse the erosion in the entire system.

It's called entropy, and it's a pervasive problem.

Now, there are a number of rather complicated ways to explain this, but let's keep ours straightforward. Over time, a system ends up having more energy than can be readily used. This is always the biggest drain on any attempt to structure a more efficient approach.

So the basic question becomes how to "save" all of this energy from being lost.

That's what's at the center of a breakthrough project I came across yesterday...

The "Biggest Small Step" I've Seen

Of course, all smart grid networks have as their backbone a way to direct energy to reduce entropy. A better way to store it would make this "traffic cop" element that much more attainable.

There are only two ways of bringing this about. The first is the search for a mega-battery breakthrough. That one has been quite elusive. We have yet to see a major advance on this front.

On the other hand, the second approach is already moving forward. It involves designing systems with the ability to police their own use.

It makes what happened yesterday in New York City so interesting... and thanks to Tina Casey at CleanTechnica for the heads up on this one.

You see, some of the biggest advances begin with small steps. This one may be the "biggest small step" I have seen in some time.

As Tina notes:

New York City's Metropolitan Transit Authority (MTA) is one of the largest single users of energy in the U.S. Yesterday, it officially launched a next generation energy storage system certain to spark a lot of interest. MTA has installed three CellCube vanadium flow batteries on the 25th floor setback of its lower Manhattan headquarters to demonstrate how small footprint, high volume on site energy storage systems can shave down peak electricity use and turn a "smart" building into a brilliant one.

Even without a renewable energy angle, onsite energy storage is the next big thing in grid management and smart building strategies. It's a huge bottom line plus for the consumer, since you can store energy during cheap off-hours rates and draw from the battery when rates are high, while ensuring resiliency in case of grid disruptions.

In the bigger picture, onsite energy storage can help local utilities reduce the need to put peaking plants on line to handle maximum load, and put off the need to build new plants.

These new CellCube batteries are produced by a German company called Gildemeister and actually draw their power off the grid.

Of course, the Germans themselves have been diving into all manner of energy network angles as they struggle with restructuring their domestic energy system.

Onsite renewable energy storage solutions are essential in this regard, given Berlin's decision to phase out nuclear and rely more heavily on wind and solar power.

With this product and approach, Gildemeister is now looking to the American market as one of great potential. Its MTA profile flow battery demonstration is the company's first foray into developing a niche in the United States.

A New Company for Your Radar

But there is one apparent drawback. The batteries used in the MTA experiment use vanadium. And at present, there are no American sources for the metal, providing what appears to be a classic supply-chain problem.

However, as Tina has discovered, one advance often leads to others.

"Last year the company American Vanadium crossed our radar because it had begun to develop a vanadium mining operation in the U.S., in the middle of Nevada," she wrote. "The operation, called the Gibellini Project, will put the company's money where its mouth is: energy plans for the operation include a solar array and CellCube flow battery system."

American Vanadium Corp. (TSX: AVC) is a Canadian-traded small-cap venture company headed up by Bill Radvak, who describes the MTA project as "an exceptional step forward for testing and understanding how vanadium flow batteries will save money by storing off peak power."

The project is being done in partnership with New York City's ConEdison. If successful, it could help to reduce the need for large substations as the demand for electricity continues to grow.

Tina continues:

"As for the vanadium flow battery advantage in an urban setting, Radvak explained that they are far more compact than lead-acid batteries, with the added benefit of being non-flammable and non-toxic.

That may be the real significance coming out of the MTA project. If you economically are able to store a large amount of energy on the 25th floor of a skyscraper, you can do it just about anywhere.

Another advantage is that flow batteries are highly durable. Since only one metal (vanadium) is involved, degradation of the electrode is minimized, and the result is a battery with no loss of capacity over a 20-years-or-more lifespan.

Then there is a further competitive aspect of scalability. Because flow batteries are relatively easy to scale up, the larger the flow battery, the more cost-effective the system becomes.

Now, keep in mind that one project hardly constitutes a "mega-change," or the discovery of a "Holy Grail." But the MTA experiment may finally be showing us how smart grids will graduate into much larger applications.

When that happens, there is going to be some serious money made by investors.

About the Author

Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle

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