Patricio Peral: Why is everybody talking about batteries?

Below you can read the notes and transcript of the episode. Also, here are links to the resources we cited:

• The new economics of energy storage (McKinsey, 2016)
• China Dominates the Lithium-ion Battery Supply Chain, but Europe is on the Rise (BloombergNEF, 2020)
• European Battery Alliance
• Asociación Española del Desarrollo y la Integración del Vehículo Eléctrico

This is the transcript of the original audio. To read the Spanish version, visit Patricio Peral: ¿Por qué todo el mundo está hablando de baterías?.

About Patricio Peral

Gabi

Welcome to Ogami Station, a podcast created by RatedPower. As every month we approach the exciting world of renewable energies through interviews with relevant figures in the sector.

Laura

Good morning to all who listen to us. And welcome to our third episode of Ogami Station, your podcast about renewable energies, we are Laura Rodríguez and Gabriel Cañadas. How are you?

Gabi

Very well, very well. Well, I'm delighted to be here with you and with our exceptional guest today. I'm sure you have a lot of very interesting things to tell us. What do we have for today Laura?

Laura

For this episode we have the presence of Patricio Peral, who we now present to you. But well, I do want to tell you that Patricio has more than 10 years of experience in companies in the industrial and energy sector, especially in photovoltaic energy projects. As we like.

Especially noteworthy is his experience, participation and project management in the field of active demand management and energy storage. And let's not forget: new technologies. Well, welcome. Thank you very much for being here and we are looking forward to hearing from you. How is everything?

Patricio

Hi. Good afternoon or good morning. Thank you very much. Good, good. The truth is that well, well given the circumstances of covid and all this, but the truth is that seeing the light at the end of the tunnel and delighted to be here with you, let's see what I can contribute.

Gabi

Great, thank you very much for coming again. Thank you very much for coming again. And well, as we mentioned in our first episode, renewable energies have a small characteristic and that is intermittency and unpredictability, right? This means that, for example, for hydropower it is not always raining, for solar energy the sun does not always shine, for theoretical energy the wind does not always blow. So this makes it difficult to match supply with demand.

In the end, there are times when more energy is needed, more energy than is being produced by renewables. And there are other times, on the contrary, when less is needed and more is produced. So, how can this be solved? Well, in the end it is solved with batteries.

It is a topic that is currently under discussion in Spain and around the world and that is why today we would like to have you and your experience to talk a little about this issue of batteries. How the technology works, the different types of technology that exist within the batteries and also where this market is going. But well, first of all, we would also like to ask you a more personal question and tell us how you got into this world of renewables and a little bit about your career over the years.

Patricio

Well, first of all, I am grateful and delighted, as I said, to be here with you today, I think it is a very interesting initiative and, well, my experience. Let's see, I started. I was lucky that a good friend of mine worked in a company in an energy research center in Valencia. I am from Valencia and she gave me the opportunity while I was in the industrial sector and so on. She gave me the opportunity, so it was around 2008 and the end of 2008.

At the height of the renewable energy boom, he gave me the opportunity to join the research center and start collaborating on energy projects with large companies. We are talking about Iberdrola, Unión Fenosa, which were not even Gas Natural or Naturgy.

Well, these types of companies and start collaborating in the industrial sector, sorry, in the energy sector, also with companies very close to us, such as Power Electronics, which you know is also from Valencia. And well, I was getting my head a little bit into the renewable energy sector there.

Well, I started my journey in the energy sector and the truth is that luckily, because I think it is a fantastic sector, I have not left it until now, but I have been going from one side to another in the sense of seeing the sector from different perspectives, for example, thanks to several projects in which we were involved with energy storage companies such as Saft Batteries, which is a French multinational that recently bought Total.

Thanks to these collaborations I started working in an energy storage battery company in Madrid and I came here. And well, that's where my experience came from, seeing the sector from another angle, which was the storage part. Then I also worked in an EPCista company. So, seeing the sector from different points of view and always, to tell you the truth, with great enthusiasm, because as I said, it seems to me a sector with a lot of progression and well, what am I going to tell you.

How do batteries work in renewable projects?

Laura

I think that passion is certainly shared. That's great. Well, I wanted to ask you, since you have already finished talking about batteries, to make a little introduction. If you could tell them for those who don't know too much about how a battery works and how it is integrated into a renewable project.

Patricio

A battery is good, batteries are hundreds of years old. In fact they were discovered at the beginning of the century... well, I would say the 15th century, but even earlier, right? Prehistoric sites were discovered and they were already using copper and a series of oils and so on to store energy.

Basically, a battery is two electrodes positive and negative, and then it has a separator, a separating membrane to prevent short circuits from entering. And then they have an electrolyte that allows the flow of electrons between one electrode and the other. This for us, who are not battery scientists. Well, it's a black box for a lot of people. It's a black box that what you do is you connect positive and negative, you charge it and discharge it, like you can do in a cell phone or in a computer or so on. And of course, that's a lot more involved.

In fact, in the battery company where I was, when we did courses and so on, we often talked about the fact that batteries are ultimately chemistry. A battery is pure chemistry, right? Well, batteries end up being a bit like people, they have their parameters. Many times a battery does not behave in the same way as the next one in the assembly line.

So you have to take into account many factors and that's why the integration within renewables and any application requires not only the battery, but also requires some little things. Well, a BNS, which is a Battery Management System to manage the operation of the charging and discharging; monitoring systems, power electronics, which integrates the battery and, above all, knowing what you are going to use it for.

Because in the end, as I said, the battery behaves differently depending on how you charge it, discharge it and so on. And it is not the same, for example, in renewable energies, that you put a battery for "energy management" which is called or grid saturation. That is to say, when you have a surplus in renewable energies and you want to use it later to discharge it gradually to use it for other electrical consumption, it is not the same as for a frequency regulation or a regulation or voltage dips that you need the response to be fast and quick. So it is not the same to integrate it in one way than in another. And therefore you have to select the technology, one is not the same as the other.

Laura

And relating it in that sense, would you make a distinction between really in which renewable sector it makes more sense?

Patricio

Well, it is difficult to say. It is difficult to say because as Gabriel said before, the sun does not come out for everyone or at all times. The wind blows all the time, it does not rain all the time. Recently, in February, in the renewable energy magazine, on the cover, there was a poster that said "Storage is the master key to the energy transition".

Why? Because in the end, the integration of renewables into everyday life, so to speak, not only on a large scale, but also on a small scale, is because of the flexibility that we need from renewables, that is, to use the energy that is being produced when we really need it, not when it is being produced.

So, of course, it is difficult to say in which sector it can be more interesting, because in all sectors within renewable energies it is going to be interesting. It is true that there is a lot of interest in photovoltaics, because in the end you have a few hours of sunshine. Let's say that you have a much more accurate study of the irradiation that you are going to have and so on. And it is easier to predict the sizing of the batteries when using them for that flexibility, that intermittency or to avoid that intermittency of renewable energies.

Laura

I mean, we think that photovoltaic is perhaps being adopted more.

Patricio

Yes, yes, but there are all kinds of projects. In fact, in Navarra there is a relatively recent project in 2019, I think it was, from Acciona, in which they have generators of three megawatts and they have batteries for a capacity of just over 1.7 megawatts. You also have a niche there, but it is true that, of course, renewables, with all the boom that photovoltaic is having and with all the land that remains to be done, of course batteries are going to have a lot to do there.

Gabi

Also because of what you were commenting, that it's easier to predict. That also helps.

Patricio

That is correct.

Laura

And one last question, do you think it makes more sense or is it seen more in commercial, residential, or more large scale?

Patricio

It has its variations. At the commercial level, which I understand you are referring to the more industrial part, we can say it is more difficult, it is more difficult. My experience, as I was also saying in the EPCista company, we worked a lot in the industrial part and my experience is that it is more difficult to fit it, not because it is not interesting, because of what we were talking about, the flexibility of night consumption, which logically with photovoltaic you cannot do it, but because in industry companies are looking for short profitability, that is, very short paybacks.

In fact, we have reached some customers, you do the whole study of amortization only with photovoltaic and you tell them something as normal in our sector as "you have an approximate amortization of 6 years", which in photovoltaic is amazing, because the normal is 6, 7 years and also depending on the price of energy and they already look at you with a face of "but I am used to paybacks, three years or two years".

If you add to this batteries that increase your payback almost, well, it can increase your payback up to 9 years or more depending on how you do it, of course, it is not so profitable. So the industrial part, I think it will take longer to arrive. However, where I see that it has quite a push is, on the one hand, in the residential sector, because nowadays we have more and more environmental awareness, the push that the electric vehicle is having.

It is essential for any product that there is a driving sector or a driving industry for the integration of these products. And I think that the batteries are clearly being the electric vehicle, because it is the demand. So all the integration of the electric vehicle, sustainable awareness, etc., makes people start to install small photovoltaic installations in their homes if they can.

And of course, now with the issue of Covid, perhaps the consumption profiles have changed a little, but in general most of the consumption comes in hours where photovoltaic energy does not have so much production. So putting batteries there is important. And every time, Tesla, at Spanish level, Sampere, etc., have more and more solutions and they are almost like a commodity, it is almost like a piece of design furniture, so I think this is going to be important.

And then at the utility level, at a large scale, I think it will also have a place, although it will cost a little more in Spain, in Europe in general, I think it will cost a little more because it is also a financial issue. You have to look at the CAPEX, the OPEX, integrate it and so on, and the prices of batteries still have to come down on a large scale.

Laura

They will come down.

Patricio

They will come down, they will come down, for sure. Yes, yes, there is a McKinsey study that says that in the next five years or so they expect prices to go down by almost up to 90%. Let's not forget that in the last ten years, since I started in the battery world until now, prices may have dropped by as much as 50 percent. And even faster now, with more and more investment in innovation, industrialization....

In the end, the things that determine the price of the systems in everything is innovation, that is, innovation and maturity, that is, how you adapt this product to your life or daily life, to the end user and the maturity that this product has been having in that time. And that, that is one part. And then, on the other hand, competition. The more competition there is, the more industrialization there is, the more need there is, the more prices are going to go down.

Gabi

So, do you think that now, currently, utility scale projects would be profitable for an investor without subsidies.

Patricio

With the studies that I have seen and that we are doing, it still has a little bit left. It still has a little bit left. But it is true that more and more it is being analyzed and taken into account. I mean, at an economic level, today, if you do a study without subsidies, as you were saying, without financing and without anything, it is difficult for the prices to fit. But as I am watching the sector and how everything is going down and how it is evolving and so on, I believe that in two years, at the most, we will already be seeing important projects. Many of the large-scale photovoltaic projects already include the preparation of the storage system within the project. Another thing is that it is included in the installation, in the construction of the plant. But from the beginning, they already have it studied.

Laura

In fact, in the end our customers ask us for it.

Gabi

Especially outside Spain. Well, inside Spain it's starting to emerge more, but outside Spain, for example, in the United States it's something that we're being asked for more and more. And it is something that people are already studying in their projects to integrate it.

Patricio

Let's see, outside Spain, indeed, as you were saying, in the United States they have bet a lot on the integration of batteries and well, Tesla has also had a lot to do with it. In the end it is true. That is, because it is not only the marketing campaigns, but also all the governmental and other interrelationships that are made. There's no doubt about that. In the end it's like that. In China it's three quarters of the same thing.

At the end of the day, the whole relationship between the big companies and the government makes them progress more. And in Europe, England has integrated a lot of batteries in its projects out of necessity, because in the end it is an island. You should not forget that, even if you can have an interconnection with the continent. But it is an island. So, out of necessity, just like Australia, they have had to develop their projects more.

How do batteries work in renewable projects?

Gabi

Of course. And well, I understand that what we are talking about now is always about lithium batteries, it is the technology that is currently more booming and the one that has more extended its use. So, I don't know if you could also comment on whether this type of technology is the right one or if it is simply the cheapest at the moment, other sets of technology?

Patricio

Well, look, I'm going to tell you, I don't know whether to tell you that neither one nor the other. Very simple, or very complicated. As I said before, in the end, for a product to be used, first of all it needs maturity, that is, innovation, maturity and competitiveness.

So there are other technologies? Of course there are other technologies, aren't there? Well, until four days ago, so to speak, we used lead-acid batteries a lot. Are they better than lithium batteries? They are different, they are different. I mean, a whole battery, a lead acid battery, it's hard for you to see it for frequency regulation. Why? Because its response is not as fast as a lithium battery.

The price of a lead-acid battery is much cheaper than a lithium battery, but the space it takes up is much larger. So, well, there are a number of contrasts here. What is the good answer? There isn't. There isn't. I, in fact, have always thought that the future is going to be a mix of technologies. Even when we talk about lithium, we talk about a family of technologies. You have titanate lithium, you have ferrous lithium, you have manganese lithium. There are different technologies and each one has its particular characteristic.

For example, in the Acciona project I was telling you before in Navarra, they use two different lithium battery technologies, one for frequency regulation, which has almost one megawatt, and another one for energy, for the energy part, which has about 700 kilowatts or so. In the end there is no answer.

It is true that the lithium battery has been maturing for many years, not as long as lead, logically, but it has been maturing for many years. I could not tell you, but more than twenty years, almost thirty years it has been in the sector in one way or another. Of course, it has gone through many pros and cons. It has undergone many variations. There has been a lot of innovation and that means that right now it is a very mature technology, it is a technology that takes up less space and provides much better performance for certain applications, so it is very useful, for example, for frequency regulation and, logically, for energy management as well. Why?

Because of the cyclability, for example. That is, a lead-acid battery. The cyclability is, let's say, like the years of life that you have in the battery. So, of course, if you have to change a lead battery every six years and a lithium battery if you can maintain it for 15 years, then logically it is more profitable to use a lithium battery, even if it is a little more expensive from the beginning. Well, that's kind of the point.

Of course, today the technology being used is the lithium family. But there is innovation. There is innovation and new technologies are coming soon. Well, with solid electrolyte, which makes batteries safer, or with other metals, with aluminum instead of lithium, or with zinc, etc. So yes, that and that will come.

Battery development by country

Laura

Okay. I wanted to ask you, although we've talked a little bit about it before. But in which countries have they been developed to the greatest extent? And why? 

Patricio

Well, let's see. I would distinguish two things here. On the one hand, I would distinguish between the development of batteries and, on the other hand, the development of battery projects, because it is different. In the development of batteries, in the end, as in all products, the issue of raw materials comes into play. The issue of industry, and so on. And there China takes the lead. That goes without saying. And in fact there is a study, if I'm not mistaken, from BloombergNEF that says that until 2025 that will be the case.

Gabi

Nobody else is going to make batteries, right?

Patricio

No, no, it's not that they don't make batteries, it's that the ones that take the lead in the sector, in the industry, in manufacturing is China. Then there is also the United States. And well, there is talk that within two or three years they will also come into play. Some are already coming into play, some in some countries of the European Union. Well, Sweden, Germany and so on. Until 2017 Europe was lagging behind in manufacturing. Well, we're still a little bit behind, but it was lagging behind.

And in fact, in 2017, a European Union initiative was launched which is the European Battery Alliance, the EBA. Which right now already has more than 600 companies of different kinds, from the automotive sector, from the electricity sector, and it also has other research centers also adhered from all over Europe. And the aim is to motivate the creation of this battery industry within Europe in order to improve and to make it more competitive and to have more product integration in Europe.

Why? Because at European level we are also a bit behind in project integration. In fact, the countries that I mentioned before, the ones that are betting more on integrating batteries in their renewable projects are the United States. A little bit also because of that, because of the governmental support that has been there, the fiscal and financial aid that they have had there, and so on.

And then Australia has also had a great development, out of necessity, because there they do have the resources and you are isolated, so you need to ensure the flexibility of your renewable energies. In England it has also developed quite a lot. In Asia, but within Asia almost more Japan, Japan, which also for the same reason, because it is an island, is where more projects have been developed and in fact, in fact, almost 90 percent of the patents at the electric level have been made in batteries in the last years, the last ten years, and many, many of them. In Japan.

Gabi

And then, what do you think we would need in Spain, well, in Europe, to be able to boost the sector and reach those levels and that batteries will really be integrated in our projects?

Patricio

Well, interesting question. A lot of work is being done. In fact, at the beginning of the year it was announced that a factory or a mega battery factory is going to be built in Spain. In fact, it has been suggested that it is going to be built in Extremadura. There is an association, which let's say is the nexus of the European Battery Alliance with the Spanish Ministry, which is the rival, which I was lucky enough in my previous company to support the launch and in fact the person who is in charge is a former colleague of mine. And these are small steps that I know are being taken in the strategic energy plan, because there is already talk of battery integration.

Right now in Spain there are about 8 gigabytes of storage in projects presented.

Gabi

Have they been submitted or already approved?

Patricio

A bit of everything, a bit of everything, yes. Not everything is in progress, but in projects that have already been proposed and with the objective of implementing them, of course, it will be necessary, first, for people to believe it and second, for the numbers to come out. Lower prices can help and that is why we need to integrate the industry. What we were talking about, having a battery factory in Spain can help, having a tractor industry like the automotive industry. That is going to help and there are more and more registrations of electric vehicles. And that, that has to help, above all to lower the prices of batteries and to make us more familiar with their use. And then, when it comes to the integration of renewable energy projects, a little more support should be given.

We know that there are other countries, especially perhaps in Latin America, where the grids are weaker, that encourage a percentage of the kilowatts and megawatts that are installed to be accompanied by storage.

Well, perhaps we in Spain are lucky enough not to have such a weak grid as in these countries, but there must be some kind of aid. In fact, in the latest aid from the Ministry for the installation, no longer on a large scale, but also in relatively large self-consumption projects of a few megawatts, it was already proposed that if you put storage, let's say that the euro watt peak that you could present for subsidy was much higher. There are still a few twists and turns to be made on this, but it is undoubtedly one of the key factors.

The future of energy storage

Laura

Very good, very good. And let's talk a little bit about the future, if you like. Where do you see the sector in five years? Do you think we are going to see it already in most homes, industries? What is your opinion?

Patricio

Well, let's see. There is a lot of betting on batteries at the European level. Well, at the international level, but at the European level, as I was saying, the European Battery Alliance is working hard to integrate batteries. In fact, there is an important issue and it is that they are going to inject more than 3000 million in R&D for batteries. And that shows us a little bit the importance that is being given to it-Germany, for example, has said that for the next few years it wants 40 percent of its projects to be all about storage. Not only on a large scale, but also for self-consumption.

And then, as I said before, the residential sector is a key element and will be one of the first, because people are becoming more and more aware, the flexibility of renewables is much more useful in domestic use, where consumption is practically nocturnal, and then it is very important that there is a driving industry, in this case the electric vehicle, and in fact electric vehicle registrations have grown a lot in recent times. AEDIVE, the Spanish Association for the Development and Integration of Electric Vehicles, is doing a spectacular job. Well, Arturo Pérez de Lucía, who is the director, knows the renewable photovoltaic sector and the electric vehicle sector very well and is betting a lot and, in fact, we are seeing that all the vehicle companies already have their renewable model.

We are talking about V2G, for example, V2G is the vehicle-to-grid, which is everything that allows, for example, domestic users to use their vehicle during the day and inject what is left over from the battery into their internal network at night. Well, there is the whole issue of making the renewables that you can have in your workplace more flexible, with which you charge the vehicle and then use it at home.

In the end, all this will lead to the fact that we will see more and more batteries and their use will be closer. We have it nearby in a phone, in a laptop, but it seems that they tell us that we are going to put it in a vehicle or you have to put it in your house and it seems like a battery, but you carry it in your pocket already.

Battery recycling

Gabi

Well, that's why, as we are going to see more and more batteries, as you say, an important issue is also going to be in the future. I imagine the recycling of these batteries just because really a useful life from that point on. What happens to those batteries?

Patricio

There's fabric here. Why? Because let's see, one thing, the battery lifetime, is what's called the battery health state. Okay, in the battery health status is basically, to explain it in a very simplified way, if you when you have a battery fresh from the factory, you charge it to 100 percent and it tells you that you have charged it to 100 percent and you have that 100 percent to use in your day.

But as time goes on, logically the materials degrade and when you charge it to what you think is 100 percent, in reality the battery is, let's say, charged to 80 percent of what you could charge it to begin with. Okay, so the state of health of the battery at that point will be 80 percent, because your maximum charge is 80 percent of what you could do initially.

Well, depending on the application, there comes a time when you can no longer use the battery, for example, the 80 percent that I said before I have done it with great intention, because when you have a battery in an electric vehicle, if the state of health is less than 80 percent, you can no longer use it in the electric vehicle, because in the end the performance is no longer the same and you lose a lot. In renewables, in photovoltaics, in wind power, let's say you can use much more. Therefore, many manufacturers of batteries for electric vehicles use, let's say, what is called the second life of the batteries. And that is that the battery that you can no longer use in the electric vehicle, still has a useful life in other applications, such as renewables.

To give you an idea, in 2015, on a visit to URBASER, specifically to the part of recycling and waste collection that they have in the offices of Barcelona, I bet a lot on this. In fact, they had electric vehicles with lead batteries at that time. Of course, because lithium was not yet widespread. Electric vehicles with lead batteries and the batteries that were discharged that they could no longer use, they used them for their offices and they came to have. In 2015 they had up to 25 percent of the electricity consumption in their offices based on batteries and a small photovoltaic installation they had. So, well, if that is a form of recycling, that is what is called the second life battery, the second life of the batteries.

But of course, there comes a time when it is no longer useful. Logically, the lead-acid part is already widespread and well known, but it is true that the lithium part is still being worked on. There are many processes and it is very difficult because lithium batteries have a lot of electronics. In the end it is what I was talking about before, that you have to monitor it, you have to manage it well, they have perhaps more electronics for safety than a lead-acid battery. So that complicates things a little bit, but for many years now there have been different entities.

For example, in France SNAM. It is a company that is dedicated to the recycling of batteries and practically I would say that all the batteries of Spain were sent there less than ten years ago, because they already began at the beginning of 2010 to incorporate some of the processes of the recycling of lithium in their facilities. There is still a lot to do in Europe, because as I was saying France has things, Germany has things, but in Spain there is still nothing, there is no industry around battery recycling. And well, there are some entities, some associations for, well, Recyclia, that are working on the recycling of batteries and so on, but there is still a lot to be done. There I agree with you, well, it is complicated, it is complicated, it is a good question.

Laura

What exactly is the recycling of lithium in a battery?

Patricio

Well, I am not an expert on the subject and I do not know how to go into detail, but I can tell you that the first thing you do is to divide, let's say the battery. As I was saying before, you have a battery, you have two electrodes, you have a separating membrane, you have an electrolyte and then you have the envelope. In the case of lithium batteries, you also have all the electronics, so you have to separate the electronic components on the one hand, then through some piezo systems, electrical and others, you separate the metals and then you go through different phases.

There is a whole process in which you separate the metals and there are some that can be recovered more easily and others not. Normally the electrolyte is more difficult to recover because they are organic components that degrade and well, it is more difficult. But let's say, it is separating part by part. And in a lithium battery, as well as in a lead-acid battery, well, practically because of the knowledge that we have of the technology, almost 80 percent of the battery can be recycled, in a lithium battery. If I remember correctly, we were in the region of 40 to 50.

Takeaways

Laura

Ok, thanks. I got you a little out of your depth. You have defended yourself very well. Thank you very much. Nothing. Well, I think we're running out of time and now that we're here, we're going to go on forever with thousands of interesting questions. So nothing, thank you for all this mastery of drums, which we personally have learned a lot, I hope our listeners have learned a lot too. What did you think?

Gabi

The truth is that thank you very much for coming and for teaching us about drums. We already know a little bit more and we hope to be learning little by little and that our listeners have also learned a little bit about drums.

Patricio

Thank you very much to you for the opportunity to contribute that grain of sand that I don't think was much more than a grain of sand. And it has been a pleasure, a fantastic experience. Thank you very much and congratulations for the projection that you carry inside RatedPower also.

Gabi

Thank you. Thank you. Well, nothing. Well, that's it. As we were saying, we hope that our listeners have also learned and that we have achieved our goal, which in the end is to bring everyone closer to renewable energies.

And well, we also want to say that do not forget to leave us your questions and comments on iVoox and reviews on Apple Podcast and well, suggest any topic you want us to talk about in future episodes, we are open to discuss any topic.

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Remember that you can also see the episode notes and all the links that we have discussed in ratedpower.com/podcast and well, thank you very much and we will listen to you soon.