Energy storage company Energy Vault announced today a $110 million dollar investment from Japan’s SoftBank Vision Fund. This investment will set the company on the path to accelerating its development of large energy storage projects with its unique gravity-assisted technology.
If you haven’t heard of Energy Vault, in part that’s because they only recently announced themselves at last year’s Energy Storage North America Conference in November and have maintained a relatively low profile since then. CEO and Co-Founder Robert Piconi noted that this measured PR strategy to date has been deliberate, commenting, “we only announce things when they are very significant.”
An increasing profile in an electric industry hungry for storage
That low profile may be about to change though, even as the entire energy storage market has significantly increased its presence in 2019. In recent months, the news from the storage industry has ramped up significantly. Eye-popping projects have recently been announced, such as 8minute’s agreement with Los Angeles Department of Water and Power to supply 200 megawatts (MW) of solar energy at under $20 per MWh, combined with energy storage with 100 MW of four hours of battery storage for an additional $13 per MWh. We have seen other recent announcements of large battery storage projects, some as big as NextEra’s Manatee Solar/Storage undertaking involving 409 MW and 900 megawatt-hours (MWh) and a 495 MW energy storage project from Intersect Power that may be developed Texas.
However, these projects utilize lithium ion batteries, and are typically limited to relatively short durations, storing and shifting no more than four hours of intermittent renewable energy to periods when it is most needed.
By contrast, Piconi notes that the Energy Vault system is capable of delivering energy for far longer periods. To understand this crucial difference, one has to first understand lithium ion batteries, and then appreciate the logic of Energy Vault’s approach.
First, let’s address the batteries: To oversimplify, it’s perhaps best to think of lithium ion batteries as Lego-type building blocks with fixed ratios of energy relative to capacity. If one needs capacity (a quick release of energy), as if you were stacking the blocks vertically, and shortening the timeframe. By contrast, if one wants a longer release of energy (capacity over a longer timeframe) one would line the blocks up horizontally. Thus, for example, if you have four MWh of batteries, you could use them to get four MWs of capacity for one hour or one MW of capacity for four hours. At today’s prices, if you need lots of energy – say eight or 10 hours – a lithium ion system is simply too cost-prohibitive.
Enervault’s tower of power (and energy)
Energy Vault does not suffer from such limitations. The company’s technology combines a nearly 500-foot tower (the height of a 35 story building) with machine vision software controlling cranes, pulleys, and cables to raise or lower huge composite bricks. If the bricks are being elevated, energy is being pulled from the grid. If the bricks are being lowered, they deliver energy and/or capacity back to the grid. (There is perhaps no better way to understand how this works than to view the company’s remarkable and futuristic-feeling video). As one increases the net quantity of bricks that are moved up or down over a given duration, one stores or releases corresponding amounts of energy.
This approach allows the company to take on the challenge of long-term energy storage, which until now has largely been the realm of pumped hydro systems with large reservoirs. However, few pumped hydro facilities are being built anymore, since they can cost as much as $1 billion dollars, involve lengthy environmental permitting processes, and take years to build. Another emerging potential competitor for longer duration storage is cryogenic storage (liquid air), such as Highview Power, which recently announced a partnerships with Tenaskato develop giga-watt scale projects in the U.S. However, its round-trip efficiency (the energy lost in the process of absorbing and then releasing energy back to the grid) is roughly 60%, compared with Energy Vault’s, which stands at between 80% and 90%.
The bricks themselves are modular, and can be manipulated individually, with multiple cranes and pulleys moving numerous blocks at the same time. As a consequence, the Energy Vault system can ramp quickly and deliver (or absorb) large amounts of capacity and longer-term energy, depending on the need. The system is remarkably fast: According to Piconi, it can ramp from zero to 4 MW in 2.9 seconds, and is nearly linear in its delivery profile, providing milli-second response, and the delivering the first 1.3 MW in one second. The standard 35 MWh system is also relatively large, combining a tower of 150 to 160 meters with 6,000 to 7,000 bricks that each weighing 35 metric tons.
Piconi sees Energy Vault’s ability to easily value stack (tap into different revenue streams) as one of its chief differentiators, and notes that the services offered range from black start (bringing the grid back online in the event of an outage), to shorter term grid balancing services or providing 8 to 10 hours of back-up energy to help firm up intermittent renewable energy offerings.
The bricks are foundational
The pulleys, cranes, and motors are off-the-shelf equipment. The software that autonomously interacts with the grid, receives the market signal, and notifies the system which blocks to raise or lower, and for how long, is custom-designed and highly sophisticated.
However, the true secret sauce may lie in the recipe for the massive bricks. Early in the development process, Piconi’s team soon recognized that it would be too expensive to use normal concrete. Enter Mexican cement and building materials manufacturer CEMEX, (it coincidentally has its R&D and Innovation center headquartered in Switzerland) which reached out to Energy Vault when news of the company started to spread.
CEMEX’s material science team had already developed technology to make road pavement and other material composites from basic soil and other simple input materials, and the two companies began to collaborate to develop a new material that would be lightweight, durable (lasting 30 or more years), inexpensive and capable of incorporating multiple waste materials, such as used debris concrete, coal ash, industrial slag, and even the local site soil. CEMEX then focused its materials science group to successfully develop a solution that would meet those criteria for a new energy storage application. As a result, Energy Vault may not only get paid for grid services but also for incorporating waste materials into future projects, absorbing material that would otherwise have to be landfilled.
Where SoftBank’s investment will go
The $110 million Series B funding round will allow the company to develop projects that follow on the heels of its existing quarter-scale demonstration installation in Switzerland. The initial project, which has been functioning since July 2018, has allowed the company to refine the software that controls the system, test the durability of the composite bricks, and improve overall efficiencies in order to provide a cost-effective storage solution.
Piconi says the company is now satisfied it has a technology that works, at a price the market wants, “We knew we needed to be around three to four cents levelized cost per kWh ($30 – $40 per MWh) to add to PV or wind in order to be competitive below fossil. This took a lot of innovation.” The result is a storage technology that when combined with renewables can undercut conventional natural gas-fired generation.
Piconi indicated the global response to the technology has been “overwhelming,” with interest coming from numerous prospects, including developers, utilities, and corporates on multiple continents. Energy Vault is evaluating longer-term relationships and contractual obligations and Piconi notes that when the time comes, “we will be announcing some joint and individual partnerships.”
Piconi notes that Energy Vault’s first full-scale demonstration project is expected to come online in northern Italy by the end of 2019, with other projects to follow in 2020. The infusion of capital enables Energy Vault “to really go global and scale the company at a much faster pace, with concurrent multi-continent deployments…We’ve got something interesting and sustainable. We believe it will help with the transformation the world needs.”
SoftBank’s Vision Fund announced its first investment in an energy company on Thursday, marking a shift for the $100 billion fund that has made its name pouring money into big tech companies like Uber, WeWork and Slack.
The Vision Fund said it completed a $110 million investment in Swiss start-up Energy Vault, which creates renewable energy storage products. Energy Vault’s system uses recycled concrete blocks built into a tower that can store and release energy.
“For the first time, we’ve got a cost point in economics with energy storage that enables renewables to be deployed below the cost of fossil fuel,” Energy Vault co-founder and CEO Robert Piconi told CNBC’s “Squawk Box Europe” Thursday.
SoftBank’s Vision Fund, which launched in 2017, has disrupted the venture capital model by injecting billions of dollars into start-ups, driving up their valuations. The Fund said last week its operating profit had jumped 66% year-on-year in the last quarter, thanks to valuation increases companies like food delivery platform Doordash and Indian hotel-booking firm Oyo. It said its $66.3 billion investment in 81 tech firms is now worth $82.billion.
The Vision Fund’s portfolio has so far been weighted heavily toward tech companies focused on transportation and logistics like Uber and its Southeast Asian rival Grab, as well as enterprise firms like Slack and “frontier tech” names like British chip designer Arm. In July, SoftBank launched a $108 billion-Vision Fund 2 that will target companies developing artificial intelligence.
Energy Vault did not disclose its valuation as part of the latest investment. Piconi said the funding will be used to help scale the company’s storage technology on a “multi-continent basis.” Andreas Hansson, partner for SoftBank Investment Advisers, will join Energy Vault’s board of directors as part of the investment.