Wärtsilä’s VP Of Storage Andy Tang Talks Microgrids & Maximizing Renewables

Andy Tang, Wärtsilä’s VP of energy storage and optimization, sat down with me for a CleanTech Talks episode a few weeks ago. This second half of our extensive conversation includes talks on large island microns in the Azores and the Caribbean, the benefits of Wärtsilä’s engines in a net-zero transition, and flexible fuel engines for marine and ground-based power.

There are two broad sets of topics on why you should manage storage, security / risk and earnings, both equally important. In terms of safety and risk, while everyone calls batteries goods, they are very picky about how they want to live their lives. Health condition, charge condition, resting point, ideal operating temperature and other factors must be maintained and tracked to keep the warranties valid. Optimally discharged batteries avoid thermal running risks and preserve the life of the asset.

Then there is the commercial aspect. A battery is a pile of chemicals sitting in a field. It only makes money if electrons flow in one direction or the other. The Energy Management System (EMS) connects it with the electricity markets to the market. This varies by jurisdiction, by utility, by independent system operator (ISO) and by revenue streams such as ancillary network services. And how do you get these revenue streams without degrading the battery?

But that being said, at peak times, when a utility is willing to pay $ 9 per kWh for electricity, everything else goes out the window except risk concerns. Tang’s demand management efforts with PG&E and startups prepared him very well to find the optimal way through.

In the Azores on the island of Graciosa, 1,500 kilometers from mainland Portugal, the 4,000 inhabitants had wind and sun, but could not exceed 17% of the annual demand. Their diesel generators have their own control requirements that can be triggered and create power outages across the island. The day before, Wärtsilä’s GEM EMS created wind and solar generation forecasts from weather forecasting services and combined it with their understanding of optimal utilization of generator motors and deployed a small battery lasting one hour. It reduced the equalized cost of electricity by $ 0.10 per tonne. kWh and increased the utilization of renewable energy to over 60%. Massive fuel savings, of course.

The battery alone would not have done that. The intelligence contained in the EMS plus the battery allows it.

Another example is the island of Bonaire in the ABC islands, Aruba, Bonaire and Curacao. It is an island with 20,000 inhabitants in the southern Caribbean. Wärtsilä’s efforts enabled them to shift their wind production assets from mid-teen percentages of annual demand to the upper 30s, again with a significant reduction in electricity production from diesel. These are not tiny grids, but MW scale grids.

This is in line with the other side of Wärtsilä’s business, offshore power. Their largest motor is a 20 MW output power. All ships are ‘microgrids’, and virtually all the systems that do not push them through the water are powered by electricity. Every solid cruise ship and bulk carrier is a micronet. More and more of them also have significant battery storage, although few larger ships have hybrid powertrains.

Thirty years ago, it would have been near impossible to effectively manage storage in a mixed microgrid for renewable energy and generators because the forecasts were much worse, the computers were expensive, and the battery technology was much less mature. Twenty years ago, that would have been difficult, too. Now the intersection between the emergence of mature LFP and lithium-ion batteries plus cheap computers plus internet plus high accurate weather forecasts has made this type of micronet optimization much more viable.

Wärtsilä retrieves data from a handful of different weather systems and uses them appropriately for geography. While 5-day weather forecasts are now as accurate as 1-day forecasts used to be, that does not mean that every weather forecast system is equally good in different regions.

Wärtsilä’s warehouse business is a subset of their energy business. They are looking at the fuels of the future and are strongly focused on flexible fuel engines to get through the transition. Wärtsilä’s Front-loading Net Zero white paper models cost-optimal paths to 100% renewable energy systems in different markets with widely differing socio-economic dynamics, different energy systems and challenges to be overcome. A key focus is how to do it in a cost-effective way. While critics say it will be too expensive, Wärtsilä has done the math for their scenarios. Ignoring policy, Wärtsilä argues that it is possible to get to net zero faster by recognizing that there is a role for engines that provide long-term storage that runs on current fossil fuels but transition to green fuels in the future. California could, for example, use existing natural gas storage, run engines out of it and then switch to biomethane in the future.

This is in line with finding ways of profitability for natural gas and coal generators to operate in annually declining capacity until they are no longer needed at all. Denmark did this with their coal production assets as their wind energy fleet grew, as an obvious example.

Wärtsilä has an advantage over its piston engines over gas turbines for this long-term storage path. An engine can start-stop hundreds of times a year without affecting maintenance, unlike gas turbines that would be affected. It looks like modern cars that turn off their engines at stoplights and then restart them. Gas turbines do not like to be turned on and off several times a day. They can be adjusted up and down in terms of output, but maintenance costs increase with more start-stop cycles.

In line with this, they are developing ammonia and methanol flex-fuel engines as the marine industry is considering both of these fuels. In my projection of shipping up to 2100, I see that electrification is a bigger wedge than the industry does, combined with ongoing optimization and innovation in ship efficiency, and consider it likely that biofuels that are plug-compatible with current engines will become a more likely path.

Wärtsilä is also considering pure hydrogen for marine powertrains and production assets that they sell. Tang points out that if Europe drives itself into hydrogen-as-fuel with government action and incentives, then it could end up being a thing despite the clear challenges.

Wärtsilä has seen wild shifts in battery prices recently, primarily due to the price of lithium carbonate required for LFP and lithium-ion batteries. System-level pricing is expected to increase by 21% this year and 31% next year. The industry is digesting this and some implementations have become non-viable with ugly negotiations. Tang’s perspective is that in 2024-2025 this will just be a painful look in the rearview mirror. My position is the same, as lithium is a commentary element in both hard rock and lithium brine in oil and gas regions, we are only experiencing a short-term interruption between resource extraction volumes and market demand.

Tang hopes that things like redox flow batteries mature and enable long-term storage, as cell-based chemistry has significant limits to economically scaling energy. 6-8 hours is about as long a duration as they can store financially and we need longer lasting solutions. His perspective is that it will be an all-of-it-all result.

Seaweed came to his career choices because of his love of skiing. He has seen the average snow level in the Sierras move a thousand feet up since he started skiing three decades ago. Resorts with base heights of 6,000 feet used to have every storm that came in like snow, and now half of the storms come in like rain. Tang’s perspective is that we have a chance to get ahead of this. We have a chance to fix this. Going with renewable energy is personally important to Tang. He will be a steward for future generations of skiers. He says we have the tools, we just have to have the policy wrapped up behind it and make it happen.


 

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