Batteries are ancient, by today’s tech standards.  Benjamin Franklin is the first person we know of to use the term, and the first published science on the topic dates to 1791.  The days of metal disks stacked in brine are long gone (except in middle school science class).  Lead-acid batteries in cars and golf carts are still common and will be for years, given their low cost.  But the focus here is on the next generation of large-scale systems.  And the question is how these batteries – bigger and more powerful than anything we’ve known  can redefine and remake the world’s electrical grid. 

You’ve likely heard the expression “lightning in a bottle”.  Storing electricity at industrial scale is very much like that.  Electricity moves fast.  In copper wire or other conductors, it’s traveling at somewhere between 50% and 99% of the speed of light.  And in grid operations, it has to be sold – that is, used – as soon as it’s produced.  If it isn’t, grid and utility engineers run the risk of power plants disconnecting, since they’re only designed to run in a very narrow range of conditions.  What this next generation of battery tech provides is a way to store that electricity and in doing so provide a whole basket of benefits – financial, technical and environmental.   

Arguably the biggest single benefit battery storage provides is the ability to capture electricity from renewable sources.  Obviously, the wind doesn’t always blow.  And even when it does, that’s an issue in itself.  In February 2017, the Danes powered their entire country for 24 hours on windpower.  But if a wind farm produces more power than needed, the system operator must start shutting down turbines or face overloading the grid.  And while the sun defines “predictable”, solar plants only provide power for so many hours per day.  Large-scale storage means that intermittent, low-cost, and environmentally-friendly electricity can be stored now and used later.    

Having large amounts of electricity in storage and ready to go at a moment’s notice is a financial boost for power companies.  It means that utilities can sell back low-cost power from renewables to meet peak demand; when power sells for far more than it cost to generate.  It also means that utilities can meet their own demand spikes without having to pay the often-bruising high prices electricity markets produce at peak demand. 

There’s more.  Energy storage can improve the system’s operating reserve.  Like energy, the grid is always moving – more demand here, less demand there, big storms and equipment failures now and again.  It’s a dance that never stops.  Engineers and analysts meet these constant changes with machines and data to keep the system balanced.  But they are never 100% correct in predicting what will happen on any given day.  Having stored reserve power that can be deployed in seconds boosts the operating reserve, and in doing so, boosts grid stability.  Improving stability can mean lower infrastructure investment costs.  It can also cut the costs of “black starts” when generators go down.  Typically, they have to be restarted with diesel generators, but battery systems for just this purpose have already been successfully tested. 

So, what do utility-scale batteries look like?  Imagine shipping containers lined up in an electrical substation, or row after row of gigantic desktop computer towers.  The Hornsdale Power Reserve, in South Australia, was designed and built by Tesla.  It uses lithium-ion batteries (like in your computer) and provides 129 MWh of power – enough to supply all the electricity for about 3,500 homes for an hour.  These projects sound large, though total deployments to date are tiny – globally about 6 GWh through 2018.  But there’s one simple fact that you need to remember.  In 2010, commercial battery packs cost about $1,100 per kilowatt-hour.  By December 2019, that price had fallen to $156 per kilowatt-hour, a drop of 87% – and nearly 50% of that total decline came in the preceding three years.  With costs set to break the $100 mark by as early as 2024, batteries are increasingly likely to be included in energy infrastructure and development for years to come. 

Kansas City International Airport is no stranger to cleaner fuels.  It began deploying compressed natural gas (CNG) buses back in 1997providing natural gas on site with its own high-speed fueling station.  This made the Aviation Department something of a pioneer in alt-fuel adoption.  The next step, though, was a big jump in fuel efficiency, and in October of 2017, KCI became the first US airport to deploy all-electric shuttle buses.  It’s currently running 7 BYD K7 battery-electric shuttles along with older CNG units. 

There’s no getting around the fact that up-front costs for electric vehicles are going to be higher than for equivalent conventional buses.  In fact, when the airport rolled out data on the comparative costs of different fuels, the contrast was stark.  A brand-new diesel shuttle buses cost about $385,000; for CNG, add an additional 14% for a sticker price of $440,000.  All-electric models come in at a fairly eye-popping $540,000, more than 40% more expensive than the price for a baseline diesel.   

But as anybody who’s bought a car knows, the sticker price isn’t the only price.  The sticker price, in fact, is only the beginning of years of recurring costs.  Kenny Williams is the Fleet Asset Manager for the Aviation Department and one of the main proponents of the EV deployment back in 2016-17 as the project began to take shape.  He broke it down as follows: 

Costs Per Mile (Including fuel and maintenance) 
  • Diesel – variable/volatile fuel prices; approximate costs $1.50/mile 
  • CNG – more stable fuel prices; approximate costs $1.00/mile, $0.45-.50 w. alt-fuel tax credit 
  • Electric – fixed fuel prices; approximate costs $0.50/mile 

Maintenance costs add up quickly for the shuttle bus duty cycle.  Oil changes for CNG units are about $170 and have to happen every other month.  Annual tune-ups add an additional $3,800 to CNG bus operating costs.  So, even with fuel at an economical $0.50/gallon thanks to the clean fuel tax credit, CNG bus maintenance per year comes in between $4,800 and $5,000 per unit.  It’s not like EV buses float on air.  Like CNG units, they need new tires, and fluid changes every 18 months add annual costs of about $165 per year.  But no internal combustion engine means no tune-ups, avoiding the lion’s share of regular maintenance overhead. 

And yet, even with maintenance savings of around $50,000 per bus over ten years, there’s still a big price gap between diesel, CNG and electric buses.  That’s where federal clean-fuel funding comes in.  Thanks to support from the US Department of Energy, KCI was eligible for reimbursements of $72,000 per bus, dropping their costs to just $2,000 more than comparable CNG shuttles.   

The same grant, “Accelerating Alternative Fuel Adoption in Mid-America” provided funding for charging infrastructure, covering about $100,000 of $225,000 in construction and equipment costs for the new systems.  KCI’s electric bus charging lot has eight pedestals installed, with space for an additional four slots if more EV units are purchased  Charging time is about three hours, and this “fueling” process hasn’t had any negative impact on operations.   

Kenny Williams talks EV bus duty cycles at the airport’s charging lot.

What has the driver response been like?  Per Kenny Williams, “For most drivers, once they drive them, they really like them.”  The only minor hitch has been how drivers operate the bus HVAC systems – since they are battery-driven, power loss from cranking up AC or heating at full throttle can take a bite out of driving range when a gentler touch would work better. And KCI is planning on investing in additional EV units.  The economic toll of the pandemic has postponed acquisition of a few of the 12 units originally planned.  However, the Aviation Department is planning on ordering three more units in addition to the seven already in service.  These new buses will be slightly different.  They’ll have inductive charging systems, which will let them power up without cords or plugs, as they pick up passengers at the new terminal starting in early 2023.   

This material is based upon work supported by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE) Vehicle Technologies Program under Award Number DE-EE0008262 . 

As we near the end of the year, it is anticipated that Congress will be discussing whether to extend certain federal tax credits such as the Alternative Fuel and Energy Efficiency Tax CreditsContact your representative to learn if they will support extending the Alternative Fuel Tax Credit and below energy efficiency tax incentives that also expire at the end of 2020. (Note that biodiesel credits are covered under the Biodiesel Income Tax Credit which continues through December 31, 2022. The Renewable Energy Tax Credits expire December 31, 2021.) 

  • Alternative Fuel Tax CreditA tax incentive is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. A tax credit of $0.50 per gallon is available for the following alternative fuels: natural gas, liquefied hydrogen, propane, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. 
  • Commercial Building Energy-Efficiency Tax DeductionA tax deduction of up to $1.80 per square foot is available to owners of commercial buildings or systems that save at least 50% of the heating and cooling energy as compared to ASHRAE Standard 90.1-2007 (or 90.1-2001 for buildings or systems placed in service before January 1, 2018). The deduction is available for buildings or systems placed in service after December 31, 2017 through December 31, 2020. Partial deductions can also be taken for measures affecting the building envelope, lighting, or heating and cooling systems.
  • Residential Tax Credits for Energy Equipment & Energy Efficiency Improvements: Homeowners can claim a federal tax credit for installing appliances that are designed to boost energy efficiency or making certain improvements to their homes (10% of cost up to $500 or a specific amount from $50-$300).  
  • Tax Credits for Builders of Energy Efficient HomesHome builders are eligible for tax credits for a new energy efficient home that achieves energy savings for heating and cooling over the 2006 International Energy Conservation Code (IECC) and supplements. A required amount of energy savings must come from building envelope improvements. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards and meeting the energy efficiency requirements. Alternatively, a manufactured home also qualifies for a $1,000 tax credit if it meets ENERGY STAR requirements. 

If you would like additional information regarding the above incentives visit the Database of State Incentives for Renewable Energy (DSIRE)email your Clean Cities coordinator, or contact MEC at (816) 531-7283. 

Carnage in the conventional energy sector has drawn a lot of attention in the past few weeks.  But the collapse of recent months was presaged by mediocre performance stretching back literally years.  Total returns for the Standard & Poor Energy Sector for 2019, including dividends, were a paltry 6%.  And for the entire decade of 2010-2019, the same sector was up 34%, by far the worst performance of the 11 sectors S&P tracks.  The fracking revolution, it turns out, created a world awash in oil and gas, but didn’t do much to help the industry that created it.

Which brings us to a related question – if oil & gas are in trouble from COVID-19 and from a decade of overproduction and low prices, what has the ongoing turmoil done to alternative fuels?  In particular, since KC Clean Cities operates in the biofueled, beating heart of the Midwest, what’s happened to biodiesel and (particularly) ethanol?

A bit of backstory:   more than 95% of vehicle gasoline sold in the US is a 10% ethanol blend.  There are several reasons for this.  Until about 15 years ago, a compound known as MTBE (methyl tertiary-butyl ether) was blended with gasoline to add oxygen.  As a result, gasoline burned cleaner, and cut smog-forming chemicals and toxins like benzene in exhaust.  But there were problems – MTBE leaked into groundwater from gas station tanks, creating water quality problems.  Moreover, it’s listed as a potential carcinogen.  Enter ethanol, exit MTBE with the Energy Policy Act of 2005.

Like MTBE, ethanol adds oxygen to gasoline and cuts smog-forming emissions.  Unlike MTBE, it’s also a way for America to deal with its massive agricultural surpluses by distilling a value-added product from corn. (It’s worth noting that ethanol now accounts for 40% of all the corn we grow.)

With the Energy Independence & Security Act of 2007, Congress created a mandate that steadily increasing amounts of renewables would be blended into America’s fuel supply – 36 billion gallons by 2022.  This is the Renewable Fuels Standard, which has been hotly debated over the last few years in Washington and elsewhere.

So far so good.  Refineries and fuel importers had a choice – they could blend steadily increasing amounts of renewable fuels.  Or, if they didn’t want to, they could use RINs – Renewable Inventory Numbers – attached to each gallon of renewable fuel produced.  Pecos Pete’s refinery has already hit their required volume of ethanol blended with gasoline for the year, but they keep on blending.  Why?  Because Brownsville Bob’s refinery hasn’t blended any ethanol into their gasoline.  However, Bob can stay in compliance by buying RINs from Pecos Pete, with the price set by the RIN market.

There’s also been a safety valve built into the system, called the Small Refinery Exemption or SRE.  “Small” is relative, but refineries with less than 75,000 barrels per day as of 2006 qualify, and can petition EPA to be excused from renewable fuel blending.  And this is where the fur begins to fly.  Between 2016 and 2018, the EPA granted a total of 85 small refinery exemptions, a big jump that removed a total of 4 billion gallons of mandated demand from the market.  This has been a sore spot with farmers, but hardly the only one.  The ongoing trade war with China has dried up what was a major market for ethanol, corn and distiller’s grain, a byproduct of the ethanol production process used as animal feed.  Allowing year-round sales of E-15 – that is, gasoline that is 15% ethanol by volume hasn’t made much of a dent, since relatively few gas stations sell it even though all light-duty gasoline vehicles 2001 or newer are approved to use E15.

And now, COVID.  Just as Texas and Oklahoma oil producers and refineries don’t have any place left to store their crude and refined products as consumer demand collapses, ethanol producers are running out of storage.  Federal Reserve research shows US ethanol production down nearly 50% since the beginning of 2020.  73 out of 200 total plants nationwide are shut down, while another 71 are on reduced production schedules.  At least two dozen ethanol plants are now producing alcohol for hand sanitizer, but at low volume, much of which will be donated anyway.

For the time being, the sector seems to be shaking its way into stasis.  Whatever shape the ethanol industry takes in 2021 and beyond will depend for now on what the virus does– and how we respond – in 2020.

For additional details on why this matters, please check out our guest blog posting by David VanderGriend of the Urban Air Institute.  Fuel blending standards can sound arcane, and the details of ethanol and corn and agriculture seem like something taking place in distant, rural counties.  They’re not.  They impact the lives of residents of metro Kansas City every day, and at the fundamental level of our own health.