C&I Energy Perspective: Supply Chain, H2 moves prove Groundswell isn’t settling anytime soon

In walking the floor of Intersolar/Energy Storage North America last week in Long Beach, I was fascinated at the variety of players gaining scale in the energy transition.

Where I used to expect to see a multitude of solar panel firms—and there were plenty there—I also found battery storage suppliers, digitalization technologists, aggregators and integrators.

They are all driven by causes above and beyond their own economic needs. They see peril ahead that must be answered with action.

“The vision has been realized by the world at large,” Janice Lin, Strategen founder and CEO and a planner for Intersolar, said during one of the Long Beach keynotes. “Climate change is no longer a theoretical.”

Clearly, the commercial and industrial sector participants are buying into decarbonization from both environmental and economic aims. The utilities do not hold the monopoly on the more than 30 GW in wind and solar installed capacity added over the past two years, with independent developers, community solar firms, manufacturing plants and even bakeries working to create their own energy resiliency with solar panels, battery storage and microgrids.

Factors driving that energy transition ever upward will include federal incentives, tightened supply chain and manufacturing siting, as well as pressure from investors and simply stronger business cases to reduce emissions and torque efficiencies. A new report by accounting and consulting giant Deloitte admits that rising demand may be hobbled by supply chain constraints and interconnection bottlenecks, but the future is bright, indeed.

“There is a focus now; it’s hard to imagine it not continuing,” Jim Thomson, vice chair and U.S. Power, Utilities and Renewables leader at Deloitte, said in an exclusive interview with EnergyTech.

“It seems the groundswell now is really going strong across all aspects of the economy,” Thomson added. “It’d be a head scratcher to see that stop.”

The stories posted on this EnergyTech website alone in the last six months offer witness to that long-term conviction to up the ante on decarbonizing the power sector and C&I operations. Incentives embedded with the federal Infrastructure and Inflation Reduction Acts deliver some certainty for investors considering deep dives into solar, battery storage, microgrids, fleet electrification, grid upgrades, building energy efficiencies and digitalization technologies.

For instance, companies announcing moves to build manufacturing facilities in the U.S. include a Honda-LG Energy Solutions joint venture, AESC, Microvast, FREYR, First Solar, Stellantis and Samsung, Ford and GM.

Meanwhile, Intersolar exhibitors such as Briggs & Stratton Energy Solutions and its SimpliPhi Power unit, as well as CellCude and many others, are connecting with C&I and mission critical customers such as manufacturers, military bases and office complexes to offer energy storage capacity to micro and nanogrids.

The tightening of the supply chain is a big deal, even if it is relatively new after decades of moving manufacturing overseas to reduce overall costs.

“It helps the supply chain conundrum, but it’s not an overnight thing,” Deloitte’s Thomson pointed out. “But the fact that they are investing now, having that coming in for the next two, three years, is a big thing.”

Alas, turning the giant ship is a time-consuming act. And, it must take into account that the U.S. is not currently a hotbed for production of rare earth minerals and elements required by the battery industry, although that could change over coming years.

“There’s going to be at least some dependence on sourcing cobalt and those other elements,” he added. “What legislation does is help the economics and cost side of it.”

The resiliency and abundance side of it are other matters. Of course, the sun doesn’t always shine nor the wind always blow, and battery storage can only balance that out for so long.

The energy transition may really well need something hydrogen, the light gas with high energy density and no carbon emissions. The key challenges are creating that H2, storing, transporting and converting it to electricity.

There are no two ways about it: Hydrogen can happen at scale without partnerships and rational thinking about efficiencies.

Marty Adams, general manager of the Los Angeles Department of Water and Power, spoke last week at Intersolar about his utility’s need for joint ventures and collaboration to make H2 happen in decarbonizing both power generation and transportation. LADWP is going to be off-taker of the massive Advanced Clean Energy Storage hydrogen project in Utah, while also develop its own hub in the southern California region.

The city of Angels plans to be Net Zero by 2045. Adding hydrogen to the mix that includes solar, wind, energy storage and fleet electrification should boost the effort over the top, Adams said.

“Some would say it’s an aspirational challenge,” he said during the Intersolar keynote. “I would say it’s not—it’s achievable. . . (But) This is not something we go about by ourselves.”

For sure. Thomson noted that the Infrastructure Act impetus in pushing hydrogen past utility-scale found a lucrative way to offer an end-around to some of the geographical and engineering challenges facing H2.

“The real ideal set up is focusing on geographic hydrogen hubs,” he said. “Where there are local consumers right there to use the hydrogen, where you have natural resources like salt caverns to store it.

“That is the focus of those regional hubs. You address some challenges by removing some of the storage challenges, removing some of the transportation challenges.”

Now, so-called carbon-free hydrogen can be a misnomer, as it’s easily collected and you have to make it. Making H2 is typically done one of two ways: the carbon-intensive steam reforming of methane gas (splitting four hydrogen atoms from methane) or by using electric-powered electrolyzers to split H2 out of water.

To be green hydrogen, those electrolyzers should be powered by electricity from carbon-free resources such as wind, solar, hydro or nuclear. The new federal incentives can offer $3 per kilogram for green hydrogen, making it competitive with the price of gray H2.

“That makes the equation a lot easier,” Thomson said. “That gets this moving more quickly.”

The C&I Energy Transition obviously has many pathways to net zero should they all prove to be scalable and sustainable economically. Artificial intelligence and other digital advancements can provide balancing and interconnected, bidirectional traffic wardens, as well as a frontline in cybersecurity protection.

A majority of industry leadership respondents in the Deloitte renewable energy survey believe that the aforementioned moves will drive adoption of carbon-reduction technologies, but that even the near-term to realization sometime later this decade.

There is a lot that goes into it, but they are prepared,” Deloitte’s Thomson said. “It’s a multi-year journey.”