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    To improve solar and other clean energy tech, look beyond hardware

    To continue reducing the costs of solar energy and other clean energy technologies, scientists and engineers will likely need to focus, at least in part, on improving technology features that are not based on hardware, according to MIT researchers. They describe this finding and the mechanisms behind it today in Nature Energy.

    While the cost of installing a solar energy system has dropped by more than 99 percent since 1980, this new analysis shows that “soft technology” features, such as the codified permitting practices, supply chain management techniques, and system design processes that go into deploying a solar energy plant, contributed only 10 to 15 percent of total cost declines. Improvements to hardware features were responsible for the lion’s share.

    But because soft technology is increasingly dominating the total costs of installing solar energy systems, this trend threatens to slow future cost savings and hamper the global transition to clean energy, says the study’s senior author, Jessika Trancik, a professor in MIT’s Institute for Data, Systems, and Society (IDSS).

    Trancik’s co-authors include lead author Magdalena M. Klemun, a former IDSS graduate student and postdoc who is now an assistant professor at the Hong Kong University of Science and Technology; Goksin Kavlak, a former IDSS graduate student and postdoc who is now an associate at the Brattle Group; and James McNerney, a former IDSS postdoc and now senior research fellow at the Harvard Kennedy School.

    The team created a quantitative model to analyze the cost evolution of solar energy systems, which captures the contributions of both hardware technology features and soft technology features.

    The framework shows that soft technology hasn’t improved much over time — and that soft technology features contributed even less to overall cost declines than previously estimated.

    Their findings indicate that to reverse this trend and accelerate cost declines, engineers could look at making solar energy systems less reliant on soft technology to begin with, or they could tackle the problem directly by improving inefficient deployment processes.  

    “Really understanding where the efficiencies and inefficiencies are, and how to address those inefficiencies, is critical in supporting the clean energy transition. We are making huge investments of public dollars into this, and soft technology is going to be absolutely essential to making those funds count,” says Trancik.

    “However,” Klemun adds, “we haven’t been thinking about soft technology design as systematically as we have for hardware. That needs to change.”

    The hard truth about soft costs

    Researchers have observed that the so-called “soft costs” of building a solar power plant — the costs of designing and installing the plant — are becoming a much larger share of total costs. In fact, the share of soft costs now typically ranges from 35 to 64 percent.

    “We wanted to take a closer look at where these soft costs were coming from and why they weren’t coming down over time as quickly as the hardware costs,” Trancik says.

    In the past, scientists have modeled the change in solar energy costs by dividing total costs into additive components — hardware components and nonhardware components — and then tracking how these components changed over time.

    “But if you really want to understand where those rates of change are coming from, you need to go one level deeper to look at the technology features. Then things split out differently,” Trancik says.

    The researchers developed a quantitative approach that models the change in solar energy costs over time by assigning contributions to the individual technology features, including both hardware features and soft technology features.

    For instance, their framework would capture how much of the decline in system installation costs — a soft cost — is due to standardized practices of certified installers — a soft technology feature. It would also capture how that same soft cost is affected by increased photovoltaic module efficiency — a hardware technology feature.

    With this approach, the researchers saw that improvements in hardware had the greatest impacts on driving down soft costs in solar energy systems. For example, the efficiency of photovoltaic modules doubled between 1980 and 2017, reducing overall system costs by 17 percent. But about 40 percent of that overall decline could be attributed to reductions in soft costs tied to improved module efficiency.

    The framework shows that, while hardware technology features tend to improve many cost components, soft technology features affect only a few.

    “You can see this structural difference even before you collect data on how the technologies have changed over time. That’s why mapping out a technology’s network of cost dependencies is a useful first step to identify levers of change, for solar PV and for other technologies as well,” Klemun notes.  

    Static soft technology

    The researchers used their model to study several countries, since soft costs can vary widely around the world. For instance, solar energy soft costs in Germany are about 50 percent less than those in the U.S.

    The fact that hardware technology improvements are often shared globally led to dramatic declines in costs over the past few decades across locations, the analysis showed. Soft technology innovations typically aren’t shared across borders. Moreover, the team found that countries with better soft technology performance 20 years ago still have better performance today, while those with worse performance didn’t see much improvement.

    This country-by-country difference could be driven by regulation and permitting processes, cultural factors, or by market dynamics such as how firms interact with each other, Trancik says.

    “But not all soft technology variables are ones that you would want to change in a cost-reducing direction, like lower wages. So, there are other considerations, beyond just bringing the cost of the technology down, that we need to think about when interpreting these results,” she says.

    Their analysis points to two strategies for reducing soft costs. For one, scientists could focus on developing hardware improvements that make soft costs more dependent on hardware technology variables and less on soft technology variables, such as by creating simpler, more standardized equipment that could reduce on-site installation time.

    Or researchers could directly target soft technology features without changing hardware, perhaps by creating more efficient workflows for system installation or automated permitting platforms.

    “In practice, engineers will often pursue both approaches, but separating the two in a formal model makes it easier to target innovation efforts by leveraging specific relationships between technology characteristics and costs,” Klemun says.

    “Often, when we think about information processing, we are leaving out processes that still happen in a very low-tech way through people communicating with one another. But it is just as important to think about that as a technology as it is to design fancy software,” Trancik notes.

    In the future, she and her collaborators want to apply their quantitative model to study the soft costs related to other technologies, such as electrical vehicle charging and nuclear fission. They are also interested in better understanding the limits of soft technology improvement, and how one could design better soft technology from the outset.

    This research is funded by the U.S. Department of Energy Solar Energy Technologies Office. More

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    The reasons behind lithium-ion batteries’ rapid cost decline

    Lithium-ion batteries, those marvels of lightweight power that have made possible today’s age of handheld electronics and electric vehicles, have plunged in cost since their introduction three decades ago at a rate similar to the drop in solar panel prices, as documented by a study published last March. But what brought about such an astonishing cost decline, of about 97 percent?

    Some of the researchers behind that earlier study have now analyzed what accounted for the extraordinary savings. They found that by far the biggest factor was work on research and development, particularly in chemistry and materials science. This outweighed the gains achieved through economies of scale, though that turned out to be the second-largest category of reductions.

    The new findings are being published today in the journal Energy and Environmental Science, in a paper by MIT postdoc Micah Ziegler, recent graduate student Juhyun Song PhD ’19, and Jessika Trancik, a professor in MIT’s Institute for Data, Systems and Society.

    The findings could be useful for policymakers and planners to help guide spending priorities in order to continue the pathway toward ever-lower costs for this and other crucial energy storage technologies, according to Trancik. Their work suggests that there is still considerable room for further improvement in electrochemical battery technologies, she says.

    The analysis required digging through a variety of sources, since much of the relevant information consists of closely held proprietary business data. “The data collection effort was extensive,” Ziegler says. “We looked at academic articles, industry and government reports, press releases, and specification sheets. We even looked at some legal filings that came out. We had to piece together data from many different sources to get a sense of what was happening.” He says they collected “about 15,000 qualitative and quantitative data points, across 1,000 individual records from approximately 280 references.”

    Data from the earliest times are hardest to access and can have the greatest uncertainties, Trancik says, but by comparing different data sources from the same period they have attempted to account for these uncertainties.

    Overall, she says, “we estimate that the majority of the cost decline, more than 50 percent, came from research-and-development-related activities.” That included both private sector and government-funded research and development, and “the vast majority” of that cost decline within that R&D category came from chemistry and materials research.

    That was an interesting finding, she says, because “there were so many variables that people were working on through very different kinds of efforts,” including the design of the battery cells themselves, their manufacturing systems, supply chains, and so on. “The cost improvement emerged from a diverse set of efforts and many people, and not from the work of only a few individuals.”

    The findings about the importance of investment in R&D were especially significant, Ziegler says, because much of this investment happened after lithium-ion battery technology was commercialized, a stage at which some analysts thought the research contribution would become less significant. Over roughly a 20-year period starting five years after the batteries’ introduction in the early 1990s, he says, “most of the cost reduction still came from R&D. The R&D contribution didn’t end when commercialization began. In fact, it was still the biggest contributor to cost reduction.”

    The study took advantage of an analytical approach that Trancik and her team initially developed to analyze the similarly precipitous drop in costs of silicon solar panels over the last few decades. They also applied the approach to understand the rising costs of nuclear energy. “This is really getting at the fundamental mechanisms of technological change,” she says. “And we can also develop these models looking forward in time, which allows us to uncover the levers that people could use to improve the technology in the future.”

    One advantage of the methodology Trancik and her colleagues have developed, she says, is that it helps to sort out the relative importance of different factors when many variables are changing all at once, which typically happens as a technology improves. “It’s not simply adding up the cost effects of these variables,” she says, “because many of these variables affect many different cost components. There’s this kind of intricate web of dependencies.” But the team’s methodology makes it possible to “look at how that overall cost change can be attributed to those variables, by essentially mapping out that network of dependencies,” she says.

    This can help provide guidance on public spending, private investments, and other incentives. “What are all the things that different decision makers could do?” she asks. “What decisions do they have agency over so that they could improve the technology, which is important in the case of low-carbon technologies, where we’re looking for solutions to climate change and we have limited time and limited resources? The new approach allows us to potentially be a bit more intentional about where we make those investments of time and money.”

    “This paper collects data available in a systematic way to determine changes in the cost components of lithium-ion batteries between 1990-1995 and 2010-2015,” says Laura Diaz Anadon, a professor of climate change policy at Cambridge University, who was not connected to this research. “This period was an important one in the history of the technology, and understanding the evolution of cost components lays the groundwork for future work on mechanisms and could help inform research efforts in other types of batteries.”

    The research was supported by the Alfred P. Sloan Foundation, the Environmental Defense Fund, and the MIT Technology and Policy Program. More

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    Making the case for hydrogen in a zero-carbon economy

    As the United States races to achieve its goal of zero-carbon electricity generation by 2035, energy providers are swiftly ramping up renewable resources such as solar and wind. But because these technologies churn out electrons only when the sun shines and the wind blows, they need backup from other energy sources, especially during seasons of high electric demand. Currently, plants burning fossil fuels, primarily natural gas, fill in the gaps.

    “As we move to more and more renewable penetration, this intermittency will make a greater impact on the electric power system,” says Emre Gençer, a research scientist at the MIT Energy Initiative (MITEI). That’s because grid operators will increasingly resort to fossil-fuel-based “peaker” plants that compensate for the intermittency of the variable renewable energy (VRE) sources of sun and wind. “If we’re to achieve zero-carbon electricity, we must replace all greenhouse gas-emitting sources,” Gençer says.

    Low- and zero-carbon alternatives to greenhouse-gas emitting peaker plants are in development, such as arrays of lithium-ion batteries and hydrogen power generation. But each of these evolving technologies comes with its own set of advantages and constraints, and it has proven difficult to frame the debate about these options in a way that’s useful for policymakers, investors, and utilities engaged in the clean energy transition.

    Now, Gençer and Drake D. Hernandez SM ’21 have come up with a model that makes it possible to pin down the pros and cons of these peaker-plant alternatives with greater precision. Their hybrid technological and economic analysis, based on a detailed inventory of California’s power system, was published online last month in Applied Energy. While their work focuses on the most cost-effective solutions for replacing peaker power plants, it also contains insights intended to contribute to the larger conversation about transforming energy systems.

    “Our study’s essential takeaway is that hydrogen-fired power generation can be the more economical option when compared to lithium-ion batteries — even today, when the costs of hydrogen production, transmission, and storage are very high,” says Hernandez, who worked on the study while a graduate research assistant for MITEI. Adds Gençer, “If there is a place for hydrogen in the cases we analyzed, that suggests there is a promising role for hydrogen to play in the energy transition.”

    Adding up the costs

    California serves as a stellar paradigm for a swiftly shifting power system. The state draws more than 20 percent of its electricity from solar and approximately 7 percent from wind, with more VRE coming online rapidly. This means its peaker plants already play a pivotal role, coming online each evening when the sun goes down or when events such as heat waves drive up electricity use for days at a time.

    “We looked at all the peaker plants in California,” recounts Gençer. “We wanted to know the cost of electricity if we replaced them with hydrogen-fired turbines or with lithium-ion batteries.” The researchers used a core metric called the levelized cost of electricity (LCOE) as a way of comparing the costs of different technologies to each other. LCOE measures the average total cost of building and operating a particular energy-generating asset per unit of total electricity generated over the hypothetical lifetime of that asset.

    Selecting 2019 as their base study year, the team looked at the costs of running natural gas-fired peaker plants, which they defined as plants operating 15 percent of the year in response to gaps in intermittent renewable electricity. In addition, they determined the amount of carbon dioxide released by these plants and the expense of abating these emissions. Much of this information was publicly available.

    Coming up with prices for replacing peaker plants with massive arrays of lithium-ion batteries was also relatively straightforward: “There are no technical limitations to lithium-ion, so you can build as many as you want; but they are super expensive in terms of their footprint for energy storage and the mining required to manufacture them,” says Gençer.

    But then came the hard part: nailing down the costs of hydrogen-fired electricity generation. “The most difficult thing is finding cost assumptions for new technologies,” says Hernandez. “You can’t do this through a literature review, so we had many conversations with equipment manufacturers and plant operators.”

    The team considered two different forms of hydrogen fuel to replace natural gas, one produced through electrolyzer facilities that convert water and electricity into hydrogen, and another that reforms natural gas, yielding hydrogen and carbon waste that can be captured to reduce emissions. They also ran the numbers on retrofitting natural gas plants to burn hydrogen as opposed to building entirely new facilities. Their model includes identification of likely locations throughout the state and expenses involved in constructing these facilities.

    The researchers spent months compiling a giant dataset before setting out on the task of analysis. The results from their modeling were clear: “Hydrogen can be a more cost-effective alternative to lithium-ion batteries for peaking operations on a power grid,” says Hernandez. In addition, notes Gençer, “While certain technologies worked better in particular locations, we found that on average, reforming hydrogen rather than electrolytic hydrogen turned out to be the cheapest option for replacing peaker plants.”

    A tool for energy investors

    When he began this project, Gençer admits he “wasn’t hopeful” about hydrogen replacing natural gas in peaker plants. “It was kind of shocking to see in our different scenarios that there was a place for hydrogen.” That’s because the overall price tag for converting a fossil-fuel based plant to one based on hydrogen is very high, and such conversions likely won’t take place until more sectors of the economy embrace hydrogen, whether as a fuel for transportation or for varied manufacturing and industrial purposes.

    A nascent hydrogen production infrastructure does exist, mainly in the production of ammonia for fertilizer. But enormous investments will be necessary to expand this framework to meet grid-scale needs, driven by purposeful incentives. “With any of the climate solutions proposed today, we will need a carbon tax or carbon pricing; otherwise nobody will switch to new technologies,” says Gençer.

    The researchers believe studies like theirs could help key energy stakeholders make better-informed decisions. To that end, they have integrated their analysis into SESAME, a life cycle and techno-economic assessment tool for a range of energy systems that was developed by MIT researchers. Users can leverage this sophisticated modeling environment to compare costs of energy storage and emissions from different technologies, for instance, or to determine whether it is cost-efficient to replace a natural gas-powered plant with one powered by hydrogen.

    “As utilities, industry, and investors look to decarbonize and achieve zero-emissions targets, they have to weigh the costs of investing in low-carbon technologies today against the potential impacts of climate change moving forward,” says Hernandez, who is currently a senior associate in the energy practice at Charles River Associates. Hydrogen, he believes, will become increasingly cost-competitive as its production costs decline and markets expand.

    A study group member of MITEI’s soon-to-be published Future of Storage study, Gençer knows that hydrogen alone will not usher in a zero-carbon future. But, he says, “Our research shows we need to seriously consider hydrogen in the energy transition, start thinking about key areas where hydrogen should be used, and start making the massive investments necessary.”

    Funding for this research was provided by MITEI’s Low-Carbon Energy Centers and Future of Storage study. More