With lithium-ion batteries raising ESG-related concerns, investors are increasingly seeing value in long-duration storage
Will Form Energy change the face of storage?
Has the energy storage market just experienced a watershed moment? Yes, say some market observers, who argue that Form Energy’s recent unveiling of its secretive battery technology could transform the energy storage market forevermore.
- Form Energy’s iron-air battery was recently backed in a $200m funding round
- Form's technology stores renewables-sourced power for six days
- But doubts remain about the ability to successfully commercialise the battery
Has the energy storage market just experienced a watershed moment?
Yes, say some market observers, who argue that Form Energy’s recent unveiling of its secretive battery technology could transform the energy storage market forevermore.
Form Energy, a four-year-old start-up from Somerville, Massachusetts, revealed that it has been developing an iron-air battery capable of discharging renewables-sourced power for more than six days at a time – outlasting the four to twelve-hour lithium-ion battery currently used at most energy storage facilities.
And investors seem convinced as last month’s $200 million series D funding round proved.
Seen by many as ground-breaking, the technology could solve the most elusive problem facing renewable energy – cheaply storing large amounts of electricity to counter its variable nature.
Form Energy: The lowdown
So what do we know about Form Energy?
The company burst onto the energy storage scene in 2017 with a roster of talent that combined 100 years of battery experience. Form Energy CEO Mateo Jaramillo, who formerly headed Tesla’s energy storage arm, teamed up with prolific MIT battery expert Yet-Ming Chiang and co-founders Billy Woodford, Marco Ferrara and Ted Wiley and set themselves the task of finding a low-cost, multi-day storage cell.
To kick things off, Form quickly raised $9 million in a Series A funding round in 2018. The initial investors included Bill Gates and Jeff Bezos-backed Breakthrough Energy Ventures, Massachusetts Institute of Technology offshoot The Engine, and supermajor Saudi Aramco, among others.
This was a real shot in the arm for the company as it surmounted what could have been a major hurdle. One of the biggest challenges Form Energy faces is commercialising its six-day battery because, currently, the market favours short-duration storage. Indeed, there have been long-duration storage companies that have raised money in the past and fallen flat on their face – take the example of Aquion, also backed by Bill Gates, which raised $190 million in venture capital and debt for its saltwater batteries intended for long-duration storage, but ended up going bankrupt. Yet, despite understandable reservations about long-duration energy storage, Form Energy’s first funding round proved that investors could see the potential of the company’s product.
Since then, more investors, have proceeded to jump aboard. The Series B funding round, led by Italian oil and gas major Eni, accumulated $40 million in 2019. Then, the Series C round followed in 2020 with $76 million raised thanks to the backing of Coatue Management and Energy Impact Partners among others.
However, most notably, two weeks ago Form Energy announced a $200 million Series D funding round led with a $25 million strategic investment from steel and mining company ArcelorMittal, which also agreed to non-exclusively supply Form’s iron-air battery with a key ingredient: iron.
Mateo Jaramillo, CEO at Form Energy, is confident in the progress made and believed now was the right time to reveal the battery’s top-secret chemistry. His confidence was clearly shared by ArcelorMittal, one of the world’s leading iron-ore producers.
How does Form’s iron-air battery work?
Form’s iron-air system operates according to the basic principle of reverse rusting. In discharge mode, the battery intakes oxygen from the air, converting the iron metal to rust. Then in charging mode, an electrical current is applied, converting the rust back to iron, releasing oxygen back into the air.
In these washing machine-sized batteries, which can be clustered together by the thousands, energy can be stored for 100 hours and conveniently sited anywhere to meet utility-scale energy needs.
Form also claims that its battery is capable of delivering energy at a much cheaper cost than lithium-ion batteries, at less than $20/kWh. Combined with renewables, it’s claimed the price is competitive enough to eliminate the need for fossil-fuel-burning power plants.
‘Boring is what scales’
Given the air of secrecy around the development of the battery, the announcement that iron is the key ingredient does not constitute the most thrilling unveiling. But that’s all part of plan, explained Jaramillo. “Boring is what scales,” he said. As the timeframe to successfully transition away from fossil fuels shortens, Jaramillo and his colleagues understand that it’s important to effectively use what they have at their disposal. Low-cost iron, water and air. And lots of it.
Although too heavy for use in electric vehicles, the battery is a safe option. According to Form, no harmful chemicals are emitted during charging, all components are recyclable, and there is no risk of thermal runaway.
Despite being portrayed as a rival to the lithium-ion battery, Form views the rechargeable iron-air battery as a complementary technology. Used together, it believes the pair can enable optimal energy system configurations, all year round.
But will it sell?
Despite the bullishness, it’s difficult to ignore that commercialising the battery could pose a major challenge.
Cody Hill, a storage developer at LS Power, pointed out on social media that “both the cost and production side of the puzzle is hard… [because] the revenue story makes no sense today and will require a totally different [market].”
But Form and its investors are aware of this perception, and furthermore, they are expecting this market shift sooner than people think. A multiday storage cell is ideal for a grid that experiences large influxes of renewable generation followed by long droughts. Could recent examples of extreme weather be a glimpse into a scenario where demand for this type of new technology will grow?
Convincing the sceptics
Yet, despite the hype, Form has yet to complete installation of its first commercial project. Its first scheme – developed in partnership with Minnesota-based utility Great River Energy – will be a 1MW / 150MWh pilot installation that is scheduled to be deployed by late 2023. The project, which is said to be on track, will give a firm indication of Form’s ability to manufacture the battery and bring it to market.
Form’s reputable leadership, not to mention its significant financial backing, makes it easy to believe the new technology could well be a success. However, until it provides low-cost storage on a utility-sized scale, there will be those who remain sceptical.
It’s an intriguing proposition and the market will be eagerly anticipating the outcome.