What drew you to establish Hydrostor in 2010?
In 2010, 70% of the grid in Ontario was composed of hydro and nuclear energy. Back then, I was working for one of Canada’s biggest nuclear energy generators. We were faced with operational challenges since the dispatch rules for grid provision prioritized wind and solar energy, meaning that we had to constantly turn the nuclear reactor up and down to accommodate demand fluctuations. So, I went looking for a different way to store energy.
At that time storage was slowly being recognized as a critical part of the renewable grid ecosystem to balance the intermittent supply and demand of energy. Before, when our grid was just coal and gas, you simply turned those up and down as you needed them. It is only once you have significant amounts of wind and solar energy that storage becomes necessary.
When the industry started, the grid needed only 15 minutes of storage. Then it required two hours, then four, and now the grid needs eight to 12 hours of storage. Eventually, it will keep moving up until it requires seasonal storage, which will probably be served by sources like hydrogen.
So what is Hydrostor’s value proposition?
Advanced Compressed Energy Storage (A-CAES) was the original idea of my co-founder, Cameron Lewis.
Pumped hydro involves lifting water and holding it in the air as potential energy. We store compressed air in a rock cavern under water pressure as potential energy
This entails that our sites require less water and space.
It is “advanced” compressed air since, unlike the existing compressed air techniques, it does not burn gas, nor does it require salt caverns to be sited. With thermal management and hydrostatically compensated rock caverns, our storage technology can be built almost anywhere we have the right geology, with no emissions.
Our capacity target is 8 to 24 storage hours. We have about 10 patent families to protect our proprietary technology. Our system has a theoretical efficiency of up to 70%, which is reasonable. But for us, since we work with long-duration storage, efficiency is not the most important factor.
What does it mean for your technology to be flexibly sited?
Whereas a battery can be put anywhere in theory, pumped hydro can only be sited in very few locations because it so difficult to install and requires a significant footprint. Our A-CAES technology falls somewhere in between a battery and pumped hydro.
Hydrostor can locate a facility almost wherever the grid needs us, be it remote farmland, or a difficult-to-access substation. We offer a long-duration, low-cost, and long-life storage technology that is orders of magnitude more flexible than pumped hydro, and much less expensive than a battery over a project lifetime.
Could you give us an illustration of how your technology can defer expensive infrastructure investments? What other interesting projects are you currently working on?
Our Silver City project in an Australian town is a great example. Traditionally, this situation would have required a billion-dollar investment into transmission using conventional approaches. Instead, our advanced project will store the excess solar energy that powers the town, establishing something like a mini-grid. In cases like these, energy storage can come to replace transmission altogether.
Another interesting project of ours is Willow Rock, in California, which we estimate will become operational by 2028. California issued a mandate requiring the grid to have 1000mW of eight-hour storage. Our project has secured roughly 500mW of that. The California grid relies heavily on wind and solar, so this is an example of where we will provide the necessary backup storage without any emissions, nor using up any water.
On the topic of water, which is a significant issue in many locations, we produce water through our process since the moisture in the air is knocked out when compressed. As opposed to batteries, which are made somewhere else and have to be shipped in, we utilized local labor, steel and concrete. Finally, our site there uses 5% of the space compared to pumped hydro.
Do you have plans for expansion to other geographies?
Thinking globally, we think there will be a role for many different storage technologies, including pumped hydro, lithium ion, and flow batteries. Our A-CAES technology can occupy between 10% and 20% of that market share.
Having said that, we realize that not every place needs long-duration storage, nor can every place afford it. Europe, although they acknowledge the importance of storage, has been behind the curve from a policy and regulatory standpoint. The USA, conversely, suddenly had all the right policies for new energy storage due to the significant tax-breaks provided by its Inflation Reduction Act. India is an attractive upcoming market in that they do baseload renewable procurements, which means you can get a contract for solar energy only if it is permanent, implying the need of storage facilities. If the right policy and economic conditions are in place, we wish to provide all markets worldwide.
What are the biggest challenges for you presently?
First off, obtaining regulatory certainty on how to pay for storage is critical. We would argue that rules should differentiate between storage methods and their different capacities—whether it is four or eight hours of storage capacity, for instance. You have this in California, but not everywhere.
Secondly, energy transmission and interconnection to the grid is an important challenge. The basic challenge here is that there is a shortage of places where you can plug into the grid.
And thirdly, we need a permitting reform. In the West, it takes three to five years to obtain permits. This is mainly due to a combination of strict environmental standards and bureaucratic inefficiencies.
Australia and some pockets of Europe are the exception because they can guarantee permitting within a year under the condition that infrastructure is built in a renewable energy zone. However, Europe does not have the contractual mechanisms facilitating payment for storage, whereas Australia has all three conditions: regulatory certainty, transmission, and permitting reform—making it such an attractive market.
Any final messages for those who will be attending COP28 in Dubai this year?
We strongly believe that the best way to tackle climate change and reduce carbon emissions globally is to electrify our energy systems as much as possible. By shifting electricity generation to renewable sources—which requires storage solutions of all shapes and sizes – we will make significant progress towards a carbon free future. But to achieve this in many jurisdictions we need easier and faster pathways - differentiated payment contracts, better transmission, and more permitting clarity.
