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Panasonic's Latest Battery Plant Has A Coal Problem
Or does it?
The hidden superpower in the EV world is Panasonic. All of Tesla’s early cars used their cells. Their partnership with Tesla and revolutionary technology is what kick-started the EV movement. To keep its spot at the top of the EV world, Panasonic has to expand its production facilities to meet demand and defend against cheaper and rapidly growing competition from China. But their new $4 billion battery plant in Kansas is getting flack for its dependence on coal and is even raising questions about how eco-friendly EVs and batteries are. However, all is not as it seems.
So, why does this battery factory need coal power? Well, the factory in De Soto, Kansas, is still being built. Once completed, it will produce a whopping 30 GWh of battery capacity per year. That’s enough batteries for 500,000 standard-range Model 3s. Panasonic has said that it will need between 200 MW and 250 MW of continuous power to operate this gargantuan site. That is about the same energy demand as a decent-sized city. This added energy demand has meant that the local energy utility will keep a coal power plant nearby open for the foreseeable future, delaying their plans to switch to slightly cleaner natural gas power.
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The big problem here is just how bad coal is for the environment and humans. It is twice as polluting per kWh as natural gas and around 166 times more polluting than solar, wind and nuclear per kWh! Moreover, its death rate per 1,000 TWh is by far the highest of any energy source.
So, the fact that the extra energy demands of such a battery factory will rely on such a polluting energy source is worrying. It has raised many questions as to the eco-credentials of EVs and renewables. A local Republican politician, Cyrus Western, has even used this as an example of how renewables are a great source of auxiliary supplemental power, but without a solid base load, such as coal or gas, to ensure a reliable energy supply, they don’t work.
However, in reality, these worries are unfounded and, at worst, anti-climate-action propaganda. Allow me to explain.
As I covered in my previous article, “Are EVs Really Better Than Combustion Cars?” EVs are better than combustion vehicles, even if they are charged by a mostly coal-dived energy mix. The EV used for the study I cited was a Tesla Model 3, and its batteries were made in the Gigafactory in Nevada, which at the time used an energy mix which included fossil fuel energy. So, basically, even in a worst-case scenario, EVs will have a lower lifetime carbon footprint than their combustion counterparts. So despite this battery factory’s reliance on coal, the EVs it will make will still be better than gasoline vehicles.
What’s more, this battery factory actually doesn’t specifically require coal.
Let’s assume Panasonic was going to build its own power source for this factory. If we average out the energy demand to 225 MW, the plant’s annual energy consumption will be 1,971 GWh.
Now, coal power plants cost around $4.5 million per MW of power output. Therefore, it would cost roughly $1.01 billion to build a 225 MW coal energy source. This price doesn’t include fuel. A kilo of coal only costs $0.12 and, once burnt, can produce 6.7 kWh of energy. This means that over a year, this billion-dollar coal plant will burn through $35 million worth of coal. So, over the roughly 20-year operation of the factory (a rough estimate of its lifespan), its energy use will cost a total of $8 billion if it uses coal!
Okay, so what about nuclear? It has just as low carbon emissions as renewables and is an on-tap power source, meaning it can consistently power the plant. Well, traditional nuclear plants cost $9 million per MW, making the upfront cost just over $2 billion. But again, this doesn’t account for fuel. Such calculations are hard to make, as the data isn’t widely available. What is widely known though, is the levelised cost per MWh of nuclear energy, which is around $100. At this price, the cost of powering such a plant for 20 years on nuclear power is $3.9 billion. This means that, despite the upfront costs of nuclear energy being much higher than coal, over the course of a few decades, the overall price is lower than coal as the fuel is so much cheaper per kWh.
Now, these numbers are all rough. But it is enough to demonstrate that power grids, utilities and battery plants like this absolutely don’t need to and shouldn’t rely on coal to meet their energy demands.
But what about the claim that this shows that renewables are not up to the task of being the primary power source? Well, that’s baloney too.
A 1MW solar array makes around 2,146 MWh of energy each year, costing approximately $750,000 to build (including land purchase). This means that a solar array capable of powering this factory would cost $688,500,000 to build. Which is way cheaper than coal or nuclear!
However, the power it will produce is sporadic and can’t meet the continuous demand of the battery plant. So we need a massive battery pack to smooth out its power delivery. A recent study that looked at the weather in Germany over the past 35 years calculated that a 100% renewable energy grid requires storage of around 7.2% of its annual energy consumption to reliably meet energy demand. This storage capacity could store enough energy to see the grid through a renewable energy deficit 3 times larger than Germany ever experienced over that 35-year period. Taking this as a base, our factory would need a 141.9 GWh battery to run entirely on renewables.
This would make it by far the largest grid storage battery ever! Now, Tesla’s own grid storage costs $333,309 per MWh, meaning this pack would cost $47 billion!
That is far more expansive than any other power solution, pricing renewables out of the equation. But better technology is already available, such as Form’s air-breathing batteries. These cost only $2,000 per MWh. Such a massive battery would only cost $0.972 billion at this price. Using the solar array and Form’s battery would put the total cost of energy for this factory over 20 years at only $1.66 billion. That is 58% cheaper than nuclear and 80% cheaper than coal!
Again, these numbers are rough and negate some of the realities of power generation at such a scale. But they demonstrate that such a battery plant can easily be powered reliably from renewables without breaking the bank if they are set up correctly.
Really, what is going on here is the utilities and energy companies aren’t transitioning to renewables and low-carbon energy sources fast enough. They are making an okay effort, but power demand is outpacing them, meaning they are having to keep older coal and gas plants open to meet demand. This problem isn’t just isolated to Kansas but the world over.
Why? Because these companies are used to having the cheaper upfront costs of coal and gas plants and then paying higher fuel prices over the years. This makes it easier to build infrastructure and is more profitable as they have smaller loans to pay off. Meanwhile, nuclear and renewables take far more upfront costs, but as their fuel requirements are non-existent or utterly tiny, they are cheaper over the long run yet less profitable.
In a nutshell, Panasonic’s upcoming battery factory doesn’t highlight a problem with battery manufacturing or EVs, as certain media outlets have claimed. Instead, it shows how energy and utility companies are failing to adopt renewable and low-carbon technology and the business models they entail to meet modern energy demands. This problem is solvable with the technology we already have; we just need to implement it faster than we are.
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