The story of Energy Cache, a drop-dead simple energy idea

Last week Bill Gates briefly mentioned that he made an investment in an energy storage startup that he called “gravel on ski lifts.” Contributor Michael Kanellos put two and two together and guessed that Gates’ reference was to the startup Energy Cache. Well, following that article on Monday, we’ve done an extensive interview with the founder and President of Energy Cache, Aaron Fyke, and we wanted to give you the details of how the technology works, how the company came into being, where it’s headed and how Bill Gates and Bill Gross became involved.

The energy storage problem

Back in 2009, Fyke — a mechanical engineer out of MIT who has both cleantech venture investing and entrepreneurial experience — started tinkering with how to tackle the problem of energy storage. The power grid currently utilizes very little energy storage technology and constantly has to balance supply and demand in real time — that makes it pretty inefficient. In addition, with the development of clean power like solar and wind, which only generate power at certain times of the day, there will need to be a lot more energy storage technologies used to smooth out the intermittent generation.

One of the most widely-embraced forms of energy storage by utilities is currently pumped hydro, where energy is used to pump water up a hill and then when energy is needed, the water is released to flow back down the hill. This is one of the cheapest forms of energy storage — far cheaper than big battery farms that can store energy. The Electric Power Research Institute (EPRI) says that there is at least 127,000 MW of pumped hydro energy storage projects globally, and pumped hydro makes up a whopping 99 percent of the world’s energy storage technologies.

However, pumped hydro technology has a few of its own issues. One is that it can only be done in very specific locations that have both a certain level of elevation and also reservoirs for the water. Another problem is these locations can take years to permit and cite. Lastly, pumped hydro is not all that flexible when it comes to being able to provide quick bursts of power to the grid to help it run more smoothly, called frequency regulation, because water flows can be difficult to stop and reverse quickly.

The drop dead simple idea

Fyke’s idea, which he worked on with the help of Idealab investor and inventor Bill Gross, was what if a technology was modeled off of pumped hydro, but used a motor and a cheap solid material instead of a liquid so that the system could be built in more locations and could also react quickly? The result is the hyper simple system that is Energy Cache’s intellectual property and the first of its kind system for energy storage in the world: a system of buckets on a line that picks up gravel at the bottom of a hill, and moves the gravel to the top of the hill; when the process is reversed the gravel moves back down the hill and powers a generator to produce energy.

Nat Goldhaber, Managing Director at Claremont Creek Ventures, which participated in a seed round in Energy Cache, described the idea as “such a simple solution for such an intractable problem.” When I asked him if the tech is the most “out there” investment he has backed, he said yes.

Fyke says the benefits of using gravel is that it can behave like both a liquid and a solid when moving it and it is also incredibly cheap. The system can be built in many more places than pumped hydro, says Fyke, because each line is twenty feet wide and doesn’t need a reservoir to run. Unlike pumped hydro, the system is also meant to be able to be scaled up, from a couple lines to some day hundreds of lines for a utility-scale project.

Energy Cache is adopting gear from the mining and ski lift industries to build the systems, which will make the projects really low cost, and so that “we don’t have to reinvent the wheel,” says Fyke. A scaled up project could eventually cost 40 percent less than pumped hydro, says Fyke.

Fyke says that the system could also potentially generate more revenue than pumped hydro, because the motorized system can respond immediately to a utility’s command and the lines could be tweaked to move fast or slow to deliver power when the utility needs it. The amount of weight on the line (or pounds of gravel in the buckets) could be tiered to deliver the most efficient system for the customer.

Early stage

Energy Cache has built a 50 kW prototype of its gravel bucket system in Irwindale, Calif. (see video). The team, which has less than 10 employees, has largely been quiet to date because they were waiting for the prototype to get built. To get the prototype constructed, the company raised money from Clarement Creek Ventures, Idealab and Bill Gates.

Goldhaber says he invested in the company after seeing Fyke’s demo project of buckets and gravel in a garage. Bill Gross brought in both Goldhaber and fellow energy innovation enthusiast Bill Gates.

The next step is for Energy Cache to build a larger scale demonstration project that will roughly be the size of one commercial line, and potentially could be sized between 500 kW and 1 MW. Fyke says that one line will probably be “sub 1 MW,” though the company hasn’t yet decided the exact size of the standard line yet. After that demo line is built, the company will then be looking to raise project financing to have its first commercial project built, perhaps in as little as three years.

Fyke says Energy Cache is already in discussions with grid operators in deregulated markets like ERCOT in Texas, PJM, and California ISO in California. Power producers and utilities will be the end customers for Energy Cache, but the grid operators will be the gate keepers to the early market of selling energy storage.

The efficiencies in the system still need to be proven out at a large scale, and all areas of friction need to be eliminated where possible. Systems with a lot of moving parts tend to lose efficiency as more parts are added. And it remains to be seen if the efficiency levels can be maintained for a larger 1 MW system.

Potential for change

However, if the system works as planned, this could be “a very bid deal,” says Goldhaber. The solution could be a cheap, modular, more flexible way to solve the energy storage problem using currently available standard parts and gear.

Last year the Electric Power Research Institute (EPRI) predicted that 2011 and 2012 would be turning points for the grid energy storage market in the U.S., because companies that have collectively received more than $ 250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S. The Department of Energy has provided loans and grants to a multitude of storage tech developers and utilities for R&D and pilot projects (including this list of tech developers receiving ARPA-E grants).

Will the long held problem of energy storage finally be solved by gravel, buckets, a ski lift?

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