These Carbon-Free Technologies Still Get the ITC. How They Can Help Microgrids Meet Soaring Demand

Most recently, Fourth Power announced that it’s developing thermal energy storage systems that are eligible for the ITC with components sourced in the U.S.

Thermal energy storage is energy stored in a material as a heat source or a cold sink and saved for use at a different time, according to the federal Department of Energy.  The systems can store thermal energy from hours to weeks. The energy can be discharged directly to change building temperatures and don’t require conversions from thermal to electrical energy.

Fourth Power’s system is unique because the technology, developed at Georgia Institute of Technology and Massachusetts Institute of Technology–has high energy density.  The company uses any form of generation to heat petroleum coke, a form of raw carbon that’s released as part of petroleum refinement, and puts it in a kiln at 2,400 degrees Celsius. The result is one-ton blocks of pure carbon that can store heat, said Arvin Ganesan, CEO of Fourth Power.

He noted that the process doesn’t sequester carbon, but doesn’t combust it, either.

Fourth Power uses special solar cells–thermophotovoltaic (TPV) cells –to transform light from the glowing white-hot infrastructure into electricity.

“TPV cells are always converting light into power because heat and light are fundamentally the same phenomenon,” explained Asegun Henry, Fourth Power's founder and chief technologist. “Every object in the universe constantly radiates light, including our own bodies.”  As objects heat up, they emit more light and shift toward higher frequencies.”

 The high temperatures created by the company’s process spark higher power density.

Thermal energy storage at $25/kWh

“The high temperatures allow you to get an unprecedented amount of power density,” Ganesan said. “The hotter, the more efficient and the smaller the system is.” The company can build a 1-GWh battery on an acre of land, which is a relatively small footprint, he said.

The company expects to deploy grid-scale systems at less than $25/kWh to store power and $1/watt to output the power. By comparison, with lithium-ion batteries, it costs about $250/kWh to store power, he said.

Solar and wind energy are the least expensive and quickest ways to charge the storage systems, he said.

Fourth Power is selling the systems in 25-MW blocks, Ganesan said.

Storage for microgrids and critical infrastructure

“You can stack up the blocks, and this can support microgrids and critical infrastructure,” he said. It can also power data centers. One option is to

use behind-the-meter generation paired with the system, which could avoid interconnection delays.

The company plans to focus first on front-of-meter applications, working with independent power producers, utilities and hyperscalers. The systems would be off-grid microgrids to avoid interconnection delays, he said. Fourth Power is now building a demonstration project in Massachusetts   Its first commercial deployment is expected in 2028.

Fuel cell microgrids for data centers

Another technology that benefits from the ITC is the fuel cell microgrid, which can provide power for data centers. Microgrids could include fuel cells along with storage and other distributed energy resources to help meet peak demand. FuelCell Energy is providing its system to Toyota’s logistics facility that’s powered by on-site renewable energy.

Emerging geothermal energy is also seen as a promising technology that’s eligible for the ITC and doesn’t necessarily need components sourced outside the U.S. The technology includes closed-loop systems that can be scaled to meet demand peaks, with minimal environmental impact, and are poised to play a key role in expanding clean energy infrastructure across communities.

Neil Ethier, interim executive vice president of origination at Eavor, said during a teleconference that the company’s closed-loop system can dispatch 10 MW/hour for every hour of the day. It can also curtail production in the middle of the day, when solar production is high, and then dispatch the system when the sun goes down.

Micro nuclear reactor energy at 15 cents/kWh?

Another form of generation eligible for the ITC is advanced nuclear energy –including micro reactors and small modular reactors. The technology is gaining ground as a solution to data center demand. For example, Samuel Gib son, founder and CEO of Hadron Energy, said in an interview that the micro reactors his company is developing can produce carbon-free power at 15 cents/kWh. Hadron Energy has  3.6 GW of signed commitments from customers, many of them data centers, and expects to begin deploying its technology in 2028 or 2029, he said.

 However, some argue that advanced nuclear reactors will produce more waste than conventional nuclear reactors. A study by Stanford University and the University  of British Columbia, titled Small Modular Reactors Produce High Levels of Nuclear Waste.

While these technologies offer promise for powering microgrids that serve large loads, industry players aren’t ruling out the importance of using solar and wind, even though the Trump administration is phasing out their tax credits.

“Our energy storage can be paired with any form of generation, but renewables are fastest to market and cheapest,” said Fourth Power’s Ganesan.