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Li-ion batteries: one path clear, another less so

In the discussion of electric vehicles (EV), the topic of the lithium-ion batteries that power them looms large and for good reason.

EV batteries' cost, weight, volume and performance arguably determine the fate of the EV sector. The role of batteries in keeping costs high and limiting range is one reason why government and business fleets are the likeliest sectors for uptake, followed distantly by individuals.

As I suggested in "Electric Vehicles: Rorschach Card for Election Year?" the existence of the EV market in the United States and federal incentives to buy them may well be a proxy for how voters see the presidential candidates this fall. Yet uptake would seem to be more a function of that battery cost, weight, volume formula.

After a recent column on EV issues, one reader asked for visibility into the possibility of Li-ion battery "breakthroughs"—as incremental, deeply researched improvements are often characterized.

So I tuned into yesterday's webcast by two Pike Research analysts who discussed their market projections and some of the nuances around the application of Li-ion batteries in the electric transportation sector as well in grid storage.

It appeared that, due to Pike analyst John Gartner's projections for uptake of EVs—a three-fold increase over 2011 by 2017 to nearly 3 million vehicles globally—that Li-ion battery costs will fall by about one-third in six years.

Globally, the market for Li-ion batteries used in transportation will grow by nearly 50 percent annually. In that regard, North America will trail Western Europe and the Asia Pacific region; the latter region will show the greatest growth, driven by uptake in China, presumably due to the well-publicized, rising middle class there that is buying increasing numbers of cars.  

That is not necessarily good news, as recent research at the University of Tennessee suggests.

According to Gartner, Li-ion vendors in the EV sector are all experimenting with various Li-ion formulations as well as parallel chemical mixes to optimize EV battery performance, weight and cost. So, unforeseen improvements may indeed hold now-hidden benefits, often hinted at by major labs around the country.

"Cost is universal," Gartner said, adding that weight and volume remain critical factors in Li-ion batteries for electric transportation.

Pike cited 10 Li-ion vendors and rated them by their strategies and execution to determine leaders, contenders, challengers and followers. Of those, four have a foot in both electric transportation and grid storage roles.

Analyst Anissa Dehamna covered the grid storage role for Li-ion batteries. She made it clear that while Li-ion technology has many potential roles in grid storage, few if any applications have been vetted in practice to determine how they could be valued. And the value might well depend on the application and the customer, further muddying the view of that nascent market.

As most of our readers know, demonstration projects are underway to nail down the value streams for, in this case, Li-ion storage for the grid. The case is more straightforward, of course, for electric transportation. In transportation, Gartner pointed out, competition exists among Li-ion battery vendors, whereas in grid storage, Li-ion competes against other nascent technologies as well as a host of incumbent, traditional alternatives such as gas-fired peaker plants and pumped hydro.

In fact, the qualifier "nascent" was emphasized by a pie chart presented yesterday that showed an infinitesimal sliver that encompassed the megawatt capacity of a dozen energy storage technologies, with virtually the entire pie delivered by traditional pumped hydro storage. In sum, those dozen newer technologies don't register even 1 percent of the total.

One important point made by the Pike analysts is that Li-ion cells' cost increases as they are "installed," and that installation-based increase varies by application. The cost for installed Li-ion cells for frequency regulation and renewables integration is the most expensive, but lies within a relatively narrow range. Other applications fall within wide enough ranges that it's difficult to compare them.

One unstated undercurrent in Dehamna's description of Li-ion batteries' role in grid storage is that while the price of that solution can be three or four times alternative technologies, it's possible that a Li-ion storage solution could serve several roles, increasing its value. But if it serves only one plausible role, the cost-benefit ratio may not be positive. We've certainly heard that mantra before in these pages.

The nature of the customer also plays a role, Dehamna added. Utilities tend to focus strictly on cost, while the Department of Defense, for instance, might emphasize performance, weight and flexibility. That adds additional complexity to an already uncertain market, she said.

Thought I'd pass along these factoids and projections for what they're worth.

Phil Carson
Intelligent Utility Daily







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