Electricity storage is both complicated and expensive. Electricity has to be converted into another form of energy then converted back into electrical energy before it can be reused. Scientists have been trying to crack the electricity storage code for over 150 years now. Despite their efforts, the two main storage technologies employed today: lead-acid batteries (invented in 1859) and pumped hydro storage (first pumped storage station was opened in Switzerland in 1909) have been around for over a century! The good news is that we have another storage technology in lithium-ion batteries which can outdo both of these technologies, and it is only 25 years old!
Lithium ion batteries were first intoduced to the market by Sony in 1991. Excellent technical progress has since been made with the latest lithium-ion batteries typically now containing 3x the energy of those first batteries. Moreover, costs have collapsed particularly over the last five years during which pack prices have fallen from $1,300 per kWh in 2011 to below $250/kWh today, noting that General Motors is buying batteries from LG Chem for the all electric Chevy Bolt at an amazingly low price of $147/kWh!
Further technology improvements our coming our way as well as a clear cost roadmap towards $100/KWh by 2020. At these levels, lithium-ion will play a massively important role in our lives. Not only will it be used to power the mass of digital devices that make up our modern digital lives but increasingly lithium-ion will become the gold standard for rechargeable batteries. The pocket rechargeable batteries which we currently use, nickel-cadmium (NiCd) and nickel-metal-hydride (NiMh) batteries, will become a think of the past. In fact, nickel-cadmium has already had its day, mainly due to environmental concerns around the use of cadmium. And nickel-cadmium will increasingly be replaced by a similarly priced but more powerful lithium-ion.
Nowhere is this more so than in the automobile where Toyota has been a major proponent of nickel-metal-hybride since it launched the Prius in 1997. The issue is that li-ion hybrid battery technology, such as that used in the Ford Fusion Energi plug-in hybrid vehicle, holds about 250 Wh/kg of energy capacity, 5x better than NiMH, and it can deliver similar levels of power. This means less batteries are required to deliver a given level of driving range. And as the pricing of lithium-ion batteries are inline with NiMh batteries it is not a surprise that Toyota’s 2017 Prius will feature a lithium-ion battery.
But it is not just nickel-cadmium (NiCd) and nickel-metal-hydride (NiMh) batteries that are under threat. Lead-acid will increasingly come under pressure as lithium-ion costs fall given their power, energy capacity, lifetime and lower charging times. And let’s not forget the annual market for lead acid batteries (starter motors for combustion engines, backup power, etc) at 350GWh per year is 5x greater than lithium-ion at 70GWh, so the opportunity is enormous!
That all said the real growth opportunity for lithium ion batteries is not the replacement of lead-acid batteries in the automobile or even the hybridization of the automobile but instead its full electrification. The Toyota Prius’ battery is 4.4kWh in size as opposed to the Tesla S100D which has a 100kWh battery. That said the average electric vehicle (EV) uses 40kWh and it looks like this year some 700,000 EVs will be sold worldwide this year. That is close to 30GWh of lithium ion batteries. And the market for EVs is going to expand quickly. How quickly we do not know but what is clear is that technology advances such as sprinkling silicon on the anode side of the battery will continue to improve the performance of lithium-ion batteries and with a whole range of exciting new EVs coming to the market in the next years it looks like a very bright future ahead for lithium-ion batteries.
Then there is the question of what to do with all those lithium-ion batteries in those automobiles. Some will be immediately recycled but a large proportion will be reused in so called “2nd life applications” such as backup power, buffer storage for charging stations and grid balancing. 1m recylced 40kWh batteries would give 40 GWh of energy storage which would be enough storage capacity to supply the UK’s power needs for an hour. And those 1m ex-automobile batteries would supply as much power as all of Europe’s pumped storage capacity put together!