Good News On Battery Prices

Batteries are key to reducing greenhouse gas emissions.  We simply can’t avert massive climate change without them.  Why?  They will power our vehicles, instead of gas.  They will store surplus renewable power when the sun isn’t shining and the wind isn’t blowing.  And they can allow neighborhoods to go “off grid” entirely via microgrids, with neighborhood battery packs capturing surplus renewable power generated on-site, and no more need for electric utilities.

But the problem has always been that batteries are too expensive.

Now a new study by Björn Nykvist & Måns Nilsson in the journal Nature Climate Change (subscription only) shows remarkable progress on price.  Keep in mind that the magic number to make batteries cost-competitive and enable long-distance, cheap electric vehicle batteries is about $150 per kilowatt hour (kWh):

We show that industry-wide cost estimates declined by approximately 14% annually between 2007 and 2014, from above US$1,000 per kWh to around US$410 per kWh, and that the cost of battery packs used by market-leading BEV [battery electric vehicle] manufacturers are even lower, at US$300 per kWh, and has declined by 8% annually. Learning rate, the cost reduction following a cumulative doubling of production, is found to be between 6 and 9%, in line with earlier studies on vehicle battery technology. We reveal that the costs of Li-ion battery packs continue to decline and that the costs among market leaders are much lower than previously reported.

While this is a bit wonky sounding, it’s significant.  We’re seeing solid price declines each year and getting closer to that magic number of $150/kWh.  While it’s unlikely we’ll see a sudden, massive drop in prices like we did with solar, this pace should mean that in another decade or so, electric vehicles could be widespread and the norm.  And then renewable power can truly decarbonize our electricity sector by coupling with cheap batteries.

But we must maintain the federal and state incentives for batteries that we currently have in place, and then we can slowly phase them out as we approach that magic number.  Those incentives include federal investment tax credits, federal and state tax credits and cash rebates for electric vehicles, and various grant funding for demonstration battery projects.

Without those incentives, this progress could be arrested before it reaches that magic price number.  But for the time being, we have real reason for hope.


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