Occasionally I hear criticisms of the electric vehicle push that we are simply replacing one limited resource (oil) with another (lithium and other raw materials for EV batteries).
Yet knowledgeable people seem to indicate that the resource issue isn’t real and that plenty of materials exist to power the world over with batteries.
Now Bloomberg reports on Tesla’s efforts to lock up the raw materials it needs for its big battery push, with the potential for competition from international actors who also need batteries for their consumer products:
For its batteries, Tesla typically uses formulations including lithium, nickel, cobalt, and aluminum oxide. To find a steady and affordable supply of these materials—key to keeping the base price of the Model 3 at about $35,000—the company is recruiting staffers to scour the globe. It hired Rene LeBlanc, a former engineer at FMC Lithium, earlier this year. It’s also looking for a Tokyo-based supply-chain analyst willing to travel frequently to China and South Korea to work closely with suppliers.
Despite all the buzz about lithium, Musk reminded investors at Tesla’s May 31 shareholder meeting that the metal is “just the salt on the salad,” accounting for only about 2 percent of the material in Tesla cells. Yet it’s key to making batteries rechargeable, and even that small percentage doesn’t exempt Tesla from the laws of supply and demand. It’s competing for the metal with companies in Asia, where China, Japan, and Korea account for more than 85 percent of current lithium ion battery output, according to researcher CRU Group.
This race for resources will likely spur innovation, as Tesla is already trying to swap out more expensive cobalt for nickel, and battery innovation could change the chemical and metallic needs of future batteries.
But it’s an interesting dynamic to track, as it ultimately determines the price of the batteries, which determines the price of the vehicles, which determines their popularity to consumers, which determines how quickly we can transition away from oil and stabilize the planet’s climate in the process.
When I mention buying an electric vehicle to people, one of their first questions is: “how long will the battery last?” Followed by: “how much does it cost to replace it?”
It’s a tough series of questions because of the unknowns and the potential downside. Generally we can say that most automakers will insure the battery for 8-10 years, while battery costs are coming down.
But when you tell people a new battery can cost tens of thousands dollars and that ‘we really don’t know’ how long they’ll last, it can be a quick turn-off for potential buyers (and may explain the popularity of EV leases).
EVs have now been on the road in sizeable numbers for about five years though, so we’re starting to get some good data. And as Electrek reports, the news is pretty good, at least for Tesla batteries:
Data shows that the Model S’ battery pack generally only loses about 5% of its capacity within the first 50,000 miles and then the degradation significantly slows down with higher mileage. Plug-in America’s data shows several vehicles with over 100,000 miles driven and less than 8% degradation.
CEO Elon Musk once referred to a battery pack Tesla was testing in the lab. He said that the company had simulated over 500,000 miles on it and that it was still operating at over 80% of its original capacity.
This is all encouraging to hear, as that kind of degradation is relatively minor. And as noted, prices are coming down on batteries. It’s unclear if Tesla’s success though will translate to other EVs, as each company is using different chemistries and technologies. But the news on at least newer Nissans, for example, looks promising, too.
For some people it will take a lot more data like these to reassure them. So it’s nice to get some early returns and to see that the initial reports are generally positive. Otherwise, time will tell.
It’s on, and we’re up against global warming. Energy storage is the critical clean technology piece to decarbonize the grid (at least without nuclear power). The good news is that innovation is really taking off, now that the market for storage is clearer, with more renewables and electric vehicles.
From the San Francisco Chronicle:
In October, an international team of scientists announced a breakthrough in overcoming major obstacles in next generation energy storage and creating a battery that has five to 10 times the energy density of the best batteries on the market now. In September, Whitacre won a $500,000 invention prize for his eco-friendly water-oriented battery. And in April, Elon Musk announced plans for his Tesla Motors to sell high-tech batteries for homes with solar panels to store electricity for night time and cloudy day use, weaning the homes off dirtier power from the burning of coal, oil and gas.
“The pace of innovation does seem to be accelerating,” said JB Straubel, chief technical officer and co-founder of Tesla with Musk. “We’re kind of right at the tipping point where the current performance and lifetime of batteries roughly equal that of fossil fuels. If you are able to double that, the prospects are huge.”
Some of these breakthroughs will take years to commercialize, but at least we know in the near-term that lithium ion battery costs are coming down about 8-10 percent a year. Bottom line: lots of changes will happen on both the grid and in vehicles with these innovations.
And it can’t come soon enough.
A report from the Australian Renewable Energy Agency this month indicates it’s likely:
The 130-page report prepared by AECOM predicts a “mega-shift” to energy storage adoption, driven by demand – from both the supply side, as networks work to adapt to increasing distributed and renewable energy capacity, and from consumers wishing to store their solar energy – and by the rapidly changing economic proposition; a proposition, the report says, that will see the costs of lithium-ion batteries fall by 60 per cent in less than five years, and by 40 per cent for flow batteries.
This projection is more bullish than most analyses I’ve seen, which suggest price declines of 8-10% a year. If true, the impact on both our energy and transportation system will be enormous. Cheap batteries paired with solar will lead to customer “grid defections” from utilities, plus a proliferation of microgrids that can run independent of the grid. And of course electric vehicles will become ubiquitous with the cheaper price and better range.
Another reminder that batteries are the most critical clean technology right now in the effort to decarbonize our economy.
Just before Tesla’s announcement about a standalone battery storage option for homeowners and businesses, solar installer Sungevity announced they will provide a battery option for customers, either to own or lease:
As renewable energy becomes more widely used and battery prices fall, the company is betting that pairing rooftop solar panel systems with storage will soon be competitive with traditional electricity supplies.
“We expect that in two years there will be grid parity,” Peter Graf, Sungevity’s chief product officer, said in an interview. “All the market dynamics and hardware dynamics point in that direction right now.”
The interesting piece of it is that company leaders say customers were driving this move because they want on-site storage. But they may be in for a sticker shock, at least at first: batteries don’t really pencil for most people at this point, unless they really value the backup power or don’t care because they have a lot of money. But as prices decrease, and as new electricity rates encourage late afternoon/evening generation, batteries will become a good deal.
Tesla’s big announcement that the company is entering the standalone battery market for building owners and utilities got a lot of press and favorable Wall Street reaction. For longtime energy observers, Elon Musk wasn’t unveiling anything new — just repackaging something familiar and making it cool. But that repackaging and investment could be transformative.
The advantages to consumers that Tesla cites are well-established but probably not widely applicable. Some consumers can make a bit of money storing cheap energy and dispatching it at more expensive times under time-of-use rates. Big industrial customers may even save a lot of money this way. Other customers may like the clean backup power from batteries, although generators may be cheaper. And batteries could enable a few customers to go off-grid completely (really just for rural customers). There are already companies establishing themselves in this market, like Stem and Advanced Microgrid Solutions (which is partnering with Tesla on this effort).
Still, I can’t help but be taken by the cool factor that Elon Musk bestows on this otherwise geeky world. Just take the name: “Powerwall.” “Home battery” sounds so boring compared to having a Powerwall. And then there’s the sleek design with the Tesla logo:
Some people may pay $3500 just for the aesthetics — like a piece of garage art.
The other interesting piece is the price. At $3500 for 10kWh and $3000 for 7kWh, it looks like the estimates of a $300/kwh battery production cost may be accurate, which is a good sign for battery price decreases (prices were at about $1000kwh a few years ago). That price doesn’t include installation or the inverter.
Still, that’s not a bad deal, and if California ends up bolstering time-of-use rates, customers could soon get quicker repayment as the difference between cheap off-peak electricity and expensive peak rates increases.
The other wildcard here is repurposed batteries. Could Tesla end up taking used electric vehicle batteries and repurposing them for the Powerwall? Their future gigafactory could probably handle that workload well, further driving the price down of stationary batteries.
All told, the unveiling of Tesla Energy, while not revolutionary right now, could soon become the lead in a technology wave that fundamentally changes our energy system. As with so many clean technologies in this fast-changing field, we’ll have to stay tuned to find out.
But just not widespread — yet. The Washington Post discusses the small but growing group of people who are going off-grid entirely with the help of batteries for their solar power. And as battery prices decrease, this trend will only grow, in part thanks to Tesla’s big push in this space:
Batteries already help power homes in places where energy grids are spotty, on islands and in developing countries including India and Bangladesh. But they have remained a niche for homeowners in the U.S., even as more and more demanding connections on America’s aging power grid have pushed power outages up 285 percent since 1984.
Tesla, with its corporate star power, has quickly become the home-battery industry’s best-known cheerleader, and its boosterism could give home batteries their best shot at finding acceptance in mainstream America.
Notably, the only people for now who buy batteries for backup power seem to be those who are concerned about blackouts, want new technology, and have the money to afford it. So it will be important for policy makers to encourage these purchases through better electricity rate design that rewards rooftop solar and other battery customers who can store and discharge power when the grid needs it.
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.
For anyone in the Portland, Oregon area, I’ll be speaking this afternoon about second-life electric vehicle batteries at a Drive Oregon event in downtown. Here’s the blurb from the event organizers:
Created from heavy metals and rare earth elements, the lithium-ion batteries used in today’s electric vehicles are challenging to recycle. However, these batteries and packs are extremely valuable, so the race is on to develop innovative ways to recycle battery cells at the end of their useful lives and provide “second life” applications for these batteries.
Our February event will review the opportunities and challenges in battery recycling and reuse. Our first speaker, Steve Sloop of Bend-based OnTo Technologies, will share the latest developments in battery material recycling and his own company’s unique approach, that is both more effective and less environmentally damaging. Our second speaker, Ethan Elkind of UC – Berkeley School of Law and UCLA School of Law, will discuss current research and pilot projects in the second-use market for battery packs. A lithium-ion battery can retain up to 80% of its original capacity for holding a charge even at the end of its life in a car. Research suggests that discarded batteries aggregated together can serve as inexpensive energy storage for our power grid – a critical component needed to support the integration of more renewable energy sources.
Much of my talk will be based on the UC Berkeley / UCLA Law report “Repurpose and Repower.” You can register to attend here for $25 (non-Drive Oregon members), while Oregon wine, beer and light refreshments will be provided at no additional cost.
As I blogged about last week, California and the nation may have a golden opportunity to harvest used electric vehicle batteries for inexpensive energy storage. These repurposed batteries can be stacked for bulk storage to absorb surplus renewable energy for cloudy and dark windless times. They can save ratepayers money, clean the grid, and potentially help bring down the cost of electric vehicles, encouraging more people to switch from gas engines to cleaner electrics.
The numbers are compelling: California now has over 100,000 electric vehicles on the road today, with a goal of 1.5 million by 2025. Assuming 50 percent of the battery packs can be repurposed, with 75 percent of their original capacity, the “second-life” batteries on the road in just ten years could store and dispatch enough electricity to power 4.5 million households in any given moment, equivalent to almost 10 percent of the state’s installed power capacity.
But the market for these batteries is still new and uncertain. Used electric vehicle batteries are only just now being deployed in various grid scenarios, and automakers are concerned about uncertain liability in the event of damages, as well as the complex regulatory environment facing energy storage technologies in general.
To address the challenges and offer solutions, UCLA and UC Berkeley Schools of Law are today releasing the report Reuse and Repower: How to Save Money and Clean the Grid With Second-Life Electric Vehicle Batteries. I served as the lead author, and the report resulted from a one-day gathering of industry experts, including automakers, renewable energy developers, battery leaders, and utilities. It is the thirteenth in the law schools’ Climate Change and Business Research Initiative, sponsored by Bank of America, which develops policies that help businesses prosper in an era of climate change.
The report recommends that policy makers:
- support and partner with automakers, utilities, and other private sector entities to develop more second-life battery demonstration projects to document the market potential;
- Partner with industry leaders to identify and address the regulatory conflicts that limit the second-life battery market (often unintentionally); and
- Work with stakeholders to clarify product liability rules based on second-life battery performance standards.
To hear more about the report and the topic, UC Berkeley Law will be hosting a webinar this Friday from 10 to 11am with:
- Adam Langton, Senior Energy Analyst, California Public Utilities Commission
- Randall Winston, Special Assistant to the Executive Secretary, Office of Governor Edmund G Brown, Jr.