How cheap can energy storage get? Pretty cheap, since lithium-ion batteries appear to be on a typical learning curve:
The Electric Power Research Institute (EPRI) reviewed a variety of data to find that lithium-ion batteries drop in price by 15% per doubling of volume.
Winfriend Hoffman, the former CTO of Applied Materials, and one of the first to apply the learning curve concept to solar, similarly finds a 15% learning rate in large format lithium-ion batteries
Bloomberg New Energy Finance (BNEF), meanwhile, uses more recent data, and finds a 21.6% learning rate in electric vehicle batteries. In fact, the learning rate they find is strikingly similar to the learning rate for solar panels.
So the range of estimates of from 15% to 21%. How cheap does that suggest lithium-ion battery storage will get?
If you’re informed on wholesale electricity prices, the prices above may sound ridiculously high. Wholesale natural gas electricity from a new plant is roughly 7 cents per kwh (though that doesn’t include the cost of carbon emitted). How could batteries priced at 25 cents per kwh, or even 10 cents a kwh, compete? Particularly when you also have to pay for electricity to go into those batteries?
The answer is that batteries don’t compete with baseload power generation alone. Batteries deployed by utilities allow them to reduce the use of (or entirely remove) expensive peaker plants that only run for a few hours a month. They allow utilities to reduce spending on new transmission and distribution lines that are (up until now) built out for peak load and which sit idle at many other hours. In a world with batteries distributed close to the edge, utilities can keep their transmission lines full even during low-demand hours, using them to charge batteries close to their customers, and thus cutting the need for transmission and distribution during peak demand. And batteries reduce outages.
To roughly estimate the value that batteries provide, look at the gap between the peak retail prices customers pay at the most expensive hours of the day versus the cheapest retail power available throughout the day. In a state like California, that’s a difference of almost 20 cents per kwh, from peak-of-day prices of more 34 cents to night time power that’s less than 14 cents. That difference is an opportunity for storage.
Another opportunity is the difference between the cheapest wholesale power price – wind at 2 cents per kwh – and peak of day wholesale prices from natural gas peaker plants, which can be over 20 cents per kwh. Again, the gap is close to 20 cents per kwh.
Sheesh — let’s extrapolate an exponential rate into the far future; where has that ever lead us astray?
I’ve been following lithium battery and solar panel prices for over 20 years. The hype and naive optimism and specious analyses about future prices is a constant, but the actual price declines are always very slow and small, and the dramatic ‘breakthrough’ announcements never stand up to scrutiny.
For instance, learning curves can make prices decline in terms of manufacturing processes and labor, but can’t push below the fundamental cost of materials. The energy is stored in electronic states of Lithium atoms – you can’t squeeze more energy out per atom, so the cost of lithium salts and the other rare minerals needed to make it worth is a floor.
And we reached that floor a long time ago.
Old report to make the point: this study from Argonne National Labs which still stands from what I’ve seen in more recent studies. See Table 5.1, document page 32: at that time, the other costs had been reduced to the point that material costs of high-energy batteries already constituted 96% of the total production costs.
Imagine someone making a learning curve for the price of mass-produced ground coffee, say, in the late 1800′s. The price per pound would decline as manufacturing and transportation technologies made production and distribution cheaper. But at the end of the day, you’ve got to pay for the beans, and you can’t get cheaper than that.
Now, certainly the cost of the batteries can fall if (0) there is important innovation in battery technology, or if the input materials experience a (1) decline in global commodity prices, (2) are bought in super-bulk, and (3) there are innovations or discoveries in the mining sector that lower the cost of production.
What has actually happened is a lot of (1)-(3), which is made to look like (0) in which actual progress has been continuously overrated for decades.
Given the nature of humans working around “large format lithium-ion batteries,” there will be fires. I can see the movies made in the future: the fire that burned Manhattan or Chicago with Megin Fox as the Fire Chief and Justin Bieber as the “cow who kicked over the lantern.” Can’t Wait.
Handle, isn’t the efficiency of batteries down to how tightly you pack the layers, meaning mainly down to electrode thickness? The chemical parts are all down to picking element 3 – the smallest, easiest to ionize that’s still practical. Something something high charge/mass ratio etc.
Battery charge is mainly stopped by the back-voltage or capacitor effect. There’s always a residue of ions on the far electrode, but they’re held there by the excess charge on the near electrode. However, if you have two capacitors, you can store double the number of ions at any given voltage. The storage capacity of a battery of a given size is down to how many layers you can pack in there. Similarly, thinner layers use less material per layer.
Presumably they’ve tried most materials, they’re good at being systematic like that. But nanostructure are new, they could conceivably find a new, super-thin one. Or like an easy way to honeycomb it, since only surface area matters.
Lithium may have the best energy-to-weight ratio of any solid substance, but who cares about weight in a fixed installation? You can store energy with very little loss by pulling heavily-loaded rail cars up an inclined track:
http://www.aresnorthamerica.com/article/4875-advanced-rail-energy-storage-using-trains-to-store-power