Wednesday, April 22, 2015

Cost of Li-ion battery storage

In a blog post last year I bemoaned the fact that it was difficult to get authoritative information on costs of storage.  My post referred to a major study by the Sandia National Laboratories [1] that gave a snapshot of costs as in mid-2013.

Now an important paper by Björn Nykvist and Måns Nilsson [2] on the cost of Li-ion battery storage in recent years has been published in Nature Climate Change.  Although the paper is paywalled, it is possible to download the authors’ data spreadsheets.  There is also plenty of information about the paper available from Green Car Congress and this blog post by the authors.

The abstract is as follows:

To properly evaluate the prospects for commercially competitive battery electric vehicles (BEV) one must have accurate information on current and predicted cost of battery packs.  The literature reveals that costs are coming down, but with large uncertainties on past, current and future costs of the dominating Li-ion technology.  This paper presents an original systematic review, analysing over 80 different estimates reported 2007–2014 to systematically trace the costs of Li-ion battery packs for BEV manufacturers.  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 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.  This has significant implications for the assumptions used when modelling future energy and transport systems and permits an optimistic outlook for BEVs contributing to low-carbon transport.

The authors’ data files show that their cost estimates come from reviewed papers in international scientific journals, cited grey literature (including estimates by agencies, consultancy and industry analysts), news items of individual accounts from industry representatives and experts, and estimates for leading BEV manufacturers.

Their overall aim was to track the progress of BEV technology in general, so all variants of Li-ion technology used for BEV packs were considered.  They noted that there are still R&D improvements to be made in materials and design.  There are also expected cost reductions due to economies of scale.

Cost estimates (in 2014 USD per kWh) by Nykvist & Nilsson are shown graphically in their figure reproduced below.  I would say their work is as authoritative, timely and independent as you can get.



My observations are as follows: 
  • It’s very important to note these cost estimates are for initial capital cost; they do not take account of battery lifetime as a function of depth of discharge. 
  • I was surprised by their finding that the learning rate for Li-ion batteries is between 6% and 9% cost reduction per cumulative doubling of production.  This result is nowhere near as compelling as that for PV modules (typically 21%-22% cost reduction per doubling of production) and, in my view, contradicts commonly held perceptions.
  • Their general conclusion is that automobile battery packs for market leaders are today USD 300 per kWh and reducing at 8% annually.  If you are thinking of household or grid battery storage in Australia, you need to add a mark-up for sales to a general market (as opposed to a dedicated/captive automobile market), to convert to Australian dollars and add something for profit.  A number greater than AUD 500 per kWh seems reasonable to me.  If that number decreases at 8% annually, then you are still looking at around AUD 400 per kWh at the end of 2017.
  • Finally and for completeness, I’ll provide a link to a previous blog post referring to a paper by Barnhart & Benson [3] that discusses how much energy is stored by batteries in their entire lifetime compared to the energy required for manufacture.  That metric is Energy Stored On Invested, ESOI.

Acknowledgement

Many thanks to Anthony Kitchener for drawing my attention to paper [2].

References

[1] A A Akhil et al., “DOE/EPRI 2013 Electricity Storage Handbook in Collaboration with NRECA”, Sandia Report SAND2013-5131 (July 2013).

[2] Björn Nykvist and Måns Nilsson, Rapidly falling costs of battery packs for electric vehicles, Nature Climate Change, 5 (2015), 329-332.  See web site: 10.1038/nclimate2564

[3] C J Barnhart and S M Benson, “On the importance of reducing the energetic and material demands of electrical energy storage”, Energy Environ. Sci., 6 (2013), 1083.

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