Teri Viswanath: Welcome to Power Plays, a CoBank knowledge exchange podcast series. An audio program where we connecting you with top energy and environmental innovators and policymakers who share their insights, experience, and market observations. Hello, I'm Teri Viswanath. I'm the lead economist for power, energy, and water at CoBank. I'm joined today by cohost and CoBank managing director Tamra Reynolds. Hi Tamra.
Tamra Reynolds: Hi, Teri. Do you recall a few months back when we hosted an electric vehicle webinar for our electric co-ops, and most of the questions that we received in the chatbox revolved around batteries?
Teri: Nearly all the questions revolved around batteries. If we think about what's happening right now, the semiconductor chip shortage has affected new vehicle supply and has caused used car prices decline. We know that US automakers have promised a lot of electric cars and there are a few experts that are currently warning there may not be enough batteries for all those new models.
Tamra: A known challenge for batteries is the availability of materials. We know lithium is abundant, but in the timeframe that we need to scale up a battery supply chain, there might be problems ahead, challenges that aren't much different than what we're currently experiencing with the chip shortage. For today's episode, we wanted to take a look at the changes occurring in the battery upstream market. The steps manufacturers might be taking to reduced price and ensure that ample batteries exist for what might be an explosion in consumer demand.
Teri: For this discussion, Tamra and I invited Simon Price back to our program. As you might recall, Simon is the CEO of Exawatt, and that's a global research and advisory group that specializes in energy storage technologies.
Tamra: Here's our discussion with Simon.
Teri: Simon, welcome back to our Power Plays tech corner. Just to remind me, why is it we're talking about batteries again?
Simon Price: Well, firstly, thanks for having me back. It's great to be here. I guess the real issue is if we want to combat climate change, we have to decarbonize everything and to do that, we need renewable energy generation, including solar, PV, and wind, and we need energy storage. We need somewhere to put that energy when we generate that energy from renewable so it's available when we need it and that's where the batteries come in.
Teri: How do we bring down the cost for batteries and scale up global manufacturing so that we're producing affordable batteries to meet the need ahead?
Simon: Absolutely. I think what we need really from those batteries is low cost, high performance, and reliability in varying degrees depending on the application. The first thing to note is that there really isn't a one size fits all solution for batteries. There are at least two categories to consider as we look to the future. One is batteries for electrified transportation, so EVs, and the other is batteries for terrestrial energy storage and the technology types and cost pathways that those batteries might follow could be very different.
If we're looking at electric vehicles, the biggest factor is probably energy density. It's how much battery capacity you can fit into a given volume or mass. Cost is important for EVs, but not at the expense of energy density, but with stationary storage, cost is the key. That comes from two factors, really. The first is the upfront cost of the battery itself or the battery system. The second is how reliable the battery is, how long it lasts in the field. If we look at a solar PV, which we talked about last time I was on, solar farms are rated to last 25 years, maybe more. Ideally, if you want a solar plus storage solution, the batteries in that solution would last the same time as the panels, but today they almost certainly don't last that long.
Teri: Let's take a moment to discuss some of the challenges with continuing to lean on lithium as our main technology source at this point.
Simon: I guess one of the big challenges is the availability of materials. Lithium is an abundant material in the earth. There's no shortage of it, but in the timeframe that we need to scale up our battery supply chain, it may be, as a way maybe, it's very likely to be difficult to get the amount of lithium we need out of the earth or the sea and refine it and get it into those batteries.
Just scaling up the supply chains themselves is a challenge on the lithium side and then elsewhere in the battery, depending on the application, there are other critical materials. You may be aware of cobalt, as a conflict mineral, there's been challenges relating to that, that it can only be mined in certain parts of the world where human rights are not paramount, let's say. That's definitely a challenge. Some of the other abundant materials in the battery include nickel and nickel is also abundantly available, but it's the battery industry is going to need a lot of nickel, or at least it is for the EV side of the battery picture. Scaling up those supply chains is going to be a challenge.
Teri: When you think about the future price walk and what it might look like from a manufacturing perspective, say over the next 2, 5, 10 years, I'd like to think about the conversation we had on solar panel manufacturing. Do you see the same price environment unfolding? How is it different?
Simon: If you look at solar PV today, the cost of a solar panel is dominated by the materials in it. The solar PV industry have been on the 10-year rapid cost reduction path where the cost of the materials and the panel have been coming down dramatically but the performance of those panels hadn't improved a great deal. If you think about the figure of merit that we use for assessing PV module cost, which is dollars per watt of rated module power, that cost reduction in dollars per watt was being driven by the dollars and not by the watts.
Now in 2015, the PV industry started to turn a corner because we realized that the materials costs were not going to be coming down at the same rate in the future. We forecast that the way out of that, that corner if you like, was to focus on improving performance. Improving the watts that the panel could generate, the power the panel could generate, without increasing cost.
Teri: Focusing on the technology rather than the cost.
Simon: Yes. It's focusing on technological improvements rather than supply chain improvements to a large extent. Now, if you go back over to the battery side and you think about where we are, today, something like 60, 70% of batteries are probably made in China and those supply chains are already at very large scale. In 10 years, we'll look back and we'll say that the scale was tiny compared to where it's going to be, but there are many gigafactories in the world now.
The supply chains of batteries are large and they are maturing. A lot of the easy cost wins that you get from scaling up have already been achieved. We can't migrate to China because we've already gone to China and we can't scale up because we've already scaled up. We have to improve the performance of those batteries. We have to select materials that are earth-abundant, so widely available that can be refined at low cost and that deliver high performance.
Teri: The materials coming down like our solar coming down over the past 10 years, we've already got that material, I guess, cost reduction, right?
Simon: One thing I should have mentioned is that coming down the price curve, 10 years ago, batteries were costing $1,000 per kilowatt-hour of capacity. That's gone down to not much above $100 per kilowatt-hour now and the projections out to 2030 call for a 50% reduction. There are even more aggressive forecasts or goals or targets out there, including the U.S. DOE’s projection, or let's say hope that in 10 years, the cost of long-duration storage will be reduced by 90%. That really illustrates just how far the cost has come down, but maybe gives us pause and we think, can it really be reduced by another 90%?
Teri: I want to switch gears slightly. I want to talk a little bit about the consumer concerns around batteries. Then also hear a little more about recycling.
Simon: I would say batteries in EVs today are, there are some concerns and they certainly get amplified in the press about whether they're safe. I think to a large extent, we can say that they are safe. The chemistries inside them certainly aren't inherently safe. Mainstream high energy density batteries that you will get in most electric vehicles, the chemistries inside those batteries are not inherently safe, but the architecture of the battery systems, so the casing you put on them and the safety mechanisms you put around them, make them safe.
If you go a little bit further down the road, new generations of battery technology such as solid-state batteries are inherently safe but one of the things that may happen is that because they're inherently safe, they don't need to be as encased in safety features and robust casing. You can actually reduce the size of those batteries further. That contributes to this increased energy density and its performance that we talked about. When it comes to recycling, there's some really interesting issues here.
Batteries that go into electric vehicles are generally likely to be cycled out of the vehicle industry one way or another when they hit about 80% of their rated capacity. Which as I said earlier is maybe over 8 to 10 years or over several thousand miles of driving, 100,000 miles, something along those lines. A battery that can cycle to 80% of its rated capacity, so has a lot of value in other applications particularly energy storage, stationary storage.
One of the challenges a few years from now for the stationary storage industry is will it be possible or how will it be possible to produce and sell batteries that compete essentially with secondhand batteries rolling out of used cars? There's going to be an opportunity for the battery second life management industry if you like that will emerge, and an opportunity for system installers of stationary storage batteries. It may be a challenge for manufacturers of stationary storage batteries because they'll be competing against potentially low-cost alternatives.
Teri: Staying with that consumer interests and consumer mindset, with the Ford F-150 lighting offering coming to the market, we might have what we consider a glimpse of the true connectivity that might exist between vehicles and stationary battery requirements. Let's talk about that a little bit more.
Simon: I think more generally, we'll see well, more and more of this coming because in power electronics terms, it's not a great leap to replace the current charging, the onboard charger of an electric vehicle, which is currently in most cases what I call uni-directional. In other words, when you charge your car, you plug it in, and the power goes from the outside to the inside into the car. It's not a great leap to replace that onboard charger with a bi-directional charger that you can then hook up essentially to the grid or to the house and send power in the other direction much as the F-150 is pointing in that direction.
The next generation of vehicles or maybe the generation after next, but they're only two or three years away, most likely, will have bi-directional onboard charges that will enable you to connect them to the grid. You could imagine living in a house with solar panels on the roof, they charge the car, because the cars in most households sits there doing nothing for 95% of the time. Using that expensive battery that you paid for along with your vehicle as a store for the energy that you're generating cheaply now from your roof, and then giving it back up to the house when it's needed. Not only will it go back to the house, but in principle, it could go back to the grid.
You can actually turn your car into a source of value by selling energy back to the grid when it's required. When everybody comes home from work, and they all put their microwaves on or their ovens or whatever it might be or the TVs or whatever else. At that moment, the grid spikes, and the value of electricity goes up using that latent EV fleet as a grid resource, keep value back in the community in a sense, because it allows you as an EV owner to sell that energy back.
Teri: I want to talk about from a technology standpoint, what should we look for especially out of Exawatt? What are you focused on with regard to that horizon?
Simon: We're focused at the moment on two areas really in our battery cost forecasting. The first is looking at two different technologies for energy storage for stationary storage. One is sodium-ion, I-O-N, so replacing the lithium with sodium and using the sodium-ion as the current carrier, if you like, in the battery. Sodium is heavier than lithium, so those batteries have lower energy density but as we all know, sodium is abundant. It's in table salt, so we believe the performance of sodium-ion has more room to improve. Keeping an eye on that and we're comparing sodium-ion, I-O-N, with lithium-iron phosphate that's I-R-O-N and lithium iron phosphate uses the lithium as the ion the current carrier, but instead of nickel which is expensive, it's replaced with iron. That makes it cheap. Iron is abundant and it's cheap.
Now again, the energy density is lower than for a high energy density nickel-rich lithium battery but it's inherently safe, it's cheaper and in stationary storage, we think it could have applications depending on how well sodium-ion goes. In transport, it can also have applications where energy density is less critical and cost is more critical. Things like buses, or commercial delivery vehicles where performance isn't critical, cost is critical, and maybe range isn't always the key, but you need to get the cost of those batteries down and the reliability and the long cycle life, some of those cars and their batteries have a long lifetime in the field.
That's the first thing we're looking at. The second is solid-state batteries. It's comparing solid-state batteries, with the current generation of batteries, which are usually referred to as wet electrolyte batteries. A lot of the wet electrolytes that are used in batteries can evolve nasty gases, for example, if the battery is caught in a fire. You eliminate those problems with solid-state batteries. You can also improve the energy density of the battery for various technical reasons that are probably outside the scope of this conversation. By making them safe, you can also, as I said, you can reduce the amount of casing around the battery.
That's the compounding benefit. There are lots of challenges with solid-state. It's early days in the development of solid-state batteries but it's definitely in the sights of the car manufacturers because high energy density battery that's inherently safe is the dream for a car. If you could pack more battery capacity into a given space and wait, you make that car range longer. If you can make it inherently safe, that's a good proposition for the customer and for the manufacturer.
Teri: Well, Simon, it's been a real pleasure having you back on our technology corner segment for Power Plays. I always enjoy talking with you and learning a little bit more about what's going on in the world of solar and batteries. Thank you for your comments and for your participation today.
Simon: Well, thank you, it's been a pleasure to be involved.
Tamra: Teri, as the world seeks to reduce carbon emissions partly by ramping up EV adoption, demand is expected to soar for battery materials like lithium, cobalt, and nickel. There are going to be challenges in securing sufficient raw materials and automakers that are currently grappling with a chip crisis might soon face a more entrenched supply chain bottleneck.
Teri: The global auto industry is looking forward to an all-electric future. Maybe the most profound turning point in a century for that industry but as we discussed, there are definitely bumps in the road ahead. Once the most boring and neglected of all automotive parts, the battery, has become today's top priority and the main bottleneck for carmakers.
Tamra: The challenges or need for batteries to evolve doesn't revolve around only cars, but also for stationary battery storage. We oftentimes think about battery evolution as a single path but Simon highlighted that there are definitely forks in the road ahead and there really isn't a one-size-fits-all solution for batteries. What we need from those batteries is low cost, high performance, and reliability in varying degrees depending on the application.
Teri: That's right. I hope all of you have enjoyed our discussion with Simon and will listen in next month as we are joined on this program with our guests from Trico Electric Cooperative. A nonprofit electric distribution cooperative serving more than 45,000 members in rural areas surrounding the city of Tucson, Arizona.
Tamra: Trico has significant experience in solar power and has provided their members with an array of options from assisting with the interconnection of rooftop PV systems for homes and businesses to community solar and utility-scale solar access. It was fascinating to hear a first-hand account of how solar growth has exploded in Arizona. I hope you'll join us then.
