Navigant Research Blog

Funding R&D for Improved Advanced Batteries

— June 8, 2017

The battery of the future must meet the performance standards of industry stakeholders in the motive and stationary energy storage sectors. Navigant Research anticipates the following criteria will be key in the development of new battery advancements going forward:

  • Improved safety to reduce susceptibility to overheating
  • Abundant raw materials to reduce manufacturing costs
  • Lower $/kilowatt-hour costs on energy-intensive operations of 3-plus-hour durations
  • Lower $/kilowatt costs on power-intensive operations of less than
    1 hour
  • Improved energy density (kilowatt/kilogram or kilowatt/liter)
  • Step change cycle life improvements across both stationary and motive applications

Going forward, next-generation advanced batteries will compete with commercially available, mature advanced battery technology manufactured by large, well-funded multinational conglomerates. To do so, new advanced batteries will need to deliver more kilowatt of power per kilowatt-hour of energy to meet the power and energy needs of vehicles and multiple benefit applications on the grid.

Government and Private Sector Support

To meet the performance criteria mentioned above, government and private sector support of clean energy technology development will remain a critical driver for the commercialization of these advanced batteries. For example, Mission Innovation (MI) is a consortium of 22 countries and the European Union that have agreed to accelerate global clean energy R&D by providing funding for new efforts through countrywide and statewide programs. All member nations vowed to double their R&D spending on clean energy by 2020, including the United States, China, France, and Australia. The second MI Ministerial event, which showcases innovations and debates ideas around new energy technologies, is being held in Beijing during June 2017.

National Commitments to Clean Energy

(Source: Mission Innovation)

ARPA-E

For the US storage industry, Advanced Research Projects Agency-Energy (ARPA-E) has provided dozens of energy storage companies with funding to bring their technologies to market over the past 6 plus years. With the US Department of Energy under fire through the past several months, the future of ARPA-E was unclear, leaving several companies worried. ARPA-E is back up and running and recently received a $15 million boost from this year’s congressional budget instead of being eliminated, as previously proposed by the Trump administration. It is tasked to identify and support revolutionary energy inventions and energy technology advances, which requires constant evolution of its programming focus. This is accomplished by establishing dynamic technical agendas designed to accelerate innovation in high potential areas.

Strategic Advantage

Companies currently working to commercialize new advanced battery technologies that partner with large, well-funded technology and/or manufacturing companies now moving into the energy storage sector will be at a strategic advantage. There have been several examples of this happening in the past year; L3 Technologies’ acquisition of Open Water Power (OWP) is one of the most recent. L3 is a provider of communication, electronic, and sensor systems for government and commercial technologies. Its acquisition of OWP allows L3 to further develop and utilize OWP’s high energy density undersea power generation technologies used in unmanned underwater vehicles (UUVs) and other maritime devices. Navigant Research anticipates that advanced battery companies that show progress toward commercialization like OWP will likely receive investment or will be acquired by large technology manufacturers.

Providing adequate funding and opportunities for companies to develop new energy storage technologies is essential to the long-term evolution of the entire energy industry. Ensuring that we have the best and brightest minds working on our toughest energy storage problems and that venture startups continue to emerge is contingent on reliable funding from both government and the private sector.

 

Energy Storage Access Issues for Low Income Customers

— June 1, 2017

The total cost of ownership of distributed battery energy storage systems (BESSs) has gone down significantly in the past several years. Given the anticipated continuance of this trend and the emergence of energy storage financing asset classes, Navigant Research expects the global market for residential Li-ion BESSs to reach $310.70 per kWh and commercial and industrial (C&I) Li-ion BESSs to reach $413.90 per kWh by 2026. The drivers behind the growth of this market will encourage the adoption of new technologies like rooftop solar PV + energy storage as well. However, the deployment of these technologies is often inaccessible to many low income customers who perhaps would benefit the greatest from the environmental and economic advantages of storage. Key barriers to the deployment of energy storage that low income households face include:

  • Lack of upfront capital resources
  • Limited appetite for tax credits
  • Poor housing conditions
  • Financing barriers

Energy Storage Providers Face Challenges in Serving Low Income Customers

The need and business case for low income customers for energy storage and other distributed energy resources (DER) is dependent on several factors (e.g., geographic location, housing type, regulatory structures, local electricity prices, and reliability needs). Historically, DER technology companies target suburban, middle- and upper-class customers partly because of favorable capital resource availability and financing credit scores. However, project developers are now focused on expanding their markets and are looking to develop the customer marketing and engagement strategies required to succeed in serving all their customers, particularly their low income contingent.

Community energy storage (CES) is an emerging new model for low income neighborhoods to overcome these hurdles while also lowering customer utility bills, reducing harmful emissions, and strengthening resilience in the face of potential grid disruptions. CES can meet customer needs and overcome barriers by:

  • Allowing co-ownership of energy storage assets through a utility-based customer subscription and cooperative financing structure, which shields project developers from the individual customer financial risks associated with typical project ownership.
  • Aggregating low income households across a diverse, regional customer base to enable larger, more cost-effective projects.
  • Providing subsidized loans, which gives low income customers the opportunity to prepay CES subscription costs at low interest rates.

Restrictions and Possibilities of CES

CES, like community solar, is an issue not only for low income customers, but also for those who do not own a house or have the correct building orientation (roof integrity, adequate room for battery, etc.). Both community solar and community storage vendors are working to educate building owners who rent to tenants to show the many benefits that having community assets could provide to its residents. Flexible ownership structures would help address the social justice of community solar and/or energy storage.

California’s proposed Senate Bill 700 (SB 700), known as the Energy Storage Initiative (ESI), is an example of how to properly incent the development of CES in low income markets. If passed, SB 700 would require the California Public Utilities Commission (CPUC) to establish an ESI to pair with its support of distributed solar generation, effectively creating an incentive program for solar customers to add storage to their systems. Additionally, SB 700 would require up to 25% of the money utilities collect from this initiative to be applied to the deployment of ESSs in low income neighborhoods and housing, along with programs to encourage job training and employment opportunities in the local community. If the bill passes, current ESSs that are eligible for rebates under the Self-Generation Incentive Program (SGIP) would be transferred to the ESI program.

Overcoming Barriers to Provide More Affordable Clean Energy

Barriers to accessing affordable clean energy are rooted in broader systemic issues that low income customers face, like lack of quality housing, education, employment, and healthcare. Community ownership of renewable assets can serve as recurring and long-term sources of revenue for residents. Proactive innovation will help ensure that low income homeowners and renters are not isolated from renewable energy technologies and their benefits.

 

Materials Handling Sector Trends Upward with IoT and Automation

— May 4, 2017

As digitization and automation become mainstream, materials handling vehicles (MHVs) are evolving from passive tools to intelligent, connected pieces of the supply chain. Navigant Research believes that advanced technology options for MHVs are nascent in the materials handling industry and offer significant improvements over traditional options. As the needs of these users grow more complex, it will be important that equipment evolves as seamlessly and efficiently as possible.

The application of Internet of Things (IoT) technology is not limited to automation; it also increasingly enables data integration and using materials handling equipment as data sources. Businesses are turning to data-driven intelligence to guide decisions that improve operational efficiency and protect the bottom line. For MHVs, connected fleets and data-driven operations produce a wealth of small floor-level insights that are transformed into actionable business intelligence. Several companies recognize this and are making steps to ensure predictive analytics play a role in day-to-day operations.

IoT’s Role in Equipment Maintenance

Besides operational efficiency, IoT technology is playing an increasing role in equipment maintenance. Autonomously monitoring the condition of MHV components and generating trouble codes for service technicians can be used to detect failures and/or equipment wear before they affect the vehicle’s performance. For example, forklift manufacturer Linde is working on automating the procedure of troubleshooting fleet issues, ordering spare vehicle parts, and scheduling service engineers while simultaneously informing the customer about the order status. In turn, this makes it easier to streamline orders, identify bottlenecks, and provides transparency to customers.

Advanced Automation – Playing a Role in the Integration of Emerging Electric Powertrain Options

Communication-enabled battery data and chargers allow warehouses to:

  • Reduce or eliminate the battery room footprint by eliminating the need for bulky charging infrastructure
  • Improve forklift uptime by way of opportunity charging
  • Decrease the number of batteries and chargers onsite because of improved battery runtime

Navigant Research’s Advanced Electric Forklift Technologies in North America report states that advanced electric technologies for forklifts may have higher upfront prices. However, they can reduce operating costs with longer runtime and reduced fueling over the lifespan of the fleet.

Battery Advancements

Several battery manufacturers see increased interest in traction technologies nascent to the industry. One of the first companies to do so, Navitas Systems, recently announced it will deploy the Starlifter battery at a Defense Logistics Agency (DLA) in Pennsylvania. Navitas’ program objective is to evaluate the utility, feasibility, maintainability, and cost-effectiveness of replacing lead-acid batteries with fast-charging lithium ion (Li-ion) deep-cycle forklift batteries in DLA Distribution warehouses. The program also hopes to decrease total forklift battery costs of ownership and increase forklift operational readiness and productivity. Companies like Linde and Electrovaya also have recently announced new Li-ion options for forklift batteries as a result of the demands of current warehouse and logistics environments. Much different than the industry 20 years ago, modern warehouses have increased demand for operational efficiency, around-the-clock operations, and more advanced vehicles capable of working in cold storage climates.

Fleet managers look to operational data to improve efficiency and competitiveness. Real-time floor-level alerts are increasingly important so operators can address issues immediately. Customers also expect greater visibility into their lift truck fleet, support equipment, and ongoing asset health. In the future, vehicles will communicate with each other, decision-making will be at the user level, and batteries and charging infrastructure will combine with operator and truck data to inform fleet management across both forklift and powertrain platforms.

 

The Growing Importance of Recycling Spent Advanced Battery Materials

— April 27, 2017

Advanced batteries across all applications are proliferating the market in unfathomable numbers. Navigant Research expects advanced batteries to reach a cumulative 24.2 GW in new capacity globally by 2020—for stationary energy storage alone. As these assets have lifespans ranging from 4 to 20 years depending on the technology, the issue of what to do with these batteries when they reach the end of their usable lives is an important question that technology manufacturers, system owners, and customers must be able to answer. Second-use options are viable in some sectors, but recycling spent batteries will be a major market in the coming years. Manufacturers and governments around the world are recognizing the importance of recycling and how it translates to long-term sustainability goals.

Benefits of Recycling Batteries

Lead-acid batteries have been utilized in the market for several decades, but advances in more sophisticated technologies like lithium ion (Li-ion) and flow batteries have encroached on lead-acid market share. The spent lead-acid assets are retired and recycled in large amounts on a daily basis. An example of this is China’s announcement of doubling its lead recycling target to 2.5 million tons by 2020. China arrived at this target because the average lead-acid battery life is 4 years; batteries made in and around 2015-2016 will be available for recycling by 2020. Lead-acid battery recycling efforts are also ramping up in the United States. California lead battery manufacturers and consumers have to pay a $1 fee for each battery they make or buy following the implementation of the Lead-Acid Battery Recycling Act (AB2513). Among other recommendations, several California government officials requested adding an additional $15-$20 to each lead battery sold to help process it after its usable life.

Li-ion batteries are a bit trickier to recycle. Available in items ranging from consumer electronics to EVs, extracting the most valuable materials inside—namely, lithium and cobalt—are important to consider when reprocessing these batteries. Compounded with forward-looking lithium availability and supply chain issues, securing lithium access will be important for the industry in the future. Li-ion battery recycling is in its early stages, and there are only a handful of these plants in existence today. With few Li-ion battery chemistries available, the lack of standardization plays a role in limiting the emergence of more recycling facilities and best recycling practices for these batteries. Today, recycled lithium can be up to 5 times the cost of newly mined resources; the cost differences have limited demand for lithium recycling to date, but future price increases and new regulations can change this.

Raw material prices for advanced batteries have sporadically changed this past decade and lithium prices alone have nearly tripled. Other factors like demand in competing sectors (e.g., pharmaceuticals, construction, etc.), geopolitical relationships, and environmental concerns will also play a role in the future of battery material supply chains. Recycling advanced batteries is likely to be one of the principal methods to combat against volatile raw material prices and resource availability.

New Revenue Streams

Battery OEMs should look to partner with raw material suppliers, users, and governments to gain a strong position in their respective supply chains and increase collaboration across different sectors. Considering alternatives (e.g., second life usage), the battery recycling industry has the potential to generate significant returns. Companies that position themselves to take advantage of retiring assets will be able to access new revenue streams on top of existing businesses.

 

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