Navigant Research Blog

2015: A Turning Point for Batteries

— January 30, 2015

One of the biggest energy stories of 2014 was the emergence of battery-based energy storage as a reasonable option for grid management.  But the battery industry is just getting started.  This year, the energy news cycle will be led by batteries on all fronts.  This year will mark the tipping point that sees batteries become not only an accepted part of our electricity grid and transportation network, but also a key underpinning to the global economy.

Beneath these developments is a single realization that the world is beginning to accept: that high-quality advanced batteries are becoming very cheap.  As Navigant Research’s Materials for Advanced Batteries report explains, a lithium-ion (Li-ion) battery that was priced at more than $1,000 per kWh in 2009 can now be bought for a third of that.  And there is no visible end to the reductions in pricing.  This price decline is caused by three factors:

Manufacturing scale: The world’s battery factories are capable producing some 100 GWh worth of Li-ion cells this year.  While not that much will actually be made (Navigant Research expects that 2015 will see some 65 GWh of Li-ion batteries produced), the manufacturing scale is now in place to enable the enormous growth of the use of batteries that is to be expected as pricing comes down.  And the capacity is only growing with time.  When Tesla Motors and Panasonic build their GigaFactory in Nevada in 2017, global manufacturing capacity will be increased by 50%.

Manufacturing expertise: It’s been 24 years since Sony introduced the first mass-produced Li-ion battery.  It’s taken that long for manufacturers to make these products at high efficiencies and high speeds.  A typical production line can now crank out 4 times the batteries that the same machines were able to produce just 5 years ago in the same amount of time.

Supply chain maturity: The chemicals that go into Li-ion batteries used to be specialty, batch-processed chemicals.  Now that the industry is so large, they have been converted into continuously processed commodity chemicals.  This means cheaper input materials, which in turn translates into cheaper batteries.

Golden Age

Now that these three factors have conspired to result in an environment of cheaper Li-ion batteries, the industries that use those batteries will see dramatically increased demand.  Here are some key events expected in early 2015 that will help usher in this golden year for batteries:

New automotive launches: Three cars will be unveiled in early 2015 that have the potential to be enormous sales leaders.  The 2016 Chevy Volt might make the Volt become a reasonable alternative to other low-priced compacts, even in this age of cheap gas.  The Model X, Tesla’s version of a high-end crossover, has the potential to be even more popular than the launch of the Model S in 2013.  And the BMW 5-series electric vehicle (EV) could hit the sweet spot of a mid-size luxury EV.  Even if only two of these three models turns into a global success, it will mean dramatically higher EV sales in 2015.

The great California grid rush: Each of the major California utilities has now issued requests for proposals for grid energy storage systems.  Combined with the final announcement of the winners of the Hawaiian Electric Company (HECO) bid in Hawaii sometime this spring, these programs will see the most extensive purchases of grid storage systems in history.

Additionally, new products in the e-bike, e-scooter, and portable appliance markets will see dramatic growth in the thirst for batteries in those markets as well.  All told, 2015 is shaping up to be a historic year for the battery industry and for the industries that buy batteries to make their products popular.


Vanadium Batteries Await Breakthrough

— January 26, 2015

A remote hillside in the Nevada desert may hold the keys to developing the next generation of affordable energy storage systems.  One of the world’s largest deposits of vanadium, a hard, silvery gray mineral often mixed to create high-quality steel, is located underground on this site.  First discovered in the 1950s, the site is now being developed into a large-scale mining operation, known as the Gibellini Mine, by Vancouver, Canada-based American Vanadium.  The company, which partners with German flow battery manufacturer GILDEMEISTER, requires an affordable and secure supply of vanadium to develop its redox flow batteries.

With the majority of global vanadium supplies coming from China, a domestic source of the metal could be instrumental in reducing battery costs.  Despite the recent success of lithium ion (Li-ion) batteries, alternative technologies such as flow batteries address several shortcomings of Li-ion chemistries.

Stepping Up

There are several types of flow batteries with different characteristics currently competing for market share, including iron-chromium, zinc-bromine, and vanadium redox.  Well-suited to stationary applications, vanadium-based batteries offer several advantages over Li-ion systems.  Vanadium-based batteries can fully discharge with minimal degradation of key components, leading to a longer duration discharge and greater life expectancy.  Additionally, vanadium flow batteries are much safer than certain Li-ion chemistries, as they have no thermal runaway issues, which is a key consideration for systems located on densely populated distribution networks.

Significant improvements to flow batteries have been made in recent years as more companies enter the space and competition heats up.  One area in which flow batteries must improve is energy density; Li-ion and other batteries are much more energy-dense, giving them an edge in any project with limited space.  A recent milestone was achieved by UniEnergy Technologies with its vanadium-based flow battery, allowing a standard 500 kW, 4-hour system to be containerized and installed in a 1,000-square-foot pad.  The system has an expected operating life of 20 years and can be installed for around $750 per kWh.

As with most advanced batteries, makers of vanadium-based systems must reduce costs to fully capitalize on the diverse market opportunities available.  Fortunately, advances are being made in that area as well.  California-based Imergy, for example, claims that it will soon reduce costs enough to offer a vanadium-based flow battery for around $300 per kWh.  One reason for the low price is Imergy’s ability to use lower-grade vanadium, recycled from mining waste and other sources.  While vanadium flow batteries are currently somewhat more expensive than most Li-ion chemistries, they have the advantage of a longer life expectancy, allowing the upfront cost to be spread over several decades.

An Uncertain Future

Navigant Research’s report, Energy Storage for the Grid and Ancillary Services, found that flow batteries are likely to account for 2,357 MWh of capacity in 2020, about 7% of the total market for grid-scale systems.  However, these figures could increase dramatically with breakthroughs in system efficiency and cost.  A consistent, low-priced supply of key components, such as vanadium, could help rapidly reduce costs.  Additionally, greater diversity and competition among suppliers of key flow battery components can drive down manufacturing costs.  Given the very ambitious price reductions being forecast by manufacturers, many may be relying on market developments such as the Gibellini Mine to allow flow batteries to compete effectively with Li-ion.


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