A boom. Then a bust. And now, a new equilibrium?

The title of this post could very well apply to my enthusiasm for blogging (although it really is meant to reflect the state of the battery industry). 

The last time I made regular posts (I’m not counting the one-off posts in the last couple of years) was in May 2012.  In the meantime, a lot has happened in the world of batteries.  But I have not been writing about them.  Early last year, I noticed that I was unable to even access this site and it was auto forwarding to a different website (and no, the website it was directing to was not really that exciting!).  Apparently one of the widgets (like Digg, or equivalent) had been compromised and was taking over the site.  Welcome to the problem of monetization on the web and the unsavory practices it promotes.   

I had a personal reason for the lack of activity on this blog.  We had a kid in August 2012 and my weekends were spent trying to design a battery-powered diaper-changing robot rather than writing.  But the timing coincided with the precipitous drop in cleantech after the boom in the 1^st decade of this century.   All of cleantech was taking a beating; deal flow was nonexistent; and the whole startup scene in cleantech appeared to be dying.  

I was fully expecting battery startups to collapse and the whole sector to take a beating.   Some of this did happen: a few companies went under; few others cut back (and continue to do so); all of them started conserving cash.  I was fully expecting the interest in batteries to go back to pre-boom times.  This blog was not meant to be a spot for rumors and news, so what does one write about?

Surprisingly (!), I have been wrong.  

Folks are still starting companies.  Some are bootstrapping; others are getting small investments.  Series B and C investments are still happening, although valuation are probably not be where they were in 2010.   I don’t have any hard numbers, but I seem to hear about a new company every few weeks or so.  Anecdotally (and surprisingly), it does appear that there is growing activity in batteries.

The last battery boom was fuelled, in part, by the hope of replicating an A123: “If A123 can make a product and get a contract with an OEM in a few years, maybe we can do that too”.  Now we know that it takes thrice as long, and three times as much as we all thought (how we can accelerate this will be the subject of a future post).  So, what is driving the renewed interest?

This aspect requires exploration.   

On the other hand, these are interesting times indeed in the world of batteries. Tesla’s gigafactory promises to decrease cost of Li-ion batteries to less than $200/kWh over the next few years.  There have been claims that the costs could go down even further.  In a blog titled “One battery chemistry to rule them all” I argued that there is no winning chemistry.  For cars, I argued that Li-ion will win, but the specific chemistry is far from clear. For grid storage I argued that the time of discharge was so varied that it was pretty much impossible to predict which chemistry would win. 

Here is a quote from that article “Each chemistry has its pros and cons. There are four criteria one looks for in a battery: Cost, life, performance, and safety. No one chemistry is the magic bullet that satisfies all these criteria. Each choice leads to a compromise. As of today, it appears hard to predict the winner.”

That was 2010.  This is now.  How things have changed!

Li-ion has gotten cheaper and will get cheaper in time.  Tesla’s play is going to force all the other companies to also embark on vertical integration.  In commoditized markets like energy, cost is the main driver.  Of the four criteria, cost ends up being THE important one.  And the one who holds the cost advantage is well poised to be a winner. 

How does a non-Li-ion battery company survive in times like this?  Would they ever get the scale up to the point where their cost would compete with the big Li-ion players? Who would fund these companies to reach that scale?  Would Li-ion become the silicon solar cells equivalent, killing all other chemistries? What is the floor on Li-ion battery costs?  Would the vertical integration exclude some classes of Li-ion favoring others?  Would the locked-in investment in a certain form factor of batteries relegate newer (possibly better) designs to the sidelines?

This aspect also requires exploration. 

But the cost reduction from the big players, and the promise of the bit less than $200/kWh battery is not enough.  Cost targets for a 200-mile electric cars stand at $125/kWh for mass commercialization.  My gas-powered Subaru goes almost 400 miles on a tank.  If we decide EV’s need to have the same range, then the cost has to be even lower.  We probably do need these batteries to last 15 years as opposed to the 7-8 years that they are expected to last.  And would we ever find ourselves (in some distant future) charging our batteries in a few minutes as opposed to hours? 

Everyone says that we need batteries at $100/kWh for the grid.  Some have argued that this is not enough.  I have seen numbers that suggest that we need to be at $50/kWh if we want to cut the (electric) cord and use solar generation and battery storage and be at cost parity with the grid electricity.  And do we really want to replace our battery every 8 years?  And how big a Li-ion battery is one willing to put in ones home?  When I see PR announcements on behind-the-meter residential storage batteries, the battery guy in me knows that I would not want a significant fire-hazard adjacent to the walls of my house!  

From a pure technology perspective, the multitude of chemistries has a place in this evolving world.  Flow batteries do make sense, in long discharge-time applications.  Advanced lead-acid may very well be the ultimate chemistry, if we can solve the cycle life issues.  Other aqueous systems could all provide cheaper, safer alternatives to Li-ion, if we can spend time and resources (as we did with Li-ion) to get them to meet their potential.  The next generation of Li-based systems and non Li-based systems may very well be needed for the next jump in cost to occur. 

In most battery people’s minds there is a roadmap (akin to that in semiconductors) on the future generation of batteries.  Today we have Li-ion, then we would move to the advanced version’s of it with newer anodes and higher voltage cathodes, then onto the metal-based anodes allowing next generation cathodes to come in and so on.  This is the roadmap that the big players will follow.  But we also need to think about enabling disruption and changes to this roadmap that allow leapfrog innovations. 

This needs careful thinking. 

When I first started this blog (on Feb 9, 2010), there was so much activity (and noise) in batteries that I felt that there needed to be a forum to talk about it and set the record straight.  I had thought that, after the bust, the need was gone.  Clearly that is not true.  There is a need to talk about the lessons learnt from the last boom-bust cycle, the changing landscape, the roadmap for development of new batteries, the market drivers and challenges etc. 

TWiB is an ideal forum to have this conversation and so I have decided to bring it back to life.  I need to think about a sustainable way to do that, so that my busy schedule (you will be amazed at the number of Netflix shows I need to catch up on) does not stop activity on this site.  There is great stuff on the web on batteries and cleantech, but I can’t find anything that has the kind of close juxtaposition of technology and market analysis that TWiB brings.  And I’m a lot more entertaining (?) to read. 

So stay tuned. 

Venkat 

p.s.  All these topics would be discussed at the 2015 Bay Area Battery Summit on Nov 3 2015.  Click here for details