In my post titled “A boom. Then a bust. And now, a new equilibrium?” I had argued that this was a very unique time in batteries. My opinion is that there are two fundamental trends that we need to pay attention to:
1. Batteries are getting increasingly deployed, both in vehicles and on the grid, despite high costs.
2. Costs of batteries are coming down. Typically, costs fall at 5-6% per year. With the present push by the big companies, costs are expected to come down by a factor of two within the next 5 years.
Let us talk about the first trend: We have always had batteries in phones and laptops, but in the last few years, they have come on their own in bigger applications. And this is despite the higher costs.
Nissan has decided to commercialize a cheaper car with less battery (and, consequently, less range), while Tesla makes a big car with a big battery to kill range anxiety (but adding wallet anxiety?).
Utilities all across this country are deciding to install storage on the grid to learn more about how they work and how to monetize them, while home-owners with a green thumb (and a wallet to match) are thinking about how to stick it to the big guy.
All this means that we are learning, everyday, about how the batteries are working in the real world. Do they cycle well? How does the fade change with temperature? Are we going to get our money back if we buy a battery versus building a transmission line? And what is the actual cost of the Tesla Powerwall per kWh once you add the invertor and pay for the labor?
This is great for everyone. Deployment will be the key to figuring out what works and what does not.
And this trend will only increase with the second trend of decreasing costs. Many more will decide to go for an EV and install batteries with solar panels. We will plug the EVs on the grid to try to learn if they can help pay for the costs. We will plug them in all at the same time and we will know how the grid will react.
But reality is that batteries will still be expensive, maybe a factor of two more than where they need to be. They will still have less life than solar panels. And less energy than gasoline. And will be less safe than Niagara falls (well… I suppose that depends on how hard you want to kill yourself!). We will need new systems to satisfy these gaps.
But new systems will require time and money to reach the market. Both of which become scarce commodities when big players are cutting the costs of Li-ion batteries dramatically.
This was the context for the day when more than 200 of us met at the 2015 Bay Area Battery Summit on Nov 3 at Berkeley Lab. It was a great day with insightful talks and panels, wonderful hallway conversations with thoughts leader from academia and National Labs, industry, and policy makers.
The main theme was to explore the interplay between technological innovations in batteries; the changing market, and the role policy can play in accelerating deployment.
I thought I would use this blog as a way to list a few key discussion points that I heard. These are fodder for future blog posts, so I will keep them short.
- Storage resembles the solar market in the late 2000’s. But there are differences (and significant ones at that). What can we learn from solar?
- What does the equivalent of the California Solar Initiative look like for storage?
- If reality is that the battery has to do more than one thing for it to be cost effective on the grid, what are those low-hanging use cases? And how can we get policy to align with this reality?
- What is the balance between deploying what we already have versus finding new things that can solve the cost, life, energy and/or safety challenges?
- If we do find something new, the reality is that we need 10 years and $300M to get it to market. And on Day 1, the price of that battery will be huge! How do these technologies compete with an existing technology where depreciation is already in play?
- How do we solve the conundrum that end users want to see data on a real system, while most startups can only make a few small cells?
- Should someone in the midst of starting a battery company attempt to stay within the Li-ion manufacturing framework (to ensure that the big players buy them out)? How can they try to disrupt the existing players and avoid the risk not being to get to scale?
- What are the role of the Federal and State governments, and the role of Universities and National Labs in ensuring that we have a portfolio of technologies in the market?
- And, the impossible problem: How do you get battery companies (and researchers) to stop overhyping what they do? Funny enough, I was writing a blog post about this last week, but got distracted by the event. Will get back to that next week.
As you can see, a VERY busy day with very deep conversations. Over the next 2 months we will be consolidating the answers to these questions and providing a roadmap for ensuring success in the battery space.
One of the speakers (who, in the interest of fairness, will not be named) felt that batteries were somewhere around the “peak of inflated expectations” in the hype cycle. Resetting expectations and doubling down on innovation and deployment will be crucial in moving towards productivity.
But first, we need to talk about (and address) the problem of hype in batteries. This will be the subject of my next couple of blog posts.