Lithium Ion Batteries for Electric Transportation:Costs and Markets

Haresh Kamath

September 22nd, 2009

2© 2009 Electric Power Research Institute, Inc. All rights reserved.

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Charlotte and Lenox, MA Chauncey StarrEPRI Founder

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• 450+ participants in more than 40 countries

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BasicBasicResearchResearch

andandDevelopmentDevelopment

TechnologyTechnologyCommercializationCommercialization

CollaborativeCollaborativeTechnologyTechnology

DevelopmentDevelopmentIntegrationIntegrationApplicationApplication

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SuppliersVendors

EPRI

Help Move Technologies to the Commercialization Stage…

Our Role…

Technology Accelerator!

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Electric Energy Storage: Background

• Electric Energy Storage: A critical technology– Portable electronics– Electric transportation– Stationary power

• Lithium Ion batteries – a very promising solution– High specific energy and energy density– High efficiency– Long life– Potentially low cost

6© 2009 Electric Power Research Institute, Inc. All rights reserved.

Lithium Ion: Costs and Markets

• Cost of Lithium Ion Batteries– Understanding cost drivers– Projecting costs with volume

• Markets for Lithium Ion Batteries– How will we achieve volume?– Total applications

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Lithium Ion Battery Cost

Li-ion

NiMH

$/kWh Cost Trend in Japan - Small Rechargeable Cells Averaged Across Sizes

NiCd

0

200

400

600

800

1000

1200

1400

1600

1800

Jan-9

9May

-99Sep

-99Ja

n-00

May-00

Sep-00

Jan-0

1May

-01Sep

-01Ja

n-02

May-02

Sep-02

Jan-0

3May

-03Sep

-03Ja

n-04

May-04

Sep-04

Jan-0

5May

-05Sep

-05Ja

n-06

May-06

Sep-06

$/kW

h

Sealed Ni/Cd Ni/MH Li ion

Sou

rce:

Cre

ated

by

TIA

X b

ased

on

ME

TI d

ata

$ 200 - 250/kWh for 18650s in 2009

8© 2009 Electric Power Research Institute, Inc. All rights reserved.

Investigations into Battery Cost Drivers

Direct Labor

Materials

Purchased Items

Variable Overhead

General, Sales,AdministrationResearch andDevelopmentDepreciation

Profit

47%

17%

6%

4%

5%

5%

9%7%

47%

17%

6%

4%

5%

5%

9%7%

47%

17%

6%

4%

5%

5%

9%7%

47%

17%

6%

4%

5%

5%

9%7%

From: Nelson (ANL), 2009

Sanity check: About 60% of 18650 cost comes from material costsand purchased items (Source: TIAX)

9© 2009 Electric Power Research Institute, Inc. All rights reserved.

Where will battery costs go?

Cost Estimates with Production Volume

0

100

200

300

400

500

600

700

800

900

1000

0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000

Production Volume (packs/yr)

Cos

t ($/

kWh)

ANL (2009)EPRI (2007)Miller (2006)CARB (2007)TIAX (2009)

Cost Estimates with Production Volume

0

100

200

300

400

500

600

700

800

900

1000

0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000

Production Volume (packs/yr)

Cos

t ($/

kWh)

ANL (2009)EPRI (2007)Miller (2006)CARB (2007)TIAX (2009)

Cost Estimates with Production Volume

0

100

200

300

400

500

600

700

800

900

1000

0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000

Production Volume (packs/yr)

Cos

t ($/

kWh)

ANL (2009)EPRI (2007)Miller (2006)CARB (2007)TIAX (2009)

85% experience curvefitted to points from all models

90% experience curve projection based on ANL model

Cost range for lead-acid

10© 2009 Electric Power Research Institute, Inc. All rights reserved.

Cost modeling: Next steps

• The ANL cost model requires verification– Close examination of material cost assumptions

• Effects of volume production (positive and negative)– Examination of process cost assumptions– True costs at intermediate volumes

• Critical for stationary applications• Engage the vendor community

– Keep expectations realistic– Focus vendors on real value

11© 2009 Electric Power Research Institute, Inc. All rights reserved.

Secondary application price range

Many questions about secondary use:

• What performance can we expect from a secondary use battery?

• What cost discount will there be?

• What will the cost be for refurbishment?

0

50

100

150

200

250

300

350

400

New battery Used battery

Cos

t ($/

kWh)

Discount forPerformanceCost of Removaland RefurbishmentSecondary Value

PHEV Batteries in Secondary Use

12© 2009 Electric Power Research Institute, Inc. All rights reserved.

Cost modeling: Next steps

• The ANL cost model requires verification– Close examination of material cost assumptions

• Effects of volume production (positive and negative)– Examination of process cost assumptions– True costs at intermediate volumes

• Critical for stationary applications• Engage the vendor community

– Keep expectations realistic– Focus vendors on real value

13© 2009 Electric Power Research Institute, Inc. All rights reserved.

Battery markets

• EPRI is now working to develop an understanding of the total market for automotive lithium ion batteries– Penetration into existing markets– Cost points at which new markets appear– Depth of new markets (i.e. market size)

Storage Applications & Market Entry

Market Size

Valu

e of

ene

rgy

stor

edA

ncill

ary

Ser

vice

s T&

D D

efer

ral

Rel

iabi

lity

& P

ower

Q

ualit

y Energy Management

Systems Renewable Integration Community Storage

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Understanding Stationary Applications

• Stationary storage applications come in many sizes:

Residential(2 - 5 kW, 2 – 4 hours)

Community Energy Storage(25 – 50 kW, 4 hours)

Commercial and Industrial(100 kW to 1 MW, 2 – 4 hours)

Grid Support(>1 MW, 4 – 5 hours)

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Battery Markets (Preliminary figures)

Suitability as Alternative Application

Estim

ated

Mar

ket S

ize

for S

ervi

ces

(201

2)

Estim

ated

Tot

al M

arke

t Si

ze fo

r Sto

rage

(MW

h)

Estim

ated

Ent

ranc

e C

ost P

oint

4 ($/k

Wh)

Entr

ance

MW

h sa

les

Targ

et C

ost5 ($

/kW

h)

Targ

et M

Wh

sale

s

Application Tech

nica

l Vi

abili

ty1

Cos

t A

ppro

pria

tene

ss2

Mar

ket

Rec

eptiv

enes

s3

Estim

ated

Mar

ket S

ize

for S

ervi

ces

(201

2)

Estim

ated

Tot

al M

arke

t Si

ze fo

r Sto

rage

(MW

h)

Estim

ated

Ent

ranc

e C

ost P

oint

4 ($/k

Wh)

Entr

ance

MW

h sa

les

Targ

et C

ost5 ($

/kW

h)

Targ

et M

Wh

sale

s

ApplicationExisting Industrial Applications

Industrial truck $ 935 M 3,115 Excellent Good Good $600/kWh 312 $300/kWh 1,558Telecom batteries $ 463 M 1,158 Fair Good Fair $600/kWh 58 $400/kWh 116UPS/power quality batteries $ 306 M 766 Fair Good Fair $600/kWh 38 $400/kWh 153

Utility ApplicationsUtility-owned residential load management $ 9600 M 64,000 Fair Fair Fair $150/kWh 640 $50/kWh 12,800Utility-scale peak shaving $ 5760 M 4,267 Fair Fair Good $1,000/kWh 427 $450/kWh 1,707Utility Regulation Services $ 3000 M 4,000 Fair to Good Good Good $450/kWh 400 $250/kWh 1,600Utility-scale power quality $ 1000 M 741 Good Good Good $2,000/kWh 74 $450/kWh 370Wind Integration (Leveling and Ramping) $ 10000 M 33,333 Poor Poor Fair $600/kWh 333 $100/kWh 3,333Spinning reserve $ 1000 M 6,667 Good Fair Fair $100/kWh 667 $50/kWh 2,667

1) Technical viability: How close is this application in technical specifications and operation to the PHEV application? How well can cells and/or batteries designed for a PHEV application be expected to operate in this application?2) Cost sensitivity: How sensitive is this application to cost, and how likely is it that lithium ion will meet the cost point that satisfies the major clients in this market?

3) Market Obstacles: How conservative is the market, and how likely is it that lithium ion will achieve substantial penetration in this market?

4) Entrance cost point is the maximum cost (for energy storage alone) at which an alternative technology will first be considered on the basis of non-economic qualifiers

5) Target cost is the energy storage cost required for significant penetration (40%) in the near term

16© 2009 Electric Power Research Institute, Inc. All rights reserved.

Battery Market Demand with Cost

-

500

1,000

1,500

2,000

2,500

0 5000 10000 15000 20000 25000 30000

Total MWh produced (All factories)

Pric

e($

/kW

h)

-

500

1,000

1,500

2,000

2,500

0 5000 10000 15000 20000 25000 30000

Total MWh produced (All factories)

Pric

e($

/kW

h)

Battery Volume/Cost Curve

Battery Demand with $500/kWh Subsidy

-

500

1,000

1,500

2,000

2,500

0 5000 10000 15000 20000 25000 30000

Total MWh produced (All factories)

Pric

e($

/kW

h)

-

500

1,000

1,500

2,000

2,500

0 5000 10000 15000 20000 25000 30000

Total MWh produced (All factories)

Pric

e($

/kW

h)

Cost Curve 1:85% experience curve projected from data

Cost Curve 2:90% experience curve based on ANL model

Battery Demand CurveSecondary

use applications

17© 2009 Electric Power Research Institute, Inc. All rights reserved.

PHEV Batteries in Secondary Use

Secondary application price range

Many questions about secondary uses…

• What performance can we expect?

• What cost discount will there be?

• What will the cost be for refurbishment?

0

50

100

150

200

250

300

350

400

New battery Used battery

Cos

t ($/

kWh)

Discount forPerformanceCost of Removaland RefurbishmentSecondary Value

18© 2009 Electric Power Research Institute, Inc. All rights reserved.

Li Ion vs. Lead Acid and other technologies

• Will lithium ion batteries dominate the stationary market?– Most important factor in applications is cost– If lithium ion batteries are the most cost-effective

solution, they will dominate even if other technologies are better suited to the application

• The real competition: Lead-acid – Lead acid costs: $250 – 350 / kWh in most stationary

applications– Cost premium for lithium ion might be justified by

longer life, less O&M costs, smaller footprint, ease of replacement

19© 2009 Electric Power Research Institute, Inc. All rights reserved.Image from NASA Visible Earth

20© 2009 Electric Power Research Institute, Inc. All rights reserved.

Cycle Life

05

101520253035404550

0 1000 2000 3000 4000Cycle number

Cap

acity

(Ah)

012345678910

Mod

ule

Peak

Pow

er (k

W)

C/3 Capacity Capacity EOL @ C/3Power at 80% Relative DOD Peak Power EOL @ 80% DODPower at 80% Nominal DOD

From testing performed on SAFT cells bySouthern California and SCE

21© 2009 Electric Power Research Institute, Inc. All rights reserved.

Lithium Availability

0

2,000

4,000

6,000

8,000

10,000

1960 1970 1980 1990 2000 2010

Pric

e Li

thiu

m C

arbo

nate

[$/t]

0.0

0.1

0.2

0.3

0.4

0.5

Wor

ld P

rodu

ctio

n [g

ross

t]

Price Lithium Carbonate [$/t]Price Lithium Carbonate [$1998/t]World production [gross t]

0

5

10

15

Identified Reserve base Reserves Production

[mill

ion

tons

]

Market price & world production Reserves & consumption

Peter Mock – German Aerospace Center (DLR) – Institute of Vehicle Concepts

Data source: U.S. Geological Survey (USGS), Data Series 140Price is for Lithium Carbonate, world production is for lithium minerals and brineUSGS Mineral Commodity Summaries, USGS Minerals YearbookReserves & consumption is for lithium contained in minerals and compounds

brine (Chile)

27,400

pharmaceuticals (7 %)lubricating greases (12 %)

ceramics and glass (18 %)batteries (25 %)

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Lithium Availability and Recycling

Sou

rce:

Arg

onne

Nat

iona

l Lab

orat

orie

s