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.
Stay tuned.
Venkat
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