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The cost of lithium-ion batteries dropped a whopping 97% in just a short period, but that's not the end of the story.


Warning On Lithium-Ion Batteries: Beware Of Premature Lock-In

The cost of lithium-ion batteries dropped a whopping 97% in just a short period, but that’s not the end of the story.

Everyone is talking about a new study that outlines how the cost of lithium-ion batteries for stationary energy storage has dropped 97% since the 1990s. That’s a stunning achievement, but it would be a mistake to let the conversation stop there. The new study is not an exercise in cheerleading. Instead, it’s a warning against putting too many eggs in one technology basket, and an argument for continuing to explore new chemistries and materials.

What’s So Bad About A 97% Drop In The Cost Of Lithium-Ion Batteries?

It’s no secret that the cost of lithium-ion batteries has been falling through the floor. The new study plumbs the forces actually at work behind the cost drop, with a focus on the manufacturing side.

Until now these forces have not been fully understood, let alone confirmed, from a data perspective. The study deploys a new quantitative modeling framework to shed new light on the subject, borrowing from a concept used to study energy technology.

Considering the rapid growth of the market for electric vehicles and stationary energy storage, it is tempting to assume that economies of scale have been the biggest factor. After all, leading automakers and energy storage stakeholders have been juicing the market for lithium-ion batteries, and manufacturers have been filling the demand with bigger, faster battery factories.

More Batteries, More Quickly…Or Not

Identifying the leading factors behind the cost of lithium-ion batteries would help CEOs steer private sector dollars in a more efficient direction for future investment.

Considering the urgency of climate action, the new study could also help government policy makers steer trillions in taxpayer funding to accelerate the manufacturing of lithium-ion batteries.

Or not, as the case may be. If economies of scale are the leading factor in the cost drop, the solution is simply to increase the volume and pace of battery manufacturing. Working more efficiency throughout the battery supply chain would also help.

The new study reached a different conclusion, though. The authors note that economies of scale have played an important role, but they attribute the bulk of the cost decline during the period between the late 1990s and the early 2010s to improvements in cell charge density.

In other words, science.

But What Does This All Mean?

You can get the full study, in excruciatingly precise detail, from the Royal Chemistry Society’s open source journal Energy & Environmental Science under the title, “Determinants of lithium-ion battery technology cost decline,” authored by

“We find that the largest share of cost change was driven by public and private research and development, which we estimate contributed a majority of the observed cost reduction, with a lower contribution from economies of scale,” they explain.

“Our results indicate that the chemical diversity accessible to lithium-ion technologies might help explain their rapid improvement. Moreover, our results suggest that, given appropriate policies and investments, this diversity might present opportunities to further improve and reduce the costs of electrochemical storage technologies,” they add.

“However, public policy may be needed to help avoid premature lock-in, which can result from market forces favoring incumbent technologies,” they conclude (emphasis added).


What Could Be Better Than A 97% Drop In The Cost Of Lithium-Ion Batteries?

All in all, the study makes the case for continuing to ramp up investment in battery research and development, whether lithium-ion or some new chemistry, as the most effective strategy for continuing to push down the cost of battery-type energy storage.

The authors also pinpoint especially significant areas of focus. According to their models, about 23% of the bulk of the cost drop can be attributed to an increase in cathode charge capacity, which nearly doubled.

“This near doubling is the consequence of many improvements, including increases in both the reversible specific charge and charge density capabilities of electrode active materials, which have been a significant focus of research and development efforts,” they write.

The authors note that improvements in manufacturing processes also made a difference, along with learning curves and other factors.

Sustainable Energy Storage: It’s Not Just The Battery

The study focuses like a laser on the cost of manufacturing lithium-ion batteries in the past, but other policy issues also need to be addressed if lithium-ion batteries are destined to rule the future.

Sourcing the lithium for lithium-ion batteries can be an environmental and human rights nightmare if not regulated properly. Here in the US, lithium mining is also bumping into conflict with indigenous cultures. Alternative, lower-impact lithium sourcing methods are under development, but full commercialization is years away.

Lithium-ion battery recycling is going to be another tough nut to crack. For years, the global battery recycling industry has been dealing with the rechargeable batteries used for devices in the small-to-tiny range. Retooling and scaling up for the automotive and large scale energy storage industries will be an enormous undertaking. Even so, the cost of regulating the global recycling industry could eat into gains in manufacturing costs.

The likelihood that lithium-ion battery manufacturers will be called to account for lifecycle costs is growing, and that could dampen the impact of any future drops in the cost of manufacturing. The global economy is moving towards a cradle-to-grave model in which sourcing, disposal, and recycling impacts play a more significant role than they have in the past.

Manufacturers and industrial engineers are beginning to factor lifecycle impacts into product design, partly in response to consumer demand. As applied to the battery energy storage field, that means new chemistries need to demonstrate a more holistic approach to sustainability even while costs continue to drop.

What’s Next For Lithium-Ion Batteries

The new emphasis on lifecycle impacts helps to build the R&D case made by Ziegler, Song, and Trancik.

“The chemical diversity available to electrochemical energy storage may provide an opportunity to limit lock-in,” they write. “The sheer number of options accessible to electrochemical storage technologies increases the probability that lithium-ion technologies are not the optimal option for every application.”

They argue that the balance of R&D support with market policies worked for lithium-ion batteries, and it could do the same for emerging technologies in the area of stationary energy storage technology.

“Ensuring that investments in energy storage research appreciate the potential of this diversity, and are not just applied to those technologies with the lowest costs today, could help avoid premature lock-in,” they emphasize.

Since the topic is stationary energy storage, it’s worth mentioning that new battery-type energy storage chemistry is not the only option to emerge. Mechanical options, such as gravity-based energy storage systems, are also beginning to emerge alongside concentrating solar power and other thermal systems.

There may even be a place for the humble flywheel in the sparkling green energy storage field of the future. If you have any thoughts about that, leave us a note in the comment thread.

Meanwhile, fans of alternative energy storage chemistries better get cracking if they want to beat lithium-ion batteries to the punch. Last summer the US Department of Energy released a roadmap aimed at pushing the nation into a leading role in the global Li-ion battery market.

Follow me on Twitter @TinaMCasey.

Photo (screen shot): banks of stationary Li-ion batteries via US Department of Energy.

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Written By

Tina specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.


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