Bettering Batteries

I recently got an email entitled “Trojan Tips”.  Hmmmm, wonder what that could be about?  Alas, upon scrolling down from the subject line, I found the message provided advice from the battery manufacturer Trojan about proper battery management practices.

The more you get into cleantech, the more you realize how central a role is played by battery technology

Really, more broadly, energy storage technology is the central player in the cleantech drama.  Energy storage is not technically synonymous with batteries:  there are other non-battery storage technologies such as flywheels that exist.  Sandia National Laboratories has recently developed a modeling tool, called ES-Select, to help in determining which energy storage technology is most well-suited to a particular application need.

However, most of the major technology and commercial issues associated with energy storage are battery-related.  In other words, for the most part, talking about energy storage means talking about batteries, and vice versa.

Of course, everyone has used batteries for decades in portable electronics — beginning with transistor radios (remember them?) and flashlights, and now to smartphones and computers. 

Less obviously, batteries are making an increased push for stationary applications.  

Though generally invisible, banks of batteries have been in use for decades in telecommunications systems — ever notice how you get a dial tone on your landline when there’s a power outage? — and also in large computer and data centers in uninterruptible power supply (UPS) systems, such as those from the APC division of Schneider Electric (Euronext:  SU).  Since computers have become a consumer item in the past twenty years, UPS systems have gotten substantially smaller, to the point where many households now have them to prevent brief disruptions in power from the grid from affecting sensitive electronics. 

Imagine a UPS system so large it can power a whole neighborhood, situated at the local utility substation.  This would not only improve power quality for all the customers in the area, but it would also enable more utilization of intermittent renewable energy resources like wind and solar energy.  As this article discusses, the independent power producer AES (NASDAQ: AES) has established a new business unit to implement battery-based grid storage facilities at grid-scale.

As important as batteries may be in the future for the electricity grid, the really big future opportunity for batteries is in transportation.  For performance and economic reasons, this is also the most challenging application for batteries.

Improvements in batteries are the key enabler for wider market penetration of electric vehicles (EVs) to reduce petroleum consumption and associated emissions.  As noted by David Bello in “What Do We Need From the Battery of the Future?”, “the battery the future requires is cheap, more energy dense and less fragile”, while Joe Fargione of The Nature Conservancy is quoted as saying that EVs “need batteries that last longer, charge quickly and are inexpensive.”

Lower cost, more reliable, higher energy density, faster recharge times, longer lifetimes – all at the same time?  That’s a tall order, indeed.

Well, you can probably build a battery that simultaneously improves all of the above criteria…except the first one.  Alas, a high-performance small and lightweight battery that costs a fortune is of interest only for space and military applications.  Hardly anyone will buy a car where the batteries will cost more than a few thousand dollars.  A recent article by Vince Biancomano in Energy Efficiency & Technology says it all in the title:  “Industry Grapples with EV Battery Economics”.

One of the ways that EV players are “grappling” with battery economics is by considering leasing models, involving “hot-swapping” of discharged batteries with fully-charged batteries at service stations, as Better Place is aiming to offer (about which I’ve blogged in the past).  Alas, it will be difficult for the industry to come up with standards as uniform and widespread as the fueling infrastructure of gasoline pumps, nozzles and tanks that is ubiquitous in today’s developed economies.

Ultimately, however, an expensive battery being leased is insufficient to largely debottleneck the EV marketplace; the cost of higher-performing batteries must also come down significantly. 

According to McKinsey in its recent article entitled “Battery Technology Charges Ahead”, batteries must cost less than $250/kWh to be competitive with automobiles running on $3.50/gallon gasoline.  Alas, batteries currently cost about $500-600/kWh today, but the McKinsey analysis suggest a 60+% cost decline in the next decade, to $200/kWh by 2020.  This is hoped to be achieved by attaining greater manufacturing scale economies, reducing component prices via competitive pressures, and advancing technologies to increase the performance of batteries.

Our venture capital firm, Early Stage Partners, continues to see a robust deal flow of investment opportunities in early-stage companies that are working to develop innovative battery-related technologies – mainly for EVs, but also for other applications. 

Though discovered over 200 years ago by Alessandro Volta (hence, “volt” as the key unit of measurement), batteries remain an active field of invention, though the capital-intensity associated with maturing a physical technology through proof of concept all the way to achieving scale economies of mass production can be daunting.