They’ve already transformed consumer electronics, but the bigger changes are yet to come.
The lithium-ion battery that billions of people carry daily in their mobile phones is a Nobel Prize-winning scientific achievement. We’ve been living in the age of the lithium-ion battery ever since the 1990s via our camcorders, laptops, smart watches, and drones.
In the last decade, these little batteries have started to transform the transport and electricity sectors as surely as they did consumer electronics. New data shows how far batteries have come in a short time, and hint at how much further they’ll go.
BloombergNEF’s latest lithium-ion battery price index finds the current weighted-average price for lithium-ion storage batteries is $137 per kilowatt-hour. That’s down from nearly $1,200 per kilowatt-hour in 2010, a price drop of nearly 90% in about 10 years.
To answer an energy transition-related question that I’m asked perhaps more than any other: there’s significant variance among prices depending on application. A battery used in a bus is less expensive than one used in an electric passenger car, which is less expensive than one used for stationary energy storage on the power grid. In every application, though, these batteries are now making serious inroads into their respective markets of public transportation, personal vehicles, and electricity networks.
Storage volumes, needless to say, have increased a bit since BloombergNEF began to track them. In 2010, less than half a gigawatt-hour of batteries had been supplied to the nascent electric vehicle and stationary storage industries. A decade later, that total is now 526 gigawatt-hours, nearly 1,100 times as much. That’s nothing, really, compared to what my colleagues project: by 2030, vehicles and energy storage systems will have used more than 9,000 gigawatt-hours of batteries.
There are many numbers in the charts above, but there’s another one to mention: $100 per kilowatt-hour, the lithium-ion storage battery’s magic number. At that point, the upfront cost for an electric passenger vehicle will be the same as—or less than—a similar internal combustion model. From there, the economics are clear, and other things (hopefully) fall into place: manufacturing happens in mass volumes; charging networks grow as needed.
We aren’t quite at the moment of the market being self-fulfilling, but we’re not far off, either. So in advance of that moment, I’d like to propose a question that may, perhaps, help us frame what’s to come. Are batteries just a product? Or do they create their own markets?
Exxon Mobil Corp began working on lithium-ion batteries in the 1970s, at a time when even oil majors were searching for alternatives to the internal combustion engine. At that point, batteries were a product in search of a use—and yet the consumer electronics that emerged later couldn’t have existed without it. In that case, batteries created the market.
Today, the answer to that question is more complicated. For electric cars, the battery is fundamentally a product. Cars (even electric ones!) have existed for more than a century; they weren’t waiting on economical lithium-ion batteries to bring a market into existence. Electricity is a new way to energize cars, but the car is still the car.
Energy storage for the power grid is different. Fuel is stored energy, after all, and inexpensive lithium-ion batteries have created a new market for stored electrons at significant scale. They’ve also enabled new markets for services that battery operators can offer to the electricity grid.
So, what comes next as batteries become cheaper, with a higher energy density and produced in much greater volume? I imagine that more batteries will create new markets that we haven’t yet thought of. I’m reminded of a tale from the birth of the iPod: Toshiba had invented a 1.8-inch hard drive, but had no idea what to do with it. Apple executives knew —and created a new market with it.