John Petersen

Alternative Energy Storage: Cheap Continues to Outperform Cool

Michael, thanks for the suggestion. I've always stayed away from writing specifically about ACPW because it's traded for under a buck for quite a while and general Seeking Alpha policy doesn't want contributors focusing on pennies. But I believe ACPW merits a closer look and would be happy to write more if you don't think the editors would object too strenuously.

Digger, I worried about lithium reserves for quite a while because of the Tahil reports, so was Jack Lifton. Earlier this year, Keith Evans wrote an article on why lithium resources are adequate to cover demand. Since Jack tells me that Evans is the global authority on lithium resources, I'm inclined to accept the idea that there is enough lithium on earth to provide the required supplies.

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While I am no longer worried about resource availability, I am very worried about supply constraints because the world's existing mines do not appear ready to meet short-term demand increases and 30 years experience in natural resource development tells me that it costs 100s of millions and takes up to a decade to turn a known mineral deposit into a producing mineral deposit. While increasing production from an existing mine can be a bit cheaper and a bit less time consuming because changing old permits can be easier than getting new ones, all of the other work is essentially the same. Since mine expansions take years if not decades and there are no large-scale expansions presently underway, there will be a bottleneck of indeterminate duration while new facilities are permitted, designed, built and brought online.

Alternative Energy Storage: Cheap Continues to Outperform Cool

I'm a very happy camper.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Don, it's always good to get confirmation from a domestic lithium-ion battery manufacturer when I get off into areas like this one. Many thanks!

One of the biggest logical fallacies that people who have not studied the history of the battery industry fall into is that cheap suppliers for today will always be cheap suppliers. That appeared to be the case in the 1990s when Asian imports killed off a large segment of the domestic lead-acid battery industry. Fast forward to 2009 and imports are few and far between because home country demand in the former exporting countries has grown to the point where manufacturers are selling their products at home instead of exporting them.

In the case of cheap Asian lithium-ion batteries, I keep going back to the fact that China made 23 million electric bikes and scooters (E2W) last year and those vehicles used the battery power that we would have used for about a million PHEVs. As a matter of industrial policy China will always prefer giving mobility to 23 million of its citizens over giving mobility to 1 million wasteful Americans. As a matter of pure supply and demand 23 Chinese can afford to pay more per watt hour for the small amount of batteries they need than one American can pay for the massive amount of batteries they want for a status symbol.

I know everybody wants EVs to save on precious oil resources that are presently being wasted. However the single minded view that oil is the only precious natural resource on the planet has to be smashed. There are six billion people that want a small piece of the lifestyle that 500,000 million of us enjoy. To complicate the issue, modern communications has put the 6 billion in a position where they know that there is more to life than subsistence farming. Our greatest challenge over the next 50 years will be finding relevant scale solutions to water, food, energy and every commodity we can imagine. The idea that we can fight the waste of oil resources by encouraging the waste of other resources is terribly short-sighted.

Alternative Energy Storage: Cheap Continues to Outperform Cool

MRTTF, many thanks for jumping in here. Your perspectives and experience are always appreciated.

Mayascribe, I'll have the wassail warmed and ready, although it's beginning to look like this too may be a multi-day affair to maximize political mileage. Have to admit though, the 152% gain on my personal trading portfolio since November feels pretty good, and my guess is the fun's just starting.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Jerrydd, as a young lawyer I quickly learned that jumping into a debate and rehashing old business was rude. I don't talk down to anyone, but I expect that commenters who want to pick a fight will do their homework first. That's one of the reasons Seeking Alpha maintains archives so that new readers can bring themselves up to speed and add to debate rather than impeding it. My archive is here:

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The document I've been using as the gold standard guide to battery prices is a July 2008 Sandia National Laboratories report on its Solar Energy Grid Integration Systems – Energy Storage (SEGIS-ES) program. You can find it here:

www.sandia.gov/ess/Pub...

Sandia's price estimates for the quantities and volumes required by the major automotive OEMs are $1,333 per kWh for lithium-ion with a $780 per kWh 10-year target; and $500 per kWh for asymmetric lead carbon with a $260 per kWh 10-year target. Your experience with pricing on occasional container loads of batteries of unknown kind and quality from China is interesting, but the Sandia numbers are authoritative. If you think they're wrong, take it up with them.

I've previously discussed the DOE's views on the current suitability of lithium-ion batteries for use in mass market transportation products and the challenges that need to be overcome before lithium-ion batteries are ready for prime time. You can find those articles here:

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I've previously discussed the nature of asymmetric lead-carbon capacitors at length. They are a hybrid device that integrates a negative electrode from a supercapacitor into a lead-acid battery and results in a hybrid device with characteristics of both. The cell voltage is a bit lower at about 1.7 volts, the power is considerably higher and the charge rates and cycle-life are an order of magnitude greater. You can find those articles here:

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The SAE may not be writing about lead-carbon yet but Sandia and others are all over the technology.

While the price GM is paying for the Volt battery pack remains cloaked in secrecy, the best estimates are in the $700 to $1,000 per kWh range. The Volt has been discussed in detail here:

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Right now everyone who is working with lithium-ion battery packs is using cells manufactured for portable electronics, which is a lot like using 5,000 hamsters to pull a stagecoach. There is enough excess supply from existing factories to make experimental PHEVs and EVs (which is apparently what you do) but the lithium-ion battery industry is not by any stretch of the imagination ready to power the automotive industry and even if it was, an OEM automaker cannot pay the same price per watt-hour that a cellphone manufacturer can pay; which means automotive applications will always be at the bottom of the food chain from a battery manufacturer's perspective.

I haven't argued that global lithium resources are inadequate for quite a while now because the resource availability issue has been answered to my satisfaction. There is, however, an immense difference between saying you can get lithium from sea water and building a plant that can do so economically. Current production methods from brines involve an 18 month evaporation cycle because it's the only cost effective way to do the job. Seawater or oilfield brine extraction would be considerably more expensive because the concentrations are far lower. Jack Lifton has told us that the lithium mining industry will need $100 billion in new capital to develop production facilities to support the auto industry. It would cost far more to develop the plentiful deposits that you keep harping on. So far, that capital has not been forthcoming.

At the end of the day, Seeking Alpha is for individuals who are trying to a reasonably safe place to invest their money and earn a reasonable return on their money. I dig down into the technology a good deal further than most writers because it's impossible to understand energy storage without understanding at least a little about what the various technologies strengths and weaknesses are. Unless a technical aspect has some bearing on potential investment returns, it's irrelevant for purposes of this discussion.

I would love to have you as a regular commenter because I think that all perspectives are necessary, but the focus is how investors can make money in energy storage. If you're not willing to adopt that focus, I'd rather you didn't comment.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Don, it's more than just Vice President Biden in Detroit tomorrow. We have Secretary Chu in South Carolina with Celgard, a subsidiary of Polypore that makes separators for lithium-ion batteries, and President Obama in Elkhart Indiana with Navistar. Since this is obviously a full court press effort, it wouldn't surprise me to see them spread the announcements out over a couple of days for maximum impact. But I guess we'll know a lot more tomorrow than we do today.

Battman, that's the strength of this group of readers. We all stand in our own shoes, are honest about what those shoes are and lay out the best position for our respective perspectives. I figure the only way to go is with mutual respect knowing that each of us will have our share of being right and each of us will have our share of being wrong. But crystal balls are, after all, murky things so I won't mind being wrong from time to time.

Thumbs up to everyone for agreeing to disagree and remain civil about it.

Alternative Energy Storage: Cheap Continues to Outperform Cool

ginchinchilli, I couldn't have said it better myself. The big problem with being a writer is you can only write from the perspective of the shoes you full. That's the reason I love the debate that goes on in the comment section more than the articles themselves. This is a huge amount of work with no perceptible reward yet, but it's the most fun I've ever had.

jerrydd, I know what commenters like you and davewmart tell me the prices of lithium-ion batteries are in small lots. I also I know what the DOE says they are going to cost in the quality and lot size that OEM automakers will need. Heck, I spent hours with some of the best in the industry at Storage Week and their fondest hope is that they can get prices down to 2x or 3x lead-carbon within 3 to 5 years.

I'm not willing to argue my knowledge of what first quality batteries will cost with you or anybody else. I'm also not going to argue the incontrovertible fact that the first automotive lithium-ion battery factories cannot possibly be completed before 2012 if everything goes right - which almost never happens. You and davewmart seem to have a very narrow world view that begins and ends with the EV, a solution that I think will be limited to the mathematically challenged and emotionally committed for the next decade. I respect that perspective, but stock market investors who read Seeking Alpha want to know which companies have the greatest discounted present value of future profits and the hard fact is that profits that won't start for 10 years have almost no discounted present value. By all means develop battery technology and EV solutions, but don't try to tell me that they're worth a premium price today - it is not rational.

I've just picked up a new reader named MRTTF who works as a lithium-ion battery research scientist but leaves comments like "As I have stated before (and my background is in Li-ion research with a PhD in chemistry before that), Li-ion will ALWAYS win out when size is an issue and cost is no object. Beyond that all bets are off..."

Alternative Energy Storage: Cheap Continues to Outperform Cool

Mayascribe, I have a hard time coming to grips with all the things that will or may impact the broader markets, but it hard for me to imagine a scenario where AE in general and storage in particular will see any big setbacks for a while. The ARRA grants are announced on Wednesday. Rumor has it that some ATVM loans will also grab headline space. Since I figure A123 is a top contender in both categories, it should give a tremendous boost to their planned IPO. Once we have a big IPO on a pure play battery company, the sector should be the golden child for several years and everybody with a marketable product should benefit handsomely. So right now I'm just sitting on my board waiting for the wave.

Alternative Energy Storage: Cheap Continues to Outperform Cool

The Detroit News is reporting that the first round of ARRA battery grants will be announced at 1 p.m. on Wednesday, which helps explain why yesterday was an active day for many storage stocks. Given the number of applications that have been filed and the number of worthwhile projects to be considered, I'm glad I don't have to make that particular set of decisions.

www.detnews.com/articl...

Alternative Energy Storage: Cheap Continues to Outperform Cool

Mayascribe, like many in Washington I don't read legislation before it's passed, but my guess would be that the cap and trade will offer another good reason to store as much off peak power as possible because firing up the NG turbine tomorrow afternoon is going to cost. It also wouldn't surprise me to see some sort of incentive worked in for batteries where storage of off peak power from coal fired plants served as a sort of power laundry. As always, the devil's in the details and this scheme will likely have lots of devilish detail.

Alternative Energy Storage: Cheap Continues to Outperform Cool

You really are getting better at this commenting stuff Don. Good job and well said.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Don, while we've only met in this forum, I'm confident that your product is all you say it is. I know that you have a far more realistic view of the challenges that have to be overcome to maximize the market potential. But hard working creative guys like you will get there and we'll all be better off for it. Besides, with a tent this big there is no reason for anybody to worry about overcrowding.

Ginchinchilli, Enersys is a fine company and I've had the pleasure of spending a half-day with their European president. One of the most fascinating take-aways from our meeting was that they have lots of customers coming through the door thinking they need the Enersys lithium-ion solutions, but most of them leave with a lead acid solution that costs less and serves their needs better. It's just another example of how most of us think our needs exceptional when in fact they're rather mundane.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Don, the lithium battery roadmap says that eliminating the need for smart in batteries will be one of the big ways of driving down costs. Li-ion needs heavy duty electronics to make the cells function with each other. Lead acid and lead carbon are self adjusting and don't need any of the hardware or expense.

You really ought to study the roadmap because it is really an eye opener when it comes to the challenges the DOE foresees in making lithium-ion a mass market technology.

files.me.com/john.pete...

Alternative Energy Storage: Cheap Continues to Outperform Cool

Davewmart, I am generally kind to commenters and hate to offend, but in your case I'll make an exception and remind you that It is generally better to say nothing and have people think you a fool than to say too much and prove their point. Please do both of us a favor and stop reading my articles.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Davewmart, I'm speechless – but thank you for demonstrating your depth of knowledge about the battery industry.