Road Runner

Better Lithium-Ion Battery Plays than A123 Systems

Thanks for the good info on other battery companies in China.

Are Energy Storage Investors Chasing Their Own Tails?

Thanks much John. You are a great source of information.

Are Energy Storage Investors Chasing Their Own Tails?

GE seems to make smart decisions as to what markets and products to pursue. This battery is just one example. They are heavy into new economy energy products like wind turbines, high-efficiency jet engines, etc. When the storm is over with the big finance side of their house, I believe their stock will do well with their vast portfolio of solid, new economy products. Looks like Jack Welch left the company with good decision makers. That is why I am an investor with them.

Are Energy Storage Investors Chasing Their Own Tails?

So GE is making sodium nickel-chloride batteries and not sodium sulfer batteries as reported earlier?

Why Pure Play Energy Storage Companies Could Double for Investors

There is a critical need to store energy so that alternate energy can become part of the "base" production capacity in the US and the world. Base production is the energy generation that is available 24/7. Currently, solar and wind are limited mostly to supplemental energy production, with coal and natural gas providing base load. So don’t underestimate John’s claim about the huge potential for battery companies. If they deliver on the promise of cheaper, higher energy density products, then their market will be expand greatly.

Here’s one tiny example. Alaska’s remote towns are finding TODAY that wind power is more economical for electricity production than diesel because, though Alaska has plenty of crude, it is very expensive to get diesel fuel to remote villages. Diesel there today (yes Feb 2009) is around $5 per gallon (ouch!). But, the one thing that is holding back wind from becoming an even bigger piece of electricity generation is unreliable winds. Cheap energy storage is needed to smooth out the peaks and valleys.

Hawaii is similar to Alaska, but not as extreme. It is trying to become an alternate energy economy with it’s great sun and wind resources. They are turning the once Pineapple growing only island of Lanai into a giant wind and solar farm. They will use undersea power cables to get that power to Honolulu on Oahu. Note that geothermal is mostly limited to the big island where the population is small. It is expensive to import fossil fuel to the islands so gas and diesel prices are high. Gas runs $.50 higher than the mainland (island lingo) national average. Energy storage is needed on Lanai to make full use of the undersea cables.

Then there is the giant Texas wind farm of T. Boone Pickens and partners. Along with hundreds of wind turbines will be a coal fired and natural gas fired plant. These are needed to offset uneven winds so the expensive power lines running to cities hundreds of miles away will be fully utilized all the time. Wouldn’t it be nice to replace the coal and natural gas plants with batteries or some other type of energy storage, and put up more wind turbines?

Why Pure Play Energy Storage Companies Could Double for Investors

John, Good reading and good points. (Are you surprised to hear that from me after our lively debate on Lithium Iron Phosphate vs Lead Carbon batteries?).

Yes - lots of small funding is much better than large funding. I've come across hundreds of possible significant technical advancements in the alternate energy sector in the last 5 years, but no one knows what will be the 5 to 10 winners that actually make a difference in volume production. When the government picks winners and heavily pushes them, like ethanol from corn (gasp), it often has bad consequences. Let the marketplace determine the winners, but give many companies and technologies a little push. I just saw where Tesla (the electric car company) is getting $250 million to help build a factory. That's great - enough to make progress, but not enough to push out competitors.

Lithium Unicorns and Alternative Energy Storage

John, LiFePO4 has much different manufacturing challenges than the other types of Li-ion batteries.

LiFePO4 is naturally very stable (thanks to the phosphate, PO4, which holds the oxygen atoms very tightly) so there is no concern with explosion like in other Li-ion batteries. Thus, design concerns, and thus manufacturing techniques, are very different in that aspect. The ultra stable feature of phosphate also makes for a naturally long life. The highly stable LiFePO4 material degrades very slowly compared other Li-ion materials, so there's a difference in design and manufacturing concerns.

On the minus side, LiFePO4 is a poor conductor of electricity unlike the other Li-ion materials. Thus some sort of doping (adding conducting materials into the LiFePO4) is required. This is an area of major research and innovation today for LiFePO4, with the solutions constantly evolving. Different companies attack this problem differently (thus the confusion and controversy with the patents; but that's a whole other story that will find its conclusion in the courts).

A123 uses a “nano” technology which is some sort of extremely fine particles. Nano technology today is a very difficult and error-prone process.

BYD uses an AyMPO4 material. The “Ay” means “alkali metal”. Lithium is an alkali metal. Thus some of the Lithium is replaced with a material of similar chemical characteristics. The “M” stands for Iron (Fe), or Cobalt (Co), or some other similar metal. Thus some of the Iron is replaced with other metals.

Bottom line is that LiFePO4, and its permutations, are so different in characteristics, and in design and manufacturing challenges, that it must be evaluated separately.

Lithium Unicorns and Alternative Energy Storage

NorthernPiker, Very good post. I appreciate the calculations you gave for the cost of the materials in each type of battery.

Lithium Unicorns and Alternative Energy Storage

John, This statement is totally inaccurate, "Li-ion batteries are a mature technology class. The major Japanese companies that have been making them for 20 years have already squeezed out the economies of scale. The best producers can hope for is a competitive price that will squeeze profit margins to the bare bones."

LiFePO4 (LFP) is brand spanking new technology. It was only invented in 1996. It has only been in mass production for about 2 years. The technology is still evolving at a rapid pace.

Please stop grouping Lithium Cobalt and Lithium Iron Phosphate (LiFePO4) together as "Li-ion" batteries. They are very different batteries with very different characteristics. The Lithium Cobalt battery is totally unsuitable for autos because of risk of explosion, shorter cycle life, high expense of Cobalt, etc. The Lithium Iron Phosphate is ideally suited for autos, and many other applications. The only weakness it has compared to Lithium Cobalt is it carries about 30% less energy, so it’s use in portable electronic devices is safe.

Lithium Unicorns and Alternative Energy Storage

I'm amazed there is even a discussion about peak Lithium gong on. There should be none. There is no peak Lithium as per calculations using the worst case scenarios available.

It takes about 1.4 kg of Lithium Carbonate (LiCO3) to make 1 kWh of Li-ion battery. The Volt has a 16 kWh battery, the BYD F3DM has a 13.2 kWh battery, and the Tesla has something around a 50 kWh battery. So let’s pick the bigger battery of 50 kWh for our calculations because that will be closer to the plug-in hybrids of the future. Note that this is 3x the size of the Volt battery and 4x the size of the BYD battery.

Lithium Carbonate now costs about $8 per kg now. I read that current technology can extract Lithium Carbonate from the ocean for $22 to $32 per kg. Let’s pick the largest number of $32 which assumes that the technology never improves and current cost estimates are somewhat low. This also assumes that land based deposits are exhausted. Thus we have a bad case scenario with Lithium Carbonate costing $32 per kg (4 times current cost).

Also, for argument, let’s assume there is no improvement in battery energy per kg of Lithium Carbonate. Now that I’ve picked numbers that are “worst” case, let’s calculate.

50 kWh battery needs 70kg of Lithium Carbonate (1.4 * 50). At $32 per kg, that costs $2240 (32 * 70) .

Thus $2240 is the worst possible cost of Lithium Carbonate raw material that I could conceive for a plug-in hybrid with a powerful 50 kWh battery. Still doable. Thus, there can not be a peak Lithium controversy!

Alternative Energy Storage: It's All About Price vs. Performance

John Peterson says "Li-FePO4 is a wonderful and robust chemistry, production cost at the factory is in the $1,300 per kWh range in the Sandia report. "

First, where in the Sandia report does it break out Li-FePO4 from Li-ion and say Li-FePO4 costs $1,300 per kWh? I don’t see it.

Second, the long term price of Li-FePO4 will drop dramatically because it is a spanking new technology with strong demand. Google LiFePO4 and you will find site after site how you can upgrade Prius’, motor scooters, boats, etc to LiFePO4. One site tells how you can cannibalize many DeWalt power packs to create an electric car.

The ultimate price, after supply catches up with demand and after the patents expire, depends on material costs, and they are very low for this battery. Don’t give me the “Lithium will be in short supply” argument either, because there are many untapped dry lake beds (like Nevada) that have good deposits of Lithium. Plus it will ultimately be extracted from the oceans.

You can put all your lawyer spin on this all you want, but you can not give anything reasonable about the future price of LiFePO4 batteries.

Alternative Energy Storage: It's All About Price vs. Performance

The chart above from the "July 2008 Sandia National Laboratories report" is very disappointing because it does not break out the different types of Li-ion batteries. The material costs of a Lithium Iron Phosphate (LiFePO4 - LFP) battery (the new battery in the BYD F3DM and Chevy Volt plug-in hybrids) are much lower than the Lithium Cobalt batteries in cell phones because Cobalt is expensive. The Lithium Iron Phosphate battery also lasts 4x plus longer than the Lithium Cobalt batteries so the lifetime cost is much lower.

This article only casually mentions the Lithium Iron Phosphate battery as a new technology with potential. Do a search on “Li-FePO4”. It is disappointing it is not included in the general analysis of the article broken-out from the Li-ion battery.

America Must Rebuild Domestic Battery Manufacturing Infrastructure

Don't clump all Li-ion batteries together! There are multiple types, but 2 stand out. The Lithium-Cobalt is the highest energy density and are used in cell phones. Lithium-Iron (LiFePO4) is not as high energy density but is far superior for vehicles. This is the battery in the Chevy Volt and the China-based BYD car F3DM. This is new technology just coming out of the lab. It has impressive characteristic that match well for plug-in hybrids. Keep your eye on this battery. A123 and Lithium Technology Corp make it in the US.