CapNgain

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

Consistent with the overall theme of your article, I believe the price/performance of Lithium Iron Phosphate will translate into the following market categories:

a) For $100K and higher sports/super car category, there's a strong case for EVs, as the battery pack cost can be covered, and the high peak torque to peak horsepower ratio is hard to beat with any ICE engine. That's why Tesla's business plan could be very successful, if they can just learn to run operations better.

b) For the mid-market range, battery cost limits the economics of pure EVs, and therefore hybrids and light plug-in hybrids are reasonable

c) On the low-end of the market, battery cost only works for the lightest short range vehicles, such as scooters and e-bikes. If one visits Taiwan, China, SE Asia, and some parts of Europe with their high "in the city core" penetration of scooters, one would think the US electric scooter market is still in early adoption phase (perhaps even being slowed by extremely cheap scooters that don't work well).

The above categories could easily change w.r.t. some additional factors, such as:

a) What will government Carbon strategies look like... a cap and trade system could help EV/plug-in HEV owners recover money by selling carbon credits to gas guzzler owners...?

b) Further technical advances in lower cost hydrid sources... for example, I see potential with mechanically rechargeable Aluminum/magnesium air cells (low cost, high energy density, with the byproduct recyclable)

c) Further advances in super-capacitor technology, perhaps even built-into lithium batteries.... today's hybrids have city mileage similar to highway mileage, but with better regenerative braking energy recapture, hybrids should get much better mileage in city driving, due to less losses from wind resistance. For couriers and taxis, this could allow for more battery pack in the economics.

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

T. Boone Pickens may be onto something with natural gas.

Although simple gasoline motor conversions to natural gas can just barely stand on their own, one can get much higher efficiency with natural gas, along with reduced CO2/other pollution per unit horsepower, by taking advantage of the high effective octane performance of natural gas with higher compression engines designed for diesel or natural gas. For example, the average modern gasoline engine is around 25% efficient, versus 45% for a dedicated natural gas engine with small amounts of diesel injection.

One company I watch in this space is a Canadian traded stock (WPT-TSX) called Westport Innovations, who's been working with Cummins diesel motors.

Also, if you want North American energy independence, the US and Canada have huge amounts of natural gas locked up in Shale/Tight Rock/Coal-bed deposits, which becomes economic to extract with current natural gas prices. And, if you add in Natural Gas from Alaska, and Canada's North, once pipelines become economic, there's no shortage of Natural gas for the foreseeable future (something global peak-oil believers including myself until last summer may have overlooked).

Plus, one comment on Uranium supply (one of my invesment focus areas... Although the current supply of high grade (1% or higher U3O8) is fairly small, there's huge deposits of low-grade (say 0.15% or even 0.01%) Uranium worldwide. So, just like shale gas, although the economic supply of Uranium at $50/lb may be limited, Uranium, and Thorium for that matter are quite abundant and economic at $150/lb. And, since the cost of raw U3O8 fuel is realitively small compared with the processing, and capital costs of reactors, nuclear energy at even a longer term price of $150/lb for raw Uranium could still be economic, with a large supply ensuring a long term future for this energy choice.

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

What do you get when you put an Electric Engineer (EV focus) together with a small hedge-fund manager? .... my opinions, as follows.

Lithium Iron Phosphate (LiFePO4) batteries even today are economically a better value for EV-Hybrid vehicles than today's AGM/VRLA Lead-acid batteries, if one amortizes the battery cost over the lifetime of the battery, and if one looks at the efficiency improvements offered by LiFePO4. For example:

1. Lead-acid, and even NiMH batteries for higher power applications often spec. a 300-500 cycle lifetime, versus 2000-3000 for LiFePO4. I've bought some Chinese large-scale LiFePO4 batteries for $500/KWh versus $200/KWh for AGM lead-acid. But, if the lead-acid batteries must be replaced even only 4 times during the life of the battery, the LiFePO4 could be cheaper, depending on what discount rate you use.

2. The spec'd energy storage of LiFePO4 is fairly independent of power output (within spec'd limits), whereas many lead-acid batteries are spec'd for 10-20 hour output, and the realized value for 0.3 to 2.0 hour EV discharge is often half or less of the spec'd value, which is partly why e-Bikes with a 1 KWh LiFePO4 pack often achieve 3X the range of a 1 KWh Lead-acid pack.

3. Higher quality lead-acid batteries, where the 1 hour energy storage value is closer to the 20 hour value (names like Odyssey, Trojan, Surrette, Optima etc.)
can cost around $400/kWh (in my experience), with less than a 2X improvement in cycle-life.

4. Vehicle range is highly dependent on aerodynamics for highway travel, and vehicle weight for city driving and hill climbing. A decent 30kWh LiFePO4 battery pack capable of peak 200 HP output weighs around 500-700 lbs, whereas a similar lead-acid pack weighs around 2000-3300 lbs.

5. For decent range and battery pack like, Lead-acid and LiFePO4 require some string equalization/battery management, so any battery pack cost must include the cost of a BMS.

6. My experience has been that fast-charging some high-power high-quality lead-acid batteries takes about 4 hours, whereas my LiFePO4 batteries take 15-60 minutes for the same task. Although this advantage goes away due to charger constraints for larger battery packs, it does offer compelling advantages for e-bikes and scooters, where their smaller pack is recharged from a standard 115VAC outlet.

7. Advances in nanotechnology, materials science, and biochemistry mean that current Lead-acid, LiFePO4, and other potential battery chemistries should see significant improvements in battery performance versus cost over the next 5-10 years, so LiFePO4 could one-day look like lead-acid does today, or perhaps not.

Transitions to a new technology often take longer than many optimistic CEOs predict, so the established Lead-acid "big guys" have some time to see which companies manage to gain most market share, before deciding which pure-play companies they'll need to buy to maintain and grow certain parts of their existing market share.

And, lest Chevron's example with NiMH large format EV batteries be forgotten, patent ownership and licensing could in the end decide which LiFePO4 battery vendors survive, and which don't.