Ravi Mulugu from Siemens Venture Capital did a nice analysis on this topic. (pasted with permission here)
Will Lithium based batteries be the dominant energy storage technology for the next 3 to 5 years?
To answer this question I looked at the following aspects:
- Resources & Reserves
- World Lithium Resources and Reserves
- Lithium extraction methods
- Lithium Demand & Supply
- New Mega Factories
- Cost Structure
- Pros and Cons of Lithium Ion Batteries
- Limitations of Lithium based batteries
- Improvement opportunities for Li ion batteries
Resources & Reserves
World Lithium Resources and Reserves
Lithium occurs in a number of pegmatitic minerals (Pegmatite is a common plutonic rock, of variable texture and coarseness, that is composed of interlocking crystals of widely different sizes), but due to its solubility as an ion, is present in ocean water and is commonly obtained from brines and clays. The most widely used economical method of Lithium extraction is through evaporation of brine pools.
The quantity of worldwide Lithium – Resources and Reserves varies across studies. One should pay attention to what can be economically extracted or proven reserves versus overall identified resources.
About half the world’s known reserves are located in Bolivia. According to the US Geological Survey, Bolivia’s Uyuni Desert has 5.4 million tonnes of lithium. If we take the 2014 production number and increase it to 50,000 metric tons per year demand, then with the current reserves of 13.5 million tonnes plus Bolivian reserves totaling 19 million tonnes we have enough reserves for 380 years (19 million/50,000). Even if we use 100,000 metric tons of annual demand, the reserves would last 190 years.
According to a 2011 study conducted at Lawrence Berkeley National Laboratory and the University of California, Berkeley, the currently estimated reserve base of lithium should not be a limiting factor for large-scale battery production for electric vehicles, as the study estimated that on the order of 1 billion 40 kWh Li-based batteries could be built with current reserves. Another 2011 study by researchers from the University of Michigan and Ford Motor Company found that there are sufficient lithium resources to support global demand until 2100, including the lithium required for the potential widespread use of hybrid electric, plug-in hybrid electric and battery electric vehicles. The study estimated global lithium reserves at 39 million tons, and total demand for lithium during the 90-year period analyzed at 12–20 million tons, depending on the scenarios regarding economic growth and recycling rates.
US Production and Use: Identified lithium resources in the United States total 5.5 million tons of which 38,000 metric tons are counted as proved reserves. The only lithium mine operating in the United States was a brine operation in Nevada. Two companies produced a large array of downstream lithium compounds in the United States from domestic or South American lithium carbonate, lithium chloride, and lithium hydroxide. http://minerals.usgs.gov/minerals/pubs/commodity/lithium/index.html#mcs
Lithium extraction methods
When it comes to lithium extraction, there are two methods — but only one is more economical. Brinebased reserves, held in mineralrich aquifers, account for roughly 66% of the world’s lithium resources. The concentrations of lithium are much higher in brines because natural movement of the water and heat from the Earth have already released lithium from rocks and sediment, separated it from many other minerals, and brought it closer to the surface. From there, it’s just a matter of filtering. But even this is still developing. Traditionally, the brinebased product is slowly airdried. But there are already some methods by which the lithium can be dried through mechanical or chemical means.
The “silicate ore” circles in the above picture indicate lithium in rocks. Although this kind of mining extraction is costlier and more difficult, it’s still a main source of lithium for companies in places like Australia and Africa. Lithium is abundant on Earth, but it has very low concentrations in rock, which must be mined and crushed, then separated and ground down further. That mixture is submerged in liquid to separate the lithium particles from the rest of the minerals. It is then filtered and dried back into a solid. (source: https://www.energyandcapital.com/articles/elon-musks-lithium-revolution/4937#)
Lithium Demand & Supply
The world produced 36,000 metric tons of lithium in 2014, which went into the following applications:
Last year marked the first time battery applications — phones, laptops, plug-in vehicles, electric bikes, and the like — consumed over 30% of annual lithium production. (using the term “consumption” even though lithium is fully recyclable) A little math shows that 31% represented nearly 11,160 MT of lithium, which was up markedly from roughly 6,500 MT in 2010. Yet, while consumption in battery applications grew 73% from 2010 to 2014, total global production of lithium grew just 28%. The divergence in supply and demand has been reflected in prices paid for lithium raw materials over the same period.
While automotive demand for LIB is expected to grow, the majority of demand for LIBs may continue to be driven by Consumer Electronics applications.
Several industry research firms maintain that 1 kilogram of lithium is needed to enable a 6 kWh battery. If we assume 50 kWh as the average size of an EV battery (avg. of all makes and models) then each vehicle needs 8.3 kg of Lithium. Multiply this with annual EV sales to get annual demand from the automotive sector. A million EV sales per year means 8,000 metric tons of Lithium. Compare this with 11,160 MT of total Lithium consumption for batteries in 2014 and we will see that the Supply Chain would have been under big pressure to meet demand; prices would have sky rocketed if we really sold 1 million EVs. In 2015 global total EV sales have only been ~400,000.
A little dated but here is IEA’s EV adoption outlook – 6 million by 2020
Asia currently dominates Lithium Ion Battery (LIB) cell production with a robust upstream supply chain, from processed materials to complete cells.
Disclosed Capacity: Existing + Partially Commissioned + Under Construction + Announced capacity = 125 GWh. Removing the Announced Capacity would give us 76 GWh. (source: CEMAC http://www.nrel.gov/docs/fy15osti/63354.pdf)
Significant overcapacity exists in the LIB supply chain. Across regions automotive LIB production capacity far exceeds production. Global average utilization was estimated at 22% at the beginning of 2014.
New Mega Factories
On the capacity side of things, the big manufacturers are planning to build giga factories
Material costs comprise 74% of the total cell cost structure and are driven by:
- Purchasing volumes
- Strength of supplier relationships
- Factory yield and utilization
Minimum sustainable price is driven by other components of the total cost such as a) Labor and facilities costs b) Energy costs and also by cost of capital and return expectations.
EV battery pack costs are expected to come down to ~$200/kWh by 2020 in one scenario as shown in the picture below.
Pros and Cons of Lithium Ion Batteries
Lithium-ion batteries have the ability to store a lot of energy in a very small space. Energy density is measured in watt-hours as a function of volume, or liters (Wh/L). The energy density of the basic lead-acid battery in your car is 30 Wh/L. A basic lithium-ion battery’s is 250 Wh/L and new lithium-ion batteries in development will be able to store even more energy.
Limitations of Lithium based batteries
Advantages: High energy density, low self-discharge, light weight, long cycle life, no memory effect, low maintenance
Limitations: Requires protection circuit, reduced shelf life, moderate to high discharge current, subject to transportation regulations
Rechargeable lithium-based cells require careful “care and feeding” in both their electrical and mechanical aspects. Electrically, they have to be charged along a specific profile, with the charge rate and mode (constant current and voltage) monitored and adjusted, and their discharge profile must be within specific limits as well. Going outside the boundaries will have detrimental effects ranging from reduced capacity and run time (unpleasant but not dangerous) to overheating (very undesirable).
Improvement opportunities for Li ion batteries
- Given the temperature constraints faced by traditional lithium-ion batteries, manufacturers are increasingly seeking materials that enable lithium-ion batteries to operate effectively and safely in extreme temperatures.
- For instance, one company has developed lithium imide-based electrolytes that minimize the incidence of thermal expansion when operated in extremely hot temperatures. It is also developing silicon-based anodes that enable higher energy density compared to carbon-based anodes.
- Another company has launched SuperPolymer 2.0 lithium-ion batteries that improve battery efficiency and effectiveness across a range of applications and also exclude non-toxic material N-Methyl Pyrrolidone (NMP), which is known to be hazardous to human health. SuperPolymer 2.0 is expected to have greater fire resistance and wider operating temperature ranges, both hot and cold.
- While greater power and energy density remain the focus in new product development initiatives, stronger emphasis is also being placed on reducing overall costs, including cells, battery-pack materials, and battery management systems.
- The world has enough resources/reserves of Lithium to meet consumer demand for decades to come
- Corporations are building giga factories to produce Lithium for a variety of applications that are growing in demand – consumer electronics, electric vehicles, energy storage etc
- Current factory capacity utilization for certain application such as EVs is low which means that some productions lines could be modified to produce cells and packs for energy storage which in turn could lead to lower prices, increased demand and capacity utilization.
- Manufacturers are developing solutions to address the operational and safety constraints of Lithium battery technology and increase its performance
Based on the above data points we can reasonably conclude that Lithium based batteries are going to be the dominant storage technology for at least the next 3-5 yrs.