A recent article in Forbes shows us that lithium-ion batteries are about to hit a major milestone, and it’s going to transform more than the EV industry.
Over the last 9 years, prices for lithium-ion batteries have dropped considerably already. In 2019 dollars, we’ve already gone from over $1100 per kWh of storage to only $156 today. That alone is a major factor in the increasing affordability of electric vehicles. Further, it makes it easier and cheaper to keep existing EVs around, as it’s cheaper to restore the battery packs with newer cells that are not only better, but cheaper than what came with the car originally.
The major tipping point happens at around $100/kWh, and that’s projected to happen around 2023. However, the author does point out that even the Forbes data is probably behind the times. The writer says that his sources already are seeing prices pretty close to $100 today.
Why is $100 important? Mostly because it’s the point where the battery production is competitive with the older technologies that battery packs seek to replace. For example, an EV can cost the same as a gasoline-powered vehicle without losing any of the savings inherent to an EV. At this point, there’s no reason to keep buying gas vehicles (at least in places with good charging infrastructure).
The advantages of cheaper lithium-ion batteries don’t stop there, though.
One major industry that’s going to see big changes is the utility industry. Cheaper grid storage will lead to less dependence on “peaker” plants, and will allow more excess renewable energy to be used through the times when the sun doesn’t shine or the wind doesn’t blow. That’s not all, though. Microgrids, home energy storage (plus solar), and a number of other technologies will start lessening reliance on the grid itself.
EV charging and other high-power equipment will also be interacting with the grid in much cheaper ways. Utilities make a lot of money from customers who pull large amounts of power for short periods by charging a whole-month “demand charge” for the extra juice. This money does go to financing the extra infrastructure needed for high-draw users, but it’s also a great way to keep prices low for people drawing less juice.
As charging stations and other industrial users install battery packs, though, this changes. Instead of pulling their peak power use directly from the grid, they can pull it from a battery that slowly recharges the whole day. That way, utilities don’t get to charge for demand peaks, but often will need to leave the expensive infrastructure in place, and that’s assuming that the company keeps pulling power from the grid at all most days.
Finally, there’s the issue of the non-electric industries impacted. The largest will be the oil industry, as people shift away from oil for transportation and for energy generation. Just like coal, other industries will also be disrupted.
As battery technology continues to get cheaper, the effects become harder and harder to predict. We are likely to see things get more and more interesting in the coming years!