Rechargeable batteries keep getting cheaper

When I started working on lithium-ion batteries, in 1993, Sony and Toshiba had introduced the first such commercially available batteries a couple of years earlier. They were mostly used in “the 4 Cs” of small consumer electronics – cassette players, camcorders, cell phones and computers.

If anyone had thought about putting a bunch of lithium-ion batteries together into huge battery packs, for vehicles or utility distribution systems, they would have stopped as soon as they found out the cost: almost $200,000 per kilowatt-hour (kWh) stored. Even if a battery was used 10,000 times, using it to supply electricity would have cost $20/kWh, more than 1,000 times the usual wholesale price.

My job, at a chemical company, was to lead the development of new product lines related to electrical systems. Before the battery initiative started, I was working on concepts like metal-based inks for the technology now known as 3-dimensional printing, to make micro-capacitors for electronics.

Nickel/cadmium batteries had been around for decades. The company had considered the possibility of making nickel-based chemicals for those batteries about 20 years earlier. Management concluded that rechargeable batteries weren’t a significant growth market and hadn’t invested in related technologies.

However, the nickel/metal hydride batteries that had been introduced in the late 1980s looked like they would be a huge improvement in Ni/Cd technology. They could be recharged thousands of times. Lithium-ion batteries looked like an even bigger game-changer. They were much lighter weight than lead-based or nickel-based batteries. Like the Ni/MH batteries, they could be re-used thousands of times.

Two of our research scientists and I convinced management to take a look at battery materials as a potential product line again. Within three years, we were the second-largest global supplier of chemicals for advanced batteries, after only Sony itself.

By 1996, it was obvious that costs were going to fall significantly. We and our competitors in the supply chain were learning about lithium battery chemistry and how to reduce raw materials costs. Our customers, the battery manufacturers, were adopting lithium-ion technology as fast as they could. Every major battery company in the world and a lot of minor ones were making lithium batteries by 1997. They were all reducing costs, fast, through mass production.

Today’s electric vehicle batteries cost less than $200 per kilowatt-hour of capacity. They’re designed to be discharged and recharged up to 10,000 times. Over their lifetime, rechargeable batteries can supply electricity for as little as $0.02 per kWh ($200 divided by 10,000).

To use batteries to supply electricity to the grid, you have to buy, not just the batteries, but also the electricity to charge the batteries and the equipment and engineering to integrate the batteries with the grid, so total costs are higher. Sometimes, though, adding in those costs can make sense. The average wholesale electric price in Washington is around $0.03/kWh – but, sometimes, wholesale electricity is available at very low prices and sometimes wholesale prices are much higher than the average. There’s an opportunity to buy low and sell high – if you have storage.

Battery and systems integration costs are still falling. We’re about to see very rapid growth in the use of batteries that have been developed for electric cars in the utility industry. They’ll replace backup generators and help reduce peak wholesale pricing.