As costs continue to fall, battery energy storage looks to be a game changer in the utilities world — and beyond.


By Bill Radford III


Sony released the first commercial lithium ion battery in 1991. In the years since, the technology has emerged as a powerhouse: Lithium ion is expected to be a $50 billion industry in the next decade.

Growing demand, a resulting increase in scale of manufacturing, and “incremental changes in how they make the batteries” have fueled dramatic price reductions, particularly along the supply chain, says Sam Jaffe, founder and managing director of Cairn Energy Research Advisors, a Boulder-based global research and consulting firm specializing in energy storage.

“In 2010, people were paying more than $1,000 per kilowatt-hour for lithium ion battery cells,” Jaffe says. The best price has dropped to about $115 per kilowatt-hour today — and Jaffe expects that to drop to the much-anticipated $100 mark by 2019.

As a result, batteries will become an increasingly important tool for utilities for grid management. “The immediate impact and the most profound impact will be the ability of the grid to accept more renewables,” Jaffe says. Stored energy means power when the sun isn’t shining or the wind isn’t blowing — and the ability to better match supply and demand at all times.

“In the long run, energy storage is going to be one of the most useful tools in making the grid cleaner, more efficient and cheaper,” Jaffe says.

Economical energy storage also raises the prospect of businesses and households combining solar power and batteries to generate and use their own energy instead of contributing to the grid, but Jaffe doesn’t see “grid defection” becoming a big problem. Being their own mini-utility “is the last thing that an end consumer wants to be,” he says.

While there may be less reliance on the grid, Jaffe believes talk of a “utility death spiral” is overblown. “I do think utilities are going to have a lot of indigestion over this problem,” he says, while predicting that energy storage will be more friend than foe for them.

The falling cost of energy storage will also boost adoption of electric vehicles, Jaffe says. The gap in cost between making an electric vehicle and an internal combustion engine car, which has been a roadblock for consumers, continues to shrink, he says.

Another issue for drivers is range anxiety: How far will the car go?

“The best way to handle range anxiety,” Jaffe says, “is to cram as many batteries into that vehicle as possible. Before, that made no sense, because batteries are the most expensive part of the vehicle. Now that they’re getting low-cost, that’s a reasonable solution.”

Another use for battery storage that Jaffe sees as not imminent, “but probably over the horizon,” is electric aviation. “If we get to the point where batteries double in energy density” he says, “we could start seeing useful applications of battery-powered aircraft and helicopters.” While Jaffe doesn’t expect the average passenger jet of the future to be battery-operated, it could be feasible for shorter-haul aircraft, an idea that is “in the realm of actual strategic planning.”

Meanwhile, advances in battery technology are continually being reported as laboratories and startups take new approaches, with some touted as “the holy grail” of battery technology. “There are probably over a thousand ‘holy grails,’ depending on laboratory benchmarks,” Jaffe says. Few of these innovations will ever make it to market, he adds. Taking results from the lab to mass production is “incredibly difficult.”

Though batteries with next-generation technologies could appear by the early 2020s, it will take a lot longer for them to pose a competitive threat to lithium ion batteries, Jaffe says. It’s more likely that the new technologies would find a home in niche markets, such as aviation or robotics. “Robotics has the need for dramatically different batteries,” he notes.

But even a niche market offers the prospect for big gains. Notes Jaffe: “The battery industry is so enormous now that even a 1 percent market share is going to be a billion-dollar business.”

Read more articles like this in the full Innovative Energy Review here.