IEEFA ENERGY FINANCE 2015 - Policy Integrity › documents › 7_Jaffe... · » First lead-acid battery developed by Gaston Plante in 1859 for rail applications ... Li-ion Market

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©2014 Navigant Consulting, Inc. Notice: No material in this publication may be reproduced, stored in a retrieval system,

or transmitted by any means, in whole or in part, without the express written permission of Navigant Consulting, Inc.

IEEFA ENERGY FINANCE 2015

MARCH 17, 2015

SAM JAFFEPRINCIPAL RESEARCH ANALYST

2 ©2014 Navigant Consulting, Inc. All rights reserved.

Introduction

RESEARCH PROGRAMS:Smart Energy

Smart Utilities

Smart Transportation

Smart Buildings

RESEARCH OFFERINGS:Research Reports

Subscription Research Services

Custom Market Research

• Custom Market Analysis

• Market Sizing and Forecasting

• Primary Research

• Go-to-Market Services

• Strategic Advisory Sessions

• Commercial Due Diligence

• Technology Evaluation

NAVIGANT RESEARCH PROVIDES IN-DEPTH ANALYSIS

OF GLOBAL CLEAN TECHNOLOGY MARKETS.

The team’s research methodology combines supply-side industry

analysis, end-user primary research and demand assessment, and

deep examination of technology trends to provide a comprehensive

view of the Smart Energy ecosystem.

SECTION 1

BATTERY HISTORY AND

BACKGROUND


State of the Art Energy Storage 2010


The Baghdad Battery

(Source: Baghdad Museum) (Source: Smith)


Commercial Battery History

» Daniell battery, developed in 1836, becomes the first commercial battery

» First lead-acid battery developed by Gaston Plante in 1859 for rail applications

in France

» Rechargeable Li-ion battery developed by Dr. Stan Whittingham at Exxon in

early 1980s

» Dr. John Goodenough of Texas developed the lithium cobalt chemistry and later the lithium

iron phosphate chemistry

» Sony launched the first commercial Li-ion battery for consumer electronics in 1991

» Today, Li-ion powers most portable tools and devices, as well as most EVs and stationary

storage systems

Plante Battery Stanley Whittingham John Goodenough

(Source: Wikimedia Commons) (Source: SUNY Binghamton) (Source: University of Texas)


Li-ion Market Share by Segment, World Markets: First 5 Years

Li-ion Inflection Point

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Year 1 Year 2 Year 3 Year 4 Year 5

Power Tools

Laptops

Video Cameras

Feature Phones

Hybrid EV's

Telecom Backup Power

(Source: Navigant Research)


Lithium Ion Pricing Forecasts

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

$/k

Wh

Large Format

Small Format

Tesla Small Format

Historical and Forecast Lowest-Point Pricing for Li-ion Batteries by Form Factor, 2009-2023

Source: Navigant Research

SECTION 2

BATTERY FORECASTS


Advanced Battery Consumer Electronics Forecast

Advanced Batteries for Consumer Electronics Revenue by Region, World Markets: 2014-2023


Advanced Battery Consumer Electronics Forecast

Advanced Batteries for Consumer Electronics Revenue by Region, World Markets: 2012-2023


$0

$2

$4

$6

$8

$10

$12

$14

$16

-

10,000

20,000

30,000

40,000

50,000

60,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bil

lio

ns U

SD

MW

HMWh

Millions USD


Advanced Battery EV Forecast

Advanced Batteries for XEV Revenue by Region, World Markets: 2012-2023


$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bil

lio

ns U

SDMW

H

MWh

Millions USD


Advanced Battery Stationary Storage Forecast

Advanced Batteries Stationary Storage Revenue by Region,

World Markets: 2012-2023


$0

$1

$1

$2

$2

$3

$3

$4

$4

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bil

lio

ns

US

D

MW

H

MWh

Millions USD


Global Revenue Forecast for All Advanced Batteries

Advanced Batteries Revenue All Applications, World Markets: 2014-2023


$0

$5

$10

$15

$20

$25

$30

-

20,000

40,000

60,000

80,000

100,000

120,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bil

lio

ns U

SD

MW

HMWh

Millions USD


» Defining Storage: Transmission, Distribution, Generation or

Load?

» Creating Open Markets for Energy Storage Systems that

monetize the unique qualities of the asset: PJM’s approach to

FERC Order 755

» How to Account for Application Stacking?

» Energy Storage System Ownership: Utility, Aggregator,

Generator or Behind-the-Meter?

» Key Takeaway: Regulatory clarity is more important that

subsidies.

Key Policy and Regulatory Obstacles


» Natural Gas peaker plants provide most of the

peaking requirements of the U.S. grid

› Consist of single cycle combustion turbines

(efficiency ~40%)

› Able to ramp quickly, but cost of fuel is high, as well

as high air pollution, high carbon intensiveness and

poor energy security profile

› Combined Cycle gas plants (efficiency ~55%) are too

slow to ramp up and down in response to peak

demands

› Pair a CC-NG turbine plant with a large battery pack

(1 GW and ~400 MWh of batteries) and you get a

duty cycle that today’s batteries can meet, a more

efficient use of fossil fuels and a lower fuel cost;

additionally you make the grid more flexible, allowing

more renewables to penetrate without fears of

destabilization

Grid Storage Business Model Hypothetical Scenario:

NG Peaker Plant Augmentation

Lake Road CC Turbine Plant (Source: Alstom Power)

SECTION 4

BATTERY SUPPLY CHAIN

AND MATERIALS AND THE

GIGAFACTORY

©2014 Navigant Consulting, Inc. All rights reserved.17

Battery Materials: Lithium

» Relatively small volume of Lithium ore goes into Lithium Carbonate

» Most new battery chemistries are still lithium based, so lithium

batteries will be with us for at least the next two decades

» Navigant Research sees no significant threat of lithium shortages in

the next ten years

Forecast of Lithium Ore in Metric Tons and Lithium Carbonate in Metric Tons and Revenue,

World Markets: 2014-2023

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Mil

lio

ns

US

D

Me

tric

To

ns

Lithium Ore

Lithium Carbonate

Lithium CarbonateRevenue


» Chemistry› Optimized for high power and long cycle life

› LiNi0.76Co0.14Al0.10O2 Cathode (NCA)

› Graphite Anode

› Voltage range of 3.6 to 4.05 V

› 90% capacity after 3,000 cycles

› Tesla NCA batteries use 25% of the cobalt that

traditional LCO batteries use

» Cell design› Central rod inside the jelly roll deforms at higher

temperature, causing battery cell to collapse

downwards in case of thermal runaway

› 18650 size

› More than 7,000 cells in a Model S pack

Tesla Motors:

Pack Design-The Cell

Deformable center bar configurationSource: Tesla Patent 20110117403


» Tesla has publicly stated that it pays

somewhere between $200 and $300 per

kWh for the entire battery pack Navigant

Research estimates that it is spending

~$180 per kWh for its Panasonic cells

» Costs for cells and packs will continue to

decline in 2014 and 2015 (maybe 10-15%)

» With establishment of GigaFactory, Tesla

will be producing cells at $110-150per

kWh

Tesla Motors:

Pack Design-Costs

Model S Chassis Source: Greentech Media


» 35 GWh cell capacity; 50 GWh pack capacity

» Integrated on-site renewables for “majority” of power needs

» “Soup-to-nuts” facility: raw materials go in one end, finished battery

packs go out the other

» 6,500 employees

» Transportation of packs to NUMMI will be a minor cost, however rail is a

requirement—if shipping is by truck, then shipping costs increase by 4x

Tesla Motors:

GigaFactory-The Plan

GigaFactory renderingSource: Tesla


Lithium Ion Materials Costs

$14.49$19.08

$32.48$0.02

$2.87

$6.74

$3.48

$4.36

$24.16

$5.06

$7.27

$8.36

$3.26

$4.05

$5.51

$2.46

$5.36

$9.20

$2.38

$6.44

$7.36

$3.95

$9.75

$1.84

$0.01

$0.08

$2.25

$8.91

$9.90

$6.01

$0

$20

$40

$60

$80

$100

$120

Raw Material Price Refined Material Price Fully ProcessedMaterial Price

Other InactiveMaterial

Aluminum Container

Other ChemicalAdditives

Electrolyte Solventsand Additives

Electrolyte ActiveMaterial

Separator

Anode Copper FoilBacking

Anode ActiveMaterial

Cathode AluminumFoil Backing

Cathode ActiveMaterial

Raw Material, Refined Material, and Fully Processed Material Costs for Li-Ion Batteries, 2014

$44

$69

$104

©2014 Navigant Consulting, Inc. All rights reserved.22

Battery Transportation Logistics

» The Journey of a Molecule

› A single Lithium molecule has 7 distinct trips

before it is used by a consumer. All told, the

molecule has travelled 29,875 miles to get to

the user.

› Those trips are:1: Molecule is mined in Chile and shipped to U.S. refinery

to be turned into lithium carbonate (3,600 miles)

2: Lithium carbonate is shipped from U.S. refinery to

processing facility in Japan to be packaged and

measured (17,360 miles)

3: Lithium Carbonate is shipped to cathode powder

facility in South Korea (715 miles)

4: Cathode powder is shipped to China

5,6,7: Powder is moved within China three more times to

various distribution centers before finally getting to battery

factory to be placed inside battery (1,300 miles)

7: Finished battery is shipped from China back to U.S. to

be placed in automobile (7,800 miles)

1

2

3

5,6,78 4

Source: Navigant Research


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IEEFA ENERGY FINANCE 2015 - Policy Integrity › documents › 7_Jaffe... · » First lead-acid battery developed by Gaston Plante in 1859 for rail applications ... Li-ion Market