M A R K E T I N T E L L I G E N C E • A N A L Y S I S • B E N C H M A R K I N G
©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
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The team’s research methodology combines supply-side industry
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SECTION 1
BATTERY HISTORY AND
BACKGROUND
4 ©2014 Navigant Consulting, Inc. All rights reserved.
State of the Art Energy Storage 2010
5 ©2014 Navigant Consulting, Inc. All rights reserved.
The Baghdad Battery
(Source: Baghdad Museum) (Source: Smith)
6 ©2014 Navigant Consulting, Inc. All rights reserved.
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)
7 ©2014 Navigant Consulting, Inc. All rights reserved.
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)
8 ©2014 Navigant Consulting, Inc. All rights reserved.
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
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Advanced Battery Consumer Electronics Forecast
Advanced Batteries for Consumer Electronics Revenue by Region, World Markets: 2014-2023
(Source: Navigant Research)
Advanced Battery Consumer Electronics Forecast
Advanced Batteries for Consumer Electronics Revenue by Region, World Markets: 2012-2023
(Source: Navigant Research)
$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
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Advanced Battery EV Forecast
Advanced Batteries for XEV Revenue by Region, World Markets: 2012-2023
(Source: Navigant Research)
$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
12 ©2014 Navigant Consulting, Inc. All rights reserved.
Advanced Battery Stationary Storage Forecast
Advanced Batteries Stationary Storage Revenue by Region,
World Markets: 2012-2023
(Source: Navigant Research)
$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
13 ©2014 Navigant Consulting, Inc. All rights reserved.
Global Revenue Forecast for All Advanced Batteries
Advanced Batteries Revenue All Applications, World Markets: 2014-2023
(Source: Navigant Research)
$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
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» 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
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» 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
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» 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
19 ©2014 Navigant Consulting, Inc. All rights reserved.
» 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
20 ©2014 Navigant Consulting, Inc. All rights reserved.
» 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
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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
23 ©2014 Navigant Consulting, Inc. All rights reserved.
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