Battery degradation: causes, effects & implications?

What causes battery degradation? This 14-page note offers five rules of thumb to maximize the longevity of lithium-ion batteries, in grid-scale storage and electric vehicles. The data suggest hidden upside in the demand for batteries, for lithium and high-quality power electronics, especially if batteries are to backstop renewables.

Battery degradation matters. Small changes in battery modelling parameters — e.g., a 3-4% decline rate and a 2-3 year shorter lifespan — can obliterate a 10% IRR on a grid-scale battery. Conversely, optimizing the lifespan and functioning of a battery can double its IRR (page 2).

We present a very simple “rule of thumb” model on page 3. Then we explain why batteries degrade on pages 4-5, covering fabled mechanisms such as the solid electrolyte interface, lithium plating, positive electrode decomposition, particle fracturing. In total there are 18 main battery degradation pathways.

The complexity gets worse. We aggregated 7M data-points into a big battery degradation data file, in turn sourced from excellent lab studies by Sandia National Laboratories. When the exact same cells are tested under the exact same cycles, their lifespans can vary by a factor of 3x. One of the drivers of degradation is random manufacturing defects (page 6).

Five rules of thumb for battery degradation may nevertheless be helpful, to derive actionable conclusions. The top five drivers of battery degradation are reviewed on pages 7-11. In each case, we outline the parameter, why it causes degradation, and how it can be improved.

Are lithium ion batteries a good fit for backing up volatile renewables inputs? We answer this question on pages 12-13. There is an array of companies that increasingly excites us here, such as CATL, Stem, Powin, Eaton, supercapacitors, and other power electronics names; and general upside for lithium demand, as degradation can best be avoided by over-sizing the batteries.

However, we also fear some battery projects may end up underwater and we see more muted upside for metals such as nickel and cobalt, due to the degradation rates of different battery chemistries, which does seem to favor LFP.

Data and details on what causes battery degradation are in the note, alongside a more actionable overview of maximizing battery value.

Copyright: Thunder Said Energy, 2019-2024.