Thunder Said Energy is a research firm focused on economic opportunities that drive the energy transition. Our top ten conclusions into batteries and energy storage are summarized below, looking across all of our research.
(1) Transportation: a revolution. Gasoline and diesel vehicles are 15-25% efficient, on a wagon to wheel basis, due to immutable laws of thermodynamics. Electric vehicles using lithium ion batteries are 75-95% efficient. The technology is only getting better, including via power electronics and electric motors. So this is a game changer for light transportation, which becomes >70% electric in our oil models by 2050.
(2) Bottlenecks in battery materials will set the limit on the scale up. Numerically, the largest bottlenecks are in lithium; followed by fluorinated polymers and battery-grade nickel; then graphite and copper. We are less worried about cobalt. Our best data-file into materials used in a lithium ion battery, and their costs, is linked here.
(3) Power grids: efficiency drawbacks. Amidst materials bottlenecks, we think vehicle applications will generally outcompete grid applications. While an EV is 3-4x more efficient than what it replaces, grid scale storage usually has a 10%+ energy penalty. Thus the 65kWh battery in a typical EV saves 2-4x more energy and 25-150% more CO2 each year than a typical grid battery (note here).
(4) Power grids: the best battery is no battery. All batteries have a cost, usually $1,000-2,000/kW, which is re-couped through a storage spread, usually around 20c/kWh for daily charging-discharging (model here). Conversely, there are many loads in the power grid that can shift their demand (e.g., to the times when grids are over-saturated with renewables). This often has no cost. And no efficiency losses. Some of our favorite examples are catalogued here.
(5) Power grids: short-term first. The biggest challenges for ramping up wind and solar stem from short-term volatility (inertia, reactive power compensation, frequency regulation, <1-minute power drops). This requires short-term energy storage first, in the 2020s and 2030s. Many short term batteries can also earn their keep through recuperative energy savings. But note short term energy storage favors capacitor banks, STATCOMs, flywheels, synchronous condensers, supercapacitors. It is debatable whether lithium ion is well suited to short-term smoothing. Eaton has even recently started integrating supercapacitors into its industrial batteries, amidst increasing customer demand for short-term performance (case studies here).
(6) Long-term storage is for the 2040s, if at all. If you cycle your battery 10 times per day, you amortize its capex across 3,650 cycles per year, and the cost per cycle is <1c/kWh. Cycle 1 time per day, and it is 10-20c/kWh. Cycle 1 time per month and you are well above 200c/kWh. The maths are reviewed here. You can also stress test numbers in our pumped hydro model, other battery models. So we do not think long term storage (via batteries or hydrogen) will ever come into the money. We see more opportunity in long-distance power transmission, decarbonized gas, next-gen nuclear; fully decarbonizing future grids while keeping costs below 10-20c/kWh.
(7) Density will improve, but not enough for mass deployment of battery trucks, ships or planes. Today’s lithium ion batteries store 200Wh/kg. Oil products contain 12,000Wh/kg. Thus a battery-powered Class 8 truck will have 70-80% lower range than a diesel truck. And a battery-powered plane has a range of c60-miles. We do not currently see battery powered trucks, ships or planes going mainstream before 2050.
(8) Next-gen batteries: can we de-risk them? There is constant progress and innovation in batteries, to improve density, duration, chemistry, longevity, cost, charging speeds. So we are constantly screening patent libraries. As a general rule we have found incremental innovations easier to de-risk. But we have been less able to de-risk big changes. Replacing lithium with sodium has issues with ionic radius. Solid state batteries often have issues with dendrites and longevity. Redox flow likely works but has 70-75% efficiency.
(9) End-of-life is most unresolved. If there is one TSE research note on batteries, which we think decision-makers should read it is this one, explaining battery degradation, the best antidotes and their implications (lithium upside?, manufacturer upside?). This matters, because despite some interesting inroads, we still do not think the industry has really cracked battery recycling, a potential $100bn pa market in the 2040s.
(10) Which battery companies? We have been most impressed by manufacturing technologies from 24M and CATL, followed by integrated battery offerings from Eaton, Stem and Powin. There are some interesting innovations from Amprius, Enovix, Quantumscape. But so far, we have found it more challenging to entirely de-risk concepts from Sila, Form Energy, Solid Power, Storedot. Please email us if there are any battery technologies you would like us to explore.
Around 60 reports and data-files into batteries and energy storage have led us to these conclusions above; listed in chronological order on our batteries category page. The best way to access our PDF reports and data-files is through a subscription to TSE research.