STEERing the battery industry in right direction
A recap of the launch event at Stanford.
First post of the year! As I split my time between California and London, I get to go to more events in both parts of the world now. BTW will be at CES Vegas this week. If you’re around, say hi.
We had the pleasure to attend the STEER launch party a few months back, a new initiative at Stanford in the energy storage space and the brain child of our friend Adrian Yao.
Highlighting some notes and key takeaways. There were 4 panels:
What will dominate short-duration storage in 2030?
What is the predicted market and duration composition of storage for a decarbonizing grid?
What do we need to do differently to avoid constraining the pace and scale of the energy transition due to materials limitations?
What are realistic pathways of bringing new battery chemistries to scale in the transportation market?
What will dominate short-duration storage in 2030?
The first panel was kicked off by Cameron Dales (Peak Energy), Colin Wessells (Natron Energy), Steven Cai (Gotion), and Shayle Kann (Energy Impact Partners) moderated by Adrian Yao (STEER).
Sodium ion battery tech. Sodium ion is up and coming, with potential cost advantages and safety improvements, but not without challenges (as with any new chemistry). On manufacturing, sodium-ion can somewhat integrate into current systems but this "drop-in" notion is only “80% accurate”. Changing to sodium-ion would require considerable modifications in tooling, machines, and process design. Flipping Li-ion machinery to work with to new materials like Na -ion is costly, time-consuming and high risk given the thin profit margins in the industry.
Customers. The market scale for Na-ion needs to be as substantial as the automotive market to grow like Li-ion. The panel highlighted the need for a stable customer with predictable purchasing cycles. The auto industry is perfect for that since they can project the number of cars and batteries on a month to month basis. Energy storage is a little more sporadic, may be an order one year, and then another a few years later. This is changing as we speak, and the energy storage industry is starting to have more regular buying patterns.
Safety and Costs. Safety, although paramount, does not really get a price premium (customers may not tend to pay extra for the safety factor). The cost metrics don't always reflect the safety advantages. Li-ion remains the preferred solution (for 2030). However, there are real concerns with price hikes in the lithium industry “horror stories” - buyers in the grid space particularly value this stability. Sodium-ion is viewed as a viable alternative to counteract these price increases. Gotion today has a team of 30 engineers dedicated to investigating sodium-ion today.
Supply Chain and Geopolitics. We saw graphite exports being restricted by these Chinese government last month. Natural graphite could be produced domestically but its production is limited by lots of EPA regulations. Gotion is expanding their bases to different regions like Morocco for potential cost benefits and geopolitical advantages and to secure supply of materials (like phosphates). There's an emphasis on establishing a strong supply base to remain competitive.
Dominance in 2030. Both Shayle and Cameron believe that Li-ion will continue to dominate by 2030. New technologies would need to offer dramatic improvements over Li-ion to be competitive. The industry has been littered with many "incrementally better" technologies that never fully took off. For grid storage, US utility companies are slow and find it challenging to justify new, riskier technologies to regulators. The decision-making process for these utilities remains opaque. There's a psychological element to the decision-making process for those procuring batteries for their organizations/utilities, as their professional reputations are at stake if they champion a new technology that ultimately doesn’t work. External factors, like the EV tax credit, stationary storage tax credit, and production tax credit, will also play significant roles in the adoption and scaling of energy storage technologies.
What is the predicted market and duration composition of storage for a decarbonizing grid?
The second panel consisted of Marco Ferrara (Form Energy), Andrew Ponec (Antora Energy), Andy Ott (X, the Moonshot Factory), Haresh Kamath (EPRI), moderated by Sally Benson (STEER/Stanford).
Technology. All the panelists were involved in modelling the interplay of short and long duration storage and showing tradeoffs. The main consensus overall was that Li-ion will dominate overall energy storage market (4 hours). The need for medium-duration storage, up to approximately 100 hours, is still being assessed and will dictate the extent to which alternative storage models are integrated. The consensus suggests that true long-duration storage will likely rely on chemical storage solutions. Amidst the array of emerging technologies, it is anticipated that only a few will eventually prevail and scale up to meet economic and efficiency benchmarks. Ways to promote long duration energy storage: capacity markets.1
Transmission issues. The primary challenges revolve around enhancing capacity and reforming transmission systems, particularly across state lines. Europe emerges as a frontrunner in this domain, largely attributed to the benefit of a cohesive regulatory framework that is shared amongst the states of the European Union. This shared regulatory environment streamlines the integration of storage solutions.
Economies of finance. While individual systems with novel technologies may be cost-competitive, their financial viability can be hamstrung by project financers. This reluctance is due to a lack of familiarity with these novel technologies, which diverge from traditional risk profiles, inflating overall project costs due to perceived risks. It is important to remember that the incumbent for lots of long duration energy storage is pumped hydro storage which has been around for 100+ years and has been proven to be reliable, and aligns with the conventional comfort parameters of financers.
What do we need to do differently to avoid constraining the pace and scale of the energy transition due to materials limitations?
The third panel featured Kurt House (KoBold Metals), Richard Tite (TechMet), Sarah Maryssael (Livent), Henry Sanderson (Benchmark), moderated by Emily King (Prospector Portal).
Material Sourcing / OEM Involvement. Today, more than half of the mining efforts (by number of public companies operating and volumes mined) are directed towards precious metals rather than the battery metals needed for energy storage solutions. A focus on battery metals is growing and (some) OEMs are securing supply chains through offtakes while others are “being arrogant and not securing anything, because they believe they will be able to secure it later when they want it”, which could risk long-term reliability of material supply. Particularly difficult since mining operations take 11-12 years to setup optimistically. OEMs often lack the necessary skills to effectively choose and collaborate with mining partners, underlining the importance of expert due diligence with companies like TechMet.
Supply Chain Transparency. The current state of the supply chain lacks transparency, making it difficult to trace the origins and paths of materials. Increasing efforts are being made to track the origins and flow of materials to ensure responsible sourcing and reduce risks associated with opaque supply chains.
Economic Considerations. The market is dealing with low prices, which can impact the financial viability of mining operations. Historically, Cobalt:Nickel price ratio is typically 2-3:1, today about 1.7:1, The mining sector, especially for critical minerals, faces difficulty in maintaining profitability due to fluctuating commodity prices and operational costs. It was noted China pays less attention to prices - and instead a practice of always investing with primary considerations on geological and grade considerations, and putting ESG factors secondary.
Technical and Regulatory Challenges. Regulations make it challenging to permit new mines, particularly open-pit mines critical for battery materials. Emphasizes the importance of having not just raw materials but also the capacity to process and refine them in order to create a fully secure value chain. Handicapped if you have one without the other.
Talent. There is a general vibe of community opposition to mining projects, which can have significant implications for the development of new mining initiatives and overall material availability.
You can dig up all the usable material you want but if you can’t process and refine it then it’s useless. Xi Jinping could turn us off tomorrow if he wanted to.
What are realistic pathways of bringing new battery chemistries to scale in the transportation market?
The scaling of new battery chemistries is always the biggest question. The last panel was a well-known panel of all CTOs including Celina Mikolajczak (Lyten), Tim Holme (QuantumScape), Steven Kaye (Our Next Energy), moderated by Will Chueh (STEER/SLAC-Stanford Battery Center).
Market entry. New battery technologies take time to penetrate larger markets, necessitating initial adoption in smaller beachhead markets will be critical. Going straight for the main market segment with the biggest market is dangerous, as you don’t have enough traction to demonstrate. Different experts advocate for different initial market entry strategies, such as focusing on fleet vehicles, trucking, or high-end performance EVs as the first market. Entering markets with higher premiums and smaller volumes, like trucking for Our Next Energy, is considered a beneficial first step due to less stringent regulatory requirements. These new technologies often start off expensive, with costs reducing over time as they achieve scale and widespread acceptance.
“If you try to get there all at once, you’re going to face plant”
Government support. Governments and large corporations, especially those in countries like China and Korea, play a vital role by providing financial backing and facilitating infrastructural developments. Picking and supporting winners within countries, especially in the US, can accelerate the adoption and scaling process. Governments should come in and help with (not just) funding, but accelerate the permitting for the factory, the suppliers, the suppliers’ suppliers, etc.
Challenges in Production and Supply Chain. Manufacturing equipment have really long lead times - some coaters won’t talk to you till 5 years later, and have 2+ years lead time. New entrants compete with established factories for equipment, making market penetration more challenging. The lack of specialized battery tooling companies in the US, despite the presence of factories that manufacture complex products, presents additional challenges. However, there are a lot of other tooling companies that make similar technical equipment.
Learning curve. Historically, battery chemistries like NMC and LFP took approximately 12 years to commercialize. However, this timeline can
be shortened by learning from previous chemistries. Innovations in areas like Battery Management Systems (BMS) and pack design can expedite the commercialization process, even more than breakthroughs in battery chemistry.
Commercialisation. Automation and economies of scale have already reached advanced stages in leading factories like Panasonic, leaving limited room for cost savings in these areas. Being the first to market may not always be advantageous, as pioneers can be easily surpassed by subsequent entrants with superior or more cost-effective technologies.
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A primer on capacity markets - The Moving Landscape of Energy Storage: a short introduction to energy markets