This past week, Lux Research released a report on its outlook for lithium-ion batteries and the prospects for cost reduction.  Lux noted that the electric vehicle market has been slow to develop and that the key to its more rapid evolution is, as always, reducing the price of lithium-ion batteries.  The report suggests, however, that there is a limit to the price reductions that existing technology can deliver and that the long term commercial viability of battery electric vehicles (BEV’s) must await the development of new, next generation technologies.

The Lux report is interesting because it puts some numbers on the problem.  According to Lux’s calculation, the best that can be done with existing lithium-ion technology, largely by manufacturing batteries at scale, is to reduce their cost to about $397 per kWh.  While this is likely a significant improvement over the cost of lithium-ion automotive batteries today, it is a far cry from the <$150 per kWh threshold that the U.S. Advanced Battery Consortium estimates as necessary for BEV’s to penetrate the mass consumer market.  Lux suggests that the best opportunities for further price reductions in BEV batteries lie in developing new cathode materials, such as lithium-air, lithium-sulfur and magnesium ion, and solid state lithium-ion batteries.

Distributed, grid-connected energy storage technology is also running up against significant cost barriers.  The cost figures being reported for the initial deployments of community energy storage systems are too high and unsustainable.  The cost challenge for stationary storage, however, as opposed to motive storage, seems less related to the price of the battery itself than to the cost of evaluating, monitoring and controlling the battery both before and after it is deployed.

With an eye on addressing this problem, ARPA-E announced this week a new initiative aimed at identifying high-impact concepts for providing diagnostic, prognostic, and control capabilities for energy storage systems.  The initiative focuses on encouraging the formation of teams of companies and researchers organized across industrial sectors that will bid on ARPA-E funding opportunities for energy storage control systems that will be announced in the future. 

The ARPA-E initiative aims at encouraging the building of more and better relationships among the software, controls and battery industries, sectors which have not necessarily worked closely together in the past.  This is a very interesting concept and NAATBatt looks forward to doing its part to encourage the formation of these relationships.  More information about the ARPA-E initiative can be found at:

It is clear that new innovation is needed to bring down the cost of energy storage and that the innovation must produce technologies and systems that are different than what we use today.  But in looking for that innovation and trying to promote it, it is important to identify from where it is most likely to come.  Innovation that matters, that truly impacts mature technologies such as automobiles and the electricity grid, will not occur in a vacuum (or in a laboratory alone). 

Innovation that matters can only be promoted by giving battery manufacturers, auto makers and utilities real world, practical experience with existing energy storage technology, insufficient as it may be, and letting them figure out how best to increase its power and decrease its cost.  

Developing next generation technologies is important, even critical, to the future of energy storage.  But we must resist the temptation to believe that these new technologies will emerge magically from someone’s garage. 

Energy technology is not information technology and does not work the same way.  Giving battery manufacturers, auto makers and utilities the practical experience they need with energy storage technology is the true key to innovation that matters and that will ultimately allow energy storage technology to fulfill its promise in vehicles and on the grid.