A lost decade of innovation
Matt Rogers, the energy consultant who became DOE's chief official implementing the American Recovery and Reinvestment Act, believed "the United States' greatest competitive advantage is aligning technological innovation and high technology manufacturing to serve growing domestic and global demand."
"For the last decade, America lost sight of the important linkages along the innovation-manufacturing-deployment chain and lost global leadership in multiple industries as a result," he continued in a 2010 case study for Harvard Business School outlining DOE's approach.
In August 2009, DOE awarded $2.4 billion of stimulus funds to jump-start the U.S. industry. A123 got the second-largest grant, $249 million to build battery plants in Michigan.
In fourth place was Compact Power, a subsidiary of LG Chem, which got $150 million to build a Michigan plant of its own. When this plant is up and running, it will supply the cells for all 60,000 Volts that GM will build, annually, for the car's first edition. (Compact Power has since been absorbed as the North American division of LG Chem.)
From a policy point of view, the White House is where it wants to be. Last July, it released a report claiming its grants have begun building a U.S. industry from scratch. Factories in the United States supplied less than 2 percent of the world's advanced vehicle batteries before 2009, the report said, but they are on track to produce 40 percent in 2015.
Along the way, The White House expects battery prices to plunge through sheer manufacturing might and the research and development funded in the stimulus. Take an electric car with 100 miles of range: In 2009, its battery would have cost about $33,000. By 2030, the report said, that same battery will cost just $3,300. That cost cut would translate to smaller batteries like those in the Chevy Volt.
Are these figures realistic? The vagaries of battery chemistry and cost make it difficult to get a straight answer, or to make straight comparisons among the estimates by officials, companies, researchers and policy wonks.
But the ranges provided by most observers, within government and without, overlap in this range: $800 to $1,000 to produce a kilowatt-hour's worth of battery.
The next question -- how quickly this can fall -- is much more controversial. As usual, caveats apply: It depends what specific lithium-ion recipe you're talking about, how many you're making, and when.
One respected estimate, by Boston Consulting Group, says costs will slide to the $250 to $500 per kWh range by 2020. Another estimate last year, by a National Academy of Sciences committee, incensed electric-car supporters by claiming a kilowatt of battery costs between $1,250 and $1,700 today. These high prices, the committee said, would delay the cars' uptake until 2030, even in the most optimistic scenario.
Pushing down the cost curve
According to the Department of Energy's Vehicle Technologies Office, making lithium-ion batteries today at scale -- in batches of several hundred thousand -- costs about $800 per kWh. Patrick Davis, the office's program manager, and Dave Howell, its team lead for hybrid-electric technology, think the batteries can near $300 by 2015.
At first, this would occur at the factory level. With practice, factory managers can optimize the process. And once the plant reaches full bore, certain fixed costs get spread over the whole output, lowering the cost of an individual battery.
Then, Howell and Davis said, the scientists get to work. They'll look for ways to tweak the lithium-ion chemistry to get cheaper, more powerful, more long-lasting. "There is a lot of good things happening in the lab that point to the fact that you can do this," Davis said of the $300 mark. "No one knows where the true bottom of the market is, as far as lithium-ion. But it does get very difficult to reduce cost way beyond $300 per kWh."
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7 Comments
Add Commentso sad to see the comment about Florida....why say more...
Reply | Report Abuse | Link to thisIt sounds like A123 needs some sales people...why aren't they promoting household standbys....100 of millions of opportunities...(probably billions world wide)....
The first thing the USA & Australia also needs, is cheap reliable & bountiful electrical energy to power its industry. This is not possible while resources are used to play around with fringe technologies that will never perform according to specs. & the real alternative is shackled by ignorance & restrictions that bear no relationship to reality. To give the alternative energy sector a boost, such as carbon taxes being proposed for existing power stations without first clearing the way for the expansion of nuclear power. You will not see restrictions on nuclear power in China or any other Asian economy. Industry in Australia is also being driven off shore by this madness. Even the threat of a carbon tax has halted construction of coal fired power stations while maintaining an outright ban on nuclear. We deserve the consequences if we do not call a halt to this green inspired ignorance.
Reply | Report Abuse | Link to thisThe other big risk is Governments trying to pick winners. The Australian Government last year granted a geothermal company $90M. Turns out the deep well hydro thermal water is highly corrosive. Ate all the well pipes. Down the gurgler you might say. Only tax payers money.
I'm with Wayne Williamson on this one, A123 is missing a huge market for both home and commercial electricity storage. Off peak electricity costs less than peak electricity. By having battery storage a home or business can store up during low cost times and cut high cost time usage by using stored power. Solar and wind facilities can do the same. To be viable the price difference between peak generation and off peak needs to be returned in sufficient ammount to pay for the cost of the batteries. For the utility I work for Winter peak is over $0.17 per kwh and off peak is less than $0.2. That would give a price difference of around $0.15 per kWh. To make up the $800 per kWh you would need to charge and drain the lithium-ion batteries from A123 about 5,333 times to break even. Since high cost peak hits in summer and I don't have easy access to summer peak and off peak data all I can say is the price difference is much larger so use to break even would be lower. Unless the summer peak generation costs are much higher I don't see these batteries being overly cost effective just yet but different utilities would have different generation costs.
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