WORLD’S NEW OIL BARREL: THE NOT-SO-HUMBLE BATTERY
by Nancy Ylvisaker, C-Change Conversations
When Sony invented the lithium-ion battery in 1991, it made today’s modern technology possible, powering laptops, appliances, and the first generations of electric vehicles (EVs). We take those humble batteries for granted. Now the battery is critical yet again, this time to the success – or failure – of the mission to head off climate change by transforming the energy sector from one dependent on fossil fuels to one based on clean, renewable energy.
Renewables Revolution – The New Energy Paradigm
It is astounding that energy experts project that by 2030 we can move our energy sector to 30% renewables (from just 12% today) and have 50% of new car sales be EVs (vs. less than 5% today). And yet, it is not beyond reach, thanks to the massive innovation in wind and solar energy in the last two decades. Technologies have advanced so quickly that wind and solar are now less expensive than coal and oil. More than 80% of new power capacity today comes from renewable energy. That means renewables will generate 12 times more power by 2030 than they do today, according to the International Energy Agency. The recent enactment of the Inflation Reduction Act will provide new investment and support for the transition to renewables, and greatly improve the odds of meeting – or exceeding – these targets.
Clean Energy is Only as Good as the Battery That Stores It
But here is the problem: wind and solar energy aren’t constant, and we need reliable energy to power our homes, our cars, and economy. That of course is where batteries come in – to store the vast new renewable energy resources coming online. Batteries are so critical to this energy revolution that some analysts call them “the world’s new oil barrel.” As we shall see later, that phrase is apt in more than one sense. But while technology improvements and economies of scale have pushed down overall battery costs by 90% over the past decade – similar to the price declines in wind and solar technologies – improvements in battery technology aren’t yet sufficient to keep pace with the explosion in renewable energy capacity.
If we are to make EVs ubiquitous and to run our power grids on renewable energy, we urgently need safer, less expensive, more powerful batteries – and must address the host of serious issues besetting – and in some cases caused by – today’s battery industry. A further complication is that the needs of the EV market and the power grid have diverged. The grid needs batteries that can discharge over days, not hours – and that means new battery architecture.
The discussion below highlights the challenges – and the enormous opportunities and innovations – in energy storage today.
Battery Architecture – The Perfect Battery, Except …
Lithium-ion batteries remain the workhorse of the energy sector. Though chemically complex, the basic architecture of a battery is simple:
- a cathode (charging end), typically made of lithium-metal oxides including cobalt, nickel, and manganese;
- an anode (discharging end), made almost entirely of graphite; and
- a liquid electrolyte in between, typically lithium salts. The electrolyte shuttles the lithium ions back and forth between the cathode and anode, creating battery charge.
But this battery architecture limits both charging speed and battery life. Rather like cars on a crowded highway approaching a toll booth, only so many ions can go through the central battery electrolyte at a time. The average range in 2021 for an EV was just 234 miles – just half the distance of most gasoline-powered cars, not yet enough to induce rapid, large-scale adoption. And charging times ranging from 30 minutes to eight hours frustrate buyers used to a three-minute fill of their gas tank.
Lithium, the lithium-ion battery’s namesake raw material, was transformative in battery technology. Extremely light and very energy dense, it helped offset the drag on battery charge and range caused by the huge weight of the battery and its metal case, averaging 1,000 pounds – often 20-30% of EV weight.
But lithium-ion batteries could be dangerously unstable, causing battery fires and explosions; in 2016 aviation regulators prohibited transport of lithium-ion batteries in air cargo. To reduce that volatility and improve efficiency, cobalt and nickel have been substituted for a portion of the lithium.
Complex Environmental, Community, and Access Issues
Blood Diamonds, White Gold, and Water Wars
Unfortunately, sourcing of critical minerals like cobalt, lithium, and nickel comes with a host of complex, seemingly intractable problems. Seventy percent of cobalt, essential to preventing battery fires, is found in the Democratic Republic of Congo, a nation rife with human rights abuses. Because of the perilous working conditions for cobalt miners (including women and children), political corruption, and cobalt’s sky-high price, it is often called the “blood diamond” of the battery industry.
An estimated 50-70% of known lithium is concentrated in South America’s “Lithium Triangle,” which covers parts of Argentina, Bolivia, and Chile. It is one of the driest places on earth, with fragile, otherworldly salt flats covering thousands of acres. To extract lithium, miners flood these flats with water pumped from aquifers, local wells, and streams. The mineral rich brine evaporates in the hot, dry air over one to two years, leaving pure lithium – so valuable it is sometimes called “white gold.” Also left behind are degraded landscapes and diminished resources. In Chile’s arid Salar de Atacama, where farmers already truck in water to irrigate crops, mining activities consume 65% of the area’s water.
In Australia, the second major source of lithium, mining practices involve displacement of thousands of acres of soil, including animal habitats and their vegetation. These issues have sharply slowed approval of new projects, including in the U.S., which has an estimated 10% of world supply of lithium, but currently only one mine. Many projects are in the pipeline, but face rigorous regulatory and public challenges.
Supply Chain Woes Cause Market and Price Disruption
These issues will only escalate. Demand for battery minerals is expected to increase tenfold by 2030 alone as automakers introduce better and better EV models – and the public buys them at an increasing clip. That demand, and fears about severe supply constraints, have resulted in skyrocketing prices. Prices for lithium surged 750% just last year, and analysts expect that prices of these finite, hard-to-extract materials are expected to continue to soar. That, of course, creates a potential Catch-22: to sell more EVs they need to become more cost-competitive, but raw material scarcity will drive up prices.
Geo-politics: China’s Market Hegemony Poses Threats to the U.S.
Here is where the dark shadow of the battery/oil barrel analogy comes back: controlling the minerals that power batteries is viewed by many as a 21st century version of the 1970s’ Middle East oil crisis. And China today is to battery production what the Middle East has long been to oil production. While most raw ingredients available are currently found in Africa, South America, and Australia, China is the sole, dominant market-maker, wielding perhaps more power than OPEC some 50 years ago.
Today, 80% of cobalt production and 70% of the market for graphite are controlled by China. China also controls most processing operations, including two-thirds of all lithium processing (vs. just six percent in the United States). Even in Australia, China holds controlling stakes in the largest lithium operations. All told, a staggering 80% of batteries are produced in China.
In the U.S, this has set off alarm bells in the corridors of power and industry. Creating access to these minerals, considered “essential to our national security,” was reflected in President Biden’s recent invoking of the Defense Production Act to support production of critical minerals. This concern can be traced all through provisions of the Inflation Reduction Act: the $7,500 EV tax credits for EV purchases by consumers are only available for vehicles that do not contain “any” critical minerals or components sourced from countries such as China and Russia.
With the transformation of our energy sector riding on energy storage, and the U.S. vulnerable to finite supplies and China’s hegemony, the race is on: not just to achieve greater self-sufficiency, but to innovate battery architecture itself in a way that will transform battery capabilities – and at the same time also massively reduce environmental and access concerns. It’s a whole new battery paradigm. Fortunately, there is plenty of opportunity and action.
Opportunities – A Race For The Future
Building A Secure, U.S.-Based Supply Chain
Government and industry alike view it as hugely important to build a U.S.-based supply chain. Vast investment from both sectors is taking place. Mining projects with investors such as Toyota, Ford, and Panasonic are proposed or underway in Nevada, North Carolina, and Maine. However, many face regulatory hurdles and community challenges due to environmental concerns so researchers are hotly pursuing less destructive extraction technologies. For example, Berkshire Hathaway Energy Renewables will break ground on a facility in California’s so-called “Lithium Valley” in Imperial County, CA that will test the commercial viability of a sustainable geo-thermal process for lithium extraction, using existing geo-thermal resources from its 11 plants near the Salton Sea.
Reduce, Reuse, Recycle
Recycling seems a sensible solution to help reduce the need for mining new raw materials such as lithium. But batteries contain thousands of single cells – the Tesla Model S battery contains over 4,000 – so disassembling them for recycling is laborious and expensive. As a result, less than five percent are recycled, despite containing expensive, finite minerals. That is about to change. Redwood Materials, led by former Tesla battery executives and already a leading battery recycler, is working with Ford and Toyota to build the world’s largest recycling plant in Reno, Nevada and another in Tennessee. Recycling, by reducing demand for newly mined minerals, will help address soaring prices and minimize pressure on fragile landscapes.
Redwood is also building a $3.5 billion battery factory that will use those recycled materials to build cathodes and anodes. By 2030, the plant is projected to produce enough new materials for five million new EVs annually, placing it in the ranks of one of the world’s largest producers.
The Holy Grail for EVs – A Solid-State Lithium Metal Battery
Battery models that will vastly increase range, reduce charging time, and also address the geo-political and environmental concerns described above are finally getting close to prime time. Investors like Bill Gates and Volkswagen have invested billions to this end. Perhaps closest to market is QuantumScape’s new battery, expected to show up in Volkswagens by 2024.
QuantumScape’s battery replaces the lithium-ion’s liquid lithium electrolyte with a ceramic, which can hold more energy and transfer it faster. The results? The battery charging time is reduced by 80%, and the average EV range of 234 miles is more than doubled to 500-plus miles. That makes buying an EV a much more compelling proposition for many. The ceramic materials are also largely non-flammable, solving the problem of battery fires. And with far less lithium and cobalt, the battery will have a buffer from supply bottlenecks and the resulting price swings of these finite materials.
If successful, QuantumScape will leapfrog competitors and launch the U.S. as a major player in the battery market, helping shift the balance of market power from China. Other companies are racing just behind QuantumScape; Nissan says it will deliver its own version of a solid-state battery by 2028.
Batteries for the Grid: Think Large and Heavy
To create batteries to power the grid when the sun isn’t shining and the wind isn’t blowing, it paid to throw out the old models. Grid batteries don’t need to power anything mobile – so no need for light, expensive materials like lithium, packed under a car hood. Think large, solid, heavy – like rows upon rows of shipping containers or mobile homes.
Form Energy, also founded by former Tesla leaders, is creating giant batteries like this that can handle the massive expansion coming in the nation’s electrical grid. To solve the cost and sourcing issues, engineers put together two of the most abundant and inexpensive materials on earth: iron and oxygen. The charge is created by oxidation. Simply put, the oxygen continuously rusts and de-rusts the iron. The cost? About a tenth of a lithium-ion battery. Great River Energy, a Minnesota utility, plans to put the Iron-Air battery to work in 2023, capturing energy from its wind turbines. With success, these early projects should launch an entirely new era in energy storage and hasten our transition to abundant, clean energy.
The Future is Nigh
We tend to project the past, or the current state of play, on the future. Using that mindset, the potential for change always seems more limited, less possible – further away. And yet paradigm shifts are often in the making, behind the scenes, for a very long time. When the innovations that generate them burst on the scene, the shift to the new landscape can occur with remarkable speed. Let’s hope so. Our planet’s hopes ride on it.
Nancy Ylvisaker presents the C-Change Primer. She worked for 17 years in finance in New York City at JP Morgan and Merrill Lynch as an investment banker and head of both firm’s Community Development Corporations. After moving to her current home in St. Louis, she spent eight years heading a non-profit historic cemetery and Level II arboretum. She has served as the board chair for the Nature Conservancy in Missouri and is on several other conservation boards including the Center for Plant Conservation, the Harris World Ecology Center, and the Danforth Plant Science Center Leadership Council. Nancy holds an MBA from the Yale School of Management and in 2020 completed a post-graduate program in Financing and Deploying Clean Energy at the Yale Center for Business and the Environment.