Understanding Advanced Batteries and Energy Storage – Part I
Since I’m the new kid on the InvestorIntel block and most investors don’t have more than a passing familiarity with the advanced battery and energy storage space, my initial articles will focus on core issues and discuss them in manageable chunks. Once I’ve laid a solid foundation, I’ll begin to explore specific technologies and applications in greater detail.
My initial articles will be thought pieces that build a contextual framework for the more detailed analyses that follow. Since my perspective on the technical, economic and supply chain issues of energy storage, vehicle electrification and alternative energy is often unsettling, I encourage you to give yourself some time to read, think and participate in the discussion. The process won’t always be comforting, but I hope we’ll have a lot of fun together.
Imagination is a battery investor’s worst enemy
In 1883, Thomas Edison said,
“The storage battery is one of those peculiar things which appeals to the imagination, and no more perfect thing could be desired by stock swindlers than that very selfsame thing. …
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Understanding Advanced Batteries and Energy Storage – Part I
Posted on January 3, 2016 by John Petersen
Since I’m the new kid on the InvestorIntel block and most investors don’t have more than a passing familiarity with the advanced battery and energy storage space, my initial articles will focus on core issues and discuss them in manageable chunks. Once I’ve laid a solid foundation, I’ll begin to explore specific technologies and applications in greater detail.
My initial articles will be thought pieces that build a contextual framework for the more detailed analyses that follow. Since my perspective on the technical, economic and supply chain issues of energy storage, vehicle electrification and alternative energy is often unsettling, I encourage you to give yourself some time to read, think and participate in the discussion. The process won’t always be comforting, but I hope we’ll have a lot of fun together.
Imagination is a battery investor’s worst enemy
In 1883, Thomas Edison said,
“The storage battery is one of those peculiar things which appeals to the imagination, and no more perfect thing could be desired by stock swindlers than that very selfsame thing. …
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Just as soon as a man gets working on the secondary battery it brings out his latent capacity for lying. …”
The targets of Edison’s scorn were stock promoters who claimed they could double the value of their dynamos by charging batteries during the day, when nobody used electric lights, and selling their stored electricity at night. Edison did a masterful job of deconstructing the hype, discussing the technical challenges and related costs, and showing why the cure cost more than the disease.
Thanks to Google Books, the complete Edison interview from 1883 is available online and I believe it’s a “must read” for every prudent investor who wants a better grasp of the opportunities and challenges of alternative energy in general and advanced batteries in particular.
As we flash forward to 2016, updated lyrics for the same old song promise higher value for solar power systems that charge batteries during the day and deliver the stored electricity at night. All of the issues Edison drove home in 1883 are still issues, but they’re all too frequently ignored.
Mark Twain was right when he said, “History does not repeat itself but it rhymes.”
I began with the Edison story because his statement that batteries appeal to the imagination is a fundamental truth of energy storage A Great Truth. When fertile imaginations consider energy storage, they invariably overestimate the potential, underestimate the costs, technical challenges and risks, and make a quantum leap from sensible to absurd. By the time you factor in ideology, hope, politics and the profit motive, useful signals all but disappear. The result is an environment where promoters don’t even have to lie because the collective imagination lies for them.
Frankly, there is no alternative energy opportunity that’s more wildly overrated than the value of using manufactured energy storage devices to reinvent transportation and the electric grid. The opportunity is gargantuan, but unicorns abound and investors who don’t rigorously and regularly question their own assumptions are begging for trouble.
Battery technology improves at a glacial pace
The lead-acid batteries Thomas Edison knew in 1883 had specific energy of roughly 30 wh/kg. Today’s most advanced lithium-ion batteries have specific energies of up to 250 wh/kg. While that 7X improvement over 133 years is very important, it equates to a compound annual rate of roughly 1.6% and most of the gains were realized when new battery chemistries emerged.
Over the last 150 years, the principal innovations in the rechargeable battery world were:
1859 Invention of lead-acid battery
1899 Invention of nickel-cadmium battery
1901 Invention of nickel-iron battery
1947 Invention of sealed nickel-cadmium battery
1970 Invention of sealed lead-acid battery
1990 Commercialization of nickel-metal-hydride battery
1991 Commercialization of Lithium Cobalt Oxide (LiCoO2) battery
Since 1991 battery researchers have developed several variants on the basic LCO chemistry invented by Sony. The innovations include polymer electrolytes in 1994, Lithium Manganese Oxide (LiMn2O4) cathodes in 1996, Lithium Iron Phosphate (LiFePO4) cathodes in 1996, Lithium Nickel Cobalt Aluminum Oxide (LiNiCoAlO2) cathodes in 1999, Lithium Titanate (Li4Ti5012) cathodes in 2008 and Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2) cathodes in 2008…..
