A handful of recent setbacks for energy storage start-ups points to the high cost of bringing new concepts to commercial scale against a strongly entrenched incumbent technology—in this case, the ubiquitously successful lithium-ion battery.
MIT Technology Review pegs its observation to the fates of four alternative battery makers: one filed for bankruptcy in March, a second put itself up for sale after failing to find investors, a third retrenched, while a fourth withdrew from the storage business entirely.
What the companies had in common was that they were all trying to sell comparatively unconventional approaches to storing electricity. Aquion Energy’s batteries used a salt water electrolyte, manganese oxide cathode, and a carbon-based anode. EnerVault made flow batteries, which involve two different solutions separated by a membrane. Ambri’s batteries relied on liquid metal. And LightSail Energy proposed to “store energy as compressed air in carbon fibre tanks,” but now sells the containers to hold natural gas.
“What is clear,” MIT observes, “is that despite the compelling need for better grid storage technology, any start-up today faces several daunting realities.” One is that the market for grid-scale storage “still isn’t large, in part because the technologies are immature and expensive”—something of a Catch-22 for the industry. But “more important in the immediate term, the price of existing technology in the form of lithium-ion batteries has dropped far faster than expected, narrowing the promised benefits of new approaches.”
The cost and mind-share competition from lithium-ion batteries is only becoming more insurmountable with time, MIT asserts. Bloomberg New Energy Finance, for one, projects that the floor price of LiON cells will drop to US$109 per kilowatt-hour by 2025, and to US$73 by 2030, though former Ambri founder and MIT material scientist Donald Sadoway notes that the 2030 estimate “seems to dip below the cost of raw materials.”
Still, start-ups promoting alternative approaches “must make a massive up-front investment to develop new hardware and scale up manufacturing, all while chasing moving price and performance targets as incumbent technologies improve,” the Review notes. Meanwhile, prospective “customers considering a multi-million-dollar storage system have little incentive to bet on an emerging and riskier technology. Lithium-ion batteries already meet many of the specific needs of large-scale utility customers, offering a reliable product from stable providers.”
That might not matter, Tech Review reflects, except that “the danger, in this case, is that many observers believe lithium-ion isn’t the right technology for full-scale baseload grid storage, because there seem to be limits on how cheap and long-lasting the technology can ever become.”
For one thing, the number of charge/discharge cycles that LiON batteries can sustain remains to be proven in commercial use; a lower than expected number could drive up the effective price of that form of storage. But while that question plays out, the technology’s market dominance “frosts over an already chilly investment market for technologies that may be only minimally better today, but could have far greater potential to transform the energy system in the long run.”
Numerous technologies might fill that role, the Review notes: “In addition to advanced battery possibilities, there are flywheels, compressed air, hydrogen fuel cells, electric-vehicle-to-grid systems, and even energy-storing air conditioners. But all these technologies are likely to require deep, sustained investments to develop them, test whether they are truly viable, and make them cost-competitive. The question is where such investments will come from.”
Or whether it will come at all. “Don’t hold your breath for the things that come after lithium-ion,” said energy entrepreneur Ilan Gur. “We’re much more likely to ride the lithium-ion cost curve for another few decades.”