We often look at these price reductions relative to time. But, of course, it’s not time itself that drives these reductions. It’s the innovations in t
We often look at these price reductions relative to time. But, of course, it’s not time itself that drives these reductions. It’s the innovations in the production of these batteries that make it possible to produce them at lower and lower costs. As production increases there are more opportunities and incentives to achieve such innovations: that’s why prices often fall when technologies begin to scale [Max’s post looks at this mechanism – called Wright’s Law – in detail].
In the chart we see the relationship between prices and cumulative installed capacity of batteries. Both are shown on logarithmic axes.
In 1991 the market size of lithium-ion cells was tiny: there was just 0.13 megawatts (MWh) installed. That’s just 130 kWh – less than two 75 kWh battery packs that you’d find in a Tesla car. Since then deployed capacity has increased rapidly. By 2016, this had grown to 78,000 MWh. That’s six orders of magnitude higher.
The relationship between price and cumulative installed capacity is called the ‘learning curve’. This is a concept that is often used to understand cost improvements in scaling technologies. The learning rate tells us, on average, how much the price of something falls for every doubling of cumulative capacity. We find that for lithium-ion cells, this learning rate was 20.1%. This means prices fell an average of 18.9% every time the installed capacity doubled. As it happens, this is similar to the learning rate of solar modules; with every doubling of installed solar capacity, the price of solar modules dropped by an average of 20.2%.
The improvements we’ve seen in battery technologies are not limited to lower costs. As Ziegler and Trancik show, the energy density of cells has also been increasing. Energy density measures the amount of electrical energy you can store in a liter (or unit) of battery. In 1991 you could only get 200 watt-hours (Wh) of capacity per liter of battery. You can now get over 700 Wh. That’s a 3.4-fold increase.
What this means is that batteries have been getting smaller and lighter for any given electrical capacity. You might have noticed this yourself as your mobile phones were getting lighter and slimmer. This is a crucial technological improvement as one of the major drawbacks of some battery technologies is that they are heavy and this limits their use in a number of technologies that are still fossil fuel powered. Imagine trying to fly an electric plane full of heavy batteries. In fact, the size and weight of batteries that you’d need to power large aircraft is one the biggest barriers to a transition to electrified aviation.7 The same is true for shipping or trucks: bigger and heavier batteries just make everything more costly in energy terms.8 You need lots of large batteries, which take up space and add weight to carry around.
Our batteries are now only a fraction of the cost and are smaller and lighter. These technological improvements are just as essential to making low-carbon electricity the default affordable option as reductions in the cost of solar panels or wind turbines. But there is still a lot to do if we want to fly in electric airliners, or have our goods transported across the oceans in electric ships any time soon.