British intelligence firm IHS Markit has predicted the price of li-ion battery prices will drop below $100/kWh (€85/kWh) as discoveries of lithium deposits - one of the main materials in their production - have raised hopes about a reduction raw material costs and increased supply chain diversity.
Liion Battery. Credit: Shutterstock
The firm has predicted that storage costs will continue their downward trajectory on the back of product and process optimisation. They say that by as early as 2023, the price could finally drop below the projected amount.
Meanwhile, new lithium mining projects are set to start in both the UK and US, which could reduce dependency on raw materials from Chile, Australia and China.
The analysts have forecast average lithium-ion costs of as little as $72/kWh (€63/kWh) by the end of the decade, with the price having already dropped by 82% since 2012. They predict an 86% drop within the next three years for a total of $580/kWh (€496/kWh) over an 11-year period.
Sam Wilkinson, associate director for clean technology and renewables at IHS Markit, said: “Progress in growing the share of low-carbon generation such as solar and wind in the global power mix also brings a particular set of challenges – namely intermittency.
“Improving the cost-effectiveness of energy storage, particularly batteries, will be key to providing needed flexibility to balance this supply of electricity with demand.”
The world as a whole is moving more towards greener and more renewable energy, and with electric vehicle (EV) production and grid-scale energy storage deployment becoming pre prevalent, the global demand for lithium-ion batteries is set to grow.
This has led to moves in reducing the production prices of lithium batteries in order to meet the demand and make the technology more affordable, as businesses innovate in order to tackle the looming threat of climate change.
Tesla CEO Elon Musk has vowed to decrease the cost of lithium-ion batteries at every level of production - including sourcing large lithium deposits, such as those about to commence in the UK and US - with the hope of eventually putting an affordable EV on the market.
The increase in demand for the product will also mean businesses will look to increase factory size which will drive optimisation of the manufacturing process. With prices continuing to fall, the adoption rate of EV technology will only increase as the final products become more affordable to more of the population.
Youmin Rong, a senior analyst from IHS Markit, said that cost was the aim of the game when it comes to cheaper battery development.
He said: “Technology advances and competition between the different types of lithium-ion batteries is driving prices down. Ultimately, the two major growth markets – transportation and electric grid storage – depend upon lower costs to make batteries more competitive with the internal combustion engine and fossil fuel power generation.”
Experts hope these domestic projects could be mixed with existing clean mining projects to both increase domestic production of these materials while mitigating many of the harmful environmental effects of the sector.
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