Batteries have been beating expectations in recent years as costs continue to fall. That’s good news for the storage industry, but reveals a shortcoming in the scientific understanding of the trend.
That discrepancy prompted UC Berkeley professor Daniel Kammen to devise a new model, recently published in Nature Energy — and it ended up predicting that future cost declines will occur at a pace faster than identified in previous analyses.
Scholars have modeled clean-energy cost declines based on single factors, like annual production or cumulative production. These one-factor models approximate reductions from learning by doing: The more an industry deploys its product, the better it gets at it.
These models have a high explanatory value, but they didn’t see the recent battery-cost drops coming. They overestimate lithium-ion costs in the 2010-2015 period, the most recent years in the data set Kammen and his colleagues examined.
Their new model explains cost as the function of two variables: production volume and cumulative patents issued under the international Patent Cooperation Treaty.
When the researchers plugged in the latest battery production forecasts, with the assumption that patent activity continues at the average rate from the last five years in the dataset, they found a striking prediction.
“We find lower cost reductions than existing forecasts in the literature, which in the past has found a systematic underestimation of falling electric-vehicle battery costs,” the study says.
At the battery pack level, lithium-ion needs to hit the $125 to $165 per kilowatt-hour range to compete with internal combustion engines (based on 2015 gas prices). The two-factor model predicts EV cost-competitiveness will arrive between 2017 and 2020. This is earlier than the previous literature predicts.
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