Batteries: Lithium-Ion vs. Redox Flow and Home Installations

TL;DR

Lithium-Ion batteries aren’t the right battery for large-scale grid storage.

Redox Flow batteries are a scalable, achievable alternative

Home batteries will be in every home in the near future ( < 5 years )

Hey there, and welcome to this newsletter. A friend of mine encouraged me to do weekly updates of my research to amalgamate all of my learnings over a week into a single, digestible chunk, and share it all with you guys. So here we are!

To start, I think it’s useful to outline my intention in battery research. Over the past few months, I’ve been working on a wireless power transfer startup. The dream behind it was to make power transmission cheap and accessible to individuals, rather than a scaled utility holding all of the power. The end goal was to encourage renewable energy growth by providing cheap transmission and direct-to-market access. We viewed this as a necessary step since renewables were often located far from major urban centres where power was required, and cost of transmission and land-use disputes had caused many a project to be cancelled.

Yet, there was a question that remained: where would all of that energy go? Unlike most non-renewables, solar energy is only produced during the day, turbines rely on steady winds, and dams need enough water in reservoirs to function properly. When, inevitably, these underlying power sources are not available, we’ll need to draw energy from a different source. The answer can’t be gas or oil, at least it shouldn’t be. Batteries are what make renewables work on a systematic level. Without batteries, which store excess renewable electricity to be used when it’s lacking, there would be no wireless power transfer. After all, what’s the point in having efficient electricity transfer if there’s nothing flowing through the antennas in the first place.

To support renewables on a grid-wide scale, the general thought has been to build grid-scale energy storage solutions. Essentially, massive dumps of batteries that can store excess electricity to be transferred back onto the grid in times of duress. Hypothetically, it sounds great. In reality, though, there are some major barriers with this type of thinking.

First, of course, is cost. Most grid-level power installations rely on lithium-ion batteries to store electricity, and while lithium-ion batteries have dropped 97% in cost over the past 3 decades, including a halving in price between 2014 and 2018, they’re still expensive to install. It should be noted that there are various competing estimates for the price of an industrial lithium-ion battery, but for the purposes of highlighting a good rough estimate. The National Renewable Energy Lab (NREL) has put that cost at $345 / kWh in 2021. Assuming an average lithium-ion discharge period of 4 hours and an installation of a 1mW power storage facility, the cost would come out to $1.38 million. This is roughly enough to power 400-900 North American homes. Prices are projected to drop further, but this is a given as more technological innovation is made in the industry.

The second limiting factor to lithium-ion is their scalability. The only way to add more capacity to a power installation is to build new cells, which increases costs linearly as more power is desired. The larger and larger power storage needs get, the more the battery installation is going to cost. This obviously works fine for smaller scale uses where power is only getting set to a couple hundred buildings, but this isn’t the most efficient way of accomplishing grid-scale energy storage.

Just because we’ve spent 30 years developing a technology to meet our day-to-day power needs doesn’t mean we should be adapting it directly to utility storage systems. We need to experiment and figure out what our best option is. After all, it’s worthwhile to take the time to carefully weigh options now than to face the consequences of mass power outages ten years down the road.

Redox Flow Batteries

The focus of my research this week has been flow batteries, also referred to as redox flow batteries. They’re a different type of battery that’s better suited towards large amounts of energy storage and can be easily scaled to meet the energy needs of tomorrow.

Redox flow batteries work on much the same logic behind lithium-ion, using two electrolytes to store energy. Most batteries so far have used Vanadium as their basis, with two different electrical configurations on each side of the battery. The central cell stack facilitates the release of electrons which are taken out of the battery to do work, the pumped back in and accepted by the positive side of the battery. This reduction and oxidization process leads to the name ‘redox’.

Flow batteries offer several advantages on a utility level. They’re hypothetically limitlessly scaled as one may just increase the tank size of the electrolyte. This is a massive cost savings when compared to traditional lithium ion and requires less installation and maintenance.

Lithium ion begins to degrade the moment it is first used, and may last to 4000 cycles as a liberal estimate. Flow batteries experience some electrochemical degradation, but last upwards of 15,000 cycles, an almost 4x increase in viable lifetime usage.

NREL estimates that the 2018 price of redox per kWh was $555, while that price could be lowered to just $393 / kWh by 2025. Current available statistics show a wide range of cost estimates for redox with vanadium, so further industry insight is needed to get a better understanding into current costs and price breakdowns.

Regardless of current cost, my current hypothesis is that the price trajectory of redox, with proper research, is likely to follow or even outpace the historic price performance of lithium ion. Even in the case where redox does not outperform lithium on a purely price / kWh level, the extended life and increased scalability of redox should make it a much more attractive proposal to grid-scale utilities.

To actually decrease costs, an in-depth understanding of the cost breakdown of redox manufacturing and materials is needed, which I’m working on by talking to people in industry.

Home Batteries

The mass-market consumer is the easiest customer to target, so it would make sense for a battery to cater to them before emerging into commercial / governmental industries.

Consumer batteries have faced a few challenges so far in getting to the masses. The most glaring one is price and set-up costs. A Tesla Powerwall currently retails at $11,000, and may be enough to power a home throughout the day, depending on electricity usage and size. The initial argument is that it would save the consumer in the long run, which is a hard argument to make. Some homeowners in Utah, where utility prices are cheap, would have to wait 25 years before they saw any returns on their Powerwall, far beyond the useful life of the battery.

More recently in Europe, however, the price of electricity has risen steadily, and now has experienced a sharp up-tick. The peak rate has reached 34.43p/kWh, vs. an off-peak of 7.50p/kWh. This delta between prices has brought the payoff of a 13.4 kWh battery with a 5kW inverter down to just 4 years, 6 months. This process of buying during the night, charging the battery, and using during the day seems to work in countries with high-levels of imported energy, but would have a very long payoff in price-stabilized nations.

That’s even considering whether people have the money to fork over in the first place. After all, they could likely put the money directly into a savings account and end up better off regardless.

The idea is developing redox to the point where it’s cheap enough to put batteries in homes for free. By buying during the night and using during the day, people save money on their electricity bill. Our business model comes in and splits the savings. We get 70%, and the consumer gets 30% (just an estimate).

From the users’ perspective, they’re getting a making money by having a free battery and inverter sitting in their basement. From our perspective, we have a lifetime customer who’s pure profit after paying off the initial cost of the battery. It’s a win-win.

Of course, our payoff period depends on the delta between the off-peak and peak energies, as that’s the generation of the cost savings to the consumer. This is a calculation that will have to be made on a region by region basis to find an average payback. If it’s longer than the lifetime of the battery, it doesn’t make financial sense for the model to operate, and a reversion to selling cheaper batteries can be made.

Currently, I’m working on understanding the possibility of scaling down redox into residential use, and talking to industry on the largest problems pertaining to lithium ion home batteries.

Talk to you soon!