By John Addison (10/26/10)
You may be reading this article thanks to the lithium battery in your notebook computer, smartphone, or other mobile device. Demand for lithium is forecasted to double in this decade thanks to a wide range of applications for this metal that is half the weight of water: materials, glass, pharmaceuticals, mobile electronics, power tools, hybrid cars, and electric cars.
Currently, electric cars cost more to purchase than many gasoline-powered cars, but less to fuel. Electric charging is equivalent to fueling with gasoline at 75 cents per gallon in many situations. Nighttime charge rates are even lower.
In 2012, Ford will deliver about 100,000 lithium battery packs in its electric vehicles, new plug-in hybrid, and in all hybrids. Nissan will bring on-line a new battery plant in Tennessee that can make 200,000 lithium battery packs annually for its LEAF and hybrids. These volumes, improved battery chemistry, and streamlined supply chains will drive down the cost of lithium batteries. Automotive lithium battery packs currently cost about $700 per kilowatt-hour. By the end of the decade, automakers are optimistic that they will lower the cost to $250/kWh, at which point electric cars will be less expensive to buy than most gasoline cars.
What do the financial markets make of lithium? To find out, I interviewed Bruno del Ama, CEO of Global X Funds. His exchange-traded fund, Global X Lithium ETF (NYSE: LIT), was launched on July 23, 2010, at 16. It has already soared to 20. For some investors, lithium is the new gold. 10 of the fund holdings are in lithium mining and processing companies; 10 in lithium battery makers.
The fund is dominated with large mining firms such as Sociedad Quimica y Minera de Chile, FMC Corporation, and Rockwood Holdings. The fund is not a dream for environmentally and socially conscience investors. These companies mine a range of metals, using energy intensive processes, chemicals, and put miners in harm’s way.
The fund’s largest lithium battery company holdings include Saft, Ener1, ABT, GS Yuasa, and A123. Saft in a joint venture (JV) with Johnson Controls supplies Ford for the Transit Connect Electric and Mercedes hybrids. GS Yuasa supplies the current Japanese EV leader, Mitsubishi; GS Yuasa is well positioned to be Honda’s supplier for new electric and plug-in hybrids. Ener1 is betting on the Think. A123 is supplying Fisker and non-automotive applications.
The fund does not include the battery companies most successful in lithium: NEC, Panasonic, Samsung, and LG Chem. These diversified giants are excluded because their lithium battery business is less than the 15 percent minimum to be included in LIT. NEC is in the AESC joint venture with Nissan. Panasonic supplies Toyota and Tesla. Samsung is in a JV with Bosch to supply makers such as BMW. LG Chem’s Compact Power is supplying lithium batteries for the Chevrolet Volt and the Ford Electric.
Scientific American reports a 500-year supply of lithium, compared with only decades of available cooper. Demand for lithium will increase as we expand from devices that only need one battery cell, to notebook PCs needing the equivalent of 8, to hybrid cars that use the equivalent of 125, to the Nissan LEAF, which uses the equivalent of 3,000. Reuters Lithium Facts
It would take 60 million cars to use the current annual production of lithium. Although there is plenty of lithium, prices will increase to keep up with the growing demand. Since a typical electric car battery pack only uses 4 pounds of lithium, the price will have little impact on the total battery cost.
There is no guarantee that today’s lithium ion batteries will be the leaders in future decades. Labs to start-ups are working on lithium air, zinc air, fuel cells, ultracapacitors, and hybrid energy storage. It is challenging to overcome lithium ion’s cost and scale advantages. More energy can be stored in an ounce of this metal than any practical metal alternative.
By 2020, the California Energy Commission forecasts 1.5 million plug-in cars on California roads. Clean Fleet Report forecasts 10 million for the USA. Cars, mobile electronics, and many applications will fuel the demand for the lightest of metals and create growth opportunities for the leading battery suppliers.
Disclosure: author owns shares of LIT.
By John Addison (10/12/10)
AT&T (T), Xcel Energy (XEL), Johnson Controls (JCI), Southern California Edison (SCE), and New York Power Authority have all ordered Ford Transit Connect Electric. These pure battery-electric vans have an electric charge range of 80 miles and are a great fit for many fleet, small business, and delivery applications. Although Nissan and Chevrolet are the center of EV attention, fleets are the early adapters of new vehicles.
In the United States, fleets control some 14 million vehicles. Some fleets placed initial orders for 10 or 20 Transit Connect Electrics; bigger orders could follow in 2011. JCI has ordered 20 Transit Connect Electrics to be part of its global fleet of 19,000 vehicles.
At the heart of these compact Ford electric vans are 28 kWh lithium battery packs made by a joint venture of SAFT and Johnson Controls, #1 maker of automotive batteries, a tier 1 auto supplier, and leader in building efficiency. The other day, I interviewed Mary Ann Wright, Vice President of Global Technology and Innovation Accelerator for Johnson Controls, to better understand the future of electric vehicles and advanced batteries. Johnson Controls is one of the 100 largest corporations in the U.S., with over 60,000 employees.
Partnerships are critical to success in electric vehicles. As the world’s largest manufacturer of lead-acid batteries, Johnson Controls (JCI) works closely with its material suppliers. To accelerate development of lithium batteries, R&D and manufacturing is a joint venture of Johnson Controls – SAFT (JCS).
For speed to market, Ford has partnered with Azure Dynamics (AZD), who integrates their drive system and the Johnson Controls – SAFT (JCS) lithium batteries into the Transit Connect chassis, which is also available in gasoline and CNG versions. My test drive of the Ford Transit Connect Electric demonstrated that it is practical for many fleet applications. JCI owns over 3% of AZD.
Since 2007, Ford and Johnson Controls have worked with leading electric utilities and EPRI. In 2007, Ford announced a partnership with Southern California Edison, the electric utility with the nation’s largest and most advanced electric vehicle fleet. The partnership is designed to explore ways to make plug-in hybrids more accessible to consumers, reduce petroleum-related emissions and understand issues related to connectivity between vehicles and the electric grid. For the 3-year study, Ford Escape Plug-in Hybrids have been heavily used. It will not be until 2012, that consumers can order plug-in hybrids from Ford.
Vice President Wright told me that driving lithium battery packs down in price from industry numbers like today’s $700/kWh to a future of $200/kWh would price electric car on par with cars powered with internal combustion engines. Progress is being made at every level. Manufacturing volume will be a key driver.
The drive for cost reduction will greatly benefit consumers and fleets; cost reduction initiatives will be a mixed blessing for battery suppliers. Last year, Ford had announced that JCS would supply the lithium batteries for its 2012 Plug-in Hybrid which Clean Fleet Report forecasts will be a new Ford Focus PHEV. Now JCS will not be the supplier. Ford has decided to make its own battery packs, and have different manufacturers compete to supply the cells. JCS is the winner for the Transit Connect Electric; LG Chem’s Compact Power is the winner for the Ford Focus Electric; competition has been intense for the PHEV. It appears that Ford has selected the PHEV cell supplier, but has not yet made the announcement.
In this decade, Nancy Gioia, Director Ford Global Electrification, told me that she would like to see Ford reach $250/kWh and have hybrid and electric vehicles represent 10 to 25% of total Ford sales. Ford is making no guarantees for such an ambitious program. Ford lithium cell providers are dealing with a tough customer that could deliver high volumes and continuous improvement.
For $28 billion Johnson Controls, Ford is an important customer, but only one customer. BMW and Mercedes are already using JCS lithium batteries in hybrids. In this decade, JCI sees the biggest opportunity in advanced start-stop, mild, and full hybrid vehicles; with pure battery-electrics being a smaller opportunity. By 2025, Ms. Wright only forecasts 3% of cars being full hybrid and electric.
Look inside a hybrid car and you will see two types of batteries: advanced nickel metal or lithium batteries for the electric motor and a 12V lead-acid battery for the auxiliaries. Lead-acid batteries will continue to be used in hundreds of millions of vehicles including hybrid and those with only an ICE. Johnson Controls continues to advance lead-acid batteries with new VARTA Start-Stop technology. These new batteries are optimal for the micro hybrids now on the road in Europe in over a million cars and coming to the USA. Turning off an engine reduces fuel consumption up to 12% when a vehicle is stationary, such as red lights and rush-hour gridlock. BMW was first to use the micro hybrid approach, now Volkswagen, Audi and others are including start-stop in some models.
When I toured Johnson Controls in Milwaukee, Wisconsin, last year, advancements in both lead-acid and lithium batteries were conspicuous. JCI told me that 98% of the materials in both battery technologies are recycled. As a world leader in energy efficient buildings, Johnson Controls will have the opportunity to repurpose lithium batteries in stationary applications before materials recycling.
Improved battery technology will continue to enable vehicles to use less fuel per mile, show us bluer skies with less air pollution, and reduce our current 97% dependency on petroleum as the only way to fuel a car.
By John Addison (11/24/09)
The Department of Energy awarded today $620 million for projects around the country to demonstrate Smart Grid technologies and integrated systems that will help build a smarter, more efficient, and more resilient electrical grid. Electric cars will be smart charged and lithium batteries reused in some grid demonstrations. Secretary Chu today announced the 32 projects which include large-scale energy storage which will enable wind and solar power to be delivered when needed.
The projects also include smart meters, distribution and transmission system monitoring devices, and a range of other smart technologies that facilitate deploying integrated Smart Grid systems on a broader scale. Smart Grids will allow electric vehicles to be charged at lower rates when energy demand is down; charging will match car owner preferences, independent of when they are connected for smart charging.
The funding awards are divided into two topic areas. In the first group, 16 awards totaling $435 million will support fully integrated, regional Smart Grid demonstrations in 21 states, representing over 50 utilities and electricity organizations with a combined customer base of almost 100 million consumers. The projects include streamlined communication technologies that will allow different parts of the grid to “talk” to each other in real time; sensing and control devices that help grid operators monitor and control the flow of electricity to avoid disruptions and outages; and on-site and renewable energy sources that can be integrated onto the electrical grid. For example:
- Pacific Northwest Smart Grid Demonstration Project – Spanning five states and affecting more than 60,000 consumers, demonstrate and validate new smart grid technologies; provide two-way communication between distributed generation, storage, and demand assets and the existing grid infrastructure; and advance interoperability standards and cyber security approaches.
- Los Angeles Department of Water and Power Smart Grid Regional Demonstration – deploy smart grid systems at partners’ university campus properties and technology transfer laboratories. The projects will also include gathering data on how consumers use energy in a variety of systems, testing on the next generation of cyber security technologies, and how to integrate a significant number of plug-in hybrid electric vehicles onto the grid.
- Irvine Smart Grid Demonstration – With Southern California Edison as the lead, this will demonstrate an integrated, scalable system that includes all of the interlocking pieces of an end-to-end Smart Grid – from the transmission and distribution systems to consumer applications like smart appliances and electric vehicles.
In the second group, an additional 16 awards for a total of $185 million will help fund utility-scale energy storage projects that will enhance the reliability and efficiency of the grid, while reducing the need for new electricity plants. Improved energy storage technologies will allow for expanded integration of renewable energy resources like wind and photovoltaic systems and will improve frequency regulation and peak energy management. The selected projects include advanced battery systems (including flow batteries), flywheels, and compressed air energy systems. For example:
- Detroit Edison’s Advanced Implementation of A123s Community Energy Storage Systems for Grid Support – Demonstrate the use and benefits of Community Energy Storage (CES) systems for utilities and test the ability to integrate secondary-use electric vehicle batteries as part of the CES demonstration. Success of this demonstration could extend the lifecycle use of electric car batteries, and lead to lower lease and purchase costs of plug-in vehicles. This project will install 20 CES units, 25kW/2hr each, into a system that includes a 1 MW storage device integrated into a solar system.
- Energy East Advanced CAES Demonstration Plant – New York State Electric & Gas Corporation will lead in using an Existing Salt Storage Cavern with lower cost 150 MW Compressed Air Energy Storage (CAES) technology plant using an existing salt cavern. The project will be designed with an innovative smart grid control system to improve grid reliability and enable the integration of wind and other intermittent renewable energy sources.
- Wind Firming EnergyFarm™- Deploy a 25 MW – 75 MWh EnergyFarm for the Modesto Irrigation District in California’s Central Valley, replacing a planned $78M / 50 MW fossil fuel plant to compensate for the variable nature of wind energy providing the District with the ability to shift on-peak energy use to off-peak periods.
This funding from the American Recovery and Reinvestment Act will be leveraged with $1 billion in funds from the private sector to support more than $1.6 billion in total Smart Grid projects nationally.
Secretary Chu said, “This funding will be used to show how Smart Grid technologies can be applied to whole systems to promote energy savings for consumers, increase energy efficiency, and foster the growth of renewable energy sources like wind and solar power.”
Applicants say this investment will create thousands of new job opportunities that will include manufacturing workers, engineers, electricians, equipment installers, IT system designers, cyber security specialists, and business and power system analysts.
Description of all 32 Projects