Projecting the Price of Lithium-Ion NMC Battery Packs Using a Multifactor Learning Curve Model

Abstract

Renewable energy (RE) utilization is expected to increase in the coming years due to its decreasing costs and the mounting socio-political pressure to decarbonize the world’s energy systems. On the other hand, lithium-ion (Li-ion) batteries are on track to hit the target 100 USD/kWh price in the next decade due to economy of scale and manufacturing process improvements, evident in the rise in Li-ion gigafactories. The forecast of RE and Li-ion technology costs is important for planning RE integration into existing energy systems. Previous cost predictions on Li-ion batteries were conducted using conventional learning curve models based on a single factor, such as either installed capacity or innovation activity. A two-stage learning curve model was recently investigated wherein mineral costs were taken as a factor for material cost to set the floor price, and material cost was a major factor for the battery pack price. However, these models resulted in the overestimation of future prices. In this work, the future prices of Li-ion nickel manganese cobalt oxide (NMC) battery packs - a battery chemistry of choice in the electric vehicle and stationary grid storage markets - were projected up to year 2025 using multi-factor learning curve models. Among the generated models, the two-factor learning curve model has the most realistic and statistically sound results having learning rates of 21.18% for battery demand and 3.0% for innovation. By year 2024, the projected price would fall below the 100 USD/kWh industry benchmark battery pack price, consistent with most market research predictions. Techno-economic case studies on the microgrid applications of the forecasted prices of Li-ion NMC batteries were conducted. Results showed that the decrease in future prices of Li-ion NMC batteries would make 2020 and 2023 the best years to start investing in an optimum (solar photovoltaic + wind + diesel generator + Li-ion NMC) and 100% RE (solar photovoltaic + wind + Li-ion NMC) off-grid energy system, respectively. A hybrid grid-tied (solar photovoltaic + grid + Li-ion NMC) configuration is the best grid-tied energy system under the current net metering policy, with 2020 being the best year to deploy the investment.

An Investigation into the Potential of Hosting Capacity and the Frequency Stability of a Regional Grid with Increasing Penetration Level of Large-Scale PV Systems

“…In particular, lithium-ion batteries would be the ideal candidate, due to their higher energy density, higher efficiency, and quicker charging/discharging cycles, compared to other types of batteries [48]. Furthermore, the increase demand of energy storage technologies, innovations in the material's science, and the improvement in the manufacturing process are the attributes reducing the cost of the lithium-ion batteries, which are predicted to hit 100 USD/kWh in the next decade [49]. There might be other energy storage technologies that may fall below the 100 USD/kWh cost, but they will lack the lithium-ion batteries applicability, which is the main reason for their market demand gain despite their higher costs.…”

Battery cost forecasting: a review of methods and results with an outlook to 2050

“…Regarding forecasts in this study, a 2-factor approach is applied by three studies. 32,91,94 Third, only applied by one study, 39 a 2-stage approach, meaning that technological learning is conducted in two subsequent stages for different cost components with specific learning rates. While in some of these studies, more than one approach is used in order to validate assumptions, one central method is stated to explain cost developments most accurately.…”

“…110,111 Further, time-specific forecasts that reflect increasing price developments for lithium, cobalt and/or nickel nevertheless derive declining battery cost for NMC or NCA-based chemistries. 15,39,94 In addition, several LIB technologies are shown to be less vulnerable for increasing cobalt and nickel prices and as such present a lower risk pathway to reduced battery cost. 15 In contrast, we find significant forecast risks associated with the lithium metal anode used in SSB, LSB and LAB, where price assumptions vary significantly between studies.…”

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“…However, not too much cost related data is publicly available for inland vessels. Therefore, based on [21], we use 120 € / kWh for battery investment cost, knowing that return of investment would be even worse, if battery installation price is higher.…”