The oil of the future

The era of the electric vehicle is upon us. Vehicles powered by fossil fuel-free motors are still a rare sight on the street. But they are advertised everywhere, a sign that the car industry is switching into high gear for the new engines. The U.S. Department of Energy (DOE) also expects that the roads will look drastically different in the years to come. By 2025, up to nearly 30 million equal-zero-emission or low-emission electric cars and plug-in hybrid vehicles (PHEV) will be registered worldwide, according to a study entitled “Critical Materials Strategy” from December 2011. A study from Argonne National Laboratory (ANL) in Illinois, focusing on e-mobility, posits a scenario that after 2025, around 10 percent of all vehicles sold in the U.S. could be equipped with a modern electric motor, possibly increasing to 70 percent by 2050.
There are many reasons behind the expected e-mobility boom. Besides climate change, rising fuel prices are affecting vehicle owners’ use of their cars. Moreover, people’s relation to mobility itself is changing. “Most trips taken in a car today are less than 50 kilometers,” Harthmuth Hoffmann, Technology Spokesperson at the German car manufacturer Volkswagen tells pv magazine. While such a trend gives electric cars an enormous market potential, the fact that battery-run e-vehicles only currently have a range of 100 to 200 kilometers puts things in a different perspective. Volkswagen wants to be out front of the expected boom. “Our goal is to be the market leader in e-mobility by 2018,” says Volkswagen President Martin Winterkorn of the company’s goals. Mass production of all-electric vehicles will start in 2013 and plug-in hybrid production will begin in 2014. Other manufacturers like Toyota or Renault are accelerating even faster.
The run on the electric vehicle is not without consequences for global resources. Even though the new world of cars can get by without fossil fuels, they cannot do without energy resources. An important material in the future of electric mobility is lithium, the material needed to guarantee locomotion from batteries. According to the U.S. Geological Survey (USGS), a scientific agency of the U.S. Department of the Interior and statistical source for the DOE study, the demand for lithium tripled from 1980 to 2009. Such a jump is not a result of the amounts used by the automotive industry but stems mostly from consumer products, smart phones, laptops and cordless heavy-duty power tools. The world’s largest lithium producer, the Chilean Sociedad Química y Minera de Chile (SQM), reports that a third of the raw material goes to battery manufacturers each year. The ceramic and glass industry is next in line with another 30 percent. Global production of lithium carbonate equivalents totaled approximately 150,000 metric tons (mt) in 2010, which represents around 28,000 mt of pure lithium.
The triumph of lithium-ion technology has pushed back a whole list of earlier solutions such as nickel-metal hydride batteries (NiMH). Unlike the NiMH batteries, lithium-ion batteries do not have any “memory effect,” which means that they do not lose capacity during charging, even if they were not entirely discharged beforehand. The automotive industry also especially likes that lithium-ion batteries are significantly lighter than lead batteries and have a higher energy concentration, thus requiring less space than other batteries. “Lithium-ion is the best battery technology for now and the medium term,” says Volkswagen Manager Hoffmann. Volkswagen calculates a lithium component of 100 to 300 grams per kilowatt hours (kWh) of power. The energy supply for the e-Golf model, a 26.5 kWh battery, will require between 2.7 and 8 kilograms of lithium.
The expected growth of electric mobility will transform lithium into a type of “oil of the future,” as Volkswagen puts it. “The demand for lithium and other materials associated with lithium-ion batteries will likely grow substantially with the wide-scale deployment of electric vehicles and plug-in hybrid vehicles,” says a study by the U.S. Department of Energy.

Critical in the medium term

The DOE is forecasting which metal shortages may occur in the short and medium term due to the growth of clean zero-CO2-emission energy technologies. The study concludes that lithium supply will not be a problem now or in the coming years, but the current projections will change in 2015 to 2020: “…both the importance to clean energy and the supply risk for lithium increase to make lithium near critical in the medium term.” That is not surprising. If Argonne National Laboratory’s optimistic scenarios for the battery-powered vehicle boom in the U.S. become true, the demand for lithium by 2030 will increase to 22,000 mt just for electric mobility in the U.S. In 2050, that figure will jump to 54,000 mt – double current annual production.

According to the U.S. Geological Survey, the “expansion plans of the current lithium producers” could increase the capacity from 100,000 to 250,000 mt of lithium carbonate equivalent (LCE) by 2015 (see Critical Materials Strategy, Trajectory D). That is still sufficient to cover the expected global demand of 200,000 mt, but not for very long. Actually, the run on e-mobility is expected to begin in 2015, and really pick up in 2020. If that happens and lithium remains the primary raw material, capacities projected for 2017 will no longer be enough. The demand for LCE from clean energy sectors could grow from the current 10,000 mt to between 400,000 and 900,000. Even under a moderately optimistic scenario, green energy technologies will account for more than half of the global demand for lithium by 2025, predicts the USGS (see Critical Materials Strategy, Trajectory C). Currently the green energy sector is only consuming barely more than one percent of the white metal’s annual yield.
“The availability of lithium is generally not a problem,” says Benjamin Schott from the Center for Solar Energy and Water Research Baden-Württemberg (ZSW), Germany, referring to USGS statistics for global raw materials reserves and resources. “The identified lithium resources total 4 million mt in the U.S. and approximately 30 million mt in other countries,” the agency writes in its January 2012 Mineral Commodity Summaries. Around thirteen million mt were held in reserves. “The question is whether future production capacities can be ramped up fast enough to cover the additional demand,” says Schott.
Until now, lithium has especially been produced as a by-product during fertilizer production of potash in subsurface brines. Its extraction is thus directly dependent on the demand of an outside industry, which up to now required no more lithium than whatever was yielded in potash production. For that to change, prices must go up, either to motivate potash producers to increase production or spur investment in primary mines. Another source for future supplies is recycling, but that industry is still in its initial stages worldwide. According to the DOE forecasts, all of these completely plausible and likely measures could take longer than the advent of the projected spike in demand in 2015–2020.

Solar demand for lithium

The question of increased lithium production is also important to the PV industry, as lithium batteries are the benchmark solution for storing electricity in photovoltaics. So far, the industry hardly needed the raw material. “Such stationary systems in Europe are still only used in individual cases,” says ZSW System Analyst Schott. In Japan, South America and the U.S., they are more common, not so much for renewable energy applications but as decentralized back-up solutions to ensure grid stability. But renewable business is on the rise, as a look at the U.S. market leader A123 Systems demonstrates. The company offers large-scale storage solutions, such as a 12 MW lithium battery they recently supplied to the U.S. wind and solar farm developer Sempra for a wind farm in Hawaii.
Lithium batteries could also become increasingly attractive for individual households run on solar energy, as demonstrated by a German-French research project Sol-Ion on a ZSW test building in southern Germany. In a press release, they report that a 6 kWh lithium-ion battery together with a 5.1 kW PV system increased solar self-consumption by 26 percent during the relatively weak sun radiation spring season. In February and March, “4 KWh of solar energy could be stored on average. Often it was full,” says ZSW CEO Michael Powalla.
In many cases, however, the battery is not an economically feasible alternative. “The batteries must still significantly come down in price,” says Volkswagen’s Hoffmann. Currently the Wolfsburg-based automobile manufacturer calculates the costs at €500 to €700 per kilowatt hour. At such prices, he admits, mass production is not economical. Just the 26.5 kWh battery intended for the e-golf would cost over €13,000. For stationary energy storage for PV systems, prices sometimes exceed €1,000, according to ZSW’s Schott.
In any event, changes in the raw material’s price are giving neither the automotive industry nor the PV sector any sleepless nights. “Lithium carbonate … [is] one of the lowest cost components of a lithium-ion-battery,” says USGS Geologist Brian Jaskula. “Under current cost structures, the amount of lithium in the battery price only accounts for one to three percent,” estimates Schott.

The price of lithium

This makes green energy technologies less subject to any actual raw materials shortage in the interim. In the past, such situations for lithium as for all raw materials involved price jumps, such as when production of the white metal relocated from the U.S. to Latin America between 1995 and 2004. The result was a periodic lack of supply, which drove the price of a metric ton of lithium carbonate from US$4,000 to US$6,000 between 2005 and 2009. The price of lithium is hardly transparent, since it is only sold bilaterally and not traded on the stock exchange or other commodities markets. A look at the balance sheets of the world’s largest producer SQM shows that the price has apparently dropped since 2009. In 2011, SQM sold 40,700 mt of LCE with sales at US$183.4 million, which works out to approximately US$4,000 per mt. For 2012, the company expects a price increase. The demand for the next five years will grow at a rate of six to seven percent, according to the Chilean company’s financial outlook. Chile is the world’s largest producer, followed by Australia, China and Argentina.
The PV industry could become more independent of the direct commodity in the future. “The automotive industry will replace vehicle batteries after about ten years when their storage capacity drops to 80,” says Schott. Such a capacity is too low to deliver the distance promised by car manufacturers. The discarded batteries could be an option for solar and wind power systems, as a storage capacity of 80% would still be sufficient for renewable storage systems, and such second-hand devices offer an attractive price. That is still a long way away, as a critical mass on second-hand batteries will hardly be reached before 2025. Currently they only last about five years with 2,000 charge and discharge cycles, explains Schott. Only when the goal of a ten year usage span is attained (4,000 cycles) will the car manufacturers be able to utilize them in a significant way.

Alternatives

Another exciting question is how long lithium technologies for batteries will remain the leader. “We are researching alternatives,” says Volkswagen and others. “It is not crucial whether lithium-ions become the top pick for stationary energy storage devices for sun and wind energy for the long term,” says ZSW scientist Schott. Such storage batteries for electricity need no high energy concentration whatsoever. “Basements in houses usually have more room available. You could also use another, less space-efficient technology,” he cites as one reason. But those are long-term projections. Until then, there is no way around lithium if the electric vehicles really make the trip from the ads to the street.