Battery cost curves powering down #81

Raw materials surcharges buck decade long LI battery price declines

Happy Monday! In this week’s issue, we dig into why battery prices are projected to go up.

We also share a pop-up on the rise in private fusion companies and highlight three deals over $500m; Impossible Foods, Ionity - a German EV charging company, and Commonwealth Fusion Systems with $1.8b from Bill Gates and George Soros for nuclear fusion.

In the news this week, CO2 capture capacity is also expected to quadruple next year with 100 new facilities, UK mandates home and business EV charging capacity, and Norway’s $1.3T throws the challenge to its portfolio companies to act on climate.

Thanks for reading!

Not a subscriber yet?


The degradation of falling battery prices

Climate tech has long hung its hat on declining lithium battery prices. The two pillars of accelerating the energy transition, grid storage and EVs, are reliant on cheap, abundant lithium-ion batteries. As we wrote in May, “Batteries are the plug of decarbonizing electrification” and demand is slated to swell even further by 1700% by 2030.

Fortunately, battery prices have so far followed in the footsteps of solar. So much so, that it’s the seminal example for Wright's Law, the learning curve of innovation. As we’ve seen happen in the solar market, cost declines as a function of scaling engineering and manufacturing know-how through doubling production - in this case in the form of increasing charge density and R&D on materials and chemistry.

If we can all anticipate the headline of BloombergNEF’s annual price survey (they went down, again!), why does the entire industry watch the charts so closely? Particularly this past year, the news comes less from the headline percentage itself (6%) versus the underlying story (raw materials scarcity).

2021 retrospective: Average battery pack prices fell 6% from last year to $132 per kilowatt-hour (kWh). That’s a ~90% steady downward price drop since 2010 when a battery pack sold for $1,220/kWh, though not as drastic as the 9% decline BNEF had forecast last year.

2022 prospective: BNEF projects that next year’s prices will be $3/kWh higher than 2021 - bucking the trend of a momentous decade of cost declines across the battery industry. What’s going on? In short, a lot, all at once. (Memes say it all.)

🪨 📈 First, raw materials - As you may have heard, raw material prices are increasing. In particular, as James Frith writes, “The cost of raw materials used in the cathode — lithium, cobalt and nickel — and other key components including the electrolyte have risen this year.” Automakers and storage developers have responded by moving to cheaper lithium iron phosphate (LFP) cells. But prices for lithium carbonate, the primary input for LFP cells, have also rocketed 400% in the last year up to $31,700 a tonne.

🇨🇳 💸 Then, supply constraints - On top of material constraints, rising global demand for EVs and energy storage in China and Europe are also sucking up supply. In an ironic twist, Chinese cell producers who manufacture the lion's share of li-ion batteries, are being told to curb production due to the energy crunch in China. Now, Chinese LFP producers have already increased those prices by 10-20%, with greater hikes expected for next year.

$100/kWh target in perspective: Battery folks always ask, “When will batteries reach $100/kWh?” At this price point, lithium-ion batteries would make EVs competitive with internal combustion engines. But current lithium prices and supply constraints, as reflected in BNEF’s projected higher prices in 2022 and 2023, could delay the $100/kWh magic moment by two years. This would reduce the margins that automakers could make on EVs, but likely will not disturb the long run of EVs.

In sum, battery prices act as a leading indicator for an accelerating energy transition, key to unlocking the electrification of everything. Increasing prices will impact EV affordability and the economics of energy storage projects. As BNEF summarizes, “2021 has been a wake-up call for the battery industry, with the realization that we are at a point now where prices may not necessarily fall every year.”


Deals of the Week (11/29-12/5)

Commonwealth Fusion Systems, a Cambridge, MA-based nuclear fusion startup, raised over $1.8b in Series B funding from Bill Gates and George Soros.

Ionity, a Germany-based EV fast-charging network provider, raised $783m in funding from BlackRock, Daimler, Volkswagen, Hyundai, Ford, and BMW.

🍔 Impossible Foods, a Redwood City, CA-based plant-based meat company, raised $500m in funding from Mirae Asset Global Investments and existing investors.

⛏️ Lancium, a Houston, TX-based startup using renewable energy to power bitcoin mining, raised $150m in funding from Hanwha Solutions, Novawulf, and SBI Holdings.

⚡ Mainstream Renewable Power, an Ireland-based wind and solar energy company, raised $101.5m in funding from Aker Horizons and others.

✈️ AutoFlight, a Shanghai-based startup developing electric autonomous aircraft, raised $100m in Series A funding from Team Global.

🌱 Clarity AI, a Dover, DE-based platform optimizing ESG portfolios, raised $50m in funding from FifthWall, BlackRock, SoftBank, Deutsche Boerse, Kibo Ventures, Mundi Ventures, Seaya Ventures, and Founders Fund.

🔋 Titan Advanced Energy Solutions, a Salem, MA-based ultrasound-based battery management solutions startup, raised $33m in Series B funding from HG Ventures, H+ Partners, GS Futures, GS Energy, Doral Energy-Tech Ventures,  Energy Innovation Capital and SE Ventures.

⛵ Arc, a San Francisco, CA-based electric boat maker, raised $30m in Series A funding from Eclipse Ventures, Andreessen Horowitz, Lowercarbon Capital, and Abstract Ventures.

🧀 New Culture, an San Francisco, CA-based alternative cheese maker, raised $25m in Seed funding from Ahren Innovation Capital, CPT Capital, ADM Ventures, Be8 Ventures, S2G Ventures, Marinya Capital, and Future Ventures.

🍼 Helaina, a New York, NY-based company that uses precision fermentation to recreate immune-equivalent proteins only available in breast milk, raised $20m in Series A funding from Spark Capital, Siam Capital, Plum Alley Investments, and Primary Venture Partners.

🌱 ClearFlame Engine Tech, a Geneva, IL-based startup focused on net-zero engine technology, raised $17m in Series A funding from Breakthrough Energy Ventures, Mercuria, John Deere, and Clean Energy Ventures.

⚡ Energy Dome, a Italy-based energy storage technology company, raised $11m in Series A funding from 360 Capital, Barclays’ Sustainable Impact Capital programme, Novum Capital Partners, and Third Derivative.

☔ Stormsensor, a Seattle, WA-based rain and flooding management tech company, raised $10m in funding from Orbia Ventures, Buoyant, Burnt Island Ventures, Gratitude Railroad, Portland Seed Fund, and the American Family Institute for Corporate and Social Impact.

♻️ Sortera Alloys, a Fort Wayne, IN-based company applying AI and data analytics to the industrial scrap metal recycling and re-use industry, raised $10m in funding from  Breakthrough Energy Ventures.

⚡ Forum Mobility, an San Francisco, CA-based zero-emission fleet and infrastructure provider, raised $7.5m in Seed funding from Obvious Ventures, Homecoming Capital, and Overture VC.

🌱 Sustain.Life, a Jersey City, NJ-based SaaS platform helping companies to adopt more sustainable business practices, raised $7m in pre-Seed funding from undisclosed investors.

🚲 Upway, a France-based reconditioned e-bike marketplace, raised $5m in Seed funding from Sequoia Capital and Global Founders Capital.

🥩 Juicy Marbles, a Slovenia-based plant-based steak company, raised $4.5m in Seed funding from Ecosia, Agfunder, and others.

🥚 Perfeggt, a Germany-based producer of plant-based egg products, raised $2.8m in Seed funding from EVIG Group, Stray Dog Capital, E2JDJ, Tet Ventures, Good Seed Ventures, Sustainable Food Ventures, and Shio Capital.

🔋 Factorial Energy, a Woburn, MA-based developer of solid-state batteries for e-vehicles, raised an undisclosed amount of funding from Mercedes-Benz and Stellantis.

Exits & New Funds:

Voltus is going public via merger with SPAC Broadscale Acquisition Corp., valuing the startup at $1.3b.

VC firm Speedinvest launched a $90.4m fund for European climate tech startups.

Kompas Ventures launched a $160m sustainability-focused fund aimed at early-stage startups in the real estate, construction, and manufacturing sectors.


In the News

It’s boom time for carbon capture, utilization, and storage. Over 100 CCUS facilities have been announced in 2021, and the expectation is that CO2 capture capacity will quadruple this year.

Every new home and business built in the UK will be required to include EV charging stations starting in 2022. This new mandate is expected to increase the number of EV charging points by 145,000 per year. Check out our feature on the essential long-tail of DER installers, the mom and pop shops of residential DERs.

Norway’s $1.3T sovereign wealth fund (the largest in the world) is asking companies in its portfolio to act on climate. Upping the ante from their previous emphasis on the importance of corporate transparency, they’re now requesting that companies take tangible steps towards reducing their environmental footprint.

United Airlines flew the world’s first passenger flight powered by 100% sustainable aviation fuels (SAFs). Over 100 passengers traveled on this demo flight from Chicago’s O’Hare International Airport to Reagan Washington National.

Powell is back for a second term with Lael Brainard — a Fed board member who's outspoken on climate — as vice chair. “[Powell's] made clear to me [that] a top priority will be to accelerate the Fed's effort to address and mitigate the risks that climate change poses to our financial system and our economy," Biden said.

The Office of Science and Technology Policy (OSTP) at the White House launched a new energy division led by Sally Benson. The group’s primary goal is to implement the $21.5b allocated to clean energy demonstration projects from the new infrastructure bill.

Hines, the international real estate company with over $80b in AUM, just created a new position in their C-suite: Chief Carbon Officer.

Despite NYC buildings becoming more energy efficient, ~50% of the buildings failed to pass the green grade of energy efficiency. Fines are on the way in 2024 under Local Law 97.

We talk a lot about transitioning from fossil fuels to renewables. A new survey revealed that 56% of employees in the fossil fuel sector are talking about this transition, too.


Pop-up

The number of private fusion companies is rocketing. Despite the biggest fusion projects in the world remaining government-funded, says Sam Altman, “I couldn’t be more optimistic” after (personally) investing $375m in Helion.

Lists on lists: carbon removers, crypto x climate projects, EU climate accelerators.

Prime Movers Lab has released their Breakthrough Science Roadmap. Scroll through the key innovations they see on the horizon between now and 2050.

The climate tech community takes on Forbes 30 Under 30, dominating energy and repping strong in VC.

VC can’t do everything for climate tech. Ion Yadigaroglu, managing partner of Capricorn Investment Group, makes the case for later stage finance, government, and philanthropy.

4 snappy takeaways from COP for the real estate industry from Fifth Wall, featuring money, markets, and memos (reporting).

What can governments do to smooth the jagged transition to renewables? Foreign Affairs debunks the geopolitics of green energy.

The EV field’s next milestone: consumer paradox of choice for green cars?

Fungi for the future? Society for the Protection of Underground Networks (SPUN) is rolling out a new citizen science project to measure, map, and monitor underground fungal networks.

Are the four Rs enough to decarbonize clothing? In short, no.

Climate change may have doubled divorce rates...for albatrosses.

Wine offgassing old news? Meet hydrogen whiskey.


Opportunities & Events:

🗓️ National Academies Ocean CDR Report Release: The National Academies will be releasing their long-awaited report on ocean-based approaches to carbon dioxide removal and sequestration on Dec 8th.

🗓️ Techstars Sustainability Accelerator: Join on Dec 9th for a virtual demo day for the 2021 Sustainability class in partnership with The Nature Conservancy.

🗓️ NYC Hardware Holiday Party: Join for an in-person holiday party on Dec 16th at Newlab. The evening will have two parts: an open mic style demo, followed by a holiday party complete with open bar, food, and live six piece brass band.

💡 The Future of ClimateTech: Apply by Dec 14th to this online pitch competition for pre-seed and seed startups!

💡 LACI Startup Incubation Program: Apply by Dec 17th to LACI’s Cohort 4 if you’re a founder with a solution that addresses Clean Energy, Zero Emissions Transportation and Smart & Sustainable Cities and want to scale faster and increase your impact in your community.


Jobs

Sector Manager, Energy @CREO

Project Finance Lead @Evergrow

Development Assistant @Project Drawdown

Analyst, Investment Team @Generate Capital

Test Engineer @Electric Hydrogen

Strategy and Business Operations Mgr @ESS

Chief Operating Officer @Activate

Sales Lead @The Climate Board Company

Head of Product @Gaiascope

VP Operations & Strategy @ZZ Driggs


Feel free to 📩 send us new ideas, recent fundings, events & opportunities, or general curiosities. Have a great week ahead!

Related posts