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☀️🔋 Scale and the Economic Mechanisms of Learning Rate: Applying Lessons From Solar to the Battery Industry
Learning rates quantify the unit price decline for every doubling of manufacturing capacity and have proven to be a reliable method to forecast price declines based on market growth. In renewable energy markets like solar photovoltaics (PV) and energy storage, these learning rates have held steady for years. These price declines are often considered to be a result of volume purchasing or “economies of scale” but research has shown technology to be the primary reason for continued price declines.
Two papers published by MIT staff and students only a few years apart examine and characterize PV price declines and battery price declines using a similar methodology. There are a number of similarities in the characterized price declines of PV and batteries in their respective first 20 years of commercialization.
While a specific or absolute metric may not exist, there appears to be a market size threshold for manufacturing technologies to develop. The threshold characteristics for the market include the ability to support several optimally sized plants operating at or near nameplate capacity. Another consideration may be the resources required to validate the type of technology and the associated value proposition. While new materials can be proven out in low-volume production, manufacturing technology can only be validated at a production scale, which takes considerably more resources in comparison.
Ultrasound Inspection Optimizes EV Battery Manufacturing
Battery cell inspection technology has been neglected in favor of other innovation categories. According to a recent MIT study, inspection has not been a factor in previous price declines and therefore increased use of cell interrogation should not come as a surprise. Seemingly this would not require an engineering leap. After all, ‘borrowed technology’ from previous chemistries and other industries has worked well enough in the past.
However, large-format cells have proven to be far more difficult to manufacture at scale, compared to their small-format counterparts that have dominated the market until recently. This difficulty is in part manifested by industry-wide low manufacturing yields. Based on reports and interviews with industry insiders, it can be estimated that large-format battery yield is somewhere between 70–90% with a ramp period of five years to reach steady state yield for a new production run.
Titan Advanced Energy Solutions (‘Titan’) is one of the companies working to meet a growing demand for better inspection technology. Their ultrasound sensing technology combined with a system-based approach to manufacturing provides early and actionable feedback to the manufacturing floor, positively impacting yield and scrap rates as well as overall cell production economics. Moreover, their scan-as-a-service business model does not burden customers with additional capital expense.