Battery costs have fallen 97% since 1991, claim MIT researchers - pv magazine International

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Academics reviewed the historic price development of lithium-ion batteries and found the accepted model does not accurately reflect the full cost decline and technological improvement which has taken place. With more data points to compare, the team found batteries had improved even more than previously assumed.

March 29, 2021 Marian Willuhn

The costs of lithium-ion battery storage have decreased 97% since commercial market introduction in 1991, according to MIT researchers who have presented a new methodological approach to support their claim previous models underestimated the reduction.

To arrive at their conclusion, the researchers incorporated more data series and metrics into their price calculations. Standard models consider only the price per energy capacity decline (in dollars per kilowatt-hour). The MIT group, however, considered extra data points, including specific energy and energy density figures, to better determine how much lithium-ion technology has improved. The first striking result from their research was that lithium-ion batteries improved at a much faster pace than previously assumed.

For example, from 1992 to 2016, the researchers added energy capacity and energy density to standard cost development considerations. They concluded the annual average cost decline, measured in ‘real price per service', was around 17%, not 13% as previously estimated. The price per service is the dollar figure per energy capacity unit as a function of volume per energy capacity unit. Factoring energy density into the calculation produced the higher, 17% figure.

Learning curve

Measured by standard means, the learning rate for lithium-ion batteries–the rate of cost reduction for each doubling of cumulative market volume–is understood to be around 24% for cylindrical cells and 20% for other cell types. The MIT group, however, factored in extra metrics and observed a bump to 30% and 26%, respectively. The change was partly attributed to the previous estimate featuring a problem in accounting for the number of cells brought to market. That occurred because different cell sizes were produced for different applications, muddying the waters when comparing different devices in a standard price-progress model.

The findings led the MIT group to believe reported improvement rates may have underestimated the battery technology’s fast-paced development. “Moreover, our improvement-rate estimates suggest the degree to which lithium-ion technologies’ price decline might have been limited by performance requirements other than cost-per-energy-capacity,” the scientists wrote.