The adoption of lithium-ion batteries (LIB) for energy vehicles, electric vehicles, and portable electronics has risen significantly with increased focus on sustainability and significant reduction in LIB prices.  The Department of Energy estimates the cost of an electric vehicle lithium-ion battery pack declined 89% between 2008 and 2022¹.  Forecasts indicate that LIB demand will increase at a 27% annually to 4,700GWh by 2030².  The growth in non-LIB is also expected to be significant during the same period but starting from a smaller base, achieving approximately 50GWh by 2035³.

This growth has created a “circular value chain” for the battery supply chain, battery integrators, and battery owners, as illustrated in the diagram below:

The circular value chain for batteries illustrates the full lifespan of a battery from raw materials, to manufacture, to field deployment, and eventual recycling, where some of the materials captured go back into new batteries. Battery analytics capabilities are critical along the entire value chain to address security, safety, sustainability and profitability.

In the first section, the battery supply chain includes material providers such as anode and cathode suppliers, cell and pack manufacturers, and recyclers. Battery integrators include companies that package battery cells, modules, or packs into complete systems for electric vehicles, energy storage systems, and commercial and personal electronic devices. Battery owners include utilities, developers, commercial and industrial companies, homeowners, and government agencies.

The circularity of the value chain is established by the battery supply chain providing cells, modules or packs to the battery integrators. The battery integrators in turn package the cells, modules or packs into complete systems supplied to the battery owners. The circle is completed when battery owners recycle their batteries into the battery supply chain or sell used modules or packs to a battery integrator for reuse in a new application. Today approximately 50% of LIB that reach end-of-life are recycled⁴.  This percentage should increase with the increased awareness of the value of the LIB’s raw materials and increased availability of recycling programs.

The LIB circular value chain, by its nature, generates a significant amount of data and analytics. With the expected demand growth, the battery data and analytics associated with manufacturing and operating LIB and non-LIB will increase 39% annually to 18 exabytes by 2030. That’s enough data to fit into 18 billion laptops with 1TB of storage. The headline behind these statistics is that the market for battery analytics solutions will grow faster than the demand for new batteries, driven by the need for data analytics for operating batteries over their lifespan. The growth of battery analytics systems will lead concurrently to significant growth, and increased challenges in managing battery data.

The information needed from the data analytics by the battery supply chain, battery integrators, and battery owners focuses on four key areas: security, safety, sustainability, and profitability.

Security

Security is necessary to protect the intellectual property of suppliers and integrators in the supply chain as well as battery owners, but also to defend connected systems such as the electricity grid from rogue actors in an increasingly connected and hostile world. Robust security means that all devices in the data life cycle must be protected with firewalls and patches and that whole disk encryption using FIPS 140-2 compliant ciphers like AES-256 must be used to secure data at rest. Data transmissions must be sent over encrypted channels using the most up-to-date protocols like TLS 1.3. Access points must be secured with secret or key-based authentication, for example, using X.509 certificates, and authorization must be enforced through role-based access control.

Cybersecurity is a particular concern in the energy sector, since systems are often geographically dispersed with a wider “attack surface,” and can involve access by multiple third-party providers. Backdoors, default passwords, and obsolete user accounts that system administrators fail to terminate can be used by former colleagues, contractors, and consultants to attack the systems of their former partners.

An operator of a battery energy storage system plant may have a deep understanding of the grid and power demands, and substantial expertise in chemistry, meteorology, and physics, but they may not necessarily have those same competencies in data access and security. This becomes an issue when ad hoc applications are built in-house that lack critical security features. While it may seem to be the most expedient business solution at the time, particularly in the early stages of a company, these in-house applications later become a major source of risk months or even years later.

Implementing full end-to-end production solutions often requires the assistance of technology partners. It’s important for every company, but especially those involved in providing critical infrastructure, to know how third parties and supply chain partners treat access credentials and data security. (See the Peaxy article on Cybersecurity in the Energy Sector for additional information.)

Safety

Headlines in mainstream media such as “Lithium-ion battery fires are happening more often.  Here’s how to prevent them” ⁵ will increase the public’s concern for LIB safety, making it even more critical to insure a LIB is safely manufactured, commissioned, operated and recycled.

Battery material suppliers and battery OEMs will focus on leveraging data analytics to accelerate research and development of new materials and cells to achieve safety while balancing performance versus product costs.  Instead of ad hoc and isolated data analysis, threading data and analytics including metrology and cycler data to a specific cell serial number will accelerate the design of experiment (DOE) process to optimize the design of a safe battery cell.

Battery material suppliers and battery OEMs will improve safety by leveraging battery data analytics to reduce variability in manufacturing.  Manufacturing systems should validate that processes have been completed within specifications, and out-of-spec products should be quarantined and reworked as necessary.  Similar process controls will also benefit battery OEMs, battery integrators and battery owners to eliminate errors in commissioning.

Establishing automated alerts during operation when batteries are operating at levels exceeding OEM and system integrator warranties can help ensure the safe operation of the battery. In addition, analyzing key parameters such as temperature and voltage variation over time can help detect potential issues with cells.

If a safety or performance issue does develop during manufacturing, commissioning or operation with a specific cell, having the data and analytics threaded to the battery serial number on material supply, manufacturing, commissioning, and operations will accelerate root cause analysis and identify other specific battery cell serial numbers at risk due to the issue that caused the original safety concern.

Sustainability

Sustainability is becoming an increasingly important issue as the circular value chain requires tracking the sources of raw materials, certifications and ensuring environmental, social, and governance (ESG) compliance with each battery’s serial number. Information on the source of raw materials and ESG compliance must be shared along the entire chain, starting with battery material suppliers, to battery OEMs, to battery integrators, to battery owners, to battery recyclers, and back to battery material suppliers.  The EU Battery Regulation mandates comprehensive content requirements for the digital battery passport, including general battery and manufacturer information, compliance and certifications, carbon footprint, supply chain due diligence, battery materials and composition, circularity.⁶ This requirement can only be achieved by digitally threading this information to each battery serial number.

Profitability

While the data analytics required for security and sustainability are relatively consistent across the circular value chain, the analytics required for profitability will vary. The battery supply chain will focus on leveraging battery data analytics to reduce operating costs. As mentioned previously, material suppliers and battery OEMs will leverage data analytics to accelerate R&D and reduce variability in manufacturing and commissioning for safety, reducing costs and cycle times, and minimizing waste.

Warranty is another area where battery data analytics can reduce costs. For a battery OEM, data analytics could reduce costs by identifying potential issues before they become warranty issues, such as analyzing variations in voltage and temperature over time. If a potential warranty issue does occur, the initial diagnosis could be conducted online, avoiding the need for a technician to visit the site. A battery OEM could determine with battery data analytics if the battery was operated within warranty requirements to verify if a warranty claim is valid.

Battery integrators and owners would also benefit from having warranty issues initially diagnosed remotely. They would also benefit from receiving alerts if the battery is operating outside of the battery OEM’s warranty operating guidelines. (Refer to the Battery Smarts on the importance of battery data with grid-scale BESS warranties.)

Estimating and forecasting state of health (SOH) will allow battery integrators and owners to improve planning for battery augmentation to meet contractual requirements such as power purchase agreements (PPAs). Comparing SOH forecasts with OEM degradation models will allow the battery owner to determine if the battery needs to operate more conservatively to meet project requirements. On the other hand, if the battery is performing better than forecasted by the OEM, the battery owner has data analytics to review with the battery integrator and OEM about possibly operating the battery with greater flexibility to capitalize on market opportunities for additional revenue without invalidating a warranty.

Profitability can also be improved with battery data analytics by automating the creation and distribution of financial and technical reports for employees, customers, suppliers, and other important constituents such as regulators. The financial reports can be expanded to utilize third-party regional market electricity pricing data.

The significant growth in LIBs, along with corresponding growth in battery data analytics, creates significant opportunities to improve security, safety, sustainability, and profitability. Battery data analytics will also enable new business models around data-enabled services such as reapplying battery modules and packs.

Peaxy would welcome the opportunity to discuss specific challenges for companies in the battery supply chain, integration, or ownership to identify how battery data analytics can address these challenges and create new opportunities.

¹ Electric Vehicle Battery Pack Costs in 2022 | Department of Energy

² Lithium-ion battery demand forecast for 2030 | McKinsey

3 Quantifying battery raw material demand | Wood Mackenzie

⁴ GBA_EOL_baseline_Circular_Energy_Storage.pdf | World Economic Forum

⁵ Lithium-ion battery fires are happening more often. Here’s how to prevent them | CNN Business

⁶ WEF_Digital_Battery_Passport_2023.pdf | World Economic Forum