Earlier this week McKinsey & Company, one of the world’s foremost consulting firms, posted an interesting blog reviewing a number of predictions it made about disruptive energy technologies in 2007 and making a few more predictions.
According to McKinsey, it mostly got the technology trends in energy right in 2007, but failed to anticipate how quickly some of those trends were going to happen. In solar, McKinsey predicted falling PV solar panel costs but overestimated by 66% what prices would actually be in 2014. In wind, McKinsey similarly foresaw rapid growth but underestimated total 2014 deployments by 20%. In advanced batteries, McKinsey admits that it did not even consider in 2007 the impact of electric vehicles and energy storage that battery technology enables in its forecasts. The rapidly falling price of large format lithium-ion batteries, which were about $900 per kilowatt-hour in 2007 and which McKinsey anticipates will be less than $200 per kilowatt-hour by 2020, were a surprise and may make advanced batteries an even more important energy technology in the future.
As far as future predictions, the McKinsey blog contains several. The most important, from the standpoint of battery technology, is that value will continue to migrate from generation to services on the grid. “Distributed generation, dispatchable demand, and the digital grid are redefining the power system. Disruptors are cutting out traditional utilities as new technologies (and financing techniques) let customers opt out of traditional energy supplies,” states the blog. If McKinsey is right, the flexibility that batteries bring to the grid by allowing electricity to be stored at the most strategic points within the grid will be an essential facilitator of that trend.
The real point of the blog is that even the best and the brightest have a tendency to underestimate the pace of change in technology over the medium and longer term. Bill Gates once noted “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” As we in the battery world consider the sometimes formidable cost and performance challenges our products face in the automotive, stationary storage, consumer electronics, defense and internet of things worlds, this is an important principle to keep in mind.