We’ve seen lithium-ion battery adoption grow at a rapid rate over the last couple of years. In fact, Bloomberg New Energy Finance report forecasts that 40% of data center battery backup will be lithium-ion by the year 2025. Among hyperscale data centers, this forecast is even greater at 55%. We know valve regulated lead acid (VRLA) is a less expensive battery solution on day one, so what’s driving this rapid growth for lithium-ion?
Lithium-ion Capex Costs Continue to Decline
There have been significant improvements with chemistries and technologies of lithium-ion batteries that have made them appealing for UPS applications. The Electrical Voltage (EV) industry is largely to thank for these advances. As adoption grows and the technology continues to mature, costs per kWh are declining. They still have a higher capex than VRLA batteries, but only by a factor of 1.5x to 2x today.
A TCO Calculator Comparing Lithium-ion and VRLA Batteries
We developed a TradeOff Tool calculator to help understand the impact of choosing lithium-ion vs. VRLA energy storage for a 3-phase static UPS. This TCO in the tool includes the following costs:
Capex: The initial cost premium of the batteries. Lithium-ion generally has a higher cost. Note, a battery management system (BMS) is included in the standard lithium-ion solution, whereas with VRLA, you’d need to add another 20% to the VRLA cost for a BMS. So, comparing both solutions with BMS already narrows the capex cost gap.
Energy: Typical battery fixed losses from steady state trickle charging are 0.1% for lithium-ion and 0.2% for VRLA, which translates to 50% energy savings. Note, we didn’t include the cost of transient losses incurred during a power outage that require battery discharging and subsequent charging.
Battery replacements: VRLA batteries have a service life in the range of 3-6 years, whereas lithium-ion batteries can have a service life in the range of 10-15 years. In a 10-year TCO analysis, this generally means 2 battery replacements for VRLA batteries vs. zero for li-ion.
Maintenance: Preventive maintenance of VRLA UPS batteries differs from lithium-ion UPS batteries. All battery maintenance should include regular visual inspections and an annual torque check. However, VRLA battery maintenance requires periodic internal resistance checks of every battery jar, whereas, lithium-ion batteries do not. This is because lithium-ion batteries come with a battery management system (BMS) that provides continuous monitoring of the state of health and state of charge. Also, VRLA battery maintenance is typically performed more frequently – two times per year if the VRLA batteries include a battery monitoring system or four times per year if they don’t; whereas lithium-ion batteries are generally maintained annually. Based on this, our calculator assumes a maintenance cost of 1.5% of capex for lithium-ion and 8% for VRLA.
Space: Lithium-ion batteries have a smaller footprint than VRLA due to their high energy density. This translates into cost savings based on the value of space in the data center (i.e. revenue generating space in the case of a colocation provider).
Top 2 Drivers When Calculating TCO for Lithium-ion Batteries
The tool demonstrates that the remaining service life of the UPS and the replacement period of the batteries are the two biggest drivers.
UPS service life: If you’re contemplating li-ion for a UPS that has four years remaining on it, VRLA may prove to be the better financial choice, but when considering it for a new UPS, the TCO will almost always favor lithium-ion.
Battery replacement period: How frequent you replace the batteries is an obvious key driver. The initial cost premium of lithium-ion can be quickly offset with multiple VRLA battery replacements over the lifetime. The crossover point where lithium-ion has a lower TCO generally occurs after the first VRLA replacement.
Try Out the Calculator and Other Helpful Resources
With our default assumptions in the tool, we demonstrate a 31% TCO savings. The tool allows you to adjust several key variables to see the impact they have. It’s not the right solution for every scenario and the tool will help you figure out if lithium-ion batteries make sense for your UPS system. Try the calculator for yourself!
For more background on the overall differences between the two battery types, see our white paper 229: Battery Technology for Data Centers: VRLA vs. Li-ion. And if you’re not familiar with our TradeOff Tool library, we have 22 calculators available today (and growing) to help you quantify and justify design decisions you face for your data center projects.