Lancaster University inspired Altelium,  a non-intrusive diagnostic toolkit that for the first time enables the insurance industry to warranty batteries.

Summary

A team at Lancaster University recognised that data about battery history, state of health and future performance was crucial to the future economic viability of the electric vehicle (EV) battery market for both first and second life applications. After building diagnostic models on chemistry-related battery failure and securing interest from the insurance sector, they founded a company, Altelium, which today offers a non-intrusive diagnostic toolkit that enables the insurance industry to warranty batteries.

The Problem

EV batteries are evolving so fast that the depth of information needed to underpin warranty or investment decisions in them has not been available. End users also have not had the right information to maximise the life of their new batteries or to sell them on to second life users. Major barriers to entry exist in the insurance market for batteries as the models currently used do not allocate for chemistry-related fatigue and degradation (battery failure) versus more conventional forms of mechanical decay, such as those associated with the operation of machinery, motor vehicles and mechanical technologies.

The Challenge

The challenge the researchers faced was to create a quantitative bridge between the electrochemical kinetics of battery degradation on the one hand and the actuarial risk calculation on the other. This required the team to build diagnostic models on chemistry-related battery failure and to use data and AI tools to assess battery state of health and expected future performance. This meant the researcher team would have to move beyond modelling and to build a battery test and analysis laboratory.

Achievements

The output of this effort is the creation of Altelium, a company that harnesses the power of battery data. Real time information about battery state of health, enhanced by AI technology, has been packaged together in a secure platform that is accessible and practical for customers that need to make investment or operational decisions about EV batteries.

The Altelium platform is a state-of-the-art insurtech solution: on one hand, an integrated management system offering automated pricing issuance and underwriting of insurance products, on the other, real time data is enhanced with AI to supply the information needed.

Dynamic new warranties can now be offered on battery packs that extend the life of products and allow for market growth, with the investor’s financial risk understood and mitigated, and the cash constraints removed from their balance sheet.

In addition to offering warranties for investors in both first and second life markets, Altelium also offers service contracts and operational data information to automakers, fleet managers, facility managers and power management companies.

The Faraday Institution has facilitated this by bringing together world leading experts battery management systems, chemistry and manufacture through its Multi-Scale Modelling project. With follow-on funding from Innovate UK, this team focused on data and AI-supported warranty insurance for battery packs, bringing on an expert in the insurance market. Under the leadership of co-founders Professor Harry Hoster, Charley Grimston and John Pesmazoglou, Altelium is now a significant first mover in the green energy revolution.

As of 2020, Altelium employs more than 20 people. Altelium’s data scientists are co-located in Lancaster’s battery laboratory, thus maximising the exchange of knowledge and know-how. The growing pool of clients is attracted by the opportunity of transferring warranty related financial risks from their balance sheets to the insurance industry. Altelium builds the bridge between the chemical processes behind battery degradation on the one hand and the risk calculation standards of the insurance industry on the other. Altelium also uses real-time battery data to update risk calculations and thus improve the insurance product.

Longer-term Significance

The battery sector represents one of the fastest growing industries globally, with the market set to grow from USD $44bn in 2020 to $94bn in 2025. Altelium’s models and toolkit is lowering warranty barriers in the following areas:

• Introduction of a new insurance-backed extended warranty for battery technology, including both first and second life applications.
• Helping SMEs into the EV and stationary battery storage markets by removing warranty risks from their balance sheets.
• Environmental impacts through the enabling of investment in green energy and batteries.

Altelium’s service is valuable at many different points within the green energy and automotive industry. Its target customers include EV and stationary storage manufacturers, insurance brokers, end users and underwriters.

Among each of these customer groups Altelium is offering services from insured warranties to data analytics and is in advanced negotiations or has successfully reached agreement with them. Altelium is already enabling car manufacturers to pivot their batteries from EV to battery energy storage systems (BESS) applications.

First-life applications

• By 2025 over 14 million EVs are expected to be sold per annum and the EV market to be worth US$450 bn.
• The Li-Ion battery market is anticipated to reach $71.5bn by 2030.

Second-life applications

• The exponential growth of the BESS market can be seen comparing the capacity of the world’s largest facilities from 2017 to 2020.
• Famous for the cost and carbon savings it has delivered, Hornsdale Power Reserve Australia was the world’s largest BESS in 2017 at 194MWH. It is now dwarfed by the 6000 MWH facility approved in October 2020 for California.
• The second life BESS market is expected to grow at the same pace and reach a market value of $30bn by 2030.

“When I started in 2015 as a professor of Physical Chemistry and Director of Energy Lancaster, the university had no battery research or laboratories. From previous roles, I knew the value of linking battery research to data science. Through a collaboration between Chemistry, Engineering, Computing and Economics departments, we bridged chemical kinetics and battery models on the one hand and a probabilistic view on battery degradation and lifetime prediction on the other. Joining the Faraday Institution’s Multi-Scale Modelling project helped us to go beyond modelling and to build a battery test and analysis laboratory.”

Professor Harry Hoster, Lancaster University

Visit Altelium.com

Success story published September 2020.