Lithium-ion batteries are amazing. Their energy density is significantly greater than that of carbon-zinc, alkaline, or NiMH batteries. For this reason, they're the standard energy source for cell phones, laptops, tablet computers, electric cars, and, most recently, Dreamliners. When energy density is a must, then a li-ion battery may be the only practical option. For example, my fleet of three quadcopters simply wouldn't make it off the ground with bulkier and heavier lead-acid or NiMH batteries.
After investing in a smart li-ion charger — check out towerhobbies.com and xheli.com — I converted my floor sharks (carpet roamers and crawler robots) to compact, lightweight 3.7V li-ion cells. I've had good luck with SparkFun's li-ion USB charger and 850 mAh battery combination. If you opt for a low voltage overhaul, then you'll have to consider replacing 5V microcontrollers and sensors with 3.3V versions.
Although most consumer li-ion batteries include builtin protection against over-voltage, over-current, and minimum voltage, this protection doesn't guarantee safety. Most of the fires and explosions associated with li-ion batteries — whether in laptops, cars, or planes — occur during the charging cycle. Lithium-ion batteries are prone to thermal runaway. In this positive feedback scenario, when cells overheat due to over-charging, the elevated temperature speeds the chemical reaction in the cell which releases more energy as heat, and so on.
The best-case scenario — which typically occurs with smaller, low-capacity li-ion cells — is for the battery to exhaust itself and cool down. Other possible outcomes range from a slow, controlled meltdown of the battery to a more spectacular explosion accompanied by flames. Given the potential for smoke damage and fire, I had to modify my casual routine of dropping NiCd or NiMh cells into a charger and then checking on them hours later. Now, I charge the cells on a metal desktop, in plain sight, and only when I'm working in my shop. In addition, when I'm charging a battery larger than about 4 Ah, I put the battery in a fireproof safety sack (about $5). Finally, I store the cells in a metal drawer with ventilation holes in the sides and back.
I admit that I'm a little more casual with the micro li-ion batteries rated at less than 100 mAh. Even so, I store them in the same metal drawer that I use for the large bricks.
The bottom line is that when working with li-ion, you should respect the tradeoff of safety versus increased energy density. If and when you decide to make the move to li-ion, invest in a good charger. Or, better yet, build one. If you have a good bench DC power supply or even a wall wart, then all you need is a smart regulator circuit — an excellent weekend project. NV