Energize Weekly, August 7, 2019
Energy storage worldwide will grow 122-fold, to nearly 1,110 gigawatts (GW) by 2040 as battery prices fall and their use expands – but growth may also create supply chain challenges.
These are the views of two recent analyses, one by Bloomberg New Energy Finance (BNEF) seeing market growth, and another by Wood Mackenzie cautioning that the battery market, particularly for electric vehicles (EVs), is facing metal supply issues.
The BNEF forecast is based on rapidly declining prices for battery storage, which have already dropped 85 percent between 2010 and 2018. In 2018, the average cost of a lithium-ion battery was $176 a kilowatt-hour.
The consulting group said the cost of lithium-ion batteries will be cut in half by 2030 “as demand takes off in two different markets – stationary storage and electric vehicles.”
To get to the projected 1,095 GW by 2030 from the 9 GW deployed as of 2018 will take $662 billion in investment, BNEF said.
“Two big changes this year are that we have raised our estimate of the investment that will go into energy storage by 2040 by more than $40 billion, and that we now think the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses,” Yayoi Sekine, a BNEF energy storage analyst, said in a statement.
As battery storage gets cheaper, BNEF sees it being used in more applications such as energy shifting – where solar energy stored during the day is used at night, meeting peak electricity demand, and customers using batteries to buy power when it is cheapest and use it later.
Ten countries are expected by BNEF to make up three-quarters of the global market in terms of capacity. In 2019, South Korea is the main market, but will soon be bested by China and the U.S., BNEF said.
India, Germany, Australia, France and the United Kingdom will also be significant markets. Latin America and Southeast Asia will offer growing markets, too.
While the market and price cuts will initially be driven in large part by EV market demand – with EV sales up more than 24 percent globally in 2018 – the growth in batteries may create supply issues, according to consultant Wood Mackenzie.
“As we see demand for batteries grow at an unprecedented rate, battery metals – cobalt, lithium, and nickel – could face a supply crunch by the mid-2020s,” Wood Mackenzie said in a report on battery raw materials.
While most auto manufacturers plan to go all electric by 2050, unless new technology can be developed, commercialized and integrated into EVs and their supply chains “faster than ever before,” it may be impossible to reach those targets, Wood Mackenzie said.
Meanwhile, even as EV demand increases and is projected to account for 38 percent of the global vehicle market by 2040, prices for key metals are in the doldrums.
For example, spot prices for lithium carbonate have fallen by just under $7,000 a ton since June 2018.
Major brine producers have failed to ramp up capacity, and China emerging as a net exporter of lithium chemicals will also have an impact on market prices.
Cobalt prices have softened over the first half of 2019 with “more of crash than a steady decline,” Wood Mackenzie said. “The low prices may defer some mine projects and are likely to see reduced artisanal output from the DRC [Democratic Republic of Congo].”
The industry, nevertheless, will have to cope with an oversupply of intermediates at least out to 2024, and a “swing supply” in China will likely keep a lid on any major price increase.
“Although cobalt continues to look challenging in the long-term, the increased adoption of high-nickel batteries in EVs means the emerging deficits look slightly more achievable than previously expected,” Wood Mackenzie said.
Nickel deficits are being met by growing mining capacity in Indonesia to serve both stainless manufacturing and emerging battery demand.
“Although the battery sector share of nickel demand is much smaller than other metals, getting the quantity of nickel that EVs will need by the mid-2020s will be a challenge,” Gavin Montgomery, Wood Mackenzie research director, said in a statement. “A low nickel price has hindered any project development and with lead times often up to 10 years, investment needs to happen now.”