Not Registered? Register Now.

1. My Profile >2. Additional Information

By submitting below you certify that you have read and agree to our privacy policy.

Commodities

Battery Storage: Driving the Energy Transition

21 Jan 2020
David Linden, Director, Energy Transition Consulting – EMEA


This is a guest blog written by experts at Wood Mackenzie.

 

A radical energy transition is underway, driven by a combination of environmental, policy and technology factors. Our energy system is being electrified and decarbonised, switching away from fossil fuels into clean, renewable sources of energy. The effect will be transformational. 

Power and road transport, which together contributed around two-thirds of carbon emissions in 2017 (source: IEA), are a clear area of focus for the energy transition.  A great deal has been achieved in the development of renewables power generation and electric vehicles (EVs). Breakthroughs in battery energy storage technology have been a key enabler:

 

Power. The growth in intermittent renewable energy, such as wind and solar, creates a greater need for flexibility and reliability in power markets. Battery storage can help smoothen supply and improve grid stability. This type of energy storage is often called ‘stationary’. 

 

 

CAGR = compound average growth rate

Source: Wood Mackenzie H1 2019.

Forecasts are not an indicator of future performance and any investments are subject to risks and uncertainties.

   

Road transport. A battery can either displace or be combined with an internal combustion engine to create hybrid or fully electric vehicles.  

 

BEV = battery electric vehicles
Source: Wood Mackenzie H1 2019.

Forecasts are not an indicator of future performance and any investments are subject to risks and uncertainties.

 

Lithium-ion technology dominates the market

 

The battery storage market is currently dominated by lithium - ion battery (LiB) technology. LiB batteries have useful attributes. They’re lightweight, have a high energy density, and offer good charging and discharging properties. 

 

 

Source: Wood Mackenzie H1 2019.

Forecasts are not an indicator of future performance and any investments are subject to risks and uncertainties.

 

The first LiB was commercialised in 1991 by Sony, after 20 years of research. Until recently, the primary use was in portable electronics, including mobile phones.  As the technology has improved and scaled, it has been used in EVs and stationary storage solutions.  Going forward, while stationary storage will grow significantly, the biggest driver will be EVs – which already constitute more than half of battery demand.

 

The rise in battery storage is fuelled by falling costs. LiB costs have declined 80% this decade, primarily driven by two things.

 

Economies of scale. Every doubling of production capacity results in a 5-8% reduction in cost.

 

Energy density improvements. Market competition accelerates improvements that lead to reductions in battery prices.

 

 

Source: Wood Mackenzie H1 2019. 

Forecasts are not an indicator of future performance and any investments are subject to risks and uncertainties.

 

 

The speed of this cost decline has consistently been underestimated. Wood Mackenzie anticipates costs will continue to fall as economies of scale and energy densities further improve. 

 

Next generation technology will help satisfy growing demand

 

The battery storage sector is constantly evolving. We expect next generation LiB batteries will be commercialised in the coming decade, notably solid state batteries. 

 

A range of technologies will be required to fully satisfy storage demand. Flow batteries, liquid air, hydrogen and power-to-gas can all complement LiB – offering different properties to suit a range of applications.

 

The battery value chain is also evolving

 

 

Source: Wood Mackenzie H1 2019.

 

The battery value chain is made up of a myriad of industries across the globe. The mining and chemical industries each provide raw materials to manufacture battery cell components. Cells are then packed for different applications – such as the increasingly popular EVs.  At the end of life, batteries are recycled or used for secondary applications, such as ESS. Many companies stretch across different elements of the value chain, perhaps integrating the sourcing of raw materials with manufacturing. 

In addition, a series of industries evolve symbiotically with this value chain. Charging infrastructure and smart grid software providers can both benefit from, and support, the growth of the EV industry.

 

 

Authors who have contributed to this blog:

 

James Whiteside, Head of Multi-Commodity Research for Wood Mackenzie. He is responsible for delivery of cross-commodity coverage across the metals and mining sector. His current focus includes battery raw materials and thematic research around de-carbonization.

 

Jun Sasamura, Consultant in Wood Mackenzie's EMEARC consulting practice. He works across multiple sectors, with recent focus on energy storage and renewable technologies associated with a future of reducing carbon emissions.

Wood Mackenzie, a Verisk Analytics business, is a trusted source of commercial intelligence for the world’s natural resources sector. Wood Mackenzie empowers clients to make better strategic decisions, providing objective analysis and advice on assets, companies and markets.

 

Related blogs

Nickel rally defies industrial metals rut


Read More
Commodities, Technological evolution


Previous Post Next Post
This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.

REGISTER TO RECEIVE BLOG ALERTS

By submitting below you certify that you have read and agree to our privacy policy.