Lithium-ion batteries have been identified by energy specialists around the globe as a clear front runner in the race to develop new clean energy sources – particularly through their association with the booming electric vehicle (EV) market. According to Global Market Insights, the world’s lithium-ion battery market size surpassed US$40B in 2019 and is anticipated to grow by over 15% by 2026.
The analyst firm suggested that the surging demand for electric vehicles, owing to the ongoing concerns toward increasing pollution levels, will positively impact the growth of the lithium-ion battery industry. It noted that the automotive segment accounted for the majority of the battery market share in 2019.
Meanwhile, new research from Wood Mackenzie suggests the Americas region will overtake Asia Pacific by 2025 to lead the global energy storage market, with a total capacity of 371GWh in 2030. Most of this growth will come from the U.S. China will come second (150GWh), while Japan will sit third (25GWh) by the end of the decade.
The storage story
According to Wood Mackenzie, the slowdown in the Asia Pacific region is partly due to challenges from market incentives and business cases. Though Asia Pacific led the global storage market last year, with deployments reaching 13GWh, growth has mainly relied on pilots, government subsidies, and grid interconnection requirements over the past decade. Without strong policy support, it will be difficult to scale up the front-of-the-meter (FTM) segment across the region.
Wood Mackenzie says the U.S. tripled storage installations in 2020, accounting for 38% of new capacity. China, Germany, and the UK saw double-digit growth during the pandemic, while Australia’s installations fell in year-on-year numbers. Steady growth in a number of key countries during the coronavirus pandemic and strong recovery in 2021 will accelerate global energy storage adoption in the long term, says Wood Mackenzie.
According to Dan Finn-Foley, Wood Mackenzie’s head of energy storage, 2020 was a record year for global energy storage.
“The market exceeded 15GW/27 GWh in 2020, increasing 51% in GWh terms, and is expected to grow 27 times by 2030 by adding 70GWh of storage capacity a year to surpass 729GWh in 2030.
“Approximately US$5.4B of new investment was committed to storage projects across the world last year, increasing the total cumulative investment to an estimated US$22B. By 2025, the overall investment pot will reach US$86B, with a 24% CAGR despite the economic slowdown caused by COVID-19,” he notes.
Clean energy and competitiveness
Wood Mackenzie senior research analyst, Le Xu, says China, Japan, and South Korea have set climate-neutrality targets, underscoring their commitment to the energy transition.
“In Australia, renewables, plus storage technology, is competing with gas power and already replacing ageing coal units.
“If battery projects can solve the financing challenge they currently face, energy storage will be a key feature of decarbonization plans across the region. Asia Pacific’s energy transition ambitions could be thwarted if this issue is not resolved, as battery storage provides the flexibility power plants and grids require to generate reliable electricity around the clock,” she says.
The Wood Mackenzie report also outlines expected changes in another key storage market: Europe. It found that so far, Europe’s market development has been slower than its U.S. and Chinese counterparts.
However, this development will accelerate in the coming years as European member states are required to comply with the Renewable Energy Directive, current overcapacities in electricity markets are reduced with nuclear, and coal exits take place.
According to Wood Mackenzie, Europe will deploy approximately 3GWh of energy storage capacity in 2021, a 55% increase on 2020, and will see cumulative capacity hit 9GWh by the end of the year.
Another specialist analytics firm, IDTechEx, has forecast that the market for EV Battery Cell and Pack Materials will grow to US$52B.
The new report from IDTechEx, “Materials for Electric Vehicle Battery Cells and Packs 2021-2031”, says battery pack materials which will be in demand include aluminium, copper, thermal management materials, thermal interface materials, steel, glass fibre reinforced polymers, carbon fibre reinforced polymers, inter-cell insulation, compression foams and housings, and pack fire-retardant materials.
The current BEV market
Meanwhile, according to Lux Research, there is a lot of work to be done to reduce the cost of batteries and EVs. Lux recently stated that cheaper batteries and more efficient powertrains are crucial in making profitable electric vehicles.
The research firm says battery electric vehicles (BEVs) are the most promising zero-emission vehicle technology, as they continue to show strong growth within the automotive sector.
It added, however, that BEVs remain more expensive to build compared with incumbent internal combustion engine vehicles.
In Lux’s new report “Future Energy for Mobility: The True Costs of Electric Vehicles,” leading industry experts analysed the total cost of electric powertrains, including scenarios for advanced powertrain technologies.
“Electrification of the automotive industry is no longer a question of ‘if’ but rather ‘how fast’,” says Chris Robinson, research director at Lux and lead author of the report.
“The push for electrification is due primarily to two factors – technology improvements and regulations. Because of this, automakers have cumulatively committed to investing hundreds of billions of dollars to design, build, and sell BEVs.”
The new report proposes three ways companies can reduce costs. Batteries remain the most expensive component of an electric vehicle, but this analysis shows they aren’t the only tech that can make BEVs more profitable. Cell-to-pack construction reduces costs the most today, which enables the use of lower-cost cells and simplified pack constructions. Furthermore, a combination of improved motor and inverter efficiencies, cheaper solid-state batteries, and cell-to-pack construction results in the most significant cost reduction – bringing the price of a 75kWh electric vehicle from US$12,700 today to below US$7,000 by 2040.
“Powertrain components aren’t the only source of cost reduction, as new vehicle assembly techniques and financing models can further reduce costs,” Mr Robinson says.
“Structural batteries are currently the most promising next-generation vehicle design, but it is worth noting increasing momentum behind battery swapping, which may reduce costs through smaller battery packs.”
Lux added that as automakers push to make profitable electric vehicles built on dedicated platforms – while facing plateauing battery prices – it is expected they will place greater emphasis on battery pack and vehicle designs that extract the maximum range from the battery.
