What’s behind the energy storage boom?
By 2032, renewables will overtake conventional power sources, making them the fastest-growing energy source globally. Ambitious policy goals target 100% renewable power generation. The energy storage market is rapidly evolving to support these goals and it has a crucial role to play in helping to make these ambitions a reality. Meanwhile, the electric vehicle (EV) sector is driving innovation.
Will energy storage technology develop fast enough to keep pace with green energy ambitions?
We answer your questions about the burgeoning storage market.
How big is the global energy storage market?
In 2018, the market expanded to record levels, with 147% year-on-year growth in gigawatt-hour (GWh) terms. In the next four years, we expect to see growth in all directions as storage markets balloon. By 2024, the market will increase to a sizeable 44 GWh.
Is battery technology getting better?
Since the first lithium-ion battery was commercialised in 1991, investments have been made consistently to improve battery technology.
Remember the earliest versions of mobile phones, with batteries the size of small bricks? As battery size has reduced, capacity – or energy density – has also improved.
Lithium-ion batteries are everywhere: from mobile phones and laptops to electric vehicles. The technology can support renewable energy systems by shifting and balancing power and keeping grids stable.
It also has the ability to respond in less than a second; a crucial factor when it comes to power grid balancing. Lithium-ion has been around long enough to have the economies of scale that drives prices down. And it is flexible enough to have a variety of uses.
What about battery chemistries?
Storage for power and most EVs uses NMC – nickel, manganese and cobalt. The EV industry is continually pushing the boundaries of battery chemistry by investing in technology that will improve energy density.
The NMC 811 is the latest in the line of new-generation cathode chemistries that have been introduced to market. LFP – lithium iron phosphate – is another contender. While less energy dense than NMC, it will continue to have a place in the stationary storage market if it can compete on cost.
What’s driving innovation?
Range anxiety – running out of charge mid-journey – is top of mind for every EV manufacturer: consumers cite this as the number one reason not to buy an EV. To combat this, carmakers are investing heavily in building better batteries, and each new model boasts a bigger battery offering more miles per charge.
Supply chain sustainability is another key driver of innovation. Concerns about human rights abuses in cobalt mining, along with worries about the security of supply and the metal’s high costs, have pushed the industry to reduce its reliance on cobalt.
Are solid-state batteries the future?
Solid-state batteries offer a much higher energy density than the lithium-ion battery. They’ve long been touted as the holy grail for battery technologies.
But there’s a long way to go before they become commercially viable: don’t expect widespread use until after 2030.
By 2026, we think the cost of an EV will be on par with a conventional vehicle
Which countries are leading the investment into battery manufacturing?
Major developments are taking place across five continents. China is leading the way: it has more than 50% of the world’s battery manufacturing facilities.
The US has invested heavily, with the industry nearly doubling in size in 2018. And Europe has plans to ramp up battery manufacturing as the EV revolution takes off.
Will energy storage systems become cheaper?
Yes. As investments in the supply chain increase, more vendors will be able to realise the benefits of economies of scale. Increased competition in the market and improvements in energy density will continue to drive down prices.
We can see this happening in the EV market. Right now, a battery pack is the most expensive part of the electric vehicle. But over the last 10 years, the cost of these battery packs has dramatically reduced by as much as 86%.
As a result, EVs will become cheaper – by 2026, we think the cost of an EV will be on par with a conventional vehicle.
Storage has a vital role to play in helping to make global renewable energy ambitions a reality
Why do power plants need energy storage?
As we decarbonise the power system, energy storage can take over the role of providing clean, flexible power when it is needed, displacing some gas plants, a carbon-intensive alternative. Storage has a vital role to play in helping to make global renewable energy ambitions a reality. Without it, renewable power cannot be deployed when it's needed.
Storage gives power systems the ability to store and shift wind and solar power that would otherwise dispatch according to the weather, rather than our demands for power.
It enables power supply to be decoupled from unpredictable weather patterns and helps power providers to make sure that systems can be balanced on a second-by-second basis, so that electricity use exactly matches what’s been generated by the grid.
Will energy storage help to make power cheaper?
Yes: storage can make power systems more efficient. Take solar for example: a solar system paired with storage helps to maximise the use and value of the infrastructure involved.
And it also reduces curtailment levels: where green power is ‘lost’ because the grid can’t handle too much surplus power.
Solar plus storage systems are becoming increasingly popular for those reasons.
What effect does this have on costs? Ultimately, storage makes producing dispatchable clean power cheaper. We’re already seeing examples where solar-plus-storage PPAs are being signed at a lower cost than gas peaker plants.
Energy storage will continue to hitch a ride on EVs
What’s the future of energy storage?
As volatile renewables become the primary source of the world’s electricity over the next two decades, balancing supply and demand will become increasingly challenging.
Competitively priced energy storage will play a crucial role in keeping the system flexible. But energy storage will continue to hitch a ride on EVs: innovation in the sector wouldn’t be possible without huge investments from EV manufacturers.
As we look towards 2040, demand for batteries in EVs will dwarf demand from the energy storage and portable electronics sectors combined.