Battery Boom
The Rocky Mountain Institute (RMI), a non-profit organization dedicated to spreading knowledge of sustainability, recently released a report on the dawn of new renewable energy technologies called “Breakthrough Batteries.” It states that the global energy transition is occurring quicker than the models predicted thanks to substantial investments in the advanced-battery technology ecosystem.
So much money is getting poured into energy storage technology companies that previous and planned investments combined will reach $150 billion through 2023. That’s equal to every person on the planet chipping in $20 to the cause. Venture-capital firms in the first half of 2019 alone already contributed $1.4 billion.
RMI said:
These investments will push both Li-ion and new battery technologies across competitive thresholds for new applications more quickly than anticipated. This, in turn, will reduce the costs of decarbonization in key sectors and speed the global energy transition beyond the expectations of mainstream global energy models.
Feedback Loops
RMI foresees the establishment of “self-reinforcing feedback loops” between public policy, research and development, manufacturing, and economies of scale. Battery performance will rise because of these loops, and their price will plummet from the current cost of $187/kWh (according to Bloomberg) to as low as $87/kWh by 2025.
The report states:
These changes are already contributing to the cancellations of planned natural-gas power generation. The need for these new natural-gas plants can be offset through clean-energy portfolios (CEPs) of energy storage, efficiency, renewable energy, and demand response.
Outcompeting Natural-Gas
RMI anticipates that existing natural-gas plants will no longer be a competition as soon as 2021. Meanwhile, any new natural-gas plants are a gamble as they may just become stranded assets. Meaning that they won’t be able to compete with ‘renewables + storage’ long before managing to pay off their capital cost.
Looming Trade War
There are four major energy-storage markets: China, the European Union, the USA, and India. RMI analyzed each one and found a pair of significant trends that apply to all of them.
- Mobility markets drive demand. The rising demand in this sector is dropping costs.
- The grid storage market is set to take off.
Of the four major markets, China dominates with solar photovoltaic technologies and electric vehicles due to early, consistent, and significant investments. According to the RMI report, “China also has an advantage in upstream ore processing, critical materials, and component manufacturing.”
The report doesn’t elaborate on what would happen if China took advantage of its position in the market as a ‘weapon’ in the trade war. For instance, what if the country decided to restrict or embargo imports of critical materials for batteries to America?
In response to this, Charlie Bloch and James Newcomb, two of the four authors of the report, told Forbes in an email:
An expanded trade war looms large over all industries and the entire global economy and is not in the interest of either the U.S. or China, and it is unproductive to speculate on the potential scope or outcomes of a battery or minerals-related action.
China is no doubt aware of the long-term economic opportunity associated with being a reliable manufacturer of batteries and the risk that escalating trade war actions by either side could damage the US-China economic relationship in this important area.
Regardless, battery storage is set to take renewables to another level in the coming years.
