Pricing and tech trends shaping the global battery storage market
Feb 8, 2024
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The podcast discusses the exponential increase in battery storage installations and capacity, driven by Chinese policy. It explores rapid changes in manufacturing expansions, chemistries, and duration for grid-connected systems. Pricing trends, market shakeout, and impact of lithium demand are also highlighted. The unique aspects of the battery storage market in Europe, tech shifts in EV battery manufacturing, and emerging trends like sodium ion batteries and hydrogen integration are discussed.
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Quick takeaways
Battery storage capacity has seen significant growth, surpassing expectations and driven by factors such as surging gigawatt-hour scale projects and a drop in system costs.
Lower battery prices enable cost reductions and make EVs and stationary storage more accessible to consumers and project developers.
Deep dives
Battery storage capacity is rapidly increasing
Battery storage capacity has seen significant growth, with installations increasing from hundreds of megawatts in 2016 to 110 gigawatts in 2023. This growth has surpassed expectations and is driven by factors such as surging gigawatt-hour scale projects and a drop in system costs. The market is evolving quickly, with China emerging as a dominant player in battery manufacturing and installation. The industry is experiencing constant adjustments in forecasts and is characterized by rapidly changing dynamics.
Battery prices are expected to drop
After a rise in battery prices in 2022, the cost of battery packs and turnkey energy storage systems is projected to drop by 6% in 2023. The drop in prices is attributed to eased material prices and increased production capacity by Chinese manufacturers. Battery prices have significantly declined over the past decade, which has contributed to the affordability of electric vehicles (EVs) and stationary storage projects. Lower battery prices enable cost reductions and make EVs and stationary storage more accessible to consumers and project developers.
Battery market consolidation and shakeout could occur
The battery market, similar to the solar market in the past, is likely to witness consolidation and a shakeout period. The rapid increase in battery manufacturing capacity relative to demand creates an oversupply situation, making it challenging for all companies to sustain profitable operations. Smaller producers might face pressure, while larger companies with established contracts and anchor customers have more stability. Market dynamics, such as capacity expansion plans, EV growth, and potential company failures, will influence the level of market consolidation and its impact on manufacturing capacity.
Battery storage trends and applications vary globally
Battery storage market trends and applications differ across regions. In the US, the market is diversified, with utility-scale projects and different regions adopting varied approaches. China leads in battery deployment with a focus on renewable integration mandates. Europe experiences a significant residential storage market, particularly in Germany and Italy, driven by factors like cost reductions and government incentives. Long-duration energy storage is still a developing market, with specific projects and investments focused on different use cases, such as seasonal storage and diurnal patterns. Technology advancements, like solid-state batteries and alternative chemistries, contribute to the evolving battery storage landscape.
The storage market is full of surprises. Last year, global storage installations were a third higher than expected, driven mostly by Chinese policy to attach batteries to renewables.
Meanwhile, a ramp-up in manufacturing is causing oversupply – and a potential shakeout for smaller battery makers.
Rapid manufacturing expansion, a shift in chemistries and designs, and increases in duration for grid-connected systems are making battery storage one of the most dynamic sectors of the clean energy economy.
“We do have to constantly be reconsidering our assumptions,” said Yayoi Sekine, head of energy storage at Bloomberg New Energy Finance. “I think now we're currently in an environment where the industry is actually able to sustain itself in terms of its own battery manufacturing and supply chains. That's a pretty big shift and that's happened very recently.”
This week on The Carbon Copy, we feature a conversation with Yayoi Sekine pricing, tech, manufacturing, and deployment trends that are shaping battery storage.
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