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Global Disruptors - Energy Storage

Global Disruptors - Energy Storage 2021

The Finance Ghost | South Africa | 14 September 2021

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Report Coverage

This report focuses on energy storage including national grids, batteries and other technologies such as hydrogen and thermal energy storage. It includes information on the size and state of the sector, energy storage applications, raw materials mining, manufacture and recycling. There is also comprehensive information covering trends, applicable regulation, electric vehicle sales, charging infrastructure and developments in the use of batteries in other modes of transport.

Introduction

Energy demand is directly linked to population levels and economic growth. As GDP grows, so does energy demand and thus CO2 emissions. According to the International Energy Agency (IEA), global CO2 emissions declined by 5.8% in 2020 because of a global economic contraction driven by lockdowns. Global energy demand is expected to increase by approximately 4.6% in 2021 after a 4% contraction in 2020. The hardest-hit energy source in 2020 was oil, with demand for transport fuels having decreased 14% in 2020 as mobility was restricted. The expected increase in 2021 will take energy demand to 0.5% that of 2019, with 70% of increased demand coming from emerging markets and developing economies. Demand in advanced economies is expected to be 3% below pre-pandemic levels, and developing economies 3.4% above.The IEA estimates that coal demand will increase by 60% more than all renewables combined in 2021, showing the impact of growth in emerging markets. More than 80% of the growth in coal demand is concentrated in Asia. In a world with vastly different standards of living across countries and higher population growth rates in poor countries compared to rich countries, the debate around energy consumption is complex. Cheaper fossil fuels are driving growth in developing countries, with a negative impact on the earth’s environment and climate.Although developed countries are leading the way in the development of alternative energy and energy storage technologies, China is expected to account for almost half the global increase in renewable energy generation. India is also a major source of growth in renewable energy, although there is still substantial dependence on fossil fuels by these countries. There is arguably a race against time to find solutions that will allow developing economies to improve their standards of living, while being kinder to the environment in terms of energy production and consumption. Global awareness of the need for sustainable energy was visible in 2020, with demand for renewables up by 3% at a time when overall energy demand dropped. Solar PV and wind are expected to contribute two-thirds of the growth in renewables. The percentage of electricity generated by renewable sources is expected to increase to almost 30% in 2021, up from 27% in 2019. There is a significant global opportunity in renewable energy, which encompasses a value chain from energy generation through to energy storage. The focus of this report is on energy storage.

Strengths

• Batteries have low standby losses and both energy efficiency and density are high.
• Battery storage solutions are becoming well-developed for several uses, which can reduce reliance on fossil fuels in national grids and mobility solutions.
• The cost of production is decreasing rapidly as scale is achieved, so battery-related solutions are becoming an economically viable alternative for consumers.

Weaknesses

• Consumer safety concerns, evidenced by the number of product recalls by vehicle manufacturers.
• Limited use currently in forms of transport other than passenger vehicles.
• Mobility solutions are dependent on charging infrastructure, which in many countries is powered by fossil fuels and thus not a clean source of power.
• The mining of battery materials and the manufacturing and disposal of batteries is not a perfect environmental solution once the full life-cycle is considered.

Opportunities

• A growing global population and heightened focus on emissions will drive increased demand for energy storage solutions.
• Advances in lithium recycling technologies could further improve the environmental impact of the life-cycle of batteries.
• Decentralised power solutions, such as household solar PV or commercial off-grid projects, are growing in popularity.

Threats

• Battery technologies themselves are currently not renewable, with risk of supply challenges in global lithium mining due to limited reserves.
• Disparity between developed and developing markets can drive political and regulatory changes that may not be favourable to these technologies.
• The true cost of ownership of hybrid and electric vehicles, both to consumers and the environment, has yet to be established over an extended period.

Outlook

A larger and increasingly digitised global population needs access to electricity and mobility solutions. Addressing climate change concerns is a social and political imperative, driving a clear shift in policy that is favourable to renewable and cleaner energy solutions. The drive to incorporate renewable energy solutions and decarbonise sectors such as transport and infrastructure will support the use of energy storage technologies to develop a resilient and sustainable power network. Developed countries have the fiscal strength to incentivise consumer behaviour towards renewable solutions and support the creation of necessary infrastructure. Developing countries are likely to be reliant on fossil fuels for longer than developed countries. Batteries are playing a central role in storage solutions going forward. The flexible nature of the technology allows for deployment in a multitude of power storage projects, ranging from utility-scale installations down to household solar PV solutions. In mobility solutions such as passenger vehicles, battery technologies are running far ahead of alternatives such as hydrogen fuel-cells. Related concerns around lithium supply shortages in future years is driving vertical integration strategies, such as Tesla moving into production of lithium from clay deposits. Other battery manufacturers may look to mitigate the risk of supply shortages in coming years, which could become a significant business risk for vehicle manufacturers who do not have contingency plans in place. Energy storage solutions for passenger vehicles are running well ahead of solutions for other modes of transport. The next decade could see progress made in those areas in an effort to combat carbon emissions globally. There is likely to be a flurry of corporate activity linked to energy storage and cleaner energy overall, such as Anglo American’s unbundling of coal business Thungela and Sibanye-Stillwater’s investment in lithium projects in Europe. Petroleum giants such as Shell are investing in EV charging startups, as the garage forecourts of the future will need to cater to internal combustion engine and electric vehicles. The regulatory environment may be volatile in the short-term as governments seek to lower their emissions and harmful pollutants and encourage investments in their renewable energy sectors. Grid transformations and electricity provisions for the rapidly growing population will be prominent themes in policy decision-making regarding energy storage solutions. South Africa’s renewable energy market is still nascent and the instability of the power supply of the national grid, limited technology deployment, and over-reliance on expensive diesel generators opens up opportunity for small-scale solar PV, wind and hybrid technologies, backed by a storage component, to improve the overall system’s reliability.

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Global Disruptors - Energy Storage
Global Disruptors - Energy Storage 2021

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Table of Contents

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PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 2
2.1. National Grids 2
Pumped-storage Hydropower 3
Gravity Storage 3
Flywheel 4
2.2. Batteries 4
Applications in National Grids 5
Applications in Electric Vehicles 5
Applications in Other Transport 7
Applications in Households 8
Applications in Companies 9
2.3. Other Technologies 10
Hydrogen Fuel Cells 10
Thermal 11
3. SIZE OF THE INDUSTRY 12
3.1. Batteries 12
Raw Materials Mining 12
Chemical refining 13
Battery manufacturing globally 13
Battery Manufacturing in South Africa 14
Battery recycling 15
EV Sales Globally and in South Africa 16
Charging Infrastructure Globally and in South Africa 18
Other Transport 21
Households 22
Companies 22
3.2. Other Technologies 23
Hydrogen Fuel Cells 23
Thermal 23
4. STATE OF THE INDUSTRY 24
4.1 Trends 24
5. INFLUENCING FACTORS 26
5.1. Regulations 26
6. SWOT ANALYSIS - BATTERIES 31
7. OUTLOOK 32
8. REFERENCES 33
APPENDIX 1 35
Examples of notable players 35