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A BNEF (BloombergNEF) gathered 10 trends about what they believe to be some of the most notable developments in the energy storage in 2023.
Among the highlights are the estimates regarding the lithium ion battery prices, incentives, systems costs storage and market prospects.
Lithium Ion Batteries Price
According to consultancy, prices remain high, averaging US$ 152/kWh. In 2022, the volume-weighted cost of lithium-ion batteries across all sectors averaged US$ 151 per kWh, an increase of 7% compared to 2021 – the first time BNEF has recorded a price increase.
They now expect the volume-weighted average cost of batteries to rise to US$ 152/kWh in 2023. Lithium and nickel values will also remain high, given the uncertainty surrounding China's post-Covid reopening policy and the ongoing disruption of metal supply chains caused by the war between Russia and Ukraine.
Volatility continues
Volatility in supply, demand and prices continues, although lithium prices may begin to decline with new supply. In the second half of 2022, battery metals were hit by events around the world: “the war between Russia and Ukraine intensified, China's battle against Covid wouldn't go away, inflationary pressures and recession fears grew” .
However, they said a rise in metals prices has persisted for most of the year, and the long-term outlook is optimistic (despite signs that a small slowdown in metals demand may be imminent).
“While we are looking at all battery metals in 2023, we focus here on lithium given its price throughout the second half of 2022,” they indicated.
Sodium Ion Batteries
According to BloombergNEF, announcements from a major battery maker and a two- or three-wheeler maker give a boost to sodium-ion batteries which, “still in their infancy, are starting to grow.”
“An alternative to lithium-ion, sodium-ion battery technology offerings could alleviate battery market pressures – and potentially reduce costs – as early as 2026. For 2023, we speculate that at least one major manufacturer will launch a significant sodium ion battery supply,” said the company.
“In addition, we believe that two major energy storage system products will be launched and that at least one major two- or three-wheeler company will announce an automobile model powered by sodium-ion batteries,” they reported.
Solid State Batteries
In BNEF's view, solid-state batteries are progressing, with new announcements adding more than 40 GWh. “Such technology has become the most promising for increasing cell-level energy density up to 500 watt-hours per kilogram and reducing battery prices in the second half of the decade.”
Several leading battery manufacturers such as LG Energy Solution, CATL and SK, as well as startups such as Solid Power, Prologium and Quantumscape, have laid out clear roadmaps for commercializing solid-state batteries this decade, for example.
Investments
“US IRA (Inflation Reduction Act) guidance is released, leading to more than US$80 billion in new investment for the battery supply chain,” the company said.
The IRA was signed into law by US President Joe Biden on August 16, 2022, injecting at least US$369 billion into the country's clean energy economy. “With much of the money going to the energy sector and EVs, the rule represents the biggest effort yet to strengthen the U.S. battery supply chain.”
“In the 'Advanced Industrial Production Credit' and 'Clean Vehicle Credit' sections, the law introduced a variety of credits to support the domestic supply chain, from raw materials to battery cells, modules, EVs and energy storage.” , they pointed out.
Incentives
According to BloombergNEF, a weakened battery position forces the EU to rethink incentives. “As the North American battery supply chain enjoys a boost from the IRA, European players will likely pressure the EU to offer new incentives as well.”
“BNEF will be attentive to the EU's response, which may include new subsidy schemes for domestic manufacturing and 'buy European' requirements for local content,” they highlighted.
Facing waning enthusiasm for local battery manufacturing, Europe will be under pressure to loosen state aid rules (EU competition rules that restrict subsidy spending at country level rather than across the EU), ease permitting and potentially allocate additional EU funds for the ongoing supply of batteries.
Supply chain in China
As policies regulating the origin of raw materials take hold in the EU and US, the Chinese battery supply chain is creating creative alternative solutions.
BNEF said Chinese companies will be closely watching the release of the IRA guidance, with particular attention to the regulation of critical minerals and battery components – and the definition of 'foreign entities of interest'.
“Ford and CATL are rumored to be considering building a battery factory in Michigan, USA, in a complex arrangement that would allow the facility to reap tax benefits while complying with the terms of the law (Ford would own the facility while CATL would operate it)”, they explained.
“These creative alternatives will become increasingly likely among Chinese companies, especially among those that are interested in expanding to the United States,” the company emphasized.
Storage system costs
Estimates from BloombergNEF indicate that costs are above US$ 300/kWh for a four-hour turnkey system.
In 2022, rising raw material and component prices led to the first increase in energy storage system values since BNEF began its ESS cost survey in 2017. “Costs are expected to remain high into 2023 before falling in 2024.”
Market will double
In the company's view, the market for energy storage systems doubles. “Such a segment will continue to grow despite higher costs, adding around 28 GW/69 GWh of energy storage by the end of 2023.”
In terms of GWh, the market will almost double compared to 2022 installations. (In October 2022, BNEF estimated that 16 GW/35 GWh would be installed by the end of the year).
pumping hydropower
For the consultancy, pumped hydropower has returned, attracting more investment than other long-term storage technologies. Despite long lead times, BNEF is assuming that investors and policymakers will be betting on pumped hydro energy storage in 2023.
“We speculate that this could lead to more committed investment in pumped hydropower than in other long-duration energy storage technologies this year,” they concluded.
