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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Electricity storage, principally in the form of lithium-ion batteries, is widely regarded as the next big thing that will transform all sectors of the electricity business--generators, transmitters, distributors, energy-services companies and renewable-power developers. Industrial Info is tracking roughly three dozen battery-storage projects in the U.S. valued at slightly more than $1 billion. Many analysts expect that to grow significantly in the next few years. Virtually each day brings another announcement by an electric utility of a new battery-storage deployment. Regulatory commissions are a principal force driving increased deployments, which have helped dramatically reduce the cost of storage.
For more on how battery-storage projects could upend the electricity business, see December 28, 2017, article - Pacific Gas and Electric Awards Battery Storage Contracts for 165 MW, November 14, 2017, article - Power Executive: Electricity Storage the 'Swiss Army Knife of Energy,' November 2, 2017, article - Energy Storage Projects Take Off in U.S. and May 15, 2017, article - Energy Storage: Dynamic Business That Could Transform the Power Industry.
But a clean-tech research firm, Cleantech Analytics LLC (Centreville, Virginia), is asking whether the minerals required to build lithium-ion batteries will remain available in sufficient quantities to support the bright future being sketched out by analysts and storage advocates.
"The supply of lithium and constituent materials (including, but not limited to, cobalt) are often concentrated in only a few countries, exposing their operations to geopolitical risk," Peter Drown, founder of Cleantech Analytics, wrote in a white paper released late last year. "Over 90 percent of lithium is concentrated in four countries--China, Chile, Argentina and Australia. China, home to over 95% of current global rare-earth material supply, has demonstrated a willingness to impose export quotas of these materials."
Although Bolivia is home to the world's largest single proven lithium reserve, he continued, that country's relations with the U.S. have deteriorated over the term of President Evo Morales, "damaging many relationships with a key trading partner," he wrote in his white paper. Over 50% of the world's cobalt production comes from the Democratic Republic of Congo, "where political instability is a way of life," he added.
"Cobalt is already experiencing shortages, price run-ups, and hoarding by hedge funds, as analysts forecast that supply will not be able to keep up with demand due to EV growth projections," Drown wrote. "Macquarie Research estimates a deficit of 885 tons of Cobalt for 2018, 3,205 tons in 2019, and 5,340 tons in 2020. This tightening of the supply chain for key (lithium-ion) materials must be taken into account to provide a more realistic picture of (lithium-ion battery) penetrations in the grid storage sector."
Drown's cautions extend beyond potential supply disruptions and minerals prices. In the white paper, titled "Implications of a Lithium-Ion Storage Transformation," he also identified the environmental impacts of mining techniques and their impact on fresh-water supplies in countries that typically are arid.
These cautions do not appear to be dulling the interest in electricity storage, at least yet. This month, an estimated 1,000 people attended a conference on storage in Boston organized by the Energy Storage Association (ESA) (Washington, D.C.). There they heard full-throated support for electricity storage.
According to a report from RTO Insider, a trade-industry publication, industry experts predicted electricity storage deployments will likely grow to 35,000 megawatts (MW) by 2025. "Our industry created the momentum for the unanimous support to unleash the benefits of storage through FERC Order 841," ESA Chief Executive Kelly Speakes-Backman told conference attendees. "This is a watershed moment, friends; this is our moment."
She predicted the storage industry's growth will create hundreds of thousands of jobs, result in $4 billion in cumulative operational savings and avoid 3.6 million metric tons of CO2 emissions and 1,000 metric tons of CO2 equivalents, including nitrogen and sulfur oxide. "On a regular basis, our teams are in contact with ISOs [independent system operators] and RTOs [regional transmission organizations] who are seeking guidance in how to create markets and support rules that enable more storage on the transmission level, distribution level, in businesses and in homes," she added.
A few years back, the California Public Utilities Commission (CPUC) (San Francisco, California) required investor-owned electric utilities in the state to procure 1,300 MW of energy storage projects by 2020. Late last year, the CPUC doubled down on storage when it issued integrated resource planning (IPR) guidance to the state's shareholder-owned electric utilities--units of PG&E Corporation (NYSE:PCG) (San Francisco), Edison International (NYSE:EIX) (Rosemead, California) and Sempra Energy (NYSE:SRE) (San Diego, California)--to deploy 2,000 MW of new battery-storage projects by 2030.
Storage-deployment mandates like these, plus technological advances, have helped bring down battery-storage costs by 79% since 2010, from $1,000 per kilowatt-hour (kWh) to an estimated $209 per kWh last year, according to a research report released in late March by Bloomberg New Energy Finance (BNEF) (New York, New York). That report also documented ongoing reductions in the levelized cost of electricity (LCOE) generated by onshore wind power, solar power and offshore wind power.
BNEF's research results "are chilling for the fossil fuel sector," said Elena Giannakopoulou, head of energy economics at BNEF. "Some existing coal and gas power stations, with sunk capital costs, will continue to have a role for many years, doing a combination of bulk generation and balancing, as wind and solar penetration increase. But the economic case for building new coal and gas capacity is crumbling, as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants," she said in a March 28 statement.
"Electricity storage is a critical X factor in the evolution of the Power business," commented Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Although it is still very expensive, battery storage has some niche applications today where it is competitive. Continued cost declines for storage and renewable electric generation, backed by favorable regulation, could shift the pace of change in the industry to overdrive."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
For more on how battery-storage projects could upend the electricity business, see December 28, 2017, article - Pacific Gas and Electric Awards Battery Storage Contracts for 165 MW, November 14, 2017, article - Power Executive: Electricity Storage the 'Swiss Army Knife of Energy,' November 2, 2017, article - Energy Storage Projects Take Off in U.S. and May 15, 2017, article - Energy Storage: Dynamic Business That Could Transform the Power Industry.
But a clean-tech research firm, Cleantech Analytics LLC (Centreville, Virginia), is asking whether the minerals required to build lithium-ion batteries will remain available in sufficient quantities to support the bright future being sketched out by analysts and storage advocates.
"The supply of lithium and constituent materials (including, but not limited to, cobalt) are often concentrated in only a few countries, exposing their operations to geopolitical risk," Peter Drown, founder of Cleantech Analytics, wrote in a white paper released late last year. "Over 90 percent of lithium is concentrated in four countries--China, Chile, Argentina and Australia. China, home to over 95% of current global rare-earth material supply, has demonstrated a willingness to impose export quotas of these materials."
Although Bolivia is home to the world's largest single proven lithium reserve, he continued, that country's relations with the U.S. have deteriorated over the term of President Evo Morales, "damaging many relationships with a key trading partner," he wrote in his white paper. Over 50% of the world's cobalt production comes from the Democratic Republic of Congo, "where political instability is a way of life," he added.
"Cobalt is already experiencing shortages, price run-ups, and hoarding by hedge funds, as analysts forecast that supply will not be able to keep up with demand due to EV growth projections," Drown wrote. "Macquarie Research estimates a deficit of 885 tons of Cobalt for 2018, 3,205 tons in 2019, and 5,340 tons in 2020. This tightening of the supply chain for key (lithium-ion) materials must be taken into account to provide a more realistic picture of (lithium-ion battery) penetrations in the grid storage sector."
Drown's cautions extend beyond potential supply disruptions and minerals prices. In the white paper, titled "Implications of a Lithium-Ion Storage Transformation," he also identified the environmental impacts of mining techniques and their impact on fresh-water supplies in countries that typically are arid.
These cautions do not appear to be dulling the interest in electricity storage, at least yet. This month, an estimated 1,000 people attended a conference on storage in Boston organized by the Energy Storage Association (ESA) (Washington, D.C.). There they heard full-throated support for electricity storage.
According to a report from RTO Insider, a trade-industry publication, industry experts predicted electricity storage deployments will likely grow to 35,000 megawatts (MW) by 2025. "Our industry created the momentum for the unanimous support to unleash the benefits of storage through FERC Order 841," ESA Chief Executive Kelly Speakes-Backman told conference attendees. "This is a watershed moment, friends; this is our moment."
She predicted the storage industry's growth will create hundreds of thousands of jobs, result in $4 billion in cumulative operational savings and avoid 3.6 million metric tons of CO2 emissions and 1,000 metric tons of CO2 equivalents, including nitrogen and sulfur oxide. "On a regular basis, our teams are in contact with ISOs [independent system operators] and RTOs [regional transmission organizations] who are seeking guidance in how to create markets and support rules that enable more storage on the transmission level, distribution level, in businesses and in homes," she added.
A few years back, the California Public Utilities Commission (CPUC) (San Francisco, California) required investor-owned electric utilities in the state to procure 1,300 MW of energy storage projects by 2020. Late last year, the CPUC doubled down on storage when it issued integrated resource planning (IPR) guidance to the state's shareholder-owned electric utilities--units of PG&E Corporation (NYSE:PCG) (San Francisco), Edison International (NYSE:EIX) (Rosemead, California) and Sempra Energy (NYSE:SRE) (San Diego, California)--to deploy 2,000 MW of new battery-storage projects by 2030.
Storage-deployment mandates like these, plus technological advances, have helped bring down battery-storage costs by 79% since 2010, from $1,000 per kilowatt-hour (kWh) to an estimated $209 per kWh last year, according to a research report released in late March by Bloomberg New Energy Finance (BNEF) (New York, New York). That report also documented ongoing reductions in the levelized cost of electricity (LCOE) generated by onshore wind power, solar power and offshore wind power.
BNEF's research results "are chilling for the fossil fuel sector," said Elena Giannakopoulou, head of energy economics at BNEF. "Some existing coal and gas power stations, with sunk capital costs, will continue to have a role for many years, doing a combination of bulk generation and balancing, as wind and solar penetration increase. But the economic case for building new coal and gas capacity is crumbling, as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants," she said in a March 28 statement.
"Electricity storage is a critical X factor in the evolution of the Power business," commented Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Although it is still very expensive, battery storage has some niche applications today where it is competitive. Continued cost declines for storage and renewable electric generation, backed by favorable regulation, could shift the pace of change in the industry to overdrive."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
