The outlook for the global battery market

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Through Cary Springfield, International Banker

WWhether they power our laptops, phones, and cars, or are used extensively in energy storage solutions, it’s clear that batteries are essential to our daily lives. And with electric vehicles (EVs), electricity storage and renewable energy, all set to play an increasingly important role across the world over the next decade, our global dependence on batteries will continue to grow rapidly. Indeed, the global battery market size is expected to reach $ 310.8 billion by 2027, with a CAGR (compound annual growth rate) of 14.1% from 2020 to 2027, according to a July 2020 report from Grand View Research.

Lead-acid, lithium-ion and nickel batteries are currently the most commonly used battery types around the world, with some estimates putting their total share of the global battery market at around 95%. Of the three, lithium-ion (Li-ion) batteries are likely to generate most of the growth over the next few years. Thanks to the specific qualities of lithium which make charging and discharging much safer than other materials, Li-ion batteries are already used in a wide range of applications, including portable devices such as cell phones, laptops and tablets, as well as to efficiently deliver power. for electric vehicles (EVs), medical equipment and power tools.

A March 2021 report by research firm MarketsandMarkets predicted that the global Li-ion battery market would grow at a CAGR of 16.4% between 2020 and 2025, from $ 44.2 billion to $ 94.4 billion . Growth is likely to be driven by the preferable, often unique qualities that these batteries possess, which will drive the adoption of consumer electronics and increase the number of research and development initiatives by different organizations and battery manufacturers. , notes the report. What is more, an increase in demand for plug-in vehicles; a growing need for battery-powered automation and materials handling equipment in industries driving demand for smart devices; and a growing need for Li-ion batteries in a wide range of industrial applications are key factors that will drive the growth of Li-ion battery consumption in the coming years.

Li-ion battery market for automotive industry, on the other hand, is expected to largely account for the largest market share during the forecast period. “The increasing adoption and awareness of electric vehicles, government initiatives and regulations supporting the adoption of electric vehicles around the world are the factors driving the growth of the lithium-ion battery market,” according to MarketsandMarkets. “The market for these vehicles is expected to grow in the near future, in part due to the adoption of various environmental standards and emissions regulations. This has increased the demand for Li-ion batteries.

Additionally, a July 2021 report from Research and Markets saw the global Li-ion battery market grow from $ 41.1 billion in 2021 to $ 116.6 billion by 2030 at a CAGR of 12.3 %, with the need to meet peak electricity demand needs being the main contributing factor. “The flexibility these batteries offer to the grid in terms of energy storage helps cope with fluctuations associated with renewable energy sources, such as solar and wind power, catalyzes the adoption of energy storage systems. by lithium-ion battery “, notes the report. . “Lithium-ion battery energy storage systems allow grid operators to save electricity when there is a surplus of renewable energy. ”

The current COVID-19 situation, however, means that the expected growth of the Li-ion battery market is likely to be hampered by the pandemic restricting the supply of batteries and other components due to severe disruption in businesses and the industry. global economy, according to the report. recognized. This is because, as is the case with many industries today, supply chain disruptions dramatically affect production levels – in this case, this is mainly due to the key components of batteries manufactured in the industry. Asia-Pacific region.

“The COVID-19 situation has highlighted the region’s over-reliance on key raw materials, particularly China. Battery makers in the United States, Germany and Australia are severely affected by the shutdown of operations in China and other Asia-Pacific countries, ”according to Research and Markets. “It has also resulted in limited production, resulting in a severe decline in business inputs. Recovery depends on government support, as well as the level of corporate debt and how businesses and markets cope with reduced demand. “

And what about the environmental impact of this anticipated increase in demand for batteries? After all, the high expected energy consumption, along with the growth of the global battery market, has huge implications for the use of clean energy and sustainability as a whole. Indeed, with the right conditions in place, batteries could crucially facilitate a global global transition to greenhouse gas neutrality, especially for the transport and electricity sectors, by positioning renewable energies. as a reliable energy base rather than just an alternative energy source. That said, one should also not overlook the impact that the rapid growth in battery usage will have on overall waste and disposal capacity, especially when batteries reach their end of life point.

According to a 2019 report from the Global Battery Alliance (GBA), a public-private partnership initiated by the World Economic Forum (WEF) in 2017 with 70 member organizations to help establish a sustainable battery value chain that can power sustainable development and the climate. Mitigating the change, batteries could deliver 30% of the required reductions in carbon emissions in the transport and power sectors, provide access to electricity to 600 million people who currently do not have access to it, and create 10 million secure and sustainable jobs around the world, more than 50 of which will be in emerging economies.

For such a vision to be realized by 2030, however, the battery value chain must develop on an accelerated trajectory from current levels. “The time to pivot is now because the remaining ‘carbon budget’ is running out – without batteries, this budget will be exhausted by 2035. If the deployment of batteries is not accelerated, decarbonization will come too late”, warns the report. “Acting now is also a chance to shape an emerging value chain, while acting later requires costly reconfiguration and leads to exacerbation of social and environmental impacts.

But how can we act concretely now? The report identified five levers as being the most impactful to drive a pivot in the trajectory of the value chain:

  • Shared electric mobility: A concerted acceleration of car manufacturers in the development and marketing of electric vehicles specially designed for sharing, in parallel with a greater incentive for electric mobility shared by regulators.
  • Intelligent charging: V1G (vehicle-to-grid) makes it possible to modify the charging rate and the charging time to potentially reduce the cost of recharging an EV, and V2G makes it possible to restore energy to the electrical network from the battery of ‘a VE. Battery manufacturers, automakers and utilities should work together to ensure that these charging technologies are possible at scale.
  • Refurbishment and repair: This can extend the battery life of EVs and energy storage systems (ESS), thereby reducing the demand for new capacity and the associated costs.
  • Reuse of EV batteries after use: Some EV batteries can be reused for ESS in order to prolong their use after their first marks of end of life. This can recover a significant residual value from the battery and thus improve battery economy, as well as reduce the need for new batteries in the power sector.
  • Recycling: The recovery of end-of-life battery materials and manufacturing scrap during production minimizes the need to use virgin resources in the long term. It also ensures economical and safe end-of-life management and prevents the loss of valuable materials.

According to the Sustainable Development Scenario (SDS) of the International Energy Agency (IEA), better and cheaper electricity storage is at the heart of the future of global energy, especially the capacity of meet the main international energy and climate targets. With that in mind, the Paris-based agency estimated that nearly 10,000 gigawatt hours (GWh) of batteries across the energy system and other forms of energy storage are needed globally by 2040, or 50 times the size of the current market. .

“This would allow the world to meet more of its energy needs with clean electricity, the supply of which does not always match the location and time of demand,” the IEA said in its report “Innovation in Batteries and Electricity Storage ”released in September. 2020. “However, energy storage, which is a critical technology, is currently not on track to achieve the levels required in the sustainable development scenario, both in terms of deployment and performance. This means that we are failing to put in place the infrastructure that will be necessary for renewables to develop faster. “

Nonetheless, many believe that an inflection point is imminent or has already arrived, with an accelerated increase in battery storage on the horizon. S&P Global Ratings, for example, recently forecast that total capital investment in battery storage in North America will exceed $ 3 billion per year starting in 2024. And S&P Global Platts Analytics, a subsidiary of S&P Global Ratings , said he expects the US storage market to grow. nearly nine times over the period 2020-23, powered primarily by advanced battery energy storage, with a cumulative deployment approaching 10 GW (gigawatts) by 2024.

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