Record Setting Production and Sales of Advanced Lithium Ion Batteries Expected Despite Growing Pains
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- Oct 29, 2019 12:32 pm GMTOct 29, 2019 12:29 pm GMT
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Production and sales of lithium ion batteries have been slowing and will experience a slowdown for the remainder of 2019. That said, more than $350 million was invested in advanced li-ion battery technologies in 2019's first half, setting the stage for a record-setting year given an annual investment of $600 million in 2018, according to Wood Mackenzie Power & Renewables.
With demand continuing to grow, increases in manufacturing output, improvements in energy density and improvements in the commercialization of advances will fuel anticipated reductions in battery prices, according to Wood Mackenzie's Global Energy Storage Outlook, Q3 2019.
“Since 2018 the market has seen significant investments in advanced lithium-ion technologies from automotive giants and oil companies alike,” Wood Mackenzie Analyst Mitalee Gupta highlighted. “Investments have focused on developing batteries that are cobalt-free and use alternate electrode materials or solid-state electrolytes. While not all these technologies will become successful, several of them will make their way into the electric vehicle (EV) and storage markets in the coming years.”
2019 slowdown in advanced Li-ion battery production and sales
Production and sales of li-ion batteries have been setting new, annual records consistently in recent years. That was true in 2018, leading industry watchers and participants to expect another record-setting year. While the market started out strong and growth persisted through 2019's first half, conditions turned. “Continued annual growth is unlikely for this year,” Wood Mackenzie says.
“The global market has slowed down in key regions that saw 2018’s boom, namely South Korea and China. These countries have been plagued with fire incidences, as well as policy and regulatory changes. The US and European markets are also struggling to get capacity on the ground in 2019. Capacity is being pushed to 2020, 2021 and, in some cases, even further out.”
Looking further out beyond this year, the market research provider and consultants like what they see in terms of healthy market growth resuming. Globally, Wood Mackenzie anticipates a total of 4GW/8GWh of energy storage to be deployed this year, with these numbers increasing to 15GW/44GWh come 2024.
Global and regional advanced Li-ion growth outlook
Zooming in on major world market regions, Wood Mackenzie noted that Asia-Pacific's energy storage industry and markets are still at an early stage of development. “China’s storage market slowed in the first three quarters of 2019, primarily due to policy change. South Korea’s storage market continues to stagnate due to continuous fire incidents. However, Australia’s storage market is on track to hit targets in 2019 and is expected to grow three-fold in 2020. The rest of the Asia-Pacific market is beginning to pick up,” analysts highlighted.
The U.S. market is experiencing growing pains given supply chain constraints, regulatory hurdles and performance and safety concerns. These are leading manufacturers and advanced li-ion vendors to delay some projects set to launch this year and next, the market researchers point out. However, “the market is expected to bounce back quickly from this near-term slowdown by accelerating in 2021, driven by large-scale utility procurement targeting GWs of storage – often paired with renewables – over the next three to five years,” they highlight.
Turning to the U.K. and Germany, Wood Mackenzie's research team sees the U.K. And Germany's advanced li-ion battery storage industry at a crossroads. “Frequency markets have saturated. Now players are looking for other opportunities. In the U.K. market, intraday and balancing offer an interesting proposition. In Germany, there are interesting opportunities behind the meter, such as peak shaving and self consumption.”
Germany, continues to be the leader in residential energy storage in the E.U. And Italy's market continues t grow, in part due to regional subsidies and a favorable tax regime, according to Wood Mackenzie Senior Analyst Rory McCarthy.