1. NS4960 Spring Term 2018 Energy Storage Markets
Oxford Analytica US/Int Cell and Energy Storage Markets to Grow, January 16, 2018

2. Overview Batteries and energy storage
With rise of renewable energies and electric vehicles, major transition underway in global energy markets.
Key to facilitating growth in both areas is the falling cost of lithium-ion (Li-ion) batteries.
Cheaper batteries have
Helped reduce the cost of electric vehicles and
Made large scale energy storage on the power grid which is a necessity if renewables are to continue growing – a reality

3. Impact/Implications
Several implications from the development of Li-ion technologies
Secure access to lithium, cobalt, and other battery-related materials will be vital to economic development
Competition over resources to build batteries could see at deposit locations increased
Protests,
Skirmishing and
Illegal trade
The plunging cost of Li-ion batteries is altering the energy landscape
Facilitating rapid growth for electric vehicles and
Making utility scale energy storage (which is crucial to expanding intermittent renewables on the grid) economically viable

4. Li-ion Batteries I
Li-ion batteries have been used in consumer electronics for decades
Only in recent years have the batteries become sufficiently cheap for larger applications
Recent study found cost of Li-ion battery packs fell to $209 per kilowatt-hour in 2017 from $1,200 in 2010
Rapid cost decline is likely to continue
Tesla’s Gigafactory in Nevada is being built rapidly and will deliver
Economies of scale and
Price reducing competition
Much of the capacity is being built by Asian conglomerates aiming for market share over profits
Forecast is for prices to fall to $100 by 2015

5. Li-ion Batteries II
Falling cost of batteries enabled electric vehicles to move towards mainstream market
In recent years costlier electric vehicles have dominated the market
As battery costs fall new models that
Cost less ($30,000 $40,000) and
Appeal to a broader audience will hit the market
Nearly every major automaker has a mass-market vehicle in the pipeline to hit the market by 2020
Getting battery prices down to around $100 per kilowatt-hour would be a major inflection point.
Battery prices at that point could make it cheaper to own a car with an electric motor than an internal combustion engine

6. Energy Storage I
Cheaper Li-ion batteries enabling remarkable growth in large-scale energy storage in the power sector.
Part of the early growth in this sector is coming from homes and businesses that are using products to store energy at home as backup
Larger opportunity if for energy storage to be used by utilities to make the power grid more
Resilient,
Flexible and
Renewable-energy friendly
Already used in Southern California and Australia to ease energy shortages there.

7. Energy Storage II Storage and renewables
In the longer term, energy storage’s larger opportunity is to grow alongside renewables
Utilities are planning for a future with far more use of intermittent wind and solar power on the grid
Looking to large scale storage to help keep power flowing at the times when wind and solar power are not available
Utilities in 15 US states – mainly those with aggressive renewable targets such as California, Florida and New York already building storage into long-term plans
Storage sector looks certain to grow rapidly in coming years
Should draw tens of billions of dollars of investment

8. Energy Storage III Hurdles to clear
While trends point to cheaper batteries, there is no guarantee
Prices for raw materials needed for batters could rise sharply, negating cost reductions
Another oil price drop, reducing fuel prices could make electric vehicles less cost competitive
Many automakers are trying to make their internal combustion engines more efficient

9. Energy Storage IV Supply chain stoppages
Also risks around supply chain for
Lithium
Cobalt and
Other materials involved in manufacturing batteries
Vast new quantities of these minerals will be needed to meet rising demand from battery builders
Lithium prices have doubled since mid-2016 and cobalt prices have more than tripled over the same period.

10. Energy Storage V
Also some concern over battery manufacturers’ ability to access sufficient supplies
Globally there are plentiful reserves of the materials but getting them to the market and scale discussed will be a challenge
Tessla and others are scrambling to secure long-term spplies
Chile holds much of the world’s lithium reserves so new mining projects in the country’s Atacama Desert will be crucial to global supply

11. Energy Storage V
Much of world’s supply of cobalt comes from the Democratic Republic of Congo and country has problems
Human rights groups have warned of child labor in the cobalt mining industry
This can result in targeted sanctions for firms associate with this from the U.S. government
Other watchdog groups have pointed to rampant corruption and other governance gaps in the country’s mining sector

12. Assessment
Li-ion battery costs will likely fall further as manufacturers add new capacity resulting in
Economies of scale and falling costs and
Further research and development
An inflection point for electric vehicle costs likely in mid-2020s when cheaper betters make electric motors more affordable than internal combustion engines
Cheaper batteries will also support widespread use of energy storage on the power grid. This will
Make the electricity system more responsive to demand fluctuations
More resilient to disasters and
Better able to accommodate growing share of intermittent wind and solar power.