Investors jumpstart battery funding to plug clean energy gap
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In the race to reach net zero emissions by 2050, advances in power generation and transportation will play a critical role. And behind the new energy-transport nexus is a technology attracting the attention of countries, companies and investors: the battery.
Projections from the International Energy Agency indicate the scale of the shift needed to reach global net zero by mid-century. They show that, by 2035, all passenger cars sold must be electric vehicles and, by 2050, two-thirds of the world’s energy supply must come from sources such as wind, solar, bioenergy, geothermal and hydropower.
All of this will require improved energy storage. Batteries enable EVs to store and use electricity to power their motors. And, through vehicle-to-grid technology, they can store and feed energy back to the grid to supplement supplies during peak demand.
“We only use cars about 10 per cent of the time, so there’s an opportunity to use the batteries in our cars to balance the grid,” explains Billy Wu, a senior lecturer at Imperial College London, whose research interests include energy storage systems.
Meanwhile, since renewable power is intermittent, energy needs to be stored for when the wind stops blowing or the sun stops shining. Batteries can therefore reduce use of the polluting “peaker” fossil-fuelled plants that supplement renewable energy or support the grid at times of high demand.
“Batteries will play an increasingly important role in allowing high levels of penetration of variable renewable energy like wind and solar on the grid,” says Barbara Finamore, senior visiting research fellow at the Oxford Institute for Energy Studies.
Forecasts of battery demand are prompting the upsurge in the construction of large-scale manufacturing plants, or so-called gigafactories. “The numbers are changing so fast, people cannot keep up with how many gigafactories are in the pipeline,” says Finamore.
Investment is also pouring in to energy storage companies. In the first nine months of 2021, these companies raised $5.5bn in venture capital across 59 deals — up from $1.2bn across 91 deals in the same period of 2020, according to Mercom Capital Group.
China dominates global production of lithium-ion battery cells. However, Europe is gradually catching up, driven by emissions reduction requirements for vehicle fleets and the 2017 launch of the European Battery Alliance, an initiative designed to boost EU battery production.
As a result, the global battery production landscape could have shifted substantially by 2030, says Finamore. “China will have roughly two-thirds, so they’ll still be way ahead,” she says. “But most experts are projecting that Europe can have about a one-third global share of the battery manufacturing capability by 2030 — that’s a big jump.”
In the US, production capacity will also rise sharply in the next two years, says Alex Breckel, director of research at Energy Futures Initiative. “It’s anticipated to grow by a factor of six with just the announced factories,” he says. “That’s enormously fast scaling.”
For now, electric vehicles, not power plants, are driving investment. “Large-scale batteries are being incorporated into the power system at the wholesale level today but it’s a smaller share of total capacity,” says Breckel.
This is partly because it is easier to transform car production than energy infrastructure. “Trying to build anything in the power sector is a time-intensive process that requires a lot of planning,” says Breckel. “The bureaucracy involved has slowed down a lot of projects.”
In addition, grid-scale batteries are severely limited by their storage duration. “Utility-scale storage can help for two-to-four hours but what we really need in the long run is weeks or months of storage,” says Finamore.
Damage done in the mining of raw materials, and the energy used in their production and transport, means that batteries come with their own environmental impact, too. Tailings and slag from cobalt mining can leach into surrounding areas, while lithium mining requires large amounts of water to be pumped from the ground.
Many worry about the disposal of exhausted batteries, as well. “That’s a huge challenge,” says Wu. “We do have processors to recycle lithium-ion batteries but it’s not economical — it’s still cheaper to use virgin material.”
Efforts to reduce batteries’ weight for use in vehicles means their components are commonly held together with glue, rather than nuts and bolts — adding to the difficulty of dismantling and recycling them.
In terms of the relative environmental sustainability of EV batteries, everything ultimately depends on the source of the energy used to recharge them. For example, charging a car with energy generated by coal-fired power stations is the equivalent of burning two-thirds of a tank of petrol.
Plenty of work remains to be done to address these problems, as well as meeting the challenge of producing enough batteries to allow for the widespread adoption of EVs and shift more energy consumption to renewables.
Finamore argues that the battles of companies and countries to dominate the energy storage industry pale into insignificance when compared with this economic and existential imperative. “Our climate doesn’t care where the batteries are produced,” she points out. “The race is against time.”
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