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The need for long-duration energy storage in a net-zero emissions world is undeniable, but with conventional battery prices falling, can anything unseat lithium-ion? S&P Globals Susan Taylor brings us up to date on non-lithium storage technologies.
A perfect storm of lithium supply crises, manufacturing repatriation efforts, and increased clean energy ambitions have highlighted the need for energy storage alternatives to lithium-ion batteries.
Long-duration storage will become increasingly necessary for grids as global clean energy generation increases. Many alternatives to lithium-ion offer lower life cycle costs, greater safety, easier maintenance and, above all, less dependence on critical raw materials.
Lithium-ion currently supplies more than 90% of the worlds energy storage capacity, primarily in short-duration applications of two to four hours. Storage for more than eight hours is in relatively low demand, as renewables predominate in only a few places.
Long lasting alternatives
There is also no established long-term business model for long-duration storage, but 2023 was a record year for long-duration storage procurement and for non-lithium strategic partnerships and support plans. The US Department of Energy and the California Energy Commission, the state planning agency, announced funding for 10+ hour lithium-free energy storage. The UK supports new methods of storage longer than six hours, such as compressed air energy storage (CAES), flow batteries, liquid air energy storage (LAES) and pumped hydraulic storage (PHS) .
In the last year, agreements have been made between utilities and non-lithium energy storage providers. In Germany, for example, utilities are considering the possibility of using zinc-iron batteries and CAES to reuse depleted coal mines.
Other technology-agnostic, long-duration energy storage procurement plans have also been recently announced. These financing exercises, while attractive for alternative energy storage approaches, also offer lithium-ion projects the opportunity to qualify for support.
Australia launched a long-duration energy storage tender for projects lasting more than eight hours worth 2 GW. Of the three winners announced to date, two are lithium-ion projects and one is from CAES. More recently, Italy announced a tender for 9 GW for eight-hour storage, to be held at the end of 2024. Lithium-ion and PHS are mentioned in the relevant documents as main contenders. Historically, it had been thought that scaling up lithium-ion to that storage duration would not be cost-effective. However, in the past year, fierce competition among lithium-ion suppliers in China and falling metal prices have driven down the costs of this technology, creating competition for storage durations that were previously considered uneconomical.
Lithium-ion projects lasting six to eight hours have already been seen in China, the United States and Australia, and represent more than 50% of all planned storage projects lasting longer than six hours. This adds an additional challenge for alternative technologies that aspire to compete with that specification.
Another key challenge for many non-lithium storage approaches is the lack of manufacturing scale that lithium-ion battery manufacturers leverage from the electric vehicle (EV) sector. The growing popularity of EVs has seen lithium-ion battery costs drastically reduced over the past decade.
Non-lithium storage technologies that can leverage existing supply chains in adjacent industries in the same way as lithium-ion (CAES, LAES, sodium ion batteries, and gravity storage, for example) are well positioned to scale up production.
For example, the components and equipment used for CAES have several decades of experience using industry-standard turbomachinery in the power generation industry. CAES supply chains are already well established.
Sodium ion technology
Another notable development in the energy storage space is the growing number of sodium ion manufacturing announcements. Sodium-ion technology benefits from well-established component supply chains and manufacturing processes similar to those of lithium-ion. The much lower raw material cost of sodium means that sodium-ion batteries could, at scale, achieve a lower cost than lithium-ion batteries for durations even longer than eight hours. For this to happen, it is necessary to continue developing commercial projects and increase production. The announcement of the first 100 MWh sodium ion project in China is a sign that rapid progress is already being made in that direction.
Technology that only serves the energy storage industry may struggle to cost-effectively scale up manufacturing for more customized components, especially if suppliers compete with lithium-ion suppliers.
Looking ahead, the fundamental need for long-duration storage solutions, well beyond eight hours, is inevitable if fossil fuel-based grid flexibility is to be phased out and renewables account for the majority. of energy generation. It is critical that network flexibility requirements be determined before that need arises. This will require specific assessments of system-level flexibility, something we have already seen positive steps towards in the reform of the European electricity market in 2023.
There is also a need to overcome the challenges inherent in creating a long-term business case for long-duration storage solutions, which will become increasingly important as renewables reach a tipping point in power generation and Therefore, they require multi-day storage solutions.
The persistent price competition that is leading to a reduction in the costs of lithium systems poses a major obstacle to alternative technology, as suppliers struggle to compete with the established approach. New strategic partnerships and long-term acquisition plans will continue to drive future lines of non-lithium energy storage solutions, with those able to scale more effectively and demonstrate commercial projects at scale taking a larger share of market.
About the author: Susan Taylor is a senior analyst on the commodities research team at S&P Global. She conducts research on energy storage markets in Europe, the Middle East and Africa, focusing on emerging technologies and cross-sector integration. She previously worked as an analyst in the policy team of the European Energy Storage Association, in Brussels. |
