Guest post by Iola Hughes, Research Manager, Rho Motion - Rho Motion is an industry leader, delivering forecasts and analysis on the EV & battery, EV charging and energy stationary storage markets. Iola will be speaking about towercos' battery needs at TowerXchange Meetup Africa on October 11-12, for more information please click here.
Global demand for lithium-ion batteries
The battery energy stationary storage (BESS) market has seen significant growth over recent years, as the falling costs of batteries, the increasing number of applications batteries can meet and the growing pressure to adhere to environmental, social and governance (ESG) standards provides the stimulus for this expansion and will continue to for at least the next decade.
The stationary storage market can be split into two broad categories, grid (front of the meter) and behind the meter. As the world looks to decarbonise its electricity grid and countries step up their climate actions, the use of BESS is set to play an increasingly important role in the energy transition. Changes in electricity generation and supply is having a knock-on effect on the structure and future of the electricity grid, driving the need for stationary storage. Grid scale storage covers batteries with capacity ranging from tens to thousands of megawatt-hours. This covers small scale commercial and industrial applications, to large scale batteries that support the grid by balancing renewables, mitigating grid congestion, and preventing blackouts.
Behind the meter storage is interconnected behind the utility meter of commercial, industrial, or residential customers, with a wide range of use cases from energy arbitrage to back up power. Batteries roles within the behind the meter market have been gaining pace across multiple sectors, from the solar and storage market to EV fast charging, microgrids and, of course, telecoms.
Not only is the telecoms market set to compete with the wider BESS market for batteries, but it also forms a part of the wider battery demand picture, competing with a range of applications from electric vehicles (EV) to portable devices such as laptops. We project that global demand for lithium-ion batteries will increase from 0.4TWh in 2021 to 3TWh annually by 2030, with over 80% of the demand coming from the EV market and the BESS market set to take the second largest share.
Investment and technology advancements from the EV space
The following chart shows the position of current state of the art lithium-ion chemistries, as well as competing battery technologies, including the incumbent technologies such as lead acid and next generation technologies such as sodium ion. Lead acid has historically been well placed to meet the needs of the telecoms, UPS and data centre markets, but is losing market share due to lithium-ion technology.
The lithium-ion battery market has rapidly evolved over the last decade, driven by greater flexibility and ease of installation for batteries compared to traditional energy storage (e.g., PHSS), and more broadly by the falling costs due to increased capacity build-out to meet demand from the automotive sector. The BESS market has benefited from this with most players initially making use of surplus EV batteries. More recently however we have seen a shift, battery manufacturers are looking to technologies that are best fit for stationary storage applications, and choices are no longer being made based on availability. Similarly, we have seen a ramping up of cell manufacturers both moving into and building out technologies specifically for the BESS space.
The result of this shift has been a change in cathode chemistry for lithium-ion batteries towards lithium iron phosphate (LFP) over nickel cobalt manganese (NCM). Despite LFP batteries offering lower energy density than NCM, the big driver here is around safety.
Over recent years a number of battery fires have occurred at NCM BESS projects, mostly notably the Victoria Big Battery fire in Australia in 2021 and several BTM fires in China and Korea. These events have motivated developers, system integrators and cell suppliers to look towards a battery with a lower risk of thermal runaway. Another driver central to chemistry choice is cost, batteries for BESS need to minimise initial cost in order to generate revenue, with LFP batteries being more competitive here.
Other technologies offer a future potential solution as demand grows across the lithium-ion space, with sodium ion, redox flow, zinc, and metal air batteries all being explored, most of these at early stage of development. Sodium-ion been explored as a potential cheaper alternative to lithium-ion in the past decade, as highly volatile and rising lithium-ion raw materials commodity prices are leading to demand for low-cost, alternative chemistries. The technology is considered a good lower energy, low cost “drop-in” alternative. This means that industry is focusing on technologies that would require limited CapEx to adapt lithium-ion battery cell and pack manufacturing equipment to produce sodium-ion.
Manufacturing at scale will require the creation of new value chains which can differ substantially from lithium-ion. This will require new anode and cathode active materials, as well as battery grade sodium salts and inactive cell components. This cell chemistry doesn’t require copper current collectors, and can benefit from good calendar life, with a few suppliers suggesting that it can be stored at a fully discharged state, increasing cell safety.
Building out this supply chain will take time, however, with HiNa Technology currently leading, with a world first 1MWh ESS project installed in Taiyuan, China, and 1 GWh of planned cell manufacturing for 2022. Additionally, battery giant CATL announced its first-generation sodium-ion battery in 2021 and aims at establishing a supply chain by 2023.
Batteries in Telecoms
Telecom towers require a form of backup power to keep them running during any disruption to the electricity grid. For regions with a poor electricity grid backup power is even more important, this has historically been met by diesel generators. Towercos in these regions are increasingly looking to batteries instead in order to improve their ESG credentials.
For battery backup this market is currently dominated by lead acid. Lithium-ion batteries, in particular LFP, are increasingly replacing lead acid batteries and diesel generators in telecom networks. The comparative higher energy density of lithium-ion compared to lead acid, as well as the cost declines lithium-ion batteries have benefited from over recent years make them suitable to higher power requirements from 5G and 4G towers compared to their earlier counterparts. As well as this shift, a greater need for more base stations, due to a lower signal range, as networks are upgraded to 5G means the need for back-up power is increasing further.
By 2030 we anticipate the telecoms market will represent over 15% of battery demand of the overall BESS market. Telecoms has the potential to increase further as towercos build out their networks globally, make larger commitments to improving climate goals and begin to investigate new revenue streams for their batteries, such as energy arbitrage.
Rho Motion’s BESS Quarterly Outlook and BESS Monthly Assessment provide up to date insight into all developments in this space. The assessment provides analysis of project announcements, updates, and commissions, tracking the development of key battery stationary storage metrics over time, as well as monthly news and market updates. Our outlook provides long-term outlooks for battery demand and battery chemistry, by application and region, based on robust and informed methodologies. For more information, please contact info@rhomotion.com. Iola Hughes will be speaking about towercos' battery needs at TowerXchange Meetup Africa on October 11-12, for more information please click here.
