At least 3 years for the energy storage battery supply chain to enter the market in large numbers

The rapid growth in the size of the U.S. energy storage market will lead to further competition for available batteries, leading many to consider new energy storage technologies to replace lithium-ion energy storage systems. And many industry insiders at RE+ 2022, the largest clean energy trade show in the U.S., thought so.

In a recent interview with industry media, Andy Tang, head of energy storage business and optimization at Finnish energy and marine power solutions provider Wärtsilä, said that the company experienced a rapid development in 2021, but in 2022 The battery supply chain problems brought it back to reality.

And by 2022, like many industries, Wärtsilä was hit by supply chain issues that prevented the company from supplying its integrated lithium-ion battery energy storage solutions at contract prices, and Andy Tang said the company was forced to work with The client renegotiates the contract.

October 19, 2022

"We suddenly found ourselves in a situation where we didn't have enough batteries, and the price of lithium carbonate in the market soared 500% in a year," Andy Tang said.

While he believes the battery energy storage industry is doing a good job dealing with these changes and that most technology suppliers have adopted Raw Material Index Pricing (RMI), developing mitigation strategies and negotiating with customers can be a six-plus-month process. long process.

According to industry media reports, Sara Kayal, director of integrated photovoltaic solutions at solar power developer Lightsourcebp, pointed out in a panel discussion at RE+ 2022 that the battery energy storage industry currently relies on the same battery supply chain as electric vehicles. doesn't really work.

This is becoming one of the motivations for industry players such as Lightsourcebp to further research non-lithium alternatives, Kayal said. Kiran Kumaraswamy, vice president of marketing and head of business growth at energy storage system integrator Fluence, also expressed the same view in an interview with industry media.

"Overall, volatility in lithium prices has sparked a new wave of interest in non-lithium technology sectors," Kumaraswamy said.

Fluence's CTO has a team tasked with evaluating promising energy storage technologies, their features and how they can meet market needs. Of course, it is not easy for emerging energy storage technologies to compete with the most established advanced battery technologies.

At present, the US energy industry is focusing on the recently passed "Reducing Inflation Act", and the bill is expected to have a positive and transformative impact on the clean energy industry.

However, Jamal Burki, president of utility-scale battery storage integrator IHI Terrasun, also said that in the short term, increased demand, which some predict will lead to a doubling of battery storage deployments, could be a nuisance to an already constrained industry. Supply chains impose more constraints.

Burki highlighted the positive effects of the expected impact of the Reducing Inflation Act, but also said it could be stressful. So far, IHI Terrasun has partnered with a handful of major battery suppliers. Currently, these battery products will be sold out for at least the next two years.

"For this to work, there have to be other viable battery suppliers," Burki said. "We're starting to see some suppliers come on board, like Gotion, a company that has come in and committed to actual production in the U.S. specifically for energy storage. The battery manufacturer of the system, SK has also made some announcements.”

However, IHI Terrasun expects it will be at least three years before batteries from more suppliers enter the market in large numbers. As such, the company is looking for viable battery technologies that can be risk-free and available for years to come.

Wärtsilä's Andy Tang said that for a long time he believed that lithium-ion batteries were somehow winning the energy storage competition, but he has now changed his mind.

He said that while the cost of lithium-ion batteries has fallen over the past decade or so, he doesn't know how the new technology will be able to enter the market on a large scale. Today, however, while the sharp rise in raw material prices has slowed, it is still higher than in the past, and the battery storage industry is more aware of supply chain risks.

Tang said, “I think the energy storage industry has less than 10% of the lithium-ion battery market, and electric vehicles account for 90%. The energy storage industry is a marginal capacity that is not prioritized. All electric vehicle capacity is obviously a priority. Yes, the energy storage industry ends up with a marginal product. And EV penetration is much higher than anyone expected (especially in the U.S.), which is not a good sign for the energy storage industry.”

Rising prices do open the door to adopting other energy storage technologies, which could also be an opportunity for other energy storage developers due to insufficient supplies of mined and refined lithium materials, while users are also looking for more energy than lithium-ion batteries. Eco-friendly, low-carbon solutions.

“Even if it may be temporary in two or three years, the price dislocation and public awareness of the shortage of lithium materials and the difficulty of competing with the electric vehicle industry in terms of product supply has made a lot of people pay attention,” he said. other energy storage technologies.”

Kiran Kumaraswamy and Andy Tang did not pinpoint the most promising alternative energy storage technologies. And Jamal Burki said IHI Terrasun has been in discussions with an unnamed developer of sodium batteries.

However, he also offered a warning that any alternative energy storage technology faces enormous challenges in establishing supply chains, scaling production and bank financing to gain market traction.

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