We now have two newly made hockey sticks - one for stationary storage (ESS) and one for the EV batteries. The ESS one was made with two parts. Find out what they are below.
In 2021 the company I was running completed our first lithium-ion battery installation. It was just 300 kWh of batteries, stuffed in a 20Ft container. We’ve built it for an energy supply company, that in turn used it to provide load management services to a manufacturing plant. When the energy supplier announced another call for proposals the same year, we were able to drop the price by 30%. Mind you, at that time we just had around 200 MWh of manufacturing capacity, and that was making NMC cells, which are by far better suited for EV’s than for ESS, and are more expensive than LFP cells.
Last year, according to the IEA, the volume of installed batteries skyrocketed to over 40GW of installed capacity. Going from less than 10 GW, it is an impressive 4x growth in a year. But don’t get too excited. To put this in perspective - it’s about 40% of the total energy capacity of Turkey. Worldwide, this is a drop in the ocean.
The growth of the EV battery market was also impressive, but in this post, I want to focus on grid batteries. While the EV market was driven by technological innovation, growing scale, falling prices, and higher adoption rates, the market for ESS has a different story, albeit, tied to the EV and growth in installed renewable energy capacity. Here are the two main reasons for the hockey stick in ESS:
Drop in battery prices due to output ramp-up for EV market.
Co-location requirements for new on-grid renewable energy power plants, first of all, in China, but then in other countries as well. Renewable energy installations grew fast, and in some places reached the tipping point, where additional intermittent generation requires a balancing of the grid with batteries.
So, the ESS segment is riding on the back of two great waves - EV and renewable energy. With the expected tripling of renewable energy capacity by 2030, batteries would continue this growth at least for a couple of years. This “Tesla-like” acceleration is a clear sign that batteries are fast on the way to becoming a commodity.