Energy storage systems - The road ahead of us

In the last decades, the majority of our electricity was generated by steady sources like fossil fuels and nuclear, and it was much easier to predict power supply and maintain stable energy delivery. With forecasts of renewables dominating the market in the coming years, everything became more complex. It is a fact that the global energy sector is shifting from fossil fuels (oil, natural gas and coal) to renewable energy sources like wind and solar. It is expected that by 2040, renewables will represent 40% of the global electricity production. As I mentioned in my article about virtual power plants, energy coming from renewable sources like solar and wind has the problem of intermittency and lack of predictability. We need a stable solution to ensure that the power supply is balanced with the demand.

With countries like Germany aiming to have renewable energy sources accounting for a total of 65% of its gross electricity consumption by 2030, energy storage systems have become a topic of important discussion.

Energy storage comes in many forms and Lithium-ion batteries (Li-ion) are currently the dominating technology used to answer renewable intermittency. Furthermore, it is the technology with the strongest growth and market share compared with other electrochemical energy storage options, with market value projections surpassing $94 billion by 2025.

Nonetheless, the average lithium-ion batteries store enough energy for 4 hours only. Technically it is possible to go longer but it costs more than it’s worth in today’s market dynamics.

Why Lithium?

Since their introduction into the market in 1990, Li-ion batteries have been used in electronics, medical devices and power tools. Later, in 2010, these batteries expanded their use to commercial electric vehicles (EVs) and, more recently, to the power grid to smooth out the inherent intermittency of solar and wind generation and ensure power during power outages.

Lithium is a lightweight metal that an electric current can easily pass through. Lithium ions make a battery rechargeable because their chemical reactions are reversible, allowing them to absorb power and discharge it later. These batteries have a high energy density so they can store more power without taking up as much space as lead acid batteries. This is great for homes where space is limited. They also hold a charge for longer than other kinds of batteries. For these reasons, Li-ion batteries are the preferred choice for home solar energy storage.

Lithium resources

According to Statista, the total global lithium reserves are estimated to be around 19 million tons. Although Chile has the world's largest lithium reserves, the largest lithium producer is Autralia. Chile comes in second and China in third. As of 2021, mines in several locations across Europe were in development in order to meet European demand more locally.

Propelled by the market growth of electric vehicles, which are powered by rechargeable lithium batteries, global lithium demand is forecasted to triple by 2025, and to surpass 2 million tons by 2030.

Countries with the largest lithium reserves worldwide as of 2021

Does this mean that lithium supplies will run low?

Projections indicate that the next decade will probably see less than one percent of the world’s lithium reserves depleted. But although the risk of lithium supplies running low is very small, the concern lies on the risk of lithium not being able to be recovered quickly enough to meet the rising demand.

Nevertheless, according to the Chemistry Nobel Prize winner M. Stanley Whittingham, in the course of time, a large proportion of lithium used in batteries will be recycled, and this would reduce the need for “new” lithium. Also, better technology methods are being developed that will significantly increase the efficiency and effectiveness of lithium extraction and processing. However, this is unlikely to happen until 2030, when used batteries, with a lifetime ranging from 7 to 10 years, will be returned in large quantities.

Challenges

The first challenge of Li-ion batteries is their storage capacity. As mentioned above, the typical capacity for a battery working at full power is just 4 hours. To overcome this challenge, long-duration energy storage systems (LDES) are being developed. According to a McKinsey study, these storage systems have the potential to deploy 8 to 15 times the total energy-storage capacity deployed today, but for that to happen, a cumulative investment of $1.5 trillion to $3 trillion has to be made.

Li-ion batteries’ lifetime of between 10-20 years is not much. There is a big road ahead of us regarding their life-cycle and their end-of-life, but a very interesting solution is to use reclaimed electric vehicles batteries since these batteries can maintain up to 60% of their capacity after their first cycle. One of the drawbacks of these batteries relies on the journey and also on the effort required to recycle them. The disassembly and extraction of the valuable constituents of a Li-ion battery is extremely difficult. Their transportation to recycling sites is even more difficult, making up about 40% of the recycling costs. It is so expensive that it exceeds the cost of building new ones. So on the one hand, while recycling can be sustainable for grid energy storage, on the other hand, we still face economic, technical and logistic concerns. The good news is that the Li-ion battery recycling market that in 2019 was worth 1.5 billion dollars, is expected to reach over 18 billion U.S. dollars by 2030.

Safety is another challenge. It was not so long ago that Samsung’s Galaxy phone batteries were exploding. Some still think that it is not a good idea to build large-scale energy storage facilities with similar technologies. However, lots of time, effort, and money are being invested into Li-ion to make them safer, increase their performance, lifetime and make them easier to recycle.

Price

The price of a Li-ion battery pack has been dropping every year since 2010. Due to increasing order sizes and the growth of the electric vehicles market, the price that was above 900$ per kilowatt-hour in 2011, has fallen by over 87 % in 2019, and continued to fall until the first half of 2021. However, in the second half of 2021, for the first time, the global demand for lithium exceeded supply and this deficit is projected to rise. Lithium supply faces a number of vulnerabilities including geographical concentration of both the mining and refining processes. Nonetheless, lithium prices can be volatile because even if the demand can increase quickly, new mines can also open and increase supply, leading to drop in the price again.

Are there any good alternatives to Li-ion batteries?

There are many different ways of storing energy, and there are a couple of promising alternatives to keep an eye on, whose pros and cons I will briefly point out.

Sodium-ion (NIB or SIB)

The sodium-ion battery is a type of rechargeable battery analogous to the lithium-ion battery but using sodium ions (Na+) as the charge carriers.

Unlike some of the elements present in a lithium-ion battery (cobalt and nickel), sodium is a low cost and abundant element. The abundance of Na to Li in the earth’s crust is 23600 ppm to 20 ppm, and the overall cost of extraction and purification of Na is less than that of Li. These batteries also have greater life spans compared to lithium-ion batteries. Although lithium-ion batteries have been around for a while, sodium-ion batteries are relatively new.

The supply chain of these batteries is not robust yet and the market is still not suitable for their application on a larger scale. These batteries are a strong competitive candidate for grid storage applications. It's definitely worth it to keep an eye on their further development.

Major market players: Faradion, Natron, CATL

Compressed air

In Compressed-air energy systems (CAES) the air is stored in an underground air reservoir with minimal heat loss. When there isn't enough power to meet the demand, the compressed air is released from the underground air reservoir to power the gas turbines and generate electricity which is fed back to the grid. This makes compressed-air energy systems well suited to complement intermittent energy sources such as solar PV and wind energy. There are two commercial compressed air energy systems currently in operation, one in the United States and another in Germany.

The main disadvantage of this technology is their high capital costs. Also, when releasing the compressed air, a relevant amount of energy is lost, thereby reducing the process efficiency. Additionally, a suitable location must be found for incorporating these systems, which have to include a difference in heights between two reservoirs that is necessary for pumped-hydro system operation.

Major market players: Siemens Energy, Hydrostor, Apex CAES, and Ridge Energy Storage and Grid Services

Pumped hydro storage

Pumped Hydro storage is the most widely used storage method, and the rise of renewables has forced a new look at this old technology. This gravity-based concept physically moves water from a low to a high reservoir from which the water descends to generate electricity when needed. This technology dates from way before lithium-ion’s heyday and still provides some 95 percent of U.S. grid storage, according to the U.S. Department of Energy.

Once built, these systems boast a very low cost of storage, and they hold truly massive amounts of energy compared to even the world’s biggest battery. The problem is that it’s extremely difficult to build new pumped-hydro storage plants, due to the permitting implications of large water-based infrastructure. The main disadvantage of PSH is the specialist nature of the site required, needing both geographical height and water availability.

Major market Players: Siemens AG, Enel SpA, Duke Energy Co., Voith, GE

Vanadium redox flow battery (VRB) - Flow batteries

Vanadium redox flow batteries are viewed as one of the most promising solutions to address the vulnerability of renewable electricity generation systems. These batteries are safer, more scalable, longer-lasting, and there’s much more Vanadium than Lithium in the Earth’s crust. Furthermore, VRB batteries can offer almost unlimited energy capacity simply by using larger electrolyte storage tanks. They can be left completely discharged for long periods with no ill effects, making maintenance simpler than other batteries. However, vanadium commercialisation still suffers from the high cost of Vanadium extraction. One of their main disadvantages is that they require a lot of space, making them impractical for electric vehicles and other mobile applications.

Major market players: redT, Avalon, Invinity Energy Systems

Final thoughts

The more I read on energy topics, the clearer it gets that the best solution to answer our energy needs is to use a combination of different energy sources we have. Depending on the location and the country's financial situation, its always possible to find a solution from any or a combination of hydro, nuclear, and renewables while working to improve carbon capture technologies.

Storing energy is the future and the rise of electric vehicles and renewables bring lots more innovation and investment, leading to increased efficiency and flexibility.

At COP26, in 2021 a new council was born: The LDES Council. The Council brings together energy companies, technology providers, investors, and energy-users in a CEO-led initiative to cut carbon emissions through the deployment of long duration energy storage. It's definitely worth to keep track of further developments