Compared with new energy vehicles, the shortage of raw materials has a greater impact on the battery energy storage industry.
Battery energy storage
The energy storage industry has ushered in a period of rapid development, Tesla CEO Elon Musk believes that battery energy storage BESS is an important sector that is indistinguishable from new energy vehicles.
The power battery company CATL regards energy storage as the “second growth area” of the battery industry. Energy storage has become the hottest topic in the energy transition.
However, the raw material crisis is approaching, the business mode is not yet mature, and the industrial prototype is developing while meeting the opportunities, energy storage faces many challenges.
The rise in lithium salt prices is caused by inflation in the United States on the one hand, and the huge demand for lithium ore in the Chinese domestic new energy market on the other hand. Judging from the current supply and demand relationship, lithium salt prices will remain high in the near future.
The soaring price of lithium salt has squeezed the profit margins of lithium battery manufacturers and vehicle manufacturers.
The inflection point is when cathode material enterprises are generally unable to bear the pressure of rising raw materials. At present, cathode material enterprises have reached a state of unprofitability.
Of course, some companies still have profits, but this is mainly concentrated in those companies that previously had raw material reserves.
Raw material prices soar
From 2020 to the present, the price of lithium carbonate has increased by as much as 10 times per ton since the beginning of last year. It has remained high for some time now.
The impact of the price increase of lithium carbonate was first reflected in new energy vehicles, but the impact of the price increase of lithium carbonate on the energy storage industry is more serious, because the downstream of the energy storage industry is connected to the energy industry, and there is very little room for price increases on the consumer side.
Reasons & difficulties
The core reason is that there is a deviation between demand and supply in the short term. In addition, there is also the reason for the time lag between the pace of enterprise capacity expansion and downstream demand, coupled with the hoarding of middlemen and other factors, this round of raw material prices has been jointly promoted.
However, if the price of raw materials continues to increase, it will inhibit downstream demand, and the relationship between supply and demand will be reversed. In the future, with the increase of total production capacity, the price of raw materials will gradually decline.
Then, with the expansion of the lithium battery energy storage market, the demand for resources is also increasing. So, how long is the expansion cycle of key resources?
Taking lithium carbonate as an example, there are two steps to obtain lithium carbonate, the first is mining, and the second is smelting. For China, the resource extraction work is not in the country, and the resources are concentrated in Australia and the salt lake area of South America. The advantage of the Chinese market lies in smelting.
For the mining process, once the resources are so short that it is necessary to develop new mines, rediscover new minerals, and do new mining, the cycle will be very long. The expansion of the smelting stage is not too difficult. This stage integrates the two industries of processing and manufacturing, and is parallel to the expansion cycle of the four major raw materials.
Diversified technical routes, the key lies in application scenarios
According to the different forms of energy storage, energy storage is divided into electric energy storage, thermal energy storage and hydrogen energy storage.
Electric energy storage is the most important energy storage method, which is divided into two types: electrochemical energy storage (lithium-ion, lead storage and sodium-sulfur battery energy storage) and mechanical energy storage.
Pumped hydro energy storage
At present, China has the largest scale of pumped hydro storage in the world. For a long time to come, pumped hydro storage will still be the main way of storing energy in China’s power system.
So, since there is such a powerful technical reserve as traditional energy storage, what are the main reasons for developing new energy storage? Which technology will become mainstream in the future?
Other energy storage technologies other than pumped hydro storage are called new forms of energy storage. Which technology will become mainstream in the future is mainly related to economics, in addition to the breadth of its application scenarios and the scale of a single project.
Lithium battery energy storage
Take the lithium battery, the most mainstream technology in the energy storage industry, as an example. Lithium batteries benefit from the advantages of the new energy vehicle industry chain, the technology is progressing rapidly, and the cost has dropped significantly. This is an advantage that any non-lithium battery can’t achieve.
Prospect of sodium ion battery
Sodium ion is one of the alternative routes for lithium batteries. Based on resource considerations, replacing lithium with sodium has certain advantages.
At the same time, since energy storage does not require high energy density, and the ionic radius of sodium ion itself is large, the energy density is not comparable to that of lithium ion, which is just suitable for energy storage. Therefore, sodium ion is a more suitable technical route for application.
Solid lithium battery
The difference between an full solid-state lithium battery and a lithium battery is that the liquid electrolyte and separator are all replaced with solid-state electrolytes.
The advantage of full solid-state batteries is that by replacing the separator and electrolyte with solid-state electrolytes, the choice of cathode and anode electrode materials is wider. In addition, it also reduces the risk of a portion of the liquid electrolyte being flammable.
Shortcomings
Solid-state batteries also have their own shortcomings.
- First, the ionic conductivity of solid-state electrolytes is lower than that of liquid electrolytes.
- Second, compared with the solid-liquid interface, the solid-solid interface has relatively poor contact and ion transport capacity, which also restricts the performance of the entire product.
Therefore, most of the current commercial solid-state batteries are solid-liquid mixed systems, and full-solid-state batteries are the ultimate goal, but they are still in the laboratory stage, and there is still a long way to go before commercialization.
Long-term energy storage
“Long-term energy storage” is a hot topic of discussion in the field of energy storage technology. The energy storage system that can realize the charge-discharge cycle across the day, across the month, and even across the season is a long-term energy storage system.
With the continuous development of solar and wind energy, the intermittency of its power generation will have a more and more serious negative impact on the power grid. Some hydropower stations are also facing longer and longer dry seasons after the ecosystem is destroyed, and cannot guarantee output.
To solve this problem, it is not enough to build more transmission networks. Long-term energy storage can give full play to its long-term and large-capacity characteristics, adjust the fluctuation of new energy power generation over a longer time span, avoid grid congestion when clean energy is surplus, and increase clean energy consumption during peak load.
No 100% perfect energy storage solution
Energy storage technology is related to a series of parameters such as cost, life, safety, availability, energy density, and response rate. No energy storage technology can make all parameters an excellent all-rounder.
In the short and medium term, it is normal for multiple technical routes to coexist. Different energy storage technology routes have different application characteristics. In the process of commercialization, more attention should be paid to “specific scenarios”.
New energy + energy storage
As the most important scenario of current energy storage applications, “new energy + energy storage” faces problems such as high proportion of new energy development costs, ineffective use of resources, and low social investment willingness. This also reflects from the side that the business model of the energy storage industry needs to be further unblocked.
The “new energy + energy storage” energy storage application scenario requires the construction of energy storage power stations in new energy stations, and the energy storage and new energy stations are unified to receive grid dispatch.
Current situation & solution
However, in actual operation, the current self-built new energy energy storage is mainly to meet the competitive configuration requirements, and there is still no effective mechanism to support energy storage to generate more operating benefits.
Therefore, installing energy storage systems will increase the initial investment pressure of new energy companies to a certain extent. Low cost is often the most important selection criterion, which has a negative effect on the further development of the energy storage industry.
Therefore, the emerging business model of “shared energy storage” has become a breakthrough point to solve the above problems. The concept of “shared energy storage” was first proposed in 2018. It is a centralized independent energy storage power station invested by a third party.
By taking the power grid as a link, it integrates and optimizes the decentralized power grid, power supply, and user’s energy storage resources to reach the goal that energy storage resources serve the entire power system in a unified and coordinated manner.
In April 2019, China’s first shared energy storage power station was put into trial operation. Since 2021, many provinces in China have accelerated the pilot demonstration application of shared energy storage to promote the sharing of power and grid energy storage resources.
“shared energy storage” , next mainstream?
The core logic behind the emergence of the independent shared energy storage mode is to meet the requirements of “new energy + energy storage” in various places. From the user side in the early years, to frequency regulation, to the power grid, to today’s independent, new business models emerge every year.
The energy storage industry is a completely different industry from photovoltaics and new energy vehicles. In the future energy storage field, which business model is more ideal? Different scenarios and applications will generate diversified business models.
So far, China’s energy storage business model is not a fully market-oriented business model. Therefore, it is particularly important to explore a mature business model with market-oriented conditions.
