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While battery makers have faced tough times in 2024, the sun is shining on the stationary storage market, according to BloombergNEF.
Battery and cell makers have faced a tough 2024 so far, with margins and revenues falling due to slower-than-expected global electric vehicle (EV) sales, which has depressed volumes.
However, BloombergNEF (BNEF) reports that the stationary storage market is up 61%, and turnkey system prices are down 43% from 2023, which is partly driving that deployment. In April, the figure hit an all-time low of $115 per kilowatt-hour for two-hour energy storage systems.
Looking at annual lithium-ion battery production by Chinese manufacturers and assigning them to an application, stationary energy storage overtook consumer electronics as the second-largest application for battery production. The global stationary energy storage market is expected to nearly triple by 2023.
Even combined, the two remained a long way behind electric vehicles. However, BNEF notes that the ratio of EV battery demand to stationary battery demand has fallen from 15 to 1 to 6 to 1 over the past four years.
However, growth in this segment is much faster than that of EV batteries, starting from a smaller base, and demand forecasts show the segment continuing to grow rapidly. This is due in part to mandates in China for co-location with solar and wind for storage, in addition to the US Inflation Reduction Act, and measures being implemented in Europe, Japan, and Latin America, among others. Germany and Italy lead the residential market.
In terms of chemistry, BNEF expects the market share of NMC (nickel, cobalt and manganese) in 2030 to be around 1%, as cheaper and potentially safer LFP (lithium iron phosphate) chemistry gains market share.
Strong growth in power transfer versus ancillary services
Early battery energy storage (BESS) projects used to sell ancillary services to the grid, providing voltage support and avoiding frequency dips, which brought in considerable revenues for operators. However, as BNEF reports, the small markets for these services have dried up.
This has led to strong growth in energy-switching applications for BESS. The report notes that in China, some provinces are requiring solar projects to be paired with energy storage. BNEF’s forecast for 2024, compared to 2023, shows growth to around 70% of all demand.
Falling supply, growing demand?
Future demand will largely depend on the recovery of the EV market and the associated battery demand, as well as the price of raw materials such as lithium carbonate, which continues to languish at relatively low spot prices, 80% lower than in 2022.
On the supply side, low prices are causing mining and refining companies to react by halting planned investments or idling their assets.
Chemical company Abermarle recently put its $1.3 billion lithium refinery in South Carolina on hold, with Albemarle CEO Kent Masters reportedly telling CNBC: “It’s hard to justify investment projects where prices are today.”
Australian lithium players have either put expansion plans on hold or closed mines throughout 2024, with Arcadium Lithium saying this week it intends to “pause current investment in two of its four expansion projects.” |
