News from ESCN: The exponential increase in installed capacity of energy storage systems has created a fresh competitive landscape for battery manufacturers. Whether they are diversifying their involvement in the electric vehicle (EV) market or concentrating on battery energy storage systems, battery suppliers have a compelling chance to leverage the robust growth in this sector in the coming decade.
Wood Mackenzie has recently published a collection of technology and market reports on energy storage systems, one of which delves into the influence the energy storage market will have on the design of lithium-ion batteries. Here’s an overview of three key trends to closely monitor.
The Distinction between Energy Storage System Batteries and Power Batteries is Gaining Momentum
Various factors, such as advancements in technology, market dynamics, manufacturing practices, and policies, are propelling swift transformations in the lithium-ion battery market. With the accelerated adoption of battery energy storage systems, the industry is responding by introducing specific performance requirements tailored to these systems, thus setting them apart from electric vehicle batteries.
While electric vehicle batteries primarily focus on boosting energy density to extend range and reduce charging time, batteries designed for energy storage systems prioritize factors like cost-effectiveness, durability, and extended duration. Additionally, batteries intended for storage systems are engineered for significantly longer life cycles, accommodating up to 10,000 charge and discharge cycles, which is approximately three times that of power batteries. As the demand for prolonged battery energy storage applications grows, the differentiation between these two types of batteries continues to gain prominence.
Furthermore, incentive policies will play a crucial role in shaping the differentiation of the battery market. The recently introduced Inflation Reduction Act by the U.S. government, for instance, offers an additional 10 percent investment tax credit to battery energy storage systems that boast at least 40 percent domestic production, with this threshold increasing to 55 percent by 2029. On the other hand, electric vehicle batteries face more stringent requirements concerning the sourcing and traceability of key minerals. These stricter regulations could drive up production costs, leading to a clear segregation of battery supply for the electric vehicle and battery storage markets to avoid any unnecessary increase in battery prices.
Advancements in Lithium Iron Phosphate (LFP) Batteries in Energy Storage Applications
With the ongoing developments in advanced silicon-based and lithium-metal anode technologies, as well as emerging innovations like solid-state batteries, the focus of battery manufacturers tends to prioritize the electric vehicle and consumer electronics markets. These technologies aim to increase battery energy density, making them well-suited for portable applications.
However, in the realm of battery storage, LFP batteries have been rapidly gaining traction for several compelling reasons. LFP batteries offer enhanced safety features, a prolonged cycle life, and boast a more abundant supply of iron and phosphate, resulting in cost-effectiveness.
Moreover, there is another promising battery technology on the horizon, the sodium-ion battery, which is swiftly advancing towards commercialization. Sodium-ion batteries function similarly to their lithium-ion counterparts but offer the advantage of being less susceptible to price fluctuations in lithium, cobalt, and nickel. This aspect enhances their appeal for energy storage applications, making them an attractive alternative in the evolving battery landscape.
Cost reductions are a driving force behind the continuous innovation in battery size and shape within the energy storage market. Increasing the capacity and size of batteries is a significant approach to achieve cost reduction. This strategy reduces the number of modules in a battery energy storage system and consequently lowers the Bill of Materials (BOM) costs. Additionally, it simplifies the assembly and integration process, alleviating the management burden on the battery management system (BMS).
In grid-scale applications, the new standard for Lithium Iron Phosphate (LFP) batteries has become 280Ah, with some models boasting capacities of up to 560Ah. These batteries also exhibit an impressive number of charge and discharge cycles, reaching up to 12,000. However, it’s important to note that larger batteries require higher manufacturing capacities and more stringent safety management.
Regarding battery shape, prismatic batteries currently hold a dominant position in grid-scale energy storage systems, largely due to their popularity among Chinese battery manufacturers. These batteries offer higher space efficiency, but their manufacturing costs are relatively high. On the other hand, cylindrical batteries provide a safer, cheaper, and more straightforward production process, making them more cost-effective in the long run due to their extended lifespan. Wood Mackenzie predicts that the latest generation of larger cylindrical LFP batteries will find extensive applications in diverse energy storage markets in the coming decade.