The United States’ Inflation Reduction Act, passed in August 2022, includes an investment tax credit for stand-alone storage, which is expected to boost the competitiveness of new grid-scale storage projects.In July 2021 China announced plans to install over 30 GW of energy storage by 2025 (excluding pumped-storage hydropower), a more than three-fold increase on its installed capacity as of 2022.Some relief was observed only in the first quarter of 2023. 2022 saw the first increase in the price of lithium-ion batteries since 2010, with prices rising by 7% compared to 2021. Ranging from mined spodumene to high-purity lithium carbonate and hydroxide, the price of every component of the lithium value chain has been surging since the start of 2021. It is also the second and fourth largest producer of cobalt and graphite respectively. Russia is the largest producer of battery-grade Class 1 nickel, accounting for 20% of the world’s mined supply. Both cathode (nickel and cobalt) and anode (graphite) materials are affected. Moreover, the impacts of Russia’s invasion of Ukraine are also apparent in the battery metals market. Supply of lithium therefore remains one of the most crucial elements in shaping the future decarbonisation of light passenger transport and energy storage. Lithium is the backbone of lithium-ion batteries of all kinds, including lithium iron phosphate, NCA and NMC batteries. The leading source of lithium demand is the lithium-ion battery industry. While the past decade has witnessed substantial reductions in the price of lithium-ion batteries, it is now becoming evident that further cost reductions rely not just on technological innovation, but also on the rate of increase of battery mineral prices. In July 2022 the world’s largest vanadium redox flow battery was commissioned in China, with a capacity of 100 MW and a storage volume of 400 MWh. More energy-dense chemistries for lithium-ion batteries, such as nickel cobalt aluminium (NCA) and nickel manganese cobalt (NMC), are popular for home energy storage and other applications where space is limited.īesides lithium-ion batteries, flow batteries could emerge as a breakthrough technology for stationary storage as they do not show performance degradation for 25-30 years and are capable of being sized according to energy storage needs with limited investment. Lithium-ion battery storage continued to be the most widely used, making up the majority of all new capacity installed.īased on cost and energy density considerations, lithium iron phosphate batteries, a subset of lithium-ion batteries, are still the preferred choice for grid-scale storage. The grid-scale battery technology mix in 2022 remained largely unchanged from 2021. The United States and China led the market, each registering gigawatt-scale additions. Compared with 2021, installations rose by more than 75% in 2022, as around 11 GW of storage capacity was added. Total installed grid-scale battery storage capacity stood at close to 28 GW at the end of 2022, most of which was added over the course of the previous 6 years. Batteries are typically employed for sub-hourly, hourly and daily balancing. Although currently far smaller than pumped-storage hydropower capacity, grid-scale batteries are projected to account for the majority of storage growth world wide. Grid-scale batteries are catching up, however. The majority of plants in operation today are used to provide daily balancing. The world’s largest capacity is found in the United States. Global capability was around 8 500 GWh in 2020, accounting for over 90% of total global electricity storage. The total installed capacity of pumped-storage hydropower stood at around 160 GW in 2021. While progress is being made, projected growth in grid-scale storage capacity is not currently on track with the Net Zero Scenario and requires greater efforts. Additionally, hydrogen – which is detailed separately – is an emerging technology that has potential for the seasonal storage of renewable energy. Other storage technologies include compressed air and gravity storage, but they play a comparatively small role in current power systems. Batteries are the most scalable type of grid-scale storage and the market has seen strong growth in recent years. Pumped-storage hydropower is the most widely used storage technology and it has significant additional potential in several regions. Grid-scale storage plays an important role in the Net Zero Emissions by 2050 Scenario, providing important system services that range from short-term balancing and operating reserves, ancillary services for grid stability and deferment of investment in new transmission and distribution lines, to long-term energy storage and restoring grid operations following a blackout.
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