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Opinion piece by Dr. Parveen Kumar, Senior Manager, WRI India
Battery Energy Storage Systems (BESS) will be a crucial component in the transition to clean technologies in the energy and transport sector. According to Global Energy Storage Market 2019, the global energy storage market size is expected to grow from 164 GWh (USD 59 billion) in 2019 to 3,084 GWh by 2035 at a Compounded Annual Growth Rate (CAGR) of 20.1%. Due to declining cost and improved performance, Lithium-ion Batteries (LIBs) are emerging as the most promising battery chemistry for automotive and stationary storage applications. According to reports, the annual global demand for LIBs is expected to increase from 230 GWh in 2020 to 1,700 GWh by 2030, where a major share of demand will be from Electric Vehicles (EVs).
India has set the target to increase the share of non-fossil fuel-based electricity generation to 40% in the total energy mix, and the share of EVs to 30% of the total vehicle sale by 2030. To meet the demand for stationary storage and EVs in India, the total energy storage requirement is expected to increase to 2416 GWh by 2032. According to the JMK research report, the cumulative LIB market in India is expected to increase from 2.9 GWh in 2018 to about 800 GWh by 2030.
BESS in Automotive Application
LIBs have emerged as the most promising battery chemistry for automotive applications, this is mainly due to more than 80% reduction in the battery cost and significant reduction in battery weight due to the increase in the specific energy of LIB cells. The annual LIB market is expected to grow at a CAGR of 37.5%, and the current share of 35% of EVs in the LIB market is expected to increase to 80% market share by 2030. According to the IEA report, the estimated LIB requirement for xEVs by 2030 will be in the range of 1,600 GWh – 3,000 GWh.
India’s commitment to the EV30@30 global initiative, which targets a 30% new sales share for EVs by 2030, translates to the addition of about 24 million two-wheelers, 2.9 million three-wheelers, and 5.4 million four-wheelers. To support this transition, the total battery capacity requirement is expected to increase in the range of 2.2 – 2.6 GWh in 2020 to 825 – 1114 GWh by 2030 and 3425 – 4138 GWh by 2035.
BESS in Stationary Application
For the stationary application, many energy storage technology options are available including batteries, where the selection of technologies will depend upon the trade-off between cost and performance requirement. Among batteries, lead-acid batteries are early BESS used in stationary applications due to their track record of reliability and safety. Now, LIBs have also attracted significant interest as supporting devices in the grid because of their improved performance, life, and lower cost. Globally, the stationary battery market size is projected to grow from 15.2 GWh (USD 9.1 billion) in 2019 to 222.7 GWh (USD 111.8 billion) by 2035 at a CAGR of 18.3%.
India has an ambitious Renewable Energy (RE) target of 175 GW by 2022 and 450 GW by 2030. As of February 2021, the cumulative installed RE capacity was 93 GW, which includes 39 GW of solar and 38.8 GW of wind energy. With an increasing share of variable RE, the demand for energy storage is expected to increase to address the issue of intermittency and to improve the plant flexibility, improved grid interconnections, and demand-side management. According to the ISGF report, the total energy storage demand in the stationary storage application will be 138 GWh during 2019-2022, and it is expected to increase to 543 GWh during 2027-2032, with a total capacity of 1002 GWh by 2032. According to the Central Electricity Authority (CEA), India may need 58-108 GWh of BESS for grid-scale stationary storage.
Re-use of used EV Batteries
Once EV batteries have deteriorated to 70–80% of their initial capacity, they must be replaced because the remaining capacity is inadequate for automotive use; however, these batteries can be repurposed for other applications. The repurposing of used EV batteries could extend the lifespan of batteries for another 7-10 years, and will be an additional source of revenue until they are recycled, and will also contribute to the cost reduction of grid-scale energy storage systems. According to the BNEF report, the global cumulative capacity of the used EV batteries is expected to reach 185.5 GWh/year by 2025, where another study estimates that the total accumulative used EV batteries will be almost 1000 GWh by 2030, which is proportional to the increment of accumulated EV sales. India imported 450 million units of LIBs during 2019-20 for various applications including EVs, which valued around INR 6,600 crore.
Recycling of Batteries
With the increasing push for the adoption of clean technologies and decreasing battery cost, it is estimated that the demand for batteries will increase 14 times by 2030 compared to 2018, where the EV sector is expected to account for 88% of the total demand. Currently, the global recycling capacity of raw materials is around 1,301 kt per year, which needs to be scaled up to 3,500 kt/year by 2030. To meet the global demand for battery raw materials, it is estimated that 9,300 kt of lithium, 55,000 kt of nickel, and 9,800 kt of cobalt will be required between 2020 and 2050. Here, end-of-life recycling can help to meet the 48% of lithium, 47% of nickel, and 60% of cobalt demand. In India, the LIB recycling market is at the nascent stage, and it is expected to be around 22-23 GWh by 2030, which is USD 1000 million opportunities. It is estimated that the cumulative recycling battery market in India will increase from 0.4 GWh in 2020 to more than 80 GWh by 2030.
In brief, BESS has a particularly important role in the smooth transition to clean technologies. In addition to opportunities in manufacturing, there is huge growth potential in a second-life application and end-of-life recycling market of batteries.
By Dr. Parveen Kumar, Senior Manager, WRI India