On 13th October 2021, Glennmont Partners from Nuveen held an online webinar discussing the emerging batteries energy storage market. While renewable energy generation – like wind and solar – has the benefit of (i) offering carbon-free domestic supply, (ii) being cheap and plentiful, and (iii) creating jobs, it is reliant on weather cycles which can be intermittent and difficult to forecast. Batteries and other forms of programmable capacities offer a balancing solution and hedge against periods of volatile supply/demand and support in periods like what is currently observed in the UK power market. Looking at trends in the capacity market and battery technology, the webinar outlined opportunities and challenges in a renewables heavy power system with limited grid infrastructure, with EOS Consulting presenting the Italian market as an example and Northvolt presenting the battery manufacturing market.
Emanuele Riccobene, Founding Partner, CEO at EOS Consulting
Emanuele presented the Italian market as an example of how batteries are needed to support a renewables heavily power system. Emanuele presented how Italy looks to double the amount of wind and solar power from c.25 GW to c.50 GW in less than 10 years – and with this ambition, the transmission grid operator (“TSO”) sees the need of batteries to provide stability to the grid arising from this increase of these intermittent power sources. In Emanuele’s assessment, the TSO will target adding 8 GW of battery energy storage systems (“BESS”) or equivalent over the next 10-years. And from 2030 onward, Emanuele sees these sorts of installations being able to operate under a merchant scheme without capacity market subsidies.
Italy is an interesting market to study (3rd largest GDP in Europe), as the country currently imports circa 40 TWh p.a. mainly from Germany (via Switzerland) and France – which is mostly a coal dominated power mix. The country also looks to exit entirely from coal by 2025 (circa 6.4 GW domestically) and has no nuclear power installed. Renewables are anticipated to account for 60% of the installed capacity by 2040, up from 30% in 2020.
Wilhelm Löwenhielm, Director of Business Development ESS at Northvolt
Wilhem presented the battery energy storage market from a battery manufacturer perspective and addressed to the audience some of the ESG considerations in producing and recycling this valuable equipment. Wilhem gave as an outlook that cumulative BESS installations are anticipated to grow 14x from 2020 levels to circa 219 GWh p.a. globally by 2030. This is largely driven by the growth of renewables into power systems with BESS scene as the carbon-free and cost-efficient technology to resolve intermittency and grid capacity issues.
Wilhem concluded his presentation by discussing environmental considerations of the battery manufacturing process. Northvolt already offers a 75% improvement in lifecycle carbon emissions from battery cell manufacturing compared to their peers – but firm look to target a 90% emissions reduction from today’s benchmark by procuring 100% from renewable energy for their energy needed and by integrating recycling into their battery manufacturing process. Northvolt anticipates being able to have a mostly closed-loop circular economy manufacturing process, using at scale spent battery cells for the production of new cells, relying less on primary raw materials.