Two weeks ago I stood and watched as the battery packs for the all-electric BMW vehicles came off the production line, one every four minutes. The battery manufacturing industry in China is booming. You can almost feel the growth and construction going on around you.
On the day I visited, one company cracked a key milestone, a market value of US$1 billion. The company was founded in 2007. To get a feel for how an industry is growing, nothing beats walking the ground and seeing the progress firsthand. While the industry is still facing a number of challenges, such as universally accepted standards and testing criteria, the face of the battery industry in China is quickly emerging.
Looking to tackle domestic air pollution, the Chinese government is providing strategic support to this part of the market. In particular it is paying a subsidy of around US$10,000 per electric vehicle manufactured in China. Already the two and three wheel market is substantially electrified in China, and demand from India in the coming years will continue to grow this market segment. Coupled with high-end all electric vehicles being produced in Europe, Japan and North America, there is a convergence around a reasonable quality, mid-priced all electric.
Certainly the Chinese battery executives I spoke to saw happening much quicker than many commentators are predicting. And China is not just focused on electric scooters and cars. During another visit I watched at a State Grid facility while four all electric buses had depleted batteries removed, and new batteries installed at the same time by mechanical robots, in under five minutes. Under this model the city government leased the buses by the kilometer, and the charging station acted as an on grid reserve, controlled by power company.
Large-Scale on grid storage
Utilities in China, and across the world, are seeing big opportunities for managing short-term demand peaks and improving the quality of electricity across their networks. Increasingly, on grid storage is being deployed, owned and operated by the power companies themselves. With the cost of battery storage already below a dollar per watt of capacity, this becomes a viable alternative to expensive grid infrastructure upgrades.
On grid and off grid Micro-grid storage
Countries across the world are installing ‘fringe of grid’ micro-grid solutions, incorporating distributed generation, (often but not exclusively renewable), energy storage and smart energy management systems. Interestingly, there are significant market opportunities for these solutions in Australia. Very geographically large states like Queensland and Western Australia have massive grid networks servicing very small populations. There are multiple fringes of grid and off grid opportunities energy storage across those states. Other media applications include in mining and agricultural operations across the Australian outback.
Nano Grids (residential & small scale)
This is an interesting term some in the Chinese battery industry has given for domestic, behind the meter energy storage use. Again, Australia is a market that is tailor-made for energy storage coupled with solar PV at a household level. Over 1.5 million Australian households have deployed solar PV, and 1.5 million more are scheduled to install solar by 2020. The combination of a fantastic solar resource, high retail electricity prices and a growing community mood towards electricity self-sufficiency and control, are all pulling through small-scale domestic battery storage. And prices are coming down. The battery industry is actively competing on price, and energy management solutions are getting smarter, giving householders more control over how they generate store and use electricity.
Overall I came away with the view that cost-effective battery technology was closer than many people think, and this will have far-reaching consequences for all players in the energy sector.