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BloombergNEF: Bullish on cost reductions, in line with others on global battery market forecast

The report looked at expectations for both stationary storage and electric transport lithium-ion battery demand in the coming years. Image: Nissan.

BloombergNEF has predicted an exponential multiplying of non-pumped hydro energy storage installations around the world, culminating in nearly 3,000GWh of deployments by 2040.

The research firm has just produced its annual investment outlook report on the space, finding that 9GW / 17GWh of energy storage was deployed as of 2018 and forecasting this to rapidly grow to 1,095GW / 2,850GWh by the year 2040.

In short, energy storage “will become a practical alternative to new electricity generation [presumably meaning in combination with renewable or other distributed energy sources, although a BloombergNEF release did not make this clear], or network reinforcement”, while customer-sited behind-the-meter energy storage systems will more commonly provide network services.

In terms of expected battery demand, the firm gave a combined forecast of 4,584GWh for both electric transportation and stationary energy storage systems by 2040. Electric passenger vehicles “could make up a third of the global passenger vehicle fleet by then", BloombergNEF said.

In March this year, the firm’s head of energy storage analysis, Logan Goldie-Scott had predicted that an 'average' lithium-ion battery pack could cost as low as US$62 per kWh by 2030, noting however that some companies will "undershoot" and price their packs even cheaper than that while others will come in with higher prices.

Global cumulative energy storage installations forecast. Image: BloombergNEF.

'Further sharp declines' in lithium-ion battery costs

Meanwhile, rival research group Navigant issued new analysis in June that predicted that cost declines may not happen as rapidly as some have forecast, but will nonetheless continue on an aggressive downward trajectory. From around US$139 per kWh this year, battery cells could fall to US$76 per kWh by 2030.

BloombergNEF’s release to media on its new outlook report did not offer forecasts on price guidance, but did say that there could be a further halving of battery cell cost per kilowatt-hour by 2030, which appears to reiterate Goldie-Scott’s previously issued forecast.

“Further sharp declines in the cost of lithium-ion batteries, on top of an 85% reduction in the 2010- 2018 period” would be a key factor in enabling that predicted 122-fold increase in installed base. Getting up to that 4,854GWh figure will require US$622 billion of investment.

Market leading regions, installs forecast roughly in line with rival analyst predictions

The company said it modelled the impact of demand taking off in the two distinct markets of electric transportation and stationary energy storage on an increasingly solar and wind-penetrated global electricity system.

“Two big changes this year are that we have raised our estimate of the investment that will go into energy storage by 2040 by more than US$40 billion, and that we now think the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses,” BloombergNEF energy storage analyst Yayoi Sekine said.

Logan Goldie-Scott said that developers and grids are putting in place new contract structures that are ushering in a “new era of dispatchable renewables”, with his team seeing renewables and solar-plus-storage in particular as a “major driver for battery build”.

China and the US will be the world’s leaders by 2040, BloombergNEF said, usurping current leader South Korea. This was also the conclusion of a recent report from another team of analysts, this time at Wood Mackenzie Power & Renewables, which claimed that this overtaking could happen sooner rather than later, with the global superpowers dominating the market with a 54% share by 2024. Wood Mackenzie meanwhile offered its own prediction that after deploying 7GW / 12GWh in the five years up to 2018, global annual deployments will reach 63GW / 158GWh. Roughly speaking, that tallies with the BloombergNEF latest forecast, with 158GWh a year taking roughly 18 years to overshoot the 2040 BNEF predicted figure.

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