Battery markets and outlook

Technology Trends
Battery markets and outlook 
Among the many technologies available for electricity storage, batteries have experienced the most significant growth in recent years and are receiving the most attention. An increasing number of actors representing diverse backgrounds – including utilities, battery manufacturers and renewable project developers – is helping to drive competition (Eller and Dehamna, 2016). Batteries are being deployed in four main applications to support VRE integration and improve reliability of electricity supply. These include households with solar PV; island systems and o-grid VRE for rural electrification; VRE smoothing and energy supply shifting; and fast, short-term electricity balancing in ancillary markets (IRENA, 2015f). In Germany, for example, some 10,000 rooftop solar PV systems are coupled to battery storage systems. Batteries also play a major part in providing energy access in the developing world, particularly when combined with solar PV in lighting systems and solar home systems (IRENA, 2015g). Battery use is expected to increase substantially over the next few years, with the largest markets in North America, Europe and Asia-Pacific (see Figure 4.6) (Eller and Dehamna, 2016; GlobalData, 2016). Batteries are set to play an important role in VRE integration in existing electric grids and a key role in the ongoing ešort to provide access to those still without electricity. IRENA estimates that pumped storage hydropower in 26 countries will increase from 150 GW in 2014 to 325 GW in 2030. Over the same period, the total available battery storage for electricity will increase from just 0.8 GW to around 250 GW (IRENA, 2015h). Different types of batteries have different uses, but recent years have seen a significant shift from sodium sulphur to other battery types, particularly lithium-ion. Lithium-ion batteries have started to dominate the electricity storage market because of their high energy density, e¨ciency and relatively long life. In 2016, lithiumion batteries accounted for about half new battery deployments, with advanced lead-acid, sodium sulphur and advanced flow batteries also having significant market shares (GlobalData, 2016; Tokash and Dehamna, 2016; US DoE, 2016). Lithium-ion batteries are used widely in consumer electronics as well as in plug-in hybrids and electric vehicles. Their benefits include the ability to provide large amounts of energy for short periods of time and lower amounts of energy for longer periods. This makes them suitable for stationary (e.g., solar PV systems) and mobile (e.g., electric vehicles) electricity storage for all scales and applications (D’Aprile, Newman and Pinner, 2016). They also can be deployed rapidly. 
Role of sector coupling in realising higher shares of renewable energy 
The coupling of the power sector with heating, cooling and transport ošers significant opportunities for: integrating higher shares of VRE generation while also expanding the use of renewable energy in other end-use sectors and increasing efficiency of energy use. Sector coupling can be achieved in a number of ways, including: 
Electrification of heating and cooling in buildings and industry. Thermal grids (district heating and cooling) and individual building systems (e.g., heat pumps) can serve as new markets for renewable electricity while also operating as demand bušers for variable generation. This can be accomplished by shifting thermal demand somewhat to better coincide with the ebb and flow of variable output, and by equipping district systems to store thermal energy for later use. 
Electrification of transport. Electricity is already used for many trains, trams and other forms of transport. Electric passenger vehicles also are growing in number, with more than one million plugin electric vehicles estimated to be on the world’s roads as of 2015. Electrification of transport enables the use of renewable electricity in vehicles through on-board batteries or hydrogen fuel cells. It also allows for the opportunity to balance VRE generation by timing battery charging and hydrogen production to coincide with surplus renewable electricity generation. A third potential advantage is to utilise such vehicles as two-way storage devices that can return electricity to the grid during peak demand periods or serve other electricity needs of the owner, depending on the circumstances. 
Use of smart energy networks. Timely and relevant information about supply and demand, and the flexibility thereof, will be an increasingly critical component of the production and distribution systems that couple renewable electricity with thermal applications and transport. “Smart” electrical and thermal energy networks will convey real-time information to both energy producers and consumers to optimise and synchronise supply and demand through a combination of supply-side flexibility and demand-side management and response. One component of this is to translate information on system imbalances into price signals so that the new transport and thermal demand can efficiently respond to changing conditions on the supply side by time-shifting demand, and even return stored energy to the grid when needed. 
The potential synergy is substantial as the expanded use of renewables for transport and thermal applications, in turn, can balance grid power and perhaps offer other ancillary services for grid stability and security. Understanding how these services might be provided, and their economics, will be crucial to better assess the transition costs, or the savings, that can result from significantly higher shares of renewable energy. The coupling of the power sector with the heating, cooling and transport sectors is likely to become the key to realising the full potential of renewable energy in the overall energy system. The concept has already been put into practice in California, Denmark, Germany and China now is encouraging coupling to reduce curtailment of wind and solar power. 
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Utility-scale systems were set up in a matter of months in 2016 for grid-based projects in North America (Randall, 2016). In addition, lithium-ion batteries are starting to appear in some solar home system markets, which up until now have relied primarily on relatively low-cost deep cycle lead-acid batteries (IRENA, 2016j). By 2025, it is expected that lithium-ion batteries will be included in up to 80% of all global electricity battery storage installations (IHS Markit, 2015). 



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