Thematic Report

CLEANTECH: Batteries

by Ken Shin / Oct 19, 2015

Disruptive technology, ever-cheaper renewables, heightened environmental awareness and softening demand in established industries are driving change across sectors at warp speed. Explore CLSA’s insights into clean technology, renewable energy, alternative transport and more.

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Innovation has improved battery technology such that it is reshaping the automotive and power/utility industries and the way vehicles and grid systems operate. Lithium-ion batteries (LIBs) are at the centre of this potentially seismic shift and a significant driver in the heady rush of clean disruption, as cheaper, more efficient batteries make electric vehicles (EVs) and energy storage systems (ESS) for the grid more competitive.

Consumer electronics dominates LIB demand, but EVs will overtake The consumer electronics industry currently dominates LIB demand, but larger cell formats are increasingly taking share. This is particularly evident in autos and we forecast EVs to reach 8.7% of global vehicle sales by 2020, versus 2.6% in 2015. In battery terms, we estimate this equates to a robust 62% volume Cagr over 2015-20, with battery demand for EVs alone reaching 122GWh – far eclipsing the 59GWh of total LIBs consumed today.

Cheaper LIBs make EVs more viable For LIB’s disruptive potential to be realised, prices must continue to fall within the entire battery-supply chain. Battery cost plays a critical role in determining the commercial viability of EVs. Estimates of current and future costs vary by definition, but LIB costs have dropped by 15% pa over the past 15 years and we expect this trend to continue, driven mainly by scale from large investments and higher energy density.

Other battery technologies also have potential For grid storage, the opportunity may be even larger in the longer term, although timing is more uncertain. While we focus on LIBs in this report, we also highlight other technologies that we believe hold medium- to long-term promise and have reached some level of commerciality in grid applications, including sodium-sulphur (NaS), metal-air and flow batteries.