BloombergNEF Blog

The battery market is a pretty interesting market to follow. Bloomberg New Energy Fund (NEF) published an interesting report a few months ago titled "China Already Makes as Many Batteries as the Entire World Wants".

https://about.bnef.com/blog/china-already-makes-as-many-batteries-as-the-entire-world-wants/

I like their reports because it injects facts into what is otherwise a very opinion driven public debate. And the facts are quite impressive.

Some key points:

- they are tracking about 6 twh of new battery production related investment for 2025 world wide

- that's about 4x the projected demand of 1.5 twh for 2025; which is up from slightly under 1 twh last year (2023). So, they are signalling massive over production of batteries is about to happen. That's quite a change from the shortages companies were dealing with in the last few years.

- they expect that to have some obvious effects on prices and some of those investments: not all these projects will make it and battery over supply will drop prices and endanger producers that can't do that.

I would add to that that it is likely that wider availability of cheaper batteries is going to create new use cases as well. So their demand projection might be off. If prices drop low enough, a lot of household equipment might start coming with batteries, for example. Things like fridges and ovens for example. That's a market that barely exists now. But if prices drop enough, why not?

Another thing I find interesting is the…

This is incredible news!

EVs provide the sweetest kind of demand for a grid, they are parked 23 hours a day, can charge whenever power is free and less than free. Power prices go negative 200 million times/year[1]. Batteries, Solar and Wind and still in the early stages, as volume grows, both will get a lot cheaper. Batteries add the much needed gigantic-distributed-storage-reservoir, soaking up all the excess production that is currently wasted.

An insightful comment from a HNer (don't remember who), if there is excess production we have to either move it across time or across space. Across space requires building transmission lines (costly, takes a decade). Across time is easy, we just need more EVs, everywhere.

https://en.m.wikipedia.org/wiki/File:3-Learning-curves-for-electricity-prices.png

(2019 article) “Batteries will fall much faster than you are forecasting.” The key determinant of our forecast is the relationship between price and volume. From the observed historical values, we calculate a learning rate of around 18%. This means that for every doubling of cumulative volume, we observe an 18% reduction in price. Based on this observation, and our battery demand forecast, we expect the price of an average battery pack to be around $94/kWh by 2024 and $62/kWh by 2030: https://about.bnef.com/blog/behind-scenes-take-lithium-ion-battery-prices

Learning rate for Solar is 20%. According to this article (https://ourworldindata.org/learning-curve), the price declined…

no place has as high a capacity factor for solar pv as 50%; the world average is 14% (i.e., 14 watts average output per 100 watts nameplate output) and the country with the highest is egypt at 35%

(this doesn't mean that you get zero power for 65% or 86% of the day. it means that you get lower than max power at all times except noon. to a great extent you can compensate by that by just installing more panels, but at night you need a better strategy)

but the capacity factor is irrelevant to the fact that solar energy on the power grid generally sells for about half the price that coal-generated electricity sells for, on the same grid, when storage capacity is insufficient. in fact, prices used to go negative at night (to avoid shutting down slow-ramping baseload plants) and now they go negative in the day

https://pv-magazine-usa.com/2020/05/28/record-low-solar-ppas-in-the-southwest-means-carbon-capture-is-not-going-to-save-coal-plants/ is an article from four years ago giving some specific prices: a solar ppa had just been signed for 15 dollars per megawatt hour, while the cost of production with coal at the san juan generating station was 44.90 dollars per megawatt hour, even though it was built right on top of a coal mine to save on shipping costs. that's why the san juan generating station has been decommissioned. if you look, you'll find stories like this all over the place, and solar panels now cost half of what they did when that story was written

now, it's…

Yeah but you can do the calculations yourself.

I'm gonna use the most expensive storage technology I know (lithium-ion) and forego cheaper alternatives like pumped hydro just to make a point.

I'm gonna use data from lazard, because it looks like the most recent study[1].

- Cost of Lithium-Ion Battery Packs 139$/kWh [2] - 139000$/MWh - We want the levelized cost of electricity, so let's assume, again to make a point, that we have to throw the battery out after 500 cycles instead of it only operating at 80% charge. That's 139000$ / 500 = 278$ - The EU estimates that in a 80% renewable grid you need approx 30% storage capacity. So let's assume we need 40% storage capacity for a 100% grid.[3] That's 278$ * 0.4 = 112$ - Cost for solar 24–96$ - Cost for wind 24–75$ - Cost for solar + storage 136$ - 208$ - Cost for wind + storage 136$ - 187$ - Cost for new nuclear: 141–221$ So you can combine renewables with the most expensive/deluxe storage technology available today and it's still cheaper than nuclear.

1: https://www.lazard.com/media/typdgxmm/lazards-lcoeplus-april-2023.pdf

2: https://about.bnef.com/blog/lithium-ion-battery-pack-prices-hit-record-low-of-139-kwh/

3: https://energy.ec.europa.eu/topics/research-and-technology/energy-storage/recommendations-energy-storage_en

Small reactors were part of the original 1st gen nuclear reactors. The world went to bigger reactors in the 60s-70s because it ended up being much cheaper than building lots of small ones. Reactor fabrication is complex, and it's easier to just build them bigger.

From the 90s to the mid-2000s there was probably a window for development in this area. But the nuclear sector stagnated as a whole, and then fracking made natural gas cheap enough that people wouldn't consider it.

The jury is out on SMRs still. They're promising a lot, and the tech and engineering has improved. But plunging costs of renewables mean the window of opportunity for nuclear tech is probably mostly closed in the West. This article from a highly respected energy sector analysis group is worth a read: https://about.bnef.com/blog/scale-up-of-solar-and-wind-puts-existing-coal-gas-at-risk/

India and China are the big markets for nuclear right now -- their energy demands continue to grow, and they're building reactors as part of an all-of-the-above model. France MIGHT be a potential buyer of SMRs (their reactor fleet is getting close to end-of-life), but their nuclear companies have put a lot of push behind the EPR design.

200 billion PHP is 3.58 billion USD. The farm is 3500 MW and has 4000 MWh of battery storage. As of today 1 Wp (peak watt) of mainstream solar panels costs about 0.16 USD [1], and 1 kWh of li-ion battery costs about 140 USD [2]. Which means the panels alone cost 560M USD, and the batteries also cost 560M USD, so combined they represent 31% of the total 3.58B USD budget. It seems to be not very cost-efficient, as the overhead for everything else (2.46B USD) is quite large: inverters, mounting hardware, grid connection, installation, inspection, etc.

Edit: I was basing my "not very cost-efficient" remark on the fact that this solar plant is basically $1.00/W however the best utility-scale solar plants achieve about $0.80/W, or 20% less. However I forgot to account for the fact this plant has batteries, so a higher overhead is expected. So, after all, the capex is in line with what I'd expect.

[1] https://www.pvxchange.com/Price-Index [2] https://about.bnef.com/blog/lithium-ion-battery-pack-prices-hit-record-low-of-139-kwh/