Extract of contributed article published in Energy Storage News
The battery industry is at risk of falling into the trap of becoming too dependent on a single ingredient, and failure to diversify and address the issue now will hinder the energy transition in the long run, writes Michael Burz, CEO, founder and president of Enzinc.
A glance at any energy analyst’s predictions shows demand for batteries is strong and only getting stronger as the energy and transportation industries embrace decarbonisation. And while the industry may feel well established to those who have been working in it for the past decade, it’s still relatively early days when it comes to influencing the mix of batteries deployed.
The battery industry can derisk this coming wave of demand by ensuring that it meets the needs with a diversity of technologies.
Risk of battery chemistry concentration
The energy storage industry only needs to look as far as the solar industry to see why it’s unwise to tie a fast-growing industry to a single input or region. More than half of the key ingredient for solar panels, polysilicon, comes from one province of China.
Not only has it meant that the country producing it, China, is getting first dibs on the volume produced, but also it opened the rest of the industry to political risk as evidence of human rights abuses in China’s Xinjiang Province mount and supply chain risk as trade tensions wax and wane.
Even in established industries, lack of diversification harms markets. The recent disruption to global fossil fuel markets has reminded governments and consumers alike of the power wielded by OPEC members, which control 60% of all petroleum exports. It’s a lesson gasoline-powered car drivers have revisited many times since the 1970s oil shortages.
Today, lithium-based batteries dominate the emerging energy storage markets, from EVs to home energy storage, to utility-scale batteries.
While the industry’s nascent, it doesn’t seem problematic. However, as the industry matures, today’s concentration will seem shortsighted. Why? Because the rapidly rising demand for batteries means growth may be stymied by a lack of supply of lithium globally if we don’t diversify now.