The global battery manufacturing industry made investments totalling more than US$350 million during the six months to June, indicating 2019 will be a record year for expenditure, topping the 2018 total of $600 million, according to the firm's ‘Global energy storage outlook, Q3 2019' report.
"Since 2018 the market has seen significant investments in advanced lithium-ion technologies from automotive giants and oil companies alike," said analyst Mitalee Gupta.
Investments had mostly focused on developing batteries that were free of cobalt and used alternate electrode materials or solid-state electrolytes.
"While not all these technologies will become successful, several of them will make their way into the electric vehicle (EV) and storage markets in the coming years," Gupta said.
Gupta said market forces were pitting nickel-manganese-cobalt oxide (NMC) batteries against lithium-iron-phosphate (LFP) batteries for dominance. While the NMC batteries outperform LFP batteries in terms of energy density, the storage market is seeing significantly more interest in LFP.
Where LFP used to be more expensive than NMC, now the opposite is true. In the future, this differential is expected to shrink as NMC price declines continue to be driven by demand from EVs and energy density improvements.
"In 2018, the demand for NMC batteries from both EVs and the energy storage industry outstripped the available supply, as cell manufacturing capacity couldn't keep up with the rapidly growing demand. While there was a shortage of NMC batteries in the energy storage market, there were plenty of LFP batteries available - with capacity mostly housed in China," Gupta said.
"As lead times for NMC availability grew and prices stayed flat, LFP vendors began tapping into NMC-constrained markets at fairly competitive prices, thus making these LFP batteries an attractive option for both power and energy application."
Attributes such as improved cycle life, better safety and oversizing ratios have started to impact the choice of chemistry for different energy storage applications and market segments.
WoodMac expects planned global battery manufacturing capacity expansions across all lithium-ion sub chemistries to grow to just more than 770 gigawatt-hours by 2026.
However, growth in the emerging energy storage sector was muted, at least for 2019, senior analyst Rory McCarthy said.
"As 2018 was a bumper year for energy storage deployments, high expectations were placed on 2019. Continued annual growth is unlikely for this year."
The global market has slowed in key regions that drove 2018's boom, namely South Korea and China. "These countries have been plagued with fire incidences, as well as policy and regulatory changes. The US and European markets are also struggling to get capacity on the ground in 2019. Capacity is being pushed to 2020, 2021 and, in some cases, even further out," McCarthy said.
Wood Mackenzie expects 8GWh of energy storage to be deployed globally in 2019, with these numbers increasing to 44GWh in 2024.