The Decade(s) of Batteries is Imminent
The energy transition is just beginning. I’ve covered here before how wind and (especially) solar have seen massive step-ups in deployment scale over the past decade. That scale was driven by:
a) select technological innovations
b) increased investment in capital goods factories to deliver the necessary materials
c) improved utilization of software to lower soft costs, manage scale
These three actions resulted in 90%+ cost declines of key energy technologies, and the lower costs brought these energy solutions to cost parity (or better) than hydrocarbon solutions, resulting in big deployment figures.
If solar is the story of the 2020s, then solar & batteries will be the energy transition narrative of the late 2020s and 2030s. EV batteries and storage batteries are starting from a small scale today but the absolute % growth that is planned for the asset type is going to alter the entire energy system. I saw a few graphs this week that reveal this scale, and wanted to share:
The top chart is from a Greenhill report, and shows that 78 GW of solar are installed in the US, and 231 GW are in the process of being installed, or 25% of total pipeline is actually in the ground today. When running a similar analysis for batteries, only 10 GW of batteries are in the ground today, but 72 GW are under development. When comparing that data with the bottom chart from Wood Mackenzie, you can see the true scale of the global battery market as all economies move to adopt and integrate energy storage and electric vehicles into their energy footprint.
To put the Wood Mackenzie report in perspective: today, there is 160 GW of battery storage globally. We are now adding that much stationary storage every 2 to 2.5 years and by 2029 will be adding more capacity annually than our existing volumes. Importantly, those figures do NOT include the chart on the right. This chart shows the scale of batteries in EVs and software defined systems will help those batteries become grid resources as well. At Energize we love these tailwinds and believe the distributed and controllable battery assets are perfect candidates for our digital thesis. Should be fun to watch this play out over the next decade.