Energy storage

Tracking Clean Energy Progress

🕐 Last updated Wednesday, 23 May 2018

More efforts needed

While battery prices fell by 22% from 2016 to 2017, continuing a very positive trend, additional utility-scale deployments for all storage technologies (excluding pumped hydro) remained flat in 2017 at around 620 MWh. This 2017 deployment rate is insufficient to meet the SDS target, which requires an additional 80 GW of overall storage capacity added by 2030. Additional policy support and ensuring a wider range of storage technologies become cost-effective are crucial.


Energy storage capacity

Historical, planned and SDS targets

	Pumped Storage Hydropower (PSH)	Non-PSH storage	Planned PSH	Storage needed under SDS
2010	144.64			
2017	172.00	4.50		
2020	172.00	6.00	7.99	
2030				266.00
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In 2017, annual utility-scale deployments for all storage technologies excluding pumped hydro storage remained at broadly similar levels as the previous year, at around 620 MWh – a marked slowdown from the growth experienced in 2016. Total available storage volume, excluding pumped hydro, reached 15 300 MWh in 2017.

Total available storage volume, excluding pumped hydro

Storage reached 15 300 MWh as of 2017.

	Available storage volume
Compressed air storage	38.6
Lithium-ion battery	28.22
Flow battery	12.47
Sodium-based battery	5.7
Other	15.02
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Growth in non-hydro storage technologies, dominated by batteries, was led by Asia.

A favourable policy environment in Korea – including discounted retail rates, low-cost credit and eligibility for renewable energy certificates – led to record deployments and a near tripling of the installed base in 2017. World-leading domestic manufacturers, coupled with the large number of projects in the pipeline – including an announced 150 MW megabattery, which would become the largest system in the world – signal that the trend in Korea is likely to continue.

While significant deployment on the ground has yet to materialise in Southeast Asia, there were positive signs of activity in 2017, including headline projects announced for 2018-19 in several countries.

In Australia, while the commissioning of the Tesla 100 MW megabattery captured headlines, there were also other positive developments for storage technologies. Several pumped hydro projects were announced in 2017, including a 2 GW expansion of a facility in the Snowy Mountains. If completed, all announced pumped hydro projects would provide 50 times the capacity of the Tesla battery installation.

In the United States, creation of storage markets remained state driven. New York announced a 1.5 GW storage target by 2025, and Arizona proposed a 3 GW storage mandate by 2030. Regulatory changes in California, where a storage mandate is already in place, created a more favourable environment for storage players.

Deployment slowed significantly in the European Union and Japan in 2017.

In the United Kingdom, despite strong initial interest in storage in the 2017 capacity auction, just over 10% of pre-qualified storage capacity cleared the market. More positive trends were seen in Germany and Italy, where high retail prices and a positive regulatory framework led to an uptick in residential energy storage. Despite planned rollbacks of incentives in Germany, the growth in storage systems again reached record numbers, with over 30 000 systems installed.

Recent trends show a massive expansion of lithium-ion manufacturing capacity around the world. The 35 GWh Tesla “Gigafactory” captured headlines in 2016; planned capacity expansions by 2021 now total over 220 GWh, with more than half planned in China.

Lithium-ion continued to crowd out other chemistries, accounting for nearly 90% of utility-scale batteries commissioned in 2017.

Share of annual battery storage additions, by technology

The increasing dominance of lithium-ion continues.

	Lithium-ion batteries	Lead-based batteries	Flywheels	Flow batteries	Sodium sulphur batteries	Compressed air	Supercapacitors	Zinc air	Other
2011	41	36	13	4	3	0	0	0	3
2012	30	32	22	5	5	1	4	0	1
2013	63	10	11	6	8	1	0	0	2
2014	66	10	2	1	19	1	0	0	2
2015	73	6	1	4	9	0	0	0	8
2016	88	5	0	0	4	0	0	0	2
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Concerns around the long-term availability of lithium and cobalt is unlikely to materialise, with reserves of both critical materials expected to meet demand until 2040. Rather, the challenge lies in the short term, when the rapid scale-up of lithium-ion battery manufacturing could cause a supply crunch in the early 2020s.

Because cobalt is mined as a by-product of other metals, plans to expand mining capacity are relatively insensitive to increases in cobalt prices. In addition, the Democratic Republic of Congo concentrates half of the current production and two-thirds of planned expansions, but the value chain is weak and 20% of mining is artisanal, hand-dug and difficult to scale up.

Continued high prices are creating a flurry of activity, with companies exploring cobalt-only mining, but it remains unclear how much or how fast production can come online.

Battery costs continue to drop, as unit costs for lithium-ion decreased 22% between 2016 and 2017. While prices of active materials increased substantially over 2017, particularly those of cobalt (which more than doubled) and lithium (which grew by a half), they have not had a substantial effect on battery prices.

Even under sustained price increases, the share of costs due to cobalt and lithium materials accounts for only a few percentage points of the overall battery cost.

In another bright spot for storage overall, pumped hydro capacity grew by over 7 GW in 2017. However, pumped hydro is concentrated in a few places – half of all installed capacity is found in just three countries – and growth will remain constrained by geography.


Tracking progress

Around 80 GW of additional storage capacity is needed by 2030 to meet the SDS, and therefore continued policy support is required.

Even under highly aggressive cost and deployment scenarios, coupling storage with variable renewables remains more costly than alternatives in most geographies and applications. It will become increasingly important to also track the scale-up of cobalt and lithium production as well, as they are likely to affect progress in deployment of the batteries themselves.


Innovation

Advanced battery chemistries are required to break the 80 USD/kWh floor price of the current generation of lithium-ion batteries.

While solid state and lithium-air batteries are not optimal for energy storage, progress in these technologies is likely to spill over to power applications in the long term. In the medium term, incentives are given to other technologies less favoured in electric vehicles (EVs), such as lithium-iron-phosphate (LFP), as the penalty from having lower density is less of a factor in the power sector.

As grid-scale storage and particularly EV batteries grow, cobalt and lithium supply limitations pose risks to the scale-up in production. This fits with the goal of increasing density in EV batteries, as higher-density batteries use less or no cobalt. Increased effort is required in lithium-ion blends with higher nickel content and lower cobalt such as nickel-manganese-cobalt (NMC) 622 and 811 blend ratio batteries, which remain in the pre-commercial phase.


The IEA’s new Innovation Tracking Framework identifies key long-term “technology innovation gaps” across the energy mix that need to be filled in order to meet long-term clean energy transition goals. Each innovation gap highlights where R&D investment and other efforts need improvement.

Explore the technology innovation gaps identified for energy storage below:

Why is this RD&D challenge critical?

Cobalt, lithium, nickel scale-up poses challenges for ramping up batteries.

Key RD&D focus areas over the next 5 years

In the short term, focus on higher nickel content batteries like high nickel blend NMCs. While this is the natural direction of travel for the sector, increased push will be needed given the scale-up foreseen. In the mid-term, solid-state batteries and lithium-air could reduce most critical impacts on cobalt in particular.

Key initiatives

Toyota R&D programme on solid state batteries, leading cross-university programme including Harvard, UCL, BMW challenge. While the area is very topical, awareness of its criticality has only recently emerged. Private sector initiatives to develop lower intensities, including 60m VC funding.

Why is this RD&D challenge critical?

Current generation reaches floor costs around 2030. Other technologies, improvements to cathode and electrolyte necessary to go beyond 80USD/kWh.

Key RD&D focus areas over the next 5 years

Solid-state batteries and Li-S or Li-Air will be needed. Solid-state should become commercial by 2025. Nanon-structured lithium-ion cathode materials. Novel carbon materials for air cathodes, minimising anode interaction and O2. Li-anode passivation to avoid dendrite formation could dramatically improve total life-cycle costs. Finally, optimising device operation to optimise lifetime usage should be a key area of focus.

Key initiatives

Solid-state batteries and Li-S or Li-Air will be needed. Solid-state should become commercial by 2025. Key areas include nano-structured lithium-ion cathode materials, novel carbon materials for air cathodes, minimising anode and O2 interaction. Li-anode passivation to avoid dendrite formation could dramatically improve total life-cycle costs. Finally, optimising device operation to maximise lifetime usage should be a key area of focus.

Why is this RD&D challenge critical?

High penetration of batteries will need sound re-cycling and repurposing strategies. Materials intensity could be reduced overall by recycling.

Key RD&D focus areas over the next 5 years

Solid-state should become commercial by 2025 under a SDS world if the cost and density targets are to be met, which could mean re-assessing recycling needs. Similarly changes in chemistries and demand for raw materials will require continued monitoring and flexible strategies by manufacturers.

Key initiatives

Very low number of initiatives overall. Pressing need to develop more international partnerships (e.g. Sustainable Cobalt Initiative), as well as manufacturer alliances. Policy-maker action required in this space.

Why is this RD&D challenge critical?

With higher penetrations of renewable energy, systems could see extended periods with low generation from wind and solar.

Key RD&D focus areas over the next 5 years

  • Flow batteries are highly promising but long-term performance and reliability issues as the technology scales up need addressing. Engineered molecules for flow batteries (e.g. symmetric Organic Flow Batteries or Polyoxometallate Flow batteries) show promise.
  • Feasibility assessments for CAES, particularly adiabatic systems.

Key initiatives

  • Third-generation Vanadium redox flow initiatives in China (Rongke), UET in the US.
  • Duration Addition to electricitY Storage programme. Long-term (10-100 hours) storage (30 million USD) funding through Arpa-E. Target of USD 0.05 per kWh-cycle.
  • Primus power Amandebuilt operation for 200 kW of 5hour storage VRFB.
  • Adiabatic CAES demonstrations in Canada and Australia.

Explore all 100+ innovation gaps across 38 key technologies and sectors here.