Insights: Powering the energy transition with new batteries
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Insights: Powering the energy transition with new batteries

Insights: Powering the energy transition with new batteries

For renewables to become the energy source of choice, battery-industry innovation is a must.

Dr Ulrich Ehmes on the new generation of batteries

We’re at an inflection point.

For decades, activists have owned the debate about how to safeguard the planet. Today, ownership has extended to the boardroom. Executives across sectors and industries are taking a serious look at the environmental, social, and governance (ESG) dimensions of their businesses, recognising that ESG can benefit stakeholders and shareholders alike.

ESG – unlike its predecessor, corporate, social, responsibility (CSR) – isn’t an add-on to doing business as usual, but the driving force transforming business as such. It’s the closest we have gotten to what Harvard scholars Michael Porter and Mark Kramer call  “Shared Value,” meaning companies aligning their success with that of their community.

That COP28 took place in the UAE, which is among the world’s 10 largest producers of oil, leaves no doubt about the energy industry’s commitment to claiming its seat at the table, to playing a proactive role in advancing the energy transition.

Disruption to transition

Inclusivity of the kind the UAE COP28 Presidency has ensured is the only way forward – to keep within reach the 2015 Paris Agreement goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels. As Dr Nawal Al-Hosany, the UAE’s Permanent Representative to the International Renewable Energy Agency (IRENA) noted: it isn’t simply a matter of switching fossil fuels off and renewables on but of orchestrating a transition that accounts for impacts on livelihoods now and future gains for the planet.

The zeal with which those outside the energy industry are calling for an immediate and unconditional embrace of renewables might stem from underestimating the complexities involved. Energy that’s derived from renewables fluctuates with the weather, making it less reliable absent of advanced energy storage solutions and sophisticated electricity grids alike. It’s a reality The Economist detailed a Technology Quarterly earlier this year.

Energy storage: The missing element

We can’t talk about renewables without also talking about the batteries on which energy storage depends. McKinsey expects the lithium-ion battery chain – from mining through recycling – to grow by over 30 per cent a year from 2022 to 2030, up to an estimated value of more than $400bn, driven largely by electric vehicles (EVs).

Battery-based energy storage is going to be especially important in the MENA region, which IRENA has described as the world’s fastest-growing renewable energy market. With renewables in MENA being as abundant as hydrocarbons, countries across the region are ideally positioned to lead in paving the path toward a greener, cleaner future.

The urgency of realising that future can’t be overstated, with the UN Environment Program (UNEP) having found that we must cut global emissions by 42 per cent until 2030 to keep within reach the 1.5 degrees Celsius goal. That means we have a dual obligation of both accelerating the energy transition and improving storage for renewables to thrive.

Conventional battery materials fall short

And while batteries are key to transitioning to renewable energy, they’re mostly at odds with a more sustainable world. That’s because conventional lithium-ion batteries require raw materials such as lithium, cobalt, manganese, nickel, and graphite. Mining these geographically ‘highly concentrated’ materials – 70 per cent of the world’s cobalt, for example, comes from the Democratic Republic of the Congo (DRC) – tends to have adverse ESG implications throughout their complex and often opaque supply chains.

With battery demand growing rapidly, producing enough lithium-ion batteries will be ever more difficult. Meeting demand across China, Europe, and the US alone could require building 120 to 150 new battery factories by 2030. These gigafactories are costly and affected by factors such as shortages of manufacturing equipment, construction material, and skilled labour – on top of historic price volatility and changing national regulations. All that throws into question the long-term viability of lithium-ion batteries.

Even when just considering their performance, lithium-ion batteries aren’t ideal; they quickly exhaust their stored energy and, with each recharge, they lose capacity. And then there are the ongoing safety concerns around lithium-ion batteries catching fire. So, for renewables to become the energy source of choice, battery-industry innovation is a must.

The case for lithium-sulfur batteries

The future of energy storage could lie in lithium-sulfur batteries. Unlike the raw materials conventional batteries use, sulfur is abundant; it’s a reusable industrial waste product that doesn’t need to be mined. At 20 cents – rather than EUR25 – per kilogramme, sulfur is far cheaper than cobalt, nickel, or manganese. And being more energy-dense, sulfur makes for batteries that are three times lighter.

Production, too, is more compelling. Lithium-sulfur batteries require 50 percent less space and capital expenditure (CapEx) than regular gigafactories – with similar factory output. And since 70 per cent of battery-cell costs are material costs, with the cathode accounting for 50 per cent of that cost, opting for sulfur promises significant cost savings.

Innovation hub GCC

In such a scenario, the MENA region could come to shape the global energy transition. With an unparalleled track record of realising bold visions, the MENA region might be where the future of energy storage, where the age of lithium-sulfur batteries begins. Not only would that accelerate a greener future, it would make renewable energy more affordable, ensuring that developing countries aren’t left behind. That’s been a priority to the UAE COP28 Presidency and should be to the world.

The writer is the CEO of theion, a Berlin-based startup that specialises in battery technology.

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