Battery demand is forecast to grow at a CAGR (continuous annual growth rate) of ~25% from 2020 to 2030. Most investment will support meeting the transportation industry which will account for more than 85% of battery demand by 2030. This rapid growth presents great opportunities to support the green transition. However, paving the way for this growth comes with key challenges and opportunities which need to be addressed.
Figure 1 - Most battery investment will support meeting battery demand for the transportation industry
Source: Bloomberg New Energy Finance 2020
Seven of these opportunities and challenges are explored below:
Chemistry: More R&D is needed to optimise battery chemistry for key applications
Environmental Impact: Actively monitoring that batteries are a net positive contributor to acting on climate change by tracking and analysing the impact of batteries across their full lifecycle is critical
Battery Analytics: Advancing battery analytics to improve battery safety and maximise the usage of a battery before disposal/recycling
End of Life: State of health is only one indicator of battery degradation and opportunities exist for concepts that can proactively predict end of life for batteries
Second Life: The second life market is still nascent and facing a lack of supply that is required to develop new business models for the space
Battery Recycling: Recycling methods are already operational, but more innovation opportunities can be found at other stages of the process such as collection, discharging and dismantling
Talent Pool: Retaining existing talent and growing the talent pool is required to have workforce supply meet the demand made by battery industry growth
1. Chemistry
The potential use cases for batteries is rapidly expanding, resulting in no ‘best’ battery chemistry having been established for many applications today. A prime example is the lack of standardisation in lithium-ion anode chemistry of light passenger EVs:
Graphite heavy anodes within a liquid state battery are used in Tesla and Mercedes Benz EVs today
More silicon heavy anode within a liquid state battery chemistries are the focus of Renault, Nissan, Mitsubishi and Daimler
Silicon heavy anodes within a solid state battery is the type of technology research Volkswagen recently invested in
Other highly contested issues include lithium-ion cathode chemistry (LFP vs. NCM variations vs. NMx/high-MN etc.) and the viability of post lithium-ion technologies (like sodium ion and metal air).
Continued research and development will mature battery chemistry decision making. Engineers and scientists are focused on minimising the trade offs between:
Energy density
Performance (including impedance, temperature sensitivity and lifespan)
Stability of formulation (both by itself and how it reacts with other battery components)
Cost
Safety
Example companies playing in this space
2. Environmental Impact
In order to be a net positive contributor to acting on climate change, minimising the impact of batteries across their full lifecycle is critical.
Figure 2 - Five stages of the battery life cycle
Figure 3 - The lifetime impact of EVs is less than that of internal combustion engine (ICE) vehicles Source: The International Council on Clean Transportation 2019
Raw materials extraction & processing : Battery critical commodities (such as nickel, copper, cobalt, manganese, lithium, graphite, aluminium) are mined. Making sure the suppliers and processors of these mined commodities are complying with best practice environmental protection protocols, not participating in modern slavery practices and providing commodity taceability data is key supply chain risk the battery industry must manage.
Manufacturing: Manufacturing and assembly of components that make batteries is a high emissions activity. Optimising manufacturing plants using digital twins, using renewable energy to power factories and recycling water used within the process are some of the ways to minimise impact.
Usage: The electricity source used to recharge batteries throughout their life heavily influences their overall impact. For example, when it comes to EVs, recharging using 100% renewables sourced energy is ideal, but even a mix of renewable and fossil fuel based energy ensures that an EVs impact is significantly less than traditional internal combustion engine (ICE) vehicles.
Disposal/Recycling: End of life, 2nd life and recycling in the battery industry - which are discussed separately below.
Example companies playing in this space
3. Battery Analytics
Figure 4 - Diagram overviewing the numerous mechanisms that cause battery degradation
Source: Science direct journal: Degradation diagnostics for lithium ion cells, Birkl et. al. 2016
There are many, many mechanisms that cause battery degradation, making it important to monitor battery health for safety reasons. Measuring a batteries health is difficult due to:
Voltage discharge being non-linear and unique to each battery type/chemistry
Battery metrics being hard to measure during usage
Battery performance changing over time - requiring measurement models be regularly updated with new baselining information
Academic researches and dedicated battery analytics companies around the world are working to develop software that can directly measure battery health and/or develop reliable proxies to monitor battery health. Improvement of battery analytics will not only be highly lucrative but will allow the battery industry to:
Remove unsafe batteries before an incident occurs
Maximise the overall 1st life of a battery, and
Open up 2nd life opportunities for a battery before disposal/recycling
Example companies playing in this space
ReJoule
TWAICE
Dynexus Tech
4. End of Life
Commercial batteries are required to be pro-actively retired due to the high risks associated with unplanned battery failures - such as runaway exothermic reactions. Current industry standard considers battery end of life when 80% State of Health (SoH) is reached. The SoH reflects the ratio between the current maximum capacity vs. the batteries capacity when brand new. However, battery aging is a highly variable process, influenced by a number of factors including battery age, usage and charging behaviour, temperature and other environmental factors. Therefore, condition monitoring is required to determine when an 80% SoH is reached.
Monitoring battery condition is difficult because it is not possible to simply measure the remaining capacity to determine SoH. Today, empirical models or lab data are used to create reference materials which predict a batteries SoH at defined working points in various applications. This data is saved in the battery management system and the batteries' end of life is merely predicted by comparison with the stored data.
There is vast opportunity to improve upon battery end of life determination with more proactive methods of identifying aged or damaged batteries. Such predictive maintenance methods can involve simple software upgrades in the battery management system (BMS) or advancing diagnostic technologies such as electrochemical impedance spectroscopy (EIS).
Example companies playing in this space
5. Second Life
Second life batteries refers to the batteries that are repurposed and used in a second application, after it has been deemed unsuitable for its original application. Since the vast majority of battery demand will be for EVs, batteries that retire from this use case are most likely to develop into a second life market.
EV batteries are designed for performance under very demanding circumstances: high operating temperatures, inconsistent discharge rates due to variable usage behaviours, high power requirements for performance vehicles etc. After decades long useful life and degradation such that they no longer meet EV performance requirements, these batteries still remain capable of performing under less-demanding applications, such as for backup power, for grid support functions or for residential storage in tandem with rooftop solar.
Figure 5 - Battery value chain overview including 2nd life and recycling pathways
Source: BCG 2020
There are two key second life challenges:
i. Second life is not an unplug-plug-and-play process
While it is a beautiful image to be able to remove an EV battery and directly mount the pack onto your home’s wall as a solution for backup energy, the reality is not as elegant. Current battery designs do not fundamentally support second life applications. The first step of redirecting end of life batteries away from disposal or recycling and into a second life application, is to determine if the battery is fit for such repurposing. Just like an organ transplant, there needs to be a health check up on the battery. However, the battery analytics to verify performance guarantees for 2nd life applications is not yet mature.
ii. New batteries are getting cheaper
Whether brand new or second life, both categories of battery compete to serve the same purpose – to store energy. New batteries are becoming cheaper as the technologies mature and manufacturing scales. In comparison, the economics for second life batteries are not seeing similar cost reductions as most older batteries are still serving dutifully in their first lives. This restricted supply means that limited quantities are accessible for researchers and companies to use to improve second-life technologies or develop new business models.
Example companies playing in this space
6. Recycling
For batteries that have truly reached their end of life, recycling technologies are available and operational across the world. The battery recycling process extracts valuable rare earth materials, such as Lithium, Cobalt and Nickel, from end of life batteries so that they can then be bought as input materials for new manufacturing.
Recycling challenges
Making recycling of battery materials economical is challenging, for example:
Battery recycling is highly energy intensive and chemistry-specific, making margins slim and opportunities thin
Changes in battery chemistry trends can make existing recycling businesses unprofitable. For example, the declining popularity of cobalt in newer chemistries, replaced by lower value nickel, reduces the overall value of recoverable materials in Li-ion batteries
Batteries today are not designed with recycling in mind. For example, EV battery packs are often sealed tight and glued, making dismantling a highly customised and labour intensive step in the recycling process
Figure 6 - Battery recycling challenges by process step
Source: Circulor Energy Storage 2021
Recycling opportunities
Optimisation and innovation within every stage of the recycling process presents an opportunity to improve the economics of the industry. For example, better collection and discharging methods are being explored that will reduce the high costs of battery logistics that are incurred at the start of the recycling process. At the later stages of material recovery, researchers are seeking cleaner methods of recycling that are based on biological processes to break down and recover battery materials.
Figure 7 - Battery recycling current best practises and emerging innovations by process step
Source: Hans Eric Melin Circulor Energy Storage 2021
Companies playing in this space
7. Talent Pool
The high growth forecasting in the battery industry requires a workforce to match. Attracting existing talent and growing the available talent pool are the key battery talent challenges.
Attracting Existing Talent: Battery Associates & Arvensis Partners research shows attracting talent requires an organisation with a strong purpose and aligned values. Additionally, the ability to demonstrate team/workforce diversity is highly valued. The research also highlighted that the talent pool is fairly passive, requiring recruiters to proactively reach out with opportunities and that talent is highly willing to move so broad geographic searches should be conducted.
Growing Talent: As the battery industry grows, university curricula, for example - in engineering courses, will be adapted to provide more battery specific knowledge. In the meantime reskilling and upskilling personnel via micro-credentials can grow battery talent today. Online courses provided via university Massive Open Online Courses (MOOCs) and private online training companies (e.g. Udacity) deliver basic level knowledge on battery related topics. Additionally, dedicated battery education pathways are also developing - such as the Battery Associates’ cohort based BatteryMBA program. (Full disclosure - both authors have undertaken and highly enjoyed the BatteryMBA!) Ultimately, collaboration with these educational institutions and companies along the battery value chain will also be needed to create bespoke training opportunities matching industry needs.
Retaining Talent: For talent already working in the battery space providing adequate compensation is key. Research found the most likely reason to leave a battery job is for monetary compensation reasons. Conversely, providing training and education opportunities is of high value to talent and increases retention.
About the Authors
Bianca Goebel
Chemical Engineer, Strategy Analyst, Battery Enthusiast
Bianca is an advocate for the protection of future generations. She is passionate about using systems thinking to tackle the world’s most pressing challenges, towards the goal of equity of opportunities. Chartered as a chemical engineer, Bianca has complimented her technical skillset with strategy experience via working at management consulting firm BCG, leadership experience as CEO of a NFP and by completing an MBA - placing within the top 5% of the cohort.
Jia Hong Shaw
Angel investor, Second Life Batteries Researcher, Bicycle Tourer
Jia Hong is writing his MBA thesis on developing a roadmap for a second life battery ecosystem in Singapore. He comes from a background in finance and currently leads an angel investment syndicate that focuses on start-ups contributing to the energy transition and circular economy themes. Jia Hong is a passionate bicycle tourer, having cycled over 3000km across the European continent from London to Romania in 2019. This cycling trip inspired his career pivot into sustainability and renewable energy, and he is excited to do his part in the global energy transition.
The views expressed in this article are those of the authors alone and not Battery Associates.