Supply crunch: exploring the battery crisis

June 2023 | FEATURE | SECTOR ANALYSIS

Financier Worldwide Magazine

June 2023 Issue

Undoubtedly one of the defining manufacturing developments of our time, battery-powered technology is a major disruptor that has, among a raft of technological advancements, empowered global smartphone interconnectivity and supercharged the electric vehicle (EV) market.

Driving the need for such technology is the fact that the world needs more power, and preferably in a form that is clean and renewable. According to the United Nations (UN), around $5.9 trillion was spent on subsidising the fossil fuel industry in 2020 – a clearly unsustainable figure and one that goes a long way toward making the case for battery-powered technology.

Offering the prospect of a future without fossil fuel dependence, battery-powered technology involves the use of sophisticated technologies and materials in the design and production of batteries to enhance their performance, efficiency and durability, as well as the development of innovative charging methods, such as fast and wireless charging.

According to Saft, a battery is a pack of one or more cells, each of which has a positive electrode, a negative electrode, a separator and an electrolyte. Using different chemicals and materials for these affects the properties of the battery – how much energy it can store and output, how much power it can provide, or the number of times it can be discharged and recharged.

In terms of market players, three major battery manufacturers – LG New Energy Solutions, Samsung and SK Innovation – are expanding their battery production capacities, with LG particularly active, having to date invested approximately $13.17bn into the development of advanced battery materials.

Key battery technologies

Battery companies are constantly experimenting to find solutions that are cheaper, denser, lighter and more powerful. There are three battery technologies with transformative potential, according to Saft, as outlined below.

First, new generation lithium-ion batteries. Lithium-ion battery technology allows the highest level of energy density. Furthermore, its advantages include low self-discharge and long lifetime and cycling performances, typically thousands of charging and discharging cycles.

“With reserves for rare materials dwindling, anxiety is growing for battery-reliant businesses such as EV manufacturers, an industry also grappling with a debilitating semiconductor shortage.”

Second, lithium-sulphur batteries. A lithium-sulphur battery uses exceptionally light active materials. This technology also brings high energy density and long life. In terms of implementation, major technology barriers have been overcome and the maturity level is progressing very quickly toward full-scale prototypes.

Lastly, solid state batteries. Solid state batteries represent a paradigm shift in terms of technology. In all-solid state batteries, the key advantage is a marked improvement in safety at cell and battery levels. Moreover, as the batteries can exhibit a high power-to-weight ratio, they may be ideal for use in EVs.

However, despite the existence of these cutting-edge technologies, a lithium-ion supply shortage is contributing to significant delays for battery-powered energy storage projects.

Shortages

Despite bold assertions as to the efficacy of battery-powered technology, the world is currently facing a battery crisis, with a scarcity of raw materials and soaring prices for essential minerals such as lithium and cobalt contributing to a supply crunch.

Indeed, in its 2022 ‘New Energy Outlook’ report, Bloomberg predicted that demand for lithium-ion batteries will rise to as much as 5.9 terawatt-hours a year leading to 2030. The report also notes that higher costs – expected to rise to $152 per kWh this year – could also be problematic for the economics of battery energy storage projects that are vital to stabilising the grid as intermittent renewable power grows.

“The priciest component in each battery is the cathode, the electrode from which a conventional current leaves an electrical device,” asserts Alex Stapleton, sales director at Alexander Battery Technologies. “This is composed of valuable metals such as nickel, lithium, cobalt and manganese. In January 2022, nickel prices spiked as much as 4.4 percent to $22,745 a tonne on the commodities market – a decade-long high.”

In addition, battery experts believe that, with lithium materials likely to face a deficit in the next two to three years, the cost of electric car production – a key component of the drive toward delivering cleaner air, greener urban transport and innovation in the energy sector – could be impacted significantly, since batteries contribute to a significant part of the overall production costs.

Thus, with reserves for rare materials dwindling, anxiety is growing for battery-reliant businesses such as EV manufacturers, an industry also grappling with a debilitating semiconductor shortage.

Solutions

For the moment, it would seem that there is no quick means of resolving the raw materials crisis and resultant battery shortage. That said, one solution is to find other mineral-based alternatives that are more abundant in supply, with the graphene battery a potential source of electric power.

“The battery shortage situation is unlikely to be resolved any time soon,” concludes Mr Stapleton. “The best thing companies can do is create a long-term plan for the entire product supply chain. Affordable alternatives to the ubiquitous lithium-ion battery will become available as big companies pour billions into research and development.”

Fraser Tennant