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1、World Energy Outlook Special ReportBatteries and Secure Energy TransitionsINTERNATIONAL ENERGYAGENCYIEA member countries:Australia Austria BelgiumCanadaCzech Republic DenmarkEstoniaFinland France Germany Greece HungaryIreland ItalyJapanKoreaLithuania Luxembourg Mexico Netherlands New Zealand NorwayP

2、oland Portugal Slovak Republic Spain Sweden Switzerland Republic of Trkiye United Kingdom United StatesThe European Commission also participates in the work of the IEAIEA association countries:Argentina BrazilChinaEgyptIndiaIndonesiaKenyaMoroccoSenegalSingaporeSouth AfricaThailandUkraineThe IEA exam

3、ines the full spectrum of energy issues including oil,gas and coal supply and demand,renewable energy technologies,electricity markets,energy efficiency,access to energy,demand side management and much more.Through its work,the IEA advocates policies that will enhance the reliability,affordability a

4、nd sustainability of energy in its 31 member countries,13 association countries and beyond.This publication and any map included herein are without prejudice to the status of or sovereignty over any territory,to the delimitation of international frontiers and boundaries and to the name of any territ

5、ory,city or area.Source:IEA.International Energy Agency Website:www.iea.orgForeword 3 Foreword At the International Energy Agency(IEA),we monitor and analyse the progress of more than 500 energy technologies on a daily basis,providing valuable insights into the trajectory of the global energy sector

6、.This process supports the development of energy policies and fosters dialogue at the highest levels of policy making.In this new report,we provide an in-depth examination of a technology that is a linchpin in delivering clean energy transitions and protecting energy security.Batteries will be criti

7、cal to achieving the energy goals agreed by nearly 200 countries at the COP28 climate change conference in Dubai,notably tripling renewable energy capacity by 2030,doubling the pace of energy efficiency improvements and transitioning away from fossil fuels.Together with renewables and other clean en

8、ergy solutions,batteries can ensure reliable and abundant supply of electricity to households and businesses throughout the world.Batteries are already the beating heart of our technology-led societies and essential to the devices,such as phones and computers,that are embedded in modern life.Now,as

9、clean energy transitions pick up pace,the role of batteries is expanding significantly,and so too is our reliance on them.Manufacturers are producing batteries for an ever-growing range of consumer and industrial products as demand expands rapidly,from the drivetrains in electric vehicles to utility

10、-scale power storage in our electricity systems.Going forward,I see batteries having a profound impact on two sectors which are key pillars of the global energy transition namely transport and power.Improvements in battery technology combined with rapidly falling costs,mean that electric vehicles in

11、 many parts of the world are increasingly competitive on price with conventional cars.In the power sector,new battery capacity globally has doubled year-on-year,with 2023 setting a new record for installations.Battery costs have declined by 90%in less than 15 years.And today,utility-scale batteries

12、paired with solar PV are already competitive with new coal in some countries like India and,in the next few years,will be with new natural gas in the United States and new coal in China.Reducing emissions and getting on track to meet international energy and climate targets will hinge on whether the

13、 world can scale up batteries fast enough.More than half the job that we need to do will rely,at least in some part,on battery deployment.Our analysis shows that energy storage more broadly will need to increase sixfold by 2030 to help meet the goals set at COP28,a target that will be met almost exc

14、lusively by batteries.Yet,obstacles to progress remain.Costs must continue to come down to drive further uptake across a wide range of sectors.Battery manufacturing capacity has more than tripled in the last three years,but it remains too concentrated in only a few countries,as does the extraction a

15、nd processing of the critical minerals on which it relies.However,the good news is that new chemistries for batteries will help reduce over-reliance on only a handful of key ingredients,and improving the recycling of raw materials will in time limit the need for new critical minerals supplies.IEA.CC

16、 BY 4.0.4 International Energy Agency|Batteries and Secure Energy Transitions Governments have an important part to play in building out resilient local and international supply chains to ensure that securely and sustainably produced batteries come to market at a reasonable cost.Legislation such as

17、the Inflation Reduction Act in the United States,the Net Zero Industry Act in the European Union and the Production Linked Incentive in India are good examples of how policy can affect real change in industry by backing technology manufacturing.But supportive policies are also needed to help speed u

18、p deployment by minimising barriers to market entry for developers and reducing red tape that can often stifle new projects.I would like to thank the IEA colleagues who worked on this special report on Batteries and Secure Energy Transitions for their excellent and insightful analysis under the lead

19、ership of Laura Cozzi,Director of Sustainability,Technology and Outlooks,and lead authors Brent Wanner and Apostolos Petropoulos.The report is the first ever comprehensive assessment of the state of play across the entire battery ecosystem.It details what needs to be done to fully leverage this tech

20、nology to address the worlds energy and climate challenge.If electricity is the future,batteries will charge us towards it.Dr Fatih Birol Executive Director International Energy Agency IEA.CC BY 4.0.Acknowledgements 5 Acknowledgements This study was prepared by the Directorate of Sustainability,Tech

21、nology and Outlooks in co-operation with other directorates and offices of the International Energy Agency(IEA).The study was designed and directed by Laura Cozzi,Director,Sustainability,Technology and Outlooks.The lead authors and co-ordinators of the analysis were Apostolos Petropoulos and Brent W

22、anner.Principal IEA authors of the report were:Oskaras Alauskas(lead on transport),Yunyou Chen(power),Julie Dallard(power,flexibility),Amrita Dasgupta(lead on critical minerals,transport),Shobhan Dhir(battery chemistries,supply chain),Michael Drtil(power),Musa Erdogan(investment),Eric Fabozzi(power)

23、,David Fischer(lead on investment),Vincenzo Franza(Clean Energy Ministerial),Yun Young Kim(critical minerals),Teo Lombardo(battery chemistries,supply chain),Vera ORiordan(transport),Camille Paillard(flexibility,policies),Alessio Pastore(power),Nikolaos Papastefanakis(power),Max Schoenfisch(lead on p

24、ower,flexibility),Leonie Staas(transport),Ryota Taniguchi(lead on policies),Gianluca Tonolo(lead on energy access),Anthony Vautrin(demand-side response)and Ginevra Vittoria(transport).Other key contributors were:Mohini Bariya,Blandine Barreau,Eric Buisson,Olivia Chen,Davide DAmbrosio,Nouhoun Diarra,

25、Vincent Minier,Gabriel Saive,Oskar Schickhofer and Thomas Spencer.Marina Dos Santos and Reka Koczka provided essential support.Edmund Hosker carried editorial responsibility.Debra Justus was the copy-editor.Valuable comments and feedback were provided by other senior management and numerous other co

26、lleagues within the IEA.In particular Tim Gould,Timur Gl and Brian Motherway,as well as Heymi Bahar,Stphanie Bouckaert,Paolo Frankl,Ilkka Hannula,Dennis Hesseling,Pablo Hevia-Koch,Tae-Yoon Kim,Christophe McGlade,Araceli Fernandez Pales,Brendan Reidenbach,and Jean-Franois Gagn(Clean Energy Ministeria

27、l).A high-level workshop was held at IEA headquarters in Paris on 27 February 2024,with more than 100 representatives from governments,industry including battery and vehicle manufacturers,finance and academia.Participants from over 20 countries and regions provided valuable insights and feedback for

28、 this report.Thanks go to the IEA Communications and Digital Office for their help in producing the report and website materials,particularly to Jethro Mullen,Poeli Bojorquez,Curtis Brainard,Jon Custer,Hortense de Roffignac,Astrid Dumond,Merve Erdil,Grace Gordon,Julia Horowitz,Oliver Joy,Isabelle No

29、nain-Semelin,Robert Stone,Sam Tarling,Clara Vallois,Therese Walsh and Wonjik Yang.IEA Office of the Legal Counsel,Office of Management and Administration and Energy Data Centre provided assistance throughout the preparation of the report.IEA.CC BY 4.0.6 International Energy Agency|Batteries and Secu

30、re Energy Transitions Many high-level government representatives and international experts from outside of the IEA have contributed to the process,from early consultations to reviewing the draft at a later stage,and their comments and suggestions were of great value.They include:Philippe Adam CIGRE

31、Ali Al-Saffar The Rockefeller Foundation Alessandra Amaral Asociacin de Distribuidoras de Energa Elctrica Latinoamericanas Arina Anisie International Renewable Energy Agency Suresh Babu Department of Science and Technology,Government of India Christopher Baker-Brian Bboxx Natalia Baudry Commission d

32、e rgulation de lnergie Harmeet Bawa Hitachi Energy Mark Beveridge Benchmark Mineral Intelligence Mridula Bhardwaj International Solar Alliance Philippe Biensan Automotive Cells Company Tord Bjrndal rsted Edward Borgstein Global Energy Alliance for People and Planet Randolph Brazier HSBC Klaas Burgdo

33、rf Swedish Energy Agency Anthony Burrell National Renewable Energy Laboratory Sandra Choy Department of Climate Change,Energy,the Environment and Water,Government of Australia William Chueh Stanford University Giuseppe Cicerani Enel Green Power Patrick Clerens European Association for Storage of Ene

34、rgy Marina Colombo World Economic Forum Vincenzo Conforti Glencore Jon Creyts RMI Brian Cunningham US Department of Energy Frank Daufenbach Umicore Gabriele Davies Crossboundary Romain Desrousseaux Neoen Chris Doornbos E3 Lithium Arnaud Dubief Hydrovolt Thomas Duveau Access to Energy Institute Thoma

35、s Fssler Technical University of Munich Ccile Fournier Renault Group Naohide Fuwa Toyota Motor Europe IEA.CC BY 4.0.Acknowledgements 7 Maurizio Gastaldi Syensqo Begna Gebreyes Africa Finance Corporation Daniel Gheno Schneider Electric Craig Glazer PJM Interconnection Pilar Gonzalez Iberdrola Andr Gr

36、onke Farasis Energy Europe Raphael Guiollot Engie Access Afnan Hannan Okra Solar John Keane Solar Aid Sam Khouzami Microsoft Andreas Klein Northvolt Vasiliki Klonari WindEurope Artur Kopijkowski-Gouch Polskie Sieci Elektroenergetyczne Takanori Kumagai Toyota Motor Corporation Xiao Lin Botree Recycli

37、ng Technologies Michael Lippert SAFT Leon Liu BYD Philippe Loiseau Boralex Todd Malan Talon Metals Yasuo Matsuura Kansai Transmission and Distribution Lo Mauger Akuo Energy Oscar Miguel CIDETEC Nikhil Murarka Husk Power Systems Laura Nichol Natural Resources Canada Kentaro Oe Ministry of Economy,Tra

38、de and Industry,Japan Stig Olav Settemsdal Siemens Energy Ines Pan Power for All Carolina Demetrios Papathanasiou World Bank Brian Perusse Fluence Nico Peterschmidt INENSUS Inga Petersen Global Battery Alliance Paula Pinho Directorate General for Energy,European Commission Sharif Qamar The Energy an

39、d Resources Institute Julia Reinaud Breakthrough Energy Oliver Reynolds GOGLA Veli-Pekka Saajo Council of European Energy Regulators Eugenio Santacatterina Midac Batteries IEA.CC BY 4.0.8 International Energy Agency|Batteries and Secure Energy Transitions Tsuyoshi Sasaki Toyota Central Research&Deve

40、lopment Laboratory Dirk Uwe Sauer RWTH Aachen University Thore Sekkenes European Battery Alliance Vera Silva GE Grid Solutions Mikkel Srensen Danish Energy Agency Julia Souder Long Duration Energy Storage Council Iain Staffell Imperial College London Evelina Stoikou BloombergNEF Kieron Stopforth Kra

41、kenFlex Richard Storrie Li-Cycle Cdric Thoma Tesla Tali Trigg European Bank for Reconstruction and Development Winfried Wahl Hithium Energy Storage Soichiro Watanabe Panasonic Energy Claus Wattendrup Vattenfall Charles Weymuller EDF Urban Windelen Energy Storage Systems Association Akiyuki Yonekawa

42、Honda Motor Liu Ziyu CATL The work reflects the views of the International Energy Agency Secretariat,but does not necessarily reflect those of individual IEA member countries or of any particular funder,supporter or collaborator.None of the IEA or any funder,supporter or collaborator that contribute

43、d to this work makes any representation or warranty,express or implied,in respect of the works contents(including its completeness or accuracy)and shall not be responsible for any use of,or reliance on,the work.This report and any map included herein are without prejudice to the status of or soverei

44、gnty over any territory,to the delimitation of international frontiers and boundaries and to the name of any territory,city or area.Comments and questions are welcome and should be addressed to:Laura Cozzi Directorate of Sustainability,Technology and Outlooks International Energy Agency 9,rue de la

45、Fdration 75739 Paris Cedex 15 France E-mail:weoiea.org IEA.CC BY 4.0.Table of Contents 9 Table of Contents Foreword.3 Acknowledgements.5 Executive summary.11 Status of battery demand and supply 17 1.1 Introduction.18 1.1.1 Batteries and secure energy transitions.18 1.1.2 Battery use in the energy se

46、ctor.20 1.1.3 Recent developments in battery costs.21 1.2 Battery use in electric vehicles.22 1.2.1 Leading EV markets.23 1.2.2 EV battery chemistry.25 1.2.3 Navigating bottlenecks:Policy and infrastructure challenges.28 1.2.4 Policy support for EV batteries.29 1.2.5 Opportunities related to the exp

47、anding battery market.31 1.3 Battery use in the power sector.32 1.3.1 Batteries have multiple roles in power systems.35 1.3.2 Batteries facilitate access to electricity.42 1.3.3 Battery chemistry for storage applications.45 1.3.4 Policy support for battery storage.47 1.3.5 Regulatory barriers to bat

48、tery storage.51 1.4 Investment in batteries.53 1.4.1 Investment by sector and location.53 1.4.2 Venture capital investment in battery start-ups.55 1.5 Global battery supply chain.57 1.5.1 Lithium-ion battery manufacturing.60 1.5.2 Critical minerals in batteries.61 1.5.3 Risks in the critical mineral

49、s supply chain and price volatility.63 1.5.4 Direct investment in critical minerals by battery and EV producers.64 Outlook for battery demand and supply 67 2.1 COP28 commitments and the role of batteries.68 2.2 Outlook for EV batteries.73 2.2.1 Regional outlook for EV batteries.76 2.2.2 What type of

50、 batteries will power future EV fleets?.77 1 2 IEA.CC BY 4.0.10 International Energy Agency|Batteries and Secure Energy Transitions 2.2.3 Innovation in battery technology beyond 2030.80 2.2.4 Evolving relationship between EVs and electricity networks.82 2.3 Outlook for battery storage in the power s

51、ector.86 2.3.1 Regional outlook for battery storage.87 2.3.2 The evolution of the chemistry mix.91 2.3.3 Role of battery storage.92 2.3.4 Costs and competitiveness of utility-scale battery storage.98 2.3.5 Behind-the-meter battery storage.103 2.3.6 Battery storage to achieve universal access to elec

52、tricity.106 2.4 Investment outlook for batteries.110 2.4.1 Global and regional investment outlook.110 2.4.2 Risks to scaling batteries investment.111 2.5 Battery supply chain.112 2.5.1 Future plans for battery manufacturing.112 2.5.2 Rising demand of critical minerals for batteries.116 Policy implic

53、ations and recommendations 121 3.1 Introduction.122 3.2 Electric vehicles.123 3.2.1 Expanding EV adoption beyond key markets.123 3.2.2 Impact of average battery pack size on future demand.124 3.2.3 Electric vehicles and power systems.125 3.3 Power.126 3.3.1 Risks of delayed battery storage expansion

54、.126 3.3.2 Utility-scale battery storage.130 3.3.3 Behind-the-meter battery storage.132 3.3.4 Energy access.132 3.4 Investment in batteries.133 3.5 Manufacturing and supply chains.134 3.5.1 Developing resilient,sustainable and affordable supply chains.134 3.5.2 Ensuring secure,reliable and resilient

55、 critical minerals supplies.135 Annexes Annex A.Definitions.141 Annex B.References.153 3 IEA.CC BY 4.0.Executive Summary 11 Executive Summary Batteries are an essential part of the global energy system today and the fastest growing energy technology on the market Battery storage in the power sector

56、was the fastest growing energy technology in 2023 that was commercially available,with deployment more than doubling year-on-year.Strong growth occurred for utility-scale battery projects,behind-the-meter batteries,mini-grids and solar home systems for electricity access,adding a total of 42 GW of b

57、attery storage capacity globally.Electric vehicle(EV)battery deployment increased by 40%in 2023,with 14 million new electric cars,accounting for the vast majority of batteries used in the energy sector.Despite the continuing use of lithium-ion batteries in billions of personal devices in the world,t

58、he energy sector now accounts for over 90%of annual lithium-ion battery demand.This is up from 50%for the energy sector in 2016,when the total lithium-ion battery market was 10-times smaller.With falling costs and improving performance,lithium-ion batteries have become a cornerstone of modern econom

59、ies,underpinning the proliferation of personal electronic devices,including smart phones,as well the growth in the energy sector.In 2023,there were nearly 45 million EVs on the road including cars,buses and trucks and over 85 GW of battery storage in use in the power sector globally.Lithium-ion batt

60、eries dominate battery use due to recent cost reductions and performance improvements Lithium-ion batteries have outclassed alternatives over the last decade,thanks to 90%cost reductions since 2010,higher energy densities and longer lifetimes.Lithium-ion battery prices have declined from USD 1 400 p

61、er kilowatt-hour in 2010 to less than USD 140 per kilowatt-hour in 2023,one of the fastest cost declines of any energy technology ever,as a result of progress in research and development and economies of scale in manufacturing.They have also achieved much higher energy densities than lead acid batte

62、ries,allowing them to be stacked in much lighter and more compact battery packs.Lithium-ion batteries dominate both EV and storage applications,and chemistries can be adapted to mineral availability and price,demonstrated by the market share for lithium iron phosphate(LFP)batteries rising to 40%of E

63、V sales and 80%of new battery storage in 2023.Lithium-ion chemistries represent nearly all batteries in EVs and new storage applications today.For new EV sales,over half of batteries use chemistries with relatively high nickel content that gives them higher energy densities.LFP batteries account for

64、 the remaining EV market share and are a lower-cost,less-dense lithium-ion chemistry that does not contain nickel or cobalt,with even lower flammability and a longer lifetime.While energy density is of utmost importance for EV batteries,it is less critical for battery storage,leading to a significan

65、t shift towards LFP batteries.IEA.CC BY 4.0.12 International Energy Agency|Batteries and Secure Energy Transitions Policy support has given a boost for batteries deployment in many markets but the supply chain for batteries is very concentrated Strong government support for the rollout of EVs and in

66、centives for battery storage are expanding markets for batteries around the world.China is currently the worlds largest market for batteries and accounts for over half of all battery in use in the energy sector today.The European Union is the next largest market followed by the United States,with sm

67、aller markets also in the United Kingdom,Korea and Japan.Battery use is also growing in emerging market and developing economies outside China,including in Africa,where close to 400 million people gain access through decentralised solutions such as solar home systems and mini-grids with batteries in

68、 order to achieve universal access by 2030.While the global battery supply chain is complex,every step in it from the extraction of mineral ores to the use of high-grade chemicals for the manufacture of battery components in the final battery pack has a high degree of geographic concentration.Batter

69、y manufacturers are dependent on a small number of countries for the raw material supply and extraction of many critical minerals.China undertakes well over half of global raw material processing for lithium and cobalt and has almost 85%of global battery cell production capacity.Europe,the United St

70、ates and Korea each hold 10%or less of the supply chain for some battery metals and cells today.Achieving COP28 targets will hinge on battery deployment increasing sevenfold by 2030 Batteries are key to the transition away from fossil fuels and accelerate the pace of energy efficiency through electr

71、ification and greater use of renewables in power.In transport,a growing fleet of EVs on the road displaces the need for 8 million barrels of oil per day by 2030 in the Net Zero Emissions by 2050(NZE)Scenario,more than the entire oil consumption for road transport in Europe today.In the power sector,

72、battery storage supports transitions away from unabated coal and natural gas,while increasing the efficiency of power systems by reducing losses and congestion in electricity grids.In other sectors,clean electrification enabled by batteries is critical to reduce the use of oil,natural gas and coal.T

73、o triple global renewable energy capacity by 2030 while maintaining electricity security,energy storage needs to increase six-times.To facilitate the rapid uptake of new solar PV and wind,global energy storage capacity increases to 1 500 GW by 2030 in the NZE Scenario,which meets the Paris Agreement

74、 target of limiting global average temperature increases to 1.5 C or less in 2100.Battery storage delivers 90%of that growth,rising 14-fold to 1 200 GW by 2030,complemented by pumped storage,compressed air and flywheels.To deliver this,battery storage deployment must continue to increase by an avera

75、ge of 25%per year to 2030,which will require action from policy makers and industry,taking advantage of the fact that battery storage can be built in a matter of months and in most locations.In the NZE Scenario,about 60%of the CO2 emissions reductions in 2030 in the energy sector are associated with

76、 batteries,making them a critical element to meeting our shared IEA.CC BY 4.0.Executive Summary 13 climate goals.Close to 20%are directly linked to batteries in EVs and battery-enabled solar PV.Another 40%of emissions reductions are from electrification of end-uses and renewables that are indirectly

77、 facilitated by batteries.Batteries bolster multiple aspects of energy security Battery storage helps to strengthen electricity security in all markets.As the nature of electricity demand and supply changes,with more electrification and more variable generation from wind and solar PV,battery storage

78、 is well placed to provide short-term flexibility for periods of 1-8 hours continuously,and thus to help power system operators ensure there is enough supply to meet peak demands.Its fast and accurate responses to market signals,in a matter of seconds,make battery storage ideal for providing support

79、 for grid stability,and it is already being used for this purpose in many markets.Battery storage can also serve as critical back-up generators in case of grid outages or emergencies,ensuring uninterrupted power supplies to critical facilities such as hospitals,emergency response centres and infrast

80、ructure like grid substations and communication networks.Batteries in EVs and storage installations reduce the need for imported fossil fuels,increasing self-sufficiency in many countries.EVs reduce the need for oil imports in many countries,including China,Europe,India,Japan and Korea.The need for

81、natural gas and coal imports is reduced directly by battery-enabled renewables displacing natural gas-fired and coal-fired power,and indirectly by the electrification of industry and buildings where the use of electricity replaces fossil fuels.Further cost declines for batteries improve their afford

82、ability in all applications and make them a cost-effective part of energy systems Further innovation in battery chemistries and manufacturing is projected to reduce global average lithium-ion battery costs by a further 40%from 2023 to 2030 and bring sodium-ion batteries to the market.In the NZE Scen

83、ario,lithium-ion chemistries continue providing the vast majority of EV batteries to 2030.Further innovation both reduces the upfront costs of lithium-ion batteries and brings about additional improvements in their performance,notably in the form of higher energy densities and longer useful life.Sod

84、ium-ion batteries provide less than 10%of EV batteries to 2030 and make up a growing share of the batteries used for energy storage because they use less expensive materials and do not use lithium,resulting in production costs that can be 30%less than LFP batteries.Beyond 2030,battery costs are like

85、ly to decline further,and solid-state batteries are on track to be commercially available,with the potential to bring massive performance gains.Solar PV plus batteries is competitive today with new coal-fired power in India and,in the next couple years,become competitive with new coal in China and n

86、ew natural gas-fired power in the United States.Even in the Stated Policies Scenario(STEPS),which is based on todays policy settings,the total upfront costs of utility-scale battery storage projects including the battery plus installation,other components and developer costs are projected IEA.CC BY

87、4.0.14 International Energy Agency|Batteries and Secure Energy Transitions to decline by 40%by 2030.This makes stand-alone battery storage more competitive with natural gas peaker plants,and battery storage paired with solar PV one of the most competitive new sources of electricity.The amount of bat

88、tery storage capacity added to 2030 in the STEPS is set to be more than the total fossil fuel capacity added over the period.A significant part is behind-the-meter battery storage paired with rooftop solar PV,including many individual batteries aggregated into virtual power plants,as it becomes an i

89、ncreasingly attractive option for consumers in a world of broadly stable or rising retail electricity prices.For electricity access,the average electricity costs of mini-grids with solar PV and batteries halve by 2030.Falling battery costs are set to raise the share of cost-competitive electric cars

90、 in the market from around 50%today.Currently,the least expensive EV models are available in China,with lower sticker prices than comparable gasoline or diesel cars.In advanced economies,there is still a price gap for electric cars that takes years to recover through lower fuel and maintenance costs

91、.Battery price cuts and intense competition among car makers are set to make more types of EVs in more markets competitive.A growing number of EVs will have lower sticker prices than gasoline or diesel cars directly,and many others will cost slightly more to buy but save money for consumers over a f

92、ew years.Scaling up the global battery market creates new opportunities for diversifying supply chains The global market value of batteries quadruples by 2030 on the path to net zero emissions.Currently the global value of battery packs in EVs and storage applications is USD 120 billion,rising to ne

93、arly USD 500 billion in 2030 in the NZE Scenario.Even with todays policy settings,the battery market is set to expand to a total value of USD 330 billion in 2030.Booming markets for batteries are attracting new sources of financing,including around USD 6 billion in battery start-ups from venture cap

94、ital in 2023 alone.Batteries are a“master key”that can unlock several much bigger transformations and much bigger industrial prizes.The global car market is valued at USD 4 trillion today,and leadership in it will depend on battery technology.Batteries also support more wind and solar PV,which captu

95、re USD 6 trillion in investment in the NZE Scenario from 2024 to 2030,by balancing out their variations and stabilising the grid.Battery manufacturing is a dynamic industry and scaling it up creates opportunities to diversify battery supply chains.Battery manufacturing capacity is set to expand rapi

96、dly and,if all announced plants are built on time,would be practically sufficient to meet the battery requirements of the NZE Scenario in 2030.While China is set to expand its battery manufacturing significantly,announced plans imply that its share of the global market will decrease to about two-thi

97、rds of the global total in 2030 as other regions scale up.Both Europe and North America have announced plans to boost their domestic battery manufacturing capacity,each set to grow their market share to about 15%in 2030 and able to provide almost all their domestic demands for batteries.IEA.CC BY 4.

98、0.Executive Summary 15 There are important risks for batteries that could hinder their growth and contributions to energy transitions,energy security and affordability Scaling up critical minerals supply in time to meet rising needs is essential to the success of batteries and requires action to add

99、ress policy and regulatory barriers.In the NZE Scenario,demand for critical minerals for batteries expands rapidly by 2030,with manganese,lithium,graphite and nickel increasing at least sixfold,and cobalt more than tripling.While this requires new mining and refining,innovation on chemistries,enhanc

100、ed recycling and“right-sizing”of batteries can cut demand for critical minerals by about 25%by 2030.Failing to scale up battery storage in line with the tripling of renewables by 2030 would risk stalling clean energy transitions in the power sector.In a Low Battery Case,the uptake of solar PV in par

101、ticular is slowed down,putting at risk close to 500 GW of the solar PV needed to triple renewable capacity by 2030(20%of the gap for renewables capacity between the STEPS and NZE Scenario).If other low emission sources were not able to replace the lost solar PV,emissions reductions in the power sect

102、or would stall in the 2030s,putting the target of limiting the global average temperature rise to 1.5 C out of reach.The Low Battery Case would lead to prolonged use of coal and natural gas in the power sector and raise fuel import bills.Analysis indicates that import bills would be an average of US

103、D 12.5 billion more per year from 2030 to 2050 in importing countries,with Europe and Korea as most exposed to this risk for natural gas imports and India for coal imports.Recommendations for batteries to fulfil their roles For batteries to scale up as necessary to support ambitious clean energy tra

104、nsitions,policy makers and regulators need to take action to support their deployment and minimise barriers and bottlenecks.Policy and regulatory frameworks need to ensure that batteries are able to participate in markets and are remunerated appropriately for the services they provide to the power s

105、ystem.The large-scale adoption of EVs calls for wider availability of affordable models and the rollout of charging infrastructure.Promoting smart charging will be vital to integrate rising numbers of EVs into power systems and reduce the need for grid reinforcements.Policy makers and regulators nee

106、d to work with national and international partners and with industry to support the development of battery supply chains that are secure,resilient and sustainable.Building supply chains requires a comprehensive approach that encompasses all stages from raw material extraction,refining and manufactur

107、ing through to end-of-life product management and recycling,minimising their carbon footprint.Battery recycling has the potential to be a significant secondary source of supply of critical minerals that is more sustainable and less geographically concentrated than primary supply.Targeted policies su

108、ch as minimum recycled content requirements and tradeable recycling credits can foster its growth in the short term,especially if international standards can be established.IEA.CC BY 4.0.Chapter 1|Battery demand and supply 17 Chapter 1 Status of battery demand and supply A century of development und

109、erpinning rapid growth Batteries are an important part of the global energy system today and are poised to play a critical role in secure and affordable clean energy transitions.In the transport sector,they are the essential component in the millions of electric vehicles(EVs)sold each year.In the po

110、wer sector,they are becoming increasingly important in utility-scale and behind-the-meter applications as their costs fall and as the share of electricity generated by solar and wind rises.Average battery costs have fallen by 90%since 2010 due to advances in battery chemistry and manufacturing.Today

111、 lithium-ion batteries are a cornerstone of modern economies having revolutionised electronic devices and electric mobility,and are gaining traction in power systems.Yet,new battery chemistries being developed may pose a challenge to the dominance of lithium-ion batteries in the years ahead.The tota

112、l volume of batteries used in the energy sector was over 2 400 gigawatt-hours(GWh)in 2023,a fourfold increase from 2020.In the past five years,over 2 000 GWh of lithium-ion battery capacity has been added worldwide,powering 40 million electric vehicles and thousands of battery storage projects.EVs a

113、ccounted for over 90%of battery use in the energy sector,with annual volumes hitting a record of more than 750 GWh in 2023 mostly for passenger cars.Battery storage capacity in the power sector is expanding rapidly.Over 40 gigawatt(GW)was added in 2023,double the previous years increase,split betwee

114、n utility-scale projects(65%)and behind-the-meter systems(35%).Battery storage has many uses in power systems:it provides short-term energy shifting,delivers ancillary services,alleviates grid congestion and provides a means to expand access to electricity.Governments are boosting policy support for

115、 battery storage with more targets,financial subsidies and reforms to improve market access.Global investment in EV batteries has surged eightfold since 2018 and fivefold for battery storage,rising to a total of USD 150 billion in 2023.About USD 115 billion the lions share was for EV batteries,with

116、China,Europe and the United States together accounting for over 90%of the total.China dominates the battery supply chain with nearly 85%of global battery cell production capacity and substantial shares in cathode and anode active material production.The extraction and processing of critical minerals

117、 is also highly concentrated geographically,with China in the lead in processing the most critical minerals.Battery minerals prices have been volatile in recent years,rising steeply in 2021 and 2022 before falling sharply in 2023 and in the early months of 2024.This underlines the need for more inve

118、stment and diversification as the market expands.S U M M A R Y IEA.CC BY 4.0.18 International Energy Agency|Batteries and Secure Energy Transitions 1.1 Introduction Batteries have found a wide range of uses since they were first introduced over a century ago,and in recent years have become increasin

119、gly important in both the transport and power sector.Their average costs fell by 90%from 2010 to 2023,while improving their performance characteristics including higher energy densities1 and longer cycle life.2 As a result,batteries are now well placed to play an important part in transitioning to l

120、ow-emissions energy systems.In the power sector,energy storage in general and battery storage in particular helps to maintain electricity security by supporting grid stability,helping to meet peak load and improving integration of rising shares of variable renewables.To ensure a stable and reliable

121、power supply,electricity demand and electricity generation need to be in equilibrium at all times.Historically,conventional sources of electricity including coal and natural gas have operated flexibly,adapting their output to match demand.Energy storage,in the form of hydropower with reservoirs,has

122、long been a part of many power systems and supports electricity security by providing a buffer between available electricity supply from other sources and demand.Recently,batteries have emerged as another practicable way to store energy.Declining costs of batteries have made them a competitive sourc

123、e of flexibility in many parts of the world in stand-alone applications as well as when paired with solar photovoltaics(PV)or wind power.In the automotive industry,a shift to electric vehicles(EVs)3 is increasingly seen by governments and manufacturers as having an essential role to reduce air pollu

124、tion and greenhouse-gas(GHG)emissions.This transition entails a transformation of the traditional automotive supply chain because EVs require fewer moving parts than cars using internal combustion engines(ICEs)and depend critically on their battery pack.As a result,industries that traditionally were

125、 not closely linked are increasingly working together.For example,many vehicle manufacturers are entering into joint ventures with battery producers and component manufacturers and securing offtake agreements with mining companies or with battery material suppliers.As well,utilities are collaboratin

126、g with auto makers and battery manufacturers to identify potential synergies.1.1.1 Batteries and secure energy transitions Batteries are a desirable feature of the energy landscape,and they are set to play an essential role in providing stability and flexibility in power systems as variable renewabl

127、es scale up.Plus,batteries are at the heart of the shift to EVs which is rapidly gaining ground.Given that the power and transport sectors currently account for over 60%of global energy-related 1 Energy density is a measure of the amount of energy that a battery can store relative to its weight or v

128、olume.2 The cycle life of batteries is the number of charge and discharge cycles that it can complete before losing performance.3 Electric vehicle includes battery electric and plug-in electric vehicles.IEA.CC BY 4.0.Chapter 1|Battery demand and supply 19 1 carbon dioxide(CO2)emissions,means that th

129、ey have a crucial part to play in helping countries to fulfil commitments made at the 28th Conference of Parties of the United Nations Framework Convention on Climate Change in December 2023.Those pledges include tripling global renewable energy capacity by 2030,doubling the rate of energy efficienc

130、y improvements,and facilitating the transition away from fossil fuels.Batteries have an essential role to support of the goal of tripling the installed capacity of renewables worldwide.By facilitating the integration of rising shares of solar and wind generation by providing energy storage,batteries

131、 help to reduce the use of coal and natural gas,and to promote faster electrification and increased use of electricity in heating and cooling,and in industry.They also support the transition away from fossil fuels as rising numbers of EVs reduce the demand for oil products.Batteries also play a crit

132、ical role to enhance energy security.By helping to reduce fossil fuel demand in multiple sectors,they cut fossil fuel requirements in importing countries,thus increasing their level of domestic energy independence.Batteries also support stability and resilience of electricity grids,offer a way to pr

133、ovide backup power for homes,businesses and services(including hospitals and other critical infrastructure).Batteries can also provide critical service in the case of emergencies caused by extreme weather or other disruptions.Expanding electromobility brings with it a new era where the traditionally

134、 separate sectors of power and transport increasingly interact.Rising EV use increases demand for electricity,but the interactions go beyond that:advances in batteries for EVs have spill-over effects that benefit batteries used for storage applications,while the rising number of EVs offers potential

135、 for demand-side management in the power sector.Battery use is significantly expanding across the energy sector,with new highs in EV sales and record levels of additions of battery storage in the power sector.One-in-five cars sold worldwide today is electric,and an increasing number of solar and win

136、d power projects are paired with batteries.Announced new battery cell manufacturing facilities worldwide are many.Global scaling up of battery production offers numerous opportunities across the supply chain.However,it also brings a number of challenges,a high geographical concentration of required

137、critical minerals,a need for recycling and re-purposing facilities,and needs to tackle regulatory and policy barriers.This decade is crucial to scale up battery cell and material production by ensuring the availability of machinery and production equipment,as well as to establish effective regulator

138、y and policy frameworks to ensure a sustainable and equitable transition.The shift from a fossil fuel-based energy system to one reliant on renewable energy and other low-emissions sources will boost demand for energy storage,and thus for batteries and the critical minerals required.This requires ca

139、reful planning,international collaboration,diversification of critical minerals supply and the adoption of sustainable practices across the entire battery supply chain.Governments,vehicle manufacturers,battery makers,mining companies,recycling firms,utilities and grid operators all need to work coll

140、aboratively to address the challenges.IEA.CC BY 4.0.20 International Energy Agency|Batteries and Secure Energy Transitions 1.1.2 Battery use in the energy sector The volume of battery use in the energy sector was over 2 400 gigawatt-hours(GWh)in 2023 a fourfold increase since 2020.More than 2 000 GW

141、h of lithium-ion battery volume has been added over the last five years,powering over 40 million electric vehicles and thousands of battery storage projects(Figure 1.1).Figure 1.1 Lithium-ion battery volumes in use by type of application in the global energy sector,2015-2023 IEA.CC BY 4.0.Lithium-io

142、n battery volumes in use have surged over the last three years to 2 400 GWh Note:GWh=gigawatt-hours.Increased demand for lithium-ion battery volumes stems from higher EV penetration,with EVs accounting for over 90%of the increase from 2015 to 2023.Strong uptake of EVs is supported by a variety of fu

143、el economy targets,CO2 standards,financial incentives and EV mandates.The deployment of battery storage in power systems is also accelerating,with a focus on grid stability,backup systems and the continued expansion of variable solar PV and wind generation.The global market for battery storage doubl

144、ed in 2023,reaching over 90 GWh and increasing the volume of battery storage in use to more than 190 GWh.Most growth in battery storage is from utility-scale systems,while behind-the-meter battery storage accounts for 35%of annual growth in 2023.Off-grid battery storage is currently at much lower vo

145、lumes.Battery storage of all sizes is well-suited to providing short-term flexibility shifting energy across seconds,minutes or a few hours but can provide a broader range of services to power systems.These include ancillary and reserve services,provision of system adequacy and congestion management

146、 in transmission and distribution systems.Financial incentives,including tax credits and grants,as well as requirements to pair storage with new solar or wind projects are also driving deployment.The increase in behind-the-meter battery storage is concentrated geographically,with support measures an

147、d relatively high electricity prices driving the uptake in leading markets such as Australia,Germany,Japan and parts of the 5001 0001 5002 0002 500201520162017201820192020202120222023Off-gridBehind-the-meterUtility scaleElectric vehiclesGWhIEA.CC BY 4.0.Chapter 1|Battery demand and supply 21 1 Unite

148、d States.Battery storage is one of several energy storage technologies used in the power sector,with pumped hydro being the largest by far.Compressed air energy storage,flywheels and thermal storage are also gaining traction in several markets.1.1.3 Recent developments in battery costs The past deca

149、de can be seen as the era of the lithium-ion battery.Its fundamental advantage over older alternatives such as lead acid or nickel cadmium batteries is their much higher energy density and longer cycle life.While lead acid batteries have specific energies(energy stored per unit of weight)in the rang

150、e of 35 to 40 watt-hours per kilogramme(Wh/kg),lithium-ion batteries today have a demonstrated range of specific energies around 90-300 Wh/kg at the cell level.With their higher energy density,lithium-ion batteries can be stacked into much lighter and more compact battery packs.A lithium-ion cell ha

151、s four main components:cathode,anode,electrolyte and separator.The cathode and anode store lithium ions,from which the technology derives its name.The primary function of separator is to prevent short circuits,while the electrolyte facilitates the movement of lithium ions from the cathode to the ano

152、de during the charging mode and vice versa during the discharging mode.Today there are several varieties of lithium-ion batteries,and they continue to evolve as the result of research and development(R&D)to improve energy densities,charging times,safety and lifetime use while also cutting costs.Toda

153、y 90%of lithium-ion batteries in use are for electrification in the transport sector.Batteries for EVs must be energy dense,small and light.Battery storage,by contrast,does not have such strict requirements for size and weight,but instead prioritises low costs and durability.Trends from the automoti

154、ve industry have often transferred to the power sector,and improvements in EV batteries could significantly benefit batteries used for storage,whereas the converse may not necessarily be true.However,both sectors are looking to minimise the carbon footprint of their battery use and to maximise oppor

155、tunities for battery reuse and recycling.For example,EV batteries could potentially be repurposed for second-life applications such as behind-the-meter or storage solutions.Over a decade,lithium-ion battery prices(including cell and pack costs)have declined from around USD 800 per kilowatt-hour(kWh)

156、to less than USD 140/kWh in 2023,thanks to continued progress in R&D,economies of scale and technological innovation.This has increased the share of raw material costs in the total cost of batteries(see section 1.5.3)and battery prices now depend in large part on the price of critical minerals,which

157、 can be volatile.For example,spikes in battery metals prices in 2022 resulted in the first ever year-on-year increase in battery prices(Figure 1.2).However,an upsurge in minerals supply and enhanced battery manufacturing capacity,coupled with lower than anticipated demand in specific regions,particu

158、larly China,resulted in a significant price decrease in 2023,with the cost of batteries falling below 2021 levels.The battery industry continues to invest in low-cost cathode chemistry known as lithium iron phosphate(LFP)(see section 1.2.2).These packs and cells had the lowest global weighted averag

159、e prices of all lithium-ion batteries in 2023,with prices falling below USD 100/kWh for IEA.CC BY 4.0.22 International Energy Agency|Batteries and Secure Energy Transitions the first time(BNEF,2023a).Even in the initial months of 2024,LFP cell prices have continued their downward trajectory,and were

160、 well below USD 100/kWh in March 2024(Benchmark Minerals,2024).On a regional basis,lithium-ion battery prices were lowest in China and around 10-20%higher in the United States and Europe.Nevertheless,the reduction in price variance compared to the levels seen in 2022 and 2021 suggests a trend toward

161、 convergence in battery prices in different markets.Figure 1.2 Lithium-ion battery pack and cell prices,2013-2023 IEA.CC BY 4.0.Prices for lithium-ion batteries steadily declined over the last decade with a spike in 2022,but dropping again in 2023 Notes:USD=US dollars,kWh=kilowatt-hours.Prices are w

162、eighted average across regions and chemistries.Source:IEA analysis based on BNEF(2023a).1.2 Battery use in electric vehicles Worldwide sales volumes of batteries for EVs rose to an all-time high of over 750 GWh in 2023 reflecting a surge in EV uptake(Figure 1.3).Today nearly one-in-five new cars sol

163、d is electric.Both bigger cars and range concerns have driven an increase in the average size of EV battery packs in recent years.Worldwide the volume of batteries for electromobility has quadrupled over the past three years,with batteries for passenger light-duty vehicles(PLDVs)accounting for over

164、90%of this increase.This growth is attributed to stronger support policies compared to those available for medium freight and heavy freight trucks and buses,as well as fewer barriers associated with the larger batteries and power requirements needed for electrifying heavy-duty or long-distance trans

165、port.Electromobility is also accelerating in other modes with the electrification of two/three-wheelers and city buses moving ahead especially fast,particularly in emerging market and developing economies.200 400 600 8002013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Pack priceCell priceUSD pe

166、r kWh(2023,MER)+7%-14%-11%-35%-23%-25%-18%-13%-13%-6%IEA.CC BY 4.0.Chapter 1|Battery demand and supply 23 1 Figure 1.3 EV battery volumes in use by vehicle type,2015-2023 IEA.CC BY 4.0.EV battery volumes have quadrupled over the past three years,mostly in passenger cars Notes:Light-duty vehicles inc

167、lude passenger cars and light commercial vehicles.Freight trucks include medium and heavy freight trucks.1.2.1 Leading EV markets China dominates the global EV battery market,accounting for more than half of total EV battery volumes in 2023.The European Union and United States together accounted for

168、 30%of total EV battery volumes in use(Figure 1.4).EV sales are experiencing rapid growth worldwide.The market share of electric cars has increased more than sevenfold over the past five years,reaching 18%in 2023.Today,nearly 40%of all new cars sold in China are electric,while in the European Union

169、it is over 20%of all new car sales and 10%in the United States.Batteries used in electric cars in these three regions represent 80%of the global battery volumes in use today in the energy sector.There is huge untapped electrification potential in emerging market and developing economies other than C

170、hina,where electric cars currently constitute only 2%of sales,despite large year-on-year growth in countries such as India(up 70%in 2023)and Indonesia(up by over 60%in 2023),albeit from a small base.China is seeing a gradual reduction in its dominance of the global battery market as EV sales acceler

171、ate in advanced economies and its domestic electromobility market matures.Over the last five years,Chinas share of battery volumes used in global EV fleets has declined from over 65%to around 55%as support mechanisms and regulations intensify in other regions.The growing preference for electric spor

172、t utility vehicles(SUVs)and EVs with longer driving ranges in advanced economies is further boosting battery demand.On average,battery electric SUVs are 15%more energy intensive than medium-size EVs,which means that they require a battery that on average is 30%larger(Box 1.1).5001 0001 5002 0002 500

173、201520162017201820192020202120222023Freight trucksTwo/three-wheelersBusesLight-duty vehiclesGWhIEA.CC BY 4.0.24 International Energy Agency|Batteries and Secure Energy Transitions Figure 1.4 Battery volumes in use in EV fleets by region and market share of electric cars in sales,2015-2023 IEA.CC BY

174、4.0.China accounts for around 55%of battery volumes in use in EV fleets,but its share is gradually declining as EV sales accelerate elsewhere The volume of EV batteries in use in various countries broadly reflect their domestic battery manufacturing capacities and the size of their automotive indust

175、ries.China,Europe and the United States are currently the largest EV markets,accounting for 90%of the global EV fleet.China accounts for 83%of global battery production,Europe and the United States for another 13%,and Korea and Japan for the remaining 4%.Chinas leadership position in global both bat

176、tery plant capacity and EV manufacturing facilities enables it to supply its own EV market,powering the worlds largest electric car fleet with the most affordable batteries.Intensifying competition between battery producers trying to gain lucrative EV market share means that EV prices are dropping i

177、n some segments and regions,which is likely to further boost EV sales.Box 1.1 Batteries to meet passenger-kilometre demand Types of passenger transport have various purposes,range requirements and seating capacity,all of which influence the size of the battery requirement.When planning a sustainable

178、 and low-emissions transport sector,it is crucial to consider not only fuel economy but also the battery capacity required for operation and the relative efficiency of various modes of transport,measured in terms of passenger-kilometres.For example,battery electric buses require a lower battery capa

179、city per passenger-kilometre than passenger cars due to higher occupancy rates.Two/three-wheelers have the highest efficiency in terms of battery capacity needs per passenger-kilometre served,although ranges may differ for each mode.Battery powered buses offer the second most efficient performance f

180、or passenger-kilometres provided,4%8%12%16%20%5001 0001 5002 0002 50020152017201920212023OtherJapanKoreaUnited KingdomUnited StatesEuropean UnionChinaMarket share ofGWhelectric cars(right axis)IEA.CC BY 4.0.Chapter 1|Battery demand and supply 25 1 followed by small EVs(40 kWh)and average size EVs(ap

181、proximately 60 kWh).SUVs(around 80 kWh)demonstrate the least efficient performance on a passenger-kilometre basis,requiring double the battery capacity per passenger-kilometre of small EV(Figure 1.5).Figure 1.5 Battery capacity per passenger-kilometre of selected electric vehicle types,2023 IEA.CC B

182、Y 4.0.An electric SUV requires twice the battery capacity as a small electric car on a passenger-kilometre basis Notes:Wh/pkm=Watt-hour per passenger-kilometre,SUVs=sport utility vehicles.Analysis assumes average occupancy per vehicle type.Prioritising public transport and smaller vehicles therefore

183、 makes sense in terms of optimising future battery availability and minimising demand for the critical minerals that batteries require.1.2.2 EV battery chemistry Lithium-ion batteries are often categorised and named by reference to the composition of elements in their cathode one of the two electrod

184、es in which lithium ions are stored during charging and discharging cycles.The most common chemistries are:lithium nickel manganese cobalt oxide(NMC);lithium nickel cobalt aluminium oxide(NCA);lithium iron phosphate(LFP);and lithium cobalt oxide(LCO).Differing combinations and proportions of mineral

185、s in each battery chemistry type gives rise to different characteristics.LCO is one of the most established chemistries and is primarily used in portable electronics due to its high energy density and maturity.Today,NMC,NCA and LFP chemistries dominate in the EV battery market.In recent years,altern

186、atives to lithium-ion batteries such as solid-state and sodium-ion batteries have gained attention(Rudola et al.,2023).1 2 3 4SUVsAverage size carsSmall carsBusesTwo/threewheelersWh/pkmIEA.CC BY 4.0.26 International Energy Agency|Batteries and Secure Energy Transitions Today NMC and NCA account for

187、a large share of EV batteries because their relatively high nickel content enables batteries to be produced with higher energy densities.Nickel has gained ground at the expense of cobalt in large part because of the pressure for increased EV range,although spikes in cobalt material prices and concer

188、ns over ethical mining practices in the 2010s gave battery producers additional incentives to reduce the cobalt content in batteries over the past decade.This has led to the development of many variations of NMC chemistry,from the initial NMC 111 to variations with higher nickel content such as NMC

189、622 and NMC 811.4 Even more nickel-rich chemistries such as NMC 955 have recently emerged.However,higher nickel content requires more complex and controlled production processes,and it remains challenging to remove cobalt completely because of the contribution it makes to stability.The preference fo

190、r increasing the content of nickel is also a feature of the NCA chemistries that have historically been favoured by the auto maker Tesla.LFP is a lower cost battery chemistry,over 20%cheaper today than NMC.It does not contain nickel or cobalt,and it offers a more stable chemistry than nickel-rich ch

191、emistries,with reduced flammability and a longer cycle life.However,it has a significantly lower energy density,conventionally 20-30%lower than high nickel chemistries at battery cell level.Despite its inferior energy density,the use of LFP for EV batteries has increased significantly in recent year

192、s.It has been the leading chemistry for new EVs in China since 2021,and more recently has begun to be used by European and US auto makers.The new popularity of LFP chemistry is primarily driven by its lower price and longer lifespan relative to the alternatives,by energy density improvements such as

193、 the cell-to-pack(CTP)configuration and by improved thermal stability.Its cost effectiveness and durability make LFP the preferred battery chemistry for buses and commercial vehicles.Choice of battery chemistry involves balancing performance,longevity and cost,and depends on the target market and ap

194、plications.Geographical location is also important in battery chemistry selection,with LFP performing better in hot climates and NMC in colder climates.Furthermore,producing different cathode chemistries requires specialised expertise,and this is not evenly distributed globally.In 2023,NMC remained

195、the dominant battery chemistry,accounting for over half of the passenger car market,followed by LFP with a share of around 40%,and NCA with a share of about 7%(Figure 1.6).The increasing share of LFP cathode chemistries over the past decade reflects improvements in energy density and performance.Aro

196、und 95%of the LFP batteries for electric passenger cars were used in vehicles produced in China,driven by significant domestic investment,but non-Chinese manufacturers are now increasingly investing in developing their own LFP products.Solid-state batteries(SSBs)offer higher energy density and poten

197、tial safety improvements relative to traditional lithium-ion batteries,but so far it has proven challenging to demonstrate these advantages at scale and to overcome manufacturing hurdles.While SSBs 4 The numbers after NMC denote the relative ratios of each element in the composition of the battery c

198、hemistry,i.e.NMC 111 has equal parts of nickel,manganese and cobalt.IEA.CC BY 4.0.Chapter 1|Battery demand and supply 27 1 may have limited impact in the next few years,their significance could rise substantially in the 2030s if these challenges are overcome.Figure 1.6 Battery cathode chemistry in e

199、lectric car sales,2018-2023 IEA.CC BY 4.0.NMC remains the dominant cathode chemistry for electric cars,while the share of LFP batteries is increasing and reached its highest ever level in 2023 Sodium-ion batteries use lower cost materials and need fewer critical minerals than the batteries that curr

200、ently dominate the EV market and therefore are cheaper to produce.Different cathode chemistries can be employed for sodium-ion batteries,with layered oxides,typically using nickel,manganese or both,and Prussian white(made of sodium,iron,nitrogen and carbon)currently being the closest to mass commerc

201、ialisation.Sodium-ion is currently the only viable battery technology that does not contain lithium.Sodium-ion batteries can also use aluminium anode current collectors whereas lithium-ion batteries require copper anode current collectors,so sodium-ion batteries also reduce copper usage.They can cos

202、t 20-30%less than LFP batteries,but their relative cost advantage is dependent on the lithium price which has been highly volatile over recent years.Sodium-ion batteries can be manufactured using the same or similar manufacturing facilities as lithium-ion batteries.This could facilitate their wider

203、deployment,especially in compact urban vehicles and storage applications(McKinsey&Company,2023).However,the need to scale up supply chains,particularly for the hard carbon anode,currently is a significant constraint on production.Moreover,sodium-ion batteries currently have up to 40%lower energy den

204、sity than lithium-ion batteries,which is likely to limit their use mostly to cars that are primarily used in urban areas,two/three-wheelers and storage in the power sector.Sodium-ion technology has been developed between the United States,Europe and China,but most of the planned manufacturing capaci

205、ty today is set to be located in China.20%40%60%80%100%201820192020202120222023OtherLFPNMC 721/811NMC 532/622NMC 111NCAIEA.CC BY 4.0.28 International Energy Agency|Batteries and Secure Energy Transitions Innovation in lithium-ion batteries meanwhile is bringing further improvements in their design a

206、nd their chemistry.On the design front,advances such as CTP5 and cell-to-chassis(integrating cells directly into the vehicle chassis),are helping to deliver higher energy densities and lower costs,although they raise issues in terms of battery repairability and recycling,and may also require further

207、 work to ensure safety.On the chemistry front,the addition and increase of manganese content in both nickel-based chemistries and LFP has the potential to lower the costs of nickel-based chemistries without reducing their high energy density,and to enhance the energy density of LFP batteries as the

208、cathode moves to lithium manganese iron phosphate(LMFP).Improvements in silicon anodes may also lead to higher energy density and higher voltage batteries while reducing dependence on the highly concentrated supply chain of graphite anodes.1.2.3 Navigating bottlenecks:Policy and infrastructure chall

209、enges Global electric car registrations surged by 35%in 2023 compared with 2022,driving annual EV battery volumes up to more than 750 GWh.However,a number of challenges need to be tackled to maximise the future growth of EV markets.The first challenge is affordability.Despite efforts by vehicle manu

210、facturers to offer more affordable EVs,they still tend to cost more to buy in western markets such as the United States and Europe than their traditional gasoline and diesel counterparts.On average,consumers in Europe and the United States spend from USD 10 000 to 15 000 more to purchase a new EV mo

211、del than they would spend for a comparable ICE model.Despite the upfront price difference,the payback period for a battery electric car in several markets ranges from three to eight years,with the running costs of a battery electric car on average around 35%lower than for a gasoline car.6 However,th

212、e price tag gap remains a major barrier for many consumers.While manufacturers in the United States and Europe have tended to lean towards large and luxurious EVs,Chinese auto makers have focussed on small and lower cost models.The least expensive EV models in China are priced nearly 10%lower than t

213、heir ICE equivalents(JATO,2023).However,both Tesla and Volkswagen have announced plans to introduce electric car models priced around USD 25 000 after 2025.The second challenge is the development of charging infrastructure,particularly outside of China,the European Union and United States.In 2023,pu

214、blic charging infrastructure increased by over 40%,but only 2%of the additions were located outside these regions.While advances in battery chemistries will alleviate range anxiety,the development of adequate charging infrastructure is also crucial.A third challenge is the current lack of standardis

215、ation.Streamlining battery sizes,shapes and packaging could cut costs,facilitate battery swapping,reduce costs for reuse and 5 Cell-to-pack design integrates cells directly into the pack structure,eliminating the need for separate assembly into modules.6 Assumes annual mileage of 10 000 kilometres,c

216、omparing medium-size cars and average weighting on the passenger light-duty vehicle stock per region in 2023(IEA,2023a).IEA.CC BY 4.0.Chapter 1|Battery demand and supply 29 1 recycling,and facilitate disposal processes.On the other hand,standardisation could hinder battery innovation and constrain m

217、anufacturers.Policy frameworks will need to balance these competing considerations.A fourth challenge is the need for continued battery innovation.Drivers for innovation include further electrification beyond light-duty vehicles,environmental concerns,the desire for a higher degree of energy indepen

218、dence and raw materials supply constraints.Providing long-term planning clarity and certainty is essential.So is long-term policy support,as provided for example by the Inflation Reduction Act in the United States,the“Fit for 55”package in the European Union,the Faster Adoption and Manufacture of Hy

219、brid and Electric Vehicles Scheme in India and New Energy Vehicle policies in China.Long-term support fosters domestic manufacturing and incentivises investment in battery-led energy transitions.The battery end-of-life management industry faces a unique challenge in the current dynamic conditions:th

220、e harmonisation of compliance mechanisms for support policies,like battery passports,would help all stakeholders to tackle the challenges involved.A fifth challenge concerns supply chains.As batteries play an increasingly vital role in the energy transition,there is growing need for a resilient and

221、sustainable value chain,and for global collaboration to help achieve this.A highly concentrated market risks shortages of raw materials and components.Strategic investment could diversify supply chains,including into emerging market and developing economies outside China,and this could bring social

222、and economic benefits for those economies,particularly if investments prioritise sustainability and ethical labour practices.1.2.4 Policy support for EV batteries Policy support and the relatively high cost of EVs have concentrated global EV battery demand in China,the European Union and United Stat

223、es,which together currently account for over 85%of the global electric car fleet.Early adoption in these regions was enabled by policies such as vehicle purchase incentives,the adoption of CO2 emissions standards and fuel economy targets.China was also an early adopter of domestic automaking and bat

224、tery manufacturing support through direct incentives,with decades of financial concessions to local firms paving the way for global EV and battery giants such as BYD and CATL.These incentives were accompanied by fiscal support for purchasers of EVs.Public support schemes for small and affordable EVs

225、,including subsidies and incentives for both consumers and manufacturers,have been key to Chinas model,together with the availability of labour and access to finance.The United States is now aiming to increase the adoption of EVs through the provision of generous subsidies under the Inflation Reduct

226、ion Act of 2022 for domestically produced models that meet Clean Vehicle Tax Credit requirements,while simultaneously supporting the domestic EV industry with over USD 15 billion offered in the form of production credits for advanced manufacturing(Figure 1.7).Funding for charging infrastructure and

227、local battery production is also part of the package of policy initiatives in the United States,with IEA.CC BY 4.0.30 International Energy Agency|Batteries and Secure Energy Transitions the Infrastructure Investment and Jobs Act allocating nearly USD 7 billion in grants across the battery value chai

228、n.Figure 1.7 Government support for investment in EVs,charging and batteries in selected countries,2020-2023 IEA.CC BY 4.0.Since 2020,around USD 130 billion was provided to support electromobility and USD 25 billion for batteries Similar efforts are being made in the European Union,where CO2 standar

229、ds are prompting European auto makers to expand EV production.National subsidies in many EU member states further support EV adoption.As battery demand rises,the EU Critical Raw Materials Act sets 2030 targets to make the battery supply chain more secure.The Net Zero Industry Act aims to ensure that

230、 40%of the demand for certain clean energy technologies,including charging infrastructure and batteries,is met by 2030 from production sites located in the European Union.In parallel,it seeks to boost European production by fast-tracking permitting and allowing financial and regulatory support.With

231、support provided under the EU Temporary Crisis and Transition Framework,battery producer Northvolt recently gained approval for almost USD 1 billion in grants and guarantees to build an EV battery production plant in Germany.Similar kinds of support are also being provided elsewhere.India has alloca

232、ted USD 2.5 billion through its Production-Linked Incentive scheme in a bid to develop a domestic battery manufacturing industry.Malaysia has introduced income tax breaks for domestic EV charger manufacturers.Thailand has enacted a new USD 700 million subsidy scheme that aims to lower the production

233、 cost of domestic EV batteries.Increasing financial support from governments in recent years,provided through clean vehicle credits,tax credits and exemptions and state-backed loans,has led to a surge in global investment in EV batteries.Since 2020,nearly USD 130 billion has been spent by 5 10 15 20

234、 25 30GermanyUnited StatesItalyKoreaSpainFranceUnited KingdomIndiaChinaElectric vehicle incentivesCharging infrastructureBatteriesBillion USD(2023,MER)IEA.CC BY 4.0.Chapter 1|Battery demand and supply 31 1 governments to incentivise the production and uptake of EVs,including charging infrastructure,

235、notably through the EU Recovery and Resilience Facility and the US Inflation Reduction Act.In addition,around USD 25 billion has been provided in financial support for battery manufacturing and recycling,and in incentives for the deployment of battery storage units.As Chinas EV market matures,nation

236、al subsidies are decreasing,with regional targets and policies now playing a more important role.Similarly,countries such as Norway,the United Kingdom and certain EU member states are adjusting or reducing purchase incentives as their EV markets develop.Governments in such markets can achieve financ

237、ially sustainable road sector electrification by redirecting support from private vehicle subsidies to charging infrastructure development,for example as in China,Australia and the United Kingdom.Other policies are likely to continue to provide support for EVs,even if that is not their primary objec

238、tive.One example is low-emission zones,which are increasingly being adopted in European cities.The question of affordability is likely to continue to concern policy makers.Corporate cars typically transition to private ownership after an average of three to four years.Therefore,electrification goals

239、 for corporate fleets could boost the second-hand EV market,making EVs more affordable for private consumers(Platform for Electromobility,2021).Additionally,interest-free or low-interest loans for electric cars could help to make EVs more affordable and speed up decarbonisation of the road sector.Po

240、licy makers will need to find a way to balance future EV growth policies and the desire to build domestic industries with concerns about the risks of geopolitical fragmentation.Secure and resilient supply chains will have an important role to play in this context.This is not an easy balance to strik

241、e,but the cost-effective development of innovative battery technologies,which is essential to reach global climate ambitions,ultimately depends on co-operation as well as on competition.1.2.5 Opportunities related to the expanding battery market Many emerging market and developing economies striving

242、 for economic growth and sustainability see opportunities in the expanding battery market,and more and more governments are looking to participate in global supply chains.Indonesia,for example,is on track to become the largest lithium-ion battery and component manufacturing hub in Southeast Asia,tha

243、nks to its abundant raw material resources.However,a wealth in raw materials is not the only entry point.Batteries require a broad range of components that vary over time as the chemistry evolves.Cell and battery component manufacturing is emerging as a lucrative market,for example,as is the recycli

244、ng of metals from end-of-life batteries.The battery market incorporates a wide span of economic activity with employment opportunities at various skill levels,ranging from battery R&D,manufacturing and integration to applications and recycling.There is scope for the global battery market to grow IEA

245、.CC BY 4.0.32 International Energy Agency|Batteries and Secure Energy Transitions very significantly in the years ahead.If the world were on track with the IEA Net Zero Emissions by 2050(NZE)Scenario,over two-thirds of the global auto manufacturing workforce would be dedicated to EVs and vehicle bat

246、teries by 2030.Manufacturing of EV batteries alone would create additional 3.5 million jobs by around 2030,equivalent to a third of the ICE vehicle manufacturing workforce today.1.3 Battery use in the power sector Over the course of the last decade,global installed battery storage capacity has incre

247、ased exponentially,from about 1 gigawatt(GW)in 2013 to over 85 GW in 2023.Over 40 GW was added in 2023 alone,which was more than twice as much as in 2022.The strong increase in annual battery storage capacity additions recorded over the last five years has been driven almost entirely by China,the Eu

248、ropean Union and United States,which collectively accounted for nearly 90%of the capacity added in 2023.About 65%of the capacity additions are for utility-scale systems,with behind-the-meter battery storage responsible for about 35%of the annual additions on average.Utility-scale battery storage ref

249、ers to large applications connected directly to transmission or distribution networks(front-of-the-meter),typically ranging from several hundred kWh to multiple GWh in size.Behind-the-meter battery storage systems are generally installed at residential,commercial or industrial end-user locations,wit

250、hout a dedicated connection to the grid.They are usually,but not always,significantly smaller than utility-scale batteries.Deployment by region China became the leading market for battery storage two years ago,with its share in annual global additions rising from around 20%in 2019 to 55%in 2023(Figu

251、re 1.8).Capacity additions tripled in 2023 to 23 GW.About two-thirds of the additional capacity was utility scale,driven mainly by provincial level mandates to pair new solar PV or wind power projects with energy storage.Behind-the-meter storage capacity rose strongly as well,with large-scale commer

252、cial rather than residential users driving the uptake,underpinned by subsidies and increasing application of time-of-use electricity tariffs.The United States is the second-largest battery storage market.Additions have roughly doubled year-on-year,rising to over 8 GW in 2023.Utility-scale projects a

253、ccounted for nearly 90%of the additional capacity in 2023,with California,Texas and other states in the southwest leading deployments.Improving economics have been boosted by market reforms,falling equipment costs and an investment tax credit introduced as part of the Inflation Reduction Act.This ha

254、s allowed utility-scale batteries to make inroads into ancillary service markets,where they are increasingly tapped to provide balancing services and secure capacity in states with high shares of variable renewables generation.Installed battery storage capacity in the European Union increased by 70%

255、in 2023,with annual additions rising to nearly 6 GW.Nearly 90%of the capacity growth was associated with behind-the-meter storage,mostly in Germany and Italy,where high retail electricity IEA.CC BY 4.0.Chapter 1|Battery demand and supply 33 1 prices and incentives such as tax breaks and low-interest

256、 loans support the pairing of rooftop solar PV with storage.Close to 80%of the rooftop solar PV installed in Germany and Italy in 2023 came with storage.On the utility-scale storage side,additions are increasingly supported through capacity auctions.In Italy,for example,capacity auctions held in 202

257、2 for delivery in 2024 awarded contracts totalling 1.6 GW to battery storage,with some of these systems coming online in 2023.Figure 1.8 Battery storage capacity additions worldwide,2013-2023 IEA.CC BY 4.0.Capacity additions doubled in 2023,led by China,the United States and the European Union Note:

258、GW=gigawatts.Other markets have also seen significant growth.Capacity additions in Australia jumped to 1.3 GW in 2023,rising more than 2.5-fold from the previous year.Utility-scale projects accounted for nearly 60%,with high price spreads on the wholesale electricity market and high ancillary servic

259、e prices driving investment.Behind-the-meter capacity rose strongly as well,in part thanks to financial incentives that encourage the pairing of residential PV systems with batteries.Utility-scale battery storage capacity additions in Japan and Korea increased substantially in 2023 rising to more th

260、an 400 megawatts(MW)and 300 MW respectively.Japan has also added over 300 MW of behind-the-meter battery storage annually over the past four years.Behind-the-meter capacity additions in Korea peaked in 2018,but the market crashed following the withdrawal of subsidies and has yet to regain its 2018 l

261、evel.The United Kingdom added over a gigawatt of battery storage in 2023,becoming Europes largest market for utility-scale batteries.Meanwhile Chile added nearly 250 MW of utility-scale storage in 2023,making it the first country in Latin America to deploy battery storage at scale.In other regions,c

262、apacity additions have so far been limited.However,in addition to further rapid acceleration in todays core markets,capacity growth is expected to broaden into new 15%30%45%60%10 20 30 402013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Rest of worldOther EuropeOther Asia PacificEuropean UnionUn

263、ited StatesChinaGWBehind-the-meter share(right axis)IEA.CC BY 4.0.34 International Energy Agency|Batteries and Secure Energy Transitions markets over the next few years.Energy storage targets and financial support mean that India in particular has significant potential to emerge as another large mar

264、ket for battery storage.Market leaders for battery storage in the power sector The battery storage industry is not structured in the same way as the EV industry,which is dominated by car makers and battery manufacturers.It consists of battery cell and system manufacturers like CATL,Tesla,LG,Samsung

265、and Panasonic;system integrators,including companies like Fluence,Wartsil,Sungrow,Saft,Nidec,NextEra and Powin;and developers,who are primarily utilities and renewable energy project developers,but sometimes,and increasingly often,large investors and oil and gas majors.There is some overlap in roles

266、 within the industry.Tesla,for example,serves as both a manufacturer and an integrator,while NextEra has roles as both an integrator and a developer.Power companies are installing increasing volumes of battery storage,and batteries are becoming more prominent in their strategic planning.A significan

267、t number of these companies are renewable energy project developers,installing stand-alone battery storage or integrating it with onshore wind or solar PV generation developments.The market,particularly in the United States and Asia Pacific,is also shaped by investment firms that have either acquire

268、d or partnered with developers to build substantial battery storage portfolios.Notable examples include Blackrock and Australias CEP Energy.Half of the top-ten leading global developers of battery storage are Chinese corporations(Table 1.1),which reflects the favourable conditions and the large mark

269、et in that country.Other key players predominantly are from Europe and the United States,with a recent increase in announcements of battery storage projects from the United States stemming from increased demand for storage in microgrid projects and investment support provided under the Inflation Red

270、uction Act.In China,a long-standing leader in battery manufacturing,a significant number of companies already have at least a few GW installed or at an advanced stage of development.Around 74 of the top-100 developers of battery storage globally are Chinese.In the United States,the two primary playe

271、rs,Hecate Energy and NextEra,aim to install 10 GW of battery capacity by 2026.Among the main US players,only AES is also developing a significant pipeline in other regions,primarily in Chile and Europe.In Europe,Engie has over 6 GW installed or in an advanced stage of preparation and has set itself

272、a target of 10 GW by 2030.It is capitalising on the acquisition of US battery storage companies such as Belltown in 2022 and Broad Reach Power in 2023,both with portfolios of a few GW of projects.RWE is on track to reach 4 GW by 2027,taking account of current projects and the acquisition of Con Edis

273、on Clean Energy Businesses in the US.By 2026 Enel aims to nearly double capacity to 4 GW,primarily in Europe,Latin America and the United States.IEA.CC BY 4.0.Chapter 1|Battery demand and supply 35 1 In Australia,the leading player is not a power generation company but a developer,Akaysha,recently a

274、cquired by Blackrock.Akaysha is developing larger projects,for a total capacity of 2.8 GW,mainly in Queensland and New South Wales.These are set to be completed by next year.Table 1.1 Leading investors in battery storage Capacity installed or in an advanced stage(GW)Main project location China CNNP

275、Rich Energy 11.8 China CGN Wind Energy 8.5 China State Power Investment 6.8 China Huadian New Energy 5.6 China China Energy Investment 5.6 China North America Hecate Energy 10.9 United States,Canada Nextera 9.8 United States Solar Proponent 5.5 United States(Texas)Terra-Gen 2.4 United States(Califor

276、nia)AES 2.2 European Union,India,Latin America,United States Europe Engie1 6.3 Australia,European Union,Latin America,United States NEOEN 4.3 Australia,Canada,European Union RWE 4.0 European Union,United States Enel 4.0 European Union,Latin America,United States EDF 2.0 European Union,United Kingdom

277、 Australia Akaysha Energy 2.8 Australia AGL Energy 1.5 Australia CEP Energy 1.2 Australia 1 Includes the assets of the US companies Broad Reach Power and Belltown which were recently acquired by Engie.Note:Data includes installed capacity,projects under construction and projects at an advanced stage

278、 of development that are likely to be commissioned in two to three years,including stand-alone and battery systems capacity coupled with renewables projects.Source:IEA analysis based on company reports,press releases and BNEF data.1.3.1 Batteries have multiple roles in power systems Batteries are hi

279、ghly versatile.Both utility-scale and behind-the-meter battery storage can provide a wide range of services to electricity systems(Figure 1.9).In addition to energy shifting,which helps to balance electricity supply and demand,utility-scale battery storage can contribute to maintaining grid stabilit

280、y and security of supply by providing ancillary IEA.CC BY 4.0.36 International Energy Agency|Batteries and Secure Energy Transitions services such as inertia,voltage control and frequency regulation,grid forming,7 and delivering fast-starting reserves.8 It can also supply capacity to ensure system a

281、dequacy and help manage congestion in electricity networks.Behind-the-meter batteries can provide backup power and help consumers lower their electricity bills by allowing them to increase the consumption of self-generated electricity,take advantage of variable electricity tariffs or reduce peak ele

282、ctricity consumption from the grid.If aggregated into virtual power plants(VPPs),they can also provide many of the same services as larger scale utility-scale systems.Figure 1.9 Battery storage in power systems IEA.CC BY 4.0.Battery storage can provide a broad range of services to a power system Not

283、e:Battery storage applications are represented along the dimensions:horizontal axis shows the location within a power system;vertical axis shows the type of services.Source:Adapted from Schmidt and Staffell(2023).Whether it is economical to deploy batteries depends on the individual circumstances of

284、 the particular case.The answer can vary from region to region,depending on the characteristics of the electricity system and the regulatory environment.Value stacking by providing 7 Grid forming refers to the ability of an inverter-based source to provide voltage and frequency support to electricit

285、y networks,particularly during or after disturbances or outages,or in independent systems.8 Fast-starting reserves,also called fast reserves,quick start reserves or non-spinning reserves,deliver active power quickly through increased output from generation or reduced consumption from demand sources,

286、to help control frequency changes that can arise from sudden or unpredictable changes in generation or demand.IEA.CC BY 4.0.Chapter 1|Battery demand and supply 37 1 multiple services at the same time can boost the economics of battery storage,but it also increases the complexity of the business case

287、.Utility-scale battery storage Energy shifting is a key application for utility-scale batteries,especially in electricity systems with high shares of variable renewables with near-zero marginal costs.Utility-scale batteries with one to eight hours storage duration can provide peaking capacity:they c

288、an be charged in off-peak hours when the net demand is low,for example when solar PV generation peaks during the day,and discharged when net demand is high,for example in the evening when solar PV is not generating electricity.In competitive electricity markets,battery storage can monetise its energ

289、y shifting potential by engaging in energy arbitrage,taking advantage of price spreads on wholesale electricity markets by charging in hours when the price is low and discharging in hours when it is higher.Due to their split-second responsiveness,batteries are also ideal providers of ancillary servi

290、ces in power grids,such as frequency regulation,voltage support and operating reserves.Furthermore,their black start capabilities can restore service after outages in place of diesel generators.In many European countries,notably Germany,France and the United Kingdom,batteries have already become key

291、 providers of frequency response and reserves,facilitated by reforms that have enabled battery storage assets to access the markets for these services.In systems with rising shares of variable renewables and declining synchronous generation as conventional thermal power plants are retired,there is i

292、ncreasing demand for inertia and short-circuit power,which batteries equipped with grid-forming inverters can supply.For example,the 30 MW/8 megawatt-hour(MWh)Dalrymple battery project in Australia provides frequency control plus inertia and short-circuit power:this ensures a reliable power supply i

293、n the regional network,which connects high shares of variable renewables generation but lacks synchronous generation.In the United Kingdom,869 MW of grid forming battery storage was recently awarded contracts to provide inertia and short-circuit power to the system operator in a pathfinder scheme,wi

294、th a view to procure these services via markets.Supplying ancillary services has emerged in recent years as an important revenue source for battery storage in several markets around the world,driving over 15%of new project deployments annually,particularly for batteries with one to two hours duratio

295、n storage.Providing capacity to support system adequacy is also an increasing application for battery storage.Where regulation allows,participating in capacity markets enables the owners of battery storage to lock-in long-term revenues.In the United Kingdom,where revenues from frequency regulation h

296、ave been declining as markets become saturated,multi-year contracts awarded in capacity market auctions are becoming an increasingly important source of revenue for battery storage.Following the T-1 and T-4 auctions that took place in February 2024,contracted battery capacity in the capacity market

297、is set to reach 16 GW in 2027,up from 3.9 GW today.In regions without capacity markets,the capacity of storage assets can be monetised through power purchase agreements which remunerate their availability to IEA.CC BY 4.0.38 International Energy Agency|Batteries and Secure Energy Transitions support

298、 power system operation.The Boulouparis battery project in New Caledonia,for instance,was awarded a 12-year contract by the local network operator which remunerates the battery owner for the services provided to the grid.The batteries will be able to deliver 50 MW of power over three hours,providing

299、 peaking capacity during evening demand peaks.In addition,batteries can help to ease grid congestion by storing surplus power generated by renewables at times of high production thus reducing curtailment and grid integration costs.For example,with a 200 MW/800 MWh capacity the Dalian vanadium flow b

300、attery demonstration project in China is designed to alleviate peak loads on the grid and serve as an additional load point for the Dalian peninsula,enhancing grid stability.The first phase of the project was commissioned in 2022,and full deployment is expected to reduce peak loads by 8%from 2020 le

301、vels.When used for congestion management,batteries minimise the need for transmission or distribution network investment.This is the main application of so-called grid boosters in Germany,which are utility-scale batteries deployed to alleviate bottlenecks in the transmission system and thus reduce t

302、he need for additional investment to reinforce certain lines.Under the grid booster initiative,950 MW of storage assets were approved by the regulator as part of the network development plan,and a total of 450 MW are already under construction in the control areas of two of Germanys four transmissio

303、n system operators.The regulatory environment and the technical characteristics of grids are the key determinants of what represents a viable use for batteries.In many jurisdictions with market-based electricity systems,including the European Union,unbundling requirements impose strict limits on the

304、 ownership and operation of storage by transmission and distribution system operators(except in the case of selected pilot projects like the grid boosters mentioned),so any congestion management services must be contracted from third parties.In the United Kingdom,recently introduced distribution fle

305、xibility markets are based on open public tenders where the costs and benefits of flexibility solutions provided by third parties are compared to the cost of grid reinforcements:in 2022-2023,batteries represented more than 30%of the contracts awarded,or nearly 600 MW of storage capacity.In France,bo

306、th the transmission system operator and selected distribution system operators have recently launched local flexibility tenders which are open to battery storage assets.In California and New York,distribution system operators increasingly make use of storage assets which are co-owned or procured fro

307、m third parties through power purchase agreements in order to reduce grid congestion,thereby avoiding or deferring expensive investment to reinforce their grids.Microgrids are another application for large battery storage.In Australia and parts of the United States,for example,regulators have introd

308、uced ad-hoc measures and programmes to boost microgrid development,often based on storage solutions,in order to increase the resilience of critical facilities such as hospitals and large industrial consumers and of services for communities,in particular low-income and disadvantaged communities.Micro

309、grids increase the resilience of the system by giving operators the possibility of disconnecting from IEA.CC BY 4.0.Chapter 1|Battery demand and supply 39 1 the main grid through“adaptive islanding”in the event of major disruptions and maintaining supply despite the loss of the main energy feeder.Ce

310、rtain battery technologies can also be utilised for multi-day energy storage,addressing longer peak demand periods,or compensating for episodes of low renewables generation.An example is the first-of-its-kind 100-hour long-duration iron air battery project being built in California,which will operat

311、e under the state resource adequacy programme.However,the way that power markets are currently set up means that most grid services are focussed on short duration storage.In the United States,for instance,existing market duration requirements for operating reserves(less than one hour)and capacity(fo

312、ur hours)have led to most installed utility-scale batteries having durations of four hours or less.Historically,large-scale batteries have been mostly deployed for frequency regulation or energy shifting.With the increasing amounts of power generated by variable renewables and the small size of anci

313、llary services markets,energy shifting is becoming the primary application,and it accounted for about 85%of the installed capacity in 2023(Figure 1.10).In Germany,for instance,providing frequency control was the main driver for the deployment of utility-scale systems,but emerging new applications ha

314、ve opened additional revenue streams.These include the integration of variable renewables within the Innovation Tender for co-located generation and storage projects,the utilisation of storage as a transmission asset,i.e.grid boosters,and the optimisation of energy consumption at industrial sites.Fi

315、gure 1.10 Utility-scale battery storage capacity additions by application,2018-2023 IEA.CC BY 4.0.Energy shifting and the provision of peaking capacity are the primary applications of utility-scale batteries installed in recent years Source:Adapted from BNEF(2023b).5 10 15 20 25 30201820192020202120

316、222023Energy shifting andcapacity provisionCongestionmanagementAncillary servicesGWIEA.CC BY 4.0.40 International Energy Agency|Batteries and Secure Energy Transitions If the regulatory framework allows,value stacking across these various applications can improve the economics of battery storage and

317、 provide a hedge against single long-term contracts.However,value stacking requires a more complex energy management system and the increased frequency of dispatch resulting from value stacking can accelerate asset degradation.Moreover,certain services may be mutually incompatible due to design choi

318、ces.For example,a system optimised for high-frequency,short-duration services might not perform optimally for infrequent,longer duration ones.A reliance on value stacking also increases the complexity of the business case and makes the prediction of revenues more complex,representing a potential bar

319、rier for more risk-averse investors.Behind-the-meter battery storage Behind-the-meter battery storage refers to applications at the distribution level,installed at residential,commercial and industrial end-user locations.They are connected directly to the building and rooftop solar PV systems,behind

320、 the electricity meter and the buildings own connection to the power grid.They form part of a suite of distributed energy resources that are increasingly important in the integration of renewables.These systems can provide benefits to both consumers and the grid by minimising costs and environmental

321、 impacts while bolstering electricity security and supporting the electrification of industries.Behind-the-meter batteries offer consumers multiple ways to save costs.By using excess solar PV generation during the daytime to charge behind-the-meter batteries,consumers can increase the self-consumpti

322、on of electricity generated by a rooftop solar PV array.By charging during hours when electricity prices are lowest,behind-the-meter battery storage allows consumers subscribing to dynamic electricity tariffs to reduce their electricity bills.The use of storage can also be timed to reduce a consumer

323、s peak demand,allowing them to save costs by opting for a smaller peak power supply subscription.Furthermore,individual household level battery systems can be aggregated into VPPs and participate in the market(Box 1.2).In addition to cost-saving measures,behind-the-meter systems can improve electric

324、ity reliability by providing backup power during unplanned outages and by ensuring power quality:this is especially important for industry,hospitals and vulnerable customers such as those with uninterruptible power supply setups.From a system perspective,behind-the-meter batteries can provide many o

325、f the same benefits as utility-scale batteries.If the right signals and incentives are in place,they can help to reduce overall grid demand,lower grid stress by peak shaving and provide reserve capacity.Compared to utility-scale systems however,behind-the-meter systems act at a more localised level,

326、which can create opportunities to defer distribution grid expansion or upgrades.When aggregated into VPPs,behind-the-meter batteries can also provide ancillary services like frequency response,frequency regulation,voltage support and ramping reserves.However,the extent to which the benefits of behin

327、d-the-meter batteries are realised is highly dependent on the regulatory frameworks,most notably end-user electricity tariff structures and the rules governing market access for aggregators.It is also dependent on the deployment of smart metering.IEA.CC BY 4.0.Chapter 1|Battery demand and supply 41

328、1 Box 1.2 Behind-the-meter batteries and virtual power plants Virtual power plants(VPPs)aggregate distributed energy resources,including behind-the-meter batteries,distributed renewables and flexible loads,and dispatch them as a single electricity source.To establish a VPP,each distributed energy re

329、source is connected to a centralised control system that optimises their collective operation in response to signals from markets and grid operators.Unlike individual behind-the-meter batteries,which are limited in the extent they can interact with the grid,VPPs act like traditional power plants in

330、terms of the services they can provide and the markets they participate in.If market rules permit,they can sell electricity on wholesale electricity markets and provide ancillary services and support electricity security through contributions to capacity adequacy.However,they differ from traditional

331、 large-scale power plants in that they have the ability to respond flexibly to constraints in local grids by adjusting the output of the individual energy resources that comprise the VPP.This makes them a potentially valuable resource in managing congestion in transmission and distribution grids.VPP

332、s can offer owners of behind-the-meter batteries an additional opportunity to monetise their energy storage capacity.Depending on market prices and tariff structures,participation in a VPP may be more financially advantageous than simply maximising self-consumption.VPP participants can be rewarded i

333、n multiple ways,including through direct payments for energy supplied,reduced electricity tariffs,or discounts on the upfront cost of solar PV and battery systems:the details will depend on the specifics of the VPP.Some,but not all,VPPs require a contract in which aspects such as the maximum annual utilisation of an asset by the VPP are outlined.VPPs can scale to relatively large sizes,with some i