Batteries are still getting exponentially cheaper, more efficient: ready to displace half of global fossil fuel demand by 2045? – GWC Mag

A new report by RMI says batteries are on the path to replace 175 EJ of fossil fuel demand in the power sector, 86 EJ of fossil fuels from road transport and can put at risk another 23 EJ from shipping and aviation. That equates to a phaseout of half of global fossil fuel demand in the next two decades. Daan Walter, Sam Butler-Sloss and Kingsmill Bond at RMI summarise the findings in six graphs with explanations. Battery sales are growing exponentially like the best disruptive technologies. Costs keep falling while energy density rises. A domino effect has been cascading the advances in consumer electronics through to transport and grids. The drivers of change will strengthen (by 2030, top-tier energy densities will be between 600 and 800 Wh/kg, costs will fall to $32–$54/kWh, and battery sales will rise to between 5.5–8 TWh/year). And if you think that looks impressive, the authors note that forecasters have consistently underestimated progress.

Battery demand is growing exponentially, driven by a domino effect of adoption that cascades from country to country and from sector to sector. This battery domino effect is set to enable the rapid phaseout of half of global fossil fuel demand and be instrumental in abating transport and power emissions. This is the conclusion of RMI’s recently published report X-Change: Batteries. In this article, we highlight six of the key messages from the report.

1. Battery sales are growing exponentially up S-curves

Battery sales are growing exponentially up classic S-curves that characterise the growth of disruptive new technologies. For thirty years, sales have been doubling every two to three years, enjoying a 33 percent average growth rate. In the past decade, as electric cars have taken off, it has been closer to 40 percent.

2. Battery costs keep falling while quality rises

As volumes increased, battery costs plummeted and energy density — a key metric of a battery’s quality — rose steadily. Over the past 30 years, battery costs have fallen by a dramatic 99 percent; meanwhile, the density of top-tier cells has risen fivefold. As is the case for many modular technologies, the more batteries we deploy, the cheaper they get, which in turn fuels more deployment. For every doubling of deployment, battery costs have fallen by 19 percent. Couple these cost declines with density gains of 7 percent for every deployment doubling and batteries are the fastest-improving clean energy technology.

3. Creating a battery domino effect

As battery costs fall and energy density improves, one application after another opens up. We call this the battery domino effect: the act of one market going battery-electric brings the scale and technological improvements to tip the next. Battery technology first tipped in consumer electronics, then two- and three-wheelers and cars. Now trucks and battery storage are set to follow. By 2030, batteries will likely be taking market share in shipping and aviation too.

4. Incumbent modelers remain behind the curve

How fast will batteries continue to grow and improve? The answer is a lot faster than today’s consensus view. When it comes to the growth of small modular technologies, there are two rules of thumb: the first is that superior technologies undergoing rapid cost decline tend to grow exponentially; the second is that most analysts miss the first. Batteries have been no exception to this rule, having been consistently underestimated by modelers.

Over the past years, many battery forecasts have effectively projected linear growth. As Exhibit 4 illustrates, actual sales keep outrunning such forecasts and as a result analysts keep revising their projections upward. The caution of such linear thinking may, on the surface, seem reasonable, but in reality, it is simply wrong.

5. The drivers of change will strengthen

If we look forward to the next seven years, we see the drivers of change strengthening. Notably, we see costs continuing to fall, policy support continuing to rise, and competition between economic blocs continuing to drive a race to the top. And while there are barriers to battery adoption on the horizon, humanity’s wit, will, and capital are scaling proportionally faster. Thus, we do not see a scenario of slow adoption as credible; instead, we model two futures: fast or faster. Reality is likely to lie somewhere between the two.

RMI forecasts that in 2030, top-tier density will be between 600 and 800 Wh/kg, costs will fall to $32–$54 per kWh, and battery sales will rise to between 5.5–8 TWh per year. To get a sense of this speed of change, the lower-bound (or the “fast” scenario) is running in line with BNEF’s Net Zero scenario. The faster S-curve scenario exceeds it.

6. Enabling the phase-out of fossil fuels

The best strategy to rapidly phase out fossil fuels is to accelerate the deployment of technologies that reduce fossil fuel demand. Batteries are on the path to displace 86 exajoules (EJ) of fossil fuels from road transport (emitting 6 GtCO₂ per year) and to put at risk another 23 EJ (or 1.6 GtCO₂/y) from shipping and aviation. In the electricity sector, as batteries synchronise the natural rhythms of the sun and the wind with the timing of electricity demand, they help enable the reduction of a further 175 EJ of fossil fuel demand (or almost 15 GtCO₂/y).

Batteries are growing fast, but that’s no reason to rest on our laurels. Continued growth will require continued effort. Batteries got this far through tireless, concerted efforts of companies, governments, researchers, and climate advocates. And whether the motivation is lower prices, geopolitical advantage, or climate, it is essential to make this fast transition faster.

Download the full report here.

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Daan Walter is a Principal, Strategy Team at RMI

Sam Butler-Sloss is a Senior Associate, Strategy Team at RMI

Kingsmill Bond is a Senior Principal, Strategy Team at RMI

This article was first published on RMI.org, and has been reprinted with permission