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Outlook for Battery Technologies During the Energy Transition

Posted By Richard Macoun  

Outlook for Battery Technologies During the Energy Transition 


The transition to low carbon energy systems is providing opportunities for battery technologies. Their use in electric vehicles (EVs) and for energy storage make them a critical element of the energy transition. The International Energy Agency (IEA)1 has reported that investment in clean energy exceeded investment in fossil fuels in 2019 and has been growing at 10% p.a. since. In 2023 the investment in clean energy technology was US$1.7 trillion. The IEA also projects that this growth will need to continue at 8% p.a. until 2030 to reach US$2.3 trillion if the world follows through on the announced energy policies. In addition, annual battery production for EVs is expected to more than double by 20302 to 3.5TWh. There are clearly opportunities for investors in battery technologies. 

In this article we will be looking at rechargeable electrochemical energy storage systems, batteries, not at other alternative energy storage systems such as pumped hydro or hydrogen storage. The value chain for the production of batteries is long and complex and provides investment opportunities throughout. As a simplification the segments of the value chain are mining and refining of the minerals required, production of the advanced materials needed for battery production, production of the battery cells, and the final assembly of the cells into modules with battery management systems. There are opportunities for investors in battery manufacturing technology as well as in battery technology itself.  

The battery manufacturing industry is currently an immature industry, the first lithium-ion batteries (LIBs) entered the market in 1991 and their uses and types have expanded since then. There are dozens of battery types and new battery technologies are constantly emerging. There are new and improved battery chemistries and technologies being announced every week. In the rapid growth phase of the battery industry, which can be expected to last for about two decades, there will be opportunities for many different battery types, often finding different application niches. However, once the industry matures there will be consolidation and some battery technologies will become obsolete. 

Emerging battery types 

Currently LIBs are the main battery in production across the world, this is due to their combination of high energy density and low cost due to large-scale manufacturing. There are many emerging alternatives to LIBs, some of the more well know types include sodium-ion batteries, solid state batteries and vanadium flow batteries. But there are many other types being developed and manufactured such as aluminium graphite batteries, zinc flow batteries, lithium metal batteries, metal air batteries and sodium sulphur batteries. This list is far from complete and will become outdated as new technologies emerge, investors need to be actively looking for the emerging opportunities. 

LIBs can illuminate the commercialisation pathway for emerging battery technologies. LIBS took almost two decades before the volumes produced increased rapidly with the introduction of EVs. In today’s main applications such as EVs and battery energy storage systems (BESS) reliability and safety are essential, as is predictable and dependable performance. The path from laboratory to commercial production is not simple or cheap. Investors need to understand the technical maturity of the technology they are investing in and the steps and costs between where they are and where they want to be. It is rare for the inventors of battery technology to have a good understanding of the commercialisation pathway. The potential customers for the new batteries will want to verify that the batteries will endure thousands of charge/discharge cycles. They will also want to know that the batteries can be manufactured reliably with consistent performance and at very low defect rates. This will require the manufacturing of thousands of battery cells for qualification with potential customers. 

Lithium-ion batteries 

A less arduous task than bringing a new battery type to market is to produce components for the existing battery technologies. There are opportunities for investors in all of the components of LIBs, and other battery types. This includes producing better components but also producing the components in the volumes needed. The main components of LIBs, the anode and cathode materials will need to be manufactured in large volumes to meet the projected battery production. Historically, the production of battery components was done close to the battery cell manufacturing, due to a lack of an established supply chain and the small volumes involved. But with increasing demand production of anode and cathode materials can be expected to move closer to the point of mineral extraction to reduce the transport of waste materials. In addition to the anode and cathode materials there are opportunities for the production of metal foils for current collectors, separator films, electrolytes and the binders and casing materials. 

Some companies are working on producing better versions of existing components. For example, incorporating silicon into anodes to increase their energy density, modifying the recipes of cathode materials to improve their energy density and cycle life or developing new electrolytes that are safer and less flammable. 

Battery manufacturing technology 

We are also seeing developments in the manufacturing technologies for batteries. Each new battery factory is an improvement on existing battery factories with upgrades in energy efficiency and automation and efficiency. Because of the sensitivity of cathode materials to moisture the environment inside some areas of battery factories is carefully controlled, to the point where up to 30% of the manufacturing energy cost is for the climate control. There are companies and researchers developing new production processes that require less drying and climate control to reduce the energy cost in manufacturing of battery cells. 

Automation, instrumentation and AI control of battery production processes also provide opportunities. When starting a new battery factory, it is not unusual for the scrap and defect rates to be as high as 30%. Recycling the production scrap is often the reason that recycling plants are established next to battery factories. Improvements in automation, instrumentation and control are not just reducing the labour cost of battery manufacturing, which is usually about 5-10% of the manufacturing cost but are also improving the efficiency by increasing utilisation and reducing scrap and defects. 

Battery production 

Some estimates of the required battery production in 2050 are enormous, Benchmark Minerals forecasts that the world production of batteries will need to increase thirtyfold from 2022 to 2050 to 20 TWh p.a.3. While others, such as Wood Mackenzie forecast more modest growth to 7.3 TWh p.a.4. Currently the planned LIB manufacturing capacity for 2030 is close to 7 TWh, so depending on which forecast is closer to the truth, there is either a large opportunity for new battery factories or a small opportunity. Overlaying this overall demand picture are geopolitical factors. Currently China has about 80% of global battery production, but the US and Europe are actively working to increase their share through actions like the US’s Inflation Reduction Act (IRA) and the EU Battery Regulation. Other countries such as Indonesia and India are also introducing new regulations and incentives to increase their own battery production. There is a risk that the global battery production capacity will exceed demand leading to low utilisation of the factories and some future closures. 

Combining battery cells into modules is the final manufacturing step before the batteries are incorporated into the final products. But this is more complicated than simply putting them in a box and connecting them up. Different battery types have different performance characteristics and decay characteristics, for this reason different battery management systems (BMSs) are needed to calculate the state of charge and state of health of the battery. The BMSs control the charging and discharging of the batteries, which is critical for battery life and safety. There are companies and researchers developing new BMSs, especially using AI, which are extending the life of batteries. As new battery technologies emerge new BMSs will be needed. 


For investors the opportunities in battery technologies are diverse, from start-ups emerging out of universities to established manufacturers. The battery industry is immature and still in the early stages of its S-curve, with short to medium term opportunities for rapid growth but inevitable consolidation. Investors will be advised to take the time to understand the industry, the value chains and the commercialisation pathways required. For emerging technologies there is no certainty and a curated portfolio approach to investments will reduce the risks. For established manufacturers an understanding of their market strengths and weaknesses as well as the geopolitics may prove the best path to identifying suitable investments. 

About the Author

Richard Macoun is the principle at Breakthrough Process Solutions where he identifies, reviews and implements innovation in processing, energy use and techno-economic assessments for clients. He was recently Research Director at the Future Battery Industries Cooperative Research Centre (FBICRC). He has over 20 years’ experience in the minerals and process industries within Australian and global settings. He has specialised in leading technical innovation teams to deliver business results for clients and has considerable expertise in how to improve processing and energy use for mineral processing and mining. He has primarily worked on the upstream (mining/manufacturing) side but is also familiar with mid and downstream (recycling) angles. Richard also provides consulting services to the mining, mineral processing, and industrial chemical sectors. Prior to this he held strategy and technical roles at BASF in both Australia and Germany. He also worked at BHP managing production control engineers and as a process engineer working on refining improvements.