Use of Batteries in Renewable Energy: the Beginning of the End of the Hydrocarbon Fuel Era

Published: 13.03.2018

Battery market prospects were discussed at the CERAWeek annual conference of the biggest hydrocarbon market players.

Use of Batteries in Renewable Energy: the Beginning of the End of the Hydrocarbon Fuel Era

For umpteenth times, the carbon-burning economy has been declared to be on its deathbed. However, experts argue that the time for batteries has finally come, and the competitive edge of oil and gas projects is shrinking every day.

Batteries, once powering small devices like watches and household remote controls, now energize things most central to daily life, from smartphones to cars, even to entire homes and offices. Big Oil has made a notice of it, of course. The battery market prospects were discussed at the annual CERAWeek conference  in Huston, TX, (arranged IHS Markit) that brought together managers of the largest players on the hydrocarbon fuel market in early March of 2018. "The question is no longer if batteries will disrupt the power sector," as someone pointed out in a discussion, "but rather how much and how fast?"

Top Battery Makers

"This is a watershed event," said Joel Eisen, an energy law professor at the University of Richmond, "It is very much like early 1970s, when regulators opened up the telecommunications market with rulings that ushered in the digital age by giving computers fair access to phone lines".

The CERAWeek conference named the following three driving forces behind the use of batteries:
• increased demand for electric cars
• across-the-board decline of the share of hydrocarbons in national energy balances due to RES
• a substantial drop in battery costs

Demand for electric cars

In the recent years, analysts have discussed that further improvement of durable, energy-dense and easy-to-recharge lithium-ion batteries would mark the beginning of the end of the hydrocarbon fuel era.  And now we see that electric cars made by such companies, as Tesla, General Motors Co. and BYD Co. have already replaced more than 3 million cars with internal combustion engines globally.

Today, electric cars are predicted to outsell conventional cars no later than the year 2040. Based on Bloomberg New Energy Finance estimates, that it will reduce fuel demand by 8.5 million barrels of a day.

Electric Vehicle Production Forecast

Electric vehicle forecast to make up half of annual global car sales by 2040

Reduced Share of Hydrocarbons
The batteries’ advance into power markets threatens the reign of natural gas. Gas power plants are actively substituted with renewable energy projects. Solar and wind farms can now use energy storage systems to accumulate their power and release it on an as-needed basis.

Grid Energy Source

More batteries are coming online to backstop wind and solar energy worldwide

Over the next five years, growth in energy storage will be “more exponential, than linear,” said Alexandra Goodson of Saft Co. (a battery maker).

Battery Price Plunge

The battery-storage revolution is not just around the corner. Lithium-ion pack costs will need to halve again from today’s levels for electric cars to fully compete with gasoline-burning ones, believes Albert Cheung, head of analysis for Bloomberg New Energy Finance. Manufacturing will need to ramp up, as well as production of raw materials needed for the batteries. The technology still relies on policy mandates and incentives in most markets, while in mid-February of 2018 the US Government made equal rules of the game on the energy market for batteries and other types of energy storage. That said, battery prices are a fifth of what they were eight years ago, and they are projected to keep falling.

Tipping Point

Battery costs are expected to drop below $100 per kilowatt-hour, making electric cars competitive on price by 2025

Oil and gas companies and grid operators alike are already getting ready to imminent large-scale application of batteries on the automotive market and in energy grids. BP Plc (British Petroleum) sees oil demand peaking the 2030s, as hundreds of millions of electric cars hit the road.  The chief executive officer of oil and natural gas giant Total SA said at CERAWeek that he was already driving an electric car. "We are reaching an inflection point," said Steve Westly, founder of sustainability venture-capital firm Westly Group, - “In the future, people will talk about energy in terms of kilowatts per hour instead of oil per barrels."

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