Li-ion battery use grows in marine, non-car sectors

Lithium-ion battery use is growing in the commercial vehicle, energy storage and marine sectors, and is expected to be a key driver of demand in the coming decade, delegates heard at the virtual US Advanced Automotive Battery Conference.

The lithium-ion market is dynamic and has changed since being solely focused on consumer electronics in the early part of the century. A sharp rise in demand from electric vehicles (EVs) has resulted in growth to around 150GWh of demand by the end of 2019, up from 50GWh in 2015, according to estimates from energy research firm IDTechEx.

Now, other applications promise further growth. Ships and buses are expected to increase lithium-ion demand, as well as other applications in drones and aircraft.

Maritime applications growing "Projections in shipping are showing much higher emissions over the next few years, which may create demand for lithium-ion and hybridisation of ships," said Alex Holland, analyst at IDTechEx. He described marine applications as "low hanging fruit" for lithium-ion battery applications.

The marine industry has already embarked on transition to a low-carbon future. While batteries are unlikely to play a huge role in deep-sea vessels with long-haul journeys, smaller journeys and shallow-water vessels could use batteries.

The majority of demand in the maritime sector comes from ferries, which lend themselves well to batteries because of easy charging infrastructure at end destinations, and the reduction in operating costs for companies through fuel savings.

"You have factors that will encourage demand for lithium-ion batteries and hybridisation of ships. Low emission zones in coastal areas are being brought in and extended. These regulations revolve around sulphur so other solutions could be done, along with hybridisation and battery technology," analyst Holland said.

Hybridisation could be key for longer journeys at sea. In September, the Maritime Battery Forum (MBF) concluded that although fully electric long-haul ships were a distant technology, hybrid ships were a real possibility. "The potential of batteries on board large ocean-going vessels, with the current available technology, lies in hybridisation," MBF said.

If the sector opens up to batteries, the larger battery size and energy density requirements could drive demand higher for metals such as nickel and cobalt.

E-bus market outlook mixed Buses are another potential growth market of lithium-ion batteries. Until now, China was the main source of growth, with around 90pc of the world's e-buses produced in Asia-Pacific, according to industry estimates. It is expected to supply e-buses for other Asian countries with growing markets.

E-bus production is expected to account for around 20pc of global lithium-ion battery demand in 2020, according to Schmuel De-Leon, an Israeli consultancy. That market is expected to grow at more than 10pc CAGR over the next decade, according to its estimates.

The consultancy expects strong growth in Europe, driven by incentives to reduce traffic, noise pollution and air pollution. The ease of market penetration (one buyer orders several units at a time) is expected to grow rapidly in the European market and contribute to overall global growth.

In the US, much depends on the result of the ongoing election. A Biden administration would encourage uptake of EVs and e-buses by potentially introducing subsidies. Individual states already have measures in place — California requires all medium and heavy-duty vehicles to be fully electric by 2045.

The market in China for e-buses is expected to be around 20GWh this year, lower than the 25GWh in 2018, because of falling subsidies. In 2019, China halved its subsidies for e-buses and limited them to batteries with a higher energy density (135Wh/kg). This is expected to encourage bus manufacturers to switch from using lithium-iron-phosphate batteries to nickel-manganese-cobalt (NMC) batteries for their better energy density.

E-buses use larger batteries than standard EVs, around 250KWh. If Chinese firms switch towards NMC batteries, there could be extra demand for nickel and cobalt, metal markets that are expected to fall into deficits during the next decade because of demand from EVs.

Argus assessed cobalt hydroxide prices in China higher by 10c/lb yesterday at $11.80-12.80/lb on strong demand from Chinese cobalt chemical producers. Seaborne nickel sulphate prices were assessed at $2,900-3,500/t cif China.

By Thomas Kavanagh

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