Top 2 China and Japan compete for renewable energy facility power storage market
In the field of batteries for power generation facilities, which play a key role in the spread of renewable energy, two major manufacturers in China and Japan are competing. Dalian Rongke Energy Storage Technology Development Co., Ltd. will more than triple its production capacity by the end of 2023, while Sumitomo Electric Industrial Co. is expanding its demand by developing smaller products. Batteries are used to flexibly store and release excess power to stabilize power supply and demand. If competition makes batteries cheaper and better, it is expected to help governments and businesses decarbonize.
Manufacturers in the battery industry will strengthen their production systems and develop "Redox Flow (RF)" batteries with long life and high safety. In June, at the facilities of China's Dalian Electric Power Company, Dalian Rongke put into operation a large battery for wind power and other applications.
The power storage system of the facility has the world's largest RF battery capacity (July, Dalian, Liaoning Province)
The total storage capacity reaches 400,000 kWh. In a single construction project, the scale is the largest in the world, and the total investment of electric power companies has reached 1.9 billion yuan.
The working principle of the redox flow battery is that the electrolyte stored in the tank is circulated by a pump, and electricity is stored and discharged by the ions of the rare metal vanadium. This is the so-called "full liquid" battery. The biggest advantage is that it has a long service life of more than 20 years, while mainstream lithium batteries used in pure electric vehicles (EVs) are considered to only last about 10 years.
As of August, the actual delivery volume of Dalian Rongke was about 560,000 kWh. In the future, the equipment operating in Dalian will be expanded by 400,000 kWh.
The Chinese mainland market accounted for 60%
Dalian Rongke has a battery factory in Dalian with an annual production capacity of 1.2 million kWh. General manager Wang Xiaoli said in an interview with Nihon Keizai Shimbun (Chinese version: Nikkei Chinese website) that the annual production capacity will be expanded to at least 4 million kWh by the end of 2023.
Dalian Rongke was established in 2008 and is invested about 20% by affiliates of state-run research institutions with advantages in the battery field. Statistics from research firm Bloomberg NEF show that the Chinese market accounts for about 60% of the installed RF batteries globally by capacity (as of 2020). Dalian Rongke's goal is to maintain more than half of its share by 2025, hoping to firmly sit on the throne of the world's largest enterprise.
On the other hand, in 2001, Japan's Sumitomo Electric Co., Ltd. took the lead in the practical application of redox flow batteries. In March 2022, Sumitomo Electric delivered 51,000 kWh of RF batteries to Hokkaido Electric Power, the largest capacity in Japan. Sumitomo Electric has also supplied batteries to the United States, Taiwan, Morocco and other countries and regions, with a total capacity of 159,000 kWh.
Although Sumitomo Electric has not announced the current scale of the redox flow battery business, it said that it “will strive to achieve annual sales of 10 billion yen by fiscal 2025” (Toshika Shibata, director of RF battery technology, energy system business development department). As the usage scenarios of redox flow batteries continue to expand, Sumitomo Electric has vigorously promoted the miniaturization of batteries in order to meet the demand.
The development of a small model with a capacity of about 100 kWh has already begun, and Sumitomo Electric plans to supply it to small-scale enterprises, factories, convenience stores, nursing homes, etc., and has already started business activities. The bottom side of batteries used in power stations is often more than 10 meters long, requiring dedicated buildings and spaces. The specific size and introduction cost of the small model have not yet been determined, but it will be reduced to the point where it can be placed in a parking lot and the like.
The subject of redox flow batteries is to reduce the size (power storage system in Dalian City, Liaoning Province, produced by Dalian Rongke, picture provided by the company)
When the output power of photovoltaic and wind power generation is unstable, and the supply exceeds the demand, it will cause regional blackouts. The global market for stationary batteries such as redox flow batteries is steadily expanding due to their suitability for regulating the supply and demand of renewable energy. According to Fuji Economic forecast, the market size will expand to 3.4460 trillion yen by 2035, reaching 2.4 times that of 2021.
According to the Yano Economic Research Institute, redox flow batteries will account for about 22% of the global next-generation battery market in 2030. It is second only to all-solid-state lithium batteries expected to be used in EVs (45%) and organic rechargeable batteries that do not use rare metals (24%).
Among redox flow battery manufacturers, Chinese companies that easily secure the main raw material vanadium currently have the upper hand. According to the US Geological Survey, China will account for 66% of global vanadium production in 2021. In addition to Dalian Rongke, the emerging enterprise Grepalov Energy Storage Technology (Panjin City, Liaoning Province) invested 1 billion yuan in July to start building an RF battery factory. Beijing Pu Neng Century Technology (Beijing) has also supplied about 70,000 kWh.
Cost becomes an issue
Relying on the advantages of production scale and cost competitiveness, Chinese companies also rank among the top in the world in the field of photovoltaic panels and EV batteries. Yoshida Changteng, research director of the Institute of Energy Economics of Japan, mentioned that there are 50 to 70 RF battery manufacturers in the world, and pointed out that "there are also many Chinese companies participating, and the competition is becoming more and more fierce."
The problem facing the popularization of redox flow batteries is the high battery size and price. Models that can be charged and discharged for about 8 hours for a long time, and the cost per kWh is close to that of lithium batteries. But because of the large capacity, the total price is also high. It can be envisaged that the supply and demand of vanadium will also be tight, which will be a factor for rising costs.
The rise of a new generation of batteries, the market competition is fierce
It is not only redox flow batteries that are targeting the battery market for renewable energy. Lithium batteries and new-generation batteries are also being developed rapidly.
The basic principle of "all-resin battery" using resin as the main material is the same as that of lithium battery, but it is not easy to burn and has high safety. An "air battery" in which a material that adsorbs oxygen in the air is used for the positive electrode and a metal is used for the negative electrode is also attracting attention. Electrode materials are cheap, and some models are expected to cost less than one-tenth the cost of lithium batteries.
According to the Ministry of Economy, Trade and Industry of Japan, in the field of stationary lithium batteries, the global share of Japanese companies was 27.4% as of 2016, and it is estimated that it will drop to 4.5% in 2020. The market has been taken away by South Korean and Chinese companies, and Japanese companies have been forced to remedy that with technology and cost competitiveness.