The mankind passed through a set of power transitions. This concept is connected with development of new energy carriers which became dominating in structure of energy consumption or essentially expanding the energy volume, available to beneficial use.

Through centuries the chain of transitions which conducted mankind from firewood to nuclear power was stretched. It is now talked about «green» power transition as about inevitability, though it is only one of scenarios of development, besides a number of key components of this scenario causes questions. For example, how to establish in Europe by 2030 200 GW of accumulators, which are necessary for stable work of a power supply system from the dominating generation shares on the renewables (R) and where to find money on it and how to make so that taxpayers did not grumble.

RES and world energy crisis

In 2023, according to the International Power Agency (IPA), the electricity generation gain on renewables was 50% more than in 2022 and made 510 GW. The IPA calls the increase in China extraordinary, since in this country the same number of solar power plants was commissioned as “the whole world commissioned in 2022.”
The agency predicts that during 2023-2028 in the world there will be nearly 3.7 TVT of the new generating capacities on RES thereof 95% will provide solar and wind power stations. The forecast is courageous, especially if to consider that investment activity in the world becomes a little contradictory.

Let’s remind that the sharp growth of the generating capacities on the basis of a wind and the sun began at a boundary of the 2000s and the 2010s in Europe. The European Union at that time was the world leader in production of the equipment for wind and solar power stations. Development of «green» generation could reduce dependence on import of energy carriers and provide the additional income from export of the equipment.

Around the same period, the production of equipment for generation using renewable energy sources began to grow sharply in China, which quickly took a leading position in the commissioning of new wind and solar power plants. In addition, European companies began to lose the war for the EU market to Chinese enterprises.

To provide development of RES in the territory, to the European Union it was necessary to enter, except other measures of support, the principle of priority access to networks and to reduce number of coal and nuclear power plants. Actually the EU passed to the principle of «slash-and-burn power» within which traditional generation «was burned out» to provide growth renewable. The created system looked unstably that was confirmed during involuntary experiment of planetary scale — the world energy crisis of 2021-2024.

During this crisis by the most valuable there was an example of three largest consumers of energy — Europe, China and the United States. China which does not connect the future with any one energy carrier and with one model of pricing appeared the steadiest of them. And Europe where the total exchange binding of pricing on key energy carriers adjoined to a distortion in area of renewable power leaves the most injured of crisis. Formally RES had to support the EU and Great Britain, to make them steadier against crisis blows. But it would work only in case events of 2021-2024 are not preceded by more than 10 years of reforms and economic crises.

Although the United States has experienced the blow of the crisis in the form of sharply increased energy prices, its market still remains relatively independent from the European and Asian ones. In addition, the United States fully satisfies domestic demand for natural gas through its own production.

As we also assumed in earlier articles devoted to development of the world energy crisis Europe did not learn any lessons from the event. On the contrary, local officials were engaged in not constructive search of the guilty. Russia was predictably blamed: «REPowerEU seeks to reduce quickly our dependence on the Russian fossil fuel by acceleration of environmentally friendly transition and association of efforts for creation of steadier power system and the real Power union».

The series of failures in the field of power the strong-willed decision were called series of progress. It was not made any attempts to comprehend negative experience. Therefore within the strategy of REPowerEU the European Union plans not to roll away a part of reforms, having supported traditional power, and on the contrary — to increase a share of RES from 23% (in 2022) to 42.5% (in 2030). It is understood that a share of renewable energy sources in total electricity production will increase by 60–70% by the end of the decade. And this will require investment not only in production, but also in storage of electrical energy.

Lithium — hope and the trouble-maker

Costs of electricity generation from renewable sources can be represented constantly decreasing (with small breaks on the short and a little discouraging growth). Beautiful schedules usually ignore one important component — means of accumulation (storage) of energy and after all the sharp need for this component appeared only in connection with development of generation on RES. Means of storage of energy is first of all large batteries and «green» hydrogen.

The most popular accumulators are lithium — ion. According to BNEF, since the beginning of the 1990s they fell in price by 30 times. And according to IPA, from 2010 to 2020 their cost decreased by 90%.

At the beginning of 2021 lithium begins sharply rising in price. This — albeit not immediately — was reflected in the price of batteries.
According to Goldman Sachs Research, a battery kilowatt-hour (all-usable unit of capacity) in 2019 cost $172, in 2020 — $143 and in 2021 — $135. But in 2022 a kilowatt-hour rose in price to $156. In 2023 prices fell a little — to $151, but nevertheless remained at the level higher than that was observed in 2020.

Lithium carbonate began to fall in price after a peak of 597.5 thousand yuans per 1 ton, where it climbed after reaching a minimum of 39 thousand in November 2020. Having dropped to 165.5 thousand yuans per 1 ton in April 2023, lithium began to rise in price again. In June of the same year, prices reached 312.5 thousand yuans per 1 ton, after which the decline began again. In the winter of 2024, lithium already cost 95.5 yuans per 1 ton. Once again, statements were heard about the impending continuous reduction in price, but then at the end of February prices rose above 100 thousand yuans, reaching 108.5 thousand yuans per 1 ton by the time of writing these lines.

Easily corrected forecasts

As it is easy to see, lithium, even after a period of price reduction, costs 2.8 times more than at the lows of 2020. But then reputable organizations as one predicted an imminent breakthrough: «According to BNEF, the cost of a lithium-ion battery for electric vehicles will fall below $100 per 1 kWh by 2023,» «Wood Mackenzie expects battery pack prices to fall below the $100 per 1 kWh milestone by 2024,» «IHS Markit expects the average cost of a lithium-ion battery will fall below the $100 per 1 kWh limit in 2023.» Now the deadlines had to be shifted a little. So, on February 29, 2024, Goldman Sachs published a forecast, which again talks about a future reduction in the price of a kilowatt-hour battery to below $ 100. Goldman Sachs Research expects that in 2025 this indicator will make $91 and by 2030 will decrease to $69.

Of course, such forecasts more feed optimism of the market concerning electric cars. The same Goldman Sachs assures that «electric cars will reach breakthrough levels from the point of view of parity of expenses (without subsidies) with cars with internal combustion engines in some markets in [2025]«. This has been voiced before, but earlier the terms were called when parity was expected to be achieved. One of the most important components of parity of expenses is reduction in cost of electric transport, and it is poorly achievable if batteries do not considerably fall in price. Actually, electric cars are the main driver of increase in demand for batteries and lithium today.

In 2010 only 23% of demand for lithium and in 2021 — 74% fell to the share of accumulators. By that moment consumption of lithium increased four times. Goldman Sachs expects that demand for accumulators will grow in the current year by 29%. Besides researchers had to revise the forecast towards decrease against delay of investments into electric transport (earlier it was expected that demand in 2024 will grow by 35%).

Perhaps, the slowed-down investment activity somehow influenced new surge in optimism of respected researchers concerning parity with internal combustion engine. But it is a subject for a separate article. Here we will notice that demand for accumulators though concedes in systems of storage to electric cars, but nevertheless is quite noticeable.

Accumulators, networks, billions of euros

In the European Union in 2022, according to The European Association for Storage of Energy (EASE), about 4.5 GW of new storages were added. Expectations for 2023 (which are not confirmed with the corresponding statistical report yet) are more than 6 GW. Before EASE claimed that Europe will need 187 GW of stores by 2030 (by other estimates — 200 GW) and 600 GW by 2050 if it wants to achieve targets in the area of renewables.

It turns out that for the sake of rescue of our fragile environment, according to supporters of the radical scenario of «green» power transition, it is necessary to increase multiply production of metals (demand for lithium in accumulators, according to Wood Mackenzie, will grow from 2023 to 2030 almost three times).

But after all business is not limited by stores, power lines are necessary. According to the analytical company Ember with reference to data of the European commission, by 2030 Europe will need €584 billion investments into power supply networks. Thereof, as it is supposed, €375-425 billion need to be directed on distributive networks, and investments in cross-border interconnector and systems of storage have to make rather modest €6 billion a year. The age about a third of the European low-voltage networks, according to Ember, exceeds 40 years; by 2030 this indicator will reach 55%.

And according to Bruegel, investments into production and storage of the electric power can double and make about 1% of GDP of the European Union annually. Further the European researchers are distressed that «these very notable expenses can threaten public recognition of power transition». Amazing discovery: people reluctantly pay for certain foggy prospects and not clear benefit in the uncertain future.

Bruegel also believes that the cost level can be reduced if we switch to a joint (i.e. pan-European), rather than individual optimization of the design and operation of national electric power systems. It turns out that a systematic approach is more profitable than a spontaneous one. It’s amazing.

Not only Europe develops a segment of batteries as energy stores. In the USA at the end of 2023 about 14 GW of similar accumulators worked. Their most part settled down in California (7.3 GW) and Texas (3.2 GW) — in states with the highest dynamics of a gain of solar and wind power stations.

There is only one problem — the leader in the field of stores is China. However, it is a problem only for Europe and the USA.

Stores of China

As reported by «Xinhua» with reference to the Ministry of Industry and Informatization of the People’s Republic of China, in 2023 production of lithium — ion accumulators in China grew by 25%. Export of batteries jumped up more than on a third. Total production of lithium — ion accumulators exceeded 940 GW h, and output of accumulators for energy storage — 185 GW h.
Both Europe and the United States are interested in development of own productions of batteries. But at the moment the absolute leader is China (especially it is worth allocating the CATL and BYD companies). Besides, the companies from the People’s Republic of China make also the most part of details of which batteries consist. For example, about 77% of the made cathodes fall to their share. The United States, for comparison, occupy only 1% on this indicator.

It is appropriate to quote The New York Times here: «Despite billions of Western investments, China is so far ahead – in mining rare minerals, training engineers and building huge factories –it may take decades for the rest of the world to catch up. Even by 2030, China will produce more than twice as many batteries as all other countries combined.»

The seed of a poorly concealed conflict is ripening here. Both Brussels and Washington periodically allow themselves to speak negatively about the import of Chinese products in general and batteries in particular. In mass media hotly discuss «leaks» from the reports prepared for leaders of the EU in which it is said that «The European Union can become same dependent on China in the field of lithium — ion accumulators and fuel elements by 2030, as from Russia in the field of power earlier».

But thus measures of stimulation of own productions of batteries in the USA and Europe obviously lag behind measures for demand stimulation. It is impossible to develop separately electric generation on RES, separately to stimulate development of power supply networks and stores of energy, separately to demand that someone constructed many plants which will release accumulators, and thus to hope that all these elements by itself will be going to the working system.

One could hope for technological breakthroughs that would allow us to seize the palm, but there are no breakthroughs in the field of electricity storage at the moment. It remains only to catch up with the PRC. And, as Europeans like to do, complain about the growing dependence, this time from China.

P.S. We started the article by mentioning the «extraordinary» increase in renewable energy generation in China. And finally, we add that in 2023, China also became the world leader in commissioning coal–fired power plants — 47.4 GW. This fact washes away excess green colors from the picture of the world energy industry, making it more voluminous.