Looking back to the 1970s oil crisis, or to more recent events in Russia we see the same phenomena, energy carriers (be it oil or gas) of which the supply is controlled by one or a small group of countries using the control over these resources for financial and geopolitical leverage.
New technology same principle
It should not come as a surprise that what we have seen happen time and time again in the “oil and gas era” we see in “clean-tech” as well.
Many renewable energy sources like wind-, solar-energy are both intermittent and unable to respond to match the energy demand. So with the increasing share of renewable energy as part of the total energy supply, the demand for temporary energy buffer storage will increase significantly.
One of the most popular and rapidly growing (short-term) energy storage technologies is the Lithium Ion battery (LIB) technology. With up-to 79% (2021 data) of LIB’s manufactured in China, it is understandable that EU member-states are looking to localize production to;
- decrease dependency on Asian supply
- take advantage of the buoyant market
- safeguard supply to nationally significant industries like the automotive (EV) industry.
Gigafactories, the oil refineries of the clean-energy era.
Gigafactories however are only part of the story, the same way as having plenty of oil refining capacity did not save the oil importing countries during the 70s oil crisis, having Gigafactories alone will not save Europe from dependence on China for LIB’s
The battery plant is only a single link in the whole battery supply chain.
The main links that make up the chain are; mining of the raw-materials, refining and processing these materials to be usable in the battery production process, refined material wholesale/trading, production of cells and finally packing of the cells to modules or packs.
The last (cell-to-pack) link in the supply chain is actually the one best represented by EU owned companies. Relatively speaking that is as here too the dominant players are EU subsidiaries of the big Chinese LIB companies. But there are multiple smaller but well established players like Akasol, BMZ, Kreisel, Leclanché and Xerotech as well as very ambitious newcomers like Northvolt.
Further upstream in the supply chain however things look much more bleak, the closest Europe is to commercial scale Lithium refining, is a feasibility study by Technip Energies on behalf of Viridian Lithium to establish a battery-grade lithium production plant in France.
Going even further upstream to mining, does not make things better, there is verry little mining to speak of. Even though there are established minable reserves in countries like Portugal, Serbia, Great Britain Germany, Austria and Spain there is significant push-back from local citizens worried about the environmental impact of possible Lithium mining operations.
Beyond moving the bottleneck
In order to establish a meaningful level of independence in the energy storage market, rather than just move the bottleneck in the supply chain the EU will have to;
- Extend local refining and mining capacity to allow further vertical integration.
- Stimulate energy storage innovation & R&D with a clear and long-term strategy
- Improve coordination within the different EU commissions involved
- Accelerate the creation of practical legislation on the application transport and storage of the various battery types and chemistries