l'Actualité du Solaire

Photovoltaics will become widespread with storage

The trend towards solar + storage will accelerate.

Lithium and cobalt prices have been falling for more than six months now.

Lithium production

The demand for lithium

The text

Photovoltaics will become widespread with storage

Photovoltaics will develop when it can be cost-effectively combined with storage. That is to say, when the kWh from a battery is lower than that from the grid. We are getting closer to this point since Wood Mackenzie indicates that this is already the case in Jordan and Morocco, which augurs well for a gradual generalisation throughout the world. Bloomberg NEF confirms (https://www.pv-magazine.com/2018/11/19/solar-wind-cheapest-source-of-new-generation-in-major-economies-report/) that newly built solar/wind energy systems combined with four-hour storage can already be competitive without subsidy in Australia and India compared to new coal or gas-fired power plants.

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The trend towards solar + storage will accelerate.

On the one handThe cost of photovoltaics continues to fall. Panel prices have been falling since the beginning of the year among producers, with a trend that has been accelerating in recent weeks. In Europe, the decline has been less marked if we believe pvXchange.

On the other handThe other factor in the reduction in the cost of the kilowatt-hour from storage is the cost price of the electricity from the batteries. This is due to the progress made in the design of batteries and in the combination of components, the most important of which are lithium, cobalt, nickel, but also manganese, iron, etc. Bloomberg indicates an average annual decrease in kWh of 20% over the last ten years, which has brought it down to $176 in 2018.

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Lithium and cobalt prices have been falling for more than six months now

After a spectacular surge in lithium and cobalt prices in 2017 and 2018, a price reversal is taking place on the market. Chilean lithium carbonate fell by 18% between June 2018 and June 2019. Prices fell by 9% in the 4th ^{quarter of} 2018 and then by 8% in the 1st quarter of 2019. According to the world's second largest supplier of lithium (SQM), the decline in lithium prices could fall a further 25% in the coming months due to the large number of mines commissioned in recent quarters. Cobalt has also followed this trend with a 66% year-on-year decline on the London Stock Exchange. This should contribute to lower storage costs.

These declines are in line with the decline in raw materials worldwide due to slower growth in the Chinese economy, which grew by only 6.2% in the second quarter, the lowest rate in 27 ^{years, but} China remains the world's main supplier of lithium, with 51% of world production. This situation stems both from the Chinese refining capacity for lithium carbonates produced in the world, whose deposits are sometimes owned by Chinese groups, and from the recycling of lithium from end-of-life batteries.

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Lithium production

Theprimary supply (that extracted from deposits) is highly concentrated: the American FMC (in Chile) and Abemarle (in Argentina) or SMQ (Chile) supply half of the world market. In 2018, Australia is the world's leading producer with 51,000 tonnes; Chile is no. 2 with 16,000 tonnes; China with 8,000 tonnes; Argentina with 6,200 tonnes. Between them, they supply 80% of the world's lithium production. In total, global lithium production in 2019, according to USGS (United States Geological Survey), reaches 85,000 tonnes (69,000 tonnes in 2017 and 38,000 tonnes in 2016).

Added to this is the secondary supply: lithium is increasingly being recycled (this is much less well known). China would have recycled 67,000 tonnes in 2018, and South Korea 18,000 tonnes by hydro-metallurgical process (i.e. already 85,000 tonnes). This process, used in Asia, brings the recycling of end-of-life batteries up to 98% for certain components, whereas Western countries (Glencore or Umicore,...) use smelting which recovers 90% of the cobalt, nickel or copper, but this process is less adapted to lithium recycling. About fifty companies worldwide recycle lithium, including about thirty in China. Chinese companies seem to have a higher recovery rate due to their treatment process. This gives them the opportunity to buy waste batteries at a higher price than their competitors.

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The demand for lithium

The lithium available for global demand can therefore be estimated at between 170,000 and 200,000 tonnes.

It is estimated that only 50% of end-of-life lithium batteries are recycled. The other part of the 50% escapes investigation: some vehicle batteries have been reused in stationary storage, which is the second life of batteries, or they have been exported to Asia. Thus, when SQM (the world's second largest lithium producer) estimates that world demand in 2019 should exceed 315,000 tonnes, this figure seems high. The demand for lithium to produce batteries represented 46% of the world's consumption of this ore in 2015. This rate has had to increase considerably over the last four years. It is estimated that the expected development of electric vehicles will lead to an increase of 20% per year in the demand for batteries and therefore lithium.

What is important is that recycling, which has long been neglected or ignored, is booming. It already represents the equivalent (or more) of the supply of primary lithium. Increased recycling will reduce the need to extract large quantities of new lithium. It will ensure the expansion in the number of electric vehicle batteries that is expected over the next few years.