Asian battery boom threatens to pull plug on UK innovation
A BOOM in production of lithium-ion batteries in Asia could curtail innovation in the UK’S thriving energy storage technology industry, according to one of the country’s leading investors in clean technology.
Alex O’cinneide, chief executive of Gore Street Capital, the investment adviser of Gore Street Energy Storage Fund, the world’s first energy storage fund, says booming demand for electric vehicles is driving up production of lithium-ion batteries in Asia and causing the price of the technology to drop sharply.
Mr O’cinneide says surging production is reshaping the economics of the industry, as manufacturers in Asia seize what they view as “a market opportunity to replace every car engine in the world with batteries”.
This could create big challenges for UK companies trying to bring innovative new technologies to the market.
“We have right now a situation where large Asian manufacturers for energy storage are ramping up lithium-ion battery production,” he said. “The challenge [the UK] will face will be to get to a large enough manufacturing scale.”
Investment in battery technologies has been accelerating, driven by expectations of rapid growth in the electric vehicle industry.
The International Energy Agency (IEA) claims that there could be 220m electric vehicles on the world’s roads by 2030, up from 3m last year.
Asian companies such as Samsung, NEC and China’s BYD have all made advances in lithium-ion technology, aiming to intensify energy density to allow electric vehicles to travel longer dis- tances on the same batteries.
Lithium-ion batteries are currently attracting the lion’s share of investment because they are viewed as the best solution available for electric cars.
However, some experts believe the technology is flawed because of the large volume of expensive lithium needed and the risk of fires. They believe better alternatives may eventually emerge such as solid state batteries.
Mr O’cinneide, 46, who serves as a Unicef adviser on energy and climate change, invested heavily in solar technology in 2007 and saw a similar pattern of invest- ment from Asia stifle innova- tions in the field.
“A lot of very good solar technology companies didn’t make it because you had so much product coming out from Asia at a very competitive price.”
In the UK, the Government’s Industrial Strategy Challenge Fund, which aims to support the development of batteries with a £246m investment, risks seeing its work fall flat as new technol- ogies are left behind.
Allan Paterson, head of programme management at the Faraday Institution, the Government’s leading battery research team, admits a lot of new technology may never get recognition.
“It does take a long time to get chemistry development from the lab all the way through to full commercialisation. Those timescales are quite long and not all of them make it.”
Though Mr O’cinneide believes Asian manufacturing expansion of lithium-ion batteries puts innovation at risk, he believes a “technology agnostic” approach to investment is vital.
“We don’t take technology risk,” he said. “The solu- tions we buy for the services we offer, they need to be well grounded, they need to work and we need to get a guarantee from its year one manufacturer.
“That said, we need to understand what the various technologies are appropriate for, and we also need to understand what’s coming next.”