And welcome, everyone. Thanks so much for joining us
for the Battery Insiders podcast.
I'm extremely delighted today as Simon Anker, the founder and
Chair of Battery Associates, as the host of today's episode to
talk to Lord Turner, who is the chair of the Energy Transitions
Commission, which is a global coalition of companies to
identify technical and economical challenges to get to
net zero in all the sectors. And I was very fortunate to see
you speak in the context of one of the large OEMs out there and
really sharing, I think, a lot of your good insights and also a
lot of enthusiasm of what is even possible in this industry.
And I'm really glad to speak with you today.
Thanks for joining us. Thank you.
Brilliant. So let's get right into it.
I think I just touched on, you know, with your collision, you
look at technological challenges.
So let's talk a bit about technology.
And of course, here's part of the battery Battery Insiders
podcast. Of course, we're also quite
interested in the battery side. And to maybe start on the
technological topic, talking about cost and scalability.
And of course, we have seen that the battery price we have
plummeted. It's really exciting, especially
on the stationary side as well, but also lithium iron phosphate,
but also have topics such as sodium iron, which could still
drive it down even further. So looking at all of these
developments and the rapid developments and the
possibilities of scale up, right, to tell what our levels
of storage and what do you see as some of the bottlenecks to
really make this happen? Supply chain, for example, the
topic people talk about, manufacturing, anything else
which can stop this massive transition we're seeing.
Well, I basically think we are on an unstoppable transition to
a dramatically increased role of batteries and in particular
probably lithium ion and and maybe sodium ion batteries in
our energy systems. Since I began to be very
involved in issues to do with the energy transition about 15
or 16 years ago, 17 years ago now, 2008 when I became the
first chair of EU KS Climate Change Committee, one of the
most dramatic and at that stage unexpected changes has been an
extraordinary fall in the cost of lithium ion batteries.
I mean, essentially they are down 90% in price or even more
than they were in say 2000 and eight, 2009 when I first started
working in these areas. And this has transformed the
prospects for electrifying the global economy.
It transforms the prospects for electrifying Rd. transport in
particular, but it has also transformed the prospects for
storing electricity within grid systems, which enables us to
deploy renewables far faster than possible that far faster
than we previously thought was possible.
It really is a major change and has changed my point of view
over the last 10 to 15 years as what is possible now.
People then say, well, there are constraints.
I have to say I don't think there are major constraints, or
every time we think there's a constraint, it turns out that it
isn't an important one. I remember five years ago when
the main technology we were using, the main chemistry mix we
were using in a a lithium ion battles was NMC, nickel,
manganese and cobalt on the cathode.
And people were worried about, well, how are we going to get
enough cobalt? Most cobalt is coming from
Democratic Republic of Congo with all sorts of environmental
and child labour and political corruption issues.
What applies the price of nickel?
And then to an extent which I did not see coming about 5 or 6
years ago, a wave of innovation given us the lithium ferrous
phosphate battery which requires no nickel and no cobalt.
And as a result, the cost of cobalt and the cost of nickel
having gone up by about 3 or 4 times between about 2019 and
2022, are now down to back with the way they were before.
Because it turns out, although nickel and cobalt can enable us
to have very high performance batteries, we don't need them in
all batteries. And over 50% of all the
batteries now being produced in the world are LFP batteries with
no nickel and cobalt. A change in just five years.
As for lithium, there is lots and lots of lithium in the
world. And again we've seen a rise in
the lithium price between 2020 to 2022 of about four times and
we've seen it completely reverse.
And that's despite the fact that there's an extraordinary boom
going on in battery energy storage systems using lithium
ion batteries and despite the fact that actually electric
vehicle sales across the world are progressing faster than was
predicted five years ago. Now of course there may be
mineral supply pinch points that develop in future and there are
very important local environmental impacts about
mineral development. For instance, I'm very worried
about some of the local environmental impacts of the big
nickel production developments which have occurred in
Indonesia. But overall, I think we should
be confident that all the mineral supply issues will be
solved by finding new resources, by new and less environmentally
harmful processing technologies which are being developed and
then later by the recycling of battery material.
Now of course that at the moment is relatively small simply
because we haven't yet got to the end of a big generation of
EVs. But within 10 years time, I
think a significant proportion of all the lithium and the
nickel and the cobalt to the extent that we're still using
lithium, cobalt going into electric vehicle and stationary
batteries will be coming from the recycling of the batteries
at end of life. So my overall belief is this is
unstoppable. And when we at the Energy
Transition Commission have looked at the environmental
impact of all this of the world, of course there's an
environmental impact. Human beings can't have a high
level of prosperity without some environmental impact.
But it is an order of magnitude less or two or three orders of
magnitude less than the environmental impact of the
fossil fuel system that we're replacing.
So I I really am an optimist of this.
It's one of the in a very tricky and worrying world, this is a
technology which can transform humanity's prospects for the
better. We appreciate it instead of
closing the loop circularity. Definitely topics you can touch
on more later as well. Maybe talk about 1 aspect.
You touched already on a lot of the benefits another topic of us
causes. The topic of long duration
storage. If you think about lithium ion,
you just mentioned you often think about one hour, 2 hour, 4
hours, a bit more. But then of course, we also have
other topics. You know, we have seasonal
times, right? We also have loads of the, you
know, longer time where you know, it's darker, maybe in
winter, maybe, you know, there's time when the wind is not
blowing as much. So things like that.
So maybe what are some of the other other other technologies
we need for that? Is it and Vdox flow?
Is it hydrogen, maybe coffee or Shep?
More on the topic of long duration storage, what do you
see in that regards? Well, you're absolutely right.
It's very important to understand all the durations
across which we will have to shift supply via storage to
balance supply and demand in a variable system.
And in fact the Energy Transition Commission will be
producing a major report in July which sets out that picture.
Interestingly, it's very different in different regions
of the world. If you look at the challenge
which India or Indonesia or Africa will have, it will be
almost entirely, very primarily A diurnal challenge, right?
It will be you have a whole load of solar PV by day.
How do you keep the air conditioner running when the sun
goes down, much less in those countries, seasonal variation.
When you come to Northwest Europe, by far our biggest
balancing challenge is what to do in a February winter when we
get an anticyclone in the North Sea where the wind supply goes
down not for an individual hour or day, but goes down for maybe
even two or three weeks, two or three weeks, which you know
might happen once or twice in a winter, but you don't know when
exactly they're going to happen. And if that's a very cold
anticyclone, it might correspond with precisely the point where
there is high electricity demand, if as we should, we have
electrified heating, getting rid of the gas boilers and competing
and completing them, replacing them with heat pumps.
So we have these different balancing challenge.
We have short term essentially diurnal 2 hours, four hours, say
8 hours, but not more than that. We have weekly and a couple of
weeks and then we have these long seasonal ones and we have
to deploy a set of technologies to address each of these
different duration challenges. Now, interestingly, when you
look at batteries, technically batteries could solve any of
these, right? There is no limit to how slow
you can charge and discharge a battery.
A battery has a maximum C rate, a rate at which you can charge
and destcharge it. But that's a maximum.
You could take a battery and slowly fill it up over, you
know, a week and then slowly run it down in a week.
The reason why we don't think we'll do that is not technical
limitations, it's economics. Batteries have in the past cost
so much per kWh storable that they're only economic if we're
going to be cycling them many, many times per year.
If we're going to be recycling with them, at least say 365 * a
year, charging them up in the day and discharging them at
night. An interesting issue is how low
can battery costs go and does that challenge that assumption,
right. If I could give you a, you know,
batteries in 2010 cost in today's money 13 or $1400 per
kWh. Now at the pack level, they're
going below $100 per kWh. If I could give you a battery
which cost $10 a kWh, you might use it even for that very long
duration storage. It's all an economic issue, not
a technical issue. But at least for now, our
assumption is that the batteries will do the two hours, the four
hours, the 8 hours, the 8 or 12 hours, which is enough to solve
all of the diurnal challenges. And that's really important
because it means that in say the Sunbelt of the world where there
is a lot of sun and not much seasonal variation in in energy
demand, solar plus batteries is going to become an almost
complete solution. Come again to the Northwest,
Europe or other high latitudes. We're going to need a range of
technologies. Those will be batteries at the
shorter duration. And then there's technologies
like compressed air, maybe liquid air, maybe vanadium,
redox flow batteries at a slightly longer level, pumped
hydro, very a powerful technology wherever we have the
physical situation. Of course, best when you've got
some mountains, some elevation, because it's all based on
gravity. Heat storage, a very interesting
one, just heating up bricks or stones with electrical input
when we've got surplus electricity and then releasing
that heat either to be used as heat or to drive turbines when
we need it. Now, of course, one of the
biggest challenges is those really long cycles that I
referred to earlier, how to take, say, surplus winds that we
would tend to have in October and November with autumn winds
and to store up enough energy that we can deal with this, as
is in the German word, the dunkleflouter, the dolge of the
February or so anticyclone. Here I think hydrogen is going
to be the dominant technology, making hydrogen from
electrolysis when we have surplus wind and solar and
storing it in salt caverns. The analysis, for instance, for
the UK suggests that we have lots and lots of storage in salt
caverns and the cost of doing that is relatively low.
So the capital cost per kWh storable is so low that it
doesn't matter that you're only cycling it once or twice or
three times a a year. But there are significant
conversion losses of course, because what you will do is
you'll make the hydrogen and then almost certainly get it
back to electricity by burning it in a gas turbine.
And the combination of the loss in the electricity, the the
electrolysis process and in the combustion process will probably
be 50% or or or so. So by definition, the
electricity that comes out at the end is going to be twice as
expensive as the electricity that you put in.
But there are these full range of technologies available and we
are confident that they can solve the problem though with
this interesting wrinkle that I think the challenges of
balancing supply and demand, we are going to find much easier
and much cheaper in the Sunbelt of the world than in the
northern latitude rodent belt. Brilliant.
So what I hear from that is in some region it can be a full
solution with the best with battery storage and some others
we need to compliment with other technology.
Absolutely right. Absolutely, yeah.
Fantastic. So another application right of
of batteries is elected vehicles and elected vehicles of course.
And that's also the context where we were first connected.
But then of course also the topic how you can maybe use even
AVS, right. That's the stability to
compliment. We go to grid for the grid as
well and kind of enable, you know, and demand response and
smart charging and things like that.
As you mentioned, you know, we have more EVs coming, you know,
online maybe in people anticipated five years ago, but
there's still a range of challenges right from
infrastructure and others for EVs.
Maybe you could share with more your perspective on what we have
to do now to really scale up further like to these millions
of EVs which we require in the system and maybe what are some
of the challenges to overcome that regards.
Well, of course, it's interesting.
We sometimes talk about these challenges as if, oh, we've got
to work out what they are. But but let's be clear, there
are two major countries in the world, two countries, one very
big, one relatively small, which have solved these problems.
I mean, Norway now 95% of all new vehicle sales are electric
vehicle and primarily straight battery electric vehicle, not
plug in Hydrid. And when in the UK people say to
me, Oh dear, these, these battery electric vehicles, you
know, they won't work in cold climates because the batteries
don't work as well in cold climates and they won't work in
countries with long driving distances.
I say to them, well, have you ever been in Norway?
And can you give me an explanation of why it's working
in Norway? The answer is if you invest
enough in charging infrastructure, then a the EVs
will be the solution for the whole of passenger cars.
And I think we've got to the stage took a long time in
relation to Japan in particular where we've realized that the
idea of the hydrogen passenger car is a complete dilution.
Battery electric vehicles are fundamentally advantage.
They are. They are much more efficient.
They're silent, they don't produce local pollution in
cities. They have far higher
acceleration. For people who enjoy that sort
of thing than old fashioned, noisy, inefficient internal
combustion engines. These are going to win.
And in China, of course, we're just at the stage where a big
country rather than Norway, a little country where a, they're
going above 50% of new passenger car sales.
And I suspect that by 20-30 in China there'll be 90% of new
passenger car sales. So I think it's important to
realise this is a revolution which is absolutely unstoppable.
And with the fall in battery prices, we are probably only two
or three years away from having getting to the point where the
battery electric vehicle is cheaper than the internal
combustion engine vehicle for the same sort of size and
comfort level. And again, that point has
already been reached in China. And the other dimension of A
innovation and battery technology advance is not just
that the costs are coming down, but the energy density is going
up. Energy density is measured both
gravimetrically as Watt hours per kilogram, volumetrically as
Watt hours per litre. But both of those volumetric a
bit faster than gravimetric are growing up going up at maybe 6
to 8% per annum, doubling every 10 years or so.
And that's why we are now seeing coming onto the market EVs with
ranges of 350, even 400 miles. Let me do that in kilometers,
you know, 500 kilometers a, you know, 600 kilometers which will
meet almost all people's, you know, needs for range.
So this is unstoppable. What is interesting about that,
and it's the other question you asked is, well, what is the
implication of that for the power system?
Because let's run some interesting little numbers here.
Suppose by 2050 all the car fleet which will then exist is
electric. Let's say that's 1.5 billion
cars, all of them electric. And suppose they all have on
average a 60 kWh battery. That means that we will have
sitting out there on our streets 90 terawatt hours of battery
capacity sitting around. And one of the features of
passenger cars is that when we're talking about the
individually owned passenger car, not the not the car fleet,
the taxi, but the individually owned passenger car, they're
typically only used about 5% of all the hours or sometimes less.
The other time they just sit in the garage, sit on the street,
2590 terawatt hours of storage capacity.
By then we might be consuming across the world, say 70,000
terawatt hours of electricity per annum, 2 1/2 times up from
today's level, 70,000 terawatt hours per annum is about 190
terawatt hours per day. So we're going to end up with a
system that has demand per day of 120 terawatt hours and we've
got sitting in the street unused 90 terawatt hours of battery
capacity. So the challenge is clearly how
do we use that because it is so much that if we worked out how
to use it, we could solve all the short term duration
balancing needs, not with having to put even more batteries into
the stationary storage element, but by just using the batteries
which are in the EVs now. At one level, this is very
exciting technology. At another level, I first heard
this idea 10 or 15 years ago and we're not really seeing yet a
lot of all this sophisticated vehicle to grid type a
sophistication that people have talked about.
You know, signing up to a tariff from your electricity provider
and agreeing that as long as you let them software control their
bat, your battery, they can put out electricity in and take it
out. The first step is to simply
strongly encourage people to at very least charge that growing
fleet at a sensible time of day. And of course this is also true
to a degree, but somewhat less a degree in in heating buildings.
This issue of how do we get people to use electricity when
it is surplus to requirements, say in the northern latitude in
the middle of the night when we've still got wind or in sunny
parts of the world in the middle of the day when the surplus
solar electricity and here time of day pricing of electricity is
absolutely crucial. I was was recently talking with
one of our members, Ausgrid, major distribution company in
Australia and talking about the fact that there are parts of
Australia now where electricity is free from 11:00 AM to 3:00 PM
because there is so much rooftop solar that the grids don't want
to pay that rooftop solar to produce because it's access to
requirements and indeed the system itself is access to
requirements. So what we're trying, they're
trying to do there is saying educate people between 11:00 and
3:00 electricity is being thrown away.
So please charge your car in that period of the day.
So there is a huge potential to use this enormous a passenger
car fleet battery capacity first of all to shift electricity
demand to times of day where we've got surplus electricity.
And I'm sure that will occur to a very significant extent over
time. I think we will achieve that
revolution of people being sensible about when to charge
their car. Whether or not we then progress
to the sophisticated level of the battery, also putting
electricity back into the grid on a complicated software
control process, I don't know. But if we achieve the first, we
will dramatically reduce the costs of achieving the balance
of supply and demand within systems with high levels of
renewables. Right.
I'm telling you that, and I think expanding a bit on that,
right, I think I want to go maybe to the topic of policy and
regulation. And I know also again, you know,
for the vehicle to grid, for example, there's two topics,
right? With inverters, maybe a bit more
technical topic. And then maybe with regulation,
you know, having the right energy markets, maybe we can go
a bit more into that now. I mean, a big topic of course,
in Europe also people talk about, but also in other
regions, right, topic of permitting, right, for this
news, getting the systems, especially best systems as well.
There's a lot of different kind of regulations or there's a lot
of question marks about how to really set this up in effective
ways, get this roll out right, of these systems out there.
I've heard a very creative ways with like having, you know,
these containers on, on movable vehicles so you can move it
around, which is easier from a permitting stance in certain
regions. So all kinds of kind of
complicated topics there for also getting these, you know,
best installations, but then of course also connect to wind and
solar farms. So maybe if you could share a
bit about like what you have seen maybe out there from a
regulatory perspective, kind of what has worked well, maybe
about some challenges and to get these systems online as quick as
we can because that's something I think we're all very
passionate about. Well, if I can begin by you
mention these containerized solutions, this is a really
important technological innovation which has really
occurred in the last three or four years where the battery
producers are putting the battery packs, battery packs
have cells within them and then various packaging around them.
And they're putting them in shipping containers, literally
Teus as they're called, 20 foot equivalent unit, the actual, you
know, shipping containers, these extraordinary things like a Lego
brick, which just move in this highly standardized fashion.
So they're putting them in then with different degrees of
integration of things like inverters so that you can buy
now what's called ADC block without an inverter or you can
buy an AC block with an inverter, ADC to AC converter
within the system. And these are creating systems
which then to a significant extent are making battery energy
storage closer and closer to what you might call plug and
play. You, you, you get your container
and you just plug it into the the system.
And this has driven down the cost because within any battery
system, it's quite interesting. Until about four years ago, the
cost of stationary battery storage was much higher per kWh
than the cost of EV battery storage.
And at one level that was a bit odd because with EVs, we've got
this challenge of getting them into the smallest space
possible. But because that market had
developed more, because it was more standardised, because we
had large automotive OEMs giving large standardised orders to
reducers that had developed faster.
What we've now seen in the battery energy storage market is
this containerised solution, much bigger scale and all what's
called the, the BMS, the battery management system costs which
are on in addition to the, the, the packs which are in
themselves addition to the cells, the the battery
management systems coming down in cost.
Now, that doesn't immediately get around the other problem
that you mentioned, which is ermitting, because, you know,
these things do take up space. You've got to put them in a
field. People may not like them, you
know, being that field, you know, taking, taking over, you
know, whatever that was before. Hopefully as much as possible we
put it on brownfield land, but sometimes it will be Greenfield
land. So it generates the same
opposition and concerns that any form of development has.
Whereas in housing development or onshore wind development or
pylon development, I think over time we will find this less
challenges in terms of local opposition than for instance,
things like pylon development across the line.
Because, you know, these things can be made, you know,
relatively invisible. They don't need to be all that
high. We can use lots of brownfield
land. We can, you know, we can go down
a bit. We can, you know, cut out space
to a, a, take them down below the level of the visual site, et
cetera. But you know, we are building a
new electricity system which requires new forms of
development. And of course, every time you
put in a large battery storage system, a large battery storage
system, you are going to need some sort of grid connection and
that's going to create wires above or below the ground.
And there may be resistance to that.
So we've got to try to speed these permitting processes.
We've got to try to speed the development of grids, though the
really big grid needs will be generated by the fact that the
offshore wind is in a different location than the coal was.
We should maybe think about, you know, innovative ways of making
sure we reuse assets that we have at the moment.
For instance, every old coal plant has massive great big grid
connections with it. So when you close a coal plant
which is already a brownfield site, why not put a massive
great battery installation there because you're using the
existing asset rather than having to build new assets.
The other thing to say is that the more that we can put in
decentralized battery capacity, a battery capacity into people's
homes, into commercial and industrial sites, the more that
we achieve our balancing of slides from line demand right
down at the local level. And then we don't need to do as
much extension of the grid. We don't need to build as much
new transmission or distribution grid because we're balancing at
local level rather than balancing across the whole grid
level. So there's a set of intelligent
policies to support decentralized storage, including
in home storage as much as possible, solar plus batteries
together, for instance. There is trying to develop as
much as possible, you know, less visually less space absorbing A
developments using as much brownfield site as possible,
using existing grid connections as much as possible.
And I think we just need, you know, very conscious policies to
do that. I mean, the good news of course
is that the one thing that battery installations don't
have, they, they take up space. People don't like the visual
impact of them, but they're not producing any effluent.
They're not, you know, they're not polluting, they're they're
not producing noise. Compared with a lot of our
existing energy system, they are less intrusive.
Brilliant. Well, that, that makes a lot of
sense. And then maybe I was talking a
bit about going on the direction of markets, right, somewhat
incentives, maybe if you can share, I mean, you mentioned
already individual, right? It'd be good to have storage at
home, but then also cause also, you know, larger installations.
Do you think right now, you know, there's enough kind of
incentives out there to kind of support that?
Well, here's interesting thing on the development of battery
energy storage I think and all the long duration ones which we
talked about earlier. The challenge is just beginning
and it's quite interesting and important to realise how much
progress we have made with decarbonising electricity
systems without doing a whole load of storage.
So the UK in 2010 our electricity had a carbon
intensity of 500 grams per kWh. In 2024 it was 125g per kWh, 75%
reduction in the carbon intensity of electricity.
That's partly because we closed down our coal plants and used
gas as our fossil fuel fleet. But it's also because we have
grown a electricity renewables to I think now you know in
excess of about 30, but pushing on towards 40% wind and solar as
our source of electricity. And so far all that we've really
done is switch the gas fleet to flexible operation.
So when the wind blows, we shut down gas plants and when the
wind doesn't blow, we ramp up the gas plants.
And so far we've had very little battery investment and almost no
a long duration investment. And this is a very important
message for, you know, countries like India and China.
You can go a long way towards decarbonization if you can make
your fossil fuel fleet more flexible.
And although coal is inherently less flexible than gas, there's
a whole load of new technologies that can make it flexible.
So This is why so far, although we talk about all these storage
technologies, there hasn't been huge deployment but we are now
at the stage where we have to. So the UK is committed to get to
0 carbon or close to 0 carbon electricity by the early twenty
30s. We won't be able simply to do
that by this trick of running the gas fleet in inverse to the
the the solar and wind. We'll have to have bits where
there's no solar and wind, but we're not running the gas fleet.
We're doing something else. We're now at the stage where
we're going to have to develop the batteries, the compressed
air, the pumped hydro, the hydrogen and we need markets
that support that. It's interesting the different
market structures that can support it.
And I don't think 1 can be prescriptive.
One of the things that you can do is you can do quantitative
mandates. You can say whenever you develop
wind and solar, you have to put in a certain amount of battery
or other storage capacity. You can do what the Indian
government has done. Very interesting a development
which is what's called the round the Clock Renewables contract,
where in the major auctions for new renewable capacity and and
generation in India, typically the provider has to commit to
delivering electricity 80% of hours per year.
And indeed, they're now moving to an environment where it's not
just 80% of of all the hours at, at the developer's option, the
system generator can say, and if I tell you 24 hours in advance,
a particular half hour period, I need electricity that needs to
be one of your, you know, 6000 hours per year.
And that then pushes to the developers the challenge of
saying, OK, what is the combination of wind and solar
and batteries which will enable me to meet that contract in
almost all states of the world, relying on very, very expensive
wholesale electricity in the market if I get it wrong and I
can't quite meet it in all states of the world.
So that's another very interesting contract structure
and one which is revealing that these combinations of wind,
solar and batteries are now cheaper than coal power in a new
coal power in India to provide electricity throughout the year.
Really interesting test. Another structure you can have
is of course capacity markets where you, you, you, the the
grid operator pays people to exist as a capacity and then
they they operate in the energy market off their marginal cost,
which of course is very low. The crucial thing if you go that
way is you must have neutrality of treatment between a capacity
market that pays a gas turbine to exist and a capacity market
that pays a, a, a battery to exist or a capacity market which
is a contract with a demand side flexibility provider.
And I think we've had a problem in the past that some capacity
markets have developed in a non neutral fashion.
They've had a favoritism to basically say, I know I need my
gas turbines to continue to exist even if they only run
$1000 a year, therefore I'm going to pay them to do it.
So look, I don't think we can be prescriptive about this.
And I think what we've got experimentation going on, but
what we undoubtedly need is system operators throughout the
world thinking about the combination of this suite of
techniques which will enable us to develop all the technologies
and the business systems, the combinations of technologies
which will enable us to run systems with very high levels of
variable renewables. And we foresee systems where,
yes, they'll have hydro wherever you've got hydro.
Hydro is a beautiful resource, particularly damned hydro.
Wherever you've got it, it's cheap and it's flexible.
Yes, they will have nuclear again, if you've got existing
nuclear, keep it forever if you can because the 0 marginal cost
is low. But we see a world in which
variable renewables, wind and solar will probably go to over
70% of supply in almost all countries of the world.
And we will need system operators which think very
carefully about the combination of market design and contract
structures which enables to us to do that in a cost effective
fashion. Well, and you just mentioned on
cost, right? And of course, another topic is
the investment required, right, to get all these systems into
place. We know that's a massive
investment only on the battery side, right?
Best what's kind of required there, but it's a lot of
appetite as well in the markets. But yeah, maybe if you could
share a bit more about, you know, what could make it.
Is it attractive already now this year for the financial
markets? Who's going to put the money in?
Is it more individuals? Is it more companies?
Is it more investors? Is it more governments?
Who's really getting us most of the capacity?
I think it's going to be in most countries mainly private
investors and private companies, private developers.
I mean, it's very interesting in the EV market we, we don't even
talk about really that challenge because we just assume that
there's some OEMs, you know, big automotive companies that invest
to build EV factories and they do contracts with big battery
companies. Now if you want battery
factories to be in Europe, not China, then you get government
stepping in and providing subsidies, but the core activity
is done by private enterprise and on the whole it, it works
well. And I think broadly speaking,
for most of these power sector developments, you know, we are
going to have private developers of wind farms, private
developers of demand side flexibility offers one thing
sort of company like Octopus in, in the UK, absolute leader in
demand side flexibility packages.
And I think we'll see that in the battery space as well.
And there is, for instance, intriguingly huge investment now
going to stationary energy storage in the US, you know,
despite the fact that they now have a president who, you know,
doesn't believe in this energy transition and wants to drill,
baby drill and, you know, absolutely enormous expansion
going on. I don't think we should exclude
a role for, for instance, infrastructure banks.
And I think it should be focused on those things which are going
to be most complex and first of a kind and where you get
complicated combinations of things that have to happen.
So for instance, as I say, I think battery storage will tend
provided we can deal with the planning and permitting to be a
relatively straightforward plug and play system.
You know, you, you get your battery container situations,
you build as many of those you need together.
You, you connect the grids, you know, you don't provided you can
get the land and the grid connection, you can develop a
business system for that quite fast.
I think where we have to do you know, salt cavern developments,
hydrogen pipelines, working out whether that's going to be
retrofitting existing gas pipelines or is it new gas
pipelines? I think we may have to have a
role there for say you know, national infrastructure banks
which which take the first risk which make it happen.
Just as we are seeing for instance in the development of
carbon capture and storage networks where you're trying to
build together multiple different players.
You know, cement plants here, somebody who has an old gas
field there, somebody who owns a pipeline which is almost good
but needs to be retrofitted. You sometimes need the role of
the state or or more likely the infrastructure bank to just sort
of help lubricate those early complicated combinations of
actions. But.
I think provided you have power market design right, provided
you've got that suite of appropriate contracts which I
referred to earlier, I think most of the investment will come
from the private sector, from private investors, long term
infrastructure in funds, pension funds, insurance companies, the
sort of people who do long term investments and the and the
private developers who put that together into profitable
packages. Well, and I think we have also
as battery associates, we have seen definitely quite a bit of
demand on this side. So I think I very much agree
with you on that. I think that's, that's a lot of
interest in in these markets and for these kind of investors on
the this sector. Kind of the two last topics I
want to touch on, like the first one will be we already touched
on a few regions around the world, right?
And kind of some of them how they're maybe more head and
others and and some maybe have some more challenging times.
But maybe if you could help me a bit on, you know, for the
audience as well, kind of understand a bit like, you know,
the code, where's Europe standing right now?
But maybe also where other regions standing on the storage
type on the energy transition topic, just to understand maybe
always compared to China, North America, just kind of a bit of
understanding how we're standing in that regards.
Well, Europe in some ways it is among the most advanced
continents in a, in a transition.
I mean, of course country like Brazil has some of the cleanest
electricity in the world because it's always had clean
electricity because it's always been hydro.
So. But if you talk about countries
that started with very big fossil fuel electricity systems
and are trying to come out of them, Europe is one of the most
advanced. And we have countries like
Germany, Ireland, Spain, Denmark, Portugal already going
over 40% of their electricity becoming from variable
renewables. And that that is increasing very
significantly. And it's quite heartening that
after the Russia invasion of Ukraine and the shock that that
gave us to Das Supply, we did accelerate moves towards
renewable deployment with the Repower EU program.
And I think and with action to free up planning and permitting
systems and investment is continuing.
There's been a bit of a set back on the offshore wind industry,
but I think we're going to see that bouncing forward again, the
level of solar deployment in places like Germany and Spain
and it is quite extraordinary. That's been an explosion of the
last few years. And then on EVs, on the
electrification side, it's beginning to ramp up.
I mean, there's been a lot of talk about, oh, it's going
slower than we thought. Well, yeah, but just remember,
February, the figures are in for Germany, 30% of the new vehicles
are are are EVs. And I think we're going to see
an acceleration there. So Europe is making progress.
I think it's making slower progress on things to do with
this heavy industry transformation in residential
heat. A lot of progress too slow in
the UK. But on the whole, you know, the
UK has said it wants some 0 carbon power system by 20-30,
let's say early Twenty 30s. Europe has said by 2035.
I think we're going to get pretty close to that, right?
You know, I increasingly think the big challenge for Europe
being 0 carbon in 2050 is what are we gonna do about
agriculture? What are you gonna do about
aviation? But I think by 2050, we'll have
a primarily electrified Rd. transport passenger fleet will
have a primarily 0 carbon. It doesn't mean to be precisely
0 carbon, but let's say 10 or 20 grams per kWh electricity.
We're on target to do that. China is interesting because of
course, China emissions, China emissions have probably just
peaked. It may be that we'll find out
that calendar year 2024, maybe the peak or challenge year 2025
is deploying renewables at an absolutely stunning rate.
But what has been occurring so far is that electricity demand
has been going up to match that. What we've been seeing is China
installing enough wind and solar every year to produce about 300
terawatt hours of electricity, but electricity demand has gone
up by about 300 terawatt hours. So that although the new
electricity, the new renewables have been meeting all the
increase in demand, the the amount of demand which is met by
the coal fleet hasn't gone down. I think we're probably at the
turning point. It's obviously hugely important
for Europe that once they go beyond that turning point, they
come down as rapidly as possible.
The early stages of that will be moving the coal fleet beginning
to occur already onto a flexible process so that the coal
capacity still exists, but the utilization rate goes down as it
begins to flex in invoice pattern to the wind and solar.
That's where China is. And of course China is ahead on
electrification of Rd. transport, way, way ahead both
in production and in demand. India is somewhat similar to
China in that their electricity demand is going up very rapidly,
actually going up slightly faster than the new renewable
supply. So they really need to ramp up
the pace of renewable deployment, but it has
accelerated very significantly in the last couple of years.
Thank you for showing that. And then as a final question,
just interest of time, maybe looking a bit into the future,
what kind of what we can expect, what we can see.
We can, I think definitely tell you quite optimistic, I think.
And some of this topic is of course really good to hear to
see. But maybe, yeah, maybe on these
two topics we also touched on today, right or the three one
maybe one on the technology side, maybe what are you kind of
expecting? What could come you know to to
help on this regards maybe also long duration or chemistry
actually mine and then also the topic you know, from from
economical policy standpoints, anything you kind of expect
maybe to come with the next let's say 5 or 10 or three
years? Well, look, I think on emerging
technologies, battery technology is going to progress and
progress and progress and we may see an acceleration of it.
One must always be wary of saying that AI is going to
accelerate, but but this is one of these areas where artificial
intelligence may accelerate. Our ability to explore all the
different possible combinations of elements on the anode, the
cathode, all the different ways that the battery chemistry
works. It's similar to the fact we've
seen this amazing breakthrough on AI in understanding protein
folds in the organic chemistry area.
I think in the inorganic chemistry area, just
understanding every way that we can play around with the
elemental table, a periodic table.
I, I, I, I suspect it will accelerate, but it was going
pretty fast even before that. I mean, I, there are two key
dimensions of battery technology development.
What what 1 is the the cost and the other is the performance on
the cost. Sodium ion, you know, promises
to enable us to produce just cheaper batteries per kWh
storable. And the cheaper the batteries,
the longer the duration which batteries can address.
I, I mentioned earlier, if somebody can give me a battery
at $10 a kWh at the pack level, then I think we're seriously
into using batteries over, you know, multi day, you know, 50
hour, 100 day cycles or even longer, not just saying that
they stick at the at the short duration level.
So sodium at the moment early stages and of course therefore
it's more expensive than lithium ion.
But we know that if it becomes big manufacturing capacity, it
will be lower cost than lithium ion just because sodium is
available in essentially limitless and very cheap
quantities compared with lithium.
I think what's interesting is will sodium have an opportunity
soon or or has lithium ended up so cheap that at least it's
slowed down sodium? So people tell me sodium ion
pencil in that with mass scale, I might get it at the cell level
to, you know, $2025 per kWh. And they were saying that three
years ago when the battery cell, lithium ion battery cell was
$80.00 per kWh, but the cheapest battery cells, lithium ion, are
now $35 per kWh, in which case the sodium advantage sort of
gets squeezed a bit. Now sodium, one of the reasons
why lithium ion was $80.00 kilowatt was lithium was four
times more expensive than at the moment.
So sodium is almost an insurance policy against us hitting
limitations in lithium supply. I if the lithium price ever did
go up and if you thought there was supplied constraints that
drove it up, then sodium is in the money.
I think by the combination of lower price lithium and the
potential for sodium, what we can predict is that battery
cells will get cheaper and cheaper and cheaper.
We then have to concentrate a lot on everything else apart
from the cell, the whole of the balance of system costs.
But basically we have a set of technologies which are going to
drive down the cost of the ion based batteries.
We also need to keep our eye on other technologies which are
highly dependable, highly interesting at longer duration.
For instance, there's a very interesting ones called iron air
batteries which exploit and and it's it's almost, you know,
intriguing to understand it. It exploits the process of
rusting and de rusting oxidation is a you know it it it's like
combustion it it produces energy and reduction de rusting iron,
you know turning iron ore back into iron absorbs energy and you
can use that cycle. Now the cycle is has a large
round trip inefficiency, but its capital cost is very low because
you're it's very straightforward and you're using a very cheap
material. Which is why iron air might
develop as an alternative even to hydrogen for some of these
very long, long duration challenges where it doesn't
matter that, you know, you're only cycling a few times a year
because your capital cost is very low.
So on cost, a set of interesting thing happens.
And then I think even more on performance.
I said earlier, we're, we're managing to increase the energy
density of batteries, maybe doubling every eight years.
And as long as that continues, as somebody once said, compound
interest is a wonderful thing. If you double every eight years,
you quadruple every 16 years you know, and then you know, beyond
that you you go up 16 times every 32 years etcetera,
etcetera. And what that means is that
whereas at the moment I assume that batteries are only
applicable at Rd. transport and at the very short end of
aviation, the sort of, you know, 10 seater plane going 500
kilometers, but nothing like a jumbo jet getting across the
Atlantic. I'm going to stick in my neck
out and make a bet for anybody who wants it.
But I just warn you, the date at which we settle this date is
this bet is 2070 and I will be dead then.
So you ain't going to get your money back.
By 2070, we will have long distance battery aviation,
right, Because it will get there.
If you look at the theoretical energy density, given the
fundamental physics of what's called lithium air or lithium
oxygen batteries, they have the energy density that can do that.
So we can't rely on that. And the decarbonisation of
aviation up to 2050 has to be based on sustainable aviation
fuel continuing to use liquid hydrocarbon.
But I think you have to assume that the energy performance, the
the energy density and therefore our ability to support mobility
transportation, it will just be for the next 50 years on a
relentless upward path, which eventually will achieve even
long distance aviation. Even if we need other policies
in the meantime, we can't rely on that.
So those are different dimensions of where you know the
technology is going to take us in future.
Brilliant. Lord Turner, absolute pleasure.
I could talk with you for hours. Thank you very much.
For now, I think we have to wrap it up.
Yeah, I know, but I think it's a very good outlook there as well.
And we'll keep our eye out on these other applications well
and opportunities. But yeah, I know for now we want
to thank you for joining us for the Battery Insiders podcast.
Lord Turner, this was absolute pleasure for conversation.
I think great insights, you know, on the market and and
getting understanding where we stand and where we can go.
All the listeners today on the Battery Insiders podcast.
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I feel free to share your feedback with us.
Always great to hear that. And yeah, for today, Lord
Turner, thanks so much for joining.
This was. Thank you very much indeed.
Thank you. Simon and his battery associates
and talk to you soon. Thank you.
Bye bye.