Lithium-ion battery prices are unlikely to fall till 2024
IHS Markit, a leading business data company, has released its predictions for cleantech trends in 2022. Among its key findings, the company expects lithium-ion battery prices to continue rising until at least 2024 due to increased demand for electric vehicles, rising metal prices, and China’s dominant position in the industry. IHS also anticipates that green hydrogen projects will experience a supply crunch by 2025, as current project timelines fail to keep pace with demand.
According to IHS, the rising demand for electric vehicles, particularly those that use lithium-ion phosphate batteries, will drive up battery module prices by 5% in 2022, leading to an overall increase in the cost of stationary battery projects by around 3%. The company has recorded lithium-ion battery price increases of 10-20% in the latter part of 2021, and it believes that prices will not return to a downward trajectory for another two years.
The anticipated supply crunch in green hydrogen projects is due to a surge in project announcements for electrolyzer capacity, with nearly 250GW of capacity planned for deployment, up from 70GW worth of announcements in 2020. IHS predicts that further electrolyzer production plans in 2022 and beyond will help ease any supply squeeze, and it estimates that Europe’s green hydrogen demand alone will require up to 250GW of solar generation capacity this decade.
Despite the challenges facing the solar industry, IHS expects that smaller solar projects with generation capacities no larger than 5MW will account for 45% of new arrays in 2022. China and Germany are expected to drive over 60% of demand in this segment, while Brazil will continue to see demand for sub-5MW projects. Established smaller-scale solar markets in the US and France will also be joined by new entrants, such as Japan, India, and Italy.
Although solar and wind prices may continue to rise in 2022, clean energy remains competitive thanks to cheaper financing costs, as banks become more accustomed to backing such projects, and the world continues to demonstrate enthusiasm for green finance. Home and business rooftop arrays continue to be competitive despite rising panel prices, as they compete against retail energy prices rather than wholesale levels, which utility-scale projects must contend with.
IHS also noted moves by the US and India to onshore solar manufacturing, but expects logistics and input cost issues to continue inflating costs in 2022, particularly for the next four months. However, the company believes that new manufacturing capacity for solar panel raw material polysilicon is coming online faster than expected, solar wafers are becoming more efficient, and new wafer producers are entering the market.
In conclusion, IHS Markit’s cleantech trends for 2022 predict challenges for the solar and energy storage industries, but also suggest opportunities for growth in smaller-scale solar projects, green hydrogen, and the continued competitiveness of clean energy.