The challenges on our energy security with the expansion of renewables and its implications for battery supply chain
The beginning of the third decade of the twenty first century has had a bumpy start, whether it is the effects of the COVID pandemic or emerging conflicts, energy pricing has faced continuous upward pressure and increasing instability. Opposition to fossil fuels from evermore concerned shareholders, policymakers, world leaders and consumers has paved the way to renewables uptake. On the face of it, this is fantastic news. We all want to see net zero energies as our mainstream source of power, but this brings new challenges to our antiquated grid infrastructure.
In recent weeks consumers have borne the brunt of dramatic fossil fuel price rises as the conflict in Ukraine rages and governments seek to wean their economies from their reliance on Russian imports. As renewable energy targets are brought forward to lessen dependence on Putin’s pipelines, consideration must also be made for the new holes in our domestic energy security and stability, and how we can design a system that maintains stability and energy security while still delivering energy that is affordable and green. Increasingly batteries are being used not only for electric vehicles, but to stabilise the grid itself.
Deng Xiaoping, a former Chinese leader, approved a research and development program in 1986 to make China a global leader in minerals. Deng famously said in 1992 that "the Middle East has oil and China has rare earth," premediating the next 100 years of economic prosperity with electricity as a primary mode of energy input.[1]
That begs the question: Will the EU27 & UK ever be able to catch up to the developments in battery cell manufacture, where China has a 36-year head start?
A combination of approximately 20 minerals, including cobalt, lithium, nickel, and other rare-earth metals, are all required to make a state of the art electric vehicle battery. According to a British Geological Survey scientist, there is enough "metal in the crust" to sustain the burgeoning worldwide EV battery business. However, from a European perspective, many of the resources are inconveniently located. Other geopolitical and non-geological considerations can be seen to be hinder production and risk supply chain constraints, in a world where inputs may be closely controlled by China. That is, China as a metals superpower producing much of the world’s value-added supply, importing a great deal of the world’s raw commodities under contract from less developed economies, and representing an increasingly significant percentage of final demand. China is no one’s gas station, rather it is a formidable force.
The issue is, in part, as in the case of European demand for oil and gas, Europe lacks sufficient, secure, reliable access to the minerals required to manufacture batteries. In the UK there is currently no local source of battery raw materials. Some deposits do exist, such as lithium in Cornwall and cobalt in Alderley Edge, however, they are mineral “occurrences” rather than deposits. It will be necessary to rely on imports or recycling to sustain a whole battery dominated energy storage system.
For the UK and EU to reduce their oil, gas, and minerals reliance on other countries they must either find ways to develop these occurrences to be self-reliant. Recycling will offer a resource to be exploited. The UK, as an example, hopes to develop some domestic battery recycling capability as a result. The alternative is to find competitive advantage in new technological solutions for grid accessible energy storage, allowing batteries to be reserves for a narrower set of use cases, like light electric vehicles.
Companies in the sector are already employing pyrometallurgy, which involves heating materials to extremely high temperatures to extract minerals. Indeed, pyrometallurgy is a relatively straightforward process, but it presents difficulty in terms of material value. At the same time, it recovers high-value minerals such as cobalt, nickel, and copper, it consumes other materials such as aluminium, manganese, and lithium, which end up as slag.
Cobalt, a critical component in electric vehicle batteries, is mostly mined in the Democratic Republic of Congo (DRC). To underscore, the need for shared values in secure long term trading relationships for essential economically significant inputs, press reports repeatedly uncover activities the UK and EU would consider to be unethical such as child labour, systemic criminality and corruption. Green groups have accused carmakers of "turning a blind eye" to illegal mining to safeguard supply.
The UK and the EU know from where minerals are sourced and where “pinch points” in the system may exist. Therefore, mitigation strategies and alternative suppliers may get put in place in the event of a market disruption, such as conflict. However, a week is a long time in politics, as Western pursuit of alternative oil and gas supplies in the face of Russian aggression is proving. A great deal of economic and electoral pain can be felt in the time it takes to commission new supply of raw inputs if robust plans for diversification are not yet in place.
Moreover, the supply chain must be careful from where materials for batteries originate. In a world where trade is relatively free, it is always smart to be aware that there are problems to safeguard individual safety and national security. The challenges in attaining minerals and recycling them naturally leads to the next question: what are the alternatives that exist to balance the grid? Are they feasible? And most importantly, will they be economic for consumers?
Pumped hydro-electric storage, hydrogen and other forms of chemical storage are all candidates, but hydrogen stands out as the only mode of energy that can both be used directly for several productive purposes and can supplement electricity supplies.
Enoda’s HERA industrial green hydrogen microgrid architecture enables both types of modulation by locating hydrogen production at the point of consumption, eliminating the need for costly and technically complex transportation of hydrogen. This approach stabilises the grid by providing balancing services by generating green hydrogen from waste and low-valued electricity, reducing the excessive cost consumers currently face from a grid which relies on antiquated technologies. HERA architecture also dispatches the hydrogen to generate power for industrial uses and provide essential power to stabilise the grid during the periods of under-generation we experience due to unfavourable weather conditions for renewables.
Dynamic harmonisation enables HERA to crush the cost of delivered green hydrogen by up to 70%, making it the most cost-effective viable decarbonisation pathway for industrial combined heat and power as well as offering an economically competitive step change in the balancing market which will bring massive savings to consumers without the reliance on the harmful exotic materials that we must currently import to produce batteries in our battle to ensure grid stability.