The battery years

JOHN CAMERON-UNSPLASH

SMC Global Power Holdings Corp., the energy arm of San Miguel Corp., is readying to sell “battery” power to the public at P2-3 per kilowatt-hour, as soon as it gets the permit to do so. It has so far completed a network of battery energy storage facilities nationwide with a capacity of over 500-megawatt-hours.

The company is said to be investing $1 billion to build 32 battery energy storage facilities all over the country, with a total capacity of 1,000-megawatt-hours, by 2023. This is to ensure “reliable power supply nationwide, even in far-off areas” through the distribution of stored power from its battery facilities when needed.

The intermittent nature particularly of “renewables” will be addressed with the integration of battery storage into the power grid, according to SMC President Ramon Ang, who told media that battery storage, “and other bridge technologies, will allow us to truly achieve a just and inclusive transition to a clean energy future.”

Energy generated from renewables such as solar and wind can be stored in a network of battery storage facilities connected to the grid. When needed, stored energy can be supplied to the grid from these facilities. Battery storage plants are being readied in Albay, Bohol, Cagayan, Cebu, Davao del Norte, Davao de Oro, Isabela, Laguna, Leyte, Misamis Oriental, Pampanga, Pangasinan, and Tarlac.

A report by the Philippine News Agency noted that these battery facilities “will minimize power wastage and redirect otherwise unused capacity to remote areas,” and are viewed as the “most sustainable technical solution to the country’s power quality and reliability issues.” The facilities “will make viable use of intermittent renewable sources, such as solar and wind, by efficiently storing the energy for electricity when the sun is not shining or the wind is not blowing.”

“The major challenge of renewable power everywhere in the world is intermittency. With renewables, the ability to generate power is always limited. You cannot generate solar power at nighttime, or when weather conditions block sunlight. You cannot produce wind power when there’s no wind. When there’s a drought, you also can’t produce hydropower. Battery storage is key to mitigating all these issues,” the report quoted Mr. Ang.

Building battery storage facilities nationwide is a key component of the SMC strategy to move away from coal and transition to liquefied natural gas power and renewable energy. SMC battery storage facilities use advanced lithium-ion battery technologies, the same system that reportedly currently dominates grid-scale Battery Energy Storage Systems or BESS worldwide.

SMC is moving in the right direction, I believe. But there are concerns emerging in light of developments in battery technology as well as the increasing demand for electric vehicles worldwide. Manufacturing of rechargeable batteries for electronics, electric vehicles, and grid storage is the largest global use for lithium, representing 71% of total demand. Given this, moving forward, perhaps more suitable battery technologies may be considered for future BESS projects in the country in place of lithium-ion or Li-ion.

Some experts note that the use of Li-ion technology may be unsustainable. Of late, Li-ion has been extensively used because it has become cheaper. However, the demand for Li-ion batteries is now being driven up by the demand for electric vehicles, among others. Newer and cheaper battery technologies may have to be considered for future BESS projects.

And then there is the fear that the mining for lithium and control over its supply is bound to become the subject of “war” between countries, perhaps sooner than later, much like oil production and supply have become global concerns since the oil crisis of 1973. In fact, the control over lithium started as early as five years ago given the high demand for it by mobile phone makers.

In a March 2022 online commentary by Alex Koyfman on Wealth Daily titled “Why China’s Lithium War Is Far More Important Than Putin,” he noted that “oil in all of its forms as a fuel is on the way out” since electric vehicles are the future. “By 2030, more than half of the new cars produced globally will be battery-driven. By 2035, sales of gas- and diesel-powered vehicles may be outlawed entirely in Europe,” he wrote.

In this connection, he also noted that “China is already hard at work becoming the world’s biggest energy supplier for the next 50 years. At the heart of it all is the one element essential to current rechargeable battery production: lithium. In 2021, Chinese mining and battery companies acquired 6.4 million tons of lithium reserves — the previous year, all acquisitions by all companies totaled just 6.8 million tons.”

Koyfman quoted Seth Goldstein, a senior equity analyst at Morningstar, who noted that “Chinese companies have done the math and realized how much lithium they’re going to need to meet either battery or EV growth plans and have decided to try to secure that by going after some of the most promising junior projects in development.”

Koyfman added that “Lithium is to the 21st century what oil was to the 20th… because, like gas, lithium-ion batteries won’t only be responsible for taking you to work or your kids to school. These batteries are responsible for storing power on all levels, from the charge powering your phone, to the energy driving our biggest trains and ocean-going vessels, to the overflow production coming from our power stations.

“Without a steady and growing supply of lithium, human civilization will grind to a halt just as quickly as it would if somebody switched off the oil spigots around the world,” he added. And this further emphasizes the urgent need to develop alternative battery technologies that can replace lithium-ion, and to begin considering options with respect to new BESS projects.

Lithium mining is also becoming very controversial given its impact on the environment. In Portugal, for instance, German broadcaster Deutsche Welle reported that the government has embarked on a multibillion-euro national lithium strategy that involves open-cast mining, refining, and processing lithium ore for export. Portugal reportedly controls an estimated 10% of overall lithium deposits in Europe. However, the government plan to exploit lithium — or “white gold” — is being opposed by environmentalists.

Then there are speculations that Bolivian president Evo Morales was overthrown in 2019 over the control of his country’s lithium reserves. While Australia is the world’s largest lithium producer, accounting for nearly half of global production in 2020, Morales’ Bolivia, Chile, and Argentina are considered the “lithium triangle” with nearly 50 million tons of lithium between the three countries.

Simply put, there is great concern that lithium is replacing oil among the most important commodities in high demand globally. And whatever the world experienced with oil — the fight for control of supply and its impact on consumer prices and inflation — will also happen with lithium, eventually.

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com