Thanks to the decreasing costs, the economic viability of industrial and commercial energy storage has come to the forefront. Persistent high temperatures lead to peaks in electricity consumption, thereby prompting enterprises to exhibit a greater willingness to adopt industrial and commercial energy storage solutions. Concurrently, the prices of lithium carbonate have fallen, resulting in reduced investment costs. As battery costs continue to decline and the price gap between peak and off-peak electricity rates widens, both scenarios are poised to experience a significant increase in IRR. Furthermore, certain provinces have the capability to implement charging and discharging twice in different periods, a feature that significantly enhances project yields. In the context of PV systems and energy storage, leveraging market-oriented trading models, Hebei Province, Zhejiang Province, and Inner Mongolia have achieved Internal Rates of Return of 16.2%, 13.78%, and 12.83% respectively. These figures significantly surpass the benchmark rate of return. Consequently, it becomes evident that investing in projects within these three provinces holds substantial merit.
On August 17th, the EU Batteries and Waste Batteries Regulation (referred to hereafter as the EU Batteries Regulation) came into effect, with the primary objective of advancing the ecologically sound, low-carbon, and sustainable growth of the economy and society. This is to be achieved by meticulously managing all phases of the battery life cycle. The EU Batteries Regulation classifies products into distinct categories, namely automotive batteries, electric vehicle batteries, light vehicle batteries, industrial batteries, and portable batteries. The pivotal requisites span the entirety of the battery’s lifecycle, encompassing each stage—from the extraction and refinement of raw materials to battery usage, culminating in the recycling of discarded batteries. Furthermore, the regulation enforces obligatory guidelines concerning sustainability, safety, battery labeling, marking, and information provision. It also addresses due diligence, battery passports, battery recycling, and various other facets.
Simultaneously, the roles and obligations of battery manufacturers, importers, and distributors, along with those dealing in products containing batteries, are meticulously delineated. This encompasses comprehensive compliance evaluation procedures and stipulates criteria for market oversight. Notably, several aspects merit attention, including:
Firstly, a notable inclusion is the implementation of digital battery passports and the mandatory disclosure of carbon footprints. This poses a distinctive challenge to domestic manufacturers, compelling them to establish platforms for managing battery passports. According to the EU Batteries Regulation, electric vehicle batteries, light vehicle batteries, and rechargeable industrial batteries must come equipped with carbon footprint declarations, labels, and digital battery passports. This disclosure encompasses a spectrum of information, spanning details about the manufacturer, battery specifications, carbon footprint metrics across various lifecycle stages, the EU conformity labeling number, and a link for accessing carbon footprint declaration outcomes. It's important to acknowledge that the dissemination of such information could potentially lead to the inadvertent exposure of battery technology and core supply chain data. As a result, Chinese exporters will encounter the task of establishing their own battery passport management platforms, aligning them with EU benchmarks.
Furthermore, there is a pressing need to bolster battery recycling management and progressively enhance the incorporation of renewable materials within batteries, thereby fostering the growth of the domestic battery recycling sector. The EU Batteries Regulation mandates a substantial elevation in the recycling efficacy of waste portable and light vehicle batteries. The targets are set at 45%, 70%, and 80% for the years 2023, 2025, and 2030 respectively. Additionally, the recycling rates for lithium are to attain 50% and 80% by 2027 and 2031 correspondingly. Moreover, the recycling rates for cobalt, copper, lead, and nickel are slated to achieve 90% and 95% by 2027 and 2031, respectively. Regarding the infusion of renewable materials into batteries, the stipulation is that by 2031, the composition should comprise 16% cobalt, 85% lead, 6% lithium, and 6% nickel. This is anticipated to further advance to 26% cobalt, 85% lead, 12% lithium, and 15% nickel by the year 2036.
China holds a pivotal stance within the power battery market, both in Europe and on a global scale. As indicated by data unveiled by SNE Research, China’s dominance in the global power battery market during the first half of 2023 reached an impressive 62.6%. Furthermore, in 2022, China’s contribution to Europe’s installed power battery capacity stood at 34%. Furthermore, spanning from January to July 2023, Chinese power battery enterprises collectively exported a substantial 67.1GWh of batteries. This encompassed an accumulative export of 7.3GWh in energy storage batteries during the same period.
The implementation of the EU Batteries Regulation presents a challenge for Chinese power battery manufacturers across various dimensions, encompassing carbon footprint disclosure, the creation of digital battery passports featuring battery model data, power battery recycling and reuse, and other related aspects. Consequently, this shift will lead to an augmentation in the cost of exported products, thereby exerting a short-term impact on China’s power battery exports. However, it also expedites the advancement of China's power battery recycling sector. The emphasis on low-carbon management throughout the entirety of the power battery’s lifecycle and the promotion of recycling and reutilization of power batteries are poised to emerge as pivotal focal points in the power battery domain. Therefore, it is advisable to closely monitor the evolution of China's power battery industry chain’s transition towards low-carbon practices. Equally crucial is the ongoing attention directed towards manufacturers establishing overseas factories, delving into recycling endeavors, and showcasing prowess in carbon reduction technologies.
