Energy Industry Insights 2023

CLOSING
THE ENERGY
STORAGE GAP
Overcoming barriers in
models, methods, and markets
 DNV Energy Industry Insights 2023

ABOUT THE RESEARCH

Energy storage systems of various kinds are becoming increasingly

important components of the emerging, decarbonized energy systems of
the future. This research — which includes a specialist survey of over 400
senior executives with involvement in energy storage systems — reveals
the extent and direction of current trends in this critical area. Most agree
that to support electrification and decarbonization goals, we need to
rapidly expand energy storage capacity and services. However, this
expansion is hampered by several major barriers which are delaying
progress towards cleaner, more resilient and more efficient energy systems.

Survey demographics
We thank our survey respondents from across the energy industry.

11% 13% Sector 7%

5%
5% Region 11% 13%
13%
19% 7% 11%
Oil and gas industry 30% Europe

47% 18% Electrical power 19%

19% Asia Pacific 18%
47%
47% 18%
Renewables North America
20%
Energy-consuming Middle East and Africa
industries Latin America
59% 23%
23% 59%
30% 59%

% Seniority Annual revenue

19% 22%
C-suite executive 22%
30% US$100m or less
(or equivalent)
18%44%
US$100m - US$1bn
C-1 (report directly to 44%
44%
US$1bn or more
20%
C-suite)
19%
19% Don't know/not applicable
C-2 (boss reports
directly to C-suite)
30% 16%
16%
All other levels and
reporting lines

2 Image: courtesy EDP.

 ABOUT THE RESEARCH

436 30% 5 6 19%

senior energy of respondents regions in-depth interviews of respondents from
professionals are C-level represented with industry leaders companies with revenue
surveyed of more than USD 1 billion

ACKNOWLEDGEMENTS
We would like to thank the following interviewees for their time and insights:

Michael Barnard, António Coutinho, Felicity Jones,

Chief Strategist at TFIE CEO of EDP Innovation Solutions Lead at Kaluza

Sherrill Byrne, Pilar Gonzalez, Chang-hoon Shin,

Executive, Project Finance, Power Innovation Manager at Iberdrola Chief Technical Leader in smart
and Infrastructure Finance at Venture Capital distribution Lab of KEPRI (KEPCO
Standard Bank R&D center)

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DNV Energy Industry Insights 2023

CONTENTS

4
 CONTENTS

1 Energy storage outlook 06

Expanding storage “crucial” for net zero 06

The outlook for energy storage 07
Growing roles and expanding interests 07
Making markets for storage 08
Constrained by charges and queues 08
Slowed by short supplies 10

2 Technologies and applications 12

Smoothing the duck curve 12

Long-term and large-capacity 12
New possibilities for pumped-hydro 13
Vehicles driving battery growth 14
Advances in sodium-ion batteries 16
Green H2: Limited for storage, expanding
for industry 16
Expanding energy storage: An urgent priority 18

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DNV Energy Industry Insights 2023

1 ENERGY STORAGE OUTLOOK

There is a giant deposit of spodumene near the town of
Greenbushes in the southwestern corner of Australia. This
rocky ore, rich in lithium, is blasted and hauled from the
giant open pit mine at the Greenbushes lithium project.
This single site, no bigger than a few city blocks, accounts
for 22% of the global lithium market.
Over recent consecutive quarters, the company operating
Greenbushes announced a new production output record
for spodumene concentrate1, several expansion plans, a
new quarterly revenue record of AU$2.85 billion (approxi-
mately US$2.06 billion) and record high profit ratios.2
Greenbushes is at full throttle. It exists at the start of a
supply chain straining to keep pace with global demand
for lithium-ion batteries — part of a worldwide boom in
energy storage.
components in any realistic path to meeting global
decarbonization targets.
Almost all the senior energy executives we surveyed
(89%) believe that rapidly increasing energy storage will
be crucial to keeping their country/region on track to
meet its net zero targets.
“In any expansion model that we do about the future of
energy — be it with a lot of wind, with a lot of solar, in any
geography, in all patterns of demand and supply – once
you reach a certain level, the most economic system
deploys energy storage, every single one of them,” says
Pilar Gonzalez, Innovation Manager at Iberdrola Venture
Capital. “And the more renewables that you have, the
more duration that you need for that energy storage.”

Expanding storage “crucial” for net zero

The supply of batteries is just one of several energy 12% Rapidly increasing
storage trends which we explore in this report. These energy storage will be
35%
trends are important because energy storage technolo- crucial to keeping my
gies can boost the efficiency, flexibility and resiliency of
17% 89% country/region on track
our – increasingly distributed and electrified – energy to meet our net zero
systems. These features enable innovations in energy
targets
32%
generation, power grids and energy services that are vital

1. https://www.australianresourcesandinvestment.com.au/2023/01/31/record-prices-and-2-3b-of-quarterly-revenue-for-greenbushes/
2. https://www.australianresourcesandinvestment.com.au/2023/04/28/lithium-giant-greenbushes-generates-2-8b-windfall/

The Greenbushes Lithium mine in Australia

6
 Closing the Energy Storage Gap CHAPTER 1

Nature of involvement in energy storage

2023 vs. expected involvement in 2026 1. Owner of large-scale 2023 Overall
energy storage assets 2026 Overall

6. Actively researching and/ 2. Operator of large-scale

or piloting energy storage energy storage assets
opportunities

10%

20%

5. Investor in energy storage 30% 3. Energy storage technology

projects and/or technologies or equipment provider
40%

50%
Q: How is your organization currently involved with/in
4. Energy trader or market specialist
energy storage? How do you expect your organization will
be involved with/in energy storage in three years’ time?

The outlook for energy storage

Overall, 40% of all respondents say their organizations
are actively researching and/or piloting energy storage
opportunities.
The proportion providing energy storage equipment or
technology is expected to rise from 26% today to 36% by
2026. By this time, one third (33%) of respondents say that
their organizations will be investors in energy storage
projects and/or technologies, up from 23% today.
While just 15% currently own, and 14% are currently
operating, large-scale energy storage assets, this is
expected to rise to 23% and 22% respectively in the
next three years.
Growing roles and expanding interests
All the core industries surveyed — electrical power,
renewables, oil and gas, and industrial energy consumers
— expect to expand their interests and involvement in
energy storage over the next three years.
The biggest growth areas for electrical power organiza-
tions will be in operating and investing in energy
storage. Investing is also the leading growth area for
renewables organizations and industrial energy
consumers.
Among the industry groups, renewables organizations
have the highest current (32%) and three-year forecasted
(41%) involvement as providers of energy storage
technology or equipment.
Around one third of oil and gas respondents expect
their organizations to own (35%) or operate (33%)
energy storage assets in 2026, up from 25% and 20%
respectively today.

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DNV Energy Industry Insights 2023
Making markets for storage
The expansion of energy storage towards the levels
required to support our new energy systems is hampered
by several key barriers.
In our survey, the biggest barriers to the growth of energy
storage are issues with permits and a lack of profitability.
The profitability of storage within the energy system has
much to do with electricity markets and the business
models they support. In many countries, policies and
regulations do not properly govern energy storage and
its role within the decarbonized electricity systems that
need to be built.
“There are many interrelated factors that make every
market different,” says António Coutinho, CEO of EDP
Innovation, “but in every case we need to have both the
market mechanisms and strong enough prices to support
any given storage technology. In several countries, you
have neither, in others you have only one, and few have
both.”
Those few are worth learning from. California, for exam-
ple, has a number of policies in place to support energy
storage, including its resource adequacy program, which
requires “load-serving entities” (LSEs) to secure enough
capacity to meet peak demand (plus 15% reserve).
Crucially, that capacity can be in the form of energy
storage. The California Self-Generation Incentive
Program (SGIP) was especially important in the earlier
phases of California’s energy storage expansion, provid-
ing financial incentives for LSEs to install energy storage
systems. More recently, the Inflation Reduction Act has
made the equations look even more attractive, allowing
for a 30% Federal tax credit against the cost of installing
energy storage systems. These measures have made an
impact. Compared to 2019, California’s grid battery
storage is now twenty times greater, at 5 GW, and is
projected to be 19.5 GW by 2035, and 52 GW by 2045 .3
The UK has accelerated energy storage development by
designing an electricity market that offers high prices
3. https://www.energy.ca.gov/news/2023-05/new-data-shows-growth-californias-clean-electricity-portfolio-and-battery
4. https://www.rystadenergy.com/news/charging-up-uk-utility-scale-battery-storage-to-surge-by-2030-attracting-investme
8
(relative to other countries) for energy and ancillary
services, such as frequency control and voltage regulation.
This reflects the strategic value of storage in the UK’s future
energy infrastructure where it will balance the system’s
reliance on offshore wind. Battery storage installed
capacity is at about 2.1 GW, but the market framework and
projected demand, is such that this is expected to be just
under 12 times greater by 2030 (24 GW), attracting an
estimated US$20 billion in new investment.4
“Regulators and power industry professionals need to
look globally for innovative regulatory structures that are
working in other markets,” says Michael Barnard, Chief
Strategist at TFIE. “Adapting structures to suit their own
markets may involve changes, or even breaking them
down entirely, but doing so will help to develop regulatory
structures that enable the transition to a clean energy
future.”
We're doing commercial battery storage
projects in the places where there is a market
model that supports commercial energy
storage services. The greatest barrier is not
the capital costs or the technology. The most
important challenge for the growth of any
storage technology is that the benefits of
energy storage are not being remunerated.
- Pilar Gonzalez, Innovation Manager at
Iberdrola Venture Capital
Constrained by charges and queues
There are other aspects of electricity systems that need
to change to allow for growth in storage. Regulatory
frameworks are slowly evolving to support multidirec-
tional flows of energy, data, and payments between a
broader set of public and private sector actors. Current
technical, market, and process features were optimized
over decades to suit the needs of grids powered by large
coal, gas, or nuclear plants.
 Closing the Energy Storage Gap CHAPTER 1

Photo by Dennis Schroeder NREL 61988

For example, in many jurisdictions battery storage
operators are subject to the same network charges as
generators and load customers, which can limit the
viability of expansion.5 Even where viable, projects can
fail because of how long it takes to approve and integrate
new storage systems. In the UK, and parts of the US,
where issues around network charges have been
addressed, storage projects are heavily delayed by
interconnection queues, where they wait in the same line
as dozens of wind and solar generation projects. In the
UK, new storage projects can face a wait of over 10 years
before connection to the grid.6 In the US, there is 2,020
GW of capacity in interconnection queues around the
country, including 670 GW of storage.7
“One of the major challenges to connecting renewable
energy to the grid is that the current connection process
was designed for large, baseload generators with high
load factors,” says António Coutinho. “For example, a
2,000 MW coal power plant might have a capacity factor
of 90%, but a 200 MW solar farm might have a capacity
factor of 30%. The current grid connection process does
not adequately account for these smaller, renewable
energy generators. This can make it difficult, slow and
expensive to connect renewable energy projects to
the grid.”

5. https://reneweconomy.com.au/battery-storage-projects-could-be-hamstrung-by-new-rules-and-network-charges/
6. https://news.sky.com/story/crackdown-on-zombie-energy-projects-blocking-national-grid-to-end-squeeze-on-britains-power-supply-12894861
7. https://www.cnbc.com/2023/04/06/outdated-us-energy-grid-tons-of-clean-energy-stuck-waiting-in-line.html

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DNV Energy Industry Insights 2023

Slowed by short supplies
A distinctive aspect of the energy transition — and one of
the most challenging — is that it needs to happen quickly.
As we have covered above, in many places, electricity
markets, regulations, power grids and processes are
changing too slowly. But even where all these factors
allow for viable grid storage projects, another barrier is
limiting progress: supply chains.
“In 2022 the ability to deploy more than 1,000 GW of
battery was a challenge, and even with no other barriers
to entry, you just couldn’t — the ability to place orders and
secure delivery slots for equipment was not readily
available,” says Sherrill Byrne, Executive, Project Finance,
Power and Infrastructure Finance at Standard Bank, one
of Africa’s biggest banks. “Shortages have driven up
prices and the long lead times — up to 24 months for
batteries — have increased the financing costs. As soon as
that resolves, I think we will see a massive surge in battery
storage in Africa.”
Two years ago, supply chain problems were seen as
temporary issues that would be resolved once the
pandemic subsided. Today, it looks more like pandemic-
related issues were masking deeper issues. “From an
energy transition standpoint, these are not temporary
problems. The supply chain has a structural problem,”
says António Coutinho. “We are in more of an energy
revolution, than a transition, because we are planning to
completely redevelop 220 years of built infrastructure
within 30 years, while expanding it in line with escalating
demand for electricity.”

Top 5 barriers to the growth of energy storage in the year ahead

50% Overall
55% Oil and gas
Permits and licenses 47% Electrical power
49%
Renewables
53%
Industrial energy
consumer
47%
53%
Weak profitability / 47%
business case 46%
40%

34%
29%
Resistence to change 29%
within energy utilities 36%
36%

23%
20%
Lack of consensus on 27%
optimal technology 22%
23%

22%
18%
Supply chain 21%
inadequacy 23%
28%

Q: Which of the following do you expect to be the biggest barriers to the growth of energy storage in your country/region in the year ahead?
Please choose your top three.

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 Closing the Energy Storage Gap CHAPTER 1

Economic forces usually reduce shortages, as high prices
lead to increased supply. But demand for some new
energy system inputs — such as semiconductors and
lithium – looks set for sustained, strong growth. This
could lead to sharp swings from shortage to abundance
with accompanying price volatility. Some analysts expect
this kind of pendulum effect in the global lithium market,
which is forecast to be in surplus for a few years from 2024
before falling into shortages in 2029.8
Most of the barriers to expanding energy storage are
interrelated, and to overcome them, we require coordina-
tion and collaboration. Nowhere is this more the case
than between two of the biggest barriers: regulations
and supply chains. “If the economic support for demand
is not there, the supply chain won't get developed,” says
António Coutinho, “but you need to have the market
arrangements and the right prices to make sure that
demand starts showing up. That, in the end, will pull the
supply chain forward.”
Energy industry respondents are generally (73%)
optimistic that regulations will soon change to make
energy storage more financially viable, but there is less
optimism about the supply chain, with just 30% believing
that supply chain pressure will be reduced significantly in
the year ahead.

Expected likelihood of key energy storage developments over the year ahead

Industrial
Electrical
Net likely Summary Overall Oil and gas Renewables energy
power
consumer

Hybrid systems (renewables + storage) will grow rapidly 90% 91% 94% 92% 77%

Large-scale battery storage capacity will grow rapidly 83% 78% 82% 85% 77%

Energy regulations will improve the business case 73% 67% 71% 78% 62%
for energy storage
Energy price volatility will increase significantly 67% 75% 65% 64% 77%

Energy arbitrage profits will increase significantly 60% 65% 49% 61% 64%

Permitting for energy storage assets will become quicker 59% 55% 58% 61% 60%

Battery storage costs will decrease significantly 59% 64% 51% 61% 55%

Non-lithium battery technologies will grow rapidly 58% 55% 54% 59% 60%

Vehicle-to-grid technology will grow rapidly 51% 60% 53% 50% 40%

Supply chain pressure will lead to increased adoption 49% 56% 44% 48% 53%
of non battery storage
Supply chain pressure will be reduced significantly 30% 27% 36% 31% 21%

Q: Please estimate the likelihood of the following outcomes in the year ahead. Please select one response for each area. Five-point likelihood scale.
Chart shows net likelihood (likely and very likely).

8. https://www.reuters.com/markets/commodities/lithium-prices-bounce-after-big-plunge-surpluses-loom-2023-04-28/

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DNV Energy Industry Insights 2023
2 TECHNOLOGIES AND APPLICATIONS
Energy storage is often thought of as a warehouse or
container for storing electrons or molecules, but there
are many different applications, goals and services
which can be offered by energy storage technologies.
It is analogous to modern cloud services, that are also
narrowly perceived as warehouses or containers, but
which add considerable flexibility and resilience as well
as dozens of as-a-service applications.
Many of these applications support the stabilization and
reliability of power grids. This is particularly important
as grids adapt to reduced services from large power
stations, while integrating hundreds of distributed,
renewable energy generators. There are also many
opportunities for storage to act as an enabler for
renewables integrations that would otherwise be
impossible due to existing grid limitations.
“Our grid is constrained in our best solar areas, and so
some battery tenders are actually designed to support
the addition of more renewables by spreading the load
on the grid,” says Sherrill Byrne. “The grid is like a
congested highway during the day, but at night it's
empty. So battery storage is designed to smooth that
out, allowing for more generation to be added, which
would otherwise overwhelm the grid.”
Smoothing the duck curve
Respondents believe solar-plus-storage is the most
important application to accelerate in their region over
the next five years – 97% of electrical power industry
respondents, and 92% overall, believe it is, either
moderately, or very important.
More generally, a similar proportion overall (90%)
believe it either likely or very likely that hybrid systems
(renewables + storage) will grow rapidly in the year ahead.
The financial equation for solar-plus-storage is clearly at
a point where it makes business sense in some markets.
Indeed, 77% of respondents overall (and 86% of those in
electrical power) agree that the economic value of
12
combining batteries with solar is greater than
standalone batteries.
“At the moment, the area of greatest interest is in
time-shifting solar by a few hours into the evening,
smoothing the duck curve,” says Michael Barnard. “It is
now economically viable in some markets to use cell-
based batteries to do this, while in some cases also
providing some ancillary services like frequency
demand, voltage demand and instant peaking.”
12%
The economic value of
35% combining batteries with
17% 77% solar is greater than
standalone batteries.
32%
Long-term and large-capacity
Close to 90% of every industry group believe that both
long-duration storage, and grid-scale storage to improve
market efficiency, will be important applications to
accelerate in their region over the next five years.
Energy storage technologies are like tools, and
applications are the jobs they do – there is a diverse
range of both, so matching them correctly is crucial.
Long-duration storage is currently dominated by
pumped-hydro. Over the next three years, pumped
hydro is expected to be the second most developed
technology (after lithium-ion batteries), with 62% of
respondents expecting their country/region to reach
either small- or large-scale adoption within three years.
“When we get up past six hours or eight hours, cell-
based batteries are not economically viable,” says
 Closing the Energy Storage Gap CHAPTER 2

Importance of accelerating the use of various storage applications (or services) over the next five years
(in respondents country/region)

Solar-plus-storage 25% 67%

Grid-scale storage to improve electricity market efficiency 24% 66%

Long-duration storage 25% 64%

Demand response services 33% 55%

Transmission congestion management 35% 52%

Short-duration storage 40% 46%

Wind-plus-storage 37% 48%

Frequency regulation ancillary services 36% 48%

Voltage support 43% 40%

Electric vehicles 34% 49%
Consumer applications 42% 32%
Black start support 37% 33%

Moderately important Very important

Q: Considering your own country/region, how important is it to accelerate the use of the following storage applications (or services) over the next
five years? Please choose a response for each application. Five-point importance scale. Chart shows net importance (moderately + very important).

Michael Barnard, Chief Strategist at TFIE. “For example,
to move wind-generated electricity from the middle of
the night to the peaks in the next day we need to get to
12, 18, or 24 hours. Pumped hydro is currently the best
solution we have for this application.”
Pumped hydro represents by far the largest capacity of
any grid storage technology today, as well as the
largest capacity under construction today. The major-
ity of this is in China, which accounts for 30% of global
capacity (at 50 GW). China has a further 89 GW of
pumped-hydro capacity under construction, and
another 276 GW at various stages of planning, prepara-
tion, and approvals.9
Pumped hydro is a mature technology with a long history,
but its applications and capabilities are evolving.
For decades it has been used to store excess nuclear
power at night when demand falls, but nuclear power
generators continue to supply electricity (reactors cannot
be quickly or easily switched on and off). Today, the
pattern is reversing: pumped hydro reservoirs are
replenished when it is sunny, and discharged at night,
when solar is no longer generating.
New possibilities for pumped-hydro
“There are new innovations that are making pumped
hydro more versatile and efficient,” says Pilar Gonzalez.
“For example, there are many existing reservoirs that can
be used, or connected together, to create new pumped
hydro facilities which can reduce development costs and
environmental impact. In Spain, there is more than 10 GW
of potential new pumped hydro capacity that could be
developed at competitive cost just using existing dams.”

9. https://www.hydroreview.com/hydro-industry-news/pumped-storage-hydro/chinas-new-pumped-storage-capacity-is-helping-integrate-growing-wind-and-solar/

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DNV Energy Industry Insights 2023
Hydro-electric dams have traditionally been used for
base load generation, but pumped-hydro turns them
into adaptive, passive storage, like giant batteries. And
now, pumped hydro is evolving again to provide
ancillary services. “Dams are typically synchronous
generators, with a single RPM creating a single hertz,”
says Michael Barnard, “but now, for pumped hydro we’re
seeing synchronous turbines and asynchronous
turbines working together to provide power manage-
ment. You can have one set of turbines focused on
inertia frequency regulation, and the other on faster-
acting asynchronous electricity.”
The main problem with pumped hydro is that it takes
several years to develop, even when existing reservoirs
are used. This means it has limits in terms of its usefulness
in meeting 2030 targets, despite being a fundamental
component of the longer-term energy system.
Another issue is that many places do not have the
geography or hydrology to use pumped hydro, or to
Storage technologies expected to develop to small- or large-scale adoption over the next three years
Lithium-ion batteries
Pumped hydro
Green hydrogen
Thermal energy storage
Redox flow systems
Lead batteries
Sodium-ion batteries
Compressed air/gas
Supercapacitors
Flywheels
Liquid air/gas cryogenic
Solid mass gravitational
Superconducting magnetic 13%
Q: Please indicate how you expect your country/region to develop with respect to the following energy storage technologies over the next
three years.
14
add additional pumped hydro to meet the needs of their
current or future energy system. Other forms of longer-
duration energy storage will be needed, and multiple
innovations are developing in several areas, including flow
batteries, compressed air, and thermal storage.
Vehicles driving battery growth
The growth of electric vehicles (EVs) is shaping many
aspects of the broader energy storage landscape. The
majority of the growth in overall demand for batteries in
the period to 2030 will be driven by EVs.10 And demand
for EVs is expected to skyrocket over this period. The
trajectory is already forming: in 2022, 14% of all new car
sales globally were EVs, a significant increase from 9% in
2021 and under 5% in 2020.11 It is not surprising then that
72% of those we surveyed reported that their country is
not building electric vehicle charging infrastructure fast
enough.
Lithium-ion technology is expected to dominate EVs
energy storage in the short- to medium-term.12 It is also
86%
62%
52%
46%
41%
39%
37%
32%
29%
27%
25%
17%
Overall
 Closing the Energy Storage Gap CHAPTER 2

Energy storage technologies expecting increased investment/focus levels in the year ahead

Industrial
Electrical
Proportion increasing investment/focus Overall Oil and gas Renewables energy
power
consumer
Lithium-ion batteries 56% 48% 55% 60% 49%
Sodium-ion batteries 32% 28% 34% 34% 26%
Thermal energy storage 32% 28% 29% 31% 40%
Redox flow systems 30% 13% 34% 31% 30%
Pumped hydro 29% 16% 34% 31% 21%
Supercapacitors 19% 21% 26% 16% 19%
Compressed air/gas 16% 23% 11% 14% 28%
Liquid air/gas cryogenic 15% 33% 11% 12% 21%
Lead batteries 14% 15% 11% 14% 17%
Flywheels 10% 10% 16% 9% 8%
Solid mass gravitational 10% 3% 11% 11% 7%
Superconducting magnetic 9% 6% 17% 7% 15%
Green hydrogen (60%) has been excluded from this table because the question did not specify that the investment was for energy storage purposes specifically, and so the result is inflated by
investment in green hydrogen for use as an industrial feedstock/commodity (i.e. not for energy).

Q: Do you expect your organization to increase or decrease investment/focus levels in the following areas in the year ahead?

by far the most popular technology among our survey

respondents, with 56% reporting that their organization To unlock the power of energy storage in
will increase investment/focus levels on this technology electric vehicles it is important to understand
in the year ahead, far ahead of second place at 32%. the influence of automakers. They are uniquely
positioned to guide their customers towards
Second place was a tie between sodium-ion technology embracing smart-charging and bi-directional
and thermal energy storage. With supply of lithium-ion charging solutions right from the initial stages
batteries under such pressure, and with EVs dominating of the customer's journey. Automakers are
supply, markets and the energy industry could find also beginning to enter partnerships with
value in pursuing the next best technologies. energy retailers, which further expands their
influence. It's a mistake to just think about EVs
as batteries on wheels — this is too much of an
12%
energy-centric lens. To build a successful
My country/region is not model (that makes use of EVs as grid storage)
35% building electric vehicle you need to think as much about user experi-
17% 72% charging infrastructure ence and user journeys as you do about the
fast enough. optimization of batteries and the grid.

32% - Felicity Jones, Solutions Lead at Kaluza

10. https://www.mckinsey.com/capabilities/operations/our-insights/power-spike-how-battery-makers-can-respond-to-surging-demand-from-evs
11. https://www.iea.org/reports/global-ev-outlook-2023/executive-summary
12. https://www.dnv.com/energy-transition-outlook/about.html

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DNV Energy Industry Insights 2023
Advances in sodium-ion batteries
There is 500 times more sodium than lithium in the
earth’s crust, and 700,000 times more in seawater.
This abundance is why sodium-ion batteries are
expected to be much more affordable than lithium,
once the technology matures and the supply chain is
scaled. They can also operate across a wider range of
temperatures than lithium-ion batteries, making them
more suitable in some applications — and less of a
fire risk.
The main downside is that they have a lower energy
density than lithium-ion batteries, so they need to be
bigger to store the same energy. They also, currently,
have a shorter lifespan than lithium-ion batteries.
Green H2: Limited for storage, expanding for industry
Organizations around the world are exploring the many
potential applications for green hydrogen in clean energy
systems and heavy industry.
Just over half of respondents (52%) expect either small-
or large-scale adoption of green hydrogen in their
country/region over the next three years — only lithium-ion
batteries (86%) and pumped hydro (62%) were higher in
our list of 13 energy storage technologies.
But it is important to remember that developing a clean
hydrogen economy is being driven by a range of factors.
Hydrogen has long been a major industrial feedstock
which needs to be decarbonized, and there are several
new industrial applications which will need it (e.g. green
steel). These other applications will support the growth of
a green hydrogen value chain, potentially driving efficien-
cies and cost reductions, which could make hydrogen
more attractive as an energy storage option.
At the moment, green hydrogen is expensive and
inefficient for energy storage purposes. When renewable
16
Despite these challenges, there is growing optimism
about the future of sodium-ion batteries. As this tech-
nology continues to develop, it is likely that sodium-ion
batteries will become more affordable, energy-dense,
and long-lasting. This could make them a viable alterna-
tive to lithium-ion batteries for a variety of applications.
“Sodium-ion batteries will gain access to the market and
we believe it will happen very fast,” says Pilar Gonzalez.
“It's not going to be long duration, and the supply chain
still needs to be developed, but since sodium is an
abundant material it brings a lot of benefits in terms of
volatility of prices, access to materials, and availability.
It's a drop in technology in terms of energy density but it
helps us reduce pressure on critical materials.”
electricity is used to make green hydrogen, about
30-35% of that electricity is used to power the electrolysis
process. If we then convert green hydrogen into
ammonia, we lose another 13-25%.13 Transporting,
compressing, and storing hydrogen also consumes
significant amounts of energy, so further losses are
incurred.14 At present, there are not many contexts
where it makes sense to make green hydrogen for
energy purposes, rather than just using the available
renewable electricity directly.
“We have several hydrogen facilities, but these are aimed
at decarbonizing the existing consumption of hydrogen,
such as in fertilizers, or refinery processes,” says Pilar
Gonzalez. “It can be used in many other ways, but the
question is whether it's competitive or not. Green
hydrogen has poor efficiency as an energy carrier, which
means higher costs. There are so many other technologies
today that are more cost competitive for storing electricity,
so I doubt we will need hydrogen energy storage in the
near future. But green hydrogen has a lot of potential in
other industrial applications. ”
 Closing the Energy Storage Gap CHAPTER 2

Using hydrogen as a raw material changes the equations. “KEPCO will convert existing coal and LNG power
The same energy losses occur, but in the creation of an generation into carbon-free power generation using
industrial commodity, which competes against other clean hydrogen and ammonia,” says Chang-hoon Shin,
ways of accessing that commodity, rather than against Chief Technical Leader in smart distribution Lab of KEPRI
other ways of storing energy. (KEPCO R&D center). “We are developing a full-cycle
ecosystem for the production, storage, and utilization of
Nevertheless, there are still plans to use hydrogen for economical and stable hydrogen and ammonia, focusing
energy storage in some regions, where various factors our core competencies on high-efficiency green hydrogen
— such as local energy resources, industries, infrastructure, production technology, chemical hydrogen storage
and decarbonization targets — have led to supportive technology, fuel cell power generation systems, hydrogen
government policies. and ammonia blending technology, and hydrogen and
ammonia combustion turbines.”
For example, South Korea plans to provide its energy
system with 27.9 million mt/year of clean hydrogen (green
and blue) by 2050, at which point it is expected to be the
nation’s leading energy source.15 This will include 12%
Greater interconnections
5 million mt/year of locally produced green and blue 35% between energy networks
hydrogen, while importing 22.9 million mt/year of green
hydrogen from other countries.
17% 58% will significantly reduce
the need for large-scale
battery storage facilities
KEPCO (short for Korea Electric Power Corporation) is the
32%
largest electric utility in South Korea and will be among
the main set of organizations tasked with delivering on
this promise.

13. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Nov/IRENA_Green_hydrogen_policy_2020.pdf
14. https://data.bloomberglp.com/professional/sites/24/BNEF-Hydrogen-Economy-Outlook-Key-Messages-30-Mar-2020.pdf
15. https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/112621-s-korea-to-provide-279-mil-mtyear-of-clean-hydrogen-by-2050

17
DNV Energy Industry Insights 2023
Expanding energy storage: An urgent priority
There is no doubt that grid-scale storage systems are a
critical part of the net zero puzzle.16 Storage smooths out
the variability of renewable electricity generation and
provides services that keep power grids reliable and
efficient. But currently, there are serious challenges to our
ability to expand storage systems quickly enough to
support our nearer-term climate goals.
The urgent need to develop large energy storage
capacity is both a driver and a barrier. If there was more
time, we could wait for emerging technologies to mature,
we could make sure permitting processes were perfect,
supply chain delays would be tolerable, and we would
have time to expand transmission capacities and
develop new interconnections (reducing some of the
need for storage).
All of our current storage technologies have weaknesses
and limitations, but between them we have all the
technology we need. Large amounts of capital are
being allocated into the development of new storage
technologies, but many of these will not be viable in time
to meet our targets for 2030, or even 2040. “We have the
technology we need already,” says António Coutinho,
16. https://www.dnv.com/energy-transition-outlook/about.html
17. https://asia.nikkei.com/Business/Automobiles/Toyota-to-roll-out-solid-state-battery-EVs-as-soon-as-2027
18
“What we need now is to find a way to build storage
infrastructure at speed, at scale, and in a smart way.”
Speed, scale and smart ways are all in operation at the
giant open pit mine on the edge of the little town of
Greenbushes, Western Australia. It is said that in principle,
Greenbushes lithium mine could produce enough to
meet global lithium demand by itself. But lithium is an
abundant metal. A large enough operation in the “lithium
triangle” — spanning the salt flats of Chile, Argentina, and
Bolivia — could do the same.
We may see the use of sodium-ion technology expand
rapidly in the coming years. We may see energy storage
breakthroughs in dozens of other technologies. Toyota,
for example, recently announced a major advance in
solid-state batteries, which if commercialized, could
change the direction of EV energy storage in the next
decade.17 But to keep the energy transition moving, we
need to make full use of today’s best available energy
storage options – maximizing the potential of
pumped-hydro and lithium-ion batteries — as storage
solutions and services become an increasingly vital
component in energy systems around the world.
 Growing optimism CHAPTER 1

Lithium fields in the Atacama desert

in Chile, South America

19
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