Battery Storage is Booming Around the World...But Not In Canada

[00:00:00] Speaker 1: The rapid adoption of battery storage or storage in general for power grids has been one of the top energy stories of the last two or three years. Ember Energy has now put out a report about how, about some of the trends, the global trends and the, you know, explanations for the rapid acceleration in adoption. Katie, could you give us an overview of Ember's report, please? [00:00:24] Speaker 2: Sure, happy to. So we, this study was looking at which countries have 2030 national storage targets. At COP29, two years ago, the countries agreed to a 1,500 gigawatt storage pledge by 2030. And we wanted to look at how that storage pledge has influenced whether countries are really increasing their ambitions. So, you know, you signed on to this pledge to say we need so much storage by 2030 to support the clean energy transition. But how many countries have actually set targets, what are the size and scope of those targets, where are they, who's upgraded them, and how do they compare with what's happening in the actual storage market right now? [00:01:02] Speaker 1: My understanding from your report is that while storage is not on track to meet targets, it's booming. And China and the EU have led the way. Is that the case? [00:01:19] Speaker 2: Well, so there's two different things. When we're talking about storage booming, absolutely. I mean, additions are up well on, you know, additions have been doubling since about 2020 every year. They've slowed down to maybe one and a half times the increase in 2025 compared to 2024. But, you know, additions have increased to 17-fold over five years. We're talking about massive increases. This storage additions, one of the things I like to compare to, you know, we think of solar as being the sort of ultimate S-curve grower. It took solar about nine years to go from 10 gigawatts per year additions to 100 gigawatts per year. It's taken storage four years to go from 10 gigawatts a year to over 100 gigawatts a year. So it's really ramping up. China is definitely leading the way in additions. The U.S. also, you know, very high in terms of actual storage additions. And for us, what we saw from the China and EU storage story is about the 2030 targets. The EU signed a new tripartite block agreement just this year to set a 200 gigawatts storage target for 2030. And China put out its new 15th year plan and now has almost 460 gigawatts of storage plan for 2030. So those two regions alone, country and region, account for about 80% of 2030 storage targets. So when it comes to what's happening right now, China is a big part of the story. And when it comes to what's planned for the future, China and EU are massively dominating the story. [00:02:47] Speaker 1: Katie, my understanding of the U.S. situation is that the power grid now is under a lot of stress and growth rates are, I think I saw the other day, the growth rate, the annual average growth rate is 3.7%, which is like double what it is and has been in Canada, double what it was in historically in the U.S. Well, since 2008 anyway. And so what's happening, if I understand this correctly, is that sunny states like California and Texas are adding massive amounts of solar combined with batteries. And it's that combination, being able to move cheap solar electricity from when the, you know, the period when the sun is shining to when it isn't, when the sun goes down. And that's when a lot of the demand is when people, is that a good way to explain what's going on in the U.S.? [00:03:38] Speaker 2: Absolutely. I mean, solar plus batteries are the story right now. When it comes down to it, solar plus batteries is cheaper in terms of installing new generation capacity than almost any other source right now. Ember recently put out a report this year that's called 24-hour solar. I don't remember the exact title, but it's something about 24-hour solar. And it's really about looking at the economics of these sunny places and saying, what would it take to actually take solar from a sort of daytime peaking afternoon source to something that can take you all the way around the day? And it's the economics are surprisingly positive. And you don't actually have to be as sunny as you might think to be able to accomplish 24, 365 solar. But that all comes down to storage capability and the fact that storage is getting cheaper and cheaper. And that we're seeing places like California be really successful with shifting huge amounts of their daytime solar energy into late evening, early evening, and making solar. And all the time energy source is definitely happening in a lot of these regions, even in places without big storage targets. So you're absolutely right. And we also looked at a combination of solar and storage targets in the report. And we're really seeing the connections between countries and regions with large solar targets also have large storage targets. So you can't think of these things independently. [00:05:03] Speaker 1: We'll get to the technology in a bit because we followed battery technology here for many years. And I remember the days, you know, prior to the COVID pandemic, for example, when we were talking about, well, it's going to come. You know, you can see the innovation happening. You can see the cost curve. You know, at some point, we are going to pass the inflection point where the solar and storage, where storage is more economic. And we now appear to be there. So we're going to get to the technology in a second. But I want to run an idea past you. And that is, you know, in Canada, we have very cold winters. And we have, you know, our climate isn't great. Our solar resources aren't great. So we don't pay a lot of attention to solar here. But we kind of turn our nose up at it. We think, oh, well, if it doesn't work in Canada that well, it doesn't work anywhere else. And the problem with that attitude is that in the global south, in the emerging economies in particular, it works really well. And it gives them a source of cheap, dispatchable power that allows them to electrify big swaths of their economy, which then gives them a competitive advantage. And it's that whole process that gets missed in that the emerging economies see solar and battery storage as a major way to become more competitive in the global economy. Is that a fair way to look at this? [00:06:31] Speaker 2: Yeah, I think that is fair. And some of that is driven by the sort of behind the meter type solar and storage that's happening, sort of disconnected from the grid in some places in the developing world and in the global south. Of course, that's not necessarily true if you think about China's role in the global south. But just getting back to your point about Canada being cold. I mean, we do see successful applications of storage and solar in some of those Nordic countries. You know, there's no reason to think that there isn't a role there as well for it to play in Canada. I think it's it's you don't necessarily have to be, you know, Dubai to take advantage of solar and storage. So I would say, you know, just to sort of make that point that I don't think Canada should consider itself not a good contender. But yes, in the global south, I mean, absolutely, we're seeing a big rollout in terms of its ability. Not as much as you would think, you know, I'm sitting here in South Africa, you know, prime place for something like solar and storage to play a role. And so it's definitely happening, not just in the big developed markets, but all over the place. [00:07:49] Speaker 1: When we're talking about meeting these targets, which is essentially we're talking about, can we increase the rate of adoption faster than it is now, which is still pretty impressive at the moment, and that the role of disruptions in the global energy system, you know, we've seen the impact of the closure of the Strait of Hormuz. The Houthis attacking, you know, LNG and oil shipments in the Red Sea and what that's done to Asia and Asia has looked at that and got, well, you know, why would we subject ourselves to volatile and expensive hydrocarbons when we can build out electricity and then adopt, you know, EVs and heat pumps and other electric technology. And so I'd like to get your opinion on the role of that kind of disruption on accelerating the adoption of solar and battery storage. [00:08:50] Speaker 2: Yeah, I think, I mean, renewables said Ember, we've been talking a lot about, you know, the narrative used to be around the impact of renewables on things like climate goals. And now almost exclusively the talk is around energy security, you know, if you have your own electrons, you have your own wind, why would you be reliant on importing energy from somewhere else when you can control your own energy source domestically, especially as you said, given the disruptions and the global supply chains right now. So solar and storage, you know, it's not just about a climate picture. Solar and storage are very much about removing yourself from this volatility. So there's energy security, but also affordability, affordability and access. And given the economics of solar and storage, again, it becomes an issue of, you know, why pay more or rely on things like volatile gas prices that are dependent on decisions being made by foreign governments. And when you can, you know, supply local domestic solar and storage in your own backyard and maybe, yeah, of course, you rely on global supply chains to bring some of the parts in for a lot of cases. But that's a one time thing, as opposed to relying on global supply chains to consistently bring in your gas or your LNG or whatever it is, right, that's that becomes a continuous reliance on neighbors or on politics or on geopolitical things that you can't necessarily rely on. And so energy security and affordability are a big part of the push. And I think just sort of bringing it back to targets, one of the things when a government says, you know, we're actually going to target this amount and we want to bring this in, it gives, I think, that additional investor security that, again, it just supports that domestic, the economics of it, say, you know, we have some security here. We have some security here. This is a good investment. We need to be rolling this out domestically. [00:10:38] Speaker 1: So I want to follow up on your comment about the, you know, the conversations around energy security and increasingly around energy sovereignty. This idea that you own the means of producing your own energy in your own backyard. You buy a solar panel and battery combo once it's good for 25, 30, 35 years. And it's the conversation. I mean, this is a very active conversation in Asia in particular because they were most affected by the closure of the Strait of Hormuz. But in Canada, because we're a net exporter and a big net exporter of oil and gas, we're not part of that conversation. And we're not. Could you maybe give us insights into, you know, just how determined Asian governments are to get off that volatility of oil and gas imports? [00:11:29] Speaker 2: Well, I think when you're in a growth economy, like a lot of these Asian economies are right now, you're not just thinking about maintaining the status quo, you're thinking about sort of how do we get our systems getting bigger and bigger over time. And so I think maybe that gives a bit more of an impetus. I don't want to pretend I'm an expert on Asian economics by any stretch. But in terms of energy exporters, I mean, the largest battery facility that, you know, just came on the market recently is in Saudi Arabia. You know, an over seven gigawatt battery storage facility was just built. So there's nothing about being an energy exporter that precludes you from taking advantage of good economics, you know, and generating energy using all of the domestic resources you have, not necessarily just those that are buried in the ground. And I think that kind of taking that bigger picture kind of diversifying is, you know, in my opinion, I think always a good idea. [00:12:25] Speaker 1: Let's get to the battery technologies, because it used to be not that long ago that lithium ion was still the, and lithium ion NMC, then it became lithium iron phosphate. And now we're seeing sodium ion batteries. And now there we hear that there are other, you know, batteries in the coming in the near future could be solid state could be, could be any number of others. What's your take on the evolution of the chemistries and the battery technology? [00:13:02] Speaker 2: Look, I think we're still very much in a lithium ion market. I mean, 90% of additions last year, according to Bloomberg, were all lithium ion batteries. So that's where you've seen these really big cost curves come down. I mean, I think it's been almost 20% year on year, the compound average growth rate of the decline in battery costs 20% per year for years now. So we're not off the lithium ion battery train, you know, by any stretch, I think we're probably right in the middle of its peak. But sodium ion batteries are predicted to come, you know, increasingly in the next couple of years. And I think when we start talking about longer duration energy storage, that's where we're going to see some, you know, different technologies come through in the next couple of years. But I don't know if it's I would put sort of money on on what particular technology is going to win out on this race. But I think the energy transmission is very much benefiting from these declines in costs, improvements in technological efficiency. And we're at probably the low point of battery growth, I think, right now. I mean, there's very few places to go, but up and up and up, considering what's happening with technology that is reliable now technology, let alone thinking about what's going to come down the pipeline with improved technologies. [00:14:18] Speaker 1: So, Katie, there's a lot of attention been paid to China's dominance of the battery industry and the supply chains. And, you know, I know North America, up until the election of the current administration, was very worried about having to rely on Chinese supply chains. And was trying to build its own battery plants and critical minerals and making battery metals, all of that stuff. But outside of North America, in Europe, in other parts of Asia other than China, maybe even Africa, what's the attitude there towards building domestic supply chains and manufacturing so they're not as reliant on China? [00:15:02] Speaker 2: I mean, I can't speak to attitudes in these various places. What I can tell you is, remember, we have one of our data tools is a China solar export tracker. And that tracker, basically what we see is those panels are going everywhere. Africa is becoming, month to month, we're seeing massive increases in different parts of Africa in terms of importing Chinese solar panels. We're seeing it in Europe as much as, you know, they're trying to, you know, sort of create a little bit of a distance there. It's based on the imports. It's got to be stockpiled somewhere. You know, you can see it going into Europe. And so I think, you know, maybe there's this general idea that having a domestic industry would be great. But the reality is economically driven right now that those panels are cheap and people in a diversity of places seem to be more than happy to import them. And you can actually look at our website. That's a tracker that's updated monthly. And so you can really see real time responses to economics and to geopolitical things happening as that data set gets updated month to month. It's really valuable intel. [00:16:10] Speaker 1: I also want to get your opinion on a couple of interviews that I've done with engineers who have developed companies. One was in the United States. One was in Costa Rica. And they made some interesting points. And they said, look, the technology itself. So we're talking about solar panels, battery storage, digital controls, other technologies that are required. Maybe AI might be part of this. But their point was that it's system integration now that is the real, you know, bottleneck. It's having enough technical folks, engineers, electricians, installers, what have you. And then designing systems that work for maybe the Costa Rica example was an ice cream plant, of all things. And in the US, it might be factories or it might be big commercial operations, that sort of thing. And so what was the role of system integration, system design? How does that play out in the global south where I'm just assuming that those kinds of skills would be not as plentiful as they would be in some place like the EU or North America? [00:17:20] Speaker 2: I think this is exactly what comes back to the importance of setting targets. Because when you think about planning in an integrated holistic sense across your system is what you want to say is in the next five years, we want to accomplish X with our grid or with our energy system. And so in order to do that in a way that is efficient and least cost is to actually strategize around how much renewables, where you want things located, how you want to expand your grid and where, when and how you want to install storage. And that's what we found is one of our arguments for why, you know, the 2030 targets are so important is just to do this. And as you said, a holistic way that makes sense, because right now, you know, the economics for storage are fantastic, but that doesn't necessarily mean it's being installed in the right places, you know, exactly where the grid needs it or exactly where, you know, a country knows its demand profile is going to be shifting. You know, it's purely just driven by these economics right now where to do it efficiently and to actually have a transition, especially in places where you're simultaneously trying to grow your grid, increase access, keep affordability reasonable that you actually have to have plans here. And this is where something like setting targets really matters. And so that you can actually do this in a way that integrates all of these different components and brings in all of these different experts. And you can leverage experts outside of your own country as well in the policy planning process that allows you to, you know, to make a plan that makes sense for your region, your country, whatever it is. And so we think that that targets are absolutely a critical part of this. And, you know, 2030 is only four years away, but still from the from the time scale, you know, we're not talking about building up your power plants here. You know, solar and storage are pretty quick. So having ideas of what you want to roll out in the next four or five years, it makes sense. [00:19:08] Speaker 1: What about what we talked a lot about grid installation of battery storage on grids, but there's a big story here to be told about off grid distributed energy. And I was kind of shocked. I was looking at some data might have been embers actually that, you know, roughly half of the solar installed in China is on rooftop solar. It's not in solar farms. And of course, there's the famous example in the last few years of Pakistan and and how the consumers have imported cheap panels. Will we see a storage small scale storage with distributed energy or distributed behind the meter kind of installations? Are we going to see a boom in that as well? [00:19:57] Speaker 2: It's a really good question. You know, we we focused on because this was a policy assessment. We focused on sort of big picture utility scale type avenues. So we didn't really look too much into what's happening behind the meter or things like that. But given the economics and the scale, of course, you know, if it works, it works. I know here in South Africa where we have things like load shedding and some unreliability. That's the big push for solar PV and behind the meter and rooftop solar happened. And as I would say over the past four years, that's happened here. And now you won't get a system installed without pretty large batteries along with it, because for the cost of what you could have done four years ago, you pay the exact same money. Now you're not just getting panels on your roof, you're getting panels and good batteries to go with them. Whereas if you had done a three, four years ago, you would have paid that and just got the panels on your roof. So I can just tell you anecdotally from living in a country where this is very much a reality that it's happening. So I wouldn't be surprised if it's, you know, if this is going to be happening more and more places. [00:21:00] Speaker 1: Katie, we've covered a lot of ground in this conversation. Is there anything that we should have talked about that we didn't talk about? [00:21:09] Speaker 2: I think that some big solar countries have really not taken advantage of storage, I think, yet. Of the top 20 solar markets, eight of them still don't have storage targets, which means that solar is booming, but it's not quite being taken advantage of. Countries aren't being as efficient as they should be with it. And I think that's a big part of this story is saying, you know, we're looking at not just where is storage happening, but where should it be happening? And I think we have to turn to those big solar markets and see a bit more central planning around storage if we really want to take advantage of, you know, what can be done for grids and affordability and access for as many people as possible. [00:21:54] Speaker 1: Well, let's talk about Canada for a moment. Is Canada showing up in the conversation? And I should point out my previous comment about solar and storage. But I didn't mention that a number of utilities like BC Hydro, where in the province where I live, are looking at wind and storage as opposed to solar. Yeah. So does Canada appear in these conversations as a player or a wannabe player in the battery, in the storage space? [00:22:25] Speaker 2: Yeah, to be frank, not much. Canada doesn't really have an official storage target. So we haven't been able, we weren't able to find sort of big holistic policy views where Canada said, you know, this is what we're aiming to do or this is what we'd like to do. This is where we'd like to roll out storage. This is why we think it's important. The numbers we rely on in our tracker from the 2023 net zero, net zero scenario, I think it's called Canada's energy future or something like that. And so 2023, you know, that's three years ago, that's and it includes something like one and a half gigawatts of storage. You know, it's pretty modest for a country with, you know, Canada's size of the grid. So it's not a big player from our perspective and sort of what we were looking for for policy, certainly from different countries, unfortunately. [00:23:19] Speaker 1: Yeah, it was earlier this year, the national national government under Prime Minister Mark Carney, who you would think if there's anybody on the planet who would be advocating this, it would be it would be him. But in the electricity strategy calls for doubling the grid by 20, 2050. So more electricity. But very little of it will come from wind and solar. It'll all come from other bigger sources, including some gas. And the role of storage in the grids is kind of embarrassingly small. And I'll use it in Alberta as an example. So here's five, five and a half million. It's kind of the Texas of Canada. You know, it's the engine behind Canada being the fourth largest oil producer in the world. And I think they were bragging in a press release not that long ago, they had something like 465 megawatts of storage on the grid. And you look at the numbers that are in your report, you know, the gigawatts in the hundreds of gigawatts, never mind megawatts. And it's just embarrassingly small. And the worst part of it is, from my point of view, is that it's just not in the conversation. It's just not being looked at as a major technology. It's playing on the margins. And I think that that's going to be -- so I guess where I'm going with this, Katie, is that it's not just the policy. It's not just the deployment or the manufacturer. It's the conversation. It's the recognition of these trends that are going on at the global level, trends that are going on in the industry and the cost curves. And without those being recognized, it affects everything else along the supply chain of policy and so on. And that's my observation. What would you say? [00:25:12] Speaker 2: I agree with you. And it's a missed opportunity from a government perspective, but also for the, you know, ordinary Canadian citizens to be getting clean, safe, affordable, reliable electricity, you know, in the most technologically, economically, environmentally efficient manner. You know, and that's just something that either can be advocated for from the top down, but also from the bottom up. As you said, if these technologies get cheaper and people, you know, we live in the internet of things, everybody wants the newest, the fastest. But I think people, everyday citizens start to realize that they can actually have something that makes their lives easier, makes their air quality better, is better for their wallets. Then you might start to see a little bit more, you know, domestic push or push from people to say, hey, how come we're not talking about this? How come my friends, cousins, relatives, whoever are telling me all about this amazing app they have that's controlling their solar battery system? Look, their house is net, you know, negative on energy. How come I can't do that here? How come I don't have the policy, the regulation? How come I can't connect my house to the grid like that? You know, that's one way where it doesn't necessarily have to be top down. The conversation, I think, can also be started bottom up. And I would hope that that would, you know, is something that's coming. [00:26:25] Speaker 1: And I'll just give you a little context here. My explanation for why it hasn't been coming is that overall Canada has had a very low cost, low emission grid. You know, we were not that long ago, we were 84% zero emission led by hydro, hydro, nuclear, and some wind and solar. And it's been very stable. It's been very low cost. You know, as low as seven cents a kilowatt hour up to around 11 or 12 at the high end. That's, that's, that's about as cheap as it gets on the global scale. It doesn't get much cheaper than that. And so we've been kind of coddled and, and, and we're comfortable, you know, we've had. And so now that there's this explosion in, you know, of electrification and the growth of power grids and so on. It's, it's like, we've been caught. We got, we didn't see it coming and, and there's not in much incentive. There's no, there's no recognition that, that things have to change in order for us to be competitive out to, you know, over the next, say 25 years. Can you, and I, can you think of another country that maybe mirrors that, you know, has had the same experience? I don't know, maybe like maybe a France, for example, that has a lot of, a lot of nuclear in its, in its power grid. [00:27:40] Speaker 2: I think, you know, it's, it's, as you said, you know, it's been fine so far, but you're talking about doubling your grid by 2050. You're not going to double your hydro output all the sudden, right? So where's this going to come from? So, you know, what's worked historically, I think you need to be, doesn't necessarily mean that that's how things are going to stay if you want to have a growth scenario. And I think, you know, one of the things with Canada too, is that's slightly different from, you know, France, for example, is, you know, France has this interconnectedness with the rest of the EU. You know, whereas Canada is, you know, doesn't necessarily have that relationship with, with other small neighbors, you know, that it's reliant upon. So it is kind of an interesting, unique example, as you said. But nevertheless, from a, from a growth perspective, and from a future thinking perspective, I think it's naive to not think that some of these other technologies have a really important role to play. [00:28:32] Speaker 1: Katie, really appreciate your insights here. Thank you very much for this. Thanks very much. [00:28:38] Speaker 2: Appreciate it.