EuroWire January 2019

Transatlantic cable

thought.” Brian Eckhouse of Bloomberg News had persuasive backing for this view from the London-based technology services company Bloomberg NEF. According to a BNEF forecast published on 6 th November, the global energy-storage market will surge to a cumulative 942 gigawatts over the next two decades, and that growth will necessitate massive investment. (“The Battery Boom Will Draw $1.2Trillion in Investment by 2040,”6 th November) The sharply falling costs of batteries is seen as a key driver of the boom. BNEF expects the capital cost of a utility-scale lithium-ion storage system to fall another 52 per cent by 2030. “Costs have come down faster than we expected,” said Yayoi Sekine, a New York-based analyst with BNEF. “Batteries are going to permeate our lives.” The implications of cheaper batteries are far-reaching, upending multiple industries and helping spur technologies necessary to help ght climate change. “Batteries power the electric vehicles that are popping up on our freeways,” said Mr Eckhouse. “They also unlock solar power from the exclusive con nes of the sun.” But cost is not the sole factor. Governments from China to California are spurring demand, as is the rise of electric vehicles and solar power. There has also been growing emphasis on storage for electric-vehicle charging as well as energy access in remote areas, according to BNEF. China and California lead the pack Two important markets come into particular focus for BNEF. China, which is building up its battery-manufacturing capacity, will be a central player in the battery boom. And California has introduced a series of measures in recent years that will, directly or indirectly, prompt battery production – notably legislation that would require the state’s electricity to come exclusively from carbon-free sources by 2045. “Storage is just so sensibly the next step in the evolution of renewable energy,” Edward Fenster, the executive chairman of the rooftop-solar company Sunrun Inc (San Francisco) said in an interview with BNEF. “If we’re going to get to 100 per cent renewable energy, we’ll need storage.” Accordingly, storage bulks large in the BNEF battery forecast. Here are six key takeaways: † Annual energy-storage deployments are now expected to exceed 50 gigawatt-hours by 2020 – three years earlier than forecast by BNEF in 2017 † Energy storage could be equivalent to 7 per cent of the world’s total installed power capacity by 2040 † The Asia-Paci c region will be home to 45 per cent of total installations on a megawatt basis by 2040. Another 29 per cent will be spread across Europe, the Middle East and Africa, with the remainder in the Americas † The majority of storage capacity will be utility-scale until the mid-2030s, whereupon so-called behind-the-meter projects – installations at businesses, industrial sites and residential properties – will overtake utility-scale

† The foremost battery-making nations are China, the USA, India, Japan, Germany, France, Australia, South Korea and the UK. South Korea dominates the market today but will be overtaken by the USA early in the 2020s; both will later be eclipsed by China † Storage is coming to developing countries in Africa. BNEF expects African utilities to determine that, to service far- ung areas, a combination of solar, diesel and battery power is cheaper than building fossil fuel generators or extending the grid

US-China trade strains

Import tari s and counter-tari s are seen as ‘the biggest inhibitor’ to the expansion in American manufacturing As orders and hiring cooled amid America’s escalating trade tensions with China, data published on 1 st November by the Institute for Supply Managemen t (Tempe, Arizona) showed that its gauge of US manufacturing fell by more than forecast to a six-month low in October. Here are highlights of the report, with readings above 50 indicating expansion: † The ISM factory index dropped to 57.7 from 59.8 in September † A measure of new orders fell to 57.4 from 61.8 over the month. A two-month drop of 7.7 points is the steepest such decline since January 2015 † A gauge of export orders decreased from 56 in September to 52.2 in October, the lowest since November 2016 † The institute’s employment index declined to 56.8 from 58.8 in a month For economics reporter Sho Chandra of Bloomberg News , a key takeaway from the report was that it might add to concerns that President Donald Trump’s trade war with China was starting to in ict more pain on US manufacturers even as their industry continued to expand. The ISM export-orders gauge fell for the third time in four months, while new orders decelerated for the fourth month in ve. (“US Factory Gauge Slumps to Six-Month Low Amid Trade War,”1 st November) “The data follow other reports showing manufacturing in some of Asia’s most export-driven economies softened in October, highlighting spillovers from the trade spat,” Ms Chandra wrote. Even so, she reported, US stocks rallied on 1 st November after Mr Trump said he had had a productive conversation with Chinese President Xi Jinping on trade. Pointing out that disruptions and data volatility frommajor storms in September and October may have played a role in the ISM ndings, Ms Chandra observed that elevated price pressures and a pickup in measures of backlogs and supplier deliveries indicated lingering supply-chain bottlenecks. The stronger US dollar, which had rallied sharply over the previous six months, was seen as another possible headwind. † According to Timothy Fiore, chair of ISM’s manufacturing survey committee, more than 40 per cent of the comments from recent ISM survey respondents relate to tari s, with companies hesitant to decide on locations for setting up their manufacturing operations.

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January 2019