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Maguire: From curiosity to cornerstone, how batteries became mainstream

Batteries were essential but not transformative for most of the last century. Batteries powered radios and started cars. They also provided backup power when the grid went down.

They are now at the heart of a global shift in industry, underlying everything from electric cars and smartphones to power grids that are increasingly dependent on renewable energy.

This transformation -- from niche component to strategic basis -- has occurred with an unusually rapid pace. Batteries have evolved from a mere afterthought to a key technology in the transition from fossil fuels.

It is not a single innovation that has brought batteries to the forefront, but rather a convergence between technology, economics, policy and scale.

Portable Constraints

Batteries were used for a variety of specific and often "unglamorous" applications before the 1990s. Lead-acid batteries were the most common, and they were used in automobiles and industrial backup systems.

There were rechargeable options, but they were expensive, bulky and short-lived in comparison to the amount of energy they could hold.

Batteries were seen as a limitation rather than enabling technology in the late 20th Century, even as electronics became more prevalent. The devices were designed to work around the limitations of batteries: their short runtimes and heavy weight, as well as slow charging.

It would have been unthinkable to think that batteries could transform entire industries, or even global energy systems.

LITHIUM ION CHANGES THE EQUATION

This changed in 1991, when lithium-ion battery technology was commercialized. This new chemistry provided a significant improvement in terms of energy density, flexibility and rechargeability. Instantly, portable electronics no longer had to be plugged into power outlets.

In the decade that followed, lithium-ion battery technology quietly fueled the growth of laptops and mobile phones. Eventually, smartphones were also powered by these batteries. In the early 2000s batteries no longer supported devices, but enabled new product categories.

Batteries became a part of everyday life, even though they were still mostly invisible.

The next turning point was scale. Battery manufacturing grew dramatically in East Asia as global consumer electronics demand surged during the 2000s and 2010s.

Scale brought learning. Manufacturing processes improved. Yields increased. Supply chains matured. Costs started to drop -- first slowly, then quickly.

According to the International Energy Agency, the lithium-ion batteries' prices have dropped between 80% and 90% over the past decade. This is one of the steepest price declines for any major industrial technology.

The cost curve would be decisive. Batteries that were cheaper did not only expand the existing market, but also created new markets.

EVS BATTERIES MAKE BATTERIES STRATEGIC

Transport is the best sector to illustrate this shift.

The battery in electric vehicles has become the most important feature of the vehicle, replacing the internal combustion engines as the core of the vehicle.

This shift has forced automakers, at least those who want to compete in the electric vehicle space, to rethink their supply chains and manufacturing processes.

Tesla and other companies based their business models on battery performance and costs, while the government introduced incentives and emission?rules to accelerate adoption.

At the same, the demand for raw materials like lithium, nickel, and cobalt soared, bringing batteries into the geopolitical realm. Supply chains were transformed into strategic assets and the control of battery materials had implications for industrial competitiveness and energy security.

Batteries are no longer just a consumer technology. They're a cornerstone for the future of transport.

From Mobility to the Grid

Power has become the next frontier. The variability of renewable energies, such as wind and solar, has led to a need for greater flexibility. Batteries are one of the best tools for achieving flexibility. Battery storage projects at utility scale are being implemented to balance the supply and demand, improve grid stability and store surplus renewable energy for later use.

What started as a niche frequency regulation solution has evolved into a wide range of applications in modern power systems.

According to the IEA, in many markets, battery-powered peaking plants are now competitive with gas-fired systems for certain applications. This was unthinkable a decade earlier.

Batteries have been elevated from mobility technologies to core infrastructure.

Power Politics

The government's policy played a key role in speeding up this transition. Climate targets have moved electrification up the national agendas while industrial policies have tried to localize battery production.

In the U.S. the Inflation Reduction Act offered incentives to domestic production and supply-chain development. The European Union introduced its own battery regulations, and has invested in frameworks for investment. China has been dominating the value chain of batteries over many years.

It is not just a race to deploy batteries but also to manufacture them and secure the raw materials required to do so.

Batteries are a unique technology at the intersection of geopolitical competition, industrial strategy and climate policy.

GROWING PAINS

The transition to mainstream culture has not been smooth.

The raw material supply is a constant concern. Lithium and other inputs are subject to price volatility, and geographical concentration.

The environmental and social impacts of mining are also gaining attention, which raises questions about the sustainability of battery supply chains.

Despite this, there are still technical challenges. The pace of improvement in energy density is slowing down, while safety risks, though manageable, persist. Recycling systems must also be scaled up to meet future demand.

The next phase of 'battery history' is shaped by these constraints, rather than being stopped.

The industry is diversifying as it matures. In cost-sensitive applications such as mobile phones, lithium iron phosphate batteries (LFP) are increasing their market share. Alternatives like sodium-ion batteries are also beginning to appear for certain uses.

Solid-state batteries continue to be researched, with potential improvements in safety and performance. Commercial timelines are still uncertain.

New use cases continue to expand the market. Batteries are being used in more and more homes, businesses, and industries, creating a flexible and distributed energy system.

Recycling will also become a key component in the industry to both reduce the environmental impact as well as to ensure supply chains on a long-term basis.

From Innovation to Infrastructure

However, the most important shift may be conceptual.

Batteries are not regarded as a new technology. Batteries are now viewed as an essential part of infrastructure, embedded and indispensable.

The grids and devices that people use are based on them. They are important not only for what they can achieve individually, but also in the way they allow broader systems to work.

In this sense, the rise in batteries is similar to that of other foundational technologies. From railways to electricity networks to the Internet.

The innovation phase has not ended, but the centre of gravity is now in a new place. Now, the key questions are about scale, integration and control - who makes batteries, where are they deployed and how do they influence the global energy systems.

What was once a niche tech has now become an integral part of modern living. Batteries will play a more important role as the energy shift accelerates. They won't be on the fringes anymore, they will be at the core.

The opinions expressed are those of the columnist, author. This column is a great read! Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn, X and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets 7 days a weeks.

(source: Reuters)