The Foundation of Future Clean Electricity Systems

Critical Minerals Will Form the Foundation of Future Clean Electricity Systems

Abstract

A low-emissions electricity system differs fundamentally from one powered by conventional fossil fuel sources. Among other factors, it depends far more heavily on critical minerals. A solar PV installation requires approximately six times more critical mineral inputs than an electricity plant powered by natural gas (7,000 kilograms per megawatt [kg/MW] of installed capacity). An onshore wind facility requires nine times more critical mineral inputs (10,000 kg/MW) and an offshore wind facility requires 13 times more critical mineral inputs (15,000 kg/MW). Nuclear energy, at slightly above 5,000 kg/MW, is the least critical mineral-intensive technology among the low-emissions power generation technology group. This means that the system transformation of electricity will inevitably be accompanied by increasing demand for these critical minerals. As clean energy transitions accelerate, there will correspondingly be a shift in focus from the supply of conventional fuels to the supply of critical minerals. Rising ore prices vulnerable to geopolitical events and volatile supply chains should be viewed as warning signs for policymakers to pay greater attention to the importance of these minerals for a secure and sustainable energy transition.

System Transition Comes with New Challenges

In all forward-looking scenarios, the rapid deployment of low-emissions power, electricity grids and grid storage shows rapidly increasing demand from the electricity sector for critical minerals. Despite technological innovation leading to material intensity improvements over time, critical mineral demand rises from 7 Mt in 2021 to 11 Mt in 2030 and 13 Mt in 2050 under STEPS. The scenarios show much faster growth, reaching 18 Mt and even 20 Mt by 2050. Even under STEPS, transitions to low-emissions power, grids and storage cause cumulative demand for critical minerals in this decade to be 20% higher than between 2010 and 2020, and cumulative demand from 2030 to mid-century to increase roughly fourfold (as large as demand of the past decade). Among the minerals critical to the future of power systems are copper, rare earth elements, silicon and lithium. Copper is widely used in electricity transmission and distribution networks, but its conductive properties also make it a crucial component for low-emissions power generation technologies such as solar PV panels, wind turbines and batteries. Rare earth elements (REEs) are used to produce permanent magnets for the motors of direct-drive and hybrid wind turbines (comprising 30% of wind energy installations in 2021). Silicon is used to manufacture solar panels. As deployment of variable renewable technologies increases, the need for storage technologies to complement renewable electricity also grows rapidly. Lithium-ion batteries are the world's fastest-growing storage technology, making lithium indispensable for future electricity systems. In terms of absolute volumes, copper dominates total demand for critical minerals. The electricity sector currently has demand above 5 Mt per year, rising to 10 Mt by 2030 under APS and 13 Mt under the NZE Scenario (Figure 2). Relative to current levels, lithium demand for battery storage systems increases most sharply, rising more than 20-fold by 2030 under the NZE Scenario and nearly 50-fold by 2050. Demand for copper, silicon and REEs nearly doubles by 2030 under APS and increases approximately threefold under the NZE Scenario compared to 2021. Mt=million tonnes; kt=kilotonne. In this way, battery storage is limited to grid-scale and household energy storage and excludes demand for EV batteries. Copper demand excludes EV motor demand. Lithium demand excludes demand for EV batteries. More copper is needed for grids, rare earth elements for wind turbine motors, silicon for solar panels and lithium for battery storage to transition to low-emissions power systems.

R&D Support, Improvements in Mineral Intensity and Development of Mineral Alternatives Are Critical

Copper and aluminium currently account for approximately 16% and 4% of total grid investment costs, respectively. To reduce raw material costs, grid operators can shift to using aluminium, which is cheaper than copper, in underground cables. Increased use of aluminium in underground cables could reduce copper demand by approximately 45%. Recent advances in cable insulation technology also expand the possibility of higher transmission capacity using the same amount of conductive material. Today's electricity grids are largely operated using an alternating current (AC) system requiring at least three wires per cable to transmit electricity. HVDC systems use two cables, meaning at least one-third savings in metal demand compared to AC systems. HVDC systems also have higher electricity transmission capacity than AC systems, which could reduce copper and aluminium demand as well as the need for grid expansion. Broader adoption of HVDC systems may increase costs but would reduce both aluminium and copper demand by approximately 10% by 2050 under the NZE Scenario. Crystalline silicon (c-Si) modules dominate the solar PV market today, accounting for approximately 95% of global capacity additions. A slowdown in crystalline polysilicon production in China last year created a bottleneck in the solar energy supply chain, causing polysilicon prices to quadruple. However, innovations in the manufacturing and design of c-Si solar panels over the past decade have contributed to significant improvements in material intensity; since 2008, silicon intensity has decreased by more than half as panel thickness has significantly reduced, and silver consumption has decreased by 80%. During the same period, module costs fell by 80%, leading to extraordinary growth in global solar PV deployment. While c-Si modules are expected to continue to dominate the market, more R&D work on alternative technologies such as cadmium telluride (CdTe), perovskite or gallium arsenide (GaAs) solar cells could enable these technologies to achieve increasing market share by 2050. Wind energy capacity nearly quadrupled over the past decade thanks to an average 40% reduction in costs and strong policy support in over 130 countries. The average rated capacity of wind turbines has also increased significantly over the past decade, nearly doubling for onshore wind turbines and increasing even faster for offshore wind turbines: the newest offshore wind turbine designs are 10–14 MW, with plans up to 20 MW. Turbines in this capacity range are in the construction phase. These changes have significant impacts on material use. On a per-megawatt kilogram basis, a 3.45 MW turbine contains approximately 15% less concrete, 50% less fibreglass, 50% less copper and 60% less aluminium compared to a 2 MW turbine. Material intensity depends not only on turbine size but also on turbine type. The rapid expansion of wind energy deployment also brings with it demand for rare earth elements required to produce permanent magnets for many motors. Under the NZE Scenario, REE demand in particular for neodymium and praseodymium due to a shift from technologies using induction generators to those using permanent magnet generators is expected to increase threefold by 2050. Given rising prices and concerns about competing for REE supply with EV motors amid geopolitical events, more R&D efforts are needed to develop magnet-free technologies or hybrid configurations with smaller magnets or REE-free permanent magnets to reduce overall REE demand. Successful R&D could result in significant reductions in REE demand (Figure 3).

Recycling and Reuse Can Reduce the Burden on Primary Supply to Meet Demand

Metal recycling, while coming with its own challenges, has the potential to be an important secondary supply source to meet increasing demand for critical minerals. Recycling involves the physical collection and separation of metals and metallurgical processes to recover them. However, it involves multiple pathways and a wide range of technologies and applications. Recycling metals used in the energy transition will not only reduce the burden on primary sources through mining but will also reduce the risk of better treatment of waste streams and the entry of various hazardous substances into the environment, polluting soil and water resources. While recycling will not eliminate the significant investment needs for primary supply, some reduction in the burden on mining through recycling will eventually result in lower social and environmental impacts from mining. By mass, 95% of solar panel components are recyclable, but currently only approximately 10% of end-of-life solar panels are being recycled. Many solar panels worldwide, with an average lifespan of approximately 25 years, are now approaching the end of their service life. Under the NZE Scenario, capacity retirements for solar PV increase nearly 150-fold, from 3 GW in 2030 to approximately 400 GW in 2050. By mass, 90% of wind turbine components are recyclable and, like solar panels, have lifespans of approximately 25 years. Under the NZE Scenario, capacity retirements for wind turbines increase from 16 GW in 2030 to 240 GW in 2050. More policy effort is needed to increase metal recycling and ensure that solar panels and wind turbines reach their end-of-life service by 2050. High recycling rates have been proven possible when simple cast products such as aluminium, iron and nickel metals, and in some cases copper, are involved or when the raw material is relatively easy to collect from industrial applications. This demonstrates that these metals have relatively high potential for continuous recycling, including from clean energy technology waste streams. The same does not apply to REEs, lithium and other energy transition minerals such as cobalt. High-level recycling focused on metals needed for clean energy technologies depends on further investment and R&D as well as international cooperation among various manufacturers. Targeted policies supporting the recycling of solar panels, wind turbines and batteries—including minimum recycled content requirements, tradeable recycling credits and raw material taxes—have the potential to encourage recycling of energy transition minerals and increase secondary sources. Both policy intervention and investment in R&D must be significantly increased to enable the creation of a circular economy for low-emissions power generation technologies. Extremely rapid progress in innovation and corresponding cost reductions for EV lithium-ion batteries over the past decade have provided spillover benefits for grid-scale battery storage systems. There is now a field in the automotive industry to provide a second type of benefit for grid storage. This stems from the growing pool of EV batteries that could have second-life applications in energy storage. Used EV batteries tend to have terawatt-hours of unused energy that no longer meet usage standards in an EV but can be used for other applications. The amount of related unused energy is significant: these used batteries typically retain approximately 80% of their total usable capacity. Initial trials for second-life batteries have already started, but a number of technological and regulatory challenges continue to exist for their applications to grow at scale. Overcoming these challenges will require clear guidance on the repackaging, certification, standardization and warranty obligations of used EV batteries. The proposed update to the European Union Battery Directive attempts to address some of these issues—for example, through minimum recycled metal levels in batteries, new recycling targets and open information requirements that increase battery traceability. In our next article, we will continue with Germany and Japan's WEEE targets and financing plans, wishing that your happiness from previous years continues. Wishing you a happy new year and healthy days with your loved ones.   Dr. Associate Professor Cemil Koyunoğlu Department of Energy Systems Engineering Faculty of Engineering Yalova University