Jun 28, 2021

Renault signs two electric vehicle battery partnerships

electricvehicles
Energy
Renewables
batteries
Dominic Ellis
5 min
Renault Group enters into a strategic partnership with Envision AESC and signs MoU with Verkor as it steps up electric vehicle battery production

Renault Group has signed two partnerships as it steps up electric vehicle battery production programmes.

The group is entering into a strategic partnership with Envision AESC as it sets up a gigafactory in Douai, close to Renault ElectriCity, to support manufacture of latest technology, cost-competitive, low-carbon batteries to make electrical mobility more accessible in Europe.

As the battery arm of global green tech company Envision Group, it will invest up to €2 billion to produce latest technology, cost-competitive, low-carbon and safe batteries for electric models, including the future R5. Thanks to this partnership, Envision AESC forecasts 2,500 new jobs by 2030.

The proximity of the Envision AESC’s gigafactory to Renault ElectriCity production sites at Douai, Maubeuge and Ruitz, which will create 700 additional jobs in the Hauts-de-France region, means Renault Group can significantly boost its competitive edge and greatly improve the efficiency of its EV production chain.

Lei Zhang, founder and Chief Executive Officer of Envision Group, said it has the potential to create "thousands of new high value green jobs" as part of an end-to-end battery ecosystem in the region. The two partnerships with Renault ElectriCity industrial cluster will create nearly 4,500 direct jobs in France by 2030, while developing a robust battery manufacturing ecosystem in the heart of Europe.

Renault also plans to manufacture new high-performance battery cells with startup Verkor, and part of the initial output of Verkor’s first Gigafactory, starting construction in 2023, will be allocated to Renault’s premium vehicle programmes.

Under an MoU, initial capacity will reach 16 GWh, of which 10 GWh are for Renault Group, with a total annual capacity target of 50 GWh by 2030, of which 20 GWh will go to Renault Group. Verkor aims to build the most digital, sustainable, and efficient Gigafactory in Europe by embedding it in a competitive and transparent local value chain.

The group is to become a 20% shareholder in the French industrial company, joining EIT InnoEnergy, Groupe IDEC, Schneider Electric and Capgemini.

Verkor will now move ahead with its plans to build the Verkor Innovation Centre (VIC, pictured), an advanced research and development facility that will design innovative battery cells and modules.

The VIC, which will be located in the Auvergne-Rhône-Alpes region in France, will also accommodate a pilot line for battery cell technology testing, module prototyping and smaller-scale manufacturing, as well as train a new generation of engineers. With the VIC, Verkor will bring to the market an entirely new approach to high performance battery manufacturing that is driven by resource efficiency, recycling and enhanced environmental performance.

Benoit Lemaignan, CEO and co-founder of Verkor, said it looks forward to delivering on its common vision to roll out e-mobility on a larger scale through this partnership. "This is a first step in a series of major announcements to come over the following weeks which will demonstrate our progress in our plan to generate up to 50 GWh of battery cell production capacity by 2030 – a cornerstone in developing a competitive, sovereign and sustainable battery supply chain in Europe.”

“By joining forces with Verkor, we are accelerating the production of high-performance low-carbon batteries in France, for Europe. This project will benefit from Verkor team’s cutting-edge skills in the cell industry. Attracting and retaining top global talents, coming from over 14 countries, the Verkor team capitalises on a unique experience in the battery field”, added Luca de Meo, CEO of Renault Group.

The investment forms part of Renault Group’s strategic 'Renaulution' plan, through which it will pivot from being a car company that works with technology to a technology company that works with cars. Through the partnership, Renault Group will build on its knowledge of battery cell manufacturing while leveraging Verkor’s excellence in manufacturing low-carbon batteries through digital innovation.

Advising the partnership were Santander Corporate & Investment Banking, Barber-Hauler and De Gaulle and Fleurance & Associés.

Production and environmental challenges

report from MarketsAndMarkets forecasts global EV battery market is projected to grow at a CAGR of 25.3%, from US$27.3 billion in 2021 to US$67.2 billion by 2025.

An IDTechEx report "Charging Infrastructure for Electric Vehicles and Fleets 2021-2031" finds that the total number of electric vehicle charging outlets surpassed 1 million in 2020, with both China and Europe at or below the optimum 10 electric vehicles per charging outlet. The US is lagging at ~17 electric vehicles per outlet, but with a cool $174 billion earmarked by the Biden administration for electric vehicle and charging infrastructure market development, the tide is turning. 

Meanwhile the speed of the global electric roll-out is causing challenges.

The production of the battery electric vehicle entails a higher environmental impact, mainly due to energy intensive battery cell manufacturing. Despite the increased production burden, total life cycle impact is dramatically better, thanks to the much lower carbon impact from the use phase. 

Another challenge is improved leak-detection tests are needed for lithium-ion batteries used in electric and hybrid-electric vehicles currently on the road today, according to researchers at INFICON, a leading supplier of automotive leak-detection systems.

Dr. Daniel Wetzig, head of leak-detection research and development at INFICON, said: "Today's pressure-decay methods are either too slow or unreliable and allow significant leaks to go unnoticed."

Frost & Sullivan's recent analysis finds that the growing adoption of electric transit buses, driven by pro-green government policies, has enabled global sourcing and supply chain for alternate powertrain buses (click here).

"Growing battery capacities coupled with aggressive development in charging infrastructure technologies is expected to increase the adoption rate of electric powertrains in the coach segment though it faces stiff competition from diesel and natural gas buses," said Saideep Sudhakar, Research Manager, Frost & Sullivan. "Improving power density, efficiency and reducing cost are key areas of innovation in the market."

  • Zenobe has selected EDF as the company’s trading and optimisation partner for a new 100MW battery. The battery will be located at Capenhurst, near Chester, and will be the largest transmission-connected battery storage project in Europe. The announcement of this partnership follows several months of cooperation between the two teams working on the project. 

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Jul 28, 2021

Industry movement with heat decarbonisation

Gas
Renewables
Heatnetworks
Decarbonisation
Dominic Ellis
6 min
As SGN and Vital Energi announce 50:50 joint venture, the heat decarbonisation market is seeing some welcome movement

It is estimated that the heat network market requires approximately £30 billion of investment by 2050 to meet the UK Government’s net zero targets, and the decarbonisation of heat has been highlighted as a particular challenge.

The Climate Change Committee’s Sixth Carbon Budget states the UK should target 20% of UK heat demand through low-carbon heat networks by 2050 - but as with most discussions surrounding mass decarbonisation, even reaching that target won't be an easy task. In the UK approximately 40% of energy consumption and 20% of GHG emissions are due to the heating and hot water supply for buildings.

The International Energy Agency (IEA) estimate that globally, around half of all energy consumption is used for providing heat, mainly for homes and industry.

Source: Heat Trust

This week saw some positive movement, however, with gas distribution company SGN and UK renewable energy solutions provider Vital Energi announcing a 50:50 joint venture, which will create an Energy Services Company (ESCO) representing utility infrastructure and heat network providers. 

This includes delivery of heat to developments planned by SGN’s property arm, SGN Place, and the local vicinities where there is a demand for low-carbon heat.

The objective is to supply new and existing residential, industrial and commercial facilities and development activity is already underway for two projects in Scotland and the South East, with another 20 in the pipeline. SGN is looking to develop alternative heat solutions alongside its core gas distribution business and expand into the growing district heating market, recognising the future of heat is likely to include a mix of technological solutions and energy sources.

Vital Energi is seeking to expand into asset ownership opportunities to complement its core design, build and operations businesses. The complementary skillsets of both organisations will offer a compelling proposition for developers, commercial and industrial users and public sector bodies seeking low-carbon heat solutions.

SGN’s Director of Commercial Services and Investments Marcus Hunt said: “Heat networks are likely to play an increasing role in the delivery of UK heat in the context of net zero. The creation of this joint venture with market-leading Vital Energi enables us to build a presence in this emerging market, delivering new heat infrastructure and supporting decarbonisation.”

Nick Gosling, Chief Strategy Officer at Vital Energi, said: “Combining the resources, expertise and know-how of both organisations will allow us to play a major role in delivering the UK’s transition to low and zero-carbon heat.”

In March, the European Marine Energy Centre (EMEC) starting collaborating with Highlands and Islands Airports Limited (HIAL) to decarbonise heat and power at Kirkwall Airport through green hydrogen technology. 2G Energy was selected to deliver a CHP plant which generates heat and electricity from 100% hydrogen.

Heat decarbonisation options 

The Energy & Climate Intelligence Unit (ECIU) highlights the following options for decarbonising heating. 

Electrification

Use renewable electricity to generate heat in the home. As power sector emissions fall, emissions associated with electric heating are decreasing rapidly.

Low carbon gases

Replace natural gas that most homes use for heating with hydrogen, which releases energy but not carbon dioxide, the only waste product is water. Biomethane is also an option as it produces less carbon than natural gas over a full lifecycle.

For hydrogen to work, the pipes in the national gas grid would need to be replaced and home boilers would need to be adapted or changed. This is possible but could incur considerable cost. 

Biomethane is chemically identical to methane from natural gas, so is suited to existing infrastructure and appliances. It is unlikely, however, that it can be produced in sufficient quantities to replace fossil gas entirely.

Hybrids

A hybrid system combining both electrification and hydrogen is a third option. Here, heat pumps could be used to meet the majority of heat demand, with a (low carbon) gas boiler taking over in extremely cold weather. Advantages of this approach include helping establish a market for heat pumps while hydrogen is developed to displace natural gas in the hybrid system eventually, and the ability to call on hydrogen when heat demand is at its very highest.

Heat networks

Heat networks connect a central heat source to a number of buildings via a series of underground hot water pipes, and are popular in countries such as Denmark, where heat networks supply 63% of households. The Government expects the heat networks market in the UK to grow quickly to supply up to 20% of heat demand over the next decade or so, investing £320 million into its flagship Heat Networks Investment Project to help get this underway.

Heat networks work particularly well in built-up urban areas or industrial clusters where there is a large and concentrated demand for heat. Over time, it is thought that if the central heat source can be low carbon, then there is the opportunity to ensure that multiple homes and buildings are decarbonised at once.

Biomass

Biomass can be used to reduce emissions when used instead of more polluting fuels like oil in off gas grid properties. Support for biomass boilers has been available since 2011 via the Renewable Heat Incentive (RHI), but take-up has been low.

Supply constraints also restrict the role that biomass – burning solid material such as wood – can play. In any case, according to the Committee on Climate Change, this resource may be better used in other sectors of the economy such as construction, where it provides carbon storage without the need for CCS and reduces demand for carbon-intensive materials such as steel and cement.

The Energy Transitions Commission (ETC)'s latest report sets out how rapidly increasing demand for bioresources could outstrip sustainable supply, undermining climate mitigation efforts and harming biodiversity, unless alternative zero-carbon options are rapidly scaled-up and use of bioresources carefully prioritised.

"Alternative zero-carbon solutions, such as clean electrification or hydrogen, must be developed rapidly to lessen the need for bio-based solutions," it states.

The overall decarbonisation of industry is another major challenge, especially among four sectors that contribute 45 percent of CO2 emissions: cement, steel, ammonia, and ethylene, according to a McKinsey report. 

The process demands reimagining production processes from scratch and redesigning existing sites with costly rebuilds or retrofits. Furthermore, companies that adopt low-carbon production processes will see a short- to mid-term increase in cost, ultimately placing them at an economic disadvantage in a competitive global commodities market.

Next steps

Ken Hunnisett is Project Director for the Heat Network Investment Project (HNIP)’s delivery partner Triple Point, which is the delivery partner for the government's Heat Network Investment Project, which is responsible for investing up to £320million in strategic, low-carbon heat network projects across England and Wales.

He is calling for the urgent need to invest in the development of new heating infrastructure to support the nation’s decarbonisation effort. So far £165m of HNIP funds have prompted £421m CAPEX, providing more green jobs as the UK economy eases from the lows sustained from the pandemic.  

Decarbonising the UK's heating infrastructure is critical if we are to reach our net-zero goals and it’s crucial that progress is made in this decisive decade, he added. 

"Heat networks are a part of the lowest-cost pathway to decarbonising our homes and workplaces in the future but are also the bit of the jigsaw that we can be putting into place now," he said. "Penetration into the UK market is still low, despite heat representing 37% of UK greenhouse gas emissions, the largest single contributor by some way. Funding needs to be urgently directed towards reducing the environmental impact of the residential sector, particularly given the slow pace of the decline in residential emissions in comparison to those of business and transport."

Currently, just 3% of UK buildings are serviced by heat networks. "Further investment in this industry, using public and private funds, will not only drive wider sustainability targets but will boost the economy by providing more green jobs as the country emerges from the pandemic," he said.

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