LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 8 November. Weak EU TIO2 market unaffected by China export drop; effects to come later The steep provisional EU antidumping duties (ADDs) on Chinese titanium dioxide (TiO2) have led to a staggering fall of 63% in Chinese exports of the product to Europe late in the third quarter of 2024 from the highs earlier this year, but the effects on supply are yet to be felt, illustrating just how weak demand is. Europe PET gathers momentum amid higher freight rates, weaker euro Polyethylene terephthalate (PET) in Europe is still a bed of uncertainty when it comes to actual end demand, but PET resin buyers are seeking to secure volumes nevertheless. Europe markets up, China down as Trump wins second term as US President European stock markets rallied in early trading while China bourses closed down as Donald Trump secured a second term in office as US President. UK’s Viridor to close Avonmouth mechanical recycling plant UK-headquartered recycler Viridor intends to close its Avonmouth mechanical recycling facility following a strategic review, the company announced on Tuesday. Eurozone manufacturing slump enters record-breaking 28th month, latest PMIs show The eurozone manufacturing economy is still contracting, albeit at a slightly slower pace, according to new purchasing manager indices (PMIs) which mark the longest downturn since data collection began in 1997.

SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Monday as China’s much-awaited stimulus measures failed to impress markets, while the US is likely to put up more trade barriers against the Asian giant following the re-election of Donald Trump as president. Asian equities defy Wall Street’s 8 Nov gains; oil prices fall China Oct consumer inflation at 0.3% compared with 0.4% in Sept China central bank cuts yuan reference rate At 06:53 GMT, crude futures were down a few cents, with Brent crude down 6 cents at $73.93/barrel, and US crude down 5 cents at $70.33/barrel. At 04:00 GMT, Mitsui Chemicals was down close to 2% and Sumitomo Chemical fell by almost 2% in Tokyo, while the benchmark Nikkei 225 was down by 0.39% at 39,347.79. In Seoul, LG Chem was rangebound, with South Korea’s KOSPI Index slumping by more than 1%. In Hong Kong, PetroChina was down more than 4% as the Hang Seng Index slipped by 2.2% to 20,270.77. In Kuala Lumpur, PETRONAS Chemicals Group (PCG) slumped by nearly 5% while the stock market index dipped by 0.3%. On 8 November, US stocks rallied after Trump’s re-election as market players expect corporate tax cuts, deregulation and larger fiscal deficits under his administration starting 2025. The S&P 500 rose by 0.4% to 5,995.54 on 8 November, while the Dow Jones Industrial Average was up by 0.59%, and the Nasdaq Composite closed 0.10% higher. THE TARIFF ISSUE Threats of potential tariffs of 20% on all imported goods and a rate of 60% or more on Chinese are worrying investors in Asia. “The spectre of tariffs [is] likely to lead to somewhat lower global growth, higher US inflation, possibly fewer Fed[eral Reserve interest] rate cuts, stronger USD [US dollar], higher bond yields amid a general rise in geopolitical and trade tensions,” Japan-based Nomura Global Markets Research said in a note on 10 November. However, Nomura emphasized that the timing of Trump’s policy as well as tariffs are still “major unknowns”, and that milder policy action is likely to offset initial price-action. The effects of potential tariffs have already led to frontloading exports to the US in October, a trend likely to continue into H1 2025. Chinese exports in October were up nearly 13% year on year amid a rush to ship goods ahead of any trade protectionist move by the US once Trump is back in power next year. On Monday, the People’s Bank of China (PBOC) adjusted down its daily reference rate at yuan (CNY) 7.1786 to the US dollar, a decline not seen since late 2023. A weaker yuan would help boost competitiveness of Chinese exports amid threats of tariffs. CHINA MEASURES FAIL TO LIFT DOWNBEAT MOOD Investor sentiment was dampened by a weaker-than-expected stimulus measures announced by China following the National People’s Congress (NPC) meeting last week. The country’s top legislative body approved a bill on raising ceilings of local government debts, while allowing local governments to issue yuan (CNY) 6 trillion ($838 billion) of new bonds to swap with off-balance sheet debts, China finance minister Lan Fo’an had said on 8 November. Lackluster growth despite a stimulus package introduced in late September and a lack of further measures to encourage spending continues to weigh on sentiment. China’s consumer prices in October inched up by 0.3% year on year, slowing from the 0.4% growth in the previous month. The focus will now be on Singles’ Day, China’s equivalent of Black Friday in the US on Monday, where value-for-money purchases and online shopping will hopefully bolster overall consumption. “We suspect that given the shift toward value-for-money purchases and online shopping, we’ll continue to see solid growth numbers from the event that should comfortably outpace the overall consumption growth momentum,” Dutch-based bank ING said in a note on 7 November. Focus article by Jonathan Yee

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 8 November. Oil up by more than $1/bbl as OPEC+ delays output hike By Jonathan Yee 04-Nov-24 12:46 SINGAPORE (ICIS)–Oil prices rose by more than $1/barrel on Monday as oil cartel OPEC and its allies (OPEC+) delayed a planned December production increase by a month, and amid fears of an escalating conflict between Iran and Israel. India petrochemical demand enters seasonal lull post-holiday By Jonathan Yee 04-Nov-24 13:26 SINGAPORE (ICIS)–Oversupply and higher freight costs are driving down petrochemicals demand in India, with trades likely to remain subdued after the Diwali holidays. Saudi SABIC cuts 2024 capex; higher-margin investments eyed By Nurluqman Suratman 05-Nov-24 17:17 SINGAPORE (ICIS)–Saudi petrochemical giant SABIC has lowered its capital expenditure (capex) guidance for 2024 as it prioritizes investments in higher-margin opportunities to mitigate overcapacity in the face of poor global demand. Oil prices fall more than $1/barrel ahead of US election results By Nurluqman Suratman 06-Nov-24 15:32 SINGAPORE (ICIS)–Crude oil prices fell by more than $1/barrel on Wednesday in Asia following a rally in the US dollar as polls in the 2024 US presidential elections closed. INSIGHT: Asia faces tariff hikes after Trump’s re-election By Nurluqman Suratman 07-Nov-24 14:40 SINGAPORE (ICIS)–Donald Trump’s re-election as US president sets the stage for economic turbulence in Asia as regional businesses brace for significant increases in US tariffs. INSIGHT: Trump’s win to hit China economy as decoupling intensifies By Fanny Zhang 07-Nov-24 17:32 SINGAPORE (ICIS)–Donald Trump’s return to the White House could intensify trade frictions with China, fostering decoupling of the world’s two biggest economies, with Chinese exporters looking at making advance shipments to the US before new tariffs are imposed. PODCAST: China oxo-alcohols output to hit record high on new capacities By Claire Gao 07-Nov-24 19:00 SINGAPORE (ICIS)–China’s oxo-alcohols market will face a supply glut in the face of intensive new plant start-ups and tepid downstream demand. China Oct exports rise 12.7% as tariff fears spur frontloading By Jonathan Yee 08-Nov-24 12:56 SINGAPORE (ICIS)–China’s exports surged 12.7% year on year to $309 billion in October, driven by low base effects and a rush to ship goods ahead of a potential wave of tariffs from Donald Trump’s renewed US presidency.

TORONTO (ICIS)–The labor disruptions at Canada’s West and East coast ports continued on Friday while the chemical, fertilizer and other industries keep warning about impacts on manufacturers and the country’s overall economy. WEST COAST PORTS At Vancouver and other west coast ports, a strike and lockout by some 730 ship and dock foremen, who supervise more than 7,000 workers, was in its fifth day on Friday. Employers and union officials are due to meet on Saturday, 9 November, for further negotiations, the British Columbia Maritimes Employers Association (BCMEA) said in an update. At the Port of Vancouver, which is Canada’s largest port by far, the disruptions impact BCMEA member terminals that employ workers represented by labor union International Longshore and Warehouse Union Local 514. Operations at the ports auto and breakbulk sectors and at four container terminals are impacted by the disruptions, and rail embargoes have been put in place, the Port of Vancouver said. However, the port remains open. PORT OF MONTREAL In Montreal, a strike at two of the ports four container terminals and a strike on overtime at all four terminals was in its ninth day on Friday. The two terminals account for about 40% of the port’s total container handling capacity. The port’s logistics dry bulk and liquid bulk terminals, and its grain terminal remain in service. The Maritime Employers Association (MEA) said on Thursday that it made a final wage offer and wants a reply from labor union Syndicat des debardeurs by Sunday, 10 November, 10:00 local time. If no agreement is reached, only essential services and activities unrelated to longshoring would continue at the port, starting 10 November, 21:00 local time, MEA said. CALL FOR GOVERNMENT TO INTERVENEThe CEO of the Montreal Port Authority (MPA), Julie Gascon, on Thursday called for federal government intervention to end the dispute. “There’s no denying that our reputation has been harmed by uncertainty over the reliability of our activities, and in the long run, we are losing competitiveness,” she said. Federal labor minister Steven MacKinnon reminded port employers and unions that “public services, such as ports, exist to serve the needs of Canadians”. The negotiations to settle the disputes were “progressing at an insufficient pace”, he said, adding: “The parties must reach an agreement quickly.” In August, the government intervened in a labor dispute at the country’s freight railroads, ordering the railroads and workers to end their rail shutdown and resume service. However, political commentators said that the minority government under Prime Minister Justin Trudeau was hesitant to intervene in the port labor disputes as it relies on the left-leaning New Democratic Party (NDP) for support in parliament to stay in power. The NDP is close to labor unions. A couple of days after the government’s intervention to end the freight rail labor dispute, the NDP ended a “supply and confidence agreement” from 2022 under which it had committed to supporting the Liberals until June 2025. The NDP now votes in parliament on a case-by-case basis, it has said. This means that the NDP could vote with the opposition Conservatives to bring the government down and trigger an early election. The Conservatives are far ahead of the Liberals in opinion polls. Thumbnail photo source: Port of Vancouver

Romanian Black Sea gas prices some of the cheapest regionally Neptun Deep output  on track for 2027 start date New government must encourage investments through progressive fiscal policies LONDON (ICIS)–Romania’s offshore Black Sea gas could be one of the most competitive regionally thanks to its below-average operating and capital expenditure, a senior independent oil and gas exploration specialist told ICIS. Gary Ingram, who worked on the Neptun Deep project from 2009 to 2015, said the gas which is expected to reach markets by 2027 would be resilient to competition and price fluctuation because of its pure methane content and ‘extremely low levels of contaminant gases.’ He calculated that the operation expenditure could be less than $10 per barrel of oil equivalent (boe), which would be comparatively cheaper than the global average of $13/boe. Capital expenditure could be even lower, at $5-$6/boe for the Neptun Deep block, compared to a global average of $14/boe. “Taking the case of Neptun gas we can expect that […] the operating expenditure (OPEX) will be less than global average due to the purity of the gas requiring minimal processing, very high flow rates per development well, and wells designed for no interventions during the life of the field. “Secondly, the capital expenditure (CAPEX) for gas development will be lower than global average for a similar size of field due to the lower complexity of gas processing plant required.” Ingram, who worked for the OMV Group, whose daughter company, OMV Petrom is one of the two developers of the Neptun Deep project, said additional reserves could come from nearby exploration prospects. He said generally accepted global performance benchmark for exploration finding cost offshore is $3 per boe. In Neptun’s case, he said, costs per successful well could be kept ‘predictable’ because exploration prospects have most likely been derisked, which means they have a high probability of success. BOOSTING PRODUCTION The EU recently hailed Romania as its largest gas producer thanks to the country’s onshore output, a role which is expected to be further boosted in 2027, when offshore production at the Neptun Deep block is scheduled to start. Ingram said he is confident the project is on target, noting that 12-16 development wells are likely to be drilled as early as 2025. In the first year the bloc could produce around 17.1 million cubic meters/day or 6.3 billion cubic meters annually, which could single-handedly cover 63% of Romania’s yearly gas demand, he said. Romania’s offshore gas reserves are as high as 200billion cubic meters, with most volumes residing in the Neptun block, developed by state company Romgaz and Romanian-Austrian joint venture OMV Petrom. “Publicly quoted gas reserves in the Neptun block are up to 3.5 trillion cubic feet (100bcm), comprising the Domino and Pelican South discoveries to be developed by OMV Petrom. I estimate that there could be an additional 2 tcf  (57bcm) of volume in additional undrilled gas pools in the block,” Ingram said. REGIONAL SUPPLIES Ingram said Black Sea gas had several competitive advantages compared to resources imported regionally. “The gas from the Sakarya field in neighbouring Turkey is very similar to Neptun gas and resides in a similar geological setting,” he said. “Sakarya however is in twice the water depth, around 2km, compared to the Neptun field at approximately 1km, and is a longer distance offshore (175 km) compared to Neptun (around 140 km) with corresponding higher CAPEX.” The specialist said Azeri gas from the offshore Caspian Shah Deniz field, which currently supplies Turkey and southern European buyers, contains heavier gas components with additional gas condensate (oil) but is only 70 km offshore and in 600m of water. “This field will have a more complicated development in order to process the different hydrocarbon types compared to the single-phase methane production in Neptun. This means that Shah Deniz gas would probably have a higher OPEX per unit of production compared to Neptun.” Ingram said Neptun gas was also advantaged compared to LNG imports because it is close to its European market and therefore does not require transport and regasification costs. POLICIES Nevertheless, as Romania is braced for presidential and parliamentary elections between November 24 – December 1, he warned that the new administration should aim to facilitate the onshore and offshore gas industry with progressive fiscal policies which promote significant revenue streams. An ICIS investigation has found that companies active in the Romanian oil and gas sector pay up to 87% of their revenue from oil or gas sales on windfall and corporate taxes. The remaining 13% are then subject to ordinary taxation amounting to 16%. Current taxes paid by oil and gas companies are thought to be the highest in Europe.

Regulator to launch consultation on tariffs for 2025-2029 Long-haul tariffs could be adjusted if transit deal reached at later date Current short-haul tariffs to stay in place until 31 March, 2025 Entry-exit gas transmission tariffs in Ukraine are expected to more than double going into the new regulatory period 2025-2029, according to NERC. The Ukraine regulator published its latest proposals for the change versus current rates on 7 November. The tariffs, which will undergo a public consultation from 13 November, apply to Ukraine’s borders with the EU and Moldova, but do not include the Sudzha and Sokhranivka interconnection points with Russia. The proposed entry tariff on all EU borders, exclusive of value added tax, stands at €10.30/1000m3 (approximately €1.05/MWh), compared to $4.094/1000m3 (approximately €0.389/MWh) at the moment. At exit points, tariffs differ marginally on EU borders, however. The proposed tariffs range between €14.60/1000m3 on the Polish border to €15.76/1000m3 at the Hungarian Bereg virtual interconnection point.     These were calculated based on a no-Russian transit scenario from 2025. If an agreement is reached at a later date, they could be further adjusted, a market source said. Current short-haul tariffs for imports into storage or short-distance transmission of gas will remain unchanged until March 31, 2025. The Ukrainian gas grid operator, GTSOU has previously suggested that it would seek to change the tariff methodology for the calculation of short-haul tariffs to offer discounts at exit points. But it plans to auction entry points in future, too.   Note: This article was amended on 8 November to reflect that NERC’s proposals were issued on 7 November, rather than 8 November as previously written. 

Additional reporting by Jake Stones LONDON (ICIS)–On 31 October 2024, the Dutch government launched for consultation its proposal for an industrial obligation to use renewable fuels of non-biological origin (RFNBO), marking one of the first measures in Europe to encourage the use of renewable hydrogen associated with the renewable energy directive’s (RED III) targets for industrial decarbonisation. The scheme, renewable hydrogen industry units (HWI), focuses on setting obligations for the use of RFNBO for particular industrial participants, such as those who use more than 0.1kt of hydrogen per year, and broadly aligns with recent guidance from the European Commission. The exception is that hydrogen use associated with ammonia production does not fall under the obligation under the Dutch scheme. The HWI scheme awards RED III obligated market participants an HWI credit for each unit of renewable hydrogen, RFNBO, used in industry. The HWI can then be used to reflect a market participant has met its obligation over the year, or the party can trade the HWI with another obligated party that is yet to meet its quota. To provide a full overview of the proposal’s framework, ICIS has produced the following infographic explainer: For any further information regarding ICIS hydrogen content, please reach out to jake.stones@icis.com or sebastian.braun@icis.com

LONDON (ICIS)–“Cut the debt burden, don’t decimate the economy” This was the message in miniature from IMF chief economist Pierre‑Olivier Gourinchas when several reporters posed questions about the then-upcoming UK budget at a press conference on 24 October. Reporters from both sides of the political aisle raised questions over the potential impact of the budget, which had been expected to focus on aggressive cost-cutting after weeks of the ruling Labour government fulminating about Conservative debt. Widening the scope of the question beyond the UK, Gourinchas noted that high debt levels left countries more exposed to fiscal shocks that could precipitate the need to cut services dramatically and quickly. “When countries have elevated debt levels, when interest rates are high, when growth is OK but not great, there is a risk that things could escalate or get out of control quickly,” he said. “Most countries have important needs when it comes to spending, whether it’s about central services, what we think about healthcare, or if we think about public investment and climate transition. So we need to protect also the type of spending that can be good for growth,” he added. UK Chancellor Rachel Reeves seems to have kept that balance in mind with a high-tax, high borrowing, high spending budget, with increases targeting businesses through higher per-employee tax contributions, farmers through tighter inheritance tax rules, and the wealthy through more tax on private schools and private planes. The measures are expected to modestly goose economic growth in the short term but less so further ahead, according to the Office for Budget Responsibility, which estimates that national GDP will grow 2% next year. This slows down after, back to the prevailing trend of 1.5% per year. The budget represents one of the largest increases in taxation ever seen in the country, but the UK is far from alone in this. With borrowing costs high over the last few years and economies still paying the bill on pandemic and energy crisis-era borrowing, taxation is high across much of the developed world at present. Debt as a share of GDP is not expected to rise through to the end of the decade on the back of the budget, but nor is it expected to fall, standing at just under 100%. UK debt as a proportion of GDP Higher spending is likely to drive higher inflation in the short term, with levels now expected to firm from 1.7% in September 2024 to a quarterly peak of 2.7% in mid-2025, according to the OBR. The core UK sector trade body, the Chemical Industries Association (CIA), cautiously greeted the increase in investment spending, something that has been sorely lacking in the UK for decades. “We are pleased to see increases in investment after the UK has been in the bottom of the G7 for investment as a share of GDP for 24 of the past 30 years,” said CIA head of economics Michela Borra. That persistent low ranking has endured despite the decline for other western European economies in the G7 club in the face of weakening international competitiveness. Whether the level of public industrial investment is sufficiently substantial to drive growth remains to be seen, however. The budget earmarks £2 billion for the automotive industry for zero-emission vehicles and related supply chains, and £975 million for aerospace research, to be eked out over five years. Life sciences spending  is also set to get a bump, with £520 million to go to the creation of a Life Sciences Innovative Manufacturing Fund “to build resilience for future health emergencies”, the UK Treasury said. Automotive, aerospace and life sciences are key end markets for the upstream chemicals sector and all additional growth investment is a welcome surprise when the expectation in the run-up was for no new funding or spending cuts. That said, the electric vehicle market has slowed to a cruise after years of steady year-on-year growth, with still-developing technologies and charging infrastructure availability continuing to spook consumers. Charging infrastructure remains a Catch-22 problem, with consumers put off by limited availability and providers sceptical of demand growth levels. Firms have moved to take the first step but the level of investment in electric vehicle charging networks remains below what is needed. Another significant milestone is the recognition of a fuel-exempt mass balance approach for content in chemical recycling, which could help to map out the landscape for the sector as it matures. Under fuel exempt mass balance accounting rules, volumes used in fuel applications would not be attributable as recycled material, but material not ending up in fuels would be freely attributable across the value chain. Far larger than all the chemicals end market funding outlined in the budget is the nearly £22 billion for carbon capture and blue hydrogen announced earlier in October. With an aim to strengthen two of the country’s regional industrial clusters, the funding is expected to develop two carbon capture projects in Merseyside and Teesside, as well as two clean hydrogen production plants. Chief among the benefits of the budget is the hope that this will represent a stable longer-term roadmap for business investment, after a period of substantial changeability for government priorities during the ministerial and leadership churn of the last few years of Conservative government. “Capital intensive sectors such as chemicals will welcome this Government’s commitment to longer term policy stability – be it through its industrial strategy; its corporation tax roadmap or its full expensing regime to encourage investment in plant and equipment,” said CIA chief Steve Elliott. Despite the stronger than expected focus on capital investment, there is little direct uplift for the chemicals sector, which remains the UK’s third-largest industry in terms of GDP contribution. The only reference to the sector in the full budget text is to the mass balance recognition and, while greater focus and clarity on carbon, hydrogen and renewable power remain vital for the evolution of the sector, it remains difficult to hold policymaker attention. With the number of strategic reviews of European chemicals footprints by large global players continue to pile up, the lack of impetus to shore up a sector that has been mired in low and declining growth continues to pose a threat to its future viability. “It’s now all about delivery as the UK and wider Europe has become increasingly unattractive to global investors in manufacturing,” said Elliott. “Urgent action – and in many cases partnership between industry and government – is required if UK chemical businesses are to boost their already significant contributions to the macro-economy; strengthen their resilience in supporting the nation’s critical infrastructure and enable the country’s transition to a net zero future,” he added. Insight by Tom Brown.

With growing occurence of negative prices amid renewable penetration, more battery storage capacity will be needed Wide intra-day spreads to remain top revenue option for BESS, but margins can tighten as more capacity comes online Cross-markets optimization, battery degradation among key challenges for operators LONDON (ICIS)–Batteries can help mitigate negative wholesale power prices and wide intraday spreads but there is currently not enough capacity installed to eliminate them, Pierre Lebon, director of analytics at cQuant.io, told ICIS in an interview. Nevertheless, as new battery energy storage system (BESS) capacity comes online, it is likely that the occurrence of negative power prices will decrease, the expert noted. ICIS Analytics showed increased flexibility will be crucial in the long-run to improving solar capture prices, though expansion of battery and electrolyser capacity will remain far below the level of renewable expansion in the next few years. The latest ICIS analytics models predict 63.3GW battery storage capacity for EU countries by 2035. The European resource adequacy assessment, ENTSO-E’s annual assessment of the risks to EU security of electricity supply for up to 10 years ahead, showed Germany would be a leader in battery capacity growth across the bloc, while outside EU, the UK has the highest available capacity. It is difficult to identify an optimal ratio of renewable capacity to BESS, as many factors must be taken into account and the supply balance will ultimately depend on each country’s generation mix and demand profile, as well as variable weather conditions. As of September, the number of hours with negative prices in Germany more than doubled to 373 compared to 166 in 2023.  These could have been mitigated by an adequate battery storage capacity, in turn reining in some price spikes in times of lower renewable supply. DURATION The vast majority of battery systems in Europe are currently two- to four-hour batteries and “that’s mostly for economic reasons,” Lebon said. “If you have a four-hour battery, if you divide the power by two, you get an eight-hour battery. So you can change the duration if you change the capacity, it then becomes a matter of financial optimization,” he explained. There are currently new technologies such as iron salt battery (ISB) – also known as iron redox flow  battery (IRFB) – which can allow to build battery storage plants with a duration of up to 12-24 hours, however Lebon noted that, while the market is already looking into these technologies, they are still in early development. This seems confirmed by calculations from ICIS based on ERAA data, showing short (one hour) and medium (four hour) duration batteries will remain the preferred technology for the coming years.   REVENUES OPTIONS Operators don’t necessarily need to have a negative power price to have a profitable battery, since BESS make money on the spread between the lowest price of the day or based on the duration that they can capture, Lebon explained. “It [negative power prices] adds the extra cherry on top of the cake, which is that you get paid to actually charge the battery,” he said. In markets with a strong ‘duck-shaped’ intra-day curve, the battery operators “can see a lot of value in intra-day trading” and less so on the ancillary services markets, Lebon added. Ancillary services like frequency regulation, voltage control, reserves and black start capabilities are needed to maintain power grids stability and guarantee an uninterrupted supply of electricity. Lebon noted that while battery operators typically consider the potential revenue from both intraday power markets and ancillary services, the stability of the revenue structures associated with the ancillary markets is often questioned. This is because transmission system operators (TSOs) and regulators tend to frequently change the rules and conditions of these markets. While cross-markets optimization – operating both on intraday and ancillary markets to maximize revenue sources – is possible, technical constraints or the legal paperwork needed to access ancillary markets can lead some operators to prioritize only one of these depending on the company’s structure and resources, the expert noted. INVESTING NOW? Penetration of batteries into European markets can reduce intra-day spreads, tightening margins for battery operators. Experts have previously told ICIS that early investors could benefit more from current wide power prices spreads than waiting for cheaper technologies. “The longer it takes for that technology to come in, the more likely it is that this technology will come [online] at a time where the spreads are crushed [by more battery storage capacity being installed],” Lebon added. BATTERY DEGRADATION The degradation of current lithium-ion utility-scale battery systems depends on several factors, including technology, number of cycles and temperatures. ICIS understands the typical yearly degradation can range between 2-5% and plants lifespan between 10-20 years, as reported in the lifetime warranty provided by some producers. A study by the US National Renewable Energy Laboratory indicated 15 years as the median lifespan based on several published values. Degradation is a key challenge in the optimization of battery assets, Lebon noted, adding that operators need to ensure their cycles strategy is compatible with manufacturers’ instructions and warranty.