Market Challenges And Opportunities
Absorbent Glass Mat Battery Market Drivers
- Surging telecom infrastructure development: The rapidly growing telecom sector is one of the major factors driving the demand for absorbent glass mat (AGM) batteries. With increasing mobile and internet penetration, telecom operators are expanding their networks by setting up new cell towers and base stations, especially in remote and rural areas. This has significantly increased the need for backup power solutions to ensure uninterrupted network connectivity. AGM batteries are widely used as a reliable backup power source for telecom towers due to their high cycling capacity, low maintenance requirements, and ability to withstand frequent discharges. Moreover, the development of 5G networks worldwide is further expected to escalate AGM battery adoption in the telecom industry over the coming years. For example, India aims to establish 800,000 telecom towers by 2024 under its national broadband mission to connect rural areas, which will require massive deployment of backup batteries. Similarly, China has set a target of building over 8,00,000 5G base stations by 2023 as part of its digital transformation plans.
- Growth across UPS and inverter markets: The rising utilization of AGM batteries in UPS and power inverter systems across residential, commercial, and industrial sectors is fueling market growth. UPS and inverters are used to provide backup power to critical loads during grid power outages. AGM batteries are preferred in these systems due to their high cyclic efficiency, low self-discharge, and tolerance to deep discharge cycles. With expanding industrialization and digitalization, the demand for reliable backup power systems has increased considerably. This has driven the uptake of VRLA batteries, like AGM batteries, in the UPS and inverter markets worldwide. For instances, as per data by the International Renewable Energy Agency (IRENA), total installed solar PV capacity worldwide increased from 402 GW in 2015 to over 760 GW in 2020. IRENA also reported that over 85% of off-grid solar home system installations comprised lead-acid batteries, with most utilizing the AGM battery variant.
- High adoption in renewable energy storage: The expanding renewable energy sector is one of the major drivers for the AGM battery market. Solar and wind power plants extensively utilize AGM batteries for energy storage purposes. The ability of AGM batteries to handle frequent charge-discharge cycles and operate efficiently in harsh environmental conditions makes them ideal for energy storage applications. The capacity of renewable energy sources worldwide is anticipated to increase significantly over the next several years due to falling costs and government policies that promote them. This will consequently boost the demand for AGM batteries deployed across various renewable energy projects and microgrid systems.
- Rapid uptake in data centers: The proliferating data center industry is fueling the demand for reliable and efficient AGM batteries. Data centers have massive power requirements and are highly sensitive to power fluctuations. AGM batteries provide emergency backup and UPS capabilities to maintain continuous power supply to data center equipment. The growing colocation and hyperscale data center markets, along with increasing edge computing adoption, are expected to escalate the installation of AGM batteries in data center infrastructure during the forecast period.
Absorbent Glass Mat Battery Market Opportunities
- Traction in electric vehicle applications: The rapid adoption of electric vehicles globally provides significant growth opportunities for advanced battery technologies, including AGM batteries. The high power density, wide operating temperature range, and long cycle life make AGM batteries suitable for electric vehicle auxiliary applications. With declining lithium-ion battery prices and supportive government policies, the electric vehicle market is expected to grow exponentially in the coming decade. This will drive the utilization of AGM batteries in electric two-wheelers and passenger vehicles for auxiliary power supplies. For instance, the U.S. government announced plans in 2021 to install 500,000 new public EV charging stations over the next few years under the new infrastructure law. Such initiatives are expected to boost electric vehicle sales manifold in the coming years.
- Potential in advanced recycling processes: The development of effective recycling processes for AGM batteries presents notable growth opportunities by resolving disposal issues. Companies are investing in innovative recycling technologies to extract and reuse the battery components in an eco-friendly manner. Automated recycling processes help reduce costs and enable efficient material recovery from spent AGM batteries. Implementing battery recycling regulations and spreading awareness regarding the benefits can potentially increase recycling rates in the long run. This will address environmental concerns while creating a circular system to minimize battery waste. For instance, according to a 2021 report by the United Nations Environmental Programme (UNEP), the global stock of lithium-ion batteries stemming from electric vehicles and consumer electronics will grow to over 30 million metric tons by 2030.
- Applications in the marine industry: The marine industry is expected to emerge as a lucrative end-use sector for AGM batteries. The ability to withstand vibration, along with spill-proof and leak-proof construction makes AGM batteries suitable for marine applications. The growing recreational boating market, along with innovations in boat electrification, can accelerate the adoption of AGM batteries for trolling motors, navigation lights, fish finders, and other onboard systems. Their high temperature cranking amps also enable engine cranking for boats and yachts.
- Rising deployment of microgrids: The increasing development of microgrids across remote and rural areas in developing economies provides growth avenues for AGM batteries. Off-grid renewable energy microgrid systems extensively use AGM batteries for power storage purposes. Moreover, AGM batteries can be integrated with diesel generators in hybrid microgrids to optimize energy costs. Supportive microgrid policies and investments in rural electrification projects will positively influence the installation of AGM batteries in upcoming microgrid networks, especially across emerging economies.
Absorbent Glass Mat Battery Market Restraints
- High initial costs: Despite the long-term benefits, the high upfront cost of AGM batteries compared to conventional flooded lead-acid batteries is a major restraint to faster market penetration. The additional components, such as absorptive glass mats, alloyed tin electrodes, and valves, increase the manufacturing costs. Moreover, the complex production process also contributes to the price premium commanded by AGM batteries, limiting adoption from price-sensitive consumers and developing economies. For example, according to data from the US Environmental Protection Agency, over 95% of the lead-acid battery manufacturing capacity in North America is controlled by just five major players as of 2021 due to their access to vast capital resources. The limited number of major producers has kept industry expansion at a gradual pace.
- Performance limitations in extreme temperatures: The performance and charging capabilities of AGM batteries get affected by extremely high or low temperatures. Hot conditions accelerate water loss, leading to the drying out of batteries, while cold temperatures reduce the electrolyte conductivity, hampering charging. This can cause premature failure when AGM batteries are used in high temperature environments or regions with extreme weather conditions without proper temperature regulation systems. For example, commercial trucks and buses transporting goods across arctic regions face temperatures as low as -50°C during long winter months according to weather data from the Canadian government. At such ultra-low temperatures, AGM batteries simply do not provide reliable starting power and have very limited usable capacity.
- Availability of advanced battery technologies: The growing adoption of lithium-ion and other advanced battery technologies is posing a challenge to traditional lead-acid batteries, including AGM variants. The higher energy density, lighter weight, improved durability, and falling prices of lithium-ion batteries make them a preferred choice across many applications. Moreover, ongoing research towards developing better lead crystal, lithium sulfur, and solid-state batteries also threatens to substitute AGM batteries in the long term.
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