Both Growth and Evolution Hand in Hand in Lithium Storage

A report by energy analyst firm Wood Mackenzie’s has predicted a fourfold rise in global lithium-ion cell manufacturing capacity to reach 1.3 terawatt-hour (TWh) in 2030 compared to 2019. The firm has based this estimate on 119 battery manufacturing facilities that are operational, under construction or announced by more than 50 vendors worldwide.

The main component, lithium is a $5 billion specialty chemical industry with roughly 300,000 tons of lithium compounds produced and sold this year. Demand for lithium chemicals is projected to grow to as much as 1 million tons by 2025 – primarily driven by lithium ion batteries in electric vehicles.

China dominates this market like few others, be it lithium itself or the batteries. Of course, besides lithium itself, other components like cobalt and nickel, used in the batteries, are also very problematic, in terms of sourcing and processing them, in terms of its environmental impact.

The ‘traditional’ leaders, mostly Asian manufacturers  like – CATL, LG Chem, BYD, SK Innovation are are predicted to lead to 2030 too, followed by the emergence of a strong European cohort led by Northvolt and ACC (JV established by Saft and PSA Group).  

China of course dominates the pipeline capacity and is expected to double its capacity from 345 gigawatt-hour (GWh) in 2020 to more than 800 GWh by 2030. Other foreign manufacturers in China such as LG Chem, Samsung SDI and SK Innovation have also been adding new lines after they became eligible for subsidies from the Chinese government in 2019.

Stakeholders in the sector like Tesla CEO Elon Musk, have gone on record saying that  “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,”. Now Wood Mackenzie has predicted lithium-iron-phosphate (LFP) will overtake lithium-manganese-cobalt-oxide (NMC) as the dominant stationary energy storage chemistry.

That means at least one problematic material, cobalt, could see reduced demand, as the new LFP battery doesn’t need it.

From 10% of the stationary storage market in 2015, LFP batteries could go to 30% of the market in 2030, says Wood Mackenzie.

The push for an alternative to NMC batteries has been there ever since a shortage threatened the market in 2018. The volatility in process, and high dependence on China, has pushed a search for more options. With both mobility and storage sharing the same battery chemistry, the rise for storage capacity also impacted demand, and prices.

LFP batteries are particularly attractive for mobility based solutions, as they have shown themselves to be out performers on extended cycle times, or long duration storage. Here too, the Chinese have taken the lead, which will ensure faster spread globally now.