The scope for growth in demand for
lithium-ion (Li-ion) batteries continues to drive the
excitement around lithium production.
Centre-stage in the frenzy is the expected
surge in demand for Li-ion-powered electric vehicles (EVs),
fronted by Tesla Inc. and its enigmatic CEO, Elon Musk.
But an oft-forgotten sister market, also
expected to propel Li-ion demand, is grid energy storage.
The renewable energy sector is slated to
grow exponentially over the coming years – with wind
energy expanding at a compound annual growth rate (CAGR) of
around 10% and solar energy at around 17% – making the
necessity to find ways of flexibly storing the power produced
ever more pertinent.
Albemarle Inc., one of the
world’s 'Big Three’ lithium
producers, predicts that over the next 15 years, approximately
$1.4 trillion worth of future US infrastructure will be
underutilised without storage. In its view, Li-ion powered
grids provide the answer.
But questions remain as to the potential
of Li-ion-based grid technology, not least due to difficulties
in turning a profit. And even when it does take off, experts
maintain that when stood alongside EV technology, grid storage
will always remain the Cinderella of the Li-ion story.
Storing up growth
|Renewables are expected to
drive growth in use of Li-ion batteries in grid energy
storage. (Source: L. Murray)
According to Dean Frankel of New
York-based Lux Research Inc., in 2015, around 700 MWh
(megawatt-hours) of energy storage systems using Li-ion
chemistries were deployed on the grid.
Albemarle has suggested that, driven by
growth in renewable energy, a need for resources to provide
system flexibility and balance supply and demand, lithium
carbonate equivalent (LCE) used in grid energy storage should
increase by a CAGR of over 30% between 2014 and 2024, a higher
rate than either of the other two key markets for Li-ion
– transportation and consumer devices, with touted
growth rates of 20-30% and over 15%, respectively –
although this is from a far lower starting point.
But despite the big numbers predicted in
terms of growth, prohibitive costs remain the central issue for
the development of these systems.
"Right now, the entire stationary energy
storage market place is struggling to find consistent,
profitable applications to drive revenue," Frankel told
"The costs for energy storage systems, and
in particular Li-ion storage systems, have come down
significantly over the past three years, but finding
applications that drive consistent revenue remains a
challenge," he added.
Frankel expects rate structures for
utilities to change, however, "such that they start to value
the services energy storage can provide", with utility
providers finding more ways to own and operate energy storage
or compensate owners of energy storage systems across the
One way in which he expects energy storage
systems to begin making more money is through the use of
virtual power plants – "virtually connecting many
energy storage systems wirelessly through smart software
management to act in tandem with one another and aggregate
load, so that they can have a powerful impact on the grid".
Lux predicts Li-ion batteries will reach
more than 10 GWh (gigawatt-hours) of installed systems annually
by 2025, but notes that "they will not capture all [of the
energy storage market] as there will be alternative chemistries
deployed, like flow batteries and molten salt, among
Others remain more sceptical.
"I’m not a big fan of grid
storage involving Li-ion batteries," Jon Hykawy, CEO of
Canada-based research group, Stormcrow Research, told
IM. "I find that the proponents always
cherry-pick their data and manage somehow to argue that the
Li-ion battery is the only winning path and I believe this is
In Hykawy’s view, the two
most important parameters are capital cost per kWh
(kilowatt-hours) of power produced and operation and
maintenance costs – how much does it cost to build and
how much does it cost on a day-to-day basis to run? In neither
of these areas does Li-ion battery technology come out
"There are large-scale pumped hydro
projects out there, as working examples today that have capital
costs of $100-$200/kWh energy being delivered to the grid. The
future projections for lithium batteries are hoping to achieve
$200-$500/kWh by 2025," he said.
As well as this, Hykawy maintains that the
success of Li-ion batteries in one application (i.e. EVs) is
not necessarily transferrable to another (i.e. energy
"Simply having faith that, since lithium
batteries can make a Tesla run – where weight and
volume are critical factors – that they are going to
back up a huge wind farm or a nuclear plant – where
cost is just about the only thing that matters – would
Playing second fiddle
Despite the issues that remain, there is
little doubt that grid energy storage will grow substantially
in the coming years. But it is unlikely to reach the lofty
heights of EVs as a Li-ion end market.
"I just don’t think it has
the same scale potential," Robert Bayliss, managing director at
Roskill Information Service, told IM, noting
that whereas EVs already have an industry to transform, grid
storage is indirectly reliant on the growth of renewables such
as wind and solar, before it can transform anything.
Frankel agrees that stationary storage
will remain a significantly smaller market for Li-ion than EVs,
but said that it will approach and eventually surpass the
consumer electric segment.