The Lithium Market
Ensorcia Metals Corporation
Lithium demand will increase from 181kt Lithium Carbonate Equivalent (LCE) to 535kt LCE by 2025.*
*Deutsch Bank Research
Lithium is a chemical element with the symbol Li and atomic number 3. It is a soft, silvery-white alkali metal. Under standard conditions, it is the lightest metal and the lightest solid element. Like all alkali metals, lithium is highly reactive and flammable, and is stored in mineral oil. When cut open, it exhibits a metallic luster, but moist air corrodes it quickly to a dull silvery gray, then black tarnish. It never occurs freely in nature, but only in (usually ionic) compounds, such as pegmatite minerals which were once the main source of lithium.
Lithium salts are extracted from water in mineral springs, brine pools, and brine deposits. Lithium is present in seawater, but commercially viable methods of extraction have yet to be developed. Another potential source of lithium is the leachate of geothermal wells, which are carried to the surface. Recovery of lithium has been demonstrated in the field; the lithium is separated by simple filtration. The process and environmental costs are primarily those of the already-operating well; net environmental impacts are thus positive.
Lithium and its compounds have several industrial applications, including heat-resistant glass and ceramics, lithium grease lubricants, flux additives for iron, steel and aluminum production, lithium batteries, and lithium-ion batteries. These uses consume more than three quarters of lithium production.
Late in the 20th century, lithium became an important component of battery electrolytes and electrodes, because of its high electrode potential. Because of its low atomic mass, it has a high charge- and power-to-weight ratio. A typical lithium-ion battery can generate approximately 3 volts per cell, compared with 2.1 volts for lead-acid or 1.5 volts for zinc-carbon cells. Lithium-ion batteries, which are rechargeable and have a high energy density, should not be confused with lithium batteries, which are disposable (primary) batteries with lithium or its compounds as the anode. Other rechargeable batteries that use lithium include the lithium-ion polymer battery, lithium iron phosphate battery, and the nanowire battery.
Increase in Lithium Demand
Market research analysts at Technavio have predicted that the global lithium market will grow steadily at a CAGR of almost 8% by 2020. The increasing demand for EV (electric vehicle) from China is considered to be one of the primary drivers for this market. Mainly driven by government subsidies, the EV market in China is expected to increase exponentially in the next four years. This, in turn, will lead to the rise in demand for lithium batteries. The government subsidy policy depends mainly on the battery capacity and EV efficiency. This increases the EV manufacturers' focus to attain larger batteries from the lithium battery market to gain more benefits.
The growing demand-supply gap in the electricity sector has led to an increase in demand for lithium-ion batteries. Since lithium-ion batteries can store a considerable amount of power and be used to supply this stored power during peak hours, their demand from the electricity sector has increased in the recent years. According to this market study report, this demand for lithium-ion batteries in grid-connected storage is expected to be one of the major trends that will gain traction in this market during the forecast period.
According to research from Deutsch Bank, battery consumption worldwide is expected to increase 5x over the next 10 years, placing substantial pressure on the battery supply chain. The same report indicates that lithium demand will increase from 181kt Lithium Carbonate Equivalent (LCE) in 2015 to 535kt LCE by 2025.
Over 60% of the new energy capacity addition in 2020 and over 75% in 2030 is expected to be in renewable and clean technologies, a majority of which would require energy storage and the batteries for energy storage
What is Energy Storage
Energy storage is being touted by many energy industry analysts as the key to achieving a global transition to clean energy, by incorporating storage technology and flexibility into future smart grids and into homes.
Energy storage is literally all around us in our modern lives. This includes a wide range of technology and techniques for storing energy for use later, from the electric hot water tank at your home or business, to the batteries that start your car, and power your laptop and smartphone.
Energy storage technologies are classified as follows:
- Mechanical Energy Storage (i.e. pumped hydro)
- Electrochemical Energy Storage (i.e. batteries of various types)
- Thermal Energy Storage (i.e. molten salt)
- Chemical Energy Storage (i.e. energy converted and stored as hydrogen)
Electrochemical batteries are a rapidly growing segment of the energy storage market. Batteries are all around us in portable electronic equipment, uninterruptible power supplies (UPS) and beyond. Batteries come in a flexible array of sizes, and are optimized for numerous applications. With costs falling as scale ramps up, these batteries are experiencing rapid growth.
A recent report on energy storage by Bloomberg concludes that Batteries capable of storing power at utility scale will be as widespread in 12 years as rooftop solar panels are now, revolutionizing the way consumers use energy. It further states that the energy storage market may be valued at $250 billion or more by 2040, and expects 25 GW of the devices to be deployed by 2028, about the size of the small-scale photovoltaic industry now. Currently, less than 1 GW of batteries are operating on the grid around the world.
By 2040, the industry will mushroom, storing and discharging 759 GWh. There are several larger-scale battery projects in the works, according to S&P Global. They include a 90-MW system in Germany being built by Essen-based STEAG Energy Services GmbH and Edison International's 100-MW facility in Long Beach, California. Utility-scale storage is the new emerging market for batteries, similar to where electric vehicles were five years ago.
Batteries for Energy Storage
McKinsey Research has found that storage is already economical for many commercial customers to reduce their peak consumption levels. At today's lower prices, storage is starting to play a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability, providing power-quality services, and supporting renewables integration.Further, given regulatory changes to pare back incentives for solar in many markets, the idea of combining solar with storage to enable households to make and consume their own power on demand, instead of exporting power to the grid, is beginning to be an attractive opportunity for customers (sometimes referred to as partial grid defection).
McKinsey Research believe these markets will continue to expand, creating a significant challenge for utilities faced with flat or declining customer demand. Eventually, combining solar with storage and a small electrical generator (known as full grid defection) will make economic sense—in a matter of years, not decades, for some customers in high-cost markets.