1. Investment in lithium production is growing rapidly to meet increasing demand for batteries.
2. Battery prices are expected to remain below 2022 levels due to growth in production of lithium, nickel, and copper.
3. Energy transition technologies like batteries are receiving sufficient investment to meet decarbonization policy targets, but investment in battery metals needs to increase.
The investment in lithium production is growing rapidly, as demand for batteries increases. The spike in lithium carbonate pricing during the pandemic particularly affected the stationary battery energy storage system (BESS) sector due to its use in lithium iron phosphate (LFP) battery cells. Mainland China, Chile, and Australia, the top three lithium producers, are expected to increase production by an average of 10.6% annually until 2033, keeping prices below the levels seen in 2022.
BMI provided forecasts for battery prices in various scenarios, with the high-priced scenario seeing a slight increase in prices due to supply chain bottlenecks. In contrast, the moderate-priced scenario predicts a normalization of battery prices as metal prices ease, supply chains improve, and manufacturing grows. The low-priced scenario projects a significant decrease in battery costs by 2028 as manufacturing scales up and materials pricing decreases.
Analysts predict a decline in battery and BESS costs after the pandemic-era supply chain crisis, with estimates showing a drop of 16-47% in BESS costs by 2030 compared to 2022 levels. Investment in battery metals is expected to increase to meet decarbonization targets, but currently falls short of the necessary levels. Nickel prices are expected to remain below peak levels, with the market in surplus due to increased supply. Conversely, copper is projected to face a deficit through 2033 due to high demand across various energy transition technologies.
Solar Media will host the 2nd Energy Storage Summit Asia in Singapore in July 2024 to provide clarity on the growing energy storage market.