Grid Scale, Solar, Storage

Market for Lithium-ion Batteries Expected to Grow 4X by 2020

The global lithium-ion battery market should experience exuberant growth in next few years says a new report by Frost and Sullivan. The firm urges li-ion battery makers to include the grid and renewable energy storage segment in their growth strategy as the stationary energy storage market is likely to be the leading consumer of lithium-ion batteries in the future. In addition, utility companies will continue to seek smart grid solutions that use these batteries.

The automotive sector will also grow, increasing demand for batteries of this type in its pure electric and hybrid vehicles, according to the report. Along with these factors, the trend towards incorporating lithium-ion batteries for start-stop automotive applications will draw vendors to this space.

 “Overall demand for lithium-ion batteries will continue to increase throughout the forecast period due to anticipated high growth in the automotive and grid and renewable energy storage segments,” said Frost & Sullivan Research Manager Vishal Sapru. “North America and Asia-Pacific will lead demand, followed by Europe, wherein countries look for alternative energy sources to sustain automotive and energy sectors.”

Frost and Sullivan points out that regulatory incentives are driving demand in both the energy and automotive sectors.  In the automotive sector, regulations encouraging fuel efficiency, emission standards and use of clean energy sources are stimulating the need for lithium-ion batteries. Similarly, in grid and renewable energy storage, changing utility regulations, especially in the United States, Europe and Asia-Pacific, encourage battery-based energy storage and distribution projects.

There is also more and more focus on using batteries for back-up applications in the military, healthcare and telecommunications industries, which is also driving up demand. Coupled with the growing need for lithium-ion batteries in the power tools and equipment market, this is boosting the attractiveness of the industrial segment, according to Frost and Sullivan.

Still Some Kinks To Work Out

The firm cautions that the global lithium-ion battery market also faces some very real challenges. For one, the competitive structure of the market remains fragmented. As few small participants are expected to survive the resulting decline in prices and rise in R&D costs, market consolidation and a shake-out is imminent. 

In addition to a pending shake-out the lithium-ion industry has experienced some recent recalls due to malfunctions, leading to product safety concerns.  These concerns will hamper market growth, says Frost and Sullivan and as a consequence of this and the continued reliance on traditional energy sources, migration to lithium-ion batteries has slowed down.

“Manufacturers are searching for materials that enable lithium-ion batteries to operate optimally and safely in extreme temperatures,” noted Sapru. “Additionally, manufacturers are looking to reduce the cost of cells, battery-pack materials, and battery management systems. While these efforts will ensure a fall in prices of lithium-ion batteries, the decline rate over the next two years will be in the low single-digits.”

Lead image: Battery storage and PV via Shutterstock