June 15, 2023
Lithium-ion batteries are used for energy storage, including solar energy.
While lead-acid batteries dominated the market for many years, the use of lithium-ion and lithium iron phosphate (LiFePO4) batteries is increasing in solar-plus-storage commercial applications. This is mainly due to their:
- high energy density
- high efficiency
- low maintenance
- longer lifespan
- stability under high temperatures
- declining prices
Average lithium-ion battery pack prices have been declining rapidly; down from over $700 USD/kWh in 2013 to just $140 in 2021. However, rising raw material and battery component prices, coupled with soaring inflation, led to the first ever year-over-year increase in lithium-ion battery pack prices in 2022, up 7% to about $150.
On a regional basis, battery pack prices were cheapest in China at $127 USD/kWh, while in the US and Europe prices were about 24% ($157) and 33% ($169) higher, respectively. Although prices for key battery metals like lithium, nickel and cobalt have moderated in recent months, Incorrys expects 2023 prices to remain relatively unchanged.
Global Lithium-ion Battery Capacity
Cumulative capacity of top 15 battery manufacturers reached 600 GWh in 2021 and 700 GWh in 2022 with a further 3000 GWh of capacity under construction or in the planning stage with many expected to be in operation by 2025. This leads to more extraction and refining capacity which, in turn, will ease lithium prices. Incorrys expects battery prices to begin declining again in 2025 and forecasts average battery prices to drop below $110/kWh by 2026.
Global cumulative lithium-ion battery capacity could reach 5500 GWh by 2030; Incorrys expects battery pack prices to continue to fall through 2030 and could drop well below $100/kWh.
1.Colthorpe A (2022, December, 6), Lithium battery pack prices go up for first time since BloombergNEF began annual survey. https://www.energy-storage.news/lithium-battery-pack-prices-go-up-for-first-time-since-bloombergnef-began-annual-survey/
2.Metsolar (2022, January, 24), Will Batteries Still Be The Most Expensive Part Of The PV System in 2022? https://metsolar.eu/blog/will-batteries-still-be-the-most-expensive-part-of-the-pv-system-in-2022/
3.Woodmac (2022, March, 22), Global lithium-ion battery capacity to rise five-fold by 2030. https://www.woodmac.com/press-releases/global-lithium-ion-battery-capacity-to-rise-five-fold-by-2030/
4.Mckinsey, (2023, January, 16), Battery 2030: Resilient, sustainable, and circular. https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/battery-2030-resilient-sustainable-and-circular