Amid a backdrop of surging electric vehicle adoption and shifting dynamics in the lithium market, the energy storage landscape in the US is undergoing rapid evolution. Record-breaking installations of lithium-ion battery arrays and significant reductions in lithium prices are setting the stage for substantial transformation.
Unleashing the Power of Energy Storage, developers are pushing forward, linking unprecedented volumes of lithium-ion battery arrays to the US power grid. In 2023, approximately 6.8 GW of new large-scale battery capacity was added, marking a 59% increase from the previous year, as reported by S&P Global Market Intelligence. These projects primarily store electricity for one to four hours and are often situated alongside renewable or fossil-fueled power plants. The sector has seen over 120 installations, with California, Texas, and the greater Southwest leading the charge, bringing the total non-hydroelectric storage resources to around 17 GW.
According to data from Market Intelligence, California is at the forefront with 8,179 MW of operating batteries, followed by Texas with 4,252 MW as of February 8. Arizona ranks third with 858 MW, trailed by Nevada with 758 MW and New York with 232 MW. The battery storage pipeline is expanding beyond the Southwest, with states like Oregon, Indiana, and Wisconsin showing promising growth. In 2024, an impressive 34 GW of big battery resources are expected to come online, with over 10 GW currently under construction. However, development timelines often face delays throughout the year.
S&P Global Commodity Insights projects 4.2 GW of firm projects in 2024, anticipating a total installed battery power storage capacity of 23 GW by the end of 2025. This robust growth underscores the crucial role of energy storage in America’s transition towards a sustainable energy future.
Breaking Records and Building Resilience, despite some project delays, developers achieved a record-breaking quarter in the final three months of 2023. They installed 2,332 MW during that period, doubling the previous year’s figure and surpassing the record set in the third quarter. The largest completion was Terra-Gen LLC’s Edwards & Sanborn solar-plus-storage complex in Southern California, boasting 971 MW/3,287 MWh of storage and 800 MW of solar capacity. Other notable completions include Plus Power’s 300-MW/600-MWh Rodeo Ranch Battery Storage in Texas. These achievements in lithium-ion battery storage installations align with the optimistic growth in the plug-in electric vehicle (PEV) market.
January witnessed a surge in PEV sales in key markets, with China and the top four European markets recording impressive year-over-year growth of 101.8% and 33.7%, respectively. However, this growth was lower compared to January 2022 figures. European policymakers have scaled back PEV incentives due to fiscal concerns, while the US has implemented stricter sourcing requirements for EV tax credits, impacting models like the Ford Mustang Mach E and certain versions of the Tesla Model 3. In response to subsidy cuts, automakers are absorbing subsidy costs themselves, with Volkswagen AG and Stellantis NV taking proactive measures. Automakers are also reducing PEV prices to stimulate demand amid decreased consumer interest, with Tesla Inc. and Ford Motor Co. implementing price cuts in various markets.
Charged for Change: Challenges and Opportunities in the Lithium Market, reduced battery costs driven by lower metal prices have facilitated price reductions. Lithium-iron phosphate cell production costs decreased by around 30% in 2023, with a further 20% reduction expected in 2024. This environment has intensified competition, particularly in China, prompting PEV manufacturers to aggressively vie for market share. As the China Passenger Car Association highlights, 2024 is crucial for new energy vehicle companies, signaling fierce competition ahead.
As lithium prices continue to decline, reports of curtailed lithium mine operations have emerged, particularly impacting junior miner-led hard-rock mines in the ramp-up phase. Projects face significant pressure due to the need for initial capital and cash flow maintenance, leaving little room for high-cost ventures. Core Lithium halted open-pit mining at Finniss in Australia’s Northern Territory, while Liontown is delaying expansion plans at Kathleen Valley in Western Australia. Sayona Mining is reassessing its North American Lithium project in Quebec, while Li-FT Power (LIFT: LIFFF), a junior Canadian lithium company, is actively working to meet North American lithium demands by consolidating and advancing hard rock lithium pegmatite projects within Canada.
Despite limited trading activities and the stabilization of lithium carbonate prices, bearish sentiment persists over demand and prices. Speculation about further cuts in lepidolite mines in China has boosted Australian mining stocks and the price of the main lithium carbonate contract on the Guangzhou Futures Exchange. As the US power grid moves towards sustainability, the surge in energy storage installations represents a transformative step, with record-breaking battery installations and declining lithium prices paving the way for innovation and growth.
