With the demand for electric cars increasing since the surge in petrol prices, there has been discussions around the inexorable rise of the energy storage sector. However, concerns are growing around the supply and demand and the environmental impact this will have, causing uncertainty around the future of this industry.
In recent years, the cost of lithium (the metal which is used in all batteries globally) have plummeted. The Massachusetts Institute of Technology found that the cost of lithium-ion batteries dropped by 97% since their first inception in 1991. This has led many to believe that lithium prices will continue to decrease.
However, according to Credit Suisse, the price drop of lithium has ended and is now set to soar in the coming years - something we are already starting to see in Australia and Chile (the largest Lithium producers in the world), who have seen the price of lithium multiply five times in the last year, reaching Rmb477,500 (£58,000) a tonne.
We are also starting to see other factors contributing to this rise in cost. For example, China, who are the third biggest lithium producer behind Australia and Chile, are seeing a huge demand for electric cars, which could lead them to be more selective about who they export to in the future. Amongst this, there are also concerns about, the environmental impact the mining operations are having to source Lithium.
If lithium prices continue to soar, and the demand continues to grow and questions continue to be raised around the environmental impact, this could create serious problems for the future of the energy storage industry. As Hugh Sharman of Danish Energy Consultancy, Incoteco says ‘some major battery manufacturers could be forced out of business altogether.’
This has led to alternatives being explored, and we could start to see an increase in flow batteries, pumped heat storage or even zinc batteries being used. In the meantime, the use of compressed air storage applications and ‘gravity energy storage’ are slowly becoming more common.
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