Rapid growth in battery energy storage systems (BESS) is reshaping global lithium demand, providing producers with a fresh source of growth as the market adapts to more moderate expansion in EV sales.
Industry executives speaking at the Fastmarkets Global Lithium, Battery & Critical Materials conference in Las Vegas last week said stationary energy storage is emerging as one of the lithium market’s most important demand drivers, fuelled by investment in grid infrastructure, renewable energy projects and the increasing power needs of artificial intelligence.
Raju Daswani, chief executive of consultancy Fastmarkets, said demand for lithium used in BESS is growing by around 40% annually.
“The period of market overcorrection is over,” he said. “Energy storage has become a primary driver of growth in this market.”
The growing importance of stationary storage marks a significant shift for the lithium sector, which has traditionally relied on EVs as its principal source of demand. After a prolonged period of oversupply and weaker EV sales in some regions pushed lithium prices sharply lower, expanding investment in grid-scale battery storage is helping restore confidence across the industry.
The trend is also reflected in recent market forecasts, which predict continued strong growth in lithium-ion battery demand, driven not only by EVs but also by accelerating deployment of BESS and renewable energy projects worldwide. Analysts expect the expansion of renewable energy generation, grid modernisation and increasing demand for large-scale energy storage to become key drivers of lithium-ion battery consumption over the coming decade.
Rio Tinto’s head of aluminium and lithium, Jérôme Pécresse, said lithium demand over the next two years is expected to become more evenly balanced between EVs and energy storage as the company continues to expand its production capacity.
Albemarle, the world’s largest lithium producer, also highlighted the growing importance of stationary storage. Chief commercial officer Eric Norris said grid-scale battery storage was providing a more geographically diverse source of demand than electric vehicles.
“Grid storage is much more evenly distributed around the world,” he said. “It’s an interesting demand driver.”
Despite the improving outlook, producers continued to call for greater government support for lithium processing outside China, arguing that stronger policy backing will be needed to build resilient critical minerals supply chains as global demand for batteries continues to grow.
