A report published by Wood Mackenzie states that lithium-iron-phosphate (LFP) is poised to overtake lithium-manganese-cobalt-oxide (NMC) as the dominant stationary storage chemistry within the decade.
According to the firm’s analysis, LFP is expected to grow from 10% of the market in 2015 to more than 30% in 2030.
“The ESS market has heavily relied on EV batteries in the past but changing performance requirements will lead to an evolution of separate markets,” the document reads. “Since 2010, the rapid rise in demand for EVs has driven down the cost of lithium-ion batteries by more than 85%. Historically, the ESS market has mostly deployed NMC batteries. In late 2018 and early 2019, demand for NMC batteries for energy storage industry grew swiftly, outstripping the available supply.”
Within this context where there was a shortage of NMC batteries in the storage market, there were plenty of LFP batteries available with capacity mostly in China.
“As lead times for NMC availability grew and prices remained flat, LFP vendors began tapping into NMC constrained markets at competitive prices, thus making LFP an attractive option for both power and energy applications,” Mitalee Gupta, Wood Mackenzie senior analyst, writes in the report.
In Gupta’s view, original equipment manufacturers will likely begin to innovate and specialize their product offerings in the coming years as demand from both EVs and ESS shoots up and evolving performance priorities create a divergence between the types of batteries used for each application.
“Aspects like high recycling capabilities and high frequency will take precedence over energy density and reliability for the ESS market. Cost and safety will continue to top the mind of battery vendors for multiple applications.”
While LFP will steal the show for ESS applications, Wood Mackenzie says the use of LFP will remain popular within the Chinese EV market before breaking into the global passenger EV sector. The chemistry is expected to retain more than 20% of EV battery installations through 2025.