The Great Demand for Lithium Ion Batteries and Its Impact on Grid-Scale Energy Storage

In the 1970s, a new battery concept was born — the lithium-ion battery. Designed by chemist Stanely Whittingham while employed by Exxon, the conceptual lithium-ion battery would not become a commercial product until 1991. Once lithium-ion batteries hit the market, they were primarily used for consumer electronics. It wouldn’t be until years later that lithium-ion batteries became the central topic surrounding all future technology.

Since their inception, lithium-ion batteries — also referred to as li-ion batteries or LIB — have grown rapidly in both their use and in their design. Today, many companies are now manufacturing large-scale versions of lithium-ion batteries, ideal for use in grid-scale energy storage and electric vehicle applications.

With the great demand for li-ion batteries, new challenges are facing the industry. From concerns around disposal to a struggle to keep up with the necessary, but costly materials utilized in li-ion batteries, the landscape is continually evolving and ever-expanding.

To understand how these batteries rose to such widespread use, particularly in grid-scale energy storage applications, it all begins with an understanding of how these batteries work and the unique benefits they provide.

What is a Lithium Ion Battery?

Lithium-ion refers to a range of batteries that implement similar technology with differing chemistries. What ties all lithium-ion batteries together is their use of the transferring of ions between electrodes as they charge and discharge. These batteries do not contain metallic lithium, but instead, they utilize lithiated metal oxides or phosphates.

Examples of the different types of lithium-ion batteries include the following:

  • Lithium cobalt oxide: Common applications for these li-ion batteries include cellphones, laptops, and cameras
  • Lithium manganese oxide: Common applications for these li-ion batteries include laptops, power tools, medical equipment, and electric vehicles
  • Lithium iron phosphate: Common applications for these li-ion batteries include electric bikes and electric vehicles
  • Lithium nickel manganese cobalt oxide: Common applications for these li-ion batteries include electric vehicles and power tools
  • Lithium nickel cobalt aluminum oxide: Common applications for these li-ion batteries include electric vehicles and grid-scale energy storage
  • Lithium titanate: Common applications for these li-ion batteries include aerospace applications, grid-scale energy storage, wind energy storage, solar energy storage, and power-system backups

What is Grid-Scale Energy Storage

To further understand the implementation of lithium-ion batteries in grid-scale energy storage, it is important to understand the role batteries play in this industry.

Grid-scale battery storage is used by power system and utility companies to store energy on a large scale. These battery banks can capture energy from an existing source, such as a power plant or through solar or wind farms, and store it until it needs to be used. The batteries can later discharge the energy, providing electricity to a designated grid.

Historically, numerous types of batteries have been used for grid-scale storage purposes. This has included lead-acid, redox flow, and molten salt batteries. However, with the increased advancements in lithium-ion batteries, these batteries have come to dominate the global grid-scale energy storage industry.

The Incredible Advantages of Lithium-Ion Batteries for Grid-Scale Storage

Lithium-ion batteries have risen in popularity for grid-scale storage for numerous reasons. To begin with, lithium-ion batteries provide the highest energy density of any rechargeable battery. This means that in less space and with less weight, they are capable of holding and delivering more power. And when it comes to delivering current, lithium-ion batteries are also the clear leader.

Additionally, lithium-ion batteries have low maintenance requirements and long shelf lives with low self-discharge rates. This makes them a superior choice for grid-scale applications, as they help to lower operational costs while offering superior capabilities of retaining power over long periods of time.

Lithium-ion batteries also do not have a memory effect. A memory effect occurs in most batteries when they are charged prior to all of their energy storage being utilized. The result is that the battery “remembers” a lower capacity and, subsequently, will provide a shorter operating time. With lithium-ion batteries, this effect does not take place, allowing the battery to be recharged from any energy starting point.

Finally, rounding out their benefits, lithium-ion batteries are considered significantly less toxic than lead-acid batteries. This makes them a more sustainable choice with less negative impact on the environment.

Current Industry Trends

With the incredible benefits that lithium-ion batteries present, particularly in the grid-scale energy storage industry, their market size is growing rapidly. According to a recent market report, the lithium-ion battery market size is estimated to be worth USD 44.5 billion in 2022 and is projected to grow to an incredible USD 135.1 billion by 2031.

Source: National Renewable Energy Laboratory, operated by Alliance for Sustainable Energy, LLC, for the U.S. Department of Energy (DOE)

A large portion of the growth of li-ion battery demand is a direct result of the burgeoning battery energy storage system market. As new, sustainable power sources are put into place, accompanying battery banks must be designed in sync. According to a recent report, even during the COVID-19 pandemic, the global market for Battery Energy Storage Systems was estimated at a healthy USD $4.7 Billion in the year 2022. From here, experts are predicting that it will reach a revised size of USD $12.9 Billion by 2026.

As electric vehicle (EV) markets expand, the need for improved energy grids will be forced to expand in sync. For this reason, it is easy to see how the demand for li-ion batteries will grow in a dual progression. Both EV markets and the necessary upgraded power grids will be placing a market demand for the manufacturing of more and more li-ion batteries.

The Issues Facing the Manufacturing of Lithium-Ion Batteries

Lithium-ion batteries are central to the decarbonzation and electrification efforts taking place globally. As governments and organizations push away from the use of fossil fuels toward wind, solar, and other green energy solutions, li-ion batteries will be central to the success of a sustainable future.

However, there are key issues facing the manufacturing market of lithium-ion batteries. With the increasing demand for the production of these efficient batteries, there is growing pressure on the metals and mining sector. The supply chain for the key components of lithium-ion batteries is being pushed to its brink. To understand this progression, it is important to consider the complexities facing the extraction of valuable materials.

Acquiring Lithium & Cobalt

There are numerous raw materials that are used in the manufacturing of li-ion batteries. Key components include manganese, graphite, lithium, and cobalt. Of these materials, lithium and cobalt have been placed under the supply chain microscope due to the fact that they are highly concentrated in only a few countries. This has resulted in a less open market with a higher volatility.

For example, between 2014 and 2016, an average of 53% of global mined cobalt production came from the Democratic Republic of Congo (DRC). This incredibly high dependence on one region for the mining of this material has led to high market volatility. Not only that, but there is increasing global scrutiny into concerns around the human welfare of those responsible for extracting this valuable mineral from the earth. In the DRC, mining conditions are often harsh, involving long hours, poor pay, dangerous working conditions, and child labor. While corporations are being scrutinized for their use of cobalt resulting from these alarming mining conditions, the cobalt industry is far from transparent and tracing cobalt from mine to manufacturer is nearly impossible.

Adding to the complexity of li-ion manufacturing is the spike in demand for lithium. In 2015, less than 30 percent of lithium demand was for batteries. Now, experts are predicting that by 2030, batteries will account for 95 percent of lithium demand, requiring the total production of lithium to spike from 3.3 million to 3.8 million metric tons.

Similar to cobalt, lithium currently comes from a limited number of sources. Australia is responsible for 44% of lithium production, with Chile producing 34% and Argentina 13%.


And, akin to cobalt, there are increasing concerns around the extraction of lithium and the impact it has both environmentally and socially. For starters, lithium extraction is a water-intensive project, requiring around 500,000 gallons per metric ton of lithium extracted. Unfortunately, in many regions where lithium is being extracted, water is a finite and scarce resource. In one region in Chile, for example, lithium extraction activities consumed 65 percent of the area’s total water. Soil and air contamination have also been linked to these extraction activities in regions across the globe.

Contributing to a Sustainable Future Through Battery Recycling

While there are numerous challenges facing the li-ion battery market, the future is not all bleak. There is a renewed focus being placed on improving recycling processes, allowing for more materials to be extracted from lithium-ion batteries at their end-of-life.

Today, the process for recycling li-ion batteries is complex and the number of batteries being recycled is limited. Recent data indicates that currently in the European Union and the U.S., less than 5% of lithium-ion batteries are recycled.

Much of the lag in li-ion battery recycling has been due to the unique challenges facing this industry. Unlike the recycling processes in place for lead-acid batteries, lithium-ion battery recycling is complicated. Much of this complexity is due to the variability in the design of li-ion batteries. With unique chemistry makeups and structural designs, it is currently difficult for recycling facilities to process lithium-ion batteries in an efficient manner. This drives up recycling costs, creating a gap between the profitability of recycled materials and newly extracted raw materials.

However, government agencies around the globe are beginning to pour funding into li-ion battery recycling innovation. In the U.S., the Department of Energy (DOE) recently launched the first DOE lithium-ion battery recycling R&D center. This center — the ReCell Center— is focused on creating improved recycling strategies and is aiming to reduce the U.S. dependency on foreign sources for battery materials.

In addition to the innovation taking place at the ReCell Center, the recently passed Bipartisan Infrastructure Law in the U.S. has allocated USD $10 million to be used by the Environmental Protection Agency to develop battery recycling best practices.

As the use of lithium-ion batteries in grid-scale energy storage continues to increase, it is easy to see the incredibly valuable role that recycling will continue to play in the production of future batteries. It is, in fact, critical that for renewable energy measures to be truly renewable, recycling must begin to take center stage.

Your Business Can Contribute Your Part

Founded in 2009, Battery Recyclers of America is designed to provide the best battery recycling solutions to date. Today, we operate in all 50 states and have recycled over 46 million pounds of batteries (and counting).

If your business is looking for ways to contribute to a more sustainable future of li-ion battery usage, we are here to help. We work with companies across industries to find efficient and profitable recycling solutions for li-ion batteries. We can work with you to not only ensure that your batteries do not contribute to toxic landfill waste but to also help you turn your end-of-life batteries into a valuable revenue stream.

To learn more about our work, or to set up recycling services for your company, please reach out to our team. You can contact us through our online form, or you can give our team a call at 866-399-6186. We look forward to helping you contribute to a more sustainable future for all.

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