Hike in Lithium Prices

Much of the current movement to decarbonize the grid involves installing many gigawatts of battery-based energy storage. Lithium-ion technology is leading the way with breathtaking advances that are addressing everything from improved performance to strategies to mitigate the risk of fires. But the rapid development is causing numerous challenges.

The high demand for lithium-ion batteries has translated into shortages of lithium along with shortages of other essential commodities like copper, aluminum, nickel and cobalt. As we all learned in Market Economics 101, limited supply caused by high demand leads to high prices, market volatility and long lead times.

In the span of a year, between March 2021 and March 2022, lithium carbonate prices jumped from around $12,000 per ton to $78,000 per ton. Pricing for other commodities rose too, though not as dramatically. While lithium stabilized somewhat during 2022, pricing began advancing again by the end of the year.

Large-scale battery energy storage systems (BESS) projects are taking the brunt of these factors, with lead times stretching up to a year for large capacity orders — and pricing uncertainty that has led to a transfer of pricing risk via indexed pricing strategies that manufacturers began using in early 2022.

By the courtesy of : By JASON BARMANN | Republished with permission from Burns & McDonnell