LONDON--(BUSINESS WIRE)--Technavio’s latest report on the global lithium iron phosphate battery market provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
Sayani Roy, a lead analyst from Technavio, specializing in research on energy storage sector, says, “The global market for lithium iron phosphate battery is expected to grow an impressive CAGR of around 21% during the period 2016-2020. The growth is primarily driven by the global demand for EVs and HEVs increasing year on year and also the rise in consumer electronics and renewable power.”
APAC is the fastest-growing region for the lithium iron phosphate battery market. It is expected to account for more than 53% of the market by the end of 2020.
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The top four emerging trends driving the lithium iron phosphate battery market according to Technavio energy research analysts are:
- Increased demand from China
- Heavy investments in lithium iron phosphate manufacturing plants
- Operational challenges of lead acid batteries
- Technological advancements
Increased demand from China
A large portion of lithium iron phosphate battery consumption is attributed to China. The reason for this high demand is the significant increase in the usage of battery-operated vehicles in China. Also, China accounts for nearly 40 percent of the global lithium iron phosphate battery market. The country has nearly 95 percent of the rare earth lithium metals that could increase the lithium iron phosphate production in the coming years. The increased demand from China is expected to be the major trend in the global lithium iron phosphate battery market during the forecast period.
In 2014, Mainland China chronicled a total capacity of about 30,000 tons of lithium iron phosphate. The major companies included Guanghan Mufu Lithium Power Materials Co., Pulead Technology Industry Co., and Tianjin STL Energy Technology Co. etc., which contributed a collective capacity of 9,500 tons. Besides, there are several planned and long term lithium iron phosphate projects in China. For instance, Tianjin STL Energy Technology intends to expand its lithium iron phosphate capacity to 10,000 tons within 3 years. Pulead Technology's Base in Qinghai is planning to construct a 5,000 tons/annum lithium iron phosphate and other cathode materials project.
Heavy investments in lithium iron phosphate manufacturing plants
Extensive investment is required for carrying out research activities for the development of lithium iron phosphate (LFP) batteries. As a result, the ROI for these applications takes a long time. This results in most battery manufacturers being dependent on government funding to expand their facilities. Countries such as South Korea, Japan, and China are the leading producers of lithium iron phosphate batteries because the governments in these countries support eco-friendly and green technologies. Companies such as A123 Systems, BYD, and Formosa are the leading players in the market that continuously upgrade their lithium battery manufacturing technologies. For instance, BYD and the State Grid Corporation of China launched the world's largest lithium iron phosphate battery grid storage facility in China in 2012.
Sud-Chemie AG, a global chemical company based in Munich, is investing $75 million in the manufacturing of lithium-iron phosphate, a high-performance energy storage material used in batteries for electric vehicles.
Hence, the increased investment in lithium iron phosphate batteries is another major trend that is anticipated to drive the growth of the global lithium iron phosphate battery market.
Operational challenges of lead acid batteries
Along with Li-ion batteries, lead acid batteries are widely used in renewable energy-based projects. To increase the performance of lead-acid batteries, the US government has established a lead-acid battery program for ESS in renewable-based ESS. However, the increasing consumption of lead-acid batteries for big and large ESS leaves deposits on negative (-ve) electrodes and hinder the performance of ESS. These deposits are formed by lead sulfate crystals, and are deposited on the plates as a normal chemical reaction, which results in flow electron. This is the main reason of lead-acid batteries not being used widely in grid-scale energy storage.
In addition, these batteries are heavy, have a poor energy density ratio, and cannot be stored in discharged condition. They can cause loss of electrolyte in non-sealed batteries at higher temperatures, and high charging rates, thereby reducing battery performance. All these factors negatively affect the growth of the lead acid battery market and build a stronger case in favour of Li-ion battery in applications, such as EVs, HEVs, UPS, and energy storage etc.
Over the years, there have been several developments in technology, such as the usage of nanophosphate lithium ion batteries. This rechargeable battery technology has high power and energy density, combined with excellent safety performance and an extensive life cycle. “In recent years, numerous vendors have started using lithium iron phosphate batteries in EVs and consumer electronics applications to avoid the problems related to batteries such as a shorter life span and capacity/size ratio issues,” says Sayani.
Nanophosphate lithium ion batteries also reduce the total cost of ownership for a number of applications such as micro hybrid vehicles, EVs, telecommunications backup, and lead acid replacement applications. These advances in technology are expected to elevate the growth of the global lithium iron phosphate battery market.
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