Lithium-ion battery market to surge by 2020, predicts report


The demand for energy storage in smart grid and renewable energy systems will be a key driver for the growth of the lithium-ion battery market over the next 5 to 7 years, according to a new report from research analyst Frost & Sullivan.

The report predicts that the grid and renewable energy storage energy segment will likely provide lithium-ion battery manufacturers with solid revenue growth opportunities over the next 5 to 7 years.

The study also advises manufacturers of lithium-ion batteries to include the grid and renewable energy storage in their growth strategy as the stationary energy storage market is likely to be the leading consumer of lithium-ion batteries and utility companies seek smart grid solutions that use these batteries.

Other key end-users expanding the market are electric vehicle manufacturers, and makers of healthcare, power tools and equipment and military applications.

Global demand

Vishal Sapru, research manager at Frost & Sullivan, said: “Overall demand for lithium-ion batteries will continue to increase throughout the forecast period due to anticipated high growth in the automotive and grid and renewable energy storage segments.

“North America and Asia-Pacific will lead demand, followed by Europe, wherein countries look for alternative energy sources to sustain automotive and energy sectors.”

EV manufacturing 

The automotive sector is among the end-user segments that will present strong opportunities for vendors, as pure electric vehicles are expected to witness longer mass adoption cycles and the push to marketing hybrid vehicles will continue.

In both the automotive and grid and renewable energy storage sectors, regulatory incentives affect lithium-ion battery uptake. In the automotive sector, regulations encouraging fuel efficiency, emission standards and use of alternative and green energy sources stimulate need for lithium-ion batteries.

Similarly, in grid and renewable energy storage, changing utility regulations, especially in the United States, Europe and Asia-Pacific, encourage battery-based energy storage and distribution projects.

Challenges to storage companies

However, the global lithium-ion battery market has its share of challenges. For one, the competitive structure of the market remains fragmented. As few small participants are expected to survive the resulting decline in prices and rise in R&D costs, market consolidation and a shake-out is imminent.

Further, due to recent recalls of many lithium-ion battery operated devices for risk of battery malfunction, product safety concerns have surfaced, effectively hampering market development. As a consequence of this and the continued reliance on traditional energy sources, migration to lithium-ion batteries has slowed down.

“Manufacturers are searching for materials that enable lithium-ion batteries to operate optimally and safely in extreme temperatures,” noted Sapru. “Additionally, manufacturers are looking to reduce the cost of cells, battery-pack materials, and battery management systems. While these efforts will ensure a fall in prices of lithium-ion batteries, the decline rate over the next two years will be in the low single-digits.”