With the global push towards renewable fuels, investors are increasingly focusing on alternative energy sources such as solar and wind. In addition, this has generated more demand for battery metals such as lithium, that are used to store electricity.
Although lithium prices have not risen as much as coal and natural gas prices, they are still up substantially so far in 2021. The cost of solar energy has fallen by over 60% for residential and commercial installations and by over 80% for utility-scale installations over the past decade.
The main challenge is that solar doesn’t produce energy when the sun isn’t shining. It is a good news then that the cost of lithium battery storage has fallen by 70% over the last decade and by 98% over the past three decades.
If the cost of solar energy and lithium batteries were to continue to progress at current rates, it is possible to imagine a future with abundant inexpensive clean energy.
Battery demand is the main source of growth for lithium, growing from 19% of lithium usage in 2004 to 71% by 2020. But despite this boom in demand, the price of battery-grade lithium carbonate has only increase from $5,000 per ton in 2010, to around $8,000 on average in 2020. That’s a growth of 4.4% per year.
Prices however have been volatile, rising to over $17,000 per ton briefly in 2018. What’s kept a lid on lithium prices is its booming production. Between 1994 and 2020, lithium production grew by 1,400%.
In Southeast Asia, the lithium-ion battery market was valued at USD $540 million in 2019. It is expected to register a CAGR of about 13.9% during 2021-2026.
In 2021, the Singapore government released an announcement targeting to deploy 60,000 electric vehicles (EV) charging points across Singapore by 2030, which comprise 40,000 in public car-parks and 20,000 in private premises. The government is also planning to roll out several measures which will target to cease new diesel car and taxi registrations from 2025 and requires all new car and taxi vehicles to be of cleaner-energy models from 2030, and all vehicles to be powered by cleaner source of energy.
Additionally, Thailand, under the National Electric Vehicle Policy Committee (NEVPC) roadmap, is looking to add between 60,000 to 110,000 EVs annually until 2022. This will then increase to between 100,000 to 300,000 by 2025 and finally between 400,000 and 750,000 by 2026. To meet the target, the government in November 2020, announced a tax incentive for EV manufacturing. Under the incentive, PHEV projects worth at least THB 5 billion would be eligible to receive a three-year corporate tax holiday, whereas BEV projects worth THB 5 billion will receive an eight-year corporate tax holiday. Such projects are likely to create positive impact for the EV market, which, in turn, increases the demand for lithium-ion battery market in the country and region as whole.
In April 2021, EVLOMO Inc. and Rojana Industrial Park Public (ROJNA) announced plans to setup 8 GWH lithium battery plant in the Eastern Economic Corridor (EEC) of Thailand. Together, the companies will invest up to a total of USD $1.06 billion through a new joint venture company. In this new JV company, Rojana Industrial Park Public Co., Ltd. would own 55% shares and balance 45% would be owned by EVLOMO Inc.
In August 2020, 3DOM Inc., a Japanese innovative battery technology company, had launched a new lithium-ion battery in the Southeast region through its subsidiary in Singapore and networks. The newly developed Li-ion battery is a 30Ah class pouch cell shape. The company is planning to install in LAVLE products (electric boat business).
With pressure building to reduce carbon emissions and continuous advancements of alternative energy technologies, the demand for battery metals could continue to remain robust in coming years.
If so, price volatility in these metals could one day have important consequences for the global economy much as prices for coal, natural gas, and crude oil have today.