Surging Demand: How a Global BESS Boom is Outpacing EVs
Battery Energy Storage Systems (BESS) Are Indeed Driving Lithium Prices Higher
In fact, it’s the start of something big I reckon, just the beginning.
For instance, Chinese lithium carbonate futures just hit a five-session winning streak. Furthermore, the spot market rebounded to a two-month high.
And here’s what’s primarily fuelling it: BESS.
While everyone’s watching EVs, BESS demand is growing at mid-50% this year. To put that in perspective, compare that to EV battery growth in the mid-20s. It’s not even close.
Specifically, China’s going all-in.
They’re planning to more than double BESS capacity to 180 gigawatts by 2027. Essentially, that’s the government’s way of backstopping all that wind and solar flooding the grid.
However, it’s not just China.
For example, Samsung SDI is switching EV battery lines to boost BESS production in the US.
Similarly, Australian miners like PLS are calling the sector growth “leaps and bounds.”
Moreover, BloombergNEF says energy storage additions will hit records every year through to 2035.
As a result, the US and China are cementing themselves as the two largest markets.
Additionally, don’t forget the AI data centres driving this. In essence, more data centres means more power demand, which means more grid stabilisation, which means more BESS.
Meanwhile, inventories are likely shrinking. After all, we’re entering the seasonally strong period for lithium demand, and port stocks are starting to diminish.
Supply & Sentiment: Tightening Markets and Easing Trade Tensions
And here’s the other tailwind:
With a potential trade war détente playing out between the US and China right now… consequently, there is less incentive for prices to remain strategically depressed too.
For instance, Trump just announced tariffs on Chinese goods would be reduced from 57% to 47%, with rare earth exports flowing and soybean purchases resuming.
Therefore, when the world’s two largest economies ease tensions, commodity markets start to breathe again.
On the supply side? It’s still murky in China after regulators put the brakes on capacity. Case in point: The world’s biggest EV battery maker, CATL, still hasn’t had its mine permit fully renewed since August.
So yeah, prices are still 85% below the 2022 peak. But momentum’s shifting.
