Growing demand for both industrial and automotive lithium-ion battery has propelled lithium prices in recent years. Since the beginning of 2022 to September 22, China's 99.5% lithium carbonate (Li2CO3) spot price has risen by 80.72% to CNY501,500 (US$70,686) per metric ton.
London Metal Exchange (LME) 1-month lithium hydroxide futures price closed at US$77,214 per metric ton on September 22, having risen by 237% this year.
One of the main drivers behind soaring lithium prices is the growing demand for EV-use battery. Concerns for car safety are prompting automakers to adopt LFP batteries. While nickel-based ternary batteries provide higher energy density, lithium batteries are generally safer than either ternary batteries or lead-acid batteries.
Lead-acid batteries are largely implemented for industrial use cases such as back-up power system. According to Taiwan-based LFP battery technology provider Truewin, large manufacturing companies that require continuous power supply are seeking to replace lead-acid batteries with lithium ones.
Truewin's clients include semiconductor foundries, such as TSMC, who would not be able to take the impact from even one nanosecond of power outage.
As Taiwan enters the transitional phase of developing green energy, power grid stability becomes the top issue for power company.
Truewin CTO Franky Hsieh said they are helping TSMC replace lead-acid UPS (uninterrupted power supply) system with LFP UPS system. Having begun researching on LFP batteries 30 years ago, Hsieh was one of the pioneers in the lithium battery field. However, costs of LFP batteries were higher than lead-acid batteries, so the benefits of LFP battery were not recognized until recent years.
LFP batteries are slightly more expensive than the lead-acid ones as of today, said Hsieh, but they have longer lifetime and higher safety. Truewin is now set to develop its own LFP battery cell technologies, which are likely to improve safety by changing the recipe of the chemical internally. On the other hand, LFP batteries' status can be monitored by battery management systems (BMS), which also generate data for manufacturers to track.
Hsieh added that improving the design of the cabinet of the back-up power system is another way to improve battery safety. Overall, LFP batteries are only getting safer not only for cars but also for industries.
LFP battery applications range from EV batteries and UPS systems to energy storage systems (ESS). Hsieh noted that ESS will be a huge market in the future as renewable energy attains the world's focus.
Speaking of soaring lithium prices, Hsieh admitted that the raw material has gotten so much more expensive as demand surges. However, the challenge is paired up with the requirements from the US government to increase local content rate.
Hsieh said they still have a couple years to find a solution to local manufacturing before Biden's new law becomes effective.