The energy transition is accelerating, and battery storage is at the center of the shift. With more solar and wind energy on national grids, storing power is key. The world needs to save energy during peak production and release it when demand is high. Lithium iron phosphate (LFP) batteries are at the forefront: they are cheaper and more reliable than older battery types.
According to UBS, total global storage capacity needs to grow eightfold by 2030 and 34 times by 2050 to keep up with renewable energy expansion. Notably, energy storage growth now outpaces electric vehicle (EV) sales.
In 2024, battery storage demand jumped 85% from the previous year. Most of the new installations came from utility-scale projects, as reported by the International Energy Agency (IEA). By 2030, energy storage is expected to make up about 20% of the total battery market. And this means LFP batteries are becoming essential.
The Rise of LFP Batteries
LFP batteries are less expensive and do not rely on nickel or cobalt, two metals traditionally used in battery chemistries. In the last 18 months, LFP battery costs have fallen by almost 50%. This makes them very appealing for large energy storage projects.
Fidra Energy’s Thorpe Marsh project in the UK will install LFP batteries on a 55-acre site. This facility will become Europe’s largest energy storage facility. These batteries are not only cheaper but are now lasting longer, with improved lifespans of up to 20 years.
LFPs are also being embraced by Chinese EV makers like BYD, which surpassed Tesla in 2024 as the world’s largest EV seller. Their lower cost and safety profile make them ideal for grid storage and increasingly popular for EV applications.
- According to the IEA, LFP batteries now make up nearly 50% of the global EV battery market, up from under 10% in 2020.
In a separate forecast by energy transition consultancy Rho Motion, the battery energy storage projects will grow tremendously in 2030. As such, the rise of LFP negatively impacts other metals, especially nickel and cobalt.
Nickel and Cobalt Losing Ground
For years, nickel and cobalt were seen as critical for high-performance batteries. But the recent shift to LFPs has changed that. CRU (Commodity Research Unit) reports that nickel intensity in battery demand fell by almost one-third from 2020 to 2024. Cobalt intensity dropped even more, by two-thirds.
The change is already impacting markets. Benchmark nickel prices have halved over the past three years, and cobalt prices have fallen by 60%. Much of the oversupply comes from producers scaling up in response to older forecasts of sustained demand from the EV sector.
Environmental and ethical concerns are also pushing the shift. Nickel mining, especially in Indonesia, carries a high carbon footprint. Cobalt mining in the Democratic Republic of Congo raises serious concerns. It is linked to child labor and human rights abuses. This issue worries both companies and consumers.
The IEA says that switching to LFP chemistries has cut cobalt demand forecasts by over 10% compared to previous estimates.
Lithium Gains Importance — But Faces Risk
While demand for nickel and cobalt wanes, lithium remains critical. Even though lithium prices have dropped another 20% this year due to oversupply, experts see growing long-term demand due to energy storage.
Iola Hughes from Rho Motion said that stationary storage is now a bigger part of lithium demand. This is happening, especially as EV sales slow down. Companies like Norway’s Morrow Batteries, which plans to manufacture one gigawatt-hour of battery cells annually, are preparing for this shift.
According to the IEA, lithium demand is expected to grow fivefold by 2040 under its Stated Policies Scenario (STEPS). Graphite and nickel demand are projected to double, while cobalt and rare earth elements are forecast to grow by 50–60%.
Lithium Demand and Mining Requirements 2040
However, lithium mining also faces scrutiny. Environmental and indigenous rights concerns in top-producing countries like Chile, Argentina, and China could affect supply and project timelines.
The IEA warns that global supplies of copper and lithium could be 30% and 40% lower by 2035. This is despite many new mining announcements. And so, more projects need to be developed and funded to avoid this shortfall.
China’s Lead and Global Challenges
China currently dominates the global battery supply chain. More than 90% of U.S. energy storage batteries come from China. Companies like Sungrow Power Supply supply batteries for key projects in Europe, such as Fidra’s Thorpe Marsh.
The IEA report confirms that China holds dominance across both LFP and nickel-based battery supply chains, from raw material mining to battery manufacturing. It will continue to do so until 2035. This reinforces global reliance on Chinese exports.
While the U.S. and Europe are trying to localize battery production, challenges remain. U.S. President Donald Trump’s administration has imposed a 41% tariff on Chinese battery imports during a 90-day trade truce. This has led to uncertainty, which may slow short-term growth in U.S. energy storage deployment.
European leaders are also concerned about dependency on Chinese battery technologies. However, industry experts like Fidra CEO Chris Elder say that working with China is often necessary to meet net-zero targets quickly and affordably.
A Metal Market in Transition
While LFP batteries dominate for now, new technologies are emerging. Sodium-ion batteries, which do not require lithium, nickel, or cobalt, are gaining attention. These batteries use common minerals like sodium and manganese. This helps create stronger and more diverse supply chains, as noted by the IEA.
Still, the global pivot toward LFP batteries and energy storage is reshaping energy policy and investment. Governments worldwide are recognizing the critical role of storage in meeting clean energy targets.
The IEA’s Global Critical Minerals Outlook 2025 says that demand for lithium, copper, and rare earth elements will keep increasing. This rise is due to their importance in clean technologies.
Investors are also shifting strategies. As EV demand softens, companies like LG Energy Solution are changing U.S. factories. They are now making LFP batteries for storage. Meanwhile, Morrow Batteries is expanding production in Europe, signaling that the energy storage sector is becoming a major force on its own.
National grids are also getting smarter. Energy storage helps stabilize the electricity supply. It reduces blackout risks, like the recent one in Spain. With energy storage increasingly tied to grid resilience, its value is no longer just economic but strategic.
The global shift to energy storage, led by the rapid adoption of LFP batteries, is transforming the battery metals landscape. Lithium, despite price volatility, remains central, with demand projected to grow fivefold by 2040. As new technologies evolve and markets mature, those who stay ahead of these shifts will help shape the future of global energy.
