Battery storage could power the next lithium boom
- Singapore-based Arcane Capital sees a lithium rebound as soon as Q4 2025
- Recovery could be driven by low battery prices and BESS market growth
- Companies like AZL, FBM, GT1 and CC9 could be poised to benefit
A lot of lithium players abandoned the sector through the price downturn, but a few are standing stoic and strong, timing the development of their projects for a rebound.
Green Technology Metals is one of those companies, confident of a recovery by the time they get the Seymour project in Canada into production in 2027 – when Fastmarkets expect 5.5% spodumene concentrate to be trading at around US$1146/t.
For comparison, investment bank RBC thinks spodumene prices will rise to US$1125/t on a 6% Li2O basis in 2026.
But Arcane Capital Advisors director and co-fund manager YueJer (YJ) Lee thinks it could rebound even sooner, and said he is among the (very) short list of people that think the lithium market will turn around as early as Q4 2025.
“Low battery prices are driving down EV prices and that WILL have an effect on EV penetration rates,” he said.
Battery energy storage systems growing exponentially
That’s just the first tipping point, the second is the growth of Battery Energy Storage Systems (BESS), Lee said.
“This is growing exponentially, far faster than companies and analysts realise,” he said.
“Last year’s BESS market was 160GWh (not including behind-the-meter of another 45GWh), and I expect this year the BESS market to be in the 300GWh range (plus another 80GWh BTM).
“Many forecasters are still calculating 200GWh in the whole storage market.
“The difference here is equal to, or greater than, their entire lithium oversupply.”
He’s not alone in that opinion.
Liontown Resources Tony Ottaviano sees energy storage systems as the next big growth area for lithium demand.
“The one that I want to draw out is energy storage systems. If we look at this and seeing … the growth we’ve experienced over the last 12 months and what is being projected, we see this as a tremendous growth engine for demand of lithium units,” he said in the company’s earnings call last week.
“Just to give you a bit of colour, I don’t know how many people have seen the recent CATL prospectus, but they are projecting a significant increase in battery shipments for stationary batteries.
“And if they are accurate in their forecast by the end of the decade, they believe that market will be as big as in terms of lithium carbon equivalents to the EV market today.
“That’s how strong they believe this market will grow.”
Lee says there’s one more element to the recovery scenario, that every other large demand source is not well-covered.
“Each e-bus is 300kWh, each truck 600-800kWh,” he said.
“Even ships and ferries are going electric now (LV Shui 01 has a 50MWh battery!).
“With everything electrifying at a faster rate than before, driven by exceptionally low prices of batteries, I see a positive demand shock that should make lithium investors very happy.”
“This year we will see EVs becoming cheaper than their ICE counterparts in many markets.
“Drivers get lower upfront costs, lower maintenance over the vehicle lifetime, and nearly cost-free driving (and if paired with solar/batteries in the house, literally cost-free.)”
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