Boston, Mass. − Emerging battery technologies, led by lithium-ion (Li-ion), used in the backup and uninterruptible power supply (UPS) markets is projected to grow six-fold from $143 million in 2013 to $896 million in 2020, as storage developers shift focus due to uncertainty in the emerging grid storage market, according to a report from Lux Research.
Li-ion batteries will account for the bulk of this market, reaching $553 million in 2020, and restore the demand/supply balance in the Li-ion market, according to the Lux Research report.
"The Li-ion chemistry offers enhanced life and power density over incumbent lead acid systems, justifying higher capital expenditure. This market growth carries an additional payoff in bringing the global demand for stationary Li-ion systems in line with forecasted supply, ending years of glut," said Steven Minnihan, Lux Research senior analyst and the lead author of the report, in a statement.
The report, Backup and UPS: Stable Growth in the Unstable Stationary Storage Markets, also finds that medical, commercial and datacenter operators are the major users of backup and UPS products, which have a global installation base of 800 GW, or 15 percent of global peak consumption.
"Energy storage developers continue to pump blood, sweat, tears, and cash into emerging markets for energy storage. However, the wisest developers have recently focused efforts on the mature backup and UPS markets for stable revenues," stated Minnihan.
Key report findings include the following:
• Li-ion battery offers modest cuts in total cost of ownership (TCO).
Lux analysts believe that the UPS and backup markets offer lithium-ion developers the best bet for modest steady growth as they continue to look for large-volume customers. The takeaways: The UPS and backup markets will add 12.5 percent to global demand for stationary lithium-ion systems, and Li-ion developers will offer a four to 11 percent reduction in TCO compared to lead acid.
• Sodium nickel chloride battery market will grow thanks to the UPS market.
The sodium nickel chloride battery market is expected to reach $116 million in the backup market in 2020 thanks to cost benefits in high-use applications due to its low capital cost and significant energy capacity, said analysts. They don't expect power-dense technologies including flywheels and ultracapacitors to find a home in the UPS market because of their low energy density and prohibitive cost.
• The end to the Li-ion glut is in sight.
Of the 14 GWh of forecasted Li-ion production in 2017, only 5 GWh will target stationary applications due to consumer and mobile sector demand. Analysts expect this will end years of oversupply and shrinking margins.